Things Are Heating Up Around Marathon Patent Group Inc (OTCBB:MARA)
Whenever you start your research on a new company there are a things you need to ask yourself. Among the most important questions are: “What do these people do for a living?” and “What sort of results have they achieved so far?”. The answer to the first question is particularly interesting in the case of Marathon Patent Group Inc (OTCBB:MARA).
Just like so many other penny stocks, MARA have been through quite a lot of business sectors and they failed in virtually all of them. They spent quite a lot of time as a shell, then they purchased some uranium mineral rights from Pershing Gold Corp (OTCMKTS:PGLC) and tried to make it as a mineral exploration company. There was another business plan which was abandoned before they even started and then, in February MARA changed the name, and officially became a patent monetization company. We’ll take the time to explain what that means for those of you who don’t know.
Basically, these are (in most cases small cap) ventures who own a portfolio of patents and they monitor closely what each and every product that hits the market does. In case they see what they deem as an infringement of one of their patents, they immediately start a lawsuit and in a lot of the cases, you’ve got some big names like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and a host of others involved. The aim of the whole thing is not to do any actual damage to the giants, but more likely, to reach some sort of settlement so that the patent monetization companies can receive tens of millions of dollars. You can see why these enterprises are pejoratively known as “patent trolls”.
Truth be told, however, that might not be such a bad business plan. After all, if you can prove that you’re right in court, you will probably end up on top when the settlement is discussed. After the legal proceedings are done you can even reach licensing agreement, which will ensure that the big company can continue making their products without any significant changes while you get a more consistent stream of revenues.
In addition to this, if you ask MARA, they will tell you that they’re not the typical “patent troll” and they will probably explain how important it is to keep the intellectual property safe and how it “promote the progress of science”. We’ll leave it up to you to decide whether (and to what extent) that’s true and instead we’ll look at what the odds for their success are.
First of all, unlike many of their penny stock counterparts, MARA don’t appear to be strapped for cash. Especially when you have in mind that they started their new business not more than five months ago, their financial statement for the first quarter of 2013 looks rather good. Here are the figures:
- cash: $2.9 million
- current assets: $3 million
- current liabilities: $183 thousand
- no revenue
- quarterly net loss: $605 thousand
In addition to this, about a week ago, they announced that they have entered a settlement and licensing agreement with an unnamed but large payment terminal company regarding one of their IP portfolios and if that’s true, it should mean that some revenues will appear in the financial statements to come. We’re sure that the shareholders are quite anxious to see them.
In the meantime, we should point out that there are not many patent monetization companies in Pennyland and it really is hard to predict what’s in store for them. We did cover once such venture recently, though – Worlds Inc (OTCBB:WDDD) and you can see from the chart on the right that when they filed a patent infringement lawsuit against Activision Blizzard, Inc. (NASDAQ:ATVI) the ticker started to soar. When the scheduled hearing for June 27 approached things really heated up, but as soon as the Court decided to postpone the case by two months, it crashed. This goes to show that patent plays are risky and when there’s the added volatility of penny stocks, careful consideration of all the odds is crucial.
