Exhibit 99.1

 

Marathon Patent Group Announces Second Quarter Financial Results

 

Conference Call Scheduled Today at 4:30 p.m. Eastern Time

 

LOS ANGELES, CA—(Marketwired — August 15, 2016) - Marathon Patent Group, Inc. (NASDAQ: MARA) (“Marathon” or “Company”), an IP licensing and commercialization company, today announced its operating results for the quarter ended June 30, 2016, as published in its Quarterly Report on Form 10-Q filed today with the Securities and Exchange Commission.

 

Operating Results for the Quarter Ended June 30, 2016 and Subsequent Events

 

·                  Record Q2 revenue of $34.3 million for the three months ended June 30, 2016.

 

·                  Record Q2 non-GAAP net income of $16.5 million, compared to non-GAAP net loss of $4.5 million for Q2 2015.

 

·                  Record Q2 GAAP net profit of $7.9 million or $0.53 per basic share compared to a GAAP net loss of $4.5 million or $(0.32) per basic share for Q2 2015.

 

·                  Record six months revenue of $36.4 million. First half record operating income of $9.1 million.

 

·                  Debt reduction of $7.4M

 

·                  Other operating expenses in Q2 2016 of approximately $4.9 million, a 20% decrease as compared to operating expenses of $6.1 million in Q2 2015.

 

·                  Named Erich Spangenberg its Director of Acquisitions, Licensing, and Strategy primarily focusing on acquisitions, licensing, alliances and strategy for Marathon, with an emphasis on Marathon’s expansion into Asia and Europe.

 

·                  Added Dr. David Liu to the team with over 20 years of deep domain experience in the areas of memory and semiconductor technology

 

·                  Entered into a strategic relationship with a large fund and a Fortune Global 50 company on August 11, 2016 to commercialize and monetize 10,000+ patents in a particular industry vertical.

 

·                  Entered into agreement with Siemens AG acquiring 307 patents, many deemed Standard Essential Patents.

 

·                  Secured a lead investor for 3D Nanocolor.

 



 

Doug Croxall, Chief Executive Officer of Marathon, stated, “We are clearly pleased with year to date record financial results that we announced today, including improving our balance sheet and successfully retiring a large portion of debt.

 

Croxall concluded, “As discussed on our previous earnings call, we are refocusing our revenue generation on licenses that provide a recurring revenue feature.  The recurring revenue may take the form of fixed quarterly or annual payments by licensees to Marathon and should help investors better model future revenue potential.

 

Conference Call

 

Marathon will host a corresponding conference call to discuss the results with Chief Executive Officer Doug Croxall and Chief Financial Officer Frank Knuettel II on Monday August 15, 2016 at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-4018 ten minutes prior to the scheduled start time. International calls should dial (201) 689-8471.

 

In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company’s website at www.marathonpg.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Monday, August 29, 2016 by dialing (877) 870-5176 in the U.S. and Canada and (858) 384-5517 internationally and entering the pin number: 13643010.

 

About Marathon Patent Group

 

Marathon is an IP licensing and commercialization company. The Company acquires and manages IP rights from a variety of sources, including large and small corporations, universities and other IP owners. Marathon has a global focus on IP acquisition and management. The Company’s commercialization division is focused on the full commercialization lifecycle which includes discovering opportunities, performing due diligence, providing capital, managing development, protecting and developing IP, assisting in execution of the business plan, and realizing shareholder value. To learn more about Marathon Patent Group, visit www.marathonpg.com.

 



 

Safe Harbor Statement

 

Certain statements in this press release constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission (the “SEC”), not limited to Risk Factors relating to its patent business contained therein. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.

 

CONTACT INFORMATION

 

·                  Marathon Patent Group
Jason Assad
678-570-6791
Jason@marathonpg.com

 



 

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

7,158,779

 

$

2,555,151

 

Accounts receivable - net of allowance for bad debt of $387,976 and $375,750 for June 30, 2016 and December 31, 2015

 

128,337

 

136,842

 

Bonds posted with courts

 

2,383,069

 

1,748,311

 

Prepaid expenses and other current assets, net of discounts of $3,103 for June 30, 2016 and $3,414 for December 31, 2015

 

177,745

 

338,598

 

Total current assets

 

9,847,930

 

4,778,902

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $87,662 and $67,052 for June 30, 2016 and December 31, 2015

 

46,977

 

61,297

 

Intangible assets, net of accumulated amortization of $18,013,247 and $15,557,353 for June 30, 2016 and December 31, 2015

 

23,488,453

 

25,457,639

 

Deferred tax assets

 

8,893,421

 

12,437,741

 

Other non current assets, net of discounts of $3,279 and $4,831 for June 30, 2016 and December 31, 2015

 

204,721

 

9,169

 

Goodwill

 

4,453,945

 

4,482,845

 

Total other assets

 

37,087,517

 

42,448,691

 

 

 

 

 

 

 

Total Assets

 

$

46,935,447

 

$

47,227,593

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

6,142,186

 

$

6,534,825

 

Clouding IP earn out - current portion

 

-

 

33,646

 

Notes payable, net of discounts of $788,320 and $730,945 for June 30, 2016 and December 31, 2015

 

8,793,806

 

10,383,177

 

 

 

14,935,992

 

16,951,648

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

Notes payable, net of discount of $1,016,198 and $1,425,167 for June 30, 2016 and December 31, 2015

 

9,027,798

 

12,223,884

 

Clouding IP earn out

 

3,147,054

 

3,281,238

 

Deferred tax liability

 

789,690

 

1,044,997

 

Revenue share liability

 

1,000,000

 

1,000,000

 

Other long term liability

 

47,549

 

50,084

 

Total long-term liabilities

 

14,012,091

 

17,600,203

 

 

 

 

 

 

 

Total liabilities

 

28,948,083

 

34,551,851

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Preferred stock Series B, $.0001 par value, 50,000,000 shares authorized: 782,004 and 782,004 issued and outstanding at June 30, 2016 and December 31, 2015

 

78

 

78

 

Common stock, $.0001 par value; 200,000,000 shares authorized; 15,047,141 and 14,867,141 at June 30, 2016 and December 31, 2015

 

1,505

 

1,487

 

Additional paid-in capital

 

44,422,717

 

43,217,513

 

Accumulated other comprehensive income (loss)

 

(1,168,556)

 

(1,265,812)

 

Accumulated deficit

 

(25,264,658)

 

(29,277,524)

 

 

 

 

 

 

 

Total Marathon Patent Group, Inc. stockholders’ equity

 

17,991,086

 

12,675,742

 

 

 

 

 

 

 

Noncontrolling Interest

 

(3,722)

 

-

 

 

 

 

 

 

 

Total Stockholders’ Equity

 

17,987,364

 

12,675,742

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

46,935,447

 

$

47,227,593

 

 

The accompanying notes are an integral part to these unaudited consolidated financial statements.

 



 

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

For The

 

For The

 

For The

 

For The

 

 

 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

June 30, 2016

 

June 30, 2015

 

June 30, 2016

 

June 30, 2015

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Revenues

 

$

34,349,762

 

$

1,368,986

 

$

36,409,438

 

$

5,462,855

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Cost of revenues

 

15,467,763

 

3,860,210

 

18,107,740

 

8,188,375

 

Amortization of patents and website

 

1,961,411

 

3,029,000

 

3,987,310

 

5,627,461

 

Compensation and related taxes

 

1,120,924

 

1,087,058

 

2,154,270

 

2,668,132

 

Consulting fees

 

364,836

 

329,081

 

645,612

 

1,225,624

 

Professional fees

 

498,212

 

578,920

 

903,705

 

1,348,535

 

General and administrative

 

223,130

 

284,976

 

428,513

 

504,457

 

Goodwill impairment

 

83,000

 

-

 

83,000

 

-

 

Patent impairment

 

620,696

 

766,498

 

993,890

 

766,498

 

Total operating expenses

 

20,339,972

 

9,935,743

 

27,304,040

 

20,329,082

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) from continuing operations

 

14,009,790

 

(8,566,757)

 

9,105,398

 

(14,866,227)

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

(17,745)

 

7,439

 

(31,532)

 

7,439

 

Foreign exchange gain (loss)

 

(69,201)

 

1,899

 

(62,223)

 

(37,503)

 

Change in fair value adjustment of Clouding IP earn out

 

169,172

 

2,304,301

 

167,830

 

2,304,301

 

Interest income

 

931

 

-

 

1,862

 

2

 

Interest expense

 

(844,407)

 

(1,577,083)

 

(1,851,256)

 

(2,508,623)

 

Total other income (expenses)

 

(761,250)

 

736,556

 

(1,775,319)

 

(234,384)

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income tax benefit (expense)

 

13,248,540

 

(7,830,201)

 

7,330,079

 

(15,100,611)

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(5,345,983)

 

3,327,505

 

(3,320,935)

 

5,816,344

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

7,902,557

 

(4,502,696)

 

4,009,144

 

(9,284,267)

 

 

 

 

 

 

 

 

 

 

 

Net (income) loss attributable to noncontrolling interests

 

3,722

 

-

 

3,722

 

-

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attrributable to Marathon Patent Group, Inc. common shareholders

 

$

7,906,279

 

$

(4,502,696)

 

$

4,012,866

 

$

(9,284,267)

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.53

 

$

(0.32)

 

$

0.27

 

$

(0.67)

 

Fully Diluted

 

$

0.49

 

$

(0.32)

 

$

0.25

 

$

(0.67)

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

 

14,994,697

 

13,998,563

 

14,980,919

 

13,937,872

 

Fully Diluted

 

16,031,564

 

13,998,563

 

16,017,786

 

13,937,872

 

 

 

 

 

 

 

 

 

 

 

Other income (loss)

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

$

(150,171)

 

$

319,905

 

$

97,256

 

$

(630,334)

 

 

The accompanying notes are an integral part to these unaudited consolidated financial statements.

 



 

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

For The

 

For The

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

June 30, 2016

 

June 30, 2015

 

 

 

(unaudited)

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

4,009,144

 

$

(9,284,267)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation

 

2,710

 

3,758

 

Amortization of patents and website

 

3,987,310

 

5,627,461

 

Deferred tax asset

 

3,547,856

 

(5,307,139)

 

Deferred tax liability

 

(275,490)

 

(509,207)

 

Impairment of intangible assets

 

993,890

 

766,498

 

Impairment of goodwill

 

83,000

 

-

 

Stock based compensation

 

1,062,200

 

1,413,724

 

Stock issued for services

 

136,000

 

750,334

 

Non-cash interest, discount, and financing costs

 

664,182

 

1,625,322

 

Change in fair value of Clouding earnout

 

(167,830)

 

(2,304,301)

 

Allowance for doubtful accounts

 

12,226

 

-

 

Other non-cash adjustments

 

(104,899)

 

14,980

 

Changes in operating assets and liabilities

 

 

 

 

 

Bonds posted with courts

 

(518,455)

 

-

 

Accounts receivable

 

(2,718)

 

(487,328)

 

Prepaid expenses and other assets

 

165,301

 

51,455

 

Accounts payable and accrued expenses

 

(469,660)

 

2,046,662

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

13,124,767

 

(5,592,048)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Acquisition of patents

 

(1,150,000)

 

-

 

Purchase of property, equipment, and other intangible assets

 

(6,291)

 

(20,668)

 

Net cash provided by (used in) investing activities

 

(1,156,291)

 

(20,668)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Payment on note payable in connection with the acquisition of Medtech and Orthophoenix

 

(2,953,779)

 

(4,200,000)

 

Payment on note payable in connection with the acquisition of Orthophoenix

 

-

 

(5,000,000)

 

Payment on note payable in connection with the acquisition of Sarif

 

-

 

(276,250)

 

Payment on note payable in connection with the acquisition of IP Liquidity

 

-

 

(1,109,375)

 

Payment on note payable in connection with the acquisition of Dynamic Advances

 

-

 

(2,624,375)

 

Payment on MdR Escrow TLI

 

-

 

(50,000)

 

Cash received upon issuance of notes payable (net of issuance costs)

 

-

 

19,600,000

 

Payment on Fortress note payable

 

(3,973,854)

 

-

 

Cash received upon exercise of warrants

 

-

 

18,751

 

Repayment of convertible notes payable

 

-

 

(5,050,000)

 

Payment on note payable

 

(437,070)

 

705,093

 

Net cash provided by (used in) financing activities

 

(7,364,703)

 

2,013,844

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(145)

 

3,545

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

4,603,628

 

(3,595,327)

 

 

 

 

 

 

 

Cash at beginning of period

 

2,555,151

 

5,082,569

 

 

 

 

 

 

 

Cash at end of period

 

$

7,158,779

 

$

1,487,242

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest expense

 

$

1,187,074

 

$

805,106

 

Taxes paid

 

$

27,682

 

$

14,662

 

Loan fees

 

$

-

 

$

400,000

 

Cash invested in 3DNano

 

$

115,000

 

$

-

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

Common stock issued in conjunction with note payable

 

$

-

 

$

1,000,000

 

Warrant issued in conjunction with note payable

 

$

-

 

$

318,679

 

Revenue share liability incurred in conjunction with note payable

 

$

-

 

$

1,000,000

 

Convertible debt warrant repricing

 

$

6,425

 

$

-

 

Note payable issuance in conjunction with the acquisition of Munitech patents

 

$

1,750,000

 

$

-

 

Non-cash interest increase in debt assumed in the Orthophoenix acquisition

 

$

-

 

$

750,000

 

Note payable issuance in conjunction with the acquisition of BATO patents

 

$

-

 

$

10,000,000

 

 

The accompanying notes are an integral part to these unaudited consolidated financial statements.

 



 

 

 

Non-GAAP Reconciliation

 

 

 

 

For the Three
Months Ended
June 30, 2016

 

For the Three
Months
Ended June
30, 2015

 

For the Six
Months Ended
June 30, 2016

 

For the Six
Months Ended
June 30, 2015

 

Net income (loss)

 

  $

7,906,279

 

  $

(4,502,696)

 

  $

4,012,866

 

  $

(9,284,267)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

1,961,411

 

3,029,000

 

3,987,310

 

5,627,461

 

Equity-based compensation

 

647,764

 

750,968

 

1,198,797

 

2,210,051

 

Impairment of intellectual property

 

703,696

 

766,498

 

1,076,890

 

766,498

 

Change in earn out liability

 

(169,172)

 

(2,304,301)

 

(167,830)

 

(2,304,301)

 

Non-cash interest expense

 

58,492

 

1,089,798

 

664,182

 

1,703,517

 

Deferred tax (benefit) / tax expense

 

5,345,983

 

(3,327,505)

 

3,320,935

 

(5,816,344)

 

Other

 

13,284

 

1,852

 

14,936

 

3,758

 

Non-GAAP net income (loss)

 

  $

16,467,737

 

  $

(4,496,386)

 

  $

14,108,086

 

  $

(7,093,627)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

14,994,697

 

13,998,563

 

14,980,919

 

13,937,872

 

Weighted average common shares outstanding - diluted

 

16,031,564

 

13,998,563

 

16,017,786

 

13,937,872

 

Non-GAAP net income (loss) per common share - basic

 

  $

1.10

 

  $

(0.32)

 

  $

0.94

 

  $

(0.51)

 

Non-GAAP net income (loss) per common share - diluted

 

  $

1.03

 

  $

(0.32)

 

  $

0.88

 

  $

(0.51)