·
|
Revenues of $13.5 million, up 255% from $3.8 million from the prior quarter and more than 18 times higher than $0.7 million in the third quarter last year
|
·
|
Achieved GAAP net income for the first time in the Company’s history; GAAP net income totaled $3.5 million or $0.61 per basic share, as compared to GAAP net loss of $1.6 million or ($0.29) per diluted share in the prior quarter and GAAP net loss of $0.9 million or ($0.21) per basic share in the same quarter last year.
|
·
|
Non-GAAP net income of $6.9 million, or $1.20 per share, up from Non-GAAP net income of $1.2 million, or $0.21 per diluted share in the prior quarter and Non-GAAP net loss of $0.1 million, or ($0.03) per diluted share in the comparable year-ago time period. A detailed reconciliation of GAAP to Non-GAAP results can be found at the end of the release.
|
·
|
Cash and cash equivalents of $5.6 million as of September 30, 2014, compared to $6.5 million as of June 30, 2014 and $3.6 million as of December 31, 2013.
|
·
|
Accounts receivable of $10.5 million as of September 30, 2014, compared to $0.1 million as of June 30, 2014 and $0.3 million as of December 31, 2013.
|
·
|
Acquired 2 active patent portfolios consisting of 71 patents during the quarter.
|
September 30,
2014
|
December 31,
2013
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
5,556,584
|
$
|
3,610,262
|
||||
Accounts receivable - net
|
10,510,000
|
270,000
|
||||||
Marketable securities - available for sale securities
|
-
|
6,250
|
||||||
Prepaid expenses and other current assets
|
340,456
|
752,931
|
||||||
Total current assets
|
16,407,040
|
4,639,443
|
||||||
Other assets:
|
||||||||
Property and equipment, net
|
13,026
|
13,640
|
||||||
Intangible assets, net
|
33,514,365
|
6,157,659
|
||||||
Deferred tax assets
|
1,949,401
|
-
|
||||||
Goodwill
|
1,606,800
|
2,144,488
|
||||||
Total other assets
|
37,083,592
|
8,315,787
|
||||||
Total Assets
|
$
|
53,490,632
|
$
|
12,955,230
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
5,665,707
|
$
|
754,945
|
||||
Clouding IP earn out - current portion
|
2,148,000
|
-
|
||||||
Income tax payable
|
467,997
|
-
|
||||||
Notes payable
|
6,062,500
|
-
|
||||||
Total current liabilities
|
14,344,204
|
754,945
|
||||||
Long-term liabilities
|
||||||||
Clouding IP earn out, long-term portion
|
10,967,000
|
-
|
||||||
Total long-term liabilities
|
10,967,000
|
-
|
||||||
Liabilities of discontinued operations
|
-
|
30,664
|
||||||
Total liabilities
|
25,311,204
|
785,609
|
||||||
Stockholders' Equity:
|
||||||||
Series A Convertible Preferred Stock, $.0001 par value, 50,000,000 shares authorized: 1,008,194 and 0 issued and outstanding at September 30, 2014 and December 31, 2013
|
101
|
-
|
||||||
Series B Convertible Preferred Stock, $.0001 par value, 50,000,000 shares authorized: 391,000 and 0 issued and outstanding at September 30, 2014 and December 31, 2013
|
39
|
-
|
||||||
Common stock, ($.0001 par value; 200,000,000 shares authorized; 5,799,448 and 5,489,593 issued and outstanding at September 30, 2014 and December 31, 2013
|
580
|
549
|
||||||
Additional paid-in capital
|
35,709,773
|
22,673,287
|
||||||
Accumulated other comprehensive income - marketable securities available for sale
|
-
|
(6,250
|
)
|
|||||
Accumulated deficits
|
(7,531,065
|
)
|
(10,487,469
|
)
|
||||
Total Marathon Patent Group, Inc. equity
|
28,179,428
|
12,180,117
|
||||||
Non-controlling interest in subsidiary
|
-
|
(10,496
|
)
|
|||||
Total stockholders' equity
|
28,179,428
|
12,169,621
|
||||||
Total liabilities and stockholders' equity
|
$
|
53,490,632
|
$
|
12,955,230
|
FOR THE THREE MONTHS
ENDED
SEPTEMBER 30, 2014
|
FOR THE THREE MONTHS
ENDED
SEPTEMBER 30, 2013
|
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 2014
|
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30, 2013
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Revenues
|
$
|
13,455,472
|
$
|
710,500
|
$
|
20,059,972
|
$
|
2,235,479
|
||||||||
Cost of revenues (cost of revenue is exclusive of patent amortization expenses)
|
5,584,542
|
403,013
|
8,448,954
|
687,638
|
||||||||||||
Gross profit
|
7,870,930
|
307,487
|
11,611,018
|
1,547,841
|
||||||||||||
Expenses
|
||||||||||||||||
Amortization of patents and website
|
1,480,311
|
384,977
|
2,872,638
|
860,657
|
||||||||||||
Compensation and related taxes
|
824,165
|
470,786
|
2,266,283
|
1,938,814
|
||||||||||||
Consulting fees
|
785,601
|
269,012
|
1,550,155
|
444,921
|
||||||||||||
Professional fees
|
408,280
|
116,373
|
933,751
|
564,597
|
||||||||||||
General and administrative
|
166,216
|
108,278
|
380,400
|
315,260
|
||||||||||||
Total operating expenses
|
3,664,573
|
1,349,426
|
8,003,227
|
4,124,249
|
||||||||||||
Operating income (loss) from continuing operations
|
4,206,357
|
(1,041,939
|
)
|
3,607,791
|
(2,576,408
|
)
|
||||||||||
Other income (expenses)
|
||||||||||||||||
Other income
|
4,187
|
-
|
4,187
|
-
|
||||||||||||
Other expense
|
(24,994
|
)
|
-
|
(25,764
|
)
|
-
|
||||||||||
Realized loss - available for sale
|
-
|
(38,819
|
)
|
-
|
(38,819
|
)
|
||||||||||
Impairment of goodwill
|
(2,144,488
|
)
|
-
|
(2,144,488
|
)
|
-
|
||||||||||
Interest income
|
138
|
474
|
632
|
1,114
|
||||||||||||
Interest expense
|
-
|
(243
|
)
|
(20
|
)
|
(702
|
)
|
|||||||||
Total other income (expenses)
|
(2,165,157
|
)
|
(38,588
|
)
|
(2,165,453
|
)
|
(38,407
|
)
|
||||||||
Income (loss) from continuing operations before benefit for income taxes
|
2,041,200
|
(1,080,527
|
)
|
1,442,338
|
(2,614,815
|
)
|
||||||||||
Income tax benefit
|
1,481,404
|
-
|
1,481,404
|
-
|
||||||||||||
Income (loss) from continuing operations
|
3,522,604
|
(1,080,527
|
)
|
2,923,742
|
(2,614,815
|
)
|
||||||||||
Discontinued operations:
|
||||||||||||||||
Income from discontinued operations, net of tax
|
-
|
145,207
|
-
|
263,460
|
||||||||||||
Net Income (loss)
|
3,522,604
|
(935,320
|
)
|
2,923,742
|
(2,351,355
|
)
|
||||||||||
Deemed dividends related to beneficial conversion feature of Series A Convertible Preferred Stock
|
-
|
-
|
(1,271,492
|
)
|
-
|
|||||||||||
Net income (loss) available to common shareholders
|
3,522,604
|
(935,320
|
)
|
1,652,250
|
(2,351,355
|
)
|
||||||||||
Income (loss) per common share, basic:
|
||||||||||||||||
Income (loss) from continuing operations
|
$
|
0.61
|
$
|
(0.21
|
)
|
$
|
0.52
|
$
|
(0.60
|
)
|
||||||
Income from discontinued operations
|
-
|
0.03
|
-
|
0.06
|
||||||||||||
$
|
0.61
|
$
|
(0.18
|
)
|
$
|
0.52
|
$
|
(0.54
|
)
|
|||||||
Income (loss) per common share, diluted:
|
||||||||||||||||
Income (loss) from continuing operations
|
$
|
0.44
|
$
|
(0.21
|
)
|
$
|
0.39
|
$
|
(0.60
|
)
|
||||||
Income from discontinued operations
|
-
|
0.03
|
-
|
0.06
|
||||||||||||
$
|
0.44
|
$
|
(0.18
|
)
|
$
|
0.39
|
$
|
(0.54
|
)
|
|||||||
WEIGHTED AVERAGE COMMON SHARES
|
||||||||||||||||
OUTSTANDING - Basic
|
5,750,250
|
5,227,840
|
5,598,687
|
4,330,208
|
||||||||||||
OUTSTANDING - Diluted
|
7,983,227
|
5,227,840
|
7,463,252
|
4,330,208
|
FOR THE NINE MONTHS
|
FOR THE NINE MONTHS
|
|||||||
ENDED
|
ENDED
|
|||||||
SEPTEMBER 30, 2014
|
SEPTEMBER 30, 2013
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
2,923,742
|
$
|
(2,351,355
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
4,357
|
1,944
|
||||||
Amortization of patents and website
|
2,872,638
|
860,657
|
||||||
Amortization of expenses connected to equity to be issued for services
|
355,711
|
121,564
|
||||||
Net reversal of expense related to forfeiture of unvested stock
|
(179,708
|
)
|
-
|
|||||
Impairment of Goodwill
|
2,144,488
|
-
|
||||||
Deferred tax asset
|
(1,949,401
|
)
|
-
|
|||||
Income tax payable
|
467,997
|
-
|
||||||
Stock based compensation relating to warrants
|
31,182
|
94,930
|
||||||
Stock based compensation
|
2,070,813
|
1,347,774
|
||||||
Non-cash revenue
|
-
|
(1,000,000
|
)
|
|||||
Non-cash other income
|
(3,930
|
)
|
-
|
|||||
Realized loss - available for sale
|
-
|
38,819
|
||||||
Gain on sale of assets of discontinued operations
|
-
|
(168,216
|
)
|
|||||
Other non-cash adjustments
|
24,994
|
-
|
||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
(10,182,950
|
)
|
(330,000
|
)
|
||||
Assets of discontinued operations - current portion
|
-
|
82,145
|
||||||
Prepaid expenses and other current assets
|
(207,182
|
)
|
39,000
|
|||||
Accounts payable and accrued expenses
|
4,860,286
|
315,394
|
||||||
Net cash provided by (used in) operating activities
|
3,233,037
|
(947,344
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Acquisition of patents
|
(6,850,800
|
)
|
(1,950,000
|
)
|
||||
Purchase of property, equipment, and other intangible assets
|
(24,903
|
)
|
(10,000
|
)
|
||||
Proceeds received from sale of marketable securities
|
-
|
129,397
|
||||||
Sale of real estate property (discontinued operations)
|
-
|
1,052,320
|
||||||
Capitalized cost related to improvements of real estate property (discontinued operations)
|
-
|
(16,750
|
)
|
|||||
Net cash used in investing activities
|
(6,875,703
|
)
|
(795,033
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payment on note payable in connection with the acquisition of IP Liquidity
|
(937,500
|
)
|
-
|
|||||
Payment on note payable in connection with the acquisition of Cyberfone Systems, LLC
|
-
|
(500,000
|
)
|
|||||
Proceeds from sale of preferred and common stock, net of issuance costs
|
6,388,266
|
5,752,596
|
||||||
Cash received upon exercise of warrant
|
138,222
|
-
|
||||||
Net cash provided by financing activities
|
5,588,988
|
5,252,596
|
||||||
Net increase in cash
|
1,946,322
|
3,510,219
|
||||||
Cash at beginning of period
|
3,610,262
|
2,354,169
|
||||||
Cash at end of period
|
$
|
5,556,584
|
$
|
5,864,388
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
20
|
$
|
702
|
||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Common stock issued in connection with the acquisition of Cyberfone Systems, LLC
|
$
|
-
|
$
|
2,280,000
|
||||
Common stock issued in connection with the acquisition of Clouding Corp
|
$
|
281,000
|
$
|
-
|
||||
Earn-out liability in connection with the acquisition of Clouding Corp
|
$
|
13,119,000
|
$
|
-
|
||||
Common stock granted in connection with the acquisition of TLI Communications, LLC
|
$
|
817,800
|
$
|
-
|
||||
Series B Convertible Preferred Stock issued in connection with the acquisition of Dynamic Advances LLC
|
$
|
1,403,690
|
$
|
-
|
||||
Series B Convertible Preferred Stock issued in connection with the acquisition of IP Liquidity Ventures, LLC
|
$
|
1,403,690
|
$
|
-
|
||||
Common stock issued in connection with the acquisition of Selene Communication Technologies
|
$
|
980,000
|
$
|
-
|
||||
Value of warrants pertaining to equity issuance
|
$
|
11,595
|
$
|
11,595
|
||||
Notes payable issued in connection with the acquisition of IP Liquidity Ventures, LLC, Dynamic Advances, LLC, Selene Communication Technologies, LLC, and Clouding Corp
|
$
|
7,000,000
|
$
|
-
|
||||
Common Stock issued for prepaid services
|
$
|
(298,301
|
)
|
$
|
441,256
|
|||
Acquisition of patents in connection with a non-cash settlement
|
$
|
-
|
$
|
1,000,000
|
|
Marathon Patent Group
|
||||||||||||
Reconciliation of GAAP to Non-GAAP Financials
|
||||||||||||
(Unaudited)
|
||||||||||||
For the Three Months ended
|
||||||||||||
Sept. 30, 2014
|
June 30, 2014
|
Sept. 30, 2013
|
||||||||||
Net Income
|
$ | 3,522,604 | $ | (1,589,743 | ) | $ | (935,320 | ) | ||||
Non-GAAP
|
||||||||||||
Provision for Income Taxes
|
(1,481,404 | ) | - | - | ||||||||
Amortization of Intangible Assets
|
1,479,588 | 938,679 | 495,291 | |||||||||
Equity-based Compensation
|
1,222,086 | 554,356 | 306,333 | |||||||||
BCF
|
- | 1,271,942 | - | |||||||||
Impairment of Goodwill
|
2,144,488 | - | - | |||||||||
Depreciation
|
1,452 | 1,417 | 833 | |||||||||
Non-GAAP Net Income
|
$ | 6,888,814 | $ | 1,176,650 | $ | (132,863 | ) | |||||
Weighted Average Common Shares Outstanding (Basic)
|
5,750,250 | 5,508,323 | 4,330,208 | |||||||||
Non-GAAP Net Income per Common Share (Basic)
|
$ | 1.20 | $ | 0.21 | $ | (0.03 | ) |