Marathon Patent Group (MARA), the patent monetization company run by CEO Doug Croxall, posted a net loss of $3.15 million in 2014 as higher operating expenses offset a quintupling of licensing revenue.
Los Angeles-based Marathon said the 16 cents a share net loss compared with a net loss of $3.45 million or 37 cents a share in 2013.
Shares of Marathon fell 1.4% or 3 cents to $6.20 a share in trading on the Nasdaq. They’ve traded between $3.11 and $9.73 over the past year.
Revenue rose to $21.4 million from $3.4 million, a year ago.
Marathon said the increase in revenue resulted from existing portfolios reaching more advanced stages of enforcement as well as newly acquired portfolios already in enforcement proceedings.
The company added nine patent portfolios consisting of 260 patents during the year, bringing its total to 19 portfolios with 378 patents covering 14 distinct technology areas. Sixteen of the 19 are in active licensing campaigns versus only 4 a year ago.
Twelve portfolios have generated revenue in 2014 versus only 3 in 2013. Six of the 12 have generated a net positive return in excess of their cost to acquire and enforce the portfolio.
“Marathon saw significant revenue growth in 2014,” Croxall said in a statement. “This increase in our top-line can be attributed to strong execution of our patent licensing campaigns and an increase in the number of patents and patent portfolios acquired during 2014.
For the year, Marathon noted that 5 subsidiaries accounted for 88% of revenue, versus one subsidiary accounting for 62% last year.
Operating expenses more than doubled to $15.8 million from $6.14 million, a year ago. The increased expenses reflect the growth of its patent portfolio and the advanced stages of its enforcement campaigns.
The company had cash and cash equivalents of $5.1 million as of Dec. 31, 2014.
During a conference call with investors and analysts Croxall said "2014 was a great year and 2015 is going to be a better year."
He noted that 2015 is already scheduled with Markman hearings and trials that typically have coincided with licensing agreements.
"We have a lot of catalysts," Croxall said, citing the scheduled Markman hearings and trials.
"It's going to be a very fun Q2, Q3 and Q4."
In February, Marathon announced up to $50 million in secured debt financing from Fortress Investment Group (FIG), which it plans to use for general corporate purposes including possible acquisitions.
The investment firm’s intellectual property unit led by Eran Zur has been investing in a number of penny patent monetization companies.
In addition to Marathon, Fortress has invested in Andrea Electronics (ANDR), Crossroads Systems Inc. (CRDS), Document Security Systems (DSS), Inventergy Global (INVT), Netlist Inc. (NLST) and SITO Mobile Ltd. (SITO).
Marathon recently has been adding directors with mergers and acquisition experience such as Dirk Tyler and Richard Chernicoff after its unsolicited bid for Spherix Inc. (SPEX) was rejected by the rival patent assertion company as inadequate.
Many patent market observers believe, however, that a wave of consolidation may be coming in the patent monetization space as they have experienced several major litigation setbacks, rising litigation costs and dwindling cash.
Indeed, a number of patent assertion companies including Vringo Inc. (VRNG), ParkerVision Inc. (PRKR), Endeavor IP Inc. (ENIP) and Blue Calypso Inc. (BCYP) noted in their recent financial statements for the year ended 2014 that auditors had raised concerns about their ability to continue as going concerns.
Marathon is seen by many in the patent monetization as one of the few companies able to be an acquirer in the current market. Indeed, the company is one of the few patent monetizers to consistently produce licensing revenue each quarter.
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