Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 02, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | ACACIA RESEARCH CORP | |
Entity Central Index Key | 934,549 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 50,604,782 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 101,081 | $ 127,540 |
Restricted cash | 0 | 11,512 |
Short-term investments | 57,487 | 19,443 |
Accounts receivable | 300 | 26,750 |
Prepaid expenses and other current assets | 3,520 | 3,245 |
Total current assets | 162,388 | 188,490 |
Investments at fair value | 208,796 | 0 |
Investment - equity method | 2,284 | 0 |
Loan receivable and accrued interest | 0 | 18,616 |
Investment warrants and shares | 0 | 1,960 |
Patents, net | 67,360 | 86,319 |
Other assets | 382 | 618 |
Total assets | 441,210 | 296,003 |
Current liabilities: | ||
Accounts payable and accrued expenses | 7,691 | 14,283 |
Royalties and contingent legal fees payable | 19,824 | 13,908 |
Total current liabilities | 27,515 | 28,191 |
Other liabilities | 8,752 | 369 |
Total liabilities | 36,267 | 28,560 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 50,604,782 and 50,476,042 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 51 | 50 |
Treasury stock, at cost, 1,729,408 shares as of September 30, 2017 and December 31, 2016 | (34,640) | (34,640) |
Additional paid-in capital | 647,930 | 642,453 |
Accumulated comprehensive loss | (38) | (76) |
Accumulated deficit | (209,815) | (342,198) |
Total Acacia Research Corporation stockholders' equity | 403,488 | 265,589 |
Noncontrolling interests in operating subsidiaries | 1,455 | 1,854 |
Total stockholders' equity | 404,943 | 267,443 |
Total liabilities and stockholders' equity | $ 441,210 | $ 296,003 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' Equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 50,604,782 | 50,476,042 |
Common stock, shares outstanding | 50,604,782 | 50,476,042 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock, Shares | 1,729,408 | 1,729,408 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | $ 36,633,000 | $ 64,658,000 | $ 61,944,000 | $ 130,730,000 |
Operating costs and expenses | ||||
Inventor royalties | 0 | 17,844,000 | 4,939,000 | 19,417,000 |
Contingent legal fees | 12,173,000 | 7,709,000 | 16,036,000 | 22,236,000 |
Litigation and licensing expenses - patents | 4,073,000 | 7,348,000 | 14,593,000 | 22,895,000 |
Amortization of patents | 5,625,000 | 6,467,000 | 16,711,000 | 27,986,000 |
General and administrative expenses(2) | 12,715,000 | 8,334,000 | 26,365,000 | 23,863,000 |
Other expenses - business development | 241,000 | 666,000 | 994,000 | 2,522,000 |
Impairment of patent-related intangible assets | 2,248,000 | 0 | 2,248,000 | 40,165,000 |
Total operating costs and expenses | 37,075,000 | 48,368,000 | 81,886,000 | 159,084,000 |
Operating income (loss) | (442,000) | 16,290,000 | (19,942,000) | (28,354,000) |
Gain on Conversion of Loan and Accrued Interest | 0 | 0 | 2,671,000 | 0 |
Gain on exercise of warrant | 0 | 0 | 4,616,000 | 0 |
Change in fair value of investment, net | 158,979,000 | 0 | 146,281,000 | 0 |
Equity in earnings (losses) of investee | (116,000) | 0 | (130,000) | 0 |
Interest income and other | 164,000 | 261,000 | 1,423,000 | 206,000 |
Total other income (expense) | 159,027,000 | 261,000 | 154,861,000 | 206,000 |
Income (loss) before provision for income taxes | 158,585,000 | 16,551,000 | 134,919,000 | (28,148,000) |
Provision for income taxes | (216,000) | (9,655,000) | (2,935,000) | (15,774,000) |
Net income (loss) including noncontrolling interests in subsidiaries | 158,369,000 | 6,896,000 | 131,984,000 | (43,922,000) |
Net loss attributable to noncontrolling interests in subsidiaries | 96,000 | 186,000 | 399,000 | 466,000 |
Net loss attributable to Acacia Research Corporation | 158,465,000 | 7,082,000 | 132,383,000 | (43,456,000) |
Net Income (Loss) Available to Common Stockholders, Basic | 158,326,000 | 7,043,000 | 132,142,000 | (43,456,000) |
Net Income (Loss) Available to Common Stockholders, Diluted | $ 158,326,000 | $ 7,043,000 | $ 132,143,000 | $ (43,456,000) |
Earnings Per Share, Basic | $ 3.13 | $ 0.14 | $ 2.62 | $ (0.87) |
Earnings Per Share, Diluted | $ 3.13 | $ 0.14 | $ 2.61 | $ (0.87) |
Weighted Average Number of Shares Outstanding, Basic | 50,554,234 | 50,124,302 | 50,462,990 | 50,024,047 |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 50,599,974 | 50,618,757 | 50,684,725 | 50,024,047 |
General and administrative expenses excluding share-based compensation | $ 3,262,000 | $ 5,790,000 | $ 13,297,000 | $ 18,109,000 |
Non-cash stock compensation general and administrative | 1,272,000 | 2,544,000 | 4,833,000 | 5,754,000 |
Non-cash stock compensation - profits interests | $ 8,181,000 | $ 0 | $ 8,235,000 | $ 0 |
Consolidated Statements of Inco
Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Non-cash stock compensation | $ 9,453 | $ 2,544 | $ 13,068 | $ 5,754 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Other comprehensive income (loss): | ||||
Net income (loss) including noncontrolling interests in operating subsidiaries | $ 158,369 | $ 6,896 | $ 131,984 | $ (43,922) |
Unrealized gain on short-term investments, net of tax of $0 | 15 | 16 | 20 | 42 |
Unrealized gain (loss) on foreign currency translation, net of tax of $0 | 9 | 96 | 18 | 92 |
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax | 0 | 0 | 0 | (22) |
Total other comprehensive loss | 158,393 | 7,008 | 132,022 | (43,766) |
Comprehensive Income (Loss) Attributable to Noncontrolling Interest | (96) | (186) | (399) | (466) |
Comprehensive income (loss) attributable to Acacia Research Corporation | $ 158,489 | $ 7,194 | $ 132,421 | $ (43,300) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows Statement - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) including noncontrolling interests in operating subsidiaries | $ 131,984,000 | $ (43,922,000) |
Adjustments to reconcile net loss including noncontrolling interests in operating subsidiaries to net cash provided by operating activities: | ||
Gain on Conversion of Loan and Accrued Interest | (2,671,000) | 0 |
Gain on exercise of warrant | 4,616,000 | 0 |
Change in fair value of investment, net | (146,281,000) | 0 |
Depreciation and amortization | 16,780,000 | 28,105,000 |
Non-cash stock compensation | 13,068,000 | 5,754,000 |
Impairment of Intangible Assets (Excluding Goodwill) | 2,248,000 | 40,165,000 |
Other | (473,000) | (81,000) |
Changes in assets and liabilities: | ||
Restricted cash | 11,512,000 | (3,316,000) |
Accounts receivable | 26,450,000 | (20,200,000) |
Prepaid expenses and other assets | (874,000) | 1,191,000 |
Accounts payable and accrued expenses | (6,608,000) | 5,392,000 |
Royalties and contingent legal fees payable | 5,916,000 | 10,131,000 |
Net cash provided by operating activities | 46,435,000 | 23,219,000 |
Cash flows from investing activities: | ||
Payments to Acquire Other Investments | (31,514,000) | 0 |
Advances to Investee | (4,000,000) | (10,000,000) |
Purchase of available-for-sale investments | (424,945,000) | (62,633,000) |
Maturities and sale of available-for-sale investments | 386,920,000 | 32,352,000 |
Patent portfolio investment costs | 0 | (1,000,000) |
Purchases of property and equipment | 0 | (4,000) |
Net cash provided by (used in) investing activities | (73,539,000) | (41,285,000) |
Cash flows from financing activities: | ||
Repurchased Restricted Common Stock | 35,000 | 25,000 |
Payments to Noncontrolling Interests | 0 | 1,358,000 |
Proceeds from exercises of stock options | 680,000 | 242,000 |
Net cash used in financing activities | 645,000 | (1,141,000) |
Increase (decrease) in cash and cash equivalents | (26,459,000) | (19,207,000) |
Cash and cash equivalents, beginning | 127,540,000 | 135,223,000 |
Cash and cash equivalents, ending | 101,081,000 | 116,016,000 |
Other Noncash Income (Expense) | $ 23,061,000 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Description of Business and Basis of Presentation [Abstract] | |
Description of Business and Basis of Presentation | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business. As used herein, “Acacia” and the “Company” refer to Acacia Research Corporation and/or its wholly and majority-owned and controlled operating subsidiaries, and/or where applicable, its management. All patent investment, prosecution, licensing and enforcement activities are conducted solely by certain of Acacia’s wholly and majority-owned and controlled operating subsidiaries. Acacia’s operating subsidiaries invest in, license and enforce patented technologies. Acacia’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. In addition, Acacia and its operating subsidiaries may from time to time evaluate, leveraging their intellectual property expertise, other business opportunities. In some cases, these opportunities will complement, and / or supplement Acacia's primary licensing and enforcement business. Acacia’s operating subsidiaries generate revenues and related cash flows from the granting of intellectual property rights for the use of patented technologies that its operating subsidiaries control or own. Acacia’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies and, where necessary, with the enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. Acacia’s operating subsidiaries are principals in the licensing and enforcement effort, obtaining control of the rights in the patent portfolio, or control of the patent portfolio outright. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. Neither Acacia nor its operating subsidiaries invent new technologies or products; rather, Acacia depends upon the identification and investment in new patents, inventions and companies that own intellectual property through its relationships with inventors, universities, research institutions, technology companies and others. If Acacia’s operating subsidiaries are unable to maintain those relationships and to continue to identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and / or revenue growth. During the first nine months of 2017 Acacia obtained control of one new patent portfolio. In fiscal 2016, Acacia obtained control of two new patent portfolios, compared to three , six and 25 new patent portfolios in fiscal years 2015, 2014 and 2013, respectively. Basis of Presentation. The accompanying condensed consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. Material intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity in the condensed consolidated statements of financial position for the applicable periods presented. Consolidated net income (loss) is adjusted to include the net (income) loss attributed to noncontrolling interests in the condensed consolidated statements of operations. Refer to the accompanying condensed consolidated financial statements for total noncontrolling interests, net (income) loss attributable to noncontrolling interests and contributions from and distributions to noncontrolling interests, for the applicable periods presented. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2016 , as reported by Acacia in its Annual Report on Form 10-K filed with the SEC. The December 31, 2016 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The condensed consolidated interim financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia’s consolidated financial position as of September 30, 2017 , and results of its operations and its cash flows for the interim periods presented. The consolidated results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the entire fiscal year. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. For the periods presented herein, the majority of the revenue agreements executed by the Company provided for the payment of one-time, paid-up license fees in consideration for the grant of certain intellectual property rights for patented technology rights owned by Acacia’s operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Cost of Revenues . Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying condensed consolidated statements of operations. Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the condensed consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, upfront advances paid to patent owners by Acacia’s operating subsidiaries are recoverable from future net revenues. Patent costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the condensed consolidated statements of operations. Any unamortized upfront advances recovered from net revenues are expensed in the period recovered, and included in amortization expense in the condensed consolidated statements of operations. Contingent legal fees are expensed in the condensed consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Use of Estimates. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, the valuation of the loan and equity instruments discussed at Note 5, stock-based compensation expense, impairment of patent-related intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. Concentrations. One licensee individually accounted for 96% of revenues recognized during the three months ended September 30, 2017 , and three licensees accounted for 57% , 23% and 10% of revenues recognized during the nine months ended September 30, 2017. Two licensees individually accounted for 60% and 27% of revenues recognized during the three months ended September 30, 2016, and three licensees accounted for 30% , 27% and 13% of revenues recognized during the nine months ended September 30, 2016. For the three and nine months ended September 30, 2017 , 3% and 39% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions, based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable revenue arrangement. For the three and nine months ended September 30, 2016, 93% and 78% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. The Company does not have any material foreign operations. One licensee individually represented approximately 100% of accounts receivable at September 30, 2017 . Four licensees individually represented approximately 39% , 22% , 16% and 15% of accounts receivable at December 31, 2016. Fair Value Measurements. U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i) Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; (ii) Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and (iii) Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. At September 30, 2017 all of the Company’s investments recorded at fair value, except for short-term investments, were valued utilizing Level 3 - unobservable inputs. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. Financial assets and liabilities measured at fair value on a recurring basis as were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2017: Short-term investments $ 57,487 $ — $ — Investment at fair value (Note 5) — — 208,796 Total recurring fair value measurements (1) $ 57,487 $ — $ 208,796 ____________________ (1) There were no transfers between fair value hierarchy categories for the period presented. A reconciliation of the activity for fair value measurements categorized within Level 3 for the nine months ended September 30, 2017 is as follows (in thousands): Investment at Fair Value Common Stock Warrants Total Opening balance as of January 1, 2017 $ — $ — $ — Total gains and losses included in earnings for the period (1) Gain on conversion of loans and accrued interest 2,671 — 2,671 Gain on exercise of Primary Warrant — 4,616 4,616 Change in fair value of investment, net 115,381 30,900 146,281 Purchases, issues, sales and settlements Purchases and issues 54,202 1,026 55,228 Total recurring fair value measurements (1) $ 172,254 $ 36,542 $ 208,796 ____________________ (1) All gains and losses included in earnings for the period presented relate to assets and liabilities held as of September 30, 2017. Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Stock-based compensation expense for awards with service and / or performance conditions that affect vesting is recorded only for those awards expected to vest using an estimated forfeiture rate. Restricted stock awards and stock option awards with performance-based vesting conditions generally vest based upon the Company achieving specified cash flow performance targets over a one and two-year period from the date of grant. Performance-based stock option awards with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a four-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized for an option with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. The service period for options with a market-based vesting condition is inferred from the application of the Monte Carlo valuation technique. The derived service period represents the duration of the median of the distribution of share price paths on which the market condition is satisfied. The duration is the period of time from the service inception date to the expected date of satisfaction, as determined from the valuation technique. Assumptions utilized in connection with the Monte Carlo valuation technique included: estimated risk-free interest rate; expected volatility; and expected dividend yield. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The expected dividend yield was based on expectations regarding dividend payments. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described at Note 7, and therefore, the vesting conditions do not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the Units are classified as liability awards. Liability classified awards are measured at fair value on the grant date and re-measured each reporting period at fair value until the award is settled. Compensation expense is adjusted each reporting period for changes in fair value prorated for the portion of the requisite service period rendered. Initially, compensation expense was recognized on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which was five years. Upon full vesting, which occurred during the three months ended September 30, 2017, previously unrecognized compensation expense was immediately recognized in the period, and will continue to be fully recognized for any changes in fair value, until the Units are settled. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying condensed consolidated statement of operations. Refer to Note 7 for additional information. Cash and Cash Equivalents . Acacia considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. For the periods presented, Acacia’s cash equivalents are comprised of investments in AAA rated money market funds that invest in first-tier only securities, which primarily includes: domestic commercial paper, securities issued or guaranteed by the U.S. government or its agencies, U.S. bank obligations, and fully collateralized repurchase agreements. Acacia’s cash equivalents are measured at fair value using quoted prices that represent Level 1 inputs. Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. For the periods presented, all of Acacia’s short-term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of other comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest is included in total other income (expense). Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Security Type Cost Gains Losses Fair Value September 30, 2017: U.S. government fixed income securities $ 57,427 $ 60 $ — $ 57,487 December 31, 2016: U.S. government fixed income securities $ 19,403 $ 40 $ — $ 19,443 Patents. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or obtained in connection with business combinations. Patent costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to seven years . Equity Method Investments . Equity investments without readily determinable fair values in companies over which the Company has the ability to exercise significant influence, are accounted for using the equity method of accounting, and classified within “Equity Method Investments” in the condensed consolidated balance sheet. Acacia includes its proportionate share of earnings and/or losses of its equity method investees in equity in earnings (losses) of investee in the condensed consolidated statements of operations. Refer to Note 5 for additional information regarding equity method investments. Investments at Fair Value . On an individual investment basis, Acacia may elect to account for investments in companies where the Company has the ability to exercise significant influence over operating and financial policies of the investee, at fair value. If the fair value option is applied to an investment that would otherwise be accounted for under the equity method of accounting, it is applied to all of the financial interests in the same entity that are eligible items (i.e. common stock and warrants). Refer to Note 5 for additional information regarding investments accounted for at fair value on a recurring basis. Impairment of Investments. Acacia reviews its equity method investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia employs a systematic methodology quarterly that considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the condensed consolidated statement of operations and a new cost basis in the investment is established. Impairment of Long-lived Assets. Acacia reviews long-lived assets and intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available or not indicative of current fair value, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s condensed consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. The Company’s effective tax rates were 0% and 2% for the three and nine months ended September 30, 2017 , respectively, and 58% and 56% for the three and nine months ended September 30, 2016 , respectively. Results for the three and nine months ended September 30, 2017 included pretax net income of $158,585,000 , and $134,919,000 , respectively, primarily comprised of an unrealized gain on Acacia's investment in Veritone for the three and nine months ended September 30, 2017 totaling $158,979,000 and $153,568,000 , respectively. The unrealized gain created a deferred tax liability totaling approximately $54,108,000 at September 30, 2017. The future anticipated reversal of this deferred tax liability provides for a source of taxable income that allows for the realizability of existing deferred tax assets that have been reduced by a valuation allowance for the periods presented. The effective tax rate reflects both the recognition of the deferred tax liability and the reversal of valuation allowance, resulting in the 0% and 2% tax rate for the three and nine months ended September 30, 2017, respectively. Tax expense for the three and nine months ended September 30, 2017 primarily reflects the impact of state taxes and for the nine month period, foreign withholding taxes incurred on revenue agreements executed with third-party licensees domiciled in foreign jurisdictions. The effective rates for the 2016 periods primarily reflect the impact of foreign withholding taxes related to certain revenue agreements executed with third party licensees domiciled in foreign jurisdictions. |
Income (Loss) Per Share
Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | INCOME (LOSS) PER SHARE The Company computes net income (loss) attributable to common stockholders using the two-class method required for capital structures that include participating securities. Under the two-class method, securities that participate in non-forfeitable dividends, such as the Company’s outstanding unvested restricted stock, are considered “participating securities.” In applying the two-class method, (i) basic net income (loss) per share is computed by dividing net income (loss) (less any dividends paid on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period and (ii) diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying the two-class method and the treasury stock method to the assumed exercise or vesting of potentially dilutive common shares. The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options, and restricted stock units for calculations utilizing the two-class method, and also include unvested restricted stock, when utilizing the treasury method. The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended Numerator (in thousands): 2017 2016 2017 2016 Basic and Diluted Net income (loss) $ 158,465 $ 7,082 $ 132,383 $ (43,456 ) Undistributed earnings allocated to participating securities (139 ) (39 ) (241 ) — Net income (loss) attributable to common stockholders - basic $ 158,326 $ 7,043 $ 132,142 $ (43,456 ) Additional undistributed earnings allocated to unvested shareholders — — 1 — Net income (loss) attributable to common stockholders - diluted $ 158,326 $ 7,043 $ 132,143 $ (43,456 ) Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 50,554,234 50,124,302 50,462,990 50,024,047 Potentially dilutive options and restricted stock units 45,740 494,455 221,735 — Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted 50,599,974 50,618,757 50,684,725 50,024,047 Basic net income (loss) per common share $ 3.13 $ 0.14 $ 2.62 $ (0.87 ) Diluted net income (loss) per common share $ 3.13 $ 0.14 $ 2.61 $ (0.87 ) Anti-dilutive equity-based incentive awards excluded from the computation of diluted income (loss) per share 6,029,156 3,593,708 4,618,618 4,410,974 Maximum price of awards excluded from the computation of diluted income (loss) per share $ 6.75 $ 13.38 $ 6.75 $ 13.38 |
Patents
Patents | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Identifiable Intangible Assets | PATENTS Acacia’s only identifiable intangible assets at September 30, 2017 and December 31, 2016 are patents and patent rights. Patent-related accumulated amortization totaled $376,777,000 and $358,043,000 as of September 30, 2017 and December 31, 2016 , respectively. Acacia’s patents have remaining estimated economic useful lives ranging from one to seven years . The weighted-average remaining estimated economic useful life of Acacia’s patents is approximately four years . The following table presents the scheduled annual aggregate amortization expense as of September 30, 2017 (in thousands): For the years ending December 31, Remainder of 2017 $ 5,443 2018 20,542 2019 18,527 2020 6,134 2021 5,261 Thereafter 11,453 $ 67,360 Acacia recorded impairment of patent-related intangible asset charges of $2,248,000 and $40,165,000 for the nine months ended September 30, 2017 and 2016, respectively. Impairment charges for the nine months ended September 30, 2017 primarily reflect reductions in expected estimated future net cash flows for certain patent portfolios that management determined it would no longer allocate resources to in future periods. Impairment charges for the nine months ended September 30, 2016 were primarily comprised of the write-off of the remaining carrying value of the Adaptix portfolio due to a reduction in expected estimated future net cash flows, and the write-off of certain patent portfolios that management determined it would no longer allocate future resources to in future periods. The impairment charges consisted of the excess of the asset’s carrying value over its estimated fair value. |
Investments (Notes)
Investments (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Cost and Equity Method Investments Disclosure [Text Block] | INVESTMENTS Investment at Fair Value Veritone Investment Agreement. On August 15, 2016, Acacia entered into an Investment Agreement with Veritone, Inc. (“Veritone”), which provided for Acacia to invest up to $50 million in Veritone, consisting of both debt and equity components. Pursuant to the Investment Agreement, on August 15, 2016, Acacia entered into a secured convertible promissory note with Veritone (the “Veritone Loans”), which permitted Veritone to borrow up to $20 million through two $10 million advances, each bearing interest at the rate of 6.0% per annum (included in Other Income (Expense) in the condensed consolidated statement of operations). On August 15, 2016, Acacia funded the initial $10 million loan (the “First Loan”). On November 25, 2016, Acacia funded the second $10 million loan (the “Second Loan”). The First Loan and the Second Loan were due and payable on November 25, 2017. In conjunction with the First Loan and Second Loan, Veritone issued Acacia a total of three four-year $700,000 warrants to purchase shares of Veritone’s common stock at an exercise price of $13.6088 per share. Veritone's initial public offering date was May 12, 2017. Upon Veritone’s consummation of its qualified public offering of its common stock on May 17, 2017 (“IPO”), all outstanding principal and accrued interest under the Veritone Loans, totaling $20.7 million , automatically converted into 1,523,746 shares of Veritone’s common stock based on a conversion price of $13.6088 per share. In addition, in August 2016, Veritone issued Acacia a five-year Primary Warrant to purchase up to $50 million , less all converted amounts or amounts repaid under the Veritone Loans, worth of shares of Veritone’s common stock at an exercise price of $13.6088 per share. Pursuant to an amendment to the Primary Warrant effective March 15, 2017, the Primary Warrant was exercised automatically upon the consummation of Veritone’s IPO, resulting in the purchase by Acacia of an additional 2,150,335 shares of Veritone common stock, at an aggregate purchase price of $29.3 million . Immediately following Acacia’s exercise of the Primary Warrant in full, Veritone issued to Acacia an additional 10% Warrant that provides for the issuance of an additional 809,400 shares of Veritone common stock at an exercise price of $13.6088 per share, with 50% of the shares underlying the 10% Warrant vesting as of the issuance date of the 10% Warrant, and the remaining 50% of the shares underlying the 10% warrant vesting on the first anniversary of the issuance date of the 10% Warrant. Veritone Bridge Loan . On March 14, 2017, Acacia entered into an additional secured convertible promissory note with Veritone (the “Veritone Bridge Loan”), which permitted Veritone to borrow up to an additional $4.0 million , bearing interest at the rate of 8.0% per annum. On March 17, 2017, Acacia funded the initial $1.0 million advance (the “First Bridge Loan”). On April 14, 2017, Acacia funded the second $1.0 million advance (the “Second Bridge Loan”). All advances and accrued interest under the Veritone Bridge Loan were due and payable on November 25, 2017. In May 2017, pursuant to the terms of the Veritone Bridge Loan, Acacia elected to make an additional advance to Veritone totaling $2.0 million , representing all principal amounts not advanced upon Veritone’s consummation of its IPO. Upon consummation of Veritone’s IPO, the outstanding principal balance and accrued interest under the Veritone Bridge Loan, totaling $4.0 million , automatically converted into 295,440 shares of Veritone’s common stock at a conversion price of $13.6088 per share. In conjunction with the Veritone Bridge Loan, Veritone issued to Acacia (i) 60,000 shares of Veritone common stock (“Upfront Shares”), (ii) 90,000 shares of Veritone common stock (the “Bridge Installment Shares”), and (iii) 10-year warrants to purchase up to 157,000 shares of Veritone common stock (the “Bridge Warrant Shares”) with other terms and conditions similar to the warrants described above. All share amounts above have been adjusted to reflect a 0.6-for-1 reverse stock split of Veritone’s common stock, which was effected by Veritone in April 2017. The Veritone common shares are subject to a lock-up agreement that expires on November 8, 2017, subsequent to which the shares may be sold pursuant to Rule 144, subject to volume limitations and Rule 144 filing requirements, as well as other restrictions under applicable securities laws. All of the Veritone common stock held by Acacia, as described above, were unregistered as of the issue date and are unregistered as of September 30, 2017. Accounting Prior to Veritone IPO . Prior to conversion, Acacia’s Investment Agreement and the Veritone Bridge Loan represented variable interests in Veritone for which Acacia was not the primary beneficiary, primarily due to a lack of a controlling interest in Veritone. In addition, the Veritone Loans and Veritone Bridge Loan (the “Loans”) were not considered in-substance common stock, the common stock purchase warrants were unexercised, and the right to receive the Upfront Shares and the Installment shares (“Veritone Shares”) were considered in-substance common stock, however, application of the equity method was not material, therefore, the equity method of accounting was not applied prior to the IPO. Prior to conversion, the Loans and the related common stock purchase warrants and Veritone Shares were accounted for as separate units of account based on the relative estimated fair values of the separate units as of the effective date of the respective transactions, with the face amount of the loans allocated to (1) the Loans, which were accounted for as long-term loan receivables and (2) the common stock purchase warrants and Veritone Shares. The estimated relative fair value allocation was determined using a Monte Carlo simulation model. Key inputs to the model included the estimated value of Veritone’s equity on the effective date of the transactions, related volatility of equity assumptions, discounts for lack of marketability, assumptions related to liquidity scenarios, and assumptions related to recovery scenarios on the Loans. Assumptions used in connection with estimating the relative fair values included: (1) volatility ranging from 40% to 50% , (2) financing probabilities ranging from 25% to 75% , (3) marketability discount of 7% and (4) 100% investment recovery assumption. The loan discount, representing the difference between the face amount of the Loans and the relative fair value allocated to the Loans, was accreted over the expected life of the Loans, using the effective interest method, with the related interest amounts reflected in other income (expense) in the condensed consolidated statement of operations. As of May 2017, the unamortized loan discount totaled $1.7 million . Accretion of the loan discount included in other income (expense) in the condensed consolidated statement of operations for the nine months ended September 30, 2017 was $630,000 . Interest income for the nine months ended September 30, 2017 was $471,000 . The effective yield on the Loans for the nine months ended September 30, 2017 ranged from 9% to 53% . Accounting Subsequent to Veritone IPO . Upon Veritone’s consummation of its IPO on May 17, 2017, the Loans were converted into shares of Veritone common stock and the Primary Warrant was automatically exercised in full, as described above, resulting in a 20% ownership interest in Veritone (excluding warrants). Based on Acacia’s representation on the Veritone board of directors and Acacia’s 20% ownership interest in Veritone, Acacia management determined that the equity method of accounting was applicable. Upon becoming eligible for the equity method of accounting, Acacia elected to apply the fair value option to account for its investment in Veritone, including all of its investments in Veritone common stock and warrants, due to the availability of quoted prices in an active market for the Veritone common stock. Acacia’s investment in Veritone common shares is recorded at fair value based on the quoted market price of Veritone’s common stock on The NASDAQ Global Select Market on the applicable valuation date, as adjusted for an estimated discount for lack of marketability (“DLOM”) associated with the restricted nature of the common shares acquired (Level 3 input). Acacia’s investment in Veritone warrants is recorded at fair value, as adjusted for an estimated DLOM, based on the Black-Scholes option-pricing model, utilizing the following assumptions at September 30, 2017: risk-free interest rates ranging from 1.62% to 2.33% ; expected terms ranging from three to ten years ; volatilities ranging from 45% to 55% ; and a dividend yield of zero . The DLOM for the Veritone common stock and warrants was estimated utilizing a Finnerty model with the following results and assumptions: Veritone Common Stock Veritone Warrants IPO Date September 30, 2017 IPO Date September 30, 2017 Estimated DLOM applied 5.7% 8% 5.7% 5% Volatility assumptions 35% 100% 35% 45% Term assumptions 6 months 45 days 6 months 3 - 6 months At September 30, 2017, the fair value of Acacia’s investment in Veritone common stock totaled $172,254,000 . At September 30, 2017, the fair value of Acacia’s investment in Veritone warrants totaled $36,542,000 . A one percent increase in the DLOM assumptions utilized at all applicable valuation dates would result in an approximate 1% decrease in the fair value of our investment in Veritone at September 30, 2017 , and a corresponding decrease in the net investment gain reflected in the condensed consolidated statement of operations for the three and nine months ended September 30, 2017 . Changes in the fair value of Acacia’s investment in Veritone are recorded as unrealized gains or losses in the condensed consolidated statement of operations. For the period from the IPO on May 17, 2017 to September 30, 2017, the accompanying condensed consolidated statement of operations reflected the following (in thousands): Three Months Ended September 30, Nine Months Ended 2017 2017 Gain on conversion of loans and accrued interest (1) $ — $ 2,671 Gain on exercise of warrant (2) — 4,616 Change in fair value of investment, warrants 31,829 30,900 Change in fair value of investment, common stock 127,150 115,381 Net unrealized gain on investment at fair value $ 158,979 $ 153,568 __________________________ (1) Difference between pre-conversion carrying value of Loan and accrued interest and the estimated fair value of common stock discounted for lack of marketability. (2) Difference between pre-conversion carrying value of Primary Warrant and the estimated fair value of common stock and 10% Warrant discounted for lack of marketability. Summarized financial information for Veritone, presented on a three month lag basis, is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, 2017 2017 Revenues $ 4,087 $ 7,195 Gross profit 3,751 6,663 Operating expenses 11,599 21,142 Other income (expense), net (13,746 ) (12,960 ) Net loss attributable to common stockholders (24,992 ) (31,912 ) Net loss per share attributable to common stockholders - basic and diluted $ (2.94 ) $ (5.82 ) June 30, December 31, Current assets $ 88,831 $ 21,367 Noncurrent assets 440 981 Total Assets $ 89,271 $ 22,348 Current liabilities $ 33,746 $ 44,501 Noncurrent liabilities 18 22 Total liabilities 33,764 44,523 Preferred stock — 23,350 Total stockholder's equity (deficit) 55,507 (45,525 ) Total liabilities, preferred stock and stockholders’ equity $ 89,271 $ 22,348 Equity Method Investment In June 2017, Acacia made an investment in Miso Robotics, Inc. (“Miso Robotics”), an innovative leader in robotics and artificial intelligence solutions, totaling $2,250,000 , acquiring a 22.6% ownership interest in Miso Robotics, and one board seat. Miso Robotics will use the funding to deliver an adaptable AI-driven robotic kitchen assistant that will work alongside kitchen staff to improve operational efficiency for the restaurant industry. In addition, Acacia also entered into an intellectual property services agreement with Miso Robotics to help Miso Robotics drive AI-based solutions for the entire restaurant industry. Based on Acacia’s representation on the Miso Robotics board of directors, and greater than 20% ownership interest in Miso Robotics, the equity method of accounting was applied. The fair value option was not elected for Acacia’s investment in Miso Robotics due to the lack of a readily determinable fair market value. For the three and nine months ended September 30, 2017 , equity in losses of investee related to Miso Robotics totaled $116,000 and $130,000 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Bank Guarantee In March 2015, an operating subsidiary of Acacia entered into a standby letter of credit and guarantee arrangement (“Guarantee”) with a bank for purposes of enforcing a court ruling in a German patent court granting an injunction against the defendants in the related patent infringement case. The Guarantee was secured by a cash deposit at the contracting bank, which is classified as restricted cash in the accompanying December 31, 2016 condensed consolidated balance sheet, totaling $11,512,000 . Upon resolution of all related matters in June 2017, the Guarantee was extinguished resulting in release of the cash collateral (and related restrictions on the cash balance) by the contracting bank. As a result, no amounts of Acacia’s cash and investments are restricted as to use. Patent Enforcement Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. Other Acacia is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia’s consolidated financial position, results of operations or cash flows. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | STOCKHOLDERS’ EQUITY Profits Interest Plan. On February 16, 2017, AIP Operation LLC, a Delaware limited liability company (“AIP”), and an indirect subsidiary of Acacia, adopted a Profits Interest Plan (the “Plan”) that provides for the grant of membership interests in AIP to certain members of management and the Board of Directors of Acacia as compensation for services rendered for or on behalf of AIP. Each profits interest unit granted pursuant to the Plan is intended to qualify as a “profits interest” for U.S. federal income tax purposes and will only have value to the extent the value of AIP increases beyond the value at issuance. The membership interests are represented by units (the “Units”) reserved for the issuance of awards under the Plan. The Units entitle the holders to share in or be allocated certain AIP profits and losses and to receive or share in AIP distributions pursuant to the AIP Limited Liability Company Operating Agreement entered into as of February 16, 2017 (the “LLC Agreement”). In connection with the adoption of the Plan, a form of Profits Interest Agreement was approved pursuant to which Units may be granted from time to time. Units vest upon AIP’s achievement of certain performance milestones (one-third upon 150% appreciation, and the remaining two-thirds upon 300% appreciation in value of Acacia’s aggregate investment in Veritone), subject to the continued service of the recipient, and are subject to the terms and conditions of the Plan, the Profits Interest Agreement and the LLC Agreement. The Units were fully vested as of September 30, 2017 . Acacia owns 60% of the membership interests in AIP and at all times will control AIP. Acacia from time to time may contribute to AIP certain assets or securities related to portfolio companies in which Acacia holds an interest. Units may be awarded as one-time, discretionary grants to recipients. As of September 30, 2017 , AIP holds the Veritone 10% Warrant described at Note 5. Profits interests totaling 400 Units, or 40% of the membership interests in AIP, were granted in February 2017, with an aggregate grant date fair value of $722,000 . The fair value of the Units totaled $8,235,000 as of September 30, 2017 . Upon full vesting of the units in September 2017, all previously unrecognized compensation expense was immediately recognized. The fair value of the Units is estimated utilizing a Geometric Brownian Motion model (“GBM”) which considers probable vesting dates and values for the applicable instruments (i.e. common stock and warrants related to Acacia’s Veritone investment described at Note 5) underlying or associated with the Units. At the estimated end of the term of the underlying warrant, the model estimates the total proceeds from the hypothetical exercise of the warrant and estimates the value of the Units by allocating the proceeds based on the waterfall described in the terms of the underlying agreement. The value of the Units on a marketable basis is the average allocation across all GBM simulation paths discounted to the applicable valuation date using the risk-free rate. This estimated value is adjusted for an estimate of a discount for lack of marketability (“DLOM”) using the Finnerty model, based on a security specific volatility calculated by changing Veritone’s common stock price by 1% and measuring the corresponding change in the value of the Units. For the three and nine months ended September 30, 2017, assumptions utilized in the GBM included a term of 5 years , stock price ranging from $11.71 to $45.45 , volatility of 45% , and risk free interest rates ranging from 1.31% to 2.33% for terms ranging from 1 to 10 years . The estimated DLOM utilized ranged from 25% to 30% , based on assumptions including a term of approximately 4.9 years and a volatility of 45% for Veritone’s common stock. Volatility was estimated based on the historical volatilities of a set of comparable public companies, adjusted for leverage, over a term matching the term of the 10% warrant, which is approximately 5 years . |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements - Adopted January 1, 2017. In March 2016, the FASB issued a new standard that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it previously could for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those years. Early adoption is permitted. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. Recent Accounting Pronouncements - Not Yet Adopted. In May 2014, the FASB issued a new accounting standards update addressing revenue from contracts with customers, which clarifies existing accounting literature relating to how and when a company recognizes revenue. Under the standard, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In doing so, the Company may be required to use more judgment and make more estimates in connection with the accounting for revenue contracts with customers than under existing guidance. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, and allocating the transaction price to separate performance obligations. Under the standard, (i) an entity should account for a promise to provide a customer with a right to access the entity’s intellectual property as a performance obligation satisfied over time because the customer will simultaneously receive and consume the benefit from the entity’s performance of providing access to its intellectual property as the performance occurs, and (ii) an entity’s promise to provide a customer with the right to use its intellectual property is satisfied at a point in time. The amendments for this standard update are effective for interim and annual reporting periods beginning after December 15, 2017, and are to be applied retrospectively or the cumulative effect as of the date of adoption, with early application not permitted. The Company is currently evaluating the impact and method of adoption the pronouncement will have on its condensed consolidated financial statements and related disclosures. The Company is continuing to assess the impact of this new standard on the Company's condensed consolidated financial statements and related disclosures, including ongoing contract reviews. Currently, Acacia does not anticipate that the new guidance will have a material impact on the Company's revenue recognition policies, practices or systems. The Company preliminarily expects to use the modified retrospective method of adoption. However, the adoption method is subject to change as the Company continues to evaluate the impact of the standard. In February 2016, the FASB issued an accounting standard update which requires lessees to recognize most leases on the balance sheet. This is expected to increase both reported assets and liabilities. The new lease standard does not substantially change lessor accounting. For public companies, the standard will be effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption is permitted. Lessees and lessors will be required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. The requirements of this standard include a significant increase in required disclosures. Management is currently assessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures. In May 2017, the FASB issued amended guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the award changes as a result of the change in terms or conditions. This amendment is effective prospectively for annual periods beginning on or after December 15, 2017, with early adoption permitted. Management is currently assessing the impact that adopting this new accounting guidance will have on its financial statements and footnote disclosures. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. For the periods presented herein, the majority of the revenue agreements executed by the Company provided for the payment of one-time, paid-up license fees in consideration for the grant of certain intellectual property rights for patented technology rights owned by Acacia’s operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. |
Cost of Revenues | Cost of Revenues . Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying condensed consolidated statements of operations. |
Inventor Royalties and Contingent Legal Expenses | Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the condensed consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, upfront advances paid to patent owners by Acacia’s operating subsidiaries are recoverable from future net revenues. Patent costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the condensed consolidated statements of operations. Any unamortized upfront advances recovered from net revenues are expensed in the period recovered, and included in amortization expense in the condensed consolidated statements of operations. Contingent legal fees are expensed in the condensed consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. |
Use of Estimates | Use of Estimates. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, the valuation of the loan and equity instruments discussed at Note 5, stock-based compensation expense, impairment of patent-related intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. |
Concentrations | Concentrations. One licensee individually accounted for 96% of revenues recognized during the three months ended September 30, 2017 , and three licensees accounted for 57% , 23% and 10% of revenues recognized during the nine months ended September 30, 2017. Two licensees individually accounted for 60% and 27% of revenues recognized during the three months ended September 30, 2016, and three licensees accounted for 30% , 27% and 13% of revenues recognized during the nine months ended September 30, 2016. For the three and nine months ended September 30, 2017 , 3% and 39% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions, based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable revenue arrangement. For the three and nine months ended September 30, 2016, 93% and 78% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. The Company does not have any material foreign operations. One licensee individually represented approximately 100% of accounts receivable at September 30, 2017 . Four licensees individually represented approximately 39% , 22% , 16% and 15% of accounts receivable at December 31, 2016. |
Fair Value Measurements | Fair Value Measurements. U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i) Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; (ii) Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and (iii) Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. At September 30, 2017 all of the Company’s investments recorded at fair value, except for short-term investments, were valued utilizing Level 3 - unobservable inputs. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. Financial assets and liabilities measured at fair value on a recurring basis as were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2017: Short-term investments $ 57,487 $ — $ — Investment at fair value (Note 5) — — 208,796 Total recurring fair value measurements (1) $ 57,487 $ — $ 208,796 ____________________ (1) There were no transfers between fair value hierarchy categories for the period presented. A reconciliation of the activity for fair value measurements categorized within Level 3 for the nine months ended September 30, 2017 is as follows (in thousands): Investment at Fair Value Common Stock Warrants Total Opening balance as of January 1, 2017 $ — $ — $ — Total gains and losses included in earnings for the period (1) Gain on conversion of loans and accrued interest 2,671 — 2,671 Gain on exercise of Primary Warrant — 4,616 4,616 Change in fair value of investment, net 115,381 30,900 146,281 Purchases, issues, sales and settlements Purchases and issues 54,202 1,026 55,228 Total recurring fair value measurements (1) $ 172,254 $ 36,542 $ 208,796 ____________________ (1) All gains and losses included in earnings for the period presented relate to assets and liabilities held as of September 30, 2017. |
Stock-Based Compensation | Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Stock-based compensation expense for awards with service and / or performance conditions that affect vesting is recorded only for those awards expected to vest using an estimated forfeiture rate. Restricted stock awards and stock option awards with performance-based vesting conditions generally vest based upon the Company achieving specified cash flow performance targets over a one and two-year period from the date of grant. Performance-based stock option awards with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a four-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized for an option with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. The service period for options with a market-based vesting condition is inferred from the application of the Monte Carlo valuation technique. The derived service period represents the duration of the median of the distribution of share price paths on which the market condition is satisfied. The duration is the period of time from the service inception date to the expected date of satisfaction, as determined from the valuation technique. Assumptions utilized in connection with the Monte Carlo valuation technique included: estimated risk-free interest rate; expected volatility; and expected dividend yield. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The expected dividend yield was based on expectations regarding dividend payments. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described at Note 7, and therefore, the vesting conditions do not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the Units are classified as liability awards. Liability classified awards are measured at fair value on the grant date and re-measured each reporting period at fair value until the award is settled. Compensation expense is adjusted each reporting period for changes in fair value prorated for the portion of the requisite service period rendered. Initially, compensation expense was recognized on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which was five years. Upon full vesting, which occurred during the three months ended September 30, 2017, previously unrecognized compensation expense was immediately recognized in the period, and will continue to be fully recognized for any changes in fair value, until the Units are settled. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying condensed consolidated statement of operations. Refer to Note 7 for additional information. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents . Acacia considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. For the periods presented, Acacia’s cash equivalents are comprised of investments in AAA rated money market funds that invest in first-tier only securities, which primarily includes: domestic commercial paper, securities issued or guaranteed by the U.S. government or its agencies, U.S. bank obligations, and fully collateralized repurchase agreements. Acacia’s cash equivalents are measured at fair value using quoted prices that represent Level 1 inputs. |
Marketable Securities, Policy [Policy Text Block] | Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. For the periods presented, all of Acacia’s short-term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of other comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest is included in total other income (expense). Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Security Type Cost Gains Losses Fair Value September 30, 2017: U.S. government fixed income securities $ 57,427 $ 60 $ — $ 57,487 December 31, 2016: U.S. government fixed income securities $ 19,403 $ 40 $ — $ 19,443 |
Patents | Patents. Patents include the cost of patents or patent rights (hereinafter, collectively “patents”) acquired from third-parties or obtained in connection with business combinations. Patent costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to seven years . |
Equity Method Investments, Policy [Policy Text Block] | Equity Method Investments . Equity investments without readily determinable fair values in companies over which the Company has the ability to exercise significant influence, are accounted for using the equity method of accounting, and classified within “Equity Method Investments” in the condensed consolidated balance sheet. Acacia includes its proportionate share of earnings and/or losses of its equity method investees in equity in earnings (losses) of investee in the condensed consolidated statements of operations. Refer to Note 5 for additional information regarding equity method investments. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Investments at Fair Value . On an individual investment basis, Acacia may elect to account for investments in companies where the Company has the ability to exercise significant influence over operating and financial policies of the investee, at fair value. If the fair value option is applied to an investment that would otherwise be accounted for under the equity method of accounting, it is applied to all of the financial interests in the same entity that are eligible items (i.e. common stock and warrants). Refer to Note 5 for additional information regarding investments accounted for at fair value on a recurring basis. |
Impairment of investments [Policy Text Block] | Impairment of Investments. Acacia reviews its equity method investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia employs a systematic methodology quarterly that considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the condensed consolidated statement of operations and a new cost basis in the investment is established. |
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment of Long-lived Assets. Acacia reviews long-lived assets and intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available or not indicative of current fair value, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. |
Income Taxes | Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s condensed consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. The Company’s effective tax rates were 0% and 2% for the three and nine months ended September 30, 2017 , respectively, and 58% and 56% for the three and nine months ended September 30, 2016 , respectively. Results for the three and nine months ended September 30, 2017 included pretax net income of $158,585,000 , and $134,919,000 , respectively, primarily comprised of an unrealized gain on Acacia's investment in Veritone for the three and nine months ended September 30, 2017 totaling $158,979,000 and $153,568,000 , respectively. The unrealized gain created a deferred tax liability totaling approximately $54,108,000 at September 30, 2017. The future anticipated reversal of this deferred tax liability provides for a source of taxable income that allows for the realizability of existing deferred tax assets that have been reduced by a valuation allowance for the periods presented. The effective tax rate reflects both the recognition of the deferred tax liability and the reversal of valuation allowance, resulting in the 0% and 2% tax rate for the three and nine months ended September 30, 2017, respectively. Tax expense for the three and nine months ended September 30, 2017 primarily reflects the impact of state taxes and for the nine month period, foreign withholding taxes incurred on revenue agreements executed with third-party licensees domiciled in foreign jurisdictions. The effective rates for the 2016 periods primarily reflect the impact of foreign withholding taxes related to certain revenue agreements executed with third party licensees domiciled in foreign jurisdictions. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Financial assets and liabilities measured at fair value on a recurring basis as were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2017: Short-term investments $ 57,487 $ — $ — Investment at fair value (Note 5) — — 208,796 Total recurring fair value measurements (1) $ 57,487 $ — $ 208,796 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | A reconciliation of the activity for fair value measurements categorized within Level 3 for the nine months ended September 30, 2017 is as follows (in thousands): Investment at Fair Value Common Stock Warrants Total Opening balance as of January 1, 2017 $ — $ — $ — Total gains and losses included in earnings for the period (1) Gain on conversion of loans and accrued interest 2,671 — 2,671 Gain on exercise of Primary Warrant — 4,616 4,616 Change in fair value of investment, net 115,381 30,900 146,281 Purchases, issues, sales and settlements Purchases and issues 54,202 1,026 55,228 Total recurring fair value measurements (1) $ 172,254 $ 36,542 $ 208,796 |
Marketable Securities [Table Text Block] | Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Security Type Cost Gains Losses Fair Value September 30, 2017: U.S. government fixed income securities $ 57,427 $ 60 $ — $ 57,487 December 31, 2016: U.S. government fixed income securities $ 19,403 $ 40 $ — $ 19,443 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended Numerator (in thousands): 2017 2016 2017 2016 Basic and Diluted Net income (loss) $ 158,465 $ 7,082 $ 132,383 $ (43,456 ) Undistributed earnings allocated to participating securities (139 ) (39 ) (241 ) — Net income (loss) attributable to common stockholders - basic $ 158,326 $ 7,043 $ 132,142 $ (43,456 ) Additional undistributed earnings allocated to unvested shareholders — — 1 — Net income (loss) attributable to common stockholders - diluted $ 158,326 $ 7,043 $ 132,143 $ (43,456 ) Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 50,554,234 50,124,302 50,462,990 50,024,047 Potentially dilutive options and restricted stock units 45,740 494,455 221,735 — Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted 50,599,974 50,618,757 50,684,725 50,024,047 Basic net income (loss) per common share $ 3.13 $ 0.14 $ 2.62 $ (0.87 ) Diluted net income (loss) per common share $ 3.13 $ 0.14 $ 2.61 $ (0.87 ) Anti-dilutive equity-based incentive awards excluded from the computation of diluted income (loss) per share 6,029,156 3,593,708 4,618,618 4,410,974 Maximum price of awards excluded from the computation of diluted income (loss) per share $ 6.75 $ 13.38 $ 6.75 $ 13.38 |
Patents (Tables)
Patents (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table presents the scheduled annual aggregate amortization expense as of September 30, 2017 (in thousands): For the years ending December 31, Remainder of 2017 $ 5,443 2018 20,542 2019 18,527 2020 6,134 2021 5,261 Thereafter 11,453 $ 67,360 |
Investments Investments (Tables
Investments Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Assumptions Used [Table Text Block] | The DLOM for the Veritone common stock and warrants was estimated utilizing a Finnerty model with the following results and assumptions: Veritone Common Stock Veritone Warrants IPO Date September 30, 2017 IPO Date September 30, 2017 Estimated DLOM applied 5.7% 8% 5.7% 5% Volatility assumptions 35% 100% 35% 45% Term assumptions 6 months 45 days 6 months 3 - 6 months |
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block] | For the period from the IPO on May 17, 2017 to September 30, 2017, the accompanying condensed consolidated statement of operations reflected the following (in thousands): Three Months Ended September 30, Nine Months Ended 2017 2017 Gain on conversion of loans and accrued interest (1) $ — $ 2,671 Gain on exercise of warrant (2) — 4,616 Change in fair value of investment, warrants 31,829 30,900 Change in fair value of investment, common stock 127,150 115,381 Net unrealized gain on investment at fair value $ 158,979 $ 153,568 |
Fair Value, Assets Measured on Recurring Basis [Table Text Block] | Summarized financial information for Veritone, presented on a three month lag basis, is as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, 2017 2017 Revenues $ 4,087 $ 7,195 Gross profit 3,751 6,663 Operating expenses 11,599 21,142 Other income (expense), net (13,746 ) (12,960 ) Net loss attributable to common stockholders (24,992 ) (31,912 ) Net loss per share attributable to common stockholders - basic and diluted $ (2.94 ) $ (5.82 ) June 30, December 31, Current assets $ 88,831 $ 21,367 Noncurrent assets 440 981 Total Assets $ 89,271 $ 22,348 Current liabilities $ 33,746 $ 44,501 Noncurrent liabilities 18 22 Total liabilities 33,764 44,523 Preferred stock — 23,350 Total stockholder's equity (deficit) 55,507 (45,525 ) Total liabilities, preferred stock and stockholders’ equity $ 89,271 $ 22,348 |
Description of Business and B22
Description of Business and Basis of Presentation Patent Acquisition (Details) - patents | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Number of patent portfolios acquired | 1 | 2 | 3 | 6 | 25 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Feb. 16, 2017 | |
Summary of Significant Accounting Policies [Line Items] | ||||||
Gain (loss) on investment, net of conversion | $ 158,979,000 | $ 153,568,000 | ||||
Gain on Conversion of Loan and Accrued Interest | 0 | $ 0 | 2,671,000 | $ 0 | ||
Short-term investments | 57,487,000 | 57,487,000 | $ 19,443,000 | |||
Available-for-sale Securities, Amortized Cost Basis | 57,427,000 | 57,427,000 | 19,403,000 | |||
Available-for-sale Securities, Gross Unrealized Gain | 60,000 | 40,000 | ||||
Available-for-sale Securities, Gross Unrealized Loss | 0 | 0 | ||||
Available-for-sale Securities | 57,487,000 | 57,487,000 | 19,443,000 | |||
Investments at fair value | 208,796,000 | 208,796,000 | 0 | |||
Fair Value of Profits Interest | 8,235,000 | 8,235,000 | $ 722,000 | |||
Gain on exercise of warrant | 0 | 0 | 4,616,000 | 0 | ||
Change in fair value of investment, net | 158,979,000 | $ 0 | 146,281,000 | $ 0 | ||
Purchases and issues | 55,228,000 | |||||
Total recurring fair value measurements(1) | 208,796,000 | 208,796,000 | 0 | |||
Deferred Tax Liabilities, Investments | $ 54,108,000 | $ 54,108,000 | ||||
Effective tax rate | 0.00% | (58.00%) | (2.00%) | 56.00% | ||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 158,585,000 | $ 16,551,000 | $ 134,919,000 | $ (28,148,000) | ||
Minimum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Useful life of patents and patent rights | 1 year | |||||
Maximum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Useful life of patents and patent rights | 7 years | |||||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | |||||
Geometric Brownian Motion [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Fair Value Assumptions, Expected Term | 5 years | |||||
Fair Value Assumptions, Expected Volatility Rate | 45.00% | |||||
Geometric Brownian Motion [Member] | Minimum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Fair Value Assumptions, Expected Term | 1 year | |||||
Fair Value Assumptions, Risk Free Interest Rate | 1.00% | |||||
Geometric Brownian Motion [Member] | Maximum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Fair Value Assumptions, Expected Term | 10 years | |||||
Fair Value Assumptions, Risk Free Interest Rate | 2.00% | |||||
Fair Value, Inputs, Level 1 [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Short-term investments | 57,487,000 | $ 57,487,000 | ||||
Investments at fair value | 0 | 0 | ||||
Fair Value, Inputs, Level 2 [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Short-term investments | 0 | 0 | ||||
Investments at fair value | 0 | 0 | ||||
Fair Value, Inputs, Level 3 [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Short-term investments | 0 | 0 | ||||
Investments at fair value | 208,796,000 | 208,796,000 | ||||
Common Stock [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Gain on Conversion of Loan and Accrued Interest | 2,671,000 | |||||
Gain on exercise of warrant | 0 | |||||
Change in fair value of investment, net | 115,381,000 | |||||
Purchases and issues | 54,202,000 | |||||
Total recurring fair value measurements(1) | 172,254,000 | 172,254,000 | 0 | |||
Warrant [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Gain on Conversion of Loan and Accrued Interest | 0 | |||||
Gain on exercise of warrant | 4,616,000 | |||||
Change in fair value of investment, net | 30,900,000 | |||||
Purchases and issues | 1,026,000 | |||||
Total recurring fair value measurements(1) | $ 36,542,000 | $ 36,542,000 | $ 0 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies Concentration Risk (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentrations | |||||
Effective Income Tax Rate Reconciliation, Percent | 0.00% | (58.00%) | (2.00%) | 56.00% | |
Licensee 1 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 100.00% | 100.00% | 39.00% | ||
Licensee 1 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 96.00% | 60.00% | 57.00% | 30.00% | |
Licensee 2 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 22.00% | ||||
Licensee 2 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 27.00% | 23.00% | 27.00% | ||
Licensee 3 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 16.00% | ||||
Licensee 3 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 10.00% | 13.00% | |||
Licensee 4 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 15.00% | ||||
Licensees in foreign jurisdictions [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 3.00% | 93.00% | 39.00% | 78.00% |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Income (Loss) Attributable to Parent | $ 158,465 | $ 7,082 | $ 132,383 | $ (43,456) |
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | 139 | 39 | 241 | 0 |
Net loss available to common stockholders, basic | 158,326 | 7,043 | 132,142 | (43,456) |
Undistributed Earnings (Loss) Allocated to Participating Securities, Diluted | 0 | 0 | 1 | 0 |
Net Income (Loss) Available to Common Stockholders, Diluted | $ 158,326 | $ 7,043 | $ 132,143 | $ (43,456) |
Weighted Average Number of Shares Outstanding, Basic | 50,554,234 | 50,124,302 | 50,462,990 | 50,024,047 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 45,740 | 494,455 | 221,735 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 50,599,974 | 50,618,757 | 50,684,725 | 50,024,047 |
Earnings Per Share, Basic | $ 3.13 | $ 0.14 | $ 2.62 | $ (0.87) |
Earnings Per Share, Diluted | $ 3.13 | $ 0.14 | $ 2.61 | $ (0.87) |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,029,156 | 3,593,708 | 4,618,618 | 4,410,974 |
Maximum [Member] | ||||
Antidilutive Securities Excluded from Computation of Net Income, Per Outstanding Unit, Amount | $ 6.75 | $ 13.38 | $ 6.75 | $ 13.38 |
Patents (Details)
Patents (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Patents, accumulated amortization | $ 376,777,000 | $ 376,777,000 | $ 358,043,000 | ||
Weighted average useful life of patents and patent rights | 4 years | ||||
Impairment of patent-related intangible assets | $ 2,248,000 | $ 0 | $ 2,248,000 | $ 40,165,000 | |
Minimum [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life of patents and patent rights | 1 year | ||||
Maximum [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life of patents and patent rights | 7 years |
Patents Future Amortization Exp
Patents Future Amortization Expense for Intangible Assets (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
For the remainder of 2017 | $ 5,443 |
2,018 | 20,542 |
2,019 | 18,527 |
2,020 | 6,134 |
2,021 | 5,261 |
Thereafter | 11,453 |
Total expected amortization expense | $ 67,360 |
Investments Investments (Detail
Investments Investments (Details) - USD ($) | May 17, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Mar. 14, 2017 | Aug. 15, 2016 |
Investment [Line Items] | ||||||||||
Maximum Investment in Veritone | $ 50,000,000 | |||||||||
Secured Convertible Promissory Note | 20,000,000 | |||||||||
Secured Promissory Note Advance | $ 10,000,000 | |||||||||
Time-sharing Transactions, Stated Interest Rate for Notes Receivable | 6.00% | |||||||||
First Loan Warrant | $ 700,000 | |||||||||
Debt Instrument, Convertible, Conversion Price | $ 13.6088 | |||||||||
Loan receivable and accrued interest | $ 20,736,000 | $ 0 | $ 0 | $ 18,616,000 | ||||||
Common stock, shares outstanding | 50,604,782 | 50,604,782 | 50,476,042 | |||||||
Veritone Primary Warrant | $ 50,000,000 | |||||||||
Cash paid for primary warrant exercise | $ 29,300,000 | |||||||||
10% Warrant | 809,400 | |||||||||
Veritone Bridge Loan | $ 4,000,000 | $ 4,000,000 | ||||||||
Bridge loan stated interest rate | 8.00% | |||||||||
Veritone Bridge Loan Advance 1 | $ 1,000,000 | |||||||||
Veritone Bridge Loan Advance 3 and 4 | $ 2,000,000 | |||||||||
Upfront Shares | 60,000 | |||||||||
Bridge Installment Shares | 90,000 | |||||||||
Bridge Warrant Share | 157,000 | |||||||||
Unamortized loan discount | $ 1,700,000 | |||||||||
Accretion (Amortization) of Discounts and Premiums, Investments | $ 630,000 | |||||||||
Investments at fair value | $ 208,796,000 | 208,796,000 | $ 0 | |||||||
Gain on Conversion of Loan and Accrued Interest | 0 | $ 0 | 2,671,000 | $ 0 | ||||||
Gain on exercise of warrant | 0 | 0 | 4,616,000 | 0 | ||||||
Change in fair value of warrants | 31,829,000 | 30,900,000 | ||||||||
Unrealized Gain (Loss) on Investments | 127,150,000 | 115,381,000 | ||||||||
Loss on fair value investment net | 158,979,000 | 153,568,000 | ||||||||
Net Income (Loss) Available to Common Stockholders, Diluted | $ 158,326,000 | $ 7,043,000 | $ 132,143,000 | $ (43,456,000) | ||||||
Earnings Per Share, Basic | $ 3.13 | $ 0.14 | $ 2.62 | $ (0.87) | ||||||
Assets, Current | $ 162,388,000 | $ 162,388,000 | 188,490,000 | |||||||
Total assets | 441,210,000 | 441,210,000 | 296,003,000 | |||||||
Current liabilities | 27,515,000 | 27,515,000 | 28,191,000 | |||||||
Total liabilities | 36,267,000 | 36,267,000 | 28,560,000 | |||||||
Stockholders' Equity Attributable to Parent | $ 403,488,000 | $ 403,488,000 | 265,589,000 | |||||||
Cash Paid for Investment | 2,250,000 | |||||||||
Equity Method Investment, Ownership Percentage | 23.00% | 23.00% | ||||||||
Equity in earnings (losses) of investee | $ 116,000 | $ 0 | $ 130,000 | $ 0 | ||||||
Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Receivable with Imputed Interest, Effective Yield (Interest Rate) | 9.00% | |||||||||
Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | |||||||||
Fair Value Inputs, Probability of Default | 75.00% | |||||||||
Fair value inputs recovery | 100.00% | |||||||||
Receivable with Imputed Interest, Effective Yield (Interest Rate) | 53.00% | |||||||||
Veritone [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Investment Income, Interest | $ 471,000 | |||||||||
Revenues | $ 4,087,000 | $ 7,195,000 | ||||||||
Gross Profit | 3,751,000 | 6,663,000 | ||||||||
Operating Expenses | 11,599,000 | 21,142,000 | ||||||||
Other Operating Income (Expense), Net | (13,746,000) | (12,960,000) | ||||||||
Net Income (Loss) Available to Common Stockholders, Diluted | $ (24,992,000) | $ (31,912,000) | ||||||||
Earnings Per Share, Basic | $ (2,940) | $ (5,820) | ||||||||
Assets, Current | $ 88,831,000 | $ 88,831,000 | 21,367,000 | |||||||
Noncurrent assets | 440,000 | 440,000 | 981,000 | |||||||
Total assets | 89,271,000 | 89,271,000 | 22,348,000 | |||||||
Current liabilities | 33,746,000 | 33,746,000 | 44,501,000 | |||||||
Noncurrent liabilities | 18,000 | 18,000 | 22,000 | |||||||
Total liabilities | 33,764,000 | 33,764,000 | 44,523,000 | |||||||
Preferred Stock, Value, Outstanding | 0 | 0 | 23,350,000 | |||||||
Stockholders' Equity Attributable to Parent | 55,507,000 | 55,507,000 | (45,525,000) | |||||||
Total liabilities, preferred stock and stockholders' equity | $ 89,271,000 | $ 89,271,000 | $ 22,348,000 | |||||||
Common Stock [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Investments at fair value | 172,254,000 | 172,254,000 | ||||||||
Warrant [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Investments at fair value | $ 36,542,000 | $ 36,542,000 | ||||||||
Veritone Loans [Member] | Veritone [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Common stock, shares outstanding | 1,523,746 | |||||||||
Primary warrant [Member] | Veritone [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Common stock, shares outstanding | 2,150,335 | |||||||||
Bridge Loan [Member] | Veritone [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Common stock, shares outstanding | 295,440 | |||||||||
Finnerty - Common Stock [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 35.00% | 100.00% | ||||||||
Fair Value Inputs, Discount for Lack of Marketability | 6.00% | 8.00% | ||||||||
Fair Value Assumptions, Expected Term | 6 months | 45 days | ||||||||
Monte Carlo [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 40.00% | |||||||||
Fair Value Inputs, Probability of Default | 25.00% | |||||||||
Fair Value Inputs, Discount for Lack of Marketability | 7.00% | |||||||||
Finnerty [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Term | 4 years 11 months | |||||||||
Finnerty [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Inputs, Discount for Lack of Marketability | 25.00% | |||||||||
Finnerty [Member] | Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Inputs, Discount for Lack of Marketability | 30.00% | |||||||||
Black Scholes [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Dividend Payments | $ 0 | |||||||||
Black Scholes [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 45.00% | |||||||||
Fair Value Assumptions, Risk Free Interest Rate | 1.62% | |||||||||
Fair Value Assumptions, Expected Term | 3 years | |||||||||
Black Scholes [Member] | Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 55.00% | |||||||||
Fair Value Assumptions, Risk Free Interest Rate | 2.33% | |||||||||
Fair Value Assumptions, Expected Term | 10 years | |||||||||
Finnerty - Warrants [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 35.00% | 45.00% | ||||||||
Fair Value Inputs, Discount for Lack of Marketability | 6.00% | 5.00% | ||||||||
Fair Value Assumptions, Expected Term | 6 months | |||||||||
Finnerty - Warrants [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Term | 3 months | |||||||||
Finnerty - Warrants [Member] | Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Term | 6 months |
Commitments and Contingencies D
Commitments and Contingencies Details (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
Restricted cash | $ 0 | $ 11,512 |
Stockholders' Equity Stockholde
Stockholders' Equity Stockholders Equity (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Feb. 16, 2017 | |
Beneficial Ownership Percentage Limit | 60.00% | |
Fair Value of Profits Interest | $ 8,235,000 | $ 722,000 |
Geometric Brownian Motion [Member] | ||
Fair Value Assumptions, Expected Term | 5 years | |
Fair Value Assumptions, Expected Volatility Rate | 45.00% | |
Finnerty [Member] | ||
Fair Value Assumptions, Expected Term | 4 years 11 months | |
Term specific volatility | 45.00% | |
Minimum [Member] | Geometric Brownian Motion [Member] | ||
Fair Value Assumptions, Expected Term | 1 year | |
Fair Value Assumptions, Risk Free Interest Rate | 1.00% | |
Minimum [Member] | Finnerty [Member] | ||
Fair Value Inputs, Discount for Lack of Marketability | 25.00% | |
Maximum [Member] | ||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | |
Maximum [Member] | Geometric Brownian Motion [Member] | ||
Fair Value Assumptions, Expected Term | 10 years | |
Fair Value Assumptions, Risk Free Interest Rate | 2.00% | |
Maximum [Member] | Finnerty [Member] | ||
Fair Value Inputs, Discount for Lack of Marketability | 30.00% | |
Veritone [Member] | Minimum [Member] | ||
Share Price | $ 11.71 | |
Veritone [Member] | Maximum [Member] | ||
Share Price | $ 45.45 |