Microcap financier Barry Honig, who claims Marathon Patent Group and Inventergy Global Inc. as his two favorite patent assertion entities, signed a consulting agreement with Marathon on Sept. 17 that will pay him for advice and support.
Los Angeles-based Marathon said in a Sept. 19 filing with the Securities and Exchange Commission that Honig’s advice and support will include but not be limited to, advertising, marketing, business development, strategic and business planning, channel partner development and other functions reasonably necessary for advancing Marathon’s new Opus Analytics business.
Opus was co-developed by Marathon CEO Doug Croxall and Erich Spangenberg, the founder and owner of IP Navigation Group.
On Sept. 15 Marathon announced that its new Opus business would offer customer a set of proprietary analytical tools that offer the ability to quickly evaluate a large patent portfolio as well as to assess the strength of individual patents using a unique Alpha Score system.
“Opus has been under development for over a decade as a dedicated, in-house tool used by one of the world's leading patent monetization firms," Croxall said in a statement at the time.
“We are excited about the opportunity to bring this valuable resource to the broader intellectual property and investment communities,” he said.
He said Marathon was confident that the Opus platform will deliver a feature set and price point that IP professionals and others, including financial professionals, will find highly attractive relative to other offerings currently in the market.”
The trademarked Opus Alpha Score is a patent ranking algorithm that takes into account aspects of validity, novelty, enforceability, and relevance/timeliness, all weighted based on real world experience, providing an indication of both a patent's strength and its likely relative commercial value.
“The Alpha Score is especially helpful in identifying ‘hidden gems’ that have monetization potential in a large patent portfolio,” the company said.
The Opus platform also includes tools for conducting a deep analysis of the strength of a patent's claims. It also includes tools that help users understand not just the actual claims in a patent, but also the broader intellectual property picture.
For example, by providing a comparison of claims applied for to claims granted, Opus helps users understand product strategies and existing art.
Honig, who is president of GRQ Consultants Inc., has described the firm as an investment vehicle rather than a consulting firm, though it occasionally provides consulting work.
For his services, Honig will receive 50,000 shares of Series B convertible preferred stock, plus another 50,000 shares of the convertible preferred stock in in six equal monthly installments of 8,333 shares beginning Oct. 17, 2014.
In addition to the 100,000 shares of Series B convertible preferred stock Honig is receiving, he will be entitled to receive additional shares of Series B preferred stock as compensation for the Marathon achieving certain benchmarks.
Honig can receive an additional $60,000 in preferred stock if he helps Marathon’s Opus Analytics platform achieve $2 million in revenue. He can receive an additional $60,000 in preferred stock if it achieves $4 million in revenue and another $60,000 in preferred stock if it achieves $6 million in revenue.
If Marathon’s Opus business achieves all those benchmarks, Honig will have received $280,000 in preferred stock.
The preferred stock converts into common stock on a one for one basis. Honig said it was structured as preferred in order to keep him from becoming a 10% holder.
“I told you I rarely do consulting, the main purpose of the corporation is for investing purposes,” Honig said in an email.
He said he has been a consultant for Marathon once before for a period of time that ended before this new agreement, which he has been negotiating.
“I have helped Marathon off and on for 4 years since advising it going public as well,” he said. “If it was not for me Marathon would not have such a clean cap structure. I have helped them out with their capital market strategy since inception. It is very much out in the public that I am the largest advocate and supporter of Marathon and not a secret.”
Honig said he has already started helping out Marathon with Opus and making introductions to potential channel partners.
“I will be helping it with its out reach of their product,” he said.
Honig said he “constantly helps companies I am an investor in. I believe part of my success is helping companies I have investments in. Sometimes I am very vocal as well."
He said he also has advised MusclePharm Corp., a maker of nutritional drinks for athletes, for nearly two years.
“When I started advising Musclepharm it was a one penny stock and had 27 million debt and on the brink of bankruptcy,” he said. “It had every scumbag ‘PIPE’ (private investment in public equity) investor as an investor and billions of warrants.”
Today, he said MusclePharm is debt free, has 7 million in cash, no warrants, is a 12 dollar plus stock, with analyst coverage, and will make more than $170 million in revenue and be profitable. I also recently helped them get Tiger Woods” as a spokesman.
“I am very passionate and excited about Marathon and put my money where my mouth is. My investment in Marathon is a significant amount of money and my personal money not a fund’s."
Officials of Marathon couldn’t be reached for comment.
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