Hello and thank you for standing by. Welcome to Marathon Patent Group’s Second 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 would like to turn the conference over to Jason Assad, Investor Relations with Marathon Patent Group. Thank you. You may now begin.

Thank you, operator. Good afternoon and welcome to the Marathon Patent Group’s 2016 second 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 www.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 is 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 our 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 second quarter operating results. While we are clearly pleased to have delivered both record revenues and income in the quarter, my prepared remarks will primarily focus on what we are doing to build upon our recent momentum. With the full time addition of Erich Spangenberg to the team in May of this year, we have increased our ability to review and manage significant number of additional cases within the U.S. as well as other countries across both Europe and Asia. We’ve been busy over the last few months, increased the number of our patent assets and I’d like to briefly highlight two of those initiatives. First, as part of our ongoing strategy to provide creative outsourced solutions to patent owners, our Luxemburg subsidiary entered into a strategic relationship with a large fund and a Fortune Global 50 Company to commercialize and monetize approximately 10,000 patents all within a particular industry vertical. While I would like to discuss more details about this outsourced partnership, the specific industry category and the revenue potential, we simply cannot at this time, but we’ll have more details for you in the near future. Secondly, this morning we announced our agreements with Siemens AG, which covers two distinct portfolios. I think that opportunities like Siemens and the previously discussed Fortune Global 50 patent partnership may allow Marathon to achieve greater scale by providing our IP litigation and licensing services as an outsourcing partner to large, domestic and international corporations. Regarding [Siemens] [ph] the first portfolio of 221 patents relate to WCDMA and GSM cellular technology and cover all the major global economies including China, France, Germany, the United Kingdom and the United States. Significantly many of the patent families have…

Thanks, Doug. Second quarter revenues totalled $34.3 million. Revenue was driven primarily by the issuance of one-time non-recurring licenses which accounted for 99% of the company’s revenues in the quarter. During the second quarter of 2016 we entered into nine licenses up from two licenses in the first quarter of 2016. Direct cost of revenues in Q2, 2016 was approximately $15.5 million as compared to direct cost of revenues in Q2, 2015 of approximately $3.9 million. Direct cost of revenue includes both contingent and non-contingent payment in the patent enforcement council and patent enforcement advisors and inventors. While the cost of revenues during the second quarter of 2016 was up market release in the second quarter of 2015 as a percentage of revenue, cost of revenue this year was 45% compared to 282% cost of revenue during the second quarter of 2015. The Company reported other operating expenses in Q2, 2016 of approximately of $4.9 million, a 20% decrease as compared to other operating expenses of $6.1 million in Q2 2015. Other operating expenses declined year-over-year primarily from a reduction in expenses associated with patent amortization, professional fees and other G&A with compensation and consulting fees showing negligible increases. Total operating expenses in Q2, 2016 include non-cash expenses totaling approximately $3.3 million, including $2.0 million in patent amortization, approximately $482,000 in non-cash stock compensation expenses and approximately $704,000 in patent impairment charges. This is down from approximately $4.6 million in non-cash operating expenses during Q2, 2015 which included $3.0 million in patent amortization and $766,000 in patent impairment charges. Cash operating expenses were flat year-over-year. For Q2, 2016 the Company reported a GAAP net profit of $7.9 million or $0.53 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 income for Q2, 2016 was $16.5 million compared to non-GAAP net loss of $4.5 million for Q2, 2015. Included in this was the utilization of [Indiscernible] Marathon Preferred tax asset. A reconciliation of GAAP and non-GAAP financials can be found in both the financial tables at the end of our first quarter results and press release results issued today, as well as in the quarterly report filed today on Form 10-Q with the SEC. We ended the second quarter of 2016 with cash totaling $7.2 million as compared to $2.6 million as of March 31, 2016. Importantly, we paid down approximately |$7.4 million of our existing impediments during the second quarter. As of June 30, 2016 we had approximately $15 billion weighted average basic shares outstanding and $16 million weighted average diluted shares outstanding. Importantly, I would like to note that during Q2, 2016 warrants that purchased approximately 1.3 million shares associated with prior financing transaction expiry [ph]. Thank you for all your attention. Operator, you may now open the call for questions.

Thank you ladies and gentlemen. [Operator Instructions] Our first question comes from the line of William Gibson from ROTH Capital Partners. Please go ahead.

Couple of questions about the Siemens transaction. Is this a straight patent sale or is there some kind of working relationship where they get a share of the monetization?

So you know we have pretty strict confidentiality provisions on those two transactions. So let me just say the following: one is an outright purchase and one is more of a partnership, but I’m not – it will be evident which one is which in the next two, three quarters Bill. But we’re just going to leave it at that for now.

Okay. I think you used the word purchase on the Siemens, and I noticed in the Q in one of the footnotes that after the closing they received $250,000. Is it fair to say that’s not the total payment?

This is Frank. Without going into the details of each of the different transactions, there are different technologies and verticals and industries spaces and you know the type of transaction as Doug mentioned is different between the two, but we are not going to be able to differentiate at this point.

Okay. Why would Siemens want to sell or give up ownership of patents related to elements of LTE?

Because they want to monetize those assets, and they don’t feel that they can do it themselves or they are looking for a partner who has got expertise in that field both within the technology area as well as expertise in different jurisdictions across the globe.

Okay. And let me ask one more question and then I’ll get back in queue. The patent impairment charge in the quarter, what portfolio was that related to?

The Selene portfolio.

Selene, okay, thank you.

Thank you. Our next question comes from the line of Mike Latimore from Northland Securities. Please go ahead.

Thanks, this is Nick Altmann filling in for Mike. Couple of quick questions. What is the SEP count at now and have they been licensed already and then if you could, is there a defined royalty on those?

No, defined royalty, I don’t have the -- we haven’t broken out the patents by SEP and non-SEP so we are not providing that at this time, we may in the future. And then what was your other question, Nick?

You covered both of them, thanks.

Okay, I thought I heard a third.

And then going back to the deal, can you provide any color on how the relationship developed with Siemens and then what is the revenue share?

So the relationship with Siemens actually started years ago when we were actually adverse one another in one of our early cases, and then the TLI patent that we speak of in our prepared remarks as well as some of the most recent press releases, that’s actually originally a Siemens patent that there was a division that was spun out from Siemens years ago and the patent went with that division, ultimately it found its way to us and so that kind of brought us back to Siemens roughly about this time last year and we just kind of nurtured the relationship and it’s turned into what it’s turned into and we think that hopefully that there will be more business between Marathon and Siemens in the future. So that’s kind of how that came together and as far as revenue share percentages things like that, those are the economic details that were actually not permitted to disclose at this time, but typically what happens Nick is that as we have settlements come in and we report things in our Qs and Ks it becomes pretty evident what the approximate split is, but it’s pretty much in line with what we’ve done over the past two, three years with other companies that have sold patents to us.

Okay. Thanks and then if I could just one more. What is the percent of patents in the U.S. versus Europe, versus Asia now?

It's roughly 50/50 U.S. and all other countries, and I don't have it broken out by Continent Asia, Continent Europe and United States. We will – maybe on our November earnings call we'll have those details for you.

Okay. Thanks.

No problem.

Thank you. Our next question comes from the line of David Hoff, a Private Investor. Please go ahead.

Hi. Good afternoon. Very good results and really glad to see the news this morning and I guess after the close. Couple of quick questions on the Siemens acquisition, are there any encumbrances on the portfolio? Are we licensing from scratch or there’s already existing licenses and a framework for additional deals?

There are some existing license but on one other portfolios, on the others, there's nothing. It's fresh. And we obviously we can't go into the details of who is licensed, but we still have a lot – we still have a lot ahead of us even in that portfolio and obviously other one is completely Greenfield.

Okay. Is there a timeline to file new cases or if possibly to do some soft licensing before the end of the year?

Definitely, so you know it's our intension to have not all the cases, but certainly the first wave of cases filed well before the end of the year, if not imminently. And we're always attempting to do soft license. And in some respects, we think we'll have some success, more success in that regarded this time around, but again the decision to license or not to license “soft” regard really lies with the potential licensee and not with Marathon or its subsidiary. So, to the extent somebody wants to be serious about the discussion we certainly will and if not then we'll look to pursue that licence through litigation.

Can you maybe give us an idea on number of potential licensees that are out there? You know is there a dozen, is there two dozen, three dozen, just some of kind of – I'm trying to put together framework on what is going forward?

Across both of the Siemens portfolios I would say, probably in the neighbourhood, and one portfolio is obviously growing more than the other, but I'd say, across the combined, the numbers I would kind of steer you towards approximately 50. And I know you probably want me to break that out, but I'm just not able to break that out at this point.

No. It's not necessary.

Okay. Good. So on the combined basis I'd say about 50%, and again in a year that number could be higher just based on new entrants to the market.

Okay. Just shifting over to dynamic advances. Can you give us a status update, I know, the case was already resolved the large one. Potentially its going to file new cases or maybe a major transaction to take care of the whole thing or your litigation been filed?

So we're still in the process of pursuing potential soft licensing discussions. And obviously we're prepared to move forward with cases, if need be. But we're going to try to let the other licensing discussions to play out for the time being.

Okay. That's fair enough. I guess Clouding IP would be the same like. I know there are some IPR final decisions, and appeals that are out there, still couple of cases going forward or has that portfolio been mostly wrapped up?

No. There's two in suit right now, and yes, we want to see how all the IPRs resolve before NDF [ph] filing additional cases. So, we're kind of being in a hold mode on that one.

Okay. Last two questions. Really ones related to the 10,000 patents. You're not going to recognizes those on your books and take it large GAAP expense – depreciation expense every quarter. That's the plan is to not do that?

Correct. That's right.

Okay. The Siemens look reasonable, maybe it looks like $3 million, so I was just wondered about another 10,000 patents hitting the books and taking a big depreciation expense. I guess the last question is, is this sound like the floods gates are opening that after Uniloc transaction fell through, you know, Erich Spangenberg came on board. Two very large acquisitions have been done. We expect more through the rest of the year, as this is going to be really yet.

No. Look we have a lot -- so let me start by saying, yes, we were little – our hands were little bit tight, right, while we were in the process of merging with Uniloc. When the merger was cancelled it allowed us to really go out to the market and start refilling that pipeline in earnest and certainly with the combination of Erich coming in and the relationships that he had and the capacity that he has we were able to get the Siemens transactions done. And frankly the relationship with the Global Fortune 50 Company is even – I think a magnitude greater than what we've done with Siemens. Obviously we can't share details. That deal literally just closed late last week. We'll have more information on that as the year progresses, but we have a lot of other opportunities in the pipeline that look like the Global Fortune Company, the Global 50 Company as well as the Siemens transaction. So, I expect that we'll see more quality patents and portfolio come a board throughout the year. And again we have a pretty high bar for what we want to bring in as long as the terms and the pricing is what we think is fair and we can meet that high bar with regard to the quality of the portfolio. We'll continue to bring more assets in.

Okay. That sounds good. Look forward to the second half of the year and into 2017. Thank you.

Thank you, David.

Thank you. Our next question comes from the line of Hugh Cohen from Applied Financial. Please go ahead.

Good morning. First of all, you know, it's not an unusual to the flood management for a good quarter, but this looks rather transformational with you're going with this global company. As far as, I've just asked a bunch of questions on this, because I'm not aware of anybody really doing anything like this. As far as pricing, did Marathon spend anything to enter into this or is this we're just collecting a royalty fee, management fee?

No. It was – so the details of that will come out in Q3 report. So can't – the answer is yes, but a transaction like these four years ago I suspect would have cost the company like Marathon tens of millions of dollars. We did not pay that. And it's really the expertise of the team and the relationship that the team has developed with this particular Fortune 50 Company, that has really carried the water, not up here, here's a whole bunch of money. Let us have a shot at monetizing your portfolio. So, it's been a long process, one that actually we've been at for a number of months. So, I can't get into the exact numbers, again, those will become apparent in the next Q. And yes, it is opening the flood gates and there were transformational, I don't like to use very often. I mean, this definitely has the potential to be very transformational for Marathon and frankly for the company that we're working with. And a portfolio of this size, with this caliber of patents, we make take a very different approach to the market, I mean, we will definitely take the soft licensing approach much more seriously, hopefully the other companies in this industry vertical will as well. And you know there's an opportunity to really build not just from the existing portfolio but the portfolios in this sector from some of the other players in this sector. And we're definitely at across roads and it’s a unique opportunity that we've been given and we're really looking forward to enhancing that opportunity and hopefully generating significant revenue and significant earnings with it.

If I can just follow-up, I'm trying to understand this. This is to me kind of staggering. Yesterday the company having – you forgive me if I don’t know the exact number, approximately 300 patents and here in one cell swoop he picks up over 10,000 patents and that's like 30:40:1, 30 to 40 times the size of the company's patent portfolio. So, the natural sceptic says, are these real patents? How many of these patents can really be monetized and are of similar quality of what we've had in the past?

So certainly there are patents that are of higher quality than others, this just a nature of any portfolio. The company from which these patents derived, they are one of the most innovative companies on the globe. So, yes, we fell really comfortable and confident about the quality of patents that are in the portfolio. Will be appeal to monetize ever single one? No. But we won't need to make a difference for our investors. So yes, it’s a huge opportunity. It’s a big deal.

As far as staffing goes, you think you got to need more people in order in to do this?

Probably some domain expertise, we already had conversations with individuals that have that expertise, but we're not doubling our headcount. I mean we may grow by two, three employees, but this is not a situation where we're going to go from 8 to 18 certainly.

The press release mentions a large fund is involved with this transaction. What's the purpose of the large funds?

There are partner on this. They had some expertise clearly in licensing and the IP space. And we kind of approach this in a collaborative and partnership way, and so they are part of it going forward.

Okay. Again, I think it's just an amazing announcement, not surprised alluded with questions in another areas, but you've mentioned a couple of times, I believe the last conference call and this one, the China market. Can you just give some color as to what you see as the opportunities in the China market?

So, the – all three of the announcement today, the Global 50 and the two portfolio is coming out of Siemens, all have what we think a very strong patents in that market. And frankly, we've been looking for an entry into the Chinese market, and now we have more than one. So, we are actively pursuing the right partners there, both litigation team and other partners, local universities and research, R&D labs and we've been busy over the summer in making relationships and starting to track down who the right really is. We're not a 100% there, but we're certainly along way along that path. And I suspect it is my hope and belief that we will have cases on file before the next earnings call in November.

As far as enforcement patent law there how comfortable are you with that?

Ask me in November. I'm comfortable enough certainly to move in that direction, but I can't tell you that we have a ton of experience there. But we think it’s a great market. Look, we think that intellectual property is being taken very seriously. In China we think they have a knowledge-based economy to a large part and that's growing. And there – I know that there is a lot of – there's been a lot of internet discussion on how serious China their IP markets? We think they had taken very seriously. And we're going to go see how valuable our patents are in that market.

Thank you.

You're welcome.

Thank you. Our next question is a follow-up from the line of Michael Latimore from Northland Securities. Please go ahead.

Hey, guys. Thanks for taking my follow-up. So it sounds like you guys are open to adding some more patents this year, so I guess my question is, should we expect cost increase to support those additional patents?

So, our operating costs have really remained almost the same. Our cash operating cost, those won't likely increase and if they do it will be very small increase. Invested capital, it just depends on what future deals get structured, but certainly if we acquire a portfolio which there is some kind of payment upfront that will increase the invested capital. And then most of our costs going forward as they have in the past other than a few outliers are really based on revenue generations, so, most of the costs are going to be contingent based cost. There are certain costs that are not contingent based and those typically are related to experts and pre-trial activity. We don't have the same trial schedule that we did earlier this year, so we're not going to experience any of those typical cost, but that doesn't mean that we won't have some increased cost from foreign council, typically our experience in foreign jurisdictions have been that they are not contingency relationship and that's largely because the costs are relatively inline with what we would expect in jurisdiction, for example, Germany in which they don't have discovery in depositions and experts that can run up the cost as they do in the United States. So, we'll see a little bit of an increase as we start to bring more cases on, but it won't be outside of what you've seen in the past couple of quarters.

Okay. Thanks. And then if I could ask one more here. I know you guys can't give too much detail about the new deals here, but I guess in you initial opinion what's the bigger opportunity here between the deal with Siemens and the deal with the ones in the Fortune 50 Company here?

Comparatively it's really – that's hard question to answer. I'd say, as I sit here right now I think I have clear – look, the siemens deal closed few months ago, and then the larger deals just closed a few days ago. So I have better visibility on what we think we're going to do on Siemens portfolios. So I guess if you're like force me to answer that's probably going to be my answer. That could change those as we start to develop the most recent transaction and – but right now I would say, I probably see – I mean, its tough to say, its pretty comparable frankly. But it could be – it could grow to be significantly larger than what we even expect today.

Okay, great. Thank you.

Thank you.

Thank you. [Operator Instructions] Our next question is a follow-up from a line of William Gibson from ROTH Capital Partners. Please go ahead.

I was hoping you could share a little more color on the 3D Nanocolor transaction. The lead investor was just a one time cash payment or is an agreement to put in capital as needed? And what's Marathon's ownership profile?

So, it is – he's the lead investor in a discrete round. We are not intended to keep this round open for more than a period of time. So, with respect to any feature of fund raising needs we haven't discuss that as an evergreen approach more of as a discrete round. And frankly its essentially a private company that we would hope and anticipate in the future capital needs would receive a depth of valuation. So, it’s a discrete one time event with a prominent investor that the company is known for some time and we'll discuss any future capital needs as they may arrive and valuation at that time.

And then just one last question, on the IP Liquidity portfolio and [Indiscernible] and where does that stand and when they go to court?

So the Andrulis case against Celgene, about little over year ago, I think it was Q2 last year we had a Markman ruling that was favourable. We appeal to the Federal Circuit. They did not see our argument as well as we hope they would. And so, we lost at the Federal Circuit and we haven't, so there is no case, there is no court case scheduled right now. And we're discussing internally what we may do which we're very limited in what we can do, but we haven't made a final decision at this point.

Okay. Thank you.

Sure.

Thank you. Ladies and gentlemen, we have no further in queue at this time. I'd like to turn the floor back over to management for closing comments.

Great. Well, I just wanted to say thank you to all of our investors for the support that we've had. It's been quite a change from where we were one year ago at this same time. We've "weathered the patent storm" so to say. And we really are in a very unique position. I mean we have had a very good second quarter. We've reloaded with some great assets. We have very unique opportunities with respect to the corporate partners that we are working with. And I really do believe that the outsourcing of our Marathon's IP Licensing and Litigation expertise is really going to set the path for lot of the companies in our space. I think there's always been an opportunity to acquire the one-off portfolios for a $1 and then go license those for something greater than a $1. But we think long term revenue generation through partnerships with large corporate IP owners is going to create a very unique set of characteristic for our company both from revenue and earnings generation and I really look forward to reporting more on this in the future. So, thank you for your patients and we look forward to talking to you in the near future.

Thank you ladies and gentlemen. This does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.