What changed in this filing

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Item 1A. Risk Factors

2021-03-16 compared with 2020-03-24 · 178 added, 751 removed, 674 unchanged (58% of the section changed)

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of our common stock could decline, and you may lose all or part of your investment.

Related to Marathon

may be classified as an inadvertent investment company .

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have a materially adverse impact to conduct our operations.

is no way to determine in advance the amount the Company may be required to pay the holders of certain warrants issued by the

Company, which are classified as liabilities.

warrants issued by the Company, which are classified as liabilities on the Company’s balance sheet, have a put feature allowing

the holder to put the warrants to the Company in return for cash payment in the event that there is a change of control.

of the cash payment to each holder is based on the value of the warrant, as determined by the Black-Scholes model and Monte Carlo

method, on the day the warrant is put to the Company.

As the inputs to the Monte Carlo method include the volatility of the Company’s

stock and the underlying price of the Company’s stock on the day the warrant(s) are put to the Company, there is no way

to determine in advance the amount the Company may be required to pay the holders, but it may be material.

to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely

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and financial results would be materially harmed.

has an evolving business model.

digital assets and blockchain technologies become more widely available, we expect the services and products associated with them

Very recently, the Securities and Exchange Commission (the “Commission”

or the “SEC”) issued

a Report that promoters that use initial coin offerings or token sales to raise capital may be engaged in the offer and sale of

securities in violation of the Securities Act and the Exchange Act of 1934 (the “Exchange Act”).

This may cause us

to potentially change our future business in order to comply fully with the federal securities laws as well as applicable state

securities laws.

As a result, to stay current with the industry, our business model may need to evolve as well.

From time to time

we may modify aspects of our business model.

We cannot offer any assurance that these or any other modifications will be successful

or will not result in harm to the business.

We may not be able to manage growth effectively, which could damage our reputation,

limit our growth and negatively affect our operating results.

Assets such as bitcoin and ether are likely to be regulated as securities or investment securities.

Assets such as bitcoin are likely to be regulated as securities or investment securities.

is the oldest and most well-known form of digital asset.

Bitcoin, ether, and other forms of digital assets/cryptocurrencies have

been the source of much regulatory consternation, resulting in differing definitional outcomes without a single unifying statement.

Bitcoin and other forms of digital assets/cryptocurrencies have been

the source of much regulatory consternation, resulting in differing definitional outcomes without a single unifying statement.

When the interests of investor protection are paramount, for example in the offer or sale of Initial Coin Offering (“ICO”)

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have a material adverse effect on our business and operations.

and other digital assets are viewed differently by different regulatory and standards setting organizations.

For example, the

Financial Action Task Force (“FATF”) and the Internal Revenue Service (“IRS”) consider a cryptocurrency

as currency or an asset or property.

is described as a virtual currency by the Financial Action Task Force, as follows:

digital representation of value that can be digitally traded and functions as:

(1) a medium of exchange;

and/or (2) a unit of

and/or (3) a store of value, but does not have legal tender status (i.e., when tendered to a creditor, is a valid and

legal offer of payment) in any jurisdiction.

It is not issued or guaranteed by any jurisdiction, and it fulfils the above functions

only by agreement within the community of users of the virtual currency.

Virtual currency is distinguished from fiat currency

“real currency,”

“real money,”

or “national currency”), which is the coin and paper

money of a country that is designated as its legal tender;

and is customarily used and accepted as a medium of exchange

in the issuing country.

It is distinct from e-money, which is a digital representation of fiat currency used to electronically

transfer value denominated in fiat currency.

the IRS views bitcoin as property and applies general tax principles that apply to property transactions to transactions involving

virtual currency, as follows:

The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on virtual currency,

such as bitcoin.

These FAQs provide basic information on the U.S.

federal tax implications of transactions in, or transactions

that use, virtual currency.

some environments, virtual currency operates like “real”

currency —

i.e., the coin and paper money of the United

States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium

of exchange in the country of issuance —

but it does not have legal tender status in any jurisdiction.

notice provides that virtual currency is treated as property for U.S.

federal tax purposes.

General tax principles that apply

to property transactions apply to transactions using virtual currency.

Among other things, this means that:

paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject

to federal income tax withholding and payroll taxes.

using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally

Normally, payers must issue Form 1099.

character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset

in the hands of the taxpayer.

payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

FATF Report, Virtual Currencies, Key Definitions and Potential AML/CFT Risks, FINANCIAL ACTION TASK FORCE (June 2014), http://www.fatf-gafi.org/media/fatf/documents/reports/Virtual-currency-key-definitions-and-potentialaml-cft-risks.pdf.

The Financial Action Task Force (“FATF”) is an independent inter-governmental body that develops and promotes policies

to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons

of mass destruction.

The FATF Recommendations are recognized as the global anti-money laundering (“AML”) and counter-terrorist

financing (“CFT”) standard.

IR-2014-36 (Marth 25, 2014).

https://www.irs.gov/newsroom/irs-virtual-currency-guidance

June 2016, the AICPA commented on IRS Notice 2014-21 urging the IRS to provide additional guidance about existing tax principles

whether virtual currency is property, currency or commodity.

in the several applications to establish an Exchange Traded Fund (“ETF”) of cryptocurrency, and in the questions raised

by the Staff under the 1940 Act, no clear principles emerge from the regulators as to how they view these issues and how to regulate

cryptocurrency under the applicable securities acts.

It has been widely reported that the SEC has recently issued letters and

requested various ETF applications be withdrawn because of concerns over liquidity and valuation and unanswered questions about

absence of reporting and compliance procedures capable of being implemented under the current state of the markets for exchange

traded funds.

there is no one unifying principle governing the regulatory status of cryptocurrency nor whether cryptocurrency is a security

in each context in which it is viewed.

Cryptocurrency may be a security and its offer or sale may require compliance with Section

5 of the Securities Act, in certain instances.

However, since the Company does not intend to be engaged in the offer or sale of

securities in the form of ICO offerings its internal mining activities that are not related to ICO offerings do not require registration

under the Securities Act.

We may face similar issues with various state securities regulators who may interpret our actions as

requiring registration under state securities laws, banking laws, or money transmitter and similar laws, which are also an unsettled

area or regulation that exposes us to risks.

there has been limited precedence set for financial accounting or taxation of digital assets other than digital securities, it

is unclear how we will be required to account for digital asset transactions and the taxation of our businesses.

is currently no authoritative literature under accounting principles generally accepted in the United States which specifically

addresses the accounting for digital assets, including digital currencies.

Therefore, by analogy, we intend to record digital

assets similar to financial instruments under ASC 825, Financial Instruments, because the economic nature of these digital assets

is most closely related to a financial instrument such as an investment in a foreign currency.

believe that Marathon will recognize revenue when it is realized or realizable and earned.

Our material revenue stream is expected

to be related to the mining of digital currencies.

Marathon will derive revenue by providing transaction verification services

within the digital currency networks of crypto-currencies, such as bitcoin and ethereum commonly termed “crypto-currency

mining.”

In consideration for these services, Marathon expects to receive digital currency (also known as “Coins”).

Coins are generally recorded as revenue, using the average spot price on the date of receipt.

The coins are recorded on the balance

sheet at their fair value Gains or losses on sale of Coins are recorded in the statement of operations.

Expenses associated with

running the crypto-currency mining business, such as equipment deprecation, rent and electricity cost are recorded as cost of

2014, the IRS issued guidance in Notice 2014-21 that classified cryptocurrency as property, not currency, for federal income tax

But according to the requirements of FATCA, which requires foreign financial institutions to provide the IRS with information

about accounts held by U.S.

taxpayers or foreign entities controlled by U.S.

taxpayers, cryptocurrency exchanges, in the ordinary

course of doing business, are considered financial institutions.

November 30, 2016, a federal judge in the Northern District of California granted an IRS application to serve a “John Doe”

summons on Coinbase Inc., which operates a cryptocurrency wallet and exchange business.

The summons asked Coinbase to identify

customers who transferred convertible cryptocurrency from 2013 to 2015.

The IRS is trying to get cryptocurrency owners

to report the value of their wallets to the federal government and the IRS is treating cryptocurrency as both property and currency.

American Institute of Certified Public Accountants recommended in a June 2016 letter to the IRS that cryptocurrency accounts be

reported in the summary information section of Form 8938, Statement of Specified Foreign Financial Assets, which breaks with the

IRS’s 2014 guidance that cryptocurrency be treated as property.

is divided into certain sections within the Internal Revenue Code (“IRC”) that determine everything from how the property

is treated at sale, to how the property is depreciated, to the nature and character of the gain on sale of the asset.

For instance,

IRC §1231 property (real or depreciable business property held for more than one year) is treated as capital in nature when

sold for a profit, but it is treated as ordinary when the property is sold for a loss.

IRC §1245 property, on the other hand,

is treated as ordinary in nature.

IRC §1245 property encompasses most types of property.

IRC §1250 property covers everything

IRC §1250 states that a gain from selling real property that has been depreciated should be taxed as ordinary income,

to the extent that the accumulated depreciation exceeds the depreciation calculated using the straight-line method, which is the

most basic depreciation method used on an income statement.

IRC §1250 bases the amount of tax due on the type of property,

such as residential or nonresidential property, and on how many months the property was owned.

guidance is silent on which section of the tax code cryptocurrency falls into.

For instance, IRC §1031 allows for the like-kind

exchange of certain property.

IRC §1031 exchanges typically are done with real estate or business assets.

However, with the

classification of cryptocurrency as property by the IRS, many tax professionals will argue that cryptocurrency can be exchanged

using IRC §1031.

https://www.aicpa.org/advocacy/cpaadvocate/2016/virtual-currency-guidance-needed.html

https://seekingalpha.com/article/4137093-sec-saying-no-bitcoin-etfs-one-may-still-get-approved

believe that all of our digital asset mining activities will be accounted for on the same basis regardless of the form of digital

A change in regulatory or financial accounting standards or interpretation by the IRS or accounting standards or the SEC

could result in changes in our accounting treatment, taxation and the necessity to restate our financial statements.

Such a restatement

could negatively impact our business, prospects, financial condition and results of operation.

further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing

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of digital asset systems may adversely affect an investment in us.

assets such as bitcoins and ether, that may be used, among other things, to buy and sell goods and services are a new and rapidly

evolving industry of which the digital asset networks are prominent, but not unique, parts.

The growth of the digital asset industry

in general, and the digital asset networks of bitcoin and ether in particular, are subject to a high degree of uncertainty.

factors affecting the further development of the digital asset industry, as well as the digital asset networks, include:

assets such as bitcoins, that may be used, among other things, to buy and sell goods and services are a new and rapidly evolving

industry of which the digital asset networks are prominent, but not unique, parts.

The growth of the digital asset industry in

general, and the digital asset networks of bitcoin in particular, are subject to a high degree of uncertainty.

The factors affecting

the further development of the digital asset industry, as well as the digital asset networks, include:

worldwide growth in the adoption and use of bitcoins and other digital assets;

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to and operation of the digital asset network or similar digital assets systems;

maintenance and development of the open-source software protocol of the bitcoin network and ether network;

maintenance and development of the open-source software protocol of the bitcoin network;

in consumer demographics and public tastes and preferences;

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impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight.

decline in the popularity or acceptance of the digital asset networks of bitcoin or ether, or similar digital asset systems, could

decline in the popularity or acceptance of the digital asset networks of bitcoin, or similar digital asset systems, could

adversely affect an investment in us.

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SEC has not stated whether bitcoin and cryptocurrency is an investment security, as defined in the 1940 Act.

there is relatively small use of digital assets in the retail and commercial marketplace in comparison to relatively large use

by speculators, thus contributing to price volatility that could adversely affect an investment in us.

relatively new products and technologies, digital assets and the blockchain networks on which they exist have only recently become

widely accepted as a means of payment for goods and services by many major retail and commercial outlets and use of digital assets

by consumers to pay such retail and commercial outlets remains limited.

Conversely, a significant portion of demand for digital

assets is generated by speculators and investors seeking to profit from the short- or long-term holding of such digital assets.

A lack of expansion of digital assets into retail and commercial markets, or a contraction of such use, may result in increased

volatility or a reduction in the price of all or any digital asset, either of which could adversely impact an investment in us.

or any pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere may adversely affect our business.

COVID-19 virus has had unpredictable and unprecedented impacts in the United States and around the world.

The World Health Organization

has declared the outbreak of COVID-19 as a “pandemic,”

or a worldwide spread of a new disease.

Many countries around

the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus.

In the United

States, federal, state and local governments have enacted restrictions on travel, gatherings, and workplaces, with exceptions

made for essential workers and businesses.

As of the date of this prospectus, we have not been declared an essential business.

As a result, we may be required to substantially reduce or cease operations in response to governmental action or decree as a

result of COVID-19.

We are still assessing the effect on our business from COVID-19 and any actions implemented by the federal,

state and local governments.

We have implemented safety protocols to protect our staff, but we cannot offer any assurance that

COVID-19 or any other pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere, will not materially

and adversely affect our business.

contributors to all or any digital asset network could propose amendments to the respective network’s protocols and software

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may adversely affect an investment in us.

in a digital asset network may occur in the future which may affect the value of digital assets held by us.

example, on August 1, 2017 bitcoin’s blockchain was forked and Bitcoin Cash was created.

The fork resulted in a new blockchain

being created with a shared history, and a new path forward.

Bitcoin Cash has a block size of 8mb and other technical changes.

On October 24, 2017, bitcoin’s blockchain was forked and Bitcoin Gold was created.

The fork resulted in a new blockchain

being created with a shared history, and new path forward, Bitcoin Gold has a different proof of work algorithm and other technical

The value of the newly created Bitcoin Cash and Bitcoin Gold may or may not have value in the long run and may affect

the price of bitcoin if interest is shifted away from bitcoin to the newly created digital assets.

The value of bitcoin after

the creation of a fork is subject to many factors including the value of the fork product, market reaction to the creation of

the fork product, and the occurrence of forks in the future.

As such, the value of bitcoin could be materially reduced if existing

and future forks have a negative effect on bitcoin’s value.

If a fork occurs on a digital asset network which we are mining

or hold digital assets in it may have a negative effect on the value of the digital asset and may adversely affect an investment

open-source structure of the bitcoin network protocol means that the contributors to the protocol are generally not directly compensated

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a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including

the bitcoin network or ether network, it is possible that such actor or botnet could manipulate the blockchain in a manner that

adversely affects an investment in us.

the bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects

an investment in us.

a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions

of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network, including the bitcoin

network or ether network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such

blocks faster than the remainder of the miners on the blockchain can add valid blocks.

In such alternate blocks, the malicious

actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets

or transactions using such control.

network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster

than the remainder of the miners on the blockchain can add valid blocks.

In such alternate blocks, the malicious actor or botnet

could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions

using such control.

Using alternate blocks, the malicious actor could “double-spend”

its own digital

assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’

for so long as it maintains control.

To the extent that such malicious actor or botnet does not yield its majority control of

the processing power or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes

made to the blockchain may not be possible.

its own digital assets (i.e.,

spend the same digital assets in more than one transaction) and prevent the confirmation of other users’

transactions for

so long as it maintains control.

To the extent that such malicious actor or botnet does not yield its majority control of the

processing power or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made

to the blockchain may not be possible.

Such changes could adversely affect an investment in us.

example, in late May and early June 2014, a mining pool known as GHash.io approached and, during a 24- to 48-hour period in early

June may have exceeded, the threshold of 50% of the processing power on the bitcoin network.

To the extent that GHash.io did exceed

50% of the processing power on the network, reports indicate that such threshold was surpassed for only a short period, and there

are no reports of any malicious activity or control of the blockchain performed by GHash.io.

Furthermore, the processing power

in the mining pool appears to have been redirected to other pools on a voluntary basis by participants in the GHash.io pool, as

had been done in prior instances when a mining pool exceeded 40% of the processing power on the bitcoin network.

approach towards and possible crossing of the 50% threshold indicate a greater risk that a single mining pool could exert authority

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network protocol.

believes that from time to time there will be further considerations and adjustments to the bitcoin network, and others, including

the ether network, regarding the difficulty for block solutions.

More significant reductions in aggregate hashrate on digital

asset networks could result in material, though temporary, delays in block solution confirmation time.

Any reduction in confidence

in the confirmation process or aggregate hashrate of any digital asset network may negatively impact the value of digital assets,

which will adversely impact an investment in us.

believes that from time to time there will be further considerations and adjustments to the bitcoin network, and others regarding

the difficulty for block solutions.

More significant reductions in aggregate hashrate on digital asset networks could result in

material, though temporary, delays in block solution confirmation time.

Any reduction in confidence in the confirmation process

or aggregate hashrate of any digital asset network may negatively impact the value of digital assets, which will adversely impact

an investment in us.

the extent that the profit margins of digital asset mining operations are not high, operators of digital asset mining operations

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exchanges handling a significant portion of the volume of digital asset trading.

example, over the past 4 years, a number of bitcoin exchanges have been closed due to fraud, failure or security breaches.

many of these instances, the customers of such bitcoin exchanges were not compensated or made whole for the partial or complete

losses of their account balances in such bitcoin exchanges.

While smaller bitcoin exchanges are less likely to have the infrastructure

and capitalization that make larger bitcoin exchanges more stable, larger bitcoin exchanges are more likely to be appealing targets

for hackers and “malware”

(i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive

information or gain access to private computer systems).

Further, the collapse of the largest bitcoin exchange in 2014 suggests

that the failure of one component of the overall bitcoin ecosystem can have consequences for both users of a bitcoin exchange

and the bitcoin industry as a whole.

recently, the Wall Street Journal has reported that China will shut down bitcoin exchanges and other virtual currency trading

The article reported that China has accounted for the bulk of global bitcoin trading.

lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to

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sales of digital assets would result in a reduction in their value and could adversely affect an investment in us.

for ether and bitcoin is driven, in part, by their status as the two most prominent and secure digital assets.

It is possible

that digital assets other than ether and bitcoin could have features that make them more desirable to a material portion of the

digital asset user base, resulting in a reduction in demand for ether and bitcoin, which could have a negative impact on the price

of ether and bitcoin and adversely affect an investment in us.

and ether, as assets, hold “first-to-market”

advantages over other digital assets.

This first-to-market advantage

is driven in large part by having the largest user bases and, more importantly, the largest combined mining power in use to secure

their respective blockchains and transaction verification systems.

Having a large mining network results in greater user confidence

regarding the security and long-term stability of a digital asset’s network and its blockchain;

as a result, the advantage

of more users and miners makes a digital asset more secure, which makes it more attractive to new users and miners, resulting

in a network effect that strengthens the first-to-market advantage.

of March 23, 2020, there were over 5,000 alternate digital assets tracked by CoinMarketCap, having a total market capitalization

(including the market capitalization of ether and bitcoin) of approximately $176.0 billion, using market prices and total

available supply of each digital asset.

This included digital assets using a “proof of work”

mining structure similar

to bitcoin, and those using a “proof of stake”

transaction verification system that is different than bitcoin’s

mining system (e.g., Peercoin, Bitshares and NXT).

As of March 23, 2020, bitcoin’s $115.2 billion market capitalization

was almost eight (8) times the size of the $14.9 billion market cap of ether, the second largest proof-of-work digital

Despite the marked first-mover advantage of the bitcoin network over other digital asset networks, it is possible that

another digital asset could become materially popular due to either a perceived or exposed shortcoming of the bitcoin network

protocol that is not immediately addressed by the bitcoin contributor community or a perceived advantage of an altcoin that includes

features not incorporated into bitcoin.

If a digital asset obtains significant market share (either in market capitalization,

mining power or use as a payment technology), this could reduce bitcoin’s market share as well as other digital assets we

may become involved in and have a negative impact on the demand for, and price of, such digital assets and could adversely affect

an investment in us.

ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of our digital

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to safeguard our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack.

digital assets will also be moved to various exchanges in order to exchange them for fiat currency during which time we’ll

be relying on the security of such exchanges to safeguard our digital assets.

digital assets will also be moved to various exchanges in order to exchange them for fiat currency during which time we will be

relying on the security of such exchanges to safeguard our digital assets.

We believe that it may become a more appealing target

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such as hackers and malware.

primarily rely on Bitgo Inc.’s 5 multi-signature enterprise storage solution to safeguard its digital assets from

theft, loss, destruction or other issues relating to hackers and technological attack.

Nevertheless, Bitgo Inc.’s security

system may not be impenetrable and may not be free from defect or immune to acts of God, and any loss due to a security breach,

software defect or act of God will be borne by the Company.

The Company’s digital assets will also be stored with exchanges

such as Bitgo, Kraken, Bitfinex, Itbit and Coinbase and others prior to selling them.

primarily rely on Bitgo Inc.’s ( https://www.bitgo.com/) multi-signature enterprise storage solution to safeguard

its digital assets from theft, loss, destruction or other issues relating to hackers and technological attack.

Nevertheless, Bitgo

Inc.’s security system may not be impenetrable and may not be free from defect or immune to acts of God, and any loss due

to a security breach, software defect or act of God will be borne by the Company.

The Company’s digital assets will also

be stored with exchanges such as Bitgo, Kraken, Bitfinex, Itbit and Coinbase and others prior to selling them.

security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of

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be harmed, which could adversely affect an investment in us.

present, Marathon has not experienced hacking and we use a Bitcoin Address and other cryptocurrency wallets, and may consider

using services, such as Xapo, Inc., or Bitgo Inc., which services claim to offer a free, ultra-secure vault for storing bitcoin,

but we have not made any decision to do so.

As disclosed herein, the Company currently use Bitgo Inc.

as its wallet provider.

the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each

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To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect an investment in us.

Company’s digital assets may be subject to loss, damage, theft or restriction on access.

is a risk that part or all of the Company’s digital assets could be lost, stolen or destroyed.

We believe that our digital

assets will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal our digital assets.

Although we primarily utilize Bitgo, Inc.’s enterprise multi-signature storage solution, to minimize the risk of loss, damage

and theft, we cannot guarantee that it will prevent such loss, damage or theft, whether caused intentionally, accidentally or

by act of God.

Access to our digital assets could also be restricted by natural events (such as an earthquake or flood) or human

actions (such as a terrorist attack).

Any of these events may adversely affect the Company’s operations and, consequently,

an investment in us.

https://www.bitgo.com/

limited rights of legal recourse against us, and our lack of insurance protection expose us and our shareholders to the risk of

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any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim of ours.

https://www.bitgo.com/

sale of our digital assets to pay expenses at a time of low digital asset prices could adversely affect an investment in us.

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have begun to examine the operations of the bitcoin network, bitcoin users and the bitcoin exchange market.

July 25, 2017, the Commission issued its Report of Investigation, or “Report,”

which concluded that digital assets

or tokens issued for the purpose of raising funds may be securities within the meaning of the federal securities laws.

focused on the activities of a virtual organization which offered tokens in exchange for ether, which is a prominent digital asset.

The Report emphasized that whether a digital asset is a security is based on the facts and circumstances.

Although our activities

are not focused on raising capital or assisting others that do so, the federal securities laws are very broad, and there can be

no assurances that the Commission will not take enforcement action against us in the future including for the sale of unregistered

securities in violation of the Securities Act or acting as an unregistered investment company in violation of the Investment Company

The Commission has taken various actions against persons or entities misusing bitcoin in connection with fraudulent schemes

(i.e., Ponzi scheme), inaccurate and inadequate publicly disseminated information, and the offering of unregistered securities.

More recently, the Commission suspended trading in three digital asset public companies.

The CFTC has determined that bitcoin

and other virtual currencies are commodities and the sale of derivatives based on digital currencies must be done in accordance

with the provisions of the CEA and CFTC regulations.

Also, of significance, is that the CFTC appears to have taken the position

that bitcoin is not encompassed by the definition of currency under the CEA and CFTC regulations.

The CFTC defined bitcoin and

other “virtual currencies”

as “a digital representation of value”

that functions as a medium of exchange,

a unit of account, and/or a store of value, but does not have legal tender status in any jurisdiction.

Bitcoin and other virtual

currencies are distinct from ‘real’

currencies, which are the coin and paper money of the United States or another

country that are designated as legal tender, circulate, and are customarily used and accepted as a medium of exchange in the country

of issuance.”

To the extent that bitcoin itself is determined to be a security, commodity future or other regulated asset,

or to the extent that a U.S.

or foreign government or quasi-governmental agency exerts regulatory authority over the bitcoin or

bitcoin trading and ownership, trading or ownership in bitcoin or an investment in us may be adversely affected.

CFTC affirmed its approach to the regulation of bitcoin and bitcoin-related enterprises on June 2, 2016, when the CFTC settled

charges against Bitfinex, a bitcoin exchange based in Hong Kong.

In its Order, the CFTC found that Bitfinex engaged in “illegal,

off-exchange commodity transactions and failed to register as a futures commission merchant”

when it facilitated borrowing

transactions among its users to permit the trading of bitcoin on a “leveraged, margined or financed basis”

first registering with the CFTC.

In 2017, the CFTC stated that it would consider bitcoin and other virtual currencies as commodities

or derivatives depending on the facts of the offering.

In December 2017, bitcoin futures trading commenced on two CFTC regulated

futures markets.

state regulators such as the New York State Department of Financial Services, or NYSDFS, have also initiated examinations of bitcoin,

the bitcoin network and the regulation thereof.

In July 2014, the NYSDFS proposed the first U.S.

regulatory framework for licensing

participants in “virtual currency business activity.”

The proposed regulations, known as the “BitLicense,”

are intended to focus on consumer protection and, after the closure of an initial comment period that yielded 3,746 formal public

comments and a re-proposal, the NYSDFS issued its final “BitLicense”

regulatory framework in June 2015.

The “BitLicense”

regulates the conduct of businesses that are involved in “virtual currencies”

in New York or with New York customers

and prohibits any person or entity involved in such activity to conduct activities without a license.

Additionally,

federal magistrate judge in the U.S.

District Court for the Eastern District of Texas has ruled that “Bitcoin is

a currency or form of money,”

a Florida circuit court judge determined that bitcoin did not qualify as money or “tangible

wealth,”

and an opinion from the U.S.

District Court for the Northern District of Illinois identified bitcoin as “virtual

currency.”

Additionally, two CFTC commissioners publicly expressed a belief that derivatives based on bitcoin are subject

to the same regulation as those based on commodities, and the IRS released guidance treating bitcoin as property that is not currency

federal income tax purposes.

Taxing authorities of a number of U.S.

states have also issued their own guidance regarding

the tax treatment of bitcoin for state income or sales tax purposes.

On June 28, 2014, the Governor of the State of California

signed into law a bill that removed state-level prohibitions on the use of alternative forms of currency or value (including bitcoin).

The bill indirectly authorizes bitcoin’s use as an alternative form of money in the state.

In February 2015, a bill was

introduced in the California State Assembly to establish a licensing regime for businesses engaging in “virtual currencies.”

In September 2015, the bill was ordered to become an inactive file and as of the date of this registration statement there hasn’t

been further consideration by the California State Assembly.

As of August 2016, the bill was withdrawn from consideration for

vote for the remainder of the year.

There is a possibility of future regulatory change altering, perhaps to a material extent,

the nature of an investment in us or the ability of us to continue our operations.

assets currently face an uncertain regulatory landscape in not only the United States but also in many foreign jurisdictions such

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and bitcoin users.

those for which preliminary guidance has been issued in some form, Canada and Taiwan have labeled bitcoin as a digital or virtual

currency, distinct from fiat currency, while Sweden and Norway are among those to categorize bitcoin as a form of virtual asset

or commodity.

In Australia, a GST (similar to the European value added tax (“VAT”)) is currently applied to bitcoin,

forcing a ten (10%) percent markup on top of market price, essentially preventing the operation of any bitcoin exchange.

may be undergoing a change, however, since the Senate Economics References Committee and the Productivity Commission recommended

that digital currency be treated as money for GST purposes to remove the double taxation.

The United Kingdom determined that the

VAT will not apply to bitcoin sales.

In China, a recent government notice classified bitcoin as legal and “virtual commodities;”

however, the same notice restricted the banking and payment industries from using bitcoin, creating uncertainty and limiting the

ability of bitcoin exchanges to operate in the then-second largest bitcoin market.

In January 2016, the People’s Bank of

China, China’s central bank, disclosed that it has been studying a state-backed electronic monetary system and potentially

had plans for its own state-backed electronic money.

In January 2017, the People’s Bank of China announced that it had found

several violations, including margin financing and a failure to impose anti-money laundering controls, after on-site inspections

of two China-based bitcoin exchanges.

In response to the Chinese regulator’s oversight, the three largest China-based bitcoin

exchanges, OKCoin, Huobi, and BTC China, started charging trading commission fees to suppress speculative trading and prevent

price swings which resulted in a significant drop in volume on these exchanges.

Since December 2013, China, Iceland, Vietnam and

Russia have taken a more restrictive stance toward bitcoin and, thereby, have reduced the rate of expansion of bitcoin use in

each country.

In May 2014, the Central Bank of Bolivia banned the use of bitcoin as a means of payment.

In the summer and fall

of 2014, Ecuador announced plans for its own state-backed electronic money, while passing legislation that prohibits the use of

decentralized digital assets such as bitcoin.

In July 2016, economists at the Bank of England advocated that central banks issue

their own digital currency, and the House of Lords and Bank of England started discussing the feasibility of creating a national

virtual currency, the BritCoin.

As of July 2016, Iceland was studying how to create a system in which all money is created by

a central bank, and Canada was beginning to experiment with a digital version of its currency called CAD-COIN, intended to be

used exclusively for interbank payments.

On August 24, 2017, Canada issued guidance stating the sale of cryptocurrency may constitute

an investment contract in accordance with Canadian law for determining if an investment constitutes a security.

In July 2016,

the Russian Ministry of Finance indicated it supports a proposed law that bans bitcoin domestically but allows for its use as

a foreign currency.

Russia recently issued several releases indicating they may begin regulating bitcoin and licensing miners

and entities engaging in initial coin offerings.

Conversely, regulatory bodies in some countries such as India and Switzerland

have declined to exercise regulatory authority when afforded the opportunity.

In April 2015, the Japanese Cabinet approved proposed

legal changes that would reportedly treat bitcoin and other digital assets as included in the definition of currency.

These regulations

would, among other things, require market participants, including exchanges, to meet certain compliance requirements and be subject

to oversight by the Financial Services Agency, a Japanese regulator.

In September 2017 Japan began regulating bitcoin exchanges

and registered several such exchanges to operate within Japan.

In July 2016, the European Commission released a draft directive

that proposed applying counter-terrorism and anti-money laundering regulations to virtual currencies, and, in September 2016,

the European Banking authority advised the European Commission to institute new regulation specific to virtual currencies, with

amendments to existing regulation as a stopgap measure.

Various foreign jurisdictions may, in the near future, adopt laws, regulations

or directives that affect the bitcoin network and its users, particularly bitcoin exchanges and service providers that fall within

such jurisdictions’

regulatory scope.

Such laws, regulations or directives may conflict with those of the United States

and may negatively impact the acceptance of bitcoin by users, merchants and service providers outside of the United States and

may therefore impede the growth of the bitcoin economy.

On September 4, 2017, reports were published that China may begin prohibiting

the practice of using cryptocurrency for capital fundraising.

Additional reports have surfaced that China is considering regulating

bitcoin exchanges by enacting a licensing regime wherein bitcoin exchanges may legally operate.

In September 2017, the Financial

Services Commission of South Korea released a statement that initial coin offerings would be prohibited as a fundraising tool.

In January 2018, the South Korean Justice Minister issued remarks about banning bitcoin and other digital assets, although the

South Korean President’s office clarified that no final decision has been made.

In June 2017, India’s government ruled

in favor of regulating bitcoin and India’s ministry of Finance is currently developing rules for such regulation.

has previously introduced legislation to regulate bitcoin exchanges and increase anti-money laundering policies.

effect of any future regulatory change on us, bitcoins, or other digital assets is impossible to predict, but such change could

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to obtain a license for multi-signature software, smart contract platforms, smart property, colored coins and non-hosted, non-custodial

Starting January 1, 2016, New Hampshire requires anyone exchanges a digital currency for another currency must become

a licensed and bonded money transmitter.

In numerous other states, including Connecticut and New Jersey, legislation is being

proposed or has been introduced regarding the treatment of bitcoin and other digital assets.

Marathon will continue to monitor

for developments in such legislation, guidance or regulations.

Starting January 1, 2016, New Hampshire requires anyone who exchanges a digital currency for another currency

must become a licensed and bonded money transmitter.

In numerous other states, including Connecticut and New Jersey, legislation

is being proposed or has been introduced regarding the treatment of bitcoin and other digital assets.

Marathon will continue to

monitor for developments in such legislation, guidance or regulations.

additional federal or state regulatory obligations may cause Marathon to incur extraordinary expenses, possibly affecting an investment

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such action may adversely affect an investment in us.

the extent that digital assets including ether, bitcoins and other digital assets we may own are deemed by the Commission to fall

within the definition of a security, we may be required to register and comply with additional regulation under the 1940 Act,

including additional periodic reporting and disclosure standards and requirements and the registration of our Company as an investment

Additionally, one or more states may conclude ether, bitcoins and other digital assets we may own are a security under

state securities laws which would require registration under state laws including merit review laws which would adversely impact

us since we would likely not comply.

As stated earlier in this prospectus, some states including California define the term “investment

contract”

the extent that digital assets including bitcoins and other digital assets we may own are deemed by the Commission to fall within

the definition of a security, we may be required to register and comply with additional regulation under the 1940 Act, including

additional periodic reporting and disclosure standards and requirements and the registration of our Company as an investment company.

Additionally, one or more states may conclude bitcoins and other digital assets we may own are a security under state securities

laws which would require registration under state laws including merit review laws which would adversely impact us since we would

likely not comply.

As stated earlier in this prospectus, some states including California define the term “investment contract”

more strictly than the Commission.

Such additional registrations may result in extraordinary, non-recurring expenses

of our Company, thereby materially and adversely impacting an investment in our Company.

If we determine not to comply with such

additional regulatory and registration requirements, we may seek to cease all or certain parts of our operations.

Any such action

would likely adversely affect an investment in us and investors may suffer a complete loss of their investment.

Such additional registrations may result in extraordinary, non-recurring expenses of our Company,

thereby materially and adversely impacting an investment in our Company.

If we determine not to comply with such additional regulatory

and registration requirements, we may seek to cease all or certain parts of our operations.

Any such action would likely adversely

affect an investment in us and investors may suffer a complete loss of their investment.

federal or state legislatures or agencies initiate or release tax determinations that change the classification of bitcoins as

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tax consequence on our Company or our shareholders.

IRS guidance indicates that digital assets such as ether and bitcoin should be treated and taxed as property, and that transactions

involving the payment of ether or bitcoin for goods and services should be treated as barter transactions.

While this treatment

creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to

another, usually by means of bitcoin transactions (including off-blockchain transactions), it preserves the right to apply capital

gains treatment to those transactions which may adversely affect an investment in our Company.

December 5, 2014, the New York State Department of Taxation and Finance issued guidance regarding the application of state tax

law to digital assets such as ether or bitcoins.

The agency determined that New York State would follow IRS guidance with respect

to the treatment of digital assets such as ether or bitcoin for state income tax purposes.

Furthermore, they defined digital assets

such as ether or bitcoin to be a form of “intangible property,”

meaning the purchase and sale of ether or bitcoins

for fiat currency is not subject to state income tax (although transactions of bitcoin for other goods and services maybe subject

to sales tax under barter transaction treatment).

It is unclear if other states will follow the guidance of the IRS and the New

York State Department of Taxation and Finance with respect to the treatment of digital assets such as ether or bitcoins for income

tax and sales tax purposes.

If a state adopts a different treatment, such treatment may have negative consequences including the

imposition of greater a greater tax burden on investors in bitcoin or imposing a greater cost on the acquisition and disposition

of ether or bitcoin, generally;

in either case potentially having a negative effect on prices in the digital asset exchange market

and may adversely affect an investment in our Company.

jurisdictions may also elect to treat digital assets such as ether or bitcoin differently for tax purposes than the IRS or the

New York State Department of Taxation and Finance.

To the extent that a foreign jurisdiction with a significant share of the market

of ether or bitcoin users imposes onerous tax burdens on ether or bitcoin users, or imposes sales or value added tax on purchases

and sales of ether or bitcoin for fiat currency, such actions could result in decreased demand for ether or bitcoins in such jurisdiction,

which could impact the price of ether, bitcoin or other digital assets and negatively impact an investment in our Company.

IRS guidance indicates that digital assets such as bitcoin should be treated and taxed as property, and that transactions involving

the payment of bitcoin for goods and services should be treated as barter transactions.

While this treatment creates a potential

tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by

means of bitcoin transactions (including off-blockchain transactions), it preserves the right to apply capital gains treatment

to those transactions which may adversely affect an investment in our Company.

loss or destruction of a private key required to access a digital asset may be irreversible.

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fiat currency.

Decreased use and demand for bitcoins or ether that we have accumulated may adversely affect their value and may

adversely impact an investment in us.

initiate legal proceedings against potentially infringing companies in the normal course of our business and we believe that extended

litigation proceedings would be time-consuming and costly, which may adversely affect our financial condition and our ability

to operate our business .

monetize our patent assets, we historically have initiated legal proceedings against potential infringing companies, pursuant

to which we may allege that such companies infringe on one or more of our patents.

Our viability could be highly dependent on

the cost and outcome of the litigation, and there is a risk that we may be unable to achieve the results we desire from such litigation,

which failure would substantially harm our business.

In addition, the defendants in the litigations are likely to be much larger

than us and have substantially more resources than we do, which could make our litigation efforts more difficult and impact the

duration of the litigation which would require us to devote our limited financial, managerial and other resources to support litigation

that may be disproportionate to the anticipated recovery.

legal proceedings may continue for several years and may require significant expenditures for legal fees, patent related costs,

such as inter-parties review, and other expenses.

Disputes regarding the assertion of patents and other intellectual property

rights are highly complex and technical.

Once initiated, we may be forced to litigate against others to enforce or defend our

patent rights or to determine the validity and scope of other party’s patent rights.

The defendants or other third parties

involved in the lawsuits in which we are involved may allege defenses and/or file counterclaims or commence re-examination proceedings

by patenting issuance authorities in an effort to avoid or limit liability and damages for patent infringement or declare our

patents to be invalid or non-infringed.

If such defenses or counterclaims are successful, they may preclude our ability to derive

revenue from the patents we own.

A negative outcome of any such litigation, or an outcome which affects one or more claims contained

within any such litigation or invalidating any patents, could materially and adversely impact our business.

Additionally, we anticipate

that our legal fees and other expenses will be material and will negatively impact our financial condition and results of operations

and may result in our inability to continue our business.

We have incurred significant legal expenses in our patent litigation

in the past that are liabilities of the Company and may be unable to settle or reduce these expenses, regardless of the outcome

of our patent litigation or the inability to license or recover damages from our patents.

These liabilities may lead to litigation

or claims with respect to the payment or collection of legal expenses.

Decreased use and demand for bitcoins that we have accumulated may adversely affect their value and may adversely

impact an investment in us.

in the price of bitcoin may significantly influence the market price of our class A common stock

the extent investors view the value of our class A common stock as linked to the value or change in the value of our bitcoin,

fluctuations in the price of bitcoin may significantly influence the market price of our class A common stock.

bitcoin holdings could subject us to regulatory scrutiny

noted above, several bitcoin investment vehicles have attempted to list their shares on a U.S.

national securities exchange to

permit them to function in the manner of an ETF with continuous share creation and redemption at NAV.

To date the SEC has declined

to approve any such listing, citing concerns over the surveillance of trading in markets for the underlying bitcoin as well as

concerns about fraud and manipulation in bitcoin trading markets.

Even though we do not function in the manner of an ETF and do

not offer continuous share creation and redemption at NAV, it is possible that we nevertheless could face regulatory scrutiny

from the SEC, as a company with securities traded on The Nasdaq Global Select Market.

addition, as digital assets, including bitcoin, have grown in popularity and market size, there has been increasing focus on the

extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities,

or entities subject to sanctions regimes.

While we have implemented and maintain policies and procedures reasonably designed to

promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our

bitcoin through entities subject to anti money laundering regulation and related compliance rules in the United States, if we

are found to have purchased any of our bitcoin from bad actors that have used bitcoin to launder money or persons subject to sanctions,

we may be subject to regulatory proceedings and further transactions or dealings in bitcoin may be restricted or prohibited.

to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, they may experience

fraud, security failures or operational problems, which may adversely affect the value of our bitcoin

trading venues are relatively new and, in some cases, unregulated.

Furthermore, there are many bitcoin trading venues which do

not provide the public with significant information regarding their ownership structure, management teams, corporate practices

and regulatory compliance.

As a result, the marketplace may lose confidence in bitcoin trading venues, including prominent exchanges

that handle a significant volume of bitcoin trading.

perception, a lack of stability in the broader bitcoin markets and the closure or temporary shutdown of bitcoin trading venues

due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in bitcoin and result

in greater volatility in the prices of bitcoin.

To the extent investors view our class A common stock as linked to the value of

our bitcoin holdings, these potential consequences of a bitcoin trading venue’s failure could have a material adverse effect

on the market value of our class A common stock.

price of bitcoin may be influenced by regulatory, commercial, and technical factors that are highly uncertain

and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their

For example, the application of securities laws and other regulations to such assets is unclear in certain respects, and

it is possible that regulators in the United States or foreign countries may create new regulations or interpret laws in a manner

that adversely affects the price of bitcoin.

The growth of the digital assets industry in general, and the use and acceptance

of bitcoin in particular, may also impact the price of bitcoin and is subject to a high degree of uncertainty.

The pace of worldwide

growth in the adoption and use of bitcoin may depend, for instance, on public familiarity with digital assets, ease of buying

and accessing bitcoin, institutional demand for bitcoin as an investment asset, consumer demand for bitcoin as a means of payment,

and the availability and popularity of alternatives to bitcoin.

Even if growth in bitcoin adoption occurs in the near or medium-term,

there is no assurance that bitcoin usage will continue to grow over the long-term.

Because bitcoin has no physical existence beyond

the record of transactions on the Bitcoin blockchain, a variety of technical factors related to the Bitcoin blockchain could also

impact the price of bitcoin.

For example, malicious attacks by “miners”

who validate bitcoin transactions, inadequate

mining fees to incentivize validating of bitcoin transactions, hard “forks”

of the Bitcoin blockchain into multiple

blockchains, and advances in quantum computing could undercut the integrity of the Bitcoin blockchain and negatively affect the

price of bitcoin.

The liquidity of bitcoin may also be reduced and damage to the public perception of bitcoin may occur, if financial

institutions were to deny banking services to businesses that hold bitcoin, provide bitcoin-related services or accept bitcoin

as payment, which could also decrease the price of bitcoin.

we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to

our bitcoin, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially

adversely affected

breaches and cyberattacks are of particular concern with respect to our bitcoin.

Bitcoin and other blockchain-based cryptocurrencies

have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

A successful security

breach or cyberattack could result in a partial or total loss of our bitcoin in a manner that may not be covered by insurance

or indemnity provisions of the custody agreement with a custodian who holds our bitcoin.

Such a loss could have a material adverse

effect on our financial condition and results of operations.

change reclassifying bitcoin as a security could lead to our classification as an “investment company”

under the Investment

Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our class A common stock.

senior SEC officials have stated their view that bitcoin is not a “security”

for purposes of the federal securities

laws, the SEC has so far refused to permit the listing of any bitcoin-based exchange traded funds, citing, among other things,

concerns regarding bitcoin market integrity and custodial protections.

It is possible that the SEC could take a contrary position

to the one taken by its senior officials or a federal court could conclude that bitcoin is a security.

Such a determination could

lead to our classification as an “investment company”

under the Investment Company Act of 1940, which would subject

us to significant additional regulatory controls that could have a material adverse effect on our business and operations and

also may require us to substantially change the manner in which we conduct our business.

addition, if bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory

restrictions imposed by those laws could adversely affect the market price of bitcoin and in turn adversely affect the market

price of our class A common stock.

in intellectual property laws may adversely affect our intellectual property position.

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Currently, we have limited personnel in our organization to meet our organizational and administrative demands.

acquisitions may present risks, and we may be unable to achieve the financial or other goals intended at the time of any potential

future growth may depend in part on our ability to acquire patented technologies, patent portfolios or companies holding such

patented technologies and patent portfolios if we determine to again actively pursue patent monetization activities in the future.

Such acquisitions are subject to numerous risks, including, but not limited to the following:

inability to enter into a definitive agreement with respect to any potential acquisition, or if we are able to enter into

such agreement, our inability to consummate the potential acquisition;

integrating the operations, technology and personnel of the acquired entity including achieving anticipated synergies;

inability to achieve the anticipated financial and other benefits of the specific acquisition;

in maintaining controls, procedures and policies during the transition and monetization process;

of our management’s attention from other business concerns;

of our due diligence process to identify significant issues, including issues with respect to patented technologies and patent

portfolios and other legal and financial contingencies.

we are unable to manage these risks effectively as part of any acquisition, our business could be adversely affected.

exposure to uncontrollable risks, including new legislation, court rulings or actions by the United States Patent and Trademark

Office, could adversely affect our activities including our revenues, expenses and results of operations .

patent acquisition and monetization business is subject to numerous risks including new legislation, regulations and rules.

new legislation, regulations or rules are implemented either by Congress, the United States Patent and Trademark Office (“USPTO”),

the executive branch, or the courts, that impact the patent application process, the patent enforcement process, the rights of

patent holders, or litigation practices, such changes could materially and negatively affect our revenue and expenses and, therefore,

our results of operations and the overall success of our Company.

On March 16, 2013, the Leahy-Smith America Invents Act or the

America Invents Act became effective.

The America Invents Act includes a number of significant changes to U.S.

general, the legislation attempts to address issues surrounding the enforceability of patents and the increase in patent litigation

by, among other things, establishing new procedures for patent litigation.

For example, the America Invents Act changes the way

that parties may be joined in patent infringement actions, increasing the likelihood that such actions will need to be brought

against individual allegedly-infringing parties by their respective individual actions or activities.

In addition, the America

Invents Act enacted a new inter-partes review, or IPR, process at the USPTO which can be used by defendants, and other individuals

and entities, to separately challenge the validity of any patent.

These legislative changes, at this time, have had an impact

on the costs and effectiveness of our patent monetization and enforcement business.

addition, the U.S.

Department of Justice (the “DOJ”), has conducted reviews of the patent system to evaluate the impact

of patent assertion entities on industries in which those patents relate.

It is possible that the findings and recommendations

of the DOJ could impact the ability to effectively monetize and enforce standards-essential patents and could increase the uncertainties

and costs surrounding the enforcement of any such patented technologies.

Also, the Federal Trade Commission (the “FTC”),

has published its intent to initiate a proposed study under Section 6(b) of the Federal Trade Commission Act to evaluate the patent

assertion practice and market impact of Patent Assertion Entities, or PAEs.

judicial rules regarding the burden of proof in patent enforcement actions could substantially increase the cost of our enforcement

actions and new standards or limitations on liability for patent infringement could negatively impact our revenue derived from

such enforcement actions.

we have received a going concern opinion for the year ended December 31, 2019 from our independent registered public accounting

firm, there can be no assurances about Marathon’s ability to continue as a going concern in the future.

report of our independent registered public accounting firm with respect to our financial statements included in this report includes

a “going concern”

explanatory paragraph.

As reflected in the consolidated financial statements, we had an accumulated

deficit of approximately $105.6 million at December 31, 2019, a net loss of approximately $3.5 million and $12.8 million, and

approximately $3.3 million and $8.2 million net cash used in operating activities for the years ended December 31, 2019 and 2018,

respectively.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

the future, conditions may exist that raise substantial doubt about our ability to continue as a going concern due to our recurring

losses from operations and substantial decline in our working capital.

A “going concern”

opinion could impair our

ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives.

If we are unable

to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets

are carried on our consolidated financial statements, and it is likely that investors will lose all or a part of their investment.

patent applications are filed each year resulting in longer delays in getting patents issued by the USPTO.

hold and continue to acquire pending patents in the application or review phase.

We believe there is a trend of increasing patent

applications each year, which we believe is resulting in longer delays in obtaining approval of pending patent applications.

application delays could cause delays in monetizing such patents which could cause us to miss opportunities to license patents

before other competing technologies are developed or introduced into the market.

reductions in the funding of the USPTO could have an adverse impact on the cost of processing pending patent applications and

the value of those pending patent applications.

ownership or acquisition of pending patent applications before the USPTO is subject to funding and other risks applicable to a

government agency.

The value of our patent portfolio is dependent, in part, on the issuance of patents in a timely manner, and

any reductions in the funding of the USPTO could negatively impact the value of our assets.

Further, reductions in funding from

Congress could result in higher patent application filing and maintenance fees charged by the USPTO, causing an unexpected increase

in our expenses.

acquisitions of patent assets may be time consuming, complex and costly, which could adversely affect our operating results .

of patent or other intellectual property assets, are often time consuming, complex and costly to consummate.

We may utilize many

different transaction structures in our acquisitions and the terms of such acquisition agreements tend to be heavily negotiated.

As a result, we expect to incur significant operating expenses and may be required to raise capital during the negotiations even

if the acquisition is ultimately not consummated.

Even if we are able to acquire particular patent assets, there is no guarantee

that we will generate sufficient revenue related to those patent assets to offset the acquisition costs.

While we will seek to

conduct sufficient due diligence on the patent assets we are considering for acquisition, we may acquire patent assets from a

seller who does not have proper title to those assets.

In those cases, we may be required to spend significant resources to defend

our ownership interest in the patent assets and, if we are not successful, our acquisition may be invalid, in which case we could

lose part or all of our investment in the assets.

may also identify patent or other patent assets that cost more than we are prepared to spend.

We may incur significant costs to

organize and negotiate a structured acquisition that does not ultimately result in an acquisition of any patent assets or, if

consummated, proves to be unprofitable for us.

These higher costs could adversely affect our operating results and, if we incur

losses, the value of our securities will decline.

addition, we may acquire patents and technologies that are in the early stages of adoption in the commercial, industrial and consumer

Demand for some of these technologies will likely be untested and may be subject to fluctuation based upon the rate at

which our companies may adopt our patented technologies in their products and services.

As a result, there can be no assurance

as to whether technologies we acquire or develop will have value that we can monetize.

certain acquisitions of patent assets, we may seek to defer payment or finance a portion of the acquisition price.

This approach

may put us at a competitive disadvantage and could result in harm to our business .

have limited capital and may seek to negotiate acquisitions of patent or other intellectual property assets where we can defer

payments or finance a portion of the acquisition price.

These types of debt financing or deferred payment arrangements may not

be as attractive to sellers of patent assets as receiving the full purchase price for those assets in cash at the closing of the

As a result, we might not compete effectively against other companies in the market for acquiring patent assets,

many of whom have substantially greater cash resources than we have.

In addition, any failure to satisfy any debt repayment obligations

that we may incur, may result in adverse consequences to our operating results.

failure to maintain or protect our patent assets could significantly impair our return on investment from such assets and harm

our brand, our business and our operating results .

ability to operate our business and compete in the patent market largely depends on the superiority, uniqueness and value of our

acquired patent assets.

To protect our proprietary rights, we rely on and will rely on a combination of patent, trademark, copyright

and trade secret laws, confidentiality agreements, common interest agreements and agreements with our employees and third parties,

and protective contractual provisions.

No assurances can be given that any of the measures we undertake to protect and maintain

the value of our assets will be successful.

the acquisition of patent assets, we will likely be required to spend significant time and resources to maintain the effectiveness

of such assets by paying maintenance fees and making filings with the USPTO.

We may acquire patent assets, including patent applications

that require us to spend resources to prosecute such patent applications with the USPTO.

Moreover, there is a material risk that

patent related claims (such as, for example, infringement claims (and/or claims for indemnification resulting therefrom), unenforceability

claims or invalidity claims) will be asserted or prosecuted against us, and such assertions or prosecutions could materially and

adversely affect our business.

Regardless of whether any such claims are valid or can be successfully asserted, defending such

claims could cause us to incur significant costs and could divert resources away from our core business activities.

our efforts to protect our intellectual property rights, any of the following or similar occurrences may reduce the value of our

intellectual property:

patent applications, trademarks and copyrights may not be granted and, if granted, may be challenged or invalidated;

trademarks, copyrights, or patents may not provide us with any competitive advantages when compared to potentially infringing

other properties;

efforts to protect our intellectual property rights may not be effective in preventing misappropriation of our technology;

efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or

superior to those we acquire and/or prosecute.

we may not be able to effectively protect our intellectual property rights in certain foreign countries where we may do business

in the future or from which competitors may operate.

If we fail to maintain, defend or prosecute our patent assets properly, the

value of those assets would be reduced or eliminated, and our business would be harmed.

Related to Marathon’s Indebtedness

cash flows and capital resources may be insufficient to make required payments on our indebtedness and future indebtedness.

of March 23, 2020, we had $2,181,607 of indebtedness outstanding.

Our indebtedness could have important consequences

to our shareholders.

For example, it could:

it difficult for us to satisfy our debt obligations;

us more vulnerable to general adverse economic and industry conditions;

our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other general corporate

requirements;

us to interest rate fluctuations;

us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our

cash flow for operations and other purposes;

our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources.

addition, our ability to make payments or refinance our obligations depends on our successful financial and operating performance,

cash flows and capital resources, which in turn depend upon prevailing economic conditions and certain financial, business and

other factors, many of which are beyond our control.

These factors include, among others:

and demand factors affecting our industry;

operating costs;

operating difficulties.

our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay

capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt.

In the event that

we are required to dispose of material assets or operations to meet our debt service and other obligations, the value realized

on such assets or operations will depend on market conditions and the availability of buyers.

Accordingly, any such sale may not,

among other things, be for a sufficient dollar amount.

The foregoing encumbrances may limit our ability to dispose of material

assets or operations.

We also may not be able to restructure our indebtedness on favorable economic terms, if at all.

may incur additional indebtedness in the future.

Any incurrence of additional indebtedness would intensify the risks described

Relating to Marathon’s Stock

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standards of Nasdaq, our Common Stock could be delisted from Nasdaq.

During 2019, Marathon received multiple notices regarding

its failure to meet several continued listing standards, including the $1.00 minimum closing bid price and the $2.5 million stockholders’

equity requirements, which were subsequently satisfied.

Our repeated failures may impact our ability to continue to list our shares

for trading on NASDAQ or to obtain approval of any initial listing application in connection with any acquisitions or other changes

that require review and approval by NASDAQ.

The continued listing standards include specifically enumerated criteria, such as:

The continued listing standards include specifically enumerated

criteria, such as:

$1.00 minimum closing bid price;

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in the exercise of Nasdaq’s discretionary authority.

of our Common Stock will experience immediate and substantial dilution upon the conversion of convertible notes and the exercise

of Marathon’s outstanding options and warrants.

of March 23, 2020:

shares of our Common Stock issuable upon the exercise of outstanding stock options having a weighted average exercise price

of $5.39 per share;

shares of our Common Stock issuable upon the exercise of outstanding warrants with a weighted average exercise price of $25.04;

to 312,221 shares of Common Stock issuable upon conversion of $999,106 in outstanding convertible notes.

stock price may be volatile.

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many of which are beyond our control, including the following:

in our industry including changes which adversely affect bitcoin, ether and other digital assets;

in our industry including changes which adversely affect bitcoin and other digital assets;

pricing pressures;

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(“Securities Act”).

we became a public company in 2011 by means of a reverse merger, we may not be able to attract the attention of major brokerage

may be risks associated with Marathon having become a public company in 2011 through a reverse merger.

Securities analysts of

major brokerage firms may not provide coverage of reverse merger companies since there is no incentive to brokerage firms to recommend

the purchase of our Common Stock.

No assurance can be given that brokerage firms will, in the future, want to conduct any secondary

offerings on our behalf.

relations activities and supply and demand factors may affect the price of our Common Stock.

expect to utilize various techniques such as non-deal road shows and investor relations campaigns in order to generate investor

These campaigns may include personal, video and telephone conferences with investors and prospective investors in which

our business practices are described.

We may provide compensation to investor relations firms and pay for newsletters, websites,

mailings and email campaigns that are produced by third parties based upon publicly-available information concerning us.

not intend to review or approve the content of such analysts’

reports or other materials based upon analysts’

research or methods.

Investor relations firms should generally disclose when they are compensated for their efforts, but whether

such disclosure is made or complete is not under our control.

In addition, investors may, from time to time, also take steps to

encourage investor awareness through similar activities that may be undertaken at the expense of the investors.

Investor awareness

activities may also be suspended or discontinued which may impact the trading market of our Common Stock.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors