Marathon Digital (MARA) 8-K/A Financial Statements and Exhibits

Marathon Patent Group, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2017

							MPG
	MPG			Munitech IP S.a.r.l.			Adjustments			MPG Pro Forma
ASSETS
Current assets:
Cash		1,095,721			13,039			(11,961	) (1)		1,070,721
Accounts receivable - net of allowance for bad debt of $387,976 for June 30, 2017		116,336			-			-			116,336
Bonds posted with courts		375,603			375,603			-			-
Note receivable		588,864			-			-			588,864
Prepaid expenses and other current assets, net of discounts of $2,659 for June 30, 2017		-			-			14,464	(4)		-
		-			-			(14,464	) (5)		-
		-			-			(2,694,322	) (2)		-
		128,718			809			2,694,322	(3)		127,908
Total current assets		2,305,242			389,452			(11,961	)		1,903,829
Other assets:
Property and equipment, net of accumulated depreciation of $128,718 for June 30, 2017		12,213			-			-			355
Intangible assets, net of accumulated amortization of $12,691,608 for June 30, 2017		11,358,722			2,709,699			-			8,660,881
Other non current assets, net of discounts of $0 for June 30, 2017		200,000			-			-			200,000
Goodwill		224,353			-			-			224,353
Total other assets		11,795,288			2,709,699			-			9,085,589
Total Assets		14,100,530			3,099,151			(11,961	)		10,989,418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		5,286,920			463,366			-			4,823,554
Clouding IP earn out - current portion		81,930			-			-			81,930
Other current liabilities		7,696			-			-			7,696
Notes payable, net of discounts of $503,572 for June 30, 2017		5,622,173			750,000			-			4,872,173
Total current assets		10,998,719			1,213,366			-			9,785,353
Long-term liabilities:
Notes Payable, net of discount of $1,302,129 for June 30, 2017		11,499,723			-			-			11,499,723
Clouding IP earn out		1,386,203			-			-			1,386,203
Revenue share liability		1,225,000			-			-			1,225,000
Other long term liability		39,853			-			-			39,853
Total long-term liabilities		14,150,779			-			-			14,150,779
Total liabilities		25,149,498			1,213,366			-			23,936,132
Stockholders’ Equity:
Preferred stock Series B, $.0001 par value, 50,000,000 shares authorized: 782,004 issued and outstanding at June 30, 2017		78			-			-			78
Common stock, $.0001 par value; 200,000,000 shares authorized; 23,257,472 at June 30, 2017		2,326			-			-			2,326
Additional paid-in capital		53,950,993			-			-			53,950,993
Permanent capital-Munitech		-			14,464			14,464	(4)		-
Accumulated other comprehensive income (loss)		(933,245	)		(6,965	)		-			(926,280	)
Accumulated income (deficit)								(14,464)	(5)
								(11,961)	(1)
								(2,694,322)	(2)
		(63,749,987	)		1,878,287			2,694,322	(3)/(6)		(65,654,698	)
Total Marathon Patent Group stockholders’ equity		(10,729,834	)		1,885,785			(11,961	)		(12,627,581	)
Noncontrolling Interests		(319,134	)		-			-			(319,134	)
Total Equity		(11,048,968	)		1,885,785			(11,961	)		(12,946,714	)
Total liabilities and stockholders’ equity		14,100,530			3,099,151			(11,961	)		10,989,418

Marathon Patent Group, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operation

For the period ended June 30, 2017

							MPG
	MPG			Munitech IP S.a.r.l.			Adjustments			MPG Pro Forma
Revenues		446,937			-			-			446,937
Expenses
Cost of revenues		1,479,486			249,266			-			1,230,220
Amortization of patents and website		1,345,846			137,223			-			1,208,622
Compensation and related taxes		1,846,088			3,268			-			1,842,820
Consulting fees		56,801			5,000			-			51,801
Professional fees		1,070,830			10,336			-			1,060,494
General and administrative		386,286			13,400			-			372,885
Goodwill impairment		-			-			-			-
Patent impairment		-			-			-			-
Total operarating expenses		6,185,337			418,494			-			5,766,843
Operating loss from continuing operations		(5,738,400	)		(418,494	)		-			(5,319,906	)
Other income (expenses)
Other income (expense)		912,411			2,694,330	(5)		(11,961	) (1)		(1,808,335	)
								(14,464	) (2)
								(2,694,322	) (3)
Foreign exchange gain (loss)		17,050			126,884			-			(109,834	)
Change in fair value adjustment of Clouding IP earn out		-			-			-			-
Warrant income (expense)		(4,907	)		-			-			(4,907	)
Interest income		1,862			-			-			1,862
Interest expense		(1,133,499	)		-			-			(1,133,499	)
Total other income (expenses)		(207,083	)		2,821,213			(2,720,746	)		(3,054,713	)
Loss from continuing operations before benefit for income taxes		(5,945,483	)		2,402,719			(2,720,746	)		(8,374,619	)
Income tax benefit (expense)		(17,242	)		-			-	(4)		(17,242	)
Net income (loss)		(5,962,725	)		2,402,719			(2,720,746	)		(8,391,861	)
Net (income) loss attributable to noncontrolling interests		155,286			-			-			155,286
Net income (loss) attrributable to common shareholders		(5,807,439	)		2,402,719			(2,720,746	)		(8,236,575	)
Loss per share		(0.28	)								(0.40	)
Weighted average common shares outstanding		20,822,791									20,822,791

Marathon Patent Group, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operation

For the year ended December 31, 2016

	MPG			Munitech IP S.a.r.l.			MPG Pro Forma
Revenues		36,629,276			-			36,629,276
Expenses
Cost of revenues		19,064,473			324,562			18,739,910
Amortization of patents and website		7,453,004			142,285			7,310,719
Compensation and related taxes		5,483,031			7,557			5,475,474
Consulting fees		1,279,092			-			1,279,092
Professional fees		1,797,922			12,435			1,785,487
General and administrative		840,179			6,577			833,602
Goodwill impairment		4,336,307			-			4,336,307
Patent impairment		11,958,882			-			11,958,882
Total operarating expenses		52,212,890			493,417			51,719,472
Operating loss from continuing operations		(15,583,614	)		(493,417	)		(15,090,197	)
Other income (expenses)
Other income (expense)		(57,454	)		-			(57,454	)
Foreign exchange gain (loss)		(367,847	)		(37,277	)		(330,570	)
Change in fair value adjustment of Clouding IP earn out		1,832,872			-			1,832,872
Interest income		4,353			-			4,353
Interest expense		(3,140,375	)		-			(3,140,375	)
Total other income (expenses)		(1,728,451	)		(37,277	)		(1,691,173	)
Loss from continuing operations before benefit for income taxes		(17,312,065	)		(530,695	)		(16,781,370	)
Income tax benefit (expense)		(11,516,807	)		6,262			(11,523,069	)
Net Income (loss)		(28,828,872	)		(524,432	)		(28,304,440	)
Net (income) loss attributable to noncontrolling interests		163,848			-			163,848
Net income (loss) attrributable to common shareholders		(28,665,024	)		(524,432	)		(28,140,592	)
Loss per share		(1.89	)					(1.85	)
Weighted average common shares outstanding		15,178,056						15,178,056

Marathon Patent Group, Inc.

Significant Notes and Assumptions to the Pro Forma Condensed Combined Financial Statements

Note 1 – Pro Forma Presentation Adjustments

The adjustments included in the column under the heading “Pro Forma Adjustments” in the unaudited pro forma condensed combined financial statements are as follows:

(1)	To record the total cash paid to GPat per the agreement, with the adjusting entry set forth to show decrease in Cash and in Accumulated Deficit and Other Income (Loss).
(2)	To eliminate the book obligation from Munitech to the Company as debt forgiveness.
(3)	To reverse the consolidating entry that eliminates the Marathon / Munitech intercompany balance.
(4)	To reverse the consolidating entry that eliminates the Marathon investment in and Munitech equity.
(5)	To write off the Company’s investment in Munitech, which is recorded as other income (loss).
(6)	Munitech tax accrual retained by the Company.