Exhibit 99.1

 

Marathon Patent Group Announces Third Quarter Financial Results

 

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

 

LOS ANGELES, CA—(Marketwired — November 14, 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 September 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 Sept 30, 2016 / Subsequent and Other Year to Date Events

 

·                  YTD revenue of $36.5 million for the nine months ended September 30, 2016.

 

·                  We generated total revenue of $43 thousand and $6.4 million for the three months ended September 30, 2016 and September 30, 2015, respectively.

 

·                  Net operating loss was approximately $10.7 million (including non-cash expenses) for the three months ended September 30, 2016 compared to $3.1 million for the three months ended September 30, 2015. The net operating loss includes non-cash operating expenses, which primarily relate to share based compensation and amortization and impairment of patents, in the amounts of $8.1 million and $3.8 million for the three months ended September 30, 2016 and September 30, 2015, respectively.

 

·                  With 15,047,141 shares outstanding, on a per share basis, our GAAP net loss was $(0.42) per basic and diluted share for the three months ended September  30, 2016, compared to a GAAP net loss of $(0.15) per basic and diluted share for the three months ended September 30, 2015.

 

·                  On a per share basis, our Non-GAAP net loss was $(0.21) per basic and diluted share for the three months ended September 30, 2016, compared to a Non-GAAP net loss of $(0.01) per basic and diluted share for the three months ended September  30, 2015.

 

Doug Croxall, Chief Executive Officer of Marathon, stated, “While pleased with our record year to date revenues, our third quarter was unsurprisingly very light. While there were revenue opportunities, we remain unwilling to compromise what we believe to be reasonable licenses to try and get them into a particular quarter. It’s for that reason we’ve always advised that our financial performance should be evaluated on an annual basis, as opposed to quarterly.

 



 

Croxall concluded, “As discussed on our previous earnings call, we continue to refocus 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 November 14, 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, November 28, 2016 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13649802.

 

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

 



 

 

 

September 30, 2016

 

December 31, 2015

 

 

 

(Unaudited)

 

(Audited)

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

$

1,294,950

 

$

2,555,151

 

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

 

81,865

 

136,842

 

Bonds posted with courts

 

980,919

 

1,748,311

 

Prepaid expenses and other current assets, net of discounts of $2,483 for September 30, 2016 and $3,414 for December 31, 2015

 

153,388

 

338,598

 

Total current assets

 

$

2,511,122

 

$

4,778,902

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $98,347 and $67,052 for September 30, 2016 and December 31, 2015

 

$

38,389

 

$

61,297

 

Intangible assets, net of accumulated amortization of $16,438,642 and $15,557,353 for September 30, 2016 and December 31, 2015

 

19,551,678

 

25,457,639

 

Deferred tax assets

 

11,918,920

 

12,437,741

 

Other non current assets, net of discounts of $2,969 and $4,831 for September 30, 2016 and December 31, 2015

 

201,031

 

9,169

 

Goodwill

 

4,483,129

 

4,482,845

 

Total other assets

 

$

36,193,147

 

$

42,448,691

 

 

 

 

 

 

 

Total Assets

 

$

38,704,269

 

$

47,227,593

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

6,054,015

 

$

6,534,825

 

Clouding IP earn out - current portion

 

110,100

 

33,646

 

Notes payable, net of discounts of $818,919 and $730,945 for September 30, 2016 and December 31, 2015

 

11,139,623

 

10,383,177

 

Total current liabilities

 

$

17,303,738

 

$

16,951,648

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

Notes payable, net of discount of $798,966 and $1,425,167 for September 30, 2016 and December 31, 2015

 

$

6,456,740

 

$

12,223,884

 

Clouding IP earn out

 

1,082,586

 

3,281,238

 

Deferred tax liability

 

438,709

 

1,044,997

 

Revenue share liability

 

1,000,000

 

1,000,000

 

Other long term liability

 

45,763

 

50,084

 

Total long-term liabilities

 

$

9,023,798

 

$

17,600,203

 

 

 

 

 

 

 

Total Liabilities

 

$

26,327,536

 

$

34,551,851

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

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

 

1,505

 

1,487

 

Additional paid-in capital

 

44,901,535

 

43,217,513

 

Accumulated other comprehensive income (loss)

 

(959,401)

 

(1,265,812)

 

Accumulated deficit

 

(31,539,066)

 

(29,277,524)

 

 

 

 

 

 

 

Total Marathon Patent Group stockholders’ equity

 

$

12,404,651

 

$

12,675,742

 

 

 

 

 

 

 

Noncontrolling interests

 

(27,918)

 

-

 

 

 

 

 

 

 

Total Stockholders’ Equity

 

$

12,376,733

 

$

12,675,742

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

38,704,269

 

$

47,227,593

 

 



 

 

 

For The

 

For The

 

For The

 

For The

 

 

 

Three Months

 

Three Months

 

Nine Months

 

Nine Months

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

September 30, 2016

 

September 30, 2015

 

September 30, 2016

 

September 30, 2015

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Revenues

 

43,113

 

6,407,997

 

36,452,551

 

11,870,851

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Cost of revenues

 

1,094,378

 

4,002,040

 

19,202,118

 

12,190,415

 

Amortization of patents and website

 

2,030,886

 

2,884,269

 

6,018,196

 

8,511,730

 

Compensation and related taxes

 

1,252,571

 

903,685

 

3,406,841

 

3,571,817

 

Consulting fees

 

257,420

 

643,702

 

903,032

 

1,869,326

 

Professional fees

 

432,496

 

882,213

 

1,336,201

 

2,230,748

 

General and administrative

 

183,771

 

177,494

 

612,284

 

681,951

 

Goodwill impairment

 

-

 

-

 

83,000

 

-

 

Patent impairment

 

5,531,383

 

-

 

6,525,273

 

766,498

 

Total Operating Expenses

 

10,782,905

 

9,493,403

 

38,086,945

 

29,822,485

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(10,739,792)

 

(3,085,406)

 

(1,634,394)

 

(17,951,634)

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

Other expense

 

(37,116)

 

6,646

 

(68,647)

 

14,085

 

Foreign exchange gain (loss)

 

(175,850)

 

(20,090)

 

(238,073)

 

(57,593)

 

Change in fair value adjustments of Clouding IP earn out

 

1,954,378

 

597,047

 

2,122,208

 

2,901,348

 

Interest Income

 

931

 

135

 

2,793

 

137

 

Interest expense.

 

(649,065)

 

(1,078,615)

 

(2,500,321)

 

(3,587,238)

 

Loss on debt extinguishment

 

-

 

(654,000)

 

-

 

(654,000)

 

Total Other income (expenses)

 

1,093,278

 

(1,148,877)

 

(682,040)

 

(1,383,261)

 

 

 

 

 

 

 

 

 

 

 

Loss before (provision for) benefit from income taxes

 

(9,646,514)

 

(4,234,283)

 

(2,316,434)

 

(19,334,895)

 

 

 

 

 

 

 

 

 

 

 

(Provision for) benefit from income taxes

 

3,347,909

 

483,815

 

26,974

 

6,300,159

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(6,298,605)

 

(3,750,468)

 

(2,289,460)

 

(13,034,736)

 

 

 

 

 

 

 

 

 

 

 

Net loss attributible to noncontrolling interests

 

24,195

 

-

 

27,918

 

-

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Marathon Patent Group, Inc. common shareholders

 

(6,274,410)

 

(3,750,468)

 

(2,261,542)

 

(13,034,736)

 

 

 

 

 

 

 

 

 

 

 

Loss per common share:

 

 

 

 

 

 

 

 

 

Basic and fully diluted

 

(0.42)

 

(0.26)

 

(0.15)

 

(0.92)

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic and fully diluted

 

15,047,141

 

14,376,118

 

14,944,852

 

14,094,891

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

209,159

 

45,628

 

306,415

 

(584,706)

 

 



 

 

 

For The 

 

For The 

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

 

September 30, 2016

 

September 30, 2015

 

 

 

(Unaudited)

 

(Unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

Net loss attributable to Marathon Patent Group, Inc common shareholders

 

$

(2,261,542)

 

$

(13,034,736)

 

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

 

 

 

 

 

Depreciation

 

3,780

 

5,668

 

Amortization of patents and website

 

6,018,196

 

8,511,730

 

Allowance for doubtful accounts

 

12,226

 

-

 

Deferred tax asset

 

531,757

 

(5,579,418)

 

Deferred tax liability

 

(638,268)

 

(709,280)

 

Impairment of intangible assets

 

6,525,273

 

766,498

 

Impairment of goodwill

 

83,000

 

-

 

Stock based compensation

 

1,541,615

 

1,961,505

 

Stock issued for services

 

136,000

 

1,084,834

 

Loss on debt exstinguishment

 

-

 

654,000

 

Non-cash interest, discount, and financing costs

 

952,231

 

1,926,865

 

Change in fair value of Clouding earnout

 

(2,122,198)

 

(2,901,348)

 

Non-controlling interest

 

(27,918)

 

-

 

Other non-cash adjustments

 

96,996

 

(13,244)

 

Changes in operating assets and liabilities

 

 

 

 

 

Accounts receivable

 

43,763

 

(2,109,984)

 

Prepaid expenses and other assets

 

(6,652)

 

60,938

 

Bonds posted with court

 

883,695

 

-

 

Accounts payable and accrued expenses

 

(557,832)

 

6,454,467

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

11,214,122

 

(2,921,505)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Acquisition of patents

 

(3,552,656)

 

-

 

Purchase of property, equipment, and other intangible assets

 

(8,387)

 

(22,520)

 

Net cash provided by (used in) investing activities

 

(3,561,043)

 

(22,520)

 

 

 

 

 

 

 

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

 

Repayment of notes payable

 

(5,379,105)

 

-

 

Cash received upon exercise of warrants

 

-

 

18,751

 

Repayment of convertible notes payable

 

-

 

(5,050,000)

 

Payment on note payable

 

(578,804)

 

(42,500)

 

Net cash provided (used in) by financing activities

 

(8,911,688)

 

1,266,251

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(1,592)

 

4,044

 

 

 

 

 

 

 

Net decrease in cash

 

(1,260,201)

 

(1,673,730)

 

 

 

 

 

 

 

Cash at beginning of period

 

2,555,151

 

5,082,569

 

 

 

 

 

 

 

Cash at end of period

 

$

1,294,950

 

$

3,408,839

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest expense

 

$

1,391,567

 

$

1,660,372

 

Taxes paid

 

$

36,218

 

$

54,437

 

Loan fees

 

$

-

 

$

400,000

 

Cash invested in 3DNano

 

$

115,000

 

$

-

 

Cash invested in PG Technologies

 

$

1,000,000

 

$

-

 

 

 

 

 

 

 

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

 

Note payable issuance in conjunction with the acquisition of GE patent

 

$

1,000,000

 

$

-

 

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

 

$

-

 

$

750,000

 

Note payable issuance in conjunction with the acquisition of BATO patent

 

$

-

 

$

10,000,000

 

Note payable issuance in conjunction with the acquisition of Seimens patent

 

$

1,755,635

 

$

-

 

Note payable issuance in conjunction with the acquisition of 3Dnano Liscense

 

$

200,000

 

$

-

 

Conversion from AP to NP

 

$

-

 

$

705,093

 

 



 

 

 

Non-GAAP Reconciliation

 

 

 

For the Three
Months Ended
September 30, 2016

 

For the Three
Months Ended
September 30, 2015

 

For the Nine
Months Ended
September 30, 2016

 

For the Nine
Months Ended
September 30, 2015

 

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

 

(6,274,410)

 

(3,750,468)

 

(2,261,542)

 

(13,034,736)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,030,886

 

2,884,269

 

6,018,196

 

8,511,730

 

Equity-based compensation

 

478,819

 

901,446

 

1,677,616

 

3,111,498

 

Impairment of Intellectual Property

 

5,531,383

 

-

 

6,608,273

 

766,498

 

Change in Earn Out Liability

 

(1,954,378)

 

(597,047)

 

(2,122,208)

 

(2,901,348)

 

Non-cash interest expense

 

288,049

 

301,544

 

952,231

 

1,926,866

 

Deferred tax (benefit) / Tax expense

 

(3,347,909)

 

(483,815)

 

(26,974)

 

(6,300,159)

 

Loss on note payable

 

-

 

654,000

 

-

 

654,000

 

Clawback on Medtronic debt

 

-

 

-

 

-

 

750,000

 

Other

 

12,468

 

1,631

 

28,448

 

14,458

 

Non-GAAP net income (loss)

 

(3,235,092)

 

(88,440)

 

10,874,040

 

(6,501,193)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

15,047,141

 

14,376,118

 

14,944,852

 

14,094,891

 

Fully diluted

 

15,047,141

 

14,376,118

 

15,984,269

 

14,094,891

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

  $

 (0.21)

 

  $

 (0.01)

 

  $

 0.73

 

  $

 (0.46)

 

Fully diluted

 

  $

 (0.21)

 

  $

 (0.01)

 

  $

 0.68

 

  $

 (0.46)