Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 06, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,639,319 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 109,562 | $ 136,604 |
Short-term investments - debt securities | 30,837 | 0 |
Short-term investments - equity securities | 3,011 | 0 |
Accounts receivable | 10,572 | 153 |
Prepaid expenses and other current assets | 3,121 | 2,938 |
Total current assets | 157,103 | 139,695 |
Investments at fair value | 36,648 | 104,754 |
Investment - other | 8,195 | 2,195 |
Patents, net | 18,147 | 61,917 |
Other assets | 183 | 207 |
Total assets | 220,276 | 308,768 |
Current liabilities: | ||
Accounts payable and accrued expenses | 9,067 | 7,956 |
Royalties and contingent legal fees payable | 7,193 | 1,601 |
Total current liabilities | 16,260 | 9,557 |
Other liabilities | 1,874 | 3,552 |
Total liabilities | 18,134 | 13,109 |
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; 49,639,319 and 50,639,926 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 50 | 51 |
Treasury stock, at cost, 2,919,828 and 1,729,408 shares as of September 30, 2018 and December 31, 2017, respectively | (39,272) | (34,640) |
Additional paid-in capital | 650,814 | 648,996 |
Accumulated comprehensive loss | (122) | (88) |
Accumulated deficit | (411,172) | (320,018) |
Total Acacia Research Corporation stockholders' equity | 200,298 | 294,301 |
Noncontrolling interests in operating subsidiaries | 1,844 | 1,358 |
Total stockholders' equity | 202,142 | 295,659 |
Total liabilities and stockholders' equity | $ 220,276 | $ 308,768 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders' Equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 49,639,319 | 50,639,926 |
Common stock, shares outstanding | 49,639,319 | 50,639,926 |
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 | 2,919,828 | 1,729,408 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 13,725,000 | $ 36,633,000 | $ 82,303,000 | $ 61,944,000 |
Operating costs and expenses | ||||
Inventor royalties | 1,181,000 | 0 | 24,166,000 | 4,939,000 |
Contingent legal fees | 2,949,000 | 12,173,000 | 19,745,000 | 16,036,000 |
Other Cost of Operating Revenue | 0 | 0 | 4,000,000 | 0 |
Litigation and licensing expenses - patents | 1,231,000 | 4,073,000 | 6,106,000 | 14,593,000 |
Amortization of patents | 4,952,000 | 5,625,000 | 15,560,000 | 16,711,000 |
General and administrative expenses(1) | 6,089,000 | 12,715,000 | 16,566,000 | 26,365,000 |
Other expenses - business development | 84,000 | 241,000 | 577,000 | 994,000 |
Impairment of Intangible Assets (Excluding Goodwill) | 0 | 2,248,000 | 29,210,000 | 2,248,000 |
Other Cost and Expense, Operating | 2,202,000 | 0 | 2,202,000 | 0 |
Total operating costs and expenses | 18,688,000 | 37,075,000 | 118,132,000 | 81,886,000 |
Operating loss | (4,963,000) | (442,000) | (35,829,000) | (19,942,000) |
Gain on Conversion of Loan and Accrued Interest | 0 | 0 | 0 | 2,671,000 |
Gain on exercise of warrant | 0 | 0 | 0 | 4,616,000 |
Change in fair value of investment, net | (22,377,000) | 158,979,000 | (52,127,000) | 146,281,000 |
Loss on Sale of Investments | (5,539,000) | 0 | (5,539,000) | 0 |
Income (Loss) from Equity Method Investments | 0 | (116,000) | 0 | (130,000) |
Interest income and other | 321,000 | 164,000 | 796,000 | 1,423,000 |
Total other income (expense) | (27,595,000) | 159,027,000 | (56,870,000) | 154,861,000 |
Income (loss) before provision for income taxes | (32,558,000) | 158,585,000 | (92,699,000) | 134,919,000 |
Provision for income taxes | (306,000) | (216,000) | (782,000) | (2,935,000) |
Net income (loss) including noncontrolling interests in subsidiaries | (32,864,000) | 158,369,000 | (93,481,000) | 131,984,000 |
Net (income) loss attributable to noncontrolling interests in subsidiaries | (331,000) | 96,000 | (179,000) | 399,000 |
Net loss attributable to Acacia Research Corporation | (33,195,000) | 158,465,000 | (93,660,000) | 132,383,000 |
Net Income (Loss) Available to Common Stockholders, Basic | (33,195,000) | 158,326,000 | (93,660,000) | 132,142,000 |
Net Income (Loss) Available to Common Stockholders, Diluted | $ (33,195,000) | $ 158,326,000 | $ (93,660,000) | $ 132,143,000 |
Earnings Per Share, Basic | $ (0.67) | $ 3.13 | $ (1.87) | $ 2.62 |
Earnings Per Share, Diluted | $ (0.67) | $ 3.13 | $ (1.87) | $ 2.61 |
Weighted Average Number of Shares Outstanding, Basic | 49,557,748 | 50,554,234 | 50,080,234 | 50,462,990 |
Weighted Average Number of Shares Outstanding, Diluted | 49,557,748 | 50,599,974 | 50,080,234 | 50,684,725 |
General and administrative expenses excluding share-based compensation | $ 6,099,000 | $ 3,262,000 | $ 16,394,000 | $ 13,297,000 |
Non-cash stock compensation general and administrative | 566,000 | 1,272,000 | 1,791,000 | 4,833,000 |
Non-cash stock compensation - profits interests | $ (576,000) | $ 8,181,000 | $ (1,619,000) | $ 8,235,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Other comprehensive income (loss): | ||||
Net income (loss) including noncontrolling interests in operating subsidiaries | $ (32,864) | $ 158,369 | $ (93,481) | $ 131,984 |
Unrealized gain on short-term investments, net of tax of $0 | 85 | 15 | 75 | 20 |
Unrealized gain (loss) on foreign currency translation, net of tax of $0 | (5) | 9 | (109) | 18 |
Total other comprehensive loss | (32,784) | 158,393 | (93,515) | 132,022 |
Comprehensive Income (Loss) Attributable to Noncontrolling Interest | 331 | (96) | 179 | (399) |
Comprehensive income (loss) attributable to Acacia Research Corporation | $ (33,115) | $ 158,489 | $ (93,694) | $ 132,421 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows Statement - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) including noncontrolling interests in operating subsidiaries | $ (93,481,000) | $ 131,984,000 |
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 | 0 | 2,671,000 |
Gain on exercise of Primary Warrant | 0 | (4,616,000) |
Change in fair value of investment, net | 52,127,000 | (146,281,000) |
Loss on Sale of Investments | (5,539,000) | 0 |
Depreciation and amortization | 15,582,000 | 16,780,000 |
Non-cash stock compensation | 172,000 | 13,068,000 |
Impairment of Intangible Assets (Excluding Goodwill) | 29,210,000 | 2,248,000 |
Other | (506,000) | (473,000) |
Changes in assets and liabilities: | ||
Accounts receivable | (5,877,000) | 26,450,000 |
Prepaid expenses and other assets | (183,000) | (874,000) |
Accounts payable and accrued expenses | 1,052,000 | (6,608,000) |
Royalties and contingent legal fees payable | 3,864,000 | 5,916,000 |
Net cash provided by operating activities | 7,499,000 | 34,923,000 |
Cash flows from investing activities: | ||
Payments to Acquire Businesses, Net of Cash Acquired | 10,440,000 | 0 |
Payments to Acquire Other Investments | (7,000,000) | (31,514,000) |
Advances to Investee | 0 | (4,000,000) |
Purchase of available-for-sale investments | (65,883,000) | (424,945,000) |
Maturities and sale of available-for-sale investments | 32,508,000 | 386,920,000 |
Net cash provided by (used in) investing activities | (29,935,000) | (73,539,000) |
Cash flows from financing activities: | ||
Repurchase of common stock | (4,634,000) | 0 |
Repurchased Restricted Common Stock | 229,000 | 35,000 |
Proceeds from exercises of stock options | 257,000 | 680,000 |
Net cash used in financing activities | (4,606,000) | 645,000 |
Increase (decrease) in cash and cash equivalents | (27,042,000) | (37,971,000) |
Cash and cash equivalents, beginning | 136,604,000 | 139,052,000 |
Cash and cash equivalents, ending | $ 109,562,000 | $ 101,081,000 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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. 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. Acacia also identifies opportunities to partner with high-growth and potentially disruptive technology companies. These partnerships usually involve an equity or debt investment by Acacia, along with entering into intellectual property (“IP”) related agreements where Acacia provides IP and other patent related services to these companies. Acacia leverages its experience, expertise, data and relationships developed as a leader in the IP industry to pursue these 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 IP 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. 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 IP through its relationships with inventors, universities, research institutions, technology companies and others. If Acacia’s operating subsidiaries are unable to maintain those relationships and 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 nine months ended September 30, 2018 , Acacia did not obtain control of any new patent portfolios. During fiscal year 2017 Acacia obtained control of one new patent portfolio. In fiscal year 2016, Acacia obtained control of two new patent portfolios, compared to three new patent portfolios, and six new patent portfolios in fiscal years 2015 and 2014, 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. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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 U.S. GAAP 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, 2017 , as reported by Acacia in its Annual Report on Form 10-K filed with the SEC. The December 31, 2017 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. 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, 2018 , 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, 2018 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, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition. Revenue is recognized upon transfer of control of promised bundled IP rights (hereinafter “IP Rights”) and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by Acacia (“Paid-up Revenue Agreements”). Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, that provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio ("Other Settlements"). IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised IP Rights are inputs and (ii) the Company's promise to transfer each individual IP right described above to the customer is not separately identifiable from other promises to transfer IP Rights in the contract. Since the promised IP Rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. Acacia's subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. Acacia’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts with 30-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties, the Company includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they transfer to the licensee. In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the entity transfers promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, the Company is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. 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, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. Revenues were comprised of the following for the periods presented (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Paid-up Revenue Agreements $ 7,250 $ 35,300 $ 70,496 $ 57,460 Recurring Revenue Agreements 3,005 1,333 8,337 4,484 Other Settlements 3,470 — 3,470 — $ 13,725 $ 36,633 $ 82,303 $ 61,944 Refer to “Inventor Royalties and Contingent Legal Expenses” below for information on related direct costs 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. Cost of revenues for the nine months ended September 30, 2018 included $4.0 million of costs to acquire certain patent rights related to revenues recognized in the period. 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. Inventor royalty and contingent legal agreements typically provide for payment by the Company of contractual amounts 30 days subsequent to the fiscal quarter end during which related license fee payments are received from licensees by the Company. Use of Estimates . The preparation of financial statements in conformity with U.S. GAAP 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 equity instruments, stock-based compensation expense including the valuation of profits interests, 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. Three licensees individually accounted for 44% , 25% and 17% of revenues recognized during the three months ended September 30, 2018 , and one licensee accounted for 73% of revenues recognized during the nine months ended September 30, 2018 . One licensee 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 . For the three and nine months ended September 30, 2018 , 61% and 15% , 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, 2017 , 3% and 39% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. The Company does not have any material foreign operations. Three licensees individually represented approximately 57% , 22% and 12% of accounts receivable at September 30, 2018 . One licensee individually represented approximately 100% of accounts receivable at December 31, 2017. 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. 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. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. Financial assets and liabilities measured at fair value on a recurring basis were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2018: Short-term investments - debt securities $ 30,837 $ — $ — Short-term investments - equity securities 3,011 — — Investment at fair value - warrants (Note 5) — — 4,110 Investment at fair value - common stock (Note 5) (1) 32,538 — — Total recurring fair value measurements $ 66,386 $ — $ 4,110 Assets as of December 31, 2017: Investment at fair value (Note 5) (1) $ — $ — $ 104,754 Liabilities as of September 30, 2018: Profits interest units $ — $ — $ 1,422 Liabilities as of December 31, 2017: Profits interest units $ — $ — $ 3,041 ____________________ (1) As of December 31, 2017, the Company's shares of common stock of Veritone Inc. ("Veritone") were subject to a lock-up agreement that expired on February 15, 2018 and measured at fair value using level 3 inputs. As of March 31, 2018 and September 30, 2018, the Company's shares of Veritone common stock were not subject to a lock-up agreement and measured at fair value using level 1 inputs. At June 30, 2018, the Company's shares of Veritone common stock were subject to a lock-up agreement that expired on August 15, 2018, 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. A reconciliation of the activity for fair value measurements categorized within Level 1 and Level 3 for the nine months ended September 30, 2018 is as follows (in thousands): Investment at Fair Value Other Liabilities Common Stock Warrants Total Profits Interest Units Opening balance as of January 1, 2018 $ 90,795 $ 13,959 $ 104,754 $ 3,041 Total gains and losses included in earnings for the period (1) Non-cash stock compensation expense - Profits Interests — — — (1,619 ) Change in fair value of investment, net (42,278 ) (9,849 ) (52,127 ) — Realized loss on sale (5,539 ) — (5,539 ) — Purchases, issues, sales and settlements (10,440 ) — (10,440 ) — Transfers to Level 1 (32,538 ) — (32,538 ) — Total recurring fair value measurements (1) $ — $ 4,110 $ 4,110 $ 1,422 ____________________ (1) All gains and losses included in earnings for the period presented relate to assets and liabilities held as of September 30, 2018 or December 31, 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. The Company accounts for forfeitures of awards as they occur. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described in 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 of the award, 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. The Company has a purchase option to purchase the vested Units that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the Units on the date of termination of continuous service. At each reporting date, the value of the Units that are subject to the purchase option will be the measured at the fair value on the termination date. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying condensed consolidated statements of operations. Treasury Stock . Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital, and reflected as Treasury Stock on the condensed consolidated balance sheets. 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. Short-term Investments. 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 applicable 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). Unrealized gains and losses due to the change in the fair value of our debt securities are recorded as a separate component of other comprehensive income (loss) in stockholders’ equity until realized. Unrealized gains and losses due to the change in the fair value of our equity securities are recorded in the statement of operations in other income (expense). Realized gains and losses are recorded in the statements of operations in other income (expense). Realized and unrealized gains and losses are recorded based on the specific identification method. Interest is included in other income (expense). Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Gross Realized Security Type Cost Gains Losses Gains Losses Fair Value September 30, 2018: U.S. government fixed income securities (Maturity dates in 2018) $ 30,843 $ — $ (6 ) $ — $ — $ 30,837 Equity securities 2,930 — 81 — 3,011 $ 33,773 $ — $ (6 ) $ 81 $ — $ 33,848 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 five years . 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). Other Investments . Equity investments in common stock and in-substance common stock 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. 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. Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity's common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee's losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee's receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Refer to Note 5 for additional information. Impairment of Investments. Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia 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 statements 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, 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. Refer to Note 5 for additional information. 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 1% and 1% for the three and nine months ended September 30, 2018 , respectively and 0% and 2% for the three and nine months ended September 30, 2017 , respectively. Tax expense for the periods presented primarily reflects the impact of state taxes and foreign withholding taxes incurred on revenue agreements executed with third-party licensees domiciled in foreign jurisdictions. The Company has recorded a full valuation allowance against our net deferred tax assets as of September 30, 2018 and 2017. These assets primarily consist of foreign tax credits, capital loss carryforwards and net operating loss carryforwards. On December 22, 2017, new U.S. tax legislation was enacted that has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate to 21% , revising the rules governing net operating losses and foreign tax credits, and introducing new anti-base erosion provisions. Many of the changes were effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service (“IRS”), any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. While our analysis and interpretation of this legislation is ongoing, based on our current evaluation, we reflected a write-down of our deferred income tax assets (including the value of our net operating loss carryforwards and our tax credit carryforwards) due the reduction of the U.S. corporate income tax rate. Based on currently available information, we recorded a reduction of approximately $25,261,000 in the fourth quarter of 2017 related to the revaluation of our deferred tax assets. Given the full valuation allowance provided for net deferred tax assets for the periods presented herein, the change in tax law did not have a material impact on our condensed consolidated financial statements provided herein. There may be additional tax impacts identified in subsequent periods throughout 2018 in accordance with subsequent interpretive guidance issued by the SEC or the IRS. Further, there may be other material adverse effects resulting from the legislation that we have not yet identified. No estimated tax provision has been recorded for tax attributes that are incomplete or subject to change. |
Income (Loss) Per Share
Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2018 | |
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.” The following table presents the weighted-average number of shares of common stock outstanding used in the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 49,557,748 50,554,234 50,080,234 50,462,990 Potentially dilutive options and restricted stock units — 45,740 — 221,735 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted 49,557,748 50,599,974 50,080,234 50,684,725 Basic net income (loss) per common share $ (0.67 ) $ 3.13 $ (1.87 ) $ 2.62 Diluted net income (loss) per common share $ (0.67 ) $ 3.13 $ (1.87 ) $ 2.61 Anti-dilutive equity-based incentive awards excluded from the computation of diluted loss per share 3,518,070 6,029,156 3,549,770 4,618,618 Maximum price of awards excluded from the computation of diluted loss per share $ 6.75 $ 6.75 $ 6.75 $ 6.75 |
Patents
Patents | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Identifiable Intangible Assets | PATENTS Acacia’s only identifiable intangible assets at September 30, 2018 and December 31, 2017 are patents and patent rights. Patent-related accumulated amortization totaled $425,990,000 and $382,220,000 as of September 30, 2018 and December 31, 2017 , respectively. Acacia’s patents have remaining estimated economic useful lives ranging from one to five years . The weighted-average remaining estimated economic useful life of Acacia’s patents is approximately two years . The following table presents the scheduled annual aggregate amortization expense as of September 30, 2018 (in thousands): For the years ending December 31, Remainder of 2018 $ 3,215 2019 10,876 2020 1,682 2021 822 2022 817 Thereafter 735 $ 18,147 Acacia recorded impairment of patent-related intangible asset charges of $28,210,000 . The impairment charges were realized in the period due to a reduction in expected estimated future net cash flows for certain patents due to second quarter 2018 developments in the ongoing litigation. The impairment charges consisted of the excess of the asset’s carrying value over its estimated fair value as of June 30, 2018. Assumptions utilized in the cash flow analysis included margins on estimated net proceeds ranging from 53% to 86% and a discount for the time value of money of zero percent, due to the relatively short time-frame associated with estimated cash flows. |
Investments (Notes)
Investments (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
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 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 statements 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. Upon Veritone’s consummation of its 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 $50.0 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 and accrued interest under the Veritone Bridge Loan of $4.0 million and $21,000 , respectively, 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 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 Company's shares of Veritone common stock and the shares of Veritone common stock underlying the warrants were subject to a lock-up agreement that expired on August 15, 2018, 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 was unregistered as of the issue date and as of September 30, 2018 . On October 5, 2018, a registration statement on Form S-3 registering all of Acacia’s shares of Veritone common stock was declared effective by the SEC. 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 Bridge 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 statements of operations. Interest income for the nine months ended September 30, 2017 was $1.1 million , including accretion of the loan discount of $630,000 . 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 equity 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. On August 23, 2018, Acacia sold 1 million shares of Veritone common stock at $10.44 per share and recorded a realized loss of $5.5 million . As of September 30, 2018 , Acacia’s ownership interest in Veritone, on a fully-diluted basis, was approximately 15% . Acacia’s equity investment in shares of Veritone common stock is recorded at fair value based on the quoted market price of Veritone’s common stock on The NASDAQ Global Market on the applicable valuation date. The fair value at December 31, 2017 was adjusted for an estimated discount for lack of marketability (“DLOM”) associated with the restricted nature of the common shares as of December 31, 2017 (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, 2018 : risk-free interest rates ranging from 2.81% to 3.03% ; expected terms ranging from 2 years to 9 years ; volatility of 70% ; 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 December 31, September 30, IPO Date December 31, September 30, Estimated DLOM applied 5.7% 5% — 5.7% 10% 20% - 31% Volatility assumptions 35% 37% — 35% 72 % - 87% 70% Term assumptions 6 months 2 months — 6 months 5 months 2 - 9 years At September 30, 2018 , the fair value of the 3,119,521 shares of Veritone common stock owned by Acacia totaled $32,538,000 . At September 30, 2018 , the fair value of the 1,120,432 common stock purchase warrants held by Acacia totaled $4,110,000 . At September 30, 2018 , the cumulative net realized and unrealized loss (since the IPO) on our Veritone investment was $8,140,000 . A 10% increase in the DLOM assumptions utilized at all applicable valuation dates would result in an approximate 13% decrease in the fair value of our investment in Veritone warrants at September 30, 2018 , and a corresponding decrease in the net investment gain or loss reflected in the condensed consolidated statements of operations for the applicable period. Changes in the fair value of Acacia’s investment in Veritone are recorded as unrealized gains or losses in the condensed consolidated statements of operations. Summarized financial information for Veritone, presented on a three month lag basis, is as follows (in thousands, except per share amounts): Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Revenues $ 4,168 $ 8,556 Gross profit 3,348 7,172 Operating expenses 17,081 34,855 Other income (expense), net 133 316 Net loss attributable to common stockholders $ (14,330 ) $ (27,379 ) Net loss per share attributable to common stockholders - basic and diluted $ (0.88 ) $ (1.69 ) June 30, December 31, 2017 Current assets $ 97,833 $ 83,805 Noncurrent assets 7,190 4,753 Total Assets $ 105,023 $ 88,558 Current liabilities $ 32,027 $ 27,256 Noncurrent liabilities 473 — Total liabilities 32,500 27,256 Preferred stock — — Total stockholder's equity (deficit) 72,523 61,302 Total liabilities, preferred stock and stockholders’ equity $ 105,023 $ 88,558 Other Investment In June 2017, Acacia made an investment in the Series A Preferred financing round for 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 Series A preferred stock of Miso Robotics, and one board seat. In February 2018, Acacia made an additional equity investment in the Series B Preferred financing round for Miso Robotics totaling $6,000,000 , increasing its ownership interest (Series B preferred stock) in Miso Robotics to approximately 30% , and acquiring an additional board seat. In addition, in June 2017, Acacia also entered into an IP services agreement with Miso Robotics to help Miso Robotics drive AI-based solutions for the restaurant industry. 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. As of February 2018, the preferred stock was not deemed to be in-substance common stock due to the substantive liquidation preference associated with the preferred stock. As such, as of February 2018, the cumulative investment in Miso Robotics is recorded at cost and assessed for any impairment at each balance sheet date. Prior to February 2018, the equity method of accounting was applied. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES 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 On June 17, 2015, Celltrace Communications Ltd. (“Celltrace”) filed a lawsuit against Acacia in U.S. District Court for the Southern District of New York, Case No. 1:15-cv-04746, alleging, among other things, significant damages for alleged breach of contract, unjust enrichment and fraud. Acacia disputes the allegations and does not believe that Celltrace is entitled to any damages. Acacia successfully moved to compel arbitration of the dispute, and the District Court stayed the litigation pending arbitration before the International Court of Arbitration for the International Chamber of Commerce (the “ICC”). Celltrace appealed the decision to the U.S. Court of Appeals for the Second Circuit, which denied the appeal. Celltrace filed its request for arbitration of the claims with the ICC on November 28, 2016. Acacia filed an answer denying all allegations of wrongdoing and asserting affirmative defenses. A tribunal was appointed to preside over the arbitration and conducted its first case management conference on June 26, 2017. The parties have conducted discovery and are submitting their cases in chief to the tribunal in a series of briefs per the tribunal’s orders. That briefing is scheduled to conclude on December 7, 2018. An evidentiary hearing is scheduled to take place in February 2019, and Acacia intends to continue vigorously contesting Celltrace’s allegations. 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 condensed consolidated financial position, results of operations or cash flows. During the three and nine months ended September 30, 2018 , operating expenses included expenses for settlement and contingency accruals totaling $2,202,000 , net of prior accruals. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | STOCKHOLDERS’ EQUITY Repurchases of Common Stock. In February 2018, Acacia’s Board of Directors authorized the repurchase of up to $20,000,000 of the Company’s outstanding common stock in open market purchases or private purchases, from time to time, in amounts and at prices to be determined by the Board of Directors at its discretion (the “Stock Repurchase Program”). In determining whether or not to repurchase any shares of Acacia’s common stock, Acacia’s Board of Directors consider such factors as the impact of the repurchase on Acacia’s cash position, as well as Acacia’s capital needs and whether there is a better alternative use of Acacia’s capital. Acacia has no obligation to repurchase any amount of its common stock under the Stock Repurchase Program. Repurchases to date were made in the open market in compliance with applicable SEC rules. The authorization to repurchase shares presented an opportunity to reduce the outstanding share count and enhance stockholder value. The repurchased shares are expected to be retired. Monthly stock repurchases for the periods presented, all of which were purchased as part of a publicly announced plan or program, were as follows: Total Number of Shares Purchased Average Price paid per Share Approximate Dollar Value of Shares that May Yet be Purchased under the Program Plan Expiration May 1, 2018- May 30, 2018 1,190,420 $ 3.89 $ 15,366,000 February 28, 2019 Totals for 2018 1,190,420 $ 3.89 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 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 fair value of AIP increases beyond the fair value at the issuance date of the membership interests. The membership interests are represented by 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, 2018 . 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, 2018 , AIP holds the Veritone 10% Warrant described in Note 5 . Profits interests totaling 400 Units, or 40% of the membership interests in AIP, were granted in February 2017 pursuant to the Plan, with an aggregate grant date fair value of $722,000 . The fair value of the Units totaled $1,422,000 as of September 30, 2018 . The Company has a purchase option to purchase the vested Units that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the Units on the date of termination of continuous service. At each reporting date, the value of the Units that are subject to the purchase option will be the measured at the fair value on the termination date. Upon full vesting of the units in September 2017, all previously unrecognized compensation expense was immediately recognized. The fair value of the Units is calculated at 40% of the fair value of the 10% Warrant, based on the Black-Scholes option-pricing model ("BSM"), as adjusted for an estimated DLOM, utilizing the following assumptions. For the three months ended September 30, 2018 , assumptions utilized in the BSM included a term of 4 years , stock price from $10.43 - $21.60 , volatility from 50% to 70% , and risk free interest rates of 2.47% - 2.88% for term of 4 years . The estimated DLOM utilized was 27% - 30% , based on assumptions including a term of approximately 4 years and a volatility of 74% - 82% 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 underlying warrant asset, which was approximately 4 years . |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements - Recently 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 is required to use more judgment and make more estimates in connection with the accounting for revenue contracts with customers than under previous guidance, as described in Note 2. Under the standard, (i) an entity should account for a promise to provide a customer with a right to access the entity’s IP 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 IP as the performance occurs, and (ii) an entity’s promise to provide a customer with the right to use its IP is satisfied at a point in time. In addition, revenues from contracts with significant financing components should be recognized at an amount that reflects the price that a customer would have paid if the customer had paid cash for the goods or services when they transfer to the customer (i.e. adjustment for the time value of money). For sales and usage based royalties, the new standard requires that the Company include in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company used the modified retrospective method of adoption and recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings on January 1, 2018. Comparative prior year periods were not adjusted. The new accounting standard was applied to all contracts at the date of initial application. The cumulative effect of applying the new revenue standard, primarily relating to financing components of contracts executed in prior periods and estimates of variable consideration for sales and usage based royalty agreements executed in prior periods, was as follows (in thousands): Balance at December 31, 2017 Adjustments Due to ASC 606 Balance at January 1, 2018 Balance Sheets: Accounts receivable $ 153 $ 4,542 $ 4,695 Royalties and contingent legal fees payable 1,601 1,728 3,329 Accumulated deficit (320,018 ) 2,506 (317,512 ) Noncontrolling interests 1,358 308 1,666 The impact of the adoption of the new accounting standard on the condensed consolidated balance sheet and statement of operations was as follows (in thousands): September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Balance Sheets: Accounts receivable $ 10,572 $ 7,250 $ 3,322 Royalties and contingent legal fees payable 7,193 6,011 1,182 Three Months Ended September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Statements of Operations: Revenues $ 13,725 $ 15,798 $ (2,073 ) Inventor royalties 1,181 1,050 131 Contingent legal fees 2,949 3,598 (649 ) Nine Months Ended September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Statements of Operations: Revenues $ 82,303 $ 83,583 $ (1,280 ) Inventor royalties $ 24,166 $ 23,718 $ 448 Contingent legal fees $ 19,745 $ 20,339 $ (594 ) 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. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. Recent Accounting Pronouncements - Not Yet Adopted. 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 and expects to adopt the new standard effective January 1, 2019. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS On October 5, 2018, a registration statement on Form S-3 registering all of Acacia’s shares of Veritone common stock was declared effective by the SEC. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Revenue Recognition | Revenue Recognition. Revenue is recognized upon transfer of control of promised bundled IP rights (hereinafter “IP Rights”) and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by Acacia (“Paid-up Revenue Agreements”). Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, that provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio ("Other Settlements"). IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised IP Rights are inputs and (ii) the Company's promise to transfer each individual IP right described above to the customer is not separately identifiable from other promises to transfer IP Rights in the contract. Since the promised IP Rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. Acacia's subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. Acacia’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts with 30-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties, the Company includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they transfer to the licensee. In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the entity transfers promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, the Company is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. 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, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. Revenues were comprised of the following for the periods presented (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Paid-up Revenue Agreements $ 7,250 $ 35,300 $ 70,496 $ 57,460 Recurring Revenue Agreements 3,005 1,333 8,337 4,484 Other Settlements 3,470 — 3,470 — $ 13,725 $ 36,633 $ 82,303 $ 61,944 Refer to “Inventor Royalties and Contingent Legal Expenses” below for information on related direct costs of revenues. | |
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. Cost of revenues for the nine months ended September 30, 2018 included $4.0 million of costs to acquire certain patent rights related to revenues recognized in the period. | |
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. Inventor royalty and contingent legal agreements typically provide for payment by the Company of contractual amounts 30 days subsequent to the fiscal quarter end during which related license fee payments are received from licensees by the Company. | |
Use of Estimates | Use of Estimates . The preparation of financial statements in conformity with U.S. GAAP 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 equity instruments, stock-based compensation expense including the valuation of profits interests, 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. Three licensees individually accounted for 44% , 25% and 17% of revenues recognized during the three months ended September 30, 2018 , and one licensee accounted for 73% of revenues recognized during the nine months ended September 30, 2018 . One licensee 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 . For the three and nine months ended September 30, 2018 , 61% and 15% , 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, 2017 , 3% and 39% , respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. The Company does not have any material foreign operations. Three licensees individually represented approximately 57% , 22% and 12% of accounts receivable at September 30, 2018 . One licensee individually represented approximately 100% of accounts receivable at December 31, 2017. | |
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. 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. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. Financial assets and liabilities measured at fair value on a recurring basis were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2018: Short-term investments - debt securities $ 30,837 $ — $ — Short-term investments - equity securities 3,011 — — Investment at fair value - warrants (Note 5) — — 4,110 Investment at fair value - common stock (Note 5) (1) 32,538 — — Total recurring fair value measurements $ 66,386 $ — $ 4,110 Assets as of December 31, 2017: Investment at fair value (Note 5) (1) $ — $ — $ 104,754 Liabilities as of September 30, 2018: Profits interest units $ — $ — $ 1,422 Liabilities as of December 31, 2017: Profits interest units $ — $ — $ 3,041 ____________________ (1) As of December 31, 2017, the Company's shares of common stock of Veritone Inc. ("Veritone") were subject to a lock-up agreement that expired on February 15, 2018 and measured at fair value using level 3 inputs. As of March 31, 2018 and September 30, 2018, the Company's shares of Veritone common stock were not subject to a lock-up agreement and measured at fair value using level 1 inputs. At June 30, 2018, the Company's shares of Veritone common stock were subject to a lock-up agreement that expired on August 15, 2018, 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. A reconciliation of the activity for fair value measurements categorized within Level 1 and Level 3 for the nine months ended September 30, 2018 is as follows (in thousands): Investment at Fair Value Other Liabilities Common Stock Warrants Total Profits Interest Units Opening balance as of January 1, 2018 $ 90,795 $ 13,959 $ 104,754 $ 3,041 Total gains and losses included in earnings for the period (1) Non-cash stock compensation expense - Profits Interests — — — (1,619 ) Change in fair value of investment, net (42,278 ) (9,849 ) (52,127 ) — Realized loss on sale (5,539 ) — (5,539 ) — Purchases, issues, sales and settlements (10,440 ) — (10,440 ) — Transfers to Level 1 (32,538 ) — (32,538 ) — Total recurring fair value measurements (1) $ — $ 4,110 $ 4,110 $ 1,422 ____________________ (1) All gains and losses included in earnings for the period presented relate to assets and liabilities held as of September 30, 2018 or December 31, 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. The Company accounts for forfeitures of awards as they occur. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described in 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 of the award, 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. The Company has a purchase option to purchase the vested Units that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the Units on the date of termination of continuous service. At each reporting date, the value of the Units that are subject to the purchase option will be the measured at the fair value on the termination date. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying condensed consolidated statements of operations. | |
Treasury Stock [Policy Text Block] | Treasury Stock . Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital, and reflected as Treasury Stock on the condensed consolidated balance sheets. | |
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] | Short-term Investments. 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 applicable 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). Unrealized gains and losses due to the change in the fair value of our debt securities are recorded as a separate component of other comprehensive income (loss) in stockholders’ equity until realized. Unrealized gains and losses due to the change in the fair value of our equity securities are recorded in the statement of operations in other income (expense). Realized gains and losses are recorded in the statements of operations in other income (expense). Realized and unrealized gains and losses are recorded based on the specific identification method. Interest is included in other income (expense). Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Gross Realized Security Type Cost Gains Losses Gains Losses Fair Value September 30, 2018: U.S. government fixed income securities (Maturity dates in 2018) $ 30,843 $ — $ (6 ) $ — $ — $ 30,837 Equity securities 2,930 — 81 — 3,011 $ 33,773 $ — $ (6 ) $ 81 $ — $ 33,848 | |
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 five years . | |
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). | |
Equity Method Investments [Policy Text Block] | Other Investments . Equity investments in common stock and in-substance common stock 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. 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. Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity's common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee's losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee's receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Refer to Note 5 for additional information. | |
Impairment of investments [Policy Text Block] | Impairment of Investments. Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia 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 statements 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, 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. Refer to Note 5 for additional information. 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 1% and 1% for the three and nine months ended September 30, 2018 , respectively and 0% and 2% for the three and nine months ended September 30, 2017 , respectively. Tax expense for the periods presented primarily reflects the impact of state taxes and foreign withholding taxes incurred on revenue agreements executed with third-party licensees domiciled in foreign jurisdictions. The Company has recorded a full valuation allowance against our net deferred tax assets as of September 30, 2018 and 2017. These assets primarily consist of foreign tax credits, capital loss carryforwards and net operating loss carryforwards. On December 22, 2017, new U.S. tax legislation was enacted that has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate to 21% , revising the rules governing net operating losses and foreign tax credits, and introducing new anti-base erosion provisions. Many of the changes were effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service (“IRS”), any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. While our analysis and interpretation of this legislation is ongoing, based on our current evaluation, we reflected a write-down of our deferred income tax assets (including the value of our net operating loss carryforwards and our tax credit carryforwards) due the reduction of the U.S. corporate income tax rate. Based on currently available information, we recorded a reduction of approximately $25,261,000 in the fourth quarter of 2017 related to the revaluation of our deferred tax assets. Given the full valuation allowance provided for net deferred tax assets for the periods presented herein, the change in tax law did not have a material impact on our condensed consolidated financial statements provided herein. There may be additional tax impacts identified in subsequent periods throughout 2018 in accordance with subsequent interpretive guidance issued by the SEC or the IRS. Further, there may be other material adverse effects resulting from the legislation that we have not yet identified. No estimated tax provision has been recorded for tax attributes that are incomplete or subject to change. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 were as follows (in thousands): Level 1 Level 2 Level 3 Assets as of September 30, 2018: Short-term investments - debt securities $ 30,837 $ — $ — Short-term investments - equity securities 3,011 — — Investment at fair value - warrants (Note 5) — — 4,110 Investment at fair value - common stock (Note 5) (1) 32,538 — — Total recurring fair value measurements $ 66,386 $ — $ 4,110 Assets as of December 31, 2017: Investment at fair value (Note 5) (1) $ — $ — $ 104,754 Liabilities as of September 30, 2018: Profits interest units $ — $ — $ 1,422 Liabilities as of December 31, 2017: Profits interest units $ — $ — $ 3,041 |
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 1 and Level 3 for the nine months ended September 30, 2018 is as follows (in thousands): Investment at Fair Value Other Liabilities Common Stock Warrants Total Profits Interest Units Opening balance as of January 1, 2018 $ 90,795 $ 13,959 $ 104,754 $ 3,041 Total gains and losses included in earnings for the period (1) Non-cash stock compensation expense - Profits Interests — — — (1,619 ) Change in fair value of investment, net (42,278 ) (9,849 ) (52,127 ) — Realized loss on sale (5,539 ) — (5,539 ) — Purchases, issues, sales and settlements (10,440 ) — (10,440 ) — Transfers to Level 1 (32,538 ) — (32,538 ) — Total recurring fair value measurements (1) $ — $ 4,110 $ 4,110 $ 1,422 |
Marketable Securities [Table Text Block] | Short-term marketable securities for the periods presented were comprised of the following (in thousands): Gross Unrealized Gross Realized Security Type Cost Gains Losses Gains Losses Fair Value September 30, 2018: U.S. government fixed income securities (Maturity dates in 2018) $ 30,843 $ — $ (6 ) $ — $ — $ 30,837 Equity securities 2,930 — 81 — 3,011 $ 33,773 $ — $ (6 ) $ 81 $ — $ 33,848 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the weighted-average number of shares of common stock outstanding used in the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended 2018 2017 2018 2017 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 49,557,748 50,554,234 50,080,234 50,462,990 Potentially dilutive options and restricted stock units — 45,740 — 221,735 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted 49,557,748 50,599,974 50,080,234 50,684,725 Basic net income (loss) per common share $ (0.67 ) $ 3.13 $ (1.87 ) $ 2.62 Diluted net income (loss) per common share $ (0.67 ) $ 3.13 $ (1.87 ) $ 2.61 Anti-dilutive equity-based incentive awards excluded from the computation of diluted loss per share 3,518,070 6,029,156 3,549,770 4,618,618 Maximum price of awards excluded from the computation of diluted loss per share $ 6.75 $ 6.75 $ 6.75 $ 6.75 |
Patents (Tables)
Patents (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 (in thousands): For the years ending December 31, Remainder of 2018 $ 3,215 2019 10,876 2020 1,682 2021 822 2022 817 Thereafter 735 $ 18,147 |
Investments Investments (Tables
Investments Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 December 31, September 30, IPO Date December 31, September 30, Estimated DLOM applied 5.7% 5% — 5.7% 10% 20% - 31% Volatility assumptions 35% 37% — 35% 72 % - 87% 70% Term assumptions 6 months 2 months 0 months 6 months 5 months 2 years - 9 years |
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 June 30, 2018 Six Months Ended June 30, 2018 Revenues $ 4,168 $ 8,556 Gross profit 3,348 7,172 Operating expenses 17,081 34,855 Other income (expense), net 133 316 Net loss attributable to common stockholders $ (14,330 ) $ (27,379 ) Net loss per share attributable to common stockholders - basic and diluted $ (0.88 ) $ (1.69 ) June 30, December 31, 2017 Current assets $ 97,833 $ 83,805 Noncurrent assets 7,190 4,753 Total Assets $ 105,023 $ 88,558 Current liabilities $ 32,027 $ 27,256 Noncurrent liabilities 473 — Total liabilities 32,500 27,256 Preferred stock — — Total stockholder's equity (deficit) 72,523 61,302 Total liabilities, preferred stock and stockholders’ equity $ 105,023 $ 88,558 |
Stockholders' Equity stockholde
Stockholders' Equity stockholders equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Class of Treasury Stock [Table Text Block] | Monthly stock repurchases for the periods presented, all of which were purchased as part of a publicly announced plan or program, were as follows: Total Number of Shares Purchased Average Price paid per Share Approximate Dollar Value of Shares that May Yet be Purchased under the Program Plan Expiration May 1, 2018- May 30, 2018 1,190,420 $ 3.89 $ 15,366,000 February 28, 2019 Totals for 2018 1,190,420 $ 3.89 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements Details (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The cumulative effect of applying the new revenue standard, primarily relating to financing components of contracts executed in prior periods and estimates of variable consideration for sales and usage based royalty agreements executed in prior periods, was as follows (in thousands): Balance at December 31, 2017 Adjustments Due to ASC 606 Balance at January 1, 2018 Balance Sheets: Accounts receivable $ 153 $ 4,542 $ 4,695 Royalties and contingent legal fees payable 1,601 1,728 3,329 Accumulated deficit (320,018 ) 2,506 (317,512 ) Noncontrolling interests 1,358 308 1,666 The impact of the adoption of the new accounting standard on the condensed consolidated balance sheet and statement of operations was as follows (in thousands): September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Balance Sheets: Accounts receivable $ 10,572 $ 7,250 $ 3,322 Royalties and contingent legal fees payable 7,193 6,011 1,182 Three Months Ended September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Statements of Operations: Revenues $ 13,725 $ 15,798 $ (2,073 ) Inventor royalties 1,181 1,050 131 Contingent legal fees 2,949 3,598 (649 ) Nine Months Ended September 30, 2018 Balance as Reported Balance under Legacy GAAP Effect of Change Statements of Operations: Revenues $ 82,303 $ 83,583 $ (1,280 ) Inventor royalties $ 24,166 $ 23,718 $ 448 Contingent legal fees $ 19,745 $ 20,339 $ (594 ) |
Description of Business and B_2
Description of Business and Basis of Presentation Patent Acquisition (Details) - patent_portfolios | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of patent portfolios acquired | 1 | 2 | 3 | 6 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Feb. 16, 2017 | |
Summary of Significant Accounting Policies [Line Items] | ||||||
Short-term investments - debt securities | $ 30,837,000 | $ 0 | $ 30,837,000 | |||
Investment in common stock | 32,538,000 | 90,795,000 | 32,538,000 | |||
Investment warrants | 4,110,000 | 13,959,000 | 4,110,000 | |||
Other Cost of Operating Revenue | 0 | $ 0 | 4,000,000 | $ 0 | ||
Short-term investments | 66,386,000 | 66,386,000 | ||||
Available-for-sale Securities, Amortized Cost Basis | 30,843,000 | 30,843,000 | ||||
Available-for-sale Debt Securities Gross Unrealized Gain | 0 | |||||
Available-for-sale Debt Securities, Gross Unrealized Loss | 6,000 | |||||
Available-for-sale Securities, Gross Unrealized Gain | 0 | |||||
Available-for-sale Securities, Gross Unrealized Loss | (6,000) | |||||
Available-for-sale Securities | 33,848,000 | 33,848,000 | ||||
Investments at fair value | 36,648,000 | 104,754,000 | 36,648,000 | |||
Unrealized Gain (Loss) on Investments - Common Stock | (42,278,000) | |||||
Unrealized Gain (Loss) on Investment - Warrants | (9,849,000) | |||||
Fair Value of Profits Interest | 1,422,000 | 3,041,000 | 1,422,000 | $ 722,000 | ||
Non-cash stock compensation - profits interests | (576,000) | 8,181,000 | (1,619,000) | 8,235,000 | ||
Change in fair value of investment, net | (22,377,000) | 158,979,000 | (52,127,000) | 146,281,000 | ||
Loss on Sale of Investments | $ (5,539,000) | $ 0 | (5,539,000) | $ 0 | ||
Defined Benefit Plan, Plan Assets Level 3 Reconciliation, Increase (Decrease) for Purchases, Sales, and Settlements | (10,440,000) | |||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | (32,538,000) | |||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |||||
Write-down of deferred tax assets | 25,261,000 | |||||
Available-for-sale Equity Securities, Amortized Cost Basis | $ 2,930,000 | 2,930,000 | ||||
Available-for-sale Securities, Gross Realized Gains | 81,000 | |||||
Short-term investments - equity securities | 3,011,000 | $ 0 | 3,011,000 | |||
Available-for-sale Securities, Amortized Cost Basis | $ 33,773,000 | $ 33,773,000 | ||||
Effective tax rate | (1.00%) | 0.00% | 1.00% | (2.00%) | ||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ (32,558,000) | $ 158,585,000 | $ (92,699,000) | $ 134,919,000 | ||
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 | 5 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 | 4 years | |||||
Geometric Brownian Motion [Member] | Minimum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | |||||
Fair Value Assumptions, Risk Free Interest Rate | 2.00% | |||||
Geometric Brownian Motion [Member] | Maximum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Fair Value Assumptions, Expected Volatility Rate | 70.00% | |||||
Fair Value Assumptions, Risk Free Interest Rate | 3.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies Concentration Risk (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Concentrations | |||||
Effective Income Tax Rate Reconciliation, Percent | (1.00%) | 0.00% | 1.00% | (2.00%) | |
Licensee 1 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 57.00% | 57.00% | 100.00% | ||
Licensee 1 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 44.00% | 96.00% | 73.00% | 57.00% | |
Licensee 2 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 22.00% | 22.00% | |||
Licensee 2 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 25.00% | 23.00% | |||
Licensee 3 [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Accounts Receivable | 12.00% | 12.00% | |||
Licensee 3 [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 17.00% | 10.00% | |||
Licensees in foreign jurisdictions [Member] | License Revenues [Member] | |||||
Concentrations | |||||
Concentration Risk, Percentage - Revenues | 61.00% | 3.00% | 15.00% | 39.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies Types of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Revenues - Paid up | $ 7,250 | $ 35,300 | $ 70,496 | $ 57,460 |
Revenues - Sales-based | 3,005 | 1,333 | 8,337 | 4,484 |
Revenue - other settlements | 3,470 | 0 | 3,470 | 0 |
Revenues | $ 13,725 | $ 36,633 | $ 82,303 | $ 61,944 |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Weighted Average Number of Shares Outstanding, Basic | 49,557,748 | 50,554,234 | 50,080,234 | 50,462,990 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 45,740 | 0 | 221,735 |
Weighted Average Number of Shares Outstanding, Diluted | 49,557,748 | 50,599,974 | 50,080,234 | 50,684,725 |
Earnings Per Share, Basic | $ (0.67) | $ 3.13 | $ (1.87) | $ 2.62 |
Earnings Per Share, Diluted | $ (0.67) | $ 3.13 | $ (1.87) | $ 2.61 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,518,070 | 6,029,156 | 3,549,770 | 4,618,618 |
Maximum [Member] | ||||
Antidilutive Securities Excluded from Computation of Net Income, Per Outstanding Unit, Amount | $ 6.75 | $ 6.75 | $ 6.75 | $ 6.75 |
Patents (Details)
Patents (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Asset Impairment Charges | $ 28,210,000 | ||||
Patents, accumulated amortization | $ 425,990,000 | $ 425,990,000 | $ 382,220,000 | ||
Weighted average useful life of patents and patent rights | 2 years | ||||
Impairment of Intangible Assets (Excluding Goodwill) | $ 0 | $ 2,248,000 | $ 29,210,000 | $ 2,248,000 | |
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 | 5 years |
Patents Future Amortization Exp
Patents Future Amortization Expense for Intangible Assets (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
For the remainder of 2018 | $ 3,215 |
2,019 | 10,876 |
2,020 | 1,682 |
2,021 | 822 |
2,022 | 817 |
Thereafter | 735 |
Total expected amortization expense | $ 18,147 |
Investments Investments (Detail
Investments Investments (Details) - USD ($) | May 17, 2017 | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Mar. 14, 2017 | Aug. 15, 2016 |
Investment [Line Items] | ||||||||||
Investment in Miso Robotics | $ 6,000,000 | $ 2,250,000 | ||||||||
Percentage of ownership, Miso Robotics | 30.00% | 30.00% | 22.60% | |||||||
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 | $ 20,700,000 | |||||||||
Common stock, shares outstanding | 49,639,319 | 49,639,319 | 50,639,926 | |||||||
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 | |||||||||
Interest Income, Other | $ 1,100,000 | |||||||||
Accretion (Amortization) of Discounts and Premiums, Investments | $ 630,000 | |||||||||
Percentage of ownership, Veritone | 20.00% | |||||||||
Shares of Investment Sold | 1,000,000 | |||||||||
Sale of Stock, Price Per Share | $ 10.44 | $ 10.44 | ||||||||
Investments at fair value | $ 36,648,000 | $ 36,648,000 | $ 104,754,000 | |||||||
Revenues | 13,725,000 | 36,633,000 | 82,303,000 | 61,944,000 | ||||||
Net Income (Loss) Available to Common Stockholders, Diluted | $ (33,195,000) | $ 158,326,000 | $ (93,660,000) | $ 132,143,000 | ||||||
Earnings Per Share, Basic | $ (0.67) | $ 3.13 | $ (1.87) | $ 2.62 | ||||||
Assets, Current | $ 157,103,000 | $ 157,103,000 | 139,695,000 | |||||||
Total assets | 220,276,000 | 220,276,000 | 308,768,000 | |||||||
Current liabilities | 16,260,000 | 16,260,000 | 9,557,000 | |||||||
Total liabilities | 18,134,000 | 18,134,000 | 13,109,000 | |||||||
Stockholders' Equity Attributable to Parent | $ 200,298,000 | $ 200,298,000 | 294,301,000 | |||||||
Equity Method Investment, Ownership Percentage | 15.00% | 15.00% | ||||||||
Cumulative Unrealized Gain (Loss) Since Inception | $ 8,140,000 | $ 8,140,000 | ||||||||
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 | $ 21,000 | |||||||||
Revenues | $ 4,168,000 | $ 8,556,000 | ||||||||
Gross Profit | 3,348,000 | 7,172,000 | ||||||||
Operating Expenses | 17,081,000 | 34,855,000 | ||||||||
Other Operating Income (Expense), Net | 133,000 | 316,000 | ||||||||
Net Income (Loss) Available to Common Stockholders, Diluted | $ (14,330,000) | $ (27,379,000) | ||||||||
Earnings Per Share, Basic | $ (880) | $ (1,690) | ||||||||
Assets, Current | $ 97,833,000 | $ 97,833,000 | 83,805,000 | |||||||
Noncurrent assets | 7,190,000 | 7,190,000 | 4,753,000 | |||||||
Total assets | 105,023,000 | 105,023,000 | 88,558,000 | |||||||
Current liabilities | 32,027,000 | 32,027,000 | 27,256,000 | |||||||
Noncurrent liabilities | 473,000 | 473,000 | 0 | |||||||
Total liabilities | 32,500,000 | 32,500,000 | 27,256,000 | |||||||
Preferred Stock, Value, Outstanding | 0 | 0 | 0 | |||||||
Stockholders' Equity Attributable to Parent | 72,523,000 | 72,523,000 | 61,302,000 | |||||||
Total liabilities, preferred stock and stockholders' equity | $ 105,023,000 | $ 105,023,000 | $ 88,558,000 | |||||||
Common Stock [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Investment Owned, Balance, Shares | 3,119,521 | |||||||||
Investments at fair value | 32,538,000 | 32,538,000 | ||||||||
Warrant [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Investment Owned, Balance, Shares | 1,120,432 | |||||||||
Investments at fair value | $ 4,110,000 | $ 4,110,000 | ||||||||
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% | 0.00% | 37.00% | |||||||
Fair Value Inputs, Discount for Lack of Marketability | 6.00% | 0.00% | 5.00% | |||||||
Fair Value Assumptions, Expected Term | 6 months | 0 months | 2 months | |||||||
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 | |||||||||
Finnerty [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Inputs, Discount for Lack of Marketability | 27.00% | |||||||||
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 | 70.00% | |||||||||
Fair Value Assumptions, Risk Free Interest Rate | 2.81% | |||||||||
Fair Value Assumptions, Expected Term | 2 years | |||||||||
Black Scholes [Member] | Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Risk Free Interest Rate | 3.03% | |||||||||
Fair Value Assumptions, Expected Term | 9 years | |||||||||
Finnerty - Warrants [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 35.00% | |||||||||
Fair Value Inputs, Discount for Lack of Marketability | 6.00% | 10.00% | ||||||||
Fair Value Assumptions, Expected Term | 6 months | 2 years | 5 months | |||||||
Finnerty - Warrants [Member] | Minimum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 70.00% | 72.00% | ||||||||
Fair Value Inputs, Discount for Lack of Marketability | 20.00% | |||||||||
Finnerty - Warrants [Member] | Maximum [Member] | ||||||||||
Investment [Line Items] | ||||||||||
Fair Value Assumptions, Expected Volatility Rate | 87.00% | |||||||||
Fair Value Inputs, Discount for Lack of Marketability | 31.00% |
Commitments and Contingencies D
Commitments and Contingencies Details (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
other [Abstract] | ||||
Other Cost and Expense, Operating | $ 2,202,000 | $ 0 | $ 2,202,000 | $ 0 |
Stockholders' Equity Stockhol_2
Stockholders' Equity Stockholders Equity (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Feb. 16, 2017 | |
Treasury Stock, Shares, Acquired | 1,190,420 | ||
Treasury Stock Acquired, Average Cost Per Share | $ 3.89 | ||
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased | 15,366,000 | ||
Stock Repurchase Program Expiration Date | Feb. 28, 2019 | ||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 20,000,000 | ||
Beneficial Ownership Percentage Limit | 60.00% | ||
Fair Value of Profits Interest | $ 1,422,000 | $ 3,041,000 | $ 722,000 |
Geometric Brownian Motion [Member] | |||
Fair Value Assumptions, Expected Term | 4 years | ||
Finnerty [Member] | |||
Fair Value Assumptions, Expected Term | 4 years | ||
Minimum [Member] | Geometric Brownian Motion [Member] | |||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | ||
Fair Value Assumptions, Risk Free Interest Rate | 2.00% | ||
Minimum [Member] | Finnerty [Member] | |||
Fair Value Inputs, Discount for Lack of Marketability | 27.00% | ||
Term specific volatility | 74.00% | ||
Maximum [Member] | |||
Fair Value Assumptions, Expected Volatility Rate | 50.00% | ||
Maximum [Member] | Geometric Brownian Motion [Member] | |||
Fair Value Assumptions, Expected Volatility Rate | 70.00% | ||
Fair Value Assumptions, Risk Free Interest Rate | 3.00% | ||
Maximum [Member] | Finnerty [Member] | |||
Fair Value Inputs, Discount for Lack of Marketability | 30.00% | ||
Term specific volatility | 82.00% | ||
Veritone [Member] | Minimum [Member] | |||
Share Price | $ 10.43 | ||
Veritone [Member] | Maximum [Member] | |||
Share Price | $ 21.60 |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements Details (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Accounts Receivable, Net, Current | $ 10,572 | $ 10,572 | $ 4,695 | $ 153 | ||
Royalties and contingent legal fees payable | 7,193 | 7,193 | 3,329 | 1,601 | ||
Retained Earnings (Accumulated Deficit) | (411,172) | (411,172) | (317,512) | (320,018) | ||
Stockholders' Equity Attributable to Noncontrolling Interest | 1,844 | 1,844 | 1,666 | $ 1,358 | ||
Licenses Revenue | 13,725 | $ 36,633 | 82,303 | $ 61,944 | ||
Royalty Expense | 1,181 | 0 | 24,166 | 4,939 | ||
Contingent legal fees | 2,949 | $ 12,173 | 19,745 | $ 16,036 | ||
Adjustments for New Accounting Pronouncement [Member] | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Accounts Receivable, Net, Current | 3,322 | 3,322 | 4,542 | |||
Royalties and contingent legal fees payable | 1,182 | 1,182 | 1,728 | |||
Retained Earnings (Accumulated Deficit) | 2,506 | |||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 308 | |||||
Licenses Revenue | (2,073) | (1,280) | ||||
Royalty Expense | 131 | 448 | ||||
Contingent legal fees | (649) | (594) | ||||
Balance before adjustment [Member] | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Accounts Receivable, Net, Current | 7,250 | 7,250 | ||||
Royalties and contingent legal fees payable | 6,011 | 6,011 | ||||
Licenses Revenue | 15,798 | 83,583 | ||||
Royalty Expense | 1,050 | 23,718 | ||||
Contingent legal fees | $ 3,598 | $ 20,339 |