Hello and thank you for standing by. Welcome to Marathon Patent Group’s First Quarter 2016 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. At this time, I’d like to turn the conference over to Jason Assad, Investor Relations with Marathon Patent Group. Please go ahead.

Thank you, operator. Good afternoon and welcome to the Marathon Patent Group’s 2016 first quarter results conference call. With us today are Marathon’s Founder and Chief Executive Officer, Doug Croxall; and Chief Financial Officer, Frank Knuettel. Before I turn the call over to management, please remember that certain statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this release relate to, among other things, the effect of the global economic downturn on technology companies, the ability to successfully develop licensing programs and attract new businesses, rapid technological change in relevant markets, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general and general economic conditions. They are generally identified by words such as believes, may, expects, anticipates, should and similar expressions. Readers should not place undue reliance on such forward-looking statements which are based upon the company’s beliefs and assumptions as of the date of this release. The company’s actual results could differ materially due to risk factors and other items described in more detail in the Risk Factors section of the company’s annual reports filed with the SEC, copies of which may be obtained at SEC.gov. Subsequent events and developments may cause these forward-looking statements to change. The company specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances that occur after the date of this release, except as required by applicable law. In addition, certain of the financial information presented in this call references non-GAAP financial measures. The company’s earnings release which was issued this afternoon, and available on the company’s website, presents reconciliations to the appropriate GAAP measure and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Finally, this conference call is being webcast. The webcast link is available on the Investor Relations section of the website at www.marathonpg.com. With that, it’s now my pleasure to turn over the call to Marathon’s Founder and CEO, Doug Croxall. Doug?

Thanks, Jason, and thank you everyone for joining us this afternoon to discuss Marathon Patent Group’s first quarter operating results. I will begin today’s call with an overview of the company’s performance and a review of our operational highlights. Frank Knuettel, our CFO, will follow by providing additional details on the company’s financial results. We will then open the call to your questions. As I discussed on our year end conference call at the end of March, despite 2015 being a challenging year for patent licensing companies, I believe 2016 would ultimately tell a very different tale for Marathon. As I communicate with you today that statement is no longer a perception, but a reality. As of today, I’m very happy to report that our year-to-date revenue stands at approximately $35 million, rapidly approaching almost two times last year’s full year revenue. In light of this and based on other active patent monetization campaign we believe there is a strong possibility that 2016 full year revenue could surpass $40 million. To put this into perspective that would equate all the revenue generated in both calendar years 2014 and 2015. Equally important to our top line growth recent settlements will lead to a strong operating profit in this quarter Q2 resulting in a substantial strengthening of our balance sheet. Recent settlements however do not diminish our fundamental understanding and acknowledgement of the importance of replenishing our IP asset base in order to continue to grow. While we believe we have additional monetization opportunities with our existing portfolios we continue to explore numerous opportunities to expand our strategic patent asset. To help ensure that we are both tactical and shrewd when assessing such opportunities, I’m particularly pleased to have recently announced that Erich Spangenberg has joined the company’s management team as Director…

Thanks, Doug. First quarter revenues totaled $2.1 million. Revenue was driven primarily by the issuance of one-time non-recurring licenses with two different entities and their affiliates and these one-time licenses accounted for 93% of the company’s revenues in the quarter. Direct cost to revenue in Q1 2016 was approximately $2.6 million as compared to direct cost of revenue in Q1 2015 of approximately $4.3 million. Direct cost of revenue includes both contingent and non-contingent payment in the patent enforcement council and patent enforcement advisors and inventors. The lower cost of revenue results primarily from lower revenues in the first quarter of this year and to a lesser extent lower fixed cost associated with trial preparations in Q1 2016 and Q1 2015. The company reported other operating expenses in Q1 2016 of approximately of $4.3 million, a 29% decrease as compared to other operating expenses of $6.1 million in Q1 2015. Total operating expenses in Q1 2016 include non-cash expenses totaling approximately $3.0 million, including $2.0 million in patent amortization, approximately $550,000 in non-cash stock compensation expenses and approximately $373,000 in patent impairment charges. In Q1 2016, the company reported a GAAP net loss of $3.9 million with $0.26 per basic share compared to a GAAP net loss of $4.8 million or $0.34 basic share for the first quarter of 2015. Non-GAAP net loss for the first quarter of 2016 was $2.4 million, compared to a non-GAAP net loss of $2.6 million for the first quarter of 2015. A reconciliation of GAAP and non-GAAP financials can be found in the financial tables at the end of our first quarter press release results issued today, as well as in the quarterly report filed today on Form 10-Q with the SEC. We ended the first quarter of 2016 with cash totaling $1.4 million as compared to $2.6 million as of December 31, 2015. However with the settlement of cases in our dynamic events in MedTech portfolios as of May 10, 2016 we had approximately $25 billion in case in addition to a bond and the approximate amount of $1.4 million that will be returned to the conclusion of one of our MedTech cases in Germany. Some of this cash will be used to pay down accounts payable that is prescribed in our debt agreement and the payment of bonds to payment junctions in Germany for our TLI portfolio the company is in considerable stronger shape going forward. As of March 31, 2016, we had $15 million weighted average basic shares outstanding. Thank you for all of your attention. Operator you may now open the call for questions.

Thank you. [Operator Instructions] Our first question comes from William Gibson from ROTH Capital Partners. Please go ahead.

Hi, I would like to expand a little bit more on the quote that Eric had in the press release that this is a historic point of opportunity in the patent industry, could you - I understand the patent acquisitions are down, but could you expand on that?

Bill, this is Doug. That is Eric’s quote not mine, so I will give you my color on what he said, but I can’t speak for him obviously. We are seeing lots of opportunities. So look from August until February we really were out of the patent acquisition market because we were in our merger agreement with Uniloc. When we came out of that when that agreement was cancelled we had a lot of opportunities that had queued up prior to that and we got pretty active going out and talking to potential partners and so my feeling and this is what I think Eric was referring to in his quote is, there is lot of opportunities in the market. There is a lot fewer licensing companies or monetization companies like Marathon to handle those opportunities and supply and demand being what it is and the headwinds that have been facing this market for the better part of two years being what they are, you know we think it is a really interesting time to still be standing and have the ability to partner with some of these companies and some of these opportunities. And we are seeing deal flow today that we’ve never seen in the past and we are seeing prices on that deal flow that today that we’ve never seen in the past and we’re seeing prices on that deal flow that frankly three, four years ago, were $50,000 million opportunity that we’re seeing in fraction of that price.

Good. Thank you. Another just on the financial side, I know when you gave the second quarter estimate of operating income, but it also said absent any one time charges, are we expecting any one time charges in the second quarter or possibly ?

Yeah. Bill this is Frank Knuettel. So at the end of each quarter through the many analysis of the carrying value of our assets, so that would be the primary one time charge that I think would be potential. We haven’t done work the work yet. So, I can’t answer that specifically, but that would be through the most common or mostly likely one time item.

What was the first impairment charge? What portfolio was that it didn’t appear to be IP planning?

It was not - it was the CyberFone and [indiscernible] portfolio.

And just cost of revenue you went through it pretty quick, but I mean in theory it out to be less than your revenue at least year-over-year had a higher cost of revenue than revenue.

In quarters where we have sort of lower level of revenue on the one hand and trial perp cost on the other hand, it can increase and in the first quarter of this year our revenue was approximately half what it was in the first quarter of 2015. So, on the revenue side, it was down and on the cost side we were preparing for Apple trial and other things that drove some cost that are not really contingent based i.e. technical and damage.

And Bill, I’m sorry just to add to what Frank said. You’ll notice that we’ve had a lot of discussion in our press release and everything else about expansion overseas and that’s one of the reasons as that the cost of getting to trial is much less over specifically in Germany and a lot of that has to do with the process - the litigation cycle you go through, the lack of discovery, the lack of expert use and a lot of the other hard cost that are not contingent base as Frank discussed. So our hope and certainly desire is to see that cost of goods go down even further overtime.

Thank you. How many people are on the asset management committee?

So far two.

Okay. Thanks. I’ll turn it over to someone else.

Our next question comes from Michael Latimore from Northland Capital Market. Please go ahead.

Yeah, thanks. Congratulations on the momentum in the business here.

Thank you.

Thank you.

Just on the – your comments here on year-to-date revenue obviously the Dynamic Advances settlement was – they contributed to the second quarter, did you say that MedTech is another contributor to the second quarter, is that what you said?

I didn’t say specifically, but it is.

Okay. All right, got it. And then, for the patent asset pipeline, I know there is kind of a bigger numbers and lower costs, I guess, as you look at opportunities there, are you seeing sort of good quality assets that don’t require upfront payments or don’t require much upfront payments or are you seeing a willingness to kind of take bigger – did you guys [indiscernible] here or can we just talk about those kind of dynamics a little bit?

Yeah. So, if we had closed something, we would do our best to provide color on that. So, I don’t have anything specific that I’ve closed recently although we are very, very close. I mean I’m hopeful that throughout the month of June we’re making some announcements on some new acquisitions and kind of partnerships. And so, we’re seeing – I’d say we’re seeing a more frequent and higher propensity for the deal flow to look for more of a JV partnering relation, which typically requires a lot less cash up front to buy it. But it also then – the downside of that is that you lower your cash up front, but you typically increase the revenue share to the current patent owner or the previous patent owner. So, we’re seeing a lot of those opportunities and we’re still seeing some opportunities where we will buy the portfolio outright. And I can’t say that some of the opportunities we’re looking at, these are standard essential portfolios, which if you’re familiar with what that term means, that means it’s a patent that has a claim, the [indiscernible] on some standards bodies, description of a technology. So those are – it’s about the best quality of patents I think you can get and they’re coming from corporate partners that are Fortune 100, Fortune 500 across the globe.

Very good. And then congratulations getting Eric on the [indiscernible]. I guess it sounds like you’re going to do some work on Europe and Asia opportunities. Generally speaking is the company looking a little bit more towards kind of using the international processes and port systems for patent monetization or is it just happened Eric has expertise there? I guess there is a strategic shift in international.

Both, obviously we’ve been pretty active in the German market over the last year and a half. We’ve had a fair amount of success there. We’ve developed a fairly good reputation amongst patent owners, not just in Germany but across the globe and Eric does have a lot of skill set and expertise and experience in those markets. So it’s a combination of both frankly.

And then, you have obviously a great settlement here with dynamic advances. With regard to that patent specifically, I can imagine other potential licensees of that. I guess are you pursuing other licensees for that patent?

We are.

Okay. Great, thanks a lot.

Thanks, Mike.

Our next question comes from David Hoff [ph], who is a private investor. Please go ahead.

Hi, good afternoon. I’ve a couple of quick questions. I understand if you don’t want to answer due to their nature obviously. In France, is there any parallel U.S. litigation - currently filed or past filed?

There has been.

Okay. And what technology areas, is it able to release the disclosed?

It was in our MedTech portfolio.

Okay. Thanks. I guess shifting to TLI, I listened to the oral hearings on the federal circuit website. I first I thought it’s in go so hot and then there was a opinion out earlier today that basically reversed analyst ruling. Is that something that we see in the U.S. side that could accelerate and possibly increase the size of these potential settlements?

Yes. It’s hard to drop parallel from one case to another because these are patent cases and they tend to be specific to the actual patent and the read on the infringing products or services. So it was encouraging to see federal circuit ruling today actually overturned a C.D. Cal. judge. It’s hard to say whether that’s going to have any play on the TLI case, which came out of Eastern district of Virginia, but it’s potentially good news. And, yes, if we get a reversal from the Federal Circuit that clearly would help a negotiating position with our defendants whether they are U.S. based or not.

Okay. I was going to follow it up with Clouding IP where I actually thought that that oral recording went very well and I know there has been at least one or two other patents. I that something we should be really looking at. Do you have a target number of potential licensees that have a --?

Yeah, our position right now is to kind of see how things unfold with rest of the IPRs to know what claims and the strength of those claims before filing any additional suites, but unfortunately we are in the PTAB process and until that plays out it’s hard to say what additional suites will bring with that portfolio.

Okay. I guess my last questions, is there an estimated time to get up and running with Erich and target number of portfolio over the next 3, 6 and 12 months?

I mean Erich and talk all the time, everyday, so even though he’s not been an official employee of Marathon, he’s certainly acted like it over the past couple of years. He is up and running officially as of today, but has been for a number of months. We are not releasing specific number of targets. I mean as we see opportunities and as the pricing and the economics line up, we will move on those opportunities. If we see 10 great opportunities and we are able to get all 10 closed, we will. If we only see two, then we will only close on two. But I can tell you with confidence that the pipeline is quite full and with the announcement today, it’s getting fuller. And it should allow us to replenish and add to our existing IP base pretty materially pretty quickly.

Okay. I’m going to sneak in one last quick question. With the HP announcement, their commercial opportunity, has that brought in additional interest from other companies that maybe saw the release and what you guys are doing, sent out emails and made phone calls, is that something that happens or you anticipate to happen in the future?

Yeah, no, it happened right, I can’t recall the exact that we announced 3D Nano, it’s sometime in March I believe. But we are in continue discussions with HP on other opportunities and with other large corporations and frankly universities with their opportunities as well. So that has definitely ramped up. And frankly bringing Erich on will help – will allow me to spend more time on the commercialization and know that the licensing is in the best possible hands it could be in.

Okay, that’s it for me. Thank you.

Thanks, David.

Our next question comes from Matthew Campbell from Laridae Capital. Please go ahead.

Yeah, good afternoon, and congratulations on a really successful first half of the year.

Thanks, it’s great.

See that cash position being bolstered. To piggyback the previous question, on your commercialization project with 3D Nano, how much money – could you give us a sense how much money was actually spend on the company up to this point potentially in the R&D area from inception, do you have a sense of that?

I’m sorry, you asking me about the R&D that was spent on the opportunity prior to our ownership?

Yes, yeah.

Look, I don’t have – unfortunately, I don’t have a glimpse into HP’s accounting books. But what we’ve been told by HP and what we firmly believe is that somewhere in the $20 million to $30 million range. So it’s not like this was just some napkin idea that they pond [ph] off to us, I mean there was significant energy and dollars spent on the development of the technology, the patenting of the underlying technology and frankly the team to help flush out the different business model. So we think that we got a great opportunity and we think HP got a great deal on it as well.

That’s helpful. And if you don’t mind, could you just walk us through where you stand with TLI, you went through it quickly, but I missed it. Where are we with the TLI portfolio at this point? Thanks.

Sure. Yeah, so let me talk about the U.S. portfolio first because that’s the simpler answer. We are waiting for the Federal Circuit to rule on our appeal and the appeal is on ruling the Eastern district of Virginia. A judge in the district of Virginia gave us that the patent was ineligible because of what’s called an [indiscernible], a one-on-one ruling, subject matter eligibility basically saying this should be a patent because the patented invention is not really patent eligible. That’s the U.S. case. So we are kind of waiting for that ruling. However, in Germany, so we won the infringement portion against Yahoo! Flickr, the Flickr product or the Flickr website of Yahoo! and Pinterest. We are putting the injunction in place pending settlement. We are moving forward with the injunction against the Flickr website and the Pinterest website within the borders of Germany. On July 7, we have the final oral hearing against Tumblr, which is also owned by Yahoo! and Box. And I don’t know 30 days to 60 days after that we should have the ruling on those two.

Doug, so just on the Yahoo! Flickr, does that suggest that they – so they can’t use that product in Germany and when is that juncture put in place?

Well, there is a process you go through with the court, we’ve also opened [indiscernible] communication with the defendant, so we will see where that goes, if there is no meaningful movement, then we’ll move forward with posting the bond and the injunction will go in almost immediately once the bond is posted. And that means they cannot offer that service to anyone within the borders of Germany nor can they offer the application or any marketing of the service within the borders of Germany.

Got it. Thank you so much. Good job.

Okay, Matt.

Our next question comes from [indiscernible], private investor. Please go ahead.

Thanks for taking my call on a very informative and comprehensive update you guys gave in the earnings release and I’m sure for most investors I want to say we all appreciate that given the development since Q1 ended and very helpful, and enlightening I should say. So I have a few questions here, one has to do with the 3D Nano investment arm. Has it ever made public or can you comment on I guess what Marathon’s cash investment was into that joint venture?

We have not made it public but I will tell you that it’s less than $250,000.

Okay. And what equity stake does that represent for the joint venture for Marathon?

A great majority.

Okay. And that operates as a standalone subsidiary or maybe explain how any of them the operating expenses for that commercialization effort for that product flow through from the quarter? And then does that show up like OpEx for Marathon?

So the answer to your first set of question is that it operates as a standalone basis. So from Day one, we have set it out that it will ultimately at some point be capable of standing on its own feet. So it’s got its own set of distinct books and records, and it is preparing itself for eventual life on its own. With respect to the latter question, yes, it is a moment based on Marathon ownership. It is basically a consolidated subsidiary and it does flow through and into the Marathon books. Pending whether our future decisions with respect to the financing of that to whether or not it may become an unconsolidated stuff but at the moment consolidated and run through into Marathon.

Okay. And there were two key employees that basically represent the majority of the operating expenses so far for that?

Yes, there are two key employees and a couple of junior folks, and at the moment you are correct, that is the overwhelming percentage of the operating cost outside of personnel, overhead, CapEx, samples, et cetera.

Okay. And you gave an updated figure for the cash as of May 10. I notice I didn’t see any updated amount for the debt at Q1 quarter end. I guess looking in the 10-Q, looks like there was $10.5 million of stated notes payable for some other long term liabilities let’s assume the $10.5 million for now. Was any of that reduced given the cash inflows from the settlement, license arrangement?

So the debt at the end of the first quarter was comprised of the debt to Fortress and the MedTech acquisition debt. Subsequent to the end of the quarter and the May 10, an overwhelming percentage of the outstanding balance for the MedTech debt has been paid off as well as a small portion of the Fortress outstanding debt with additional [indiscernible].

Okay. So the $26.5 million cash does represent after some partial payments of the debt by Q1 end?

That’s right.

Okay. And Frank, in your prepared remarks, you said the revenues from Q1 over 90% of them was comprised of something. I missed what that something was. Could you refresh my memory upon what that was?

So 93% approximately of our Q1 revenue was associated with individual one-time license through the Standard & Poor component of our historical revenue.

Right and those relate to the signal portfolio?

That’s right.

Okay. And then you said Doug I think that based on what you see right now whatever I guess perhaps $40 million in revenues for all of 2016 obviously implying $5 million or so through – for Q3 and Q4 bringing back as whatever remains for Q2 obviously that’s how I should take that remark?

Look, that’s not a whole lot. That’s not a big number to achieve, not that we are but I’m reluctant to put out anything more meaningful than that today.

Got it. Okay. Fair enough. And with regards to the MedTech portfolio, could you refresh my memory how that relates to Stryker and Stryker a subset with that for vice versa and is the Stryker injunction in place, and any update on where we stand with the Stryker if that is in place and any settlement talks related to that?

Talks have concluded. We’ve reached settlement with Stryker. The case I believe is actually been dismissed as of today or the dismissal is on its way. The injunction has been lifted in Germany and they are selling their Avastin whatever other products within that border because we’ve reached settlement.

Okay. But any of those settlement figures are not included in the figures you updated through May 10, is that correct?

No, they are included.

They are included, okay. And reaching about six months back in time, Doug, two I guess maybe with the Q3 conference call held in late November last year you mentioned something is passing about your just acquired some automotive patterns and I don’t know you did something out of the norm and how you’re choosing to try to enforce those patterns or reach settlement or whatever and then you were hoping to be able to disclose something rather soon after that, and I don’t recall of hearing any update with that. Does any of this ring a bell to you and is there anything that [indiscernible]?

We found some priority was a little bit conflicting, so we actually didn’t move forward with that opportunity.

Okay. Fair enough. I think that answers all of my questions for now. I’ll sit back and listen. Thank you.

Thank you.

Our next question comes from Matt Rodman [ph], a private investor. Please go ahead.

Hi guys, thanks for taking my call. Great quarter, long time shareholder. Just a couple of quick question following up on 3D Nanocolor and Dynamic Advances. So first on 3D Nanocolor, do we have a timeline in terms of when we’ll potentially start to actually realize revenues from this venture that six months out, 12 months out, two years out. What are we looking out in terms of revenue realization?

Most likely we’re probably year and a half out from meaningful revenues.

Okay, great. And then quickly on Dynamic Advances, I just want to 100 % confirm that the cash that we have currently, you’ve already paid out the – whatever money is going to RPI, is that correct from the settlement?

That is correct.

Okay, so the cash, that’s all hard cash, none of that has been paid up. That’s great. And then in terms of – I know you probably can’t get into too much the timing of next steps against other – with other potential licensees, but can you please confirm that you are at least actively engaged in discussion and/or possibly prepping for litigation if these entities don’t become willing licensees?

Yeah, the process has already started.

Great, okay, thank you so much. Great job guys. We are looking forward to the future.

Thank you.

Okay.

Our next question comes from Joe Pratt from Stifel. Please go ahead.

Hi, Doug. Just looking at the Q here, you’ve got 10 on 10 short-term notes payable, -term notes payable, how much of that do you think will be paid back in 2016?

So a part of it is dependent upon what revenues we have for the balance of the year as the Fortress agreement does include certain principle repayment acceleration based on revenue. At this juncture based on what we’ve recently paid down on the MedTech acquisition debt and the payments and other things we anticipate making – I would expect at this point that it will be more than half.

Okay. So half the $11.4 million?

In fact even well more than half.

Okay. So, okay. And what portion of that is MedTech and what portion of that is Fortress?

So of the total MedTech represented about 15% give or take and the balance --

Okay. And the balance is Fortress?

Right.

Okay. So that’s an outflow of, I will pick a number, $7 million reducing your $25 million balance?

Yeah, the one point to also consider is that the Fortress debt does continue to amortize over the next approximately 2 remaining years, 2.5 – 2.25 remaining years, so there will be sort of monthly amortization.

Okay. Okay, thank you for answering my question.

You are welcome.

Thank you. And now I’d like to turn the floor back over to management for any closing remarks.

So I just want to say thank you to all the who dialed in and listening and called in questions and it’s been a long last four quarters, but I can confidently say that we’ve definitely turned the quarter. We’ve never had a brighter future than we have right now, we’ve never had a better team of executives than we have right now and frankly we’ve never had better opportunities than we have right now. And I appreciate everybody’s support and we look forward to speaking to you at the very least on the next earnings all and hopefully many times between now and then. Thank you for your support.

This concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time.