Marathon Patent Group Announces Second Quarter Financial Results
Conference Call Scheduled Today at 4:30 p.m. Eastern Time
/EINPresswire.com/ -- LOS ANGELES, CA -- (Marketwired) -- 08/15/16 -- 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 as 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 management 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.
MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2016 2015
------------- -------------
ASSETS (unaudited)
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, June 30, June 30, June 30,
2016 2015 2016 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 Six Months
Ended Ended
June 30, June 30,
2016 2015
------------ ------------
Cash flows from operating activities: (unaudited) (unaudited)
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 For the Three
Months Ended Months Ended
June 30, 2016 June 30, 2015
---------------- ----------------
Net income (loss) $ 7,906,279 $ (4,502,696)
Non-GAAP
Amortization of intangible assets 1,961,411 3,029,000
Equity-based compensation 647,764 750,968
Impairment of intellectual property 703,696 766,498
Change in earn out liability (169,172) (2,304,301)
Non-cash interest expense 58,492 1,089,798
Deferred tax (benefit) / tax expense 5,345,983 (3,327,505)
Other 13,284 1,852
---------------- ----------------
Non-GAAP net income (loss) $ 16,467,737 $ (4,496,386)
Weighted average common shares
outstanding - basic 14,994,697 13,998,563
Weighted average common shares
outstanding - diluted 16,031,564 13,998,563
Non-GAAP net income (loss) per common
share - basic $ 1.10 $ (0.32)
Non-GAAP net income (loss) per common
share - diluted $ 1.03 $ (0.32)
For the Six For the Six
Months Ended Months Ended
June 30, 2016 June 30, 2015
---------------- ----------------
Net income (loss) $ 4,012,866 $ (9,284,267)
Non-GAAP
Amortization of intangible assets 3,987,310 5,627,461
Equity-based compensation 1,192,797 2,210,051
Impairment of intellectual property 1,076,890 766,498
Change in earn out liability (167,830) (2,304,301)
Non-cash interest expense 664,182 1,703,517
Deferred tax (benefit) / tax expense 3,320,935 (5,816,344)
Other 14,936 3,758
---------------- ----------------
Non-GAAP net income (loss) $ 14,102,086 $ (7,093,627)
Weighted average common shares
outstanding - basic 14,980,919 13,937,872
Weighted average common shares
outstanding - diluted 16,017,786 13,937,872
Non-GAAP net income (loss) per common
share - basic $ 0.94 $ (0.51)
Non-GAAP net income (loss) per common
share - diluted $ 0.88 $ (0.51)
CONTACT INFORMATION
Marathon Patent Group
Jason Assad
678-570-6791
Email Contact
