Marathon Patent Group Announces 2018 Fiscal Year End Financial Results

Share this:

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     $   -   
       

 

Source: Marathon Patent Group, Inc. Share this: