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Thanks ash. Appreciate the response!
Does anyone know the potential ultimate dollar amount that this settlement could yield?
EMI...correct me if I'm wrong, but this is the same Apple that some recently stated here "will never settle".
Probably worth noting the other defendants remaining, Yahoo, Facebook and Google.
Interestingly, it appears as though Apple has decided to let Google go it alone with the trial in just 3 weeks. As noted below, previously scheduled for both on 9/17/2015.
TLI Communications GMBH Apple; Apple Retail Germany GmbH Infringement 1st EP0814611 09/17/15 (NOW SETTLED Per Flyers)
TLI Communications GMBH Google, Inc. Infringement 1st EP0814611 09/17/15
Facebook and Yahoo are both scheduled for a short time after, 10/22/15
TLI Communications GMBH Facebook, Inc Infringement 1st EP0814611 10/22/15
TLI Communications GMBH Flickr / Yahoo! Inc. Infringement 1st EP0814611 10/22/15
Yahoo
LOS ANGELES, CA -- (Marketwired) -- 04/09/15 -- Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon"), a patent licensing company, announced today that its wholly-owned subsidiary TLI Communications GmbH has filed a patent infringement lawsuit against Yahoo! Inc. and Yahoo! EMEA Limited in the Regional Court of Munich in Germany.
TLI Communications is asserting infringement of the German part of European patent 0 814 611 B1 by the Internet service "Flickr" operated by the Defendant, as well as the associated application software for smartphones and tablet computers. The application software can be used on devices with all current operating systems: iOS (Apple), Android (e.g. Samsung) or Windows (e.g. Microsoft Lumia).
Google
LOS ANGELES, CA -- (Marketwired) -- 03/05/15 -- Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon"), a patent licensing company, announced today that its wholly-owned subsidiary TLI Communications GmbH has filed a patent infringement lawsuit against Google, Inc. in the Regional Court of Munich in Germany.
TLI Communications is asserting infringement of the German part of European patent 0 814 611 B1 by the Internet services "YouTube" and "Google+" operated by the Defendant, as well as the associated application software for smartphones and tablet computers. The application software can be used on devices with all current operating systems: iOS (Apple), Android (e.g. Samsung) or Windows (e.g. Microsoft Lumia).
Facebook
LOS ANGELES, CA -- (Marketwired) -- 02/17/15 -- Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon"), a patent licensing company, announced today that its wholly-owned subsidiary TLI Communications GmbH has filed a patent infringement lawsuit against Facebook Inc. and Facebook Ireland Limited in the Regional Court of Munich in Germany.
TLI Communications is asserting infringement of the German part of European patent 0 814 611 B1 by the social media platform "Facebook" operated by the defendants, as well as the associated application software for smartphones and tablet computers. The application software can be used on devices with all current operating systems: iOS (Apple), Android (e.g. Samsung) or Windows (e.g. Microsoft Lumia).
Added some shares this am Al at $71.
I hope so too Al. They indicate they have the divi covered through 2017 but it's definitely a concern.
Al,
Just brutal for shares of CVX lately. So much for the low 80's support. Really had my but handed to me on this one. Probably a good opportunity setting up for the space soon but I am concerned we could see oil in the 25 a barrel range. Any other thoughts on this one or the state of the space in general?
Mara,
Completely justified requests under the circumstances.
I would simply again reiterate, due to very restrictive non-solicitation rules imposed on all publicly traded companies entering into a similarly structured transaction, they probably had to be somewhat measured in their comments on the merger.
Fortunately when the S4 is filed, we will likely learn more details as Uniloc's financial information should be disclosed.
Even if Marathon management wanted to scream from the rooftops what a great deal it is, they are currently precluded from doing so. The circumstances will change in time, but for the time being, it's in all of our collective best interest that they err on the side of caution limiting their commentary on it.
Based on limited comments from 4retire here, a long time Uniloc shareholder, there appears to be some encouraging signs as to the potential value of Uniloc from his perspective. I would hope it won't be too long before us Marathon shareholders come to learn what some of the more informed Uniloc shareholders likely already know.
Wouldn't hurt my feelings if some of them spoke up here sharing their knowledge.
At this point Augusta, no reason to even consider investing long term here in light of management's past and the consistent toxic dilution. It was a nice short term trade driven by some nice promotional activities, but little more. Good calls on your part here.
Marathon Patent Group to Present at the Sidoti Emerging Growth Conference on September 2, 2015
LOS ANGELES, CA--(Marketwired - Aug 21, 2015) - Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon"), a patent licensing company, announced today that it will be presenting at the 2015 Sidoti Emerging Growth Conference in New York City, on Wednesday, September 2, 2015 at 1:30 pm ET.
The conference will be held at the Marriott Marquis Times Square in New York City. The company will also meet one-on-one with institutional investors during the day.
About Sidoti & Company
A leading provider of institutional-quality equity research focused on small, publicly-traded companies that meet our proprietary criteria, Sidoti's research coverage universe comprises nearly 300 companies across a range of industries. These companies typically have market capitalizations of less than $3 billion and a history of profitability, and generally maintain strong balance sheets. Our approach affords institutional investor clients a combination of high-quality research, a small- and micro-cap company focused nationwide sales effort, broad access to corporate management teams and extensive trading support.
The Sidoti 2015 Emerging Growth Conference is a unique forum where emerging growth company management teams with a market cap of $1 billion or less connect with small and micro-cap institutional investors, research analysts, investment bankers, private equity professionals and select media with the goal of expanding institutional awareness amongst key stakeholders in the investment community. The 2015 Emerging Growth Conference will be held on September 2, 2015 at the Marriott Marquis in Times Square New York. The event is one of the leading small and micro-cap investment conferences of the year featuring presentations by more than 50 public companies, with past attendance exceeding 475 investors.
About Marathon Patent Group
Marathon is a patent acquisition and monetization company. The Company acquires patents from a wide-range of patent holders from individual inventors to Fortune 500 companies. Marathon's strategy of acquiring patents that cover a wide-range of subject matter allows the Company to achieve diversity within its patent asset portfolio. Marathon generates revenue with its diversified portfolio through actively managed concurrent patent rights enforcement campaigns. This approach is expected to result in a long-term, diversified revenue stream. To learn more about Marathon Patent Group, visit www.marathonpg.com.
Thanks porscha.
porscha,
Good question.
"When we add Uniloc to the mix, which may not be until the end of this year or early next year, once we get through the SEC review process and the solicitation process, that base expands dramatically."
I think the answer to the question is actually contained within the statement itself. "SEC review process and the solicitation process"
My limited understanding having been through similar situations is that the SEC probably views the S-4 (M&A registration statement) as if it were Uniloc's IPO. If Uniloc was a smaller pro-rata percentage of the final combination, it would likely be an accelerated process versus the current timeline.
Remember the SEC's job is to protect investors. This is the first time the SEC has ever heard or even looked at Uniloc since they are a private company. Upon the SEC making the S4 effective, the companies both also must get shareholder approval.
Shipwrecked,
Let's simply deal in facts for the time being. They are often stubborn.
It is extremely difficult to judge performance of any patent licensing company on anything short of an annual basis. I believe this sentiment has been echoed by both management of Marathon and Acacia, not limited to many others in the space.
Fact 1 - 2014 revenues of $21.4 million, up 526% from $3.4 million from the prior year.
Fact 2 - Achieved 2014 Non-GAAP net income of $4.2 million, or $0.36 per common share, compared to a 2013 net loss of $(300,000), or $(0.03) per share.
Fact 3 - In Q1 revenues of $4.1 million, up 204% from the prior quarter / Year over year revenues up 47% compared to the three months ended March 31, 2014.
Fact 4 - "First we incurred higher cost of revenues associated with numerous trials, one specifically where we had fixed fee price agreement. As the first of the two trials associated with this agreement has passed, with the second trial in this quarter, we expect to see some decline barring changes in revenue driving higher contingent fees in our cost of revenues this quarter and further again thereafter."
Fact 5 - "we had considerably higher patent amortization expenses than in the comparable period in 2014 as we have continued to build our portfolio of patent assets."
Fact 6 - Croxall stated clearly, "we remain on track for numerous potentially sizable revenue events over the balance of the year and going forward. We still expect the investments made to-date, many of them resulting in higher short-term expenses, to generate meaningful return on investment. We will still remain confident that our topline revenue of 2015 will surpass 2014 as we continue to believe that we have multiple potential eight figure licensing opportunities ahead of us."
Fact 7 - Croxall stated, "we have always known and repeatedly stated that guidance on a quarterly basis is and will always be difficult. We continue to stand by our previous comments to our own revenue expectations for this year."
Fact 8 - In just the current Q, just passed the halfway mark, the company has already announced the following settlements.
1. http://www.marketwired.com/press-release/marathon-patent-groups-subsidiary-selene-communication-technologies-llc-licenses-reed-nasdaq-mara-2049244.htm
2. http://www.marketwired.com/press-release/marathon-patent-groups-wholly-owned-subsidiary-tlif-llc-enters-into-settlement-license-nasdaq-mara-2047514.htm
3. http://www.marketwired.com/press-release/marathon-patent-groups-wholly-owned-subsidiaries-signal-ip-inc-loopback-technologies-nasdaq-mara-2044776.htm
4. http://www.marketwired.com/press-release/marathon-patent-groups-wholly-owned-subsidiary-cyberfone-systems-llc-enters-into-settlement-nasdaq-mara-2038799.htm
5. http://www.marketwired.com/press-release/marathon-patent-groups-wholly-owned-subsidiary-signal-ip-inc-enters-into-settlement-nasdaq-mara-2037723.htm
6. http://www.marketwired.com/press-release/marathon-patent-groups-wholly-owned-subsidiary-medtech-development-deutschland-gmbh-nasdaq-mara-2034782.htm
Opinion: you wrote "I also believe the touted proprietary software is overrated and likely nothing more than a detailed complicated keyword search program that narrows down a database quicker than others can find it."
I'm inclined to think otherwise. One must wonder if the fact that Uniloc has never lost a case in court, could somehow be tied to that very "predictive" proprietary tool? As another poster suggested, don't doubt for a second that Uniloc used Centurian to evaluate Marathon's assets before even considering the transaction. Don't forget that Uniloc's CEO holds 156 patents personally and their 216 patent beat Microsoft for the 5th largest judgment in history, ($388M), later to be settled. Many have termed Etchegoyan nothing short of a genius. My personal inclination is that Centurian is exactly as described on the recent call, powerful. I encourage you to research the matter yourself if you like.
Marasprint,
You make a good point and the company appears to agree.
The post transaction structure slide on page 14 of their deck appears to indicate the new name will be Marathon Group SA.
http://ir.marathonpg.com/presentations
Regarding institutional interest, the most recent update available shows 8 to 2 buying lead by Royce who was up to 622k shares while Vanguard added to their position.
I think your thoughts logical in that the combination eventually should make the company far more appealing to institutions as they come to learn more and better understand the transaction. Previous lack of scale was surely an issue that precluded some from investing to date. It's hard to imagine at least a few of them not eventually coming to figure out that with the Marathon Group combo, you get 101 trials in the next two years, a company that generated $93.6 million pro forma combined licensing revenue over last 30 months of operations (unaudited) and $37.5 million pro forma combined licensing revenue over trailing twelve months of operations (unaudited) with 119 defendants and a possible 150 more.
If they can execute, it seems very feasible that Mara Group could far eclipse Acacia from a profits standpoint next year considering it's much lower opex and now improved higher gross margins.
Institutional interest as of last available report for reference.
Ownership Analysis
# Of Holders / Shares
Total Shares Held
23 / 1,140,412
New Positions
8 / 749,653
Increased Positions
10 / 781,471
Decreased Positions
9 / 162,693
Holders With Activity
19 / 944,164
Sold Out Positions
5 / 143,551
ROYCE & ASSOCIATES LLC
622,430 622,430 100.00 $1,815,628 0.01 4.43 06/30/15
VANGUARD GROUP INC
156,093 21,952 16.36 $455,323 0.00 1.11 06/30/15
FORTRESS INVESTMENT GROUP LLC
134,409 0 0.00 $392,071 0.01 0.96 06/30/15
RENAISSANCE TECHNOLOGIES LLC
68,500 68,500 100.00 $199,815 0.00 0.49 06/30/15
DEUTSCHE BANK AG\
49,269 49,269 100.00 $143,718 0.00 0.35 06/30/15
GEODE CAPITAL MANAGEMENT, LLC
44,662 0 0.00 $130,279 0.00 0.32 06/30/15
IPG INVESTMENT ADVISORS LLC
17,800 (15,200) -46.06 $51,923 0.02 0.13 06/30/15
TOWER RESEARCH CAPITAL LLC (TRC)
14,099 9,866 233.07 $41,127 0.00 0.10 06/30/15
NORTHERN TRUST CORP
10,804 (1,942) -15.24 $31,515 0.00 0.08 06/30/15
MORGAN STANLEY
7,192 (1,300) -15.31 $20,979 0.00 0.05 06/30/15
GROUP ONE TRADING, L.P.
5,499 5,499 100.00 $16,041 0.00 0.04 06/30/15
AMERICAN INTERNATIONAL GROUP INC
2,700 (700) -20.59 $7,876 0.00 0.02 06/30/15
BLACKROCK INVESTMENT MANAGEMENT, LLC
2,026 2,026 100.00 $5,910 0.00 0.01 06/30/15
NORTH STAR INVESTMENT MANAGEMENT CORP.
2,000 0 0.00 $5,834 0.00 0.01 06/30/15
SIMPLEX TRADING, LLC
1,709 1,709 100.00 $4,985 0.00 0.01 06/30/15
METLIFE SECURITIES, INC
1,000 0 0.00 $2,917 0.00 0.01 06/30/15
GROUND SWELL CAPITAL, LLC
134 134 100.00 $391 0.00 0.00 09/30/14
CITIGROUP INC
86 86 100.00 $251 0.00 0.00 06/30/15
CREATIVE PLANNING
0 (200) -100.00 $0 0.00 0.00 06/30/15
UBS GROUP AG
0 (4,297) -100.00 $0 0.00 0.00 06/30/15
FOLIOMETRIX LLC
0 (10,600) -100.00 $0 0.00 0.00 06/30/15
NAVELLIER & ASSOCIATES INC
0 (12,400) -100.00 $0 0.00 0.00 06/30/15
COE CAPITAL MANAGEMENT, LLC
0 (116,054) -100.00 $0 0.00 0.00 06/30/15
Estimated currently combined enterprise value, not market cap. However for purpose of the discussion and using Acacia as comp, you must account for their $150M in cash relative to their current approximate $450M valuation which yields an enterprise value of $300M.
Market cap or enterprise value, the end comparison yields a similar result in terms of illustrating the vast disparity in the markets current valuing of the Uniloc/Mara combination in relation to Acacia. The company which is certainly now a very relevant comparable.
There was actually some nice money flow into Acacia today. It's recent tape action has been pretty strong relative to the broad market.
What might be of benefit and possibly eye opening is that if you, or someone of equal intelligence, Flyers perhaps, were to do an analysis of how the Uniloc/ Marathon combination could ultimately compare to Acacia in terms of revenue trajectory, profit potential and trial schedule. Clearly the S4 will need to be filed to accurately model it.
Based on your math, the Marathon/Uniloc combination has a current approximate $68M valuation. I assume it as accurate for the time being albeit I haven't done the math myself.
Nonetheless, Acacia currently has an approximate $450M valuation with about $150M in cash on their balance sheet. Therefore their enterprise value is about $300M currently.
While it is hard to know, I would estimate the combined Marathon / Uniloc fully diluted enterprise value to currently be in the approximate maybe $90M range give or take, or roughly 30% of Acacia?
Ironically, due to Marathon and Unilocs much leaner operations, I expect the combination could very likely generate a significantly higher actual profit and eps than Acacia in 2016.
By all current appearances, the Uniloc / Marathon combo in terms of scale, would appear to be rapidly approaching that of Acacia, if not already close upon consummation of the transaction.
Don't forget that Acacia was formerly trading at a $2B valuation at highs and while it's current disparate valuation relative to the combination of Marathon and Uniloc accounts for their own price falling precipitously. Think about how vast the disparity in valuation would be had they not seen their shares under such recent pressure.
Separately, the fact that Acacia has $150M in cash and their stock currency, can only cause a rational person to wonder if and when they may see it opportunistic to simply acquire the Marathon / Uniloc combination assuming prices remain in these levels?
Acacia too has a responsibility to further it's own growth on behalf of their shareholders.
The short position was already posted for the previous period, it declined.
The institutional interest for the last period too was reported here, it increased with about 8 shares bought for every 2 sold.
Investor emotions are always a powerful thing. Often misguided, they can often cause investors to do one thing, while they should be doing the complete opposite.
Patentinvestor,
It's already been discussed here repeatedly. Stated very clearly in all the communications from Marathon that they are a private company. This is why there is currently a general lack of information available to assess. It's for that reason I suggested the S4 and proxy statement will be highly informative.
Based on 4retires limited comments, clearly being educated on the subject, he believes Uniloc very valuable. Frankly I completely agree based on my fairly limited knowledge. I think the more who come to learn what he already knows, the better off we all are.
They've privately raised money numerous times over the last almost 10 years at varying valuations, no less than $20M almost a decade ago and more recently at $200M. Clearly 4retire was one of those investors having stated he made his investment 6 years ago.
Regarding Fortress, exactly what patents are you suggesting they put into Marathon, Uniloc or any other company?
4retire,
Based on your most recent posts, I believe you are being completely truthful and I would encourage you to please stick around. It's possible we may all be on the same team in the end so your insight into Uniloc, beyond what we already know would be deeply appreciated.
I agree fundamentally speaking that it is a very good deal for Marathon just as you point out. That said, I would also argue it a pretty good deal for you as well.
On a pro-forma trailing 12-month basis, the combined companies had $37.5 million in licensing revenue, but nearly $20.3 million came from Marathon while $17.2 million from Uniloc.
In addition, Marathon brings 100 more patent assets to the table at 381 patents across 13 different patent families while Uniloc has 281 across 7 patent families. Together, they have a staggering 101 trials on the calendar, that's pretty powerful when you think about it. One a week almost for two years. Nobody in the space besides Acacia can even come close to the combined company from a defendant and trial count.
The trial calendar appears to be highly complementary with Marathon having nearer term trials while Uniloc's are more in 2016-17.
With regard to your expectation of going public, I can understand your position based on your expectation. I'm sure however that you've been actively following the space.
The likely success, or even feasibility of a company like Uniloc trying to go public in the current environment and at their current scale would be really challenging. I don't see it as a truly viable option for Uniloc as we speak. I have to assume their bankers told them the exact same thing hence the direction they took. Probably told them that absent scale and a nearer term revenue trajectory, there would be little demand for their public offering.
Craig Etchegoyan, who you must know well, and who I hear is brilliant, must have explored and been advised of all options and decided the Marathon combination, coming public with an already Nasdaq listed stock, was the best way to advance the company and create value for you and him as shareholders. Not only that, but the cost of being public is not cheap these days. That cost is now distributed over a much larger possible revenue base.
If Marathon does what they indicated they expect to by year end, the shoe could easily be on the other foot with Marathon shareholders feeling the same as you. Ultimately you as a Uniloc shareholder may benefit by your getting shares of Marathon at what many of us feel, along with multiple analysts, is a pretty fair price relative to what they have been and ultimately be.
While both sides will inevitably argue that they should have gotten more, we are all essentially agreeing to take a smaller piece of what could be an exponentially larger, more valuable and less risky pie.
I subscribe to what the Roth analyst stated yesterday, "We believe bigger is better in the patent monetization space. A larger and more diverse portfolio helps insure that an occasional adverse ruling doesn’t impact the viability of the business."
Please stick around and further educate us on Uniloc. We'd all value your input now better understanding where you're coming from.
If I were you 4retire, I too would not support only getting a "paltry" mere 5% of the new company.
Fortunately, you don't have to! If you were to pay just a little closer attention, you would know that you're actually getting 55%.
Perhaps this will help. http://ir.marathonpg.com/press-releases/detail/1087/marathon-patent-group-and-uniloc-agree-to-merge
"Under the terms of the agreement, former Marathon equity owners are expected to own "approximately 45 percent of the fully-diluted capitalization of the combined company. The remaining 55 percent of the fully-diluted capitalization would be owned by former Uniloc equity owners. Shares of Marathon common stock and Uniloc equity will be converted into Marathon Group ordinary shares on a one-for-one basis."
Marasprint...you are completely correct that more information would be welcomed by all and likely very helpful in terms of assessing the current situation.
Unfortunately what most may not know that due to the current state of the transaction, as is the case with any like transaction, management of both companies are bound by strict regulatory non solicitation rules limiting their ability to speak specifically on certain details, let alone encouraging them to support a combination via their vote.
I believe those restrictions will abate when they file the S4 and the proxy statement aimed at giving all the investors relevant information so that they may make an informed decision and vote their shares accordingly.
https://www.sec.gov/about/forms/forms-4.pdf
Mike Latimore Northland
"Uniloc doubles the number of potential home-run cases and greatly adds to the litigation calendar: combined seven trials this year, 41 in 2016, and 53 in 2017. Trials are typically considered revenue events, either because of the trial result or increased likelihood of settlements leading up to trial. Uniloc likely did $17 mil of revs in the past 12 months and was very profitable. Uniloc also has a high gross margin we believe because it invents many of its own patents, has negotiated favorable inventor royalty rates, and has attractive contingency fee arrangements. Uniloc has multiple existing legal relationships, which should result in more favorable legal contingency terms for the combined company.
So far in 3Q, MARA has announced five deals, which we believe is ahead of last quarter's pace. We have improvement in GM in 3Q as one of the fixed fee cases concluded. We see the following as other important events for MARA in 2H:
TLI. On Sept. 17 TLI has two trials, one against Google and the other Apple. On Oct. 22 TLI has trials against Facebook and Yahoo!.
Signal IP. MARA has numerous trials in 2016, but could settle more in 2015. They've had a few settlements already with smaller licensees including in 3Q.
Bridgestone/TRW/Shrader. Bridgestone has a trial against TRW Sept 14. Where Schrader was about 50% of the market, we believe TRW is closer to 15%. Bridgestone is pursuing injunctions in Germany, and that could prove favorable for a settlement in 2H.
We will give a more definitive preliminary combined model when the proxy statements are filed in 4-6 weeks, and fully update our model when the deal closes. However, our initial FY16 model for the combined Marathon/Uniloc company is $55 mil in revenue, 55% gross margin and non-GAAP net income in the $10 mil range. Total share count would be about 31 mil we estimate. Target goes from $11 to $8 based on our DCF model and preliminary view of combined company."
Msl...
From Roth analyst:
"Although cash is tight, a MedTech subsidiary settlement and licensing agreement July 1 and three more suits following this month for the same portfolio should give Marathon enough cushion and cash flow to carry it through to potential eight figure settlements later this year. Marathon’s Signal IP and Loopback subsidiaries announced a settlement with Porsche on August 4 and its TLIF subsidiary announced a settlement with BioMet August 13."
Noticed that, good work Patentinvestor, thank you.
Roth not in entirety:
TRANSFORMATIVE MERGER
In actuality, our estimates for 2016 and beyond are likely to change significantly. Marathon announced a definitive merger agreement with a privately held Australian corporation, Uniloc Corporation Pty Limited, each to operate as fully owned Luxembourg chartered subsidiaries of a Luxembourg holding company to be known as Marathon Group SA. A Luxembourg domicile provides an effective 10% tax rate on Intellectual Property (IP) revenue.
The stock will continue to trade in the U.S. and the merger is expected to close late this year or early in 2016. Marathon’s shares, warrants and options will be exchanged for 45% of the holding company’s fully diluted capitalization. Uniloc’s shares, warrants and options and warrants will represent 55% of the holding company’s capitalization.
Marathon’s founder, Chairman and Chief Executive Officer, Doug Croxall will be CEO of the combined companies and Uniloc’s founder and CEO, Craig Etchegoyen, will be the combined company’s Chief Intellectual Property Officer. Mr. Etchegoyen is the inventor of over 180 patents and patent applications and has completed over 150 IP-related transactions.
Uniloc’s Chief Financial Officer, Drake Turner, will be CFO of Marathon Group SA, the combined companies. Frank Knuettel, Marathon’s CFO, will be Chief Operating Officer and Richard Chernicoff, Marathon’s General Counsel & General Manager, Commercialization will hold those titles at the combined company and Sean Burdick, a patent attorney (13 years) and President & General Counsel of Uniloc USA will serve as a consultant to Marathon Group SA.
On a pro-form basis, the combined companies had $93.6 million in licensing revenue over the past 30 months, $63.3 million from Uniloc and $30.3 million from Marathon. On a pro-forma trailing 12-month basis, the combined companies had $37.5 million in licensing revenue, nearly $20.3 million from Marathon and $17.2 million from Uniloc.
Marathon brings 381 patents across 13 different patent families into the combination, in active litigation with 45 defendants. Uniloc has 281 patents (185 internally developed; 96 acquired) across seven patent families, in litigation with 72 defendants. The combined companies have 662 patents. There are 101 upcoming trials through 2017 against 119 defendants, including seven trials later this year, 41 in 2016 and 52 in 2017.
We believe bigger is better in the patent monetization space. A larger and more diverse portfolio helps insure that an occasional adverse ruling doesn’t impact the viability of the business. Both companies appear to operate under low fixed cost models (seven employees each) with outsourced litigations services combined with quantitative analytics software and an efficient tax structure in a Luxembourg domicile.
Marathon holds an exclusive license to Opus Analytics, a proprietary patent evaluation platform developed by IPNav, which weighs and integrates about 120 factors, including patent life, citations by others, potential infringers and the industries in which they operate, continuously updated using actual observations.
Opus Analytics is able to review the subtleties of the language in the patent’s recorded interactions with the patent office as well as evaluations of prior art and literature and a variety of other elements that could possibly impact the magnitude and potential success of a licensing and enforcement campaign.
Uniloc’s proprietary “Centurion” technology appears to complement and surpass Opus Analytics, automating business processes related to analyzing the potential of claims, prior art identification and support positions for maintaining patent validation, helping to navigate the patent monetization minefield and lowering legal costs because it automates much of the legal research.
The Centurion database contains over 21 terabytes of indexed data, accessible through four modules, ProSearch (latent semantic analysis search technology), Portfolio DSS (patent management), Patent Factor Index Analytics (advanced patent analytics and reporting)and Patent CIA (artificial intelligence competitive patent alerting).
Although Uniloc’s financial statements are not yet available, its cash position and balance sheet were favorable factors in Marathon’s willingness to merge. Both companies borrow from Fortress. Uniloc’s last known financing was when it brought in $10 million at year-end 2014.
Our 12-month price target is $8 per share
Northland not in entirety:
Merger with Uniloc
Yesterday, MARA held a call to discuss its merger with Uniloc and its 2Q results. MARA agreed to merge with Uniloc, a privately-owned intellectual property company. The core rationale for the merger is to give MARA more scale and diversity, enabling the company to increase predictability of results. Uniloc has 281 patents across 7 patent families with 74 current defendants. Many of these patents were not acquired but were invented by Uniloc, giving Uniloc higher than average gross margin and a high success rate at trial.
Current MARA CEO, Doug Croxall, will remain CEO of the combined entity. Uniloc CEO, Craig Etchegoyen, will transition to the role of Chief Intellectual Property Officer. He generated most of Uniloc's patents. Uniloc has a proprietary patent assessment system called Centurion, which analyzes patent claims potential and prior art scenarios, and guides in portfolio development. Uniloc has leveraged the predictive nature of Centurion to not only acquire patent portfolios but also organically add patents where needed. MARA sees Centurion as highly valuable to its patent acquisition and development efforts, and a key reason to do the merger. MARA shareholders will own 45% of the combined company.
Uniloc doubles the number of potential home-run cases and greatly adds to the litigation calendar: combined seven trials this year, 41 in 2016, and 53 in 2017. Trials are typically considered revenue events, either because of the trial result or increased likelihood of settlements leading up to trial. Uniloc likely did $17 mil of revs in the past 12 months and was very profitable. Uniloc also has a high gross margin we believe because it invents many of its own patents, has negotiated favorable inventor royalty rates, and has attractive contingency fee arrangements. Uniloc has multiple existing legal relationships, which should result in more favorable legal contingency terms for the combined company. Merger is expected to close late this year or early next year and insiders will own 25% of company post merger. There are no unusual contingencies to closing the deal.
On a pro forma basis, the combined companies have generated $93.6 mil in licensing revenue over the last 30 months. and $37.5 mil over the past 12 months. The combined company will have 119 active defendants with 101 trial dates projected through 2017. It will have 662 patents (281 from Uniloc) spanning 26 patent families. The new company will be domiciled in Luxembourg, which provides an effective 10% tax rate on IP revs. Uniloc is primarily focused on US licensing. Uniloc has used Fortress as well to fund litigation, but has largely paid of the line over the past year we believe.
We will give a more definitive preliminary combined model when the proxy statements are filed in 4-6 weeks, and fully update our model when the deal closes. However, our initial FY16 model for the combined Marathon/Uniloc company is $55 mil in revenue, 55% gross margin and non-GAAP net income in the $10 mil range. Total share count would be about 31 mil we estimate. Target goes from $11 to $8 based on our DCF model and preliminary view of combined company.
Rather than merely guess or assume, I would suggest you ask Fortress or Uniloc's bankers at Lakestreet who was responsible for the introduction and how it came to be. I think you'd find your assumption that Fortress was its genesis to be inaccurate.
My personal presumption is that that while Fortress obviously blessed it, they probably had nothing to do with its orchestration.
someconcerns,
They are very post split.
Agreement entered into April 7, 2015. Dividend (split) was effectuated in Dec 2014 as you know followed by the shares trading to a split adjusted high in the approximate $9.70 area.
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10623581-1115-7910&type=sect&TabIndex=2&dcn=0001415889-15-001328&nav=1&src=Yahoo
It might be worth pointing out Richard Chernicoff's incentive plan per the public filings:
a ten (10) year stock option to purchase 280,000 shares of the Company’s common stock (the “Award”). The stock options shall have an exercise price of $6.76 per share, the closing price of the Company’s common stock on the date immediately prior to the Board of Directors approval of such stock options and the options shall vest as follows: 25% of the Award shall vest on the 12 month anniversary of the Effective Date and thereafter 2.083% on the 21st day of each succeeding calendar month, provided Mr. Chernicoff continues to provide services (in addition to as a member of the Company’s Board of Directors) at the time of vesting. The Award shall be subject in all respects to the terms of the Plan. Notwithstanding anything herein to the contrary, the Award shall be subject to the following as an additional condition of vesting: (A) options to purchase 70,000 shares of the Company’s common stock under the Award shall not vest at all unless the price of the Company’s common stock while Mr. Chernicoff continues as an officer and/or director reach $8.99 and (B) options to purchase 70,000 shares of the Company’s common stock under the Award shall not vest at all unless the price of the Company’s common stock while Mr. Chernicoff continues as an officer and/or director reach $10.14.
msl,
I believe what you're referencing is a 10b5-1 plan. It is for sales only.
"A rule established by the Securities Exchange Commission (SEC) that allows insiders of publicly traded corporations to set up a trading plan for selling stocks they own. Rule 10b5-1 allows major holders to sell a predetermined number of shares at a predetermined time. 10b5-1 plans are used by many corporate executives in an attempt to avoid accusations of insider trading."
Appears that the replay is now available for anyone who missed it earlier.
http://public.viavid.com/player/index.php?id=115667
Institutional Interest Increased as of 6/30
(Essentially 7.8 shares bought for every 1.6 sold.)
(Largest institutional buyer (Royce) upped position in recent month to 622k.)
Ownership Analysis
# Of Holders / Shares
Total Shares Held
23 / 1,140,412
New Positions
8 / 749,653
Increased Positions
10 / 781,471
Decreased Positions
9 / 162,693
Holders With Activity
19 / 944,164
Sold Out Positions
5 / 143,551
ROYCE & ASSOCIATES LLC
622,430 622,430 100.00 $1,815,628 0.01 4.43 06/30/15
VANGUARD GROUP INC
156,093 21,952 16.36 $455,323 0.00 1.11 06/30/15
FORTRESS INVESTMENT GROUP LLC
134,409 0 0.00 $392,071 0.01 0.96 06/30/15
RENAISSANCE TECHNOLOGIES LLC
68,500 68,500 100.00 $199,815 0.00 0.49 06/30/15
DEUTSCHE BANK AG\
49,269 49,269 100.00 $143,718 0.00 0.35 06/30/15
GEODE CAPITAL MANAGEMENT, LLC
44,662 0 0.00 $130,279 0.00 0.32 06/30/15
IPG INVESTMENT ADVISORS LLC
17,800 (15,200) -46.06 $51,923 0.02 0.13 06/30/15
TOWER RESEARCH CAPITAL LLC (TRC)
14,099 9,866 233.07 $41,127 0.00 0.10 06/30/15
NORTHERN TRUST CORP
10,804 (1,942) -15.24 $31,515 0.00 0.08 06/30/15
MORGAN STANLEY
7,192 (1,300) -15.31 $20,979 0.00 0.05 06/30/15
GROUP ONE TRADING, L.P.
5,499 5,499 100.00 $16,041 0.00 0.04 06/30/15
AMERICAN INTERNATIONAL GROUP INC
2,700 (700) -20.59 $7,876 0.00 0.02 06/30/15
BLACKROCK INVESTMENT MANAGEMENT, LLC
2,026 2,026 100.00 $5,910 0.00 0.01 06/30/15
NORTH STAR INVESTMENT MANAGEMENT CORP.
2,000 0 0.00 $5,834 0.00 0.01 06/30/15
SIMPLEX TRADING, LLC
1,709 1,709 100.00 $4,985 0.00 0.01 06/30/15
METLIFE SECURITIES, INC
1,000 0 0.00 $2,917 0.00 0.01 06/30/15
GROUND SWELL CAPITAL, LLC
134 134 100.00 $391 0.00 0.00 09/30/14
CITIGROUP INC
86 86 100.00 $251 0.00 0.00 06/30/15
CREATIVE PLANNING
0 (200) -100.00 $0 0.00 0.00 06/30/15
UBS GROUP AG
0 (4,297) -100.00 $0 0.00 0.00 06/30/15
FOLIOMETRIX LLC
0 (10,600) -100.00 $0 0.00 0.00 06/30/15
NAVELLIER & ASSOCIATES INC
0 (12,400) -100.00 $0 0.00 0.00 06/30/15
COE CAPITAL MANAGEMENT, LLC
0 (116,054) -100.00 $0 0.00 0.00 06/30/15
Patentinestor,
From my notes
A transaction like this does not occur overnight, does not occur out of desperation. First met with Uniloc in March this year. Regardless of our second quarter results or stock price, management of Uniloc and Marathon believe merger is in the best interest of our shareholders and positions both companies for greater success long-term.
You may have missed a previous post of mine Patentinvestor.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=116250589
My understanding is that Uniloc's last financing round in Dec 2014 was $10M at a $200M valuation. There original financing almost 9-10 years ago was done at a $20M valuation. The current Marathon deal appears to value them at $60M, a significantly lower valuation than what many of them paid.
http://www.lakestreetcapitalmarkets.com/Investment-Banking/Recent-Transactions/uniloc
Lake Street is pleased to announce it served as sole placement agent to Uniloc, an intellectual property monetization company, in its $10M private placement to a multi-billion dollar global hedge fund.
Working here...starting right now.
http://public.viavid.com/player/index.php?id=115667
EMI,
I believe if you research Uniloc's private history, you may find that they initially raised capital roughly 9 or so years back at a valuation of approximately $20M. There most recent financing was rumored to have been done at a valuation of approximately $200M. YES, most recent financing done at a $200M valuation.
http://www.lakestreetcapitalmarkets.com/Investment-Banking/Recent-Transactions/uniloc
Lake Street is pleased to announce it served as sole placement agent to Uniloc, an intellectual property monetization company, in its $10M private placement to a multi-billion dollar global hedge fund.
That alone gives some sort of preliminary indication of what both Uniloc, and certain investors in them, felt was a fair valuation in their most recent financing.
Assuming I'm remotely accurate, that would appear to indicate that even the earliest of their shareholders would only be looking at a approximately a 3X return over almost a decade while later investors are actually under water considerably considering the transaction roughly values them at what appears to be a fully diluted maybe $60M. Assuming so, this might make any hypothetical exodus unlikely.
In fact, it appears to indicate that Uniloc shareholders, just like us Marathon shareholders, truly only benefit upon the future value creation together achieved by the companies.
Furthermore, their CEO who is said to be one of the smartest minds in the space, referred to as a genius by some, is quite well off financially speaking, absent his soon to be issued Marathon shares. As you know, he will own 22% of the to be issued shares while the CFO 3%. That's 25% of the entire issuance to Uniloc to begin with. Both of them obviously be subjected to traditional "insider" reporting requirements with the SEC.
genomc,
For reference, here is the entire after hours list of trades: 7700 shares it appears
19:24 $ 3.10 Low 1,000
19:24 $ 3.20 200
19:23 $ 3.15 100
19:23 $ 3.15 2,900
17:59 $ 3.20 500
17:50 $ 3.25 High 3,000