Nevada
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000-54652
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01-0949984
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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11100 Santa Monica Blvd., Ste. 380
Los Angeles, CA
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90025
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|||
(Address of principal executive offices)
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(Zip Code)
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ITEM 9.01
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FINANCIAL STATEMENTS AND EXHIBITS
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Exhibit No.
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Description
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99.1
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Marathon Patent Group, Inc. Press Release dated August 14, 2015
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MARATHON PATENT GROUP, INC.
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|
By:
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/s/ Francis Knuettel II
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Name: Francis Knuettel II
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|
Title: Chief Financial Officer
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Total Other Operating Expenses
|
||||||||||||||||
For the Three Months Ended June 30, 2015
|
For the Three Months Ended June 30, 2014
|
For the Six Months Ended June 30, 2015
|
For the Six Months Ended June 30, 2014
|
|||||||||||||
Amortization of intangibles
|
$ | 3,029,000 | $ | 938,679 | $ | 5,627,461 | $ | 1,392,326 | ||||||||
Compensation and related taxes
|
1,087,058 | 712,131 | 2,668,132 | 1,442,118 | ||||||||||||
Consulting fees
|
329,081 | 336,447 | 1,225,624 | 764,554 | ||||||||||||
Professional fees
|
578,920 | 268,616 | 1,348,535 | 525,472 | ||||||||||||
Other general and administrative
|
284,976 | 130,521 | 504,457 | 212,185 | ||||||||||||
Patent Impairment
|
766,498 | - | 766,498 | - | ||||||||||||
Total
|
$ | 6,075,533 | $ | 2,386,394 | $ | 12,140,707 | $ | 4,336,655 |
Non-Cash Operating Expenses
|
||||||||||||||||
For the Three Months Ended June 30, 2015
|
For the Three Months Ended June 30, 2014
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For the Six Months Ended June 30, 2015
|
For the Six Months Ended June 30, 2014
|
|||||||||||||
Amortization of intangibles and depreciation
|
$ | 3,029,000 | $ | 938,679 | $ | 5,627,461 | $ | 1,392,326 | ||||||||
Compensation and related taxes
|
600,495 | 348,061 | 1,227,821 | 712,587 | ||||||||||||
Consulting fees
|
141,946 | 191,943 | 965,175 | 508,044 | ||||||||||||
Professional fees
|
8,528 | - | 17,055 | - | ||||||||||||
Other general and administrative
|
1,852 | 1,416 | 14,737 | 2,833 | ||||||||||||
Patent Impairment
|
766,498 | - | 766,498 | - | ||||||||||||
Total
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$ | 4,548,319 | $ | 1,480,099 | $ | 8,618,747 | $ | 2,615,790 |
MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
|
|||||||||||
FINANCIAL STATEMENTS
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June 30, 2015
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December 31, 2014
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 1,487,242 | $ | 5,082,569 | ||||
Accounts receivable - net of allowance for bad debt of $0 and $0 for June 30, 2015 and December 31, 2014
|
704,061 | 216,997 | ||||||
Bonds posted with courts
|
1,790,241 | 1,946,196 | ||||||
Prepaid expenses and other current assets
|
124,436 | 438,391 | ||||||
Total current assets
|
4,105,980 | 7,684,153 | ||||||
Other assets:
|
||||||||
Property and equipment, net of accumulated depreciation of $40,385 and $16,135 for June 30, 2015 and December 31, 2014
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70,738 | 53,828 | ||||||
Intangible assets, net of accumulated amortization of $12,043,560 and $6,550,528 for June 30, 2015 and December 31, 2014
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46,597,522 | 43,363,832 | ||||||
Deferred tax assets
|
10,257,415 | 4,789,293 | ||||||
Goodwill
|
4,556,291 | 4,894,208 | ||||||
Total other assets
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61,481,966 | 53,101,161 | ||||||
Total Assets
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$ | 65,587,946 | $ | 60,785,314 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
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$ | 5,289,861 | $ | 3,293,746 | ||||
Clouding IP earn out - current portion
|
883,484 | 2,092,000 | ||||||
Notes payable, net of discounts and loan fees of $676,182 and $82,010 for 6/30/15 and 12/31/14
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17,394,103 | 16,560,000 | ||||||
Total current liabilities
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23,567,448 | 21,945,746 | ||||||
Long-term liabilities
|
||||||||
Notes payable, net of discount and loan fees of $1,804,517 and $64,925, for 6/30/15 and 12/31/14
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15,608,198 | 5,403,065 | ||||||
Other non current liability
|
52,101 | - | ||||||
Deferred tax liability
|
1,256,480 | 1,823,884 | ||||||
Revenue sharing liability
|
1,000,000 | - | ||||||
Clouding IP earnout
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6,264,215 | 7,360,000 | ||||||
Total long-term liabilities
|
24,180,994 | 14,586,949 | ||||||
Total liabilities
|
47,748,442 | 36,532,695 | ||||||
Stockholders' equity:
|
||||||||
Preferred stock Series B, $.0001 par value, 50,000,000 shares authorized: 982,000 and 932,000 issued and outstanding at June 30, 2015 and December 31, 2014
|
98 | 93 | ||||||
Common stock, $.0001 par value, 200,000,000 shares authorized: 14,024,837 and 13,791,460 issued and outstanding at June 30, 2015 and December 31,2014
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1,402 | 1,379 | ||||||
Additional paid-in capital
|
40,478,627 | 36,977,169 | ||||||
Accumulated other comprehensive loss
|
(1,018,691 | ) | (388,357 | ) | ||||
Accumulated deficit
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(21,621,932 | ) | (12,337,665 | ) | ||||
Total stockholders' equity
|
17,839,504 | 24,252,619 | ||||||
Total liabilities and stockholders' equity
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$ | 65,587,946 | $ | 60,785,314 |
For the three months ended
|
For the three months ended
|
For the six months ended
|
For the six months ended
|
|||||||||||||
June 30, 2015
|
June 30, 2014
|
June 30, 2015
|
June 30, 2014
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Revenue
|
$ | 1,368,986 | $ | 3,824,500 | $ | 5,462,855 | $ | 6,604,500 | ||||||||
Expenses
|
||||||||||||||||
Cost of revenues
|
3,860,210 | 1,753,833 | 8,188,375 | 2,864,412 | ||||||||||||
Amortization of patents and website
|
3,029,000 | 938,679 | 5,627,461 | 1,392,326 | ||||||||||||
Compensation and related taxes
|
1,087,058 | 712,131 | 2,668,132 | 1,442,118 | ||||||||||||
Consulting fees
|
329,081 | 336,447 | 1,225,624 | 764,554 | ||||||||||||
Professional fees
|
578,920 | 268,616 | 1,348,535 | 525,472 | ||||||||||||
General and administrative
|
284,976 | 130,521 | 504,457 | 212,185 | ||||||||||||
Patent impairment
|
766,498 | - | 766,498 | - | ||||||||||||
Total operating expenses
|
9,935,743 | 4,140,227 | 20,329,082 | 7,201,067 | ||||||||||||
Operating loss
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(8,566,757 | ) | (315,727 | ) | (14,866,227 | ) | (596,567 | ) | ||||||||
Other income (expenses)
|
||||||||||||||||
Foreign exchange gain/(loss)
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1,899 | - | (37,503 | ) | - | |||||||||||
Change in fair value adjustment of Clouding IP earnout
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2,304,301 | - | 2,304,301 | - | ||||||||||||
Other income
|
7,439 | (2,770 | ) | 7,439 | (2,770 | ) | ||||||||||
Interest income
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- | 266 | 2 | 494 | ||||||||||||
Interest expense
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(1,577,083 | ) | (20 | ) | (2,508,623 | ) | (20 | ) | ||||||||
Total other income
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736,556 | (2,524 | ) | (234,384 | ) | (2,296 | ) | |||||||||
Loss before provision for income taxes
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(7,830,201 | ) | (318,251 | ) | (15,100,611 | ) | (598,863 | ) | ||||||||
Income tax benefit
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3,327,505 | - | 5,816,344 | - | ||||||||||||
Net loss
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(4,502,696 | ) | (318,251 | ) | (9,284,267 | ) | (598,863 | ) | ||||||||
Deemed dividends related to beneficial conversion feature of Series A preferred stock
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- | (1,271,492 | ) | - | (1,271,492 | ) | ||||||||||
Net loss attributable to common shareholders
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$ | (4,502,696 | ) | $ | (1,589,743 | ) | $ | (9,284,267 | ) | $ | (1,870,355 | ) | ||||
Loss per common share, basic and diluted:
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$ | (0.32 | ) | $ | (0.14 | ) | $ | (0.67 | ) | $ | (0.17 | ) | ||||
WEIGHTED AVERAGE COMMON SHARES
|
||||||||||||||||
OUTSTANDING - Basic and Diluted
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13,998,563 | 11,016,646 | 13,937,872 | 10,980,290 | ||||||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Foreign currency translation adjustments
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$ | 319,905 | $ | - | $ | (630,334 | ) | $ | - |
FOR THE SIX MONTHS
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FOR THE SIX MONTHS
|
|||||||
ENDED
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ENDED
|
|||||||
June 30, 2015
|
June 30, 2014
|
|||||||
(Unaudited)
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(Unaudited)
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
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$ | (9,284,267 | ) | $ | (598,863 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
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3,758 | 2,833 | ||||||
Amortization of intangible assets
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5,627,461 | 1,392,326 | ||||||
Non-cash equity compensation
|
1,413,724 | 1,234,983 | ||||||
Stock issued for services
|
750,334 | - | ||||||
Non-cash interest, discounts and financing costs
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1,625,322 | - | ||||||
Deferred tax liability
|
(509,207 | ) | - | |||||
Deferred tax assets
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(5,307,139 | ) | - | |||||
Impairment of IP
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766,498 | - | ||||||
Change in fair value of Clouding IP earn out
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(2,304,301 | ) | - | |||||
Other non-cash adjustments
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14,980 | - | ||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
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(487,328 | ) | 252,050 | |||||
Prepaid expenses and other current assets
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51,455 | (218,037 | ) | |||||
Accounts payable and accrued expenses
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2,046,662 | 334,294 | ||||||
Net cash provided by (used in) operating activities
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(5,592,048 | ) | 2,399,586 | |||||
Cash flows from investing activities:
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||||||||
Acquisition of patents
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- | (5,100,800 | ) | |||||
Purchase of property, equipment, and other intangible assets
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(20,668 | ) | - | |||||
Net cash provided by (used in) investing activities
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(20,668 | ) | (5,100,800 | ) | ||||
Cash flows from financing activities:
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||||||||
Payment on note payable in connection with the acquisition of IP Liquidity
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- | (937,500 | ) | |||||
Cash received upon exercise of warrant
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- | 138,222 | ||||||
Proceeds received from sale of Preferred Stock /common stock, net of issuance costs
|
- | 6,388,266 | ||||||
Payment on note payable in connection with the acquisition of IP Liquidity
|
(1,109,375 | ) | - | |||||
Payment on assumed note payable in connection with the acquisition of Orthophoenix
|
(5,000,000 | ) | - | |||||
Payment on note payable in connection with the acquisition of Dynamic Advances
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(2,624,375 | ) | - | |||||
Payment on note payable in connection with the acquisition of Medtech and Orthophoenix
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(4,200,000 | ) | - | |||||
Payment on MdR Escrow (TLI)
|
(50,000 | ) | - | |||||
Conversion of AP to note payable
|
705,093 | - | ||||||
Payment on note payable in connection with the acquisition of Sarif
|
(276,250 | ) | - | |||||
Repayment on convertible notes
|
(5,050,000 | ) | - | |||||
Cash received upon issuance of notes payable (net of issuance costs)
|
19,600,000 | - | ||||||
Cash received upon exercise of warrant
|
18,751 | - | ||||||
Net cash provided by financing activities
|
2,013,844 | 5,588,988 | ||||||
Effect of exchange rate changes on cash
|
3,545 | - | ||||||
Net increase in cash
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(3,595,327 | ) | 2,887,774 | |||||
Cash at beginning of period
|
5,082,569 | 3,610,261 | ||||||
Cash at end of period
|
$ | 1,487,242 | $ | 6,498,035 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest expenses and loan fees
|
$ | 805,106 | $ | 20 | ||||
Taxes paid
|
$ | 14,662 | $ | - | ||||
Loan fees
|
$ | 400,000 | $ | - | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Series B Preferred Stock issued in connection with the acquisition of Dynamic Advances, LLC
|
$ | - | $ | 1,403,690 | ||||
Series B Preferred Stock issued in connection with the acquisition of IP Liqudity Ventures, LLC
|
$ | - | $ | 1,403,690 | ||||
Common stock issued in connection with the acquisition of Selene Communication Technologies, LLC
|
$ | - | $ | 980,000 | ||||
Value of warrants pertaining to equity issuance
|
$ | - | $ | 11,595 | ||||
Notes payable in connection with the acquisition of Dynamic Advances, LLC, IP Liquidity Ventures, LLC, and Selene Communication Technologies, LLC
|
$ | - | $ | 6,000,000 | ||||
Common stock issued in conjunction with notes payable
|
$ | 1,000,000 | $ | - | ||||
Warrants issued in conjunction with note payable
|
$ | 318,679 | $ | - | ||||
Revenue share liability incurred in conjunction with note payable
|
$ | 1,000,000 | $ | - | ||||
Non-cash interest increase in debt assumed in the acquisition of Orthophoenix
|
$ | 750,000 | $ | - | ||||
Notes payable issued in conjunction with acquisition of BATO patent
|
$ | 10,000,000 | $ | - |
Non-GAAP Reconciliation
|
||||||||||||||||
For the Three Months Ended June 30, 2015
|
For the Three Months Ended June 30, 2014
|
For the Six Months Ended June 30, 2015
|
For the Six Months Ended June 30, 2014
|
|||||||||||||
Net loss
|
(4,502,696 | ) | (1,589,743 | ) | (9,284,267 | ) | (1,870,355 | ) | ||||||||
Non-GAAP
|
||||||||||||||||
Amortization of intangible assets & depreciation
|
3,029,000 | 938,679 | 5,627,461 | 1,392,326 | ||||||||||||
Equity-based compensation
|
750,968 | 554,356 | 2,210,051 | 1,234,983 | ||||||||||||
Beneficial Conversion Feature
|
- | 1,271,492 | - | 1,271,492 | ||||||||||||
Impairment of Intellectual Property
|
766,498 | - | 766,498 | - | ||||||||||||
Change in Earn Out Liability
|
(2,304,301 | ) | - | (2,304,301 | ) | - | ||||||||||
Non-cash interest expense
|
1,089,798 | - | 1,703,517 | - | ||||||||||||
Deferred tax benefit
|
(3,327,505 | ) | - | (5,816,345 | ) | - | ||||||||||
Other
|
1,852 | 1,416 | 3,758 | 2,833 | ||||||||||||
Non-GAAP profit (loss)
|
(4,496,386 | ) | 1,176,200 | (7,093,628 | ) | 2,031,279 | ||||||||||
Weighted average common shares outstanding - basic and diluted
|
13,998,563 | 11,016,646 | 13,937,872 | 10,980,290 | ||||||||||||
Non-GAAP net income (loss) per common share - basic and diluted
|
$ | (0.32 | ) | $ | 0.11 | $ | (0.51 | ) | $ | 0.18 |