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Marathon Patent Group Announces 2018 Fiscal Year End Financial Results

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LAS VEGAS, March 25, 2019 (GLOBE NEWSWIRE) -- Marathon Patent Group, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), today announced its operating results for the twelve months ended December 31, 2018, as published in its Annual Report on Form 10-K filed today with the Securities and Exchange Commission.

Operating Results for the Year Ended December 31, 2018

  • Total revenue increased 201% to $1.6 million for the year ended December 31, 2018 compared to $0.5 million for the year ended December 31, 2017.

  • Operating loss improved to $12.1 million (inclusive of non-cash expenses) for the year ended December 31, 2018 compared to an operating loss of $14.2 million (inclusive of non-cash expenses) for the year ended December 31, 2017.

  • GAAP net loss improved to $(0.60) per basic and diluted share for the year ended December 31, 2018 compared to $(4.80) the year ended December 31, 2017.

  • Net cash used in operating activities decreased from $10,808,483 in 2017 to $8,238,571 in 2018, a decrease of $2,569,912. The $8,238,571 cash loss also included a onetime charge of $2,150,000 for the Symantec settlement. Without this settlement, the cash used in operating activities would have been $6,088,571.

  • The Company had approximately $2.6 million of cash and cash equivalents as of December 31, 2018.

Merrick Okamoto, Chief Executive Officer, stated, “We’re pleased to have shown financial improvement on a year over year basis. Looking forward, our Board of Directors continues to seek potential acquisition opportunities that we deem to offer the best opportunity for appreciation for our shareholders.”

Investor Notice

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under "Risk Factors" in Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2018. If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. See "Safe Harbor" below.

Forward-Looking Statements

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Reports on Form 10-K, as may be supplemented or amended by the Company's Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

CONTACT INFORMATION

Name: Jason Assad
Phone: 678-570-6791
Email: Jason@marathonpg.com

December 31,

December 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

2,551,171

$

14,948,529

Accounts receivable - net of allowance for bad debt of $0 and $387,976 for December 31, 2018 and December 31, 2017, respectively

-

6,826

Prepaid expenses and other current assets

464,006

92,855

Total current assets

3,015,177

15,048,210

Other assets:

Property and equipment, net of accumulated depreciation and impairment charges of $4,338,931 and $134,513 for December 31, 2018 and December 31, 2017, respectively

1,034,575

10,011

Intangible assets, net of accumulated amortization of $65,245 for December 31, 2018

1,144,755

-

Total other assets

2,179,330

10,011

TOTAL ASSETS

$

5,194,507

$

15,058,221

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

1,235,444

$

1,961,784

Litigation liability

-

2,150,000

Warrant liability

39,083

1,794,396

Convertible notes payable, net of discount of $2,290,028 for December 31, 2017

999,106

1,763,920

Total current liabilities

2,273,633

7,670,100

Total liabilities

2,273,633

7,670,100

Commitments and Contingencies

Stockholders' Equity:

Preferred stock, $0.0001 par value, 50,000,000 shares authorized, 0 and 5,513 issued and outstanding at December 31, 2018 and December 31, 2017, respectively

-

1

Common stock, $0.0001 par value; 200,000,000 shares authorized; 25,519,940 and 12,477,781 issued and outstanding at December 31, 2018 and December 31, 2017, respectively

2,552

1,248

Additional paid-in capital

105,459,482

97,113,723

Accumulated other comprehensive loss

(450,719

)

(450,734

)

Accumulated deficit

(102,090,441

)

(89,276,117

)

Total stockholders’ equity

2,920,874

7,388,121

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

5,194,507

$

15,058,221


For the year ended

December 31,

2018

2017

Revenues

Cryptocurrency mining revenue

$

1,495,402

$

-

Other revenue

66,970

519,622

Total revenues

1,562,372

519,622

Operating costs and expenses

Cost of revenue

3,351,758

3,470,847

Impairment of mining equipment

2,222,688

-

Compensation and related taxes

1,984,301

4,362,371

Consulting fees

639,094

537,695

Professional fees

1,216,820

2,797,648

General and administrative

1,374,047

831,001

Goodwill impairment

-

228,401

Patent impairment

-

2,475,149

Break-up fee - issuance of shares to GBV

2,850,000

-

Total operating expenses

13,638,708

14,703,112

Operating loss

(12,076,336

)

(14,183,490

)

Other income (expenses)

Other income (expenses)

112,471

(3,173,341

)

Foreign exchange gain (loss)

28,918

(463,821

)

Gain on debt extinguishment

-

2,970,313

Gain on Fortress debt settlement

-

11,940,493

Loss on sale of companies

-

(2,610,783

)

Realized loss on sale of digital currencies

(152,485

)

-

Change in fair value adjustment of Clouding IP earn out

-

1,482,012

Change in fair value of warrant liability

1,699,522

(21,855,723

)

Loss on warrants exchanged for common stock

-

(980,400

)

Gain on exchange of warrants to series E

-

305,358

Amortization of debt discount

(2,290,028

)

(3,561,109

)

Interest income

14,230

2,793

Interest expense

(81,482

)

(1,309,823

)

Loss before income taxes

(12,745,190

)

(31,437,521

)

Income tax (expense) benefit

(69,134

)

103,952

Net loss attributable to common stockholders

$

(12,814,324

)

$

(31,333,569

)

Net loss per share, basic and diluted:

$

(0.60

)

$

(4.80

)

Weighted average shares outstanding, basic and diluted:

21,263,774

6,522,649

Net loss attributable to common stockholders

$

(12,814,324

)

$

(31,333,569

)

Other comprehensive income:

Unrealized gain on foreign currency translation

15

609,656

Comprehensive loss attributable to Marathon Patent Group, Inc.

$

(12,814,309

)

$

(30,723,913

)


Preferred Stock

Common Stock

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income (Loss)

Non-Controlling
Interest

Total
Stockholders'
Equity

Number

Amount

Number

Amount

Balance as of December 31, 2016

195,501

$

20

4,638,118

$

463

$

49,879,161

$

(57,942,548

)

$

(1,060,390

)

$

(163,848

)

$

(9,287,142

)

Stock-based compensation expense

-

-

775,000

78

1,976,738

-

-

-

1,976,816

Issuance of Series D Preferred Stock

125,688

13

-

-

678,700

-

-

-

678,713

Conversion of Series B Preferred Stock

(195,500

)

(20

)

195,500

20

-

-

-

-

-

Conversion of Series D Preferred Stock

(125,688

)

(13

)

628,438

63

107,224

-

-

-

107,274

Warrants converted to Series E preferred stock

5,512

1

-

-

-

21,525,410

-

-

-

21,525,411

Common stock issued for note conversion

-

-

1,807,565

181

1,445,871

-

-

-

1,446,052

Beneficial conversion feature

-

-

-

-

4,017,729

-

-

-

4,017,729

Proceeds received from private placement

-

-

3,492,047

349

16,074,067

-

-

-

16,074,416

Issue common stock for conversion of warrants

-

-

619,250

62

1,183,966

-

-

-

1,184,028

Warrant liability

-

-

-

-

137,334

-

-

-

137,334

Common stock issued for account payable

-

-

320,449

32

435,457

-

-

-

435,489

Loss on sale of companies

-

-

-

-

(42,576

)

-

-

-

(42,576

)

Gain on extinguishment of warrant liability

-

-

-

-

(305,358

)

-

-

-

(305,358

)

Par value adjustment and additional shares issued due to reverse split

-

-

1,414

-

-

-

-

-

-

Currency translation loss

-

-

-

-

-

-

609,656

-

609,656

Net loss

-

-

-

-

-

(31,333,569

)

-

163,848

(31,169,721

)

Balance as of December 31, 2017

5,513

1

12,477,781

1,248

97,113,723

(89,276,117

)

(450,734

)

$

-

7,388,121

Stock based compensation

-

-

443,400

44

1,425,639

-

-

-

1,425,683

Conversion of Series E preferred stock

(5,513

)

(1

)

5,511,543

551

(550

)

-

-

-

-

Common stock issued for acquisition of patents

-

-

250,000

25

959,975

-

-

-

960,000

Issue common stock for exercise of warrants

-

-

17,731

2

55,789

-

-

-

55,791

Common stock issuance related to note conversion

-

-

3,819,485

382

3,055,206

-

-

-

3,055,588

Break-up fee - issuance of shares to GBV

-

-

3,000,000

300

2,849,700

-

-

2,850,000

Currency translation gain

-

-

-

-

-

-

15

-

15

Net loss

-

-

-

-

-

(12,814,324

)

-

-

(12,814,324

)

Balance as of December 31, 2018

-

$

-

25,519,940

$

2,552

$

105,459,482

$

(102,090,441

)

$

(450,719

)

$

-

$

2,920,874

For the year ended

December 31,

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(12,814,324

)

$

(31,333,569

)

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

Depreciation

2,003,695

26,106

Amortization of patents and website

66,017

1,824,162

Loss on sale of companies

-

2,610,784

Gain on debt extinguishment

-

(2,970,313

)

Gain on extinguishment of warrant liability

-

(305,358

)

Gain on Fortress loan extinguishment

-

(11,940,494

)

Realized loss on sale of digital currencies

152,485

-

Change in fair value of warrant liability

(1,699,522

)

21,855,723

Impairment of intangible assets

-

2,475,149

Impairment of goodwill

-

228,401

Impairment of mining equipment

2,222,688

-

Stock based compensation

1,425,683

1,976,816

Amortization of debt discount

2,290,028

3,561,109

Warrants exchanged for common stock

-

980,400

Bad debt allowance

6,826

-

Change in fair value of Clouding earnout

-

(1,482,012

)

Break-up fee - issuance of shares to GBV

2,850,000

-

Non-controlling interest

-

163,848

Litigation liability

-

2,150,000

Changes in operating assets and liabilities:

Accounts receivables

-

88,243

Digital currencies

(1,495,402

)

-

Litigation liability

(2,150,000

)

-

Prepaid expenses and other assets

(371,151

)

335,194

Other non current assets

-

201,203

Accounts payable and accrued expenses

(725,594

)

(1,253,875

)

Net cash used in operating activities

(8,238,571

)

(10,808,483

)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of digital currencies

1,342,917

-

Acquisition of patents

(250,000

)

-

Purchase of property and equipment

(5,251,719

)

(7,788

)

Net cash used in investing activities

(4,158,802

)

(7,788

)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment on note payable

-

(1,273,000

)

Proceeds received on issuance of notes payable

-

5,488,693

Proceeds received on private placement

-

16,074,416

Proceeds from warrant purchase

-

17,410

Proceeds received on exercise of warrants

-

141,100

Net cash provided by financing activities

-

20,448,619

Effect of foreign exchange rate changes

15

317,867

Net (decrease) increase in cash and cash equivalents

(12,397,358

)

9,950,215

Cash and cash equivalents — beginning of period

14,948,529

4,998,314

Cash and cash equivalents — end of period

$

2,551,171

$

14,948,529

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense

$

-

$

1,543,925

Cash paid during the year for income taxes

$

-

$

5,459

Supplemental schedule of non-cash investing and financing activities:

Issuance of Series D Preferred Stock

$

-

$

678,713

Conversion of Series B Preferred Stock to common stock

$

-

$

20

Conversion of Series D Preferred Stock to common stock

$

-

$

63

Conversion of Series E Preferred Stock to common stock

$

551

$

-

Warrants converted to Series E preferred stock

$

-

$

21,525,410

Warrants reclassed to equity

$

-

$

18,187

Common stock issued for acquisition of patents

$

960,000

$

-

Common stock issued for note conversion

$

3,055,588

$

1,549,803

Restricted stock issuance

$

44

$

78

Beneficial conversion feature

$

-

$

4,017,729

Common stock issued fro account payable

$

-

$

331,739

Warrants exercised into common shares

$

55,791

$

-