Business Context and Reporting Period
This Form 8-K was filed by Marathon Patent Group, Inc. (noting the metadata reference to MARA Holdings, Inc. appears to be a discrepancy with the filing text) on November 27, 2017. The report covers events occurring between November 27 and November 30, 2017, primarily concerning a material definitive agreement regarding equity conversion and a change in the company's independent registered public accounting firm.
Key Financial Metrics and Capital Structure
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or operating margins. The primary financial activity reported is a capital restructuring transaction:
- Warrant Exchange: A holder exchanged a warrant for 6,618,500 shares of common stock for 5,480.65 shares of newly authorized Series E Convertible Preferred Stock.
- Preferred Stock Terms: Each Preferred Share has a stated value of $6,000 and an initial conversion price of $6.00 per share.
- Conversion Rights: The Preferred Shares are convertible into an aggregate of 5,480,649 shares of Common Stock.
- Liquidity and Debt: The filing does not disclose current debt levels, liquidity positions, or cash flow data.
Material Changes Versus Prior Period
The most significant material change reported is the resignation of the company's independent auditor:
- Auditor Resignation: BDO USA, LLP resigned as the independent registered public accounting firm effective November 27, 2017. BDO served as auditor from January 5, 2017, through the date of resignation.
- Going Concern Warning: BDO's report for the fiscal year ended December 31, 2016, included a paragraph stating there was substantial doubt about the Company's ability to continue as a going concern.
- New Auditor Appointment: RBSM, LLP was appointed as the new independent registered public accounting firm on November 30, 2017, for the fiscal year ending December 31, 2017.
- Capital Structure Change: The company authorized and issued Series E Convertible Preferred Stock, which ranks senior to common stock regarding dividends and liquidation rights.
- Going Concern Risk: The prior auditor's report explicitly noted substantial doubt regarding the company's ability to continue as a going concern.
- Capital Restrictions: The issuance of Series E Preferred Stock imposes restrictions on the company's ability to issue additional senior or pari passu stock without the consent of Preferred Shareholders.
- Auditor Transition: The immediate resignation of the auditor without a recommendation from the audit committee represents a governance event requiring investor attention.
- Verify the reason for BDO USA, LLP's resignation and whether the "substantial doubt" regarding the going concern status has been resolved.
- Confirm the identity of the company, as the filing text identifies "Marathon Patent Group, Inc." while the request metadata references "MARA Holdings, Inc."
- Review the full Certificate of Designation (Exhibit 4.1) to understand the specific voting rights and liquidation preferences of the new Series E Preferred Stock.
- Check subsequent filings to determine if the company has secured new financing to address the going concern issues raised by the former auditor.
Guidance, Outlook, Risks, and Contingencies
The filing contains no forward-looking guidance, revenue outlook, or management commentary regarding future operational performance. However, it highlights specific risks and contingencies: