Monday, November 16, 2015 4:04:41 PM
- Results of operations for the three months ended September 30, 2015 -
For the three months ended September 30, 2015 ("Q3 2015"), Marathon reported revenue of $6.4 million, an increase of 368% as compared to $1.4 million for second quarter ended June 30, 2015 ("Q2 2015"). Revenue in Q3 2015 represents the second highest quarterly revenue in the Company's history. The growth in revenue was largely derived from the Company's patent monetization efforts and the issuance of numerous patent license and settlement agreements.
Direct cost of revenue in Q3 2015 was approximately $4.0 million, or 63% of revenues, as compared to direct cost of revenue in Q2 2015 of approximately $3.9 million, or 282% of revenues. Direct cost of revenue includes both contingent and non-contingent payments to patent enforcement counsel and patent enforcement advisors and inventors. During Q3 2015, the Company incurred approximately $900,000 of non-contingent legal costs associated with the Bridgestone litigation.
The Company reported other operating expenses in Q3 2015 of approximately $5.5 million, a 10% decrease as compared to other operating expenses of $6.1 million in Q2 2015. Included in other operating expense for Q3 2015 was approximately $630,000 in non-recurring professional fees associated with the proposed merger with Uniloc and the litigation with Dominion Harbor, which was settled on October 30, 2015.
Total operating expenses in Q3 2015 include non-cash expenses totaling approximately $3.8 million, including $2.9 million in patent amortization and approximately $900,000 in non-cash stock compensation and fee expenses.
In Q3 2015, the Company reported a GAAP net loss of $3.8 million or $(0.26) per basic share, compared to a GAAP net loss of $4.5 million or $(0.32) per basic share for Q2 2015.
Non-GAAP net loss for Q3 2015 was approximately $88,000 compared to non-GAAP net loss of $4.5 million for Q2 2015. A reconciliation of GAAP to non-GAAP financials can be found in the financial tables at the end of this press release.
As of September 30, 2015, cash totaled $3.4 million.
Commenting on the Company's third quarter financial results, Doug Croxall, Founder & CEO of Marathon Patent Group, stated, "We are pleased to report strong top line growth in the quarter of $6.4M, our second strongest revenue quarter in company history. With both the Bridgestone Schrader and Bridgestone TRW cases now settled, the majority of the related one-time costs are now behind us. It is important to note that we inherited a non-contingent cost and fee structure on behalf of the Bridgestone enforcement action, which was a deviation from our business model. Virtually all of our other cases have costs and fees largely contingent with the outcomes of monetization efforts. We now expect to see the expense side of our P&L fall back in line with our low op-ex, high earnings leverage model."
Also during Q3, on August 14, 2015, Marathon and Uniloc announced they had entered into a definitive agreement, under which the companies will be combined in an all-stock merger of equals intended to qualify as a tax-free reorganization. The new company will be called Marathon Group SA., and will begin with a current portfolio of 662 patent assets. As of the date of the announced transaction, the new company had active litigation against 119 infringers (a 164% increase over Marathon's stand-alone cases), and 101 scheduled trials through 2017. The companies had $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 the trailing twelve months of operations (unaudited).
Investor Conference Call
Marathon will host a conference call on Monday, November 16, 2015 at 4:30 PM ET / 1:30 PM PT with Chief Executive Officer Doug Croxall and Chief Financial Officer Frank Knuettel II. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-0784 ten minutes prior to the scheduled start time. International calls should dial (201) 689-8560.
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, November 30, 2015, by dialing (877) 870-5176 in the U.S. and Canada and (858) 384-5517 internationally and entering the pin number: 13624610
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.
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.
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