| LF EQUITY INCOME FUND PORTFOLIO INVESTMENT | 10. LF EQUITY INCOME FUND PORTFOLIO INVESTMENT On April 3, 2020, the Company entered into an Option Agreement with
Seller, which included general terms through which the Company was provided the option to purchase life sciences equity securities in
a portfolio of public and private companies (“Portfolio Companies”) for an aggregate purchase price of £223.9 million,
approximately $ 277.5 On June 4, 2020, the Company executed the Transaction Agreement between
Link Fund Solutions Limited, Seller, and the Company. Pursuant to the Transaction Agreement, the Company agreed to purchase from Seller
and Seller agreed to transfer to the Company the specified equity securities of all Portfolio Companies at set prices at various future
dates. The transfer dates would vary among the Portfolio Companies as the Transaction Agreement gives the Company the exclusive right
to determine when to call for transfer of each security, and because each Portfolio Company (or its existing equity holders) may be required
to approve the transfer due to rights of first refusals and other company-specific terms and conditions. Thus, the execution of the Transaction
Agreement resulted in forward contracts for the Company to purchase equity securities in each public and private company at a specified
price on a future date. In accordance with the Transaction Agreement, the Company transferred
the total purchase price of £223.9 million into an escrow account. Upon the transfer of equity securities in the Portfolio Companies
to the Company, the associated funds were released from the escrow account to Seller based on the consideration amount assigned to the
equity securities for such Portfolio Companies in the Transaction Agreement. As of December 31, 2020, all of the equity securities in
the Portfolio Companies were transferred to the Company pursuant to the Transaction Agreement. The Company has sold a portion of the equity
securities of such Portfolio Companies while retaining an interest in a number of operating businesses, including a controlling interest
in one of the Portfolio Companies. For accounting purposes, the total purchase price of the portfolio
was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an
appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted
market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market
transactions and factoring in a discount for the illiquidity of these securities. Changes in the fair value of Acacia’s investment in the Portfolio
Companies are recorded as unrealized gains or losses in the consolidated statements of operations. For the three and six months ended June 30, 2021
and 2020, the accompanying consolidated statements of operations reflected the following:
Schedule of unrealized gains or losses
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(In thousands)
Change in fair value of equity securities - LF Fund securities $ 11,097 $ (1,069 ) $ 48,273 $ (1,069 )
Change in fair value of equity securities derivative – 6,891 – 6,891
Change in fair value of equity securities forward contract – 74,662 – 74,662
Gain (loss) on sale of trading security - LF Fund securities 15,055 (6,110 ) 15,055 (6,110 )
Net realized and unrealized gain on investment in LF Fund securities $ 26,152 $ 74,374 $ 63,328 $ 74,374 As part of the Company’s
acquisition of equity securities in the Portfolio Companies, the Company acquired a majority interest in the equity securities of MalinJ1,
which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition
as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single
identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such the cost basis of the MalinJ1
securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through
its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as it owns 37.9% of outstanding shares of Viamet. The following discussion and analysis of our financial condition
and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes
included in Part I, Item1 of this Quarterly Report on Form10-Q for the six months ended June 30, 2021, or this Report. This discussion
and analysis contains forward-looking statements that are based on our current expectations and reflect our plans, estimates and anticipated
future financial performance. See the section of this Report entitled “Cautionary Statement Regarding Forward-Looking Statements”
for additional information. These statements involve numerous risks and uncertainties. Our actual results may differ materially from those
expressed or implied by these forward-looking statements as a result of many factors, including those set forth in “Risk Factors”
in Part II, Item1A. of this Report. General Acacia Research Corporation (the “Company,” “we,”
“us,” or “our”) acquires businesses and operating assets that we believe to be undervalued and where we believe
we can leverage our resources and skill sets to realize and unlock value. We leverage our (i) access to flexible capital that can be deployed
unconditionally, (ii) expertise in corporate governance and operational restructuring, (iii) willingness to invest in out of favor industries
and businesses that suffer from a complexity discount and untangle complex, multi-factor situations, and (iv) expertise and relationships
in certain sectors, to complete strategic acquisitions of businesses, divisions, and/or assets with a focus on mature technology, healthcare,
industrial and certain financial segments. We seek to identify opportunities where we believe we are advantaged buyers, where we can avoid
structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price
due to our unique capabilities, relationships, or expertise, or where we believe the target would be worth more to us than to other buyers. We operate our business based on three key principles of People, Process
and Performance and have built a management team with identified expertise in Research, Execution and Operation of our targeted acquisitions. We utilized these skill sets and resources to acquire a portfolio of
equity securities of public and private life science businesses, or the “Portfolio Companies”, in June 2020. As of June 30,
2021, we have monetized a portion of the portfolio while retaining an interest in a number of operating businesses, including a controlling
interest in one of the companies in the portfolio. Further, some of the businesses in which we continue to hold an interest generate revenues
through the receipt of royalties. We also operate our legacy business of investing in intellectual property,
or IP, and related absolute return assets and engaging in the licensing and enforcement of patented technologies. We partner with inventors
and patent owners, from small entities to large corporations, applying our legal and technology expertise to patent assets to unlock the
financial value in their patented inventions. We are an intermediary in the patent marketplace, bridging the gap between invention and
application, and facilitating efficiency in connection with the monetization of patent assets. We generate revenues and related cash flows from the granting of IP
rights for the use of patented technologies that our operating subsidiaries control or own. We 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. Currently, on a consolidated basis, our operating subsidiaries own
or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies
used in a variety of industries. We have established a proven track record of licensing and enforcement
success with over 1,600 license agreements executed to date, across nearly 200 patent portfolio licensing and enforcement programs. To
date, we have generated gross licensing revenue of approximately $1.7 billion, and have returned $822.4 million to our patent partners. Executive Summary Overview Our operating activities during the periods presented were focused
on the continued operation of our patent licensing and enforcement business, including the continued pursuit of our ongoing patent licensing
and enforcement programs. Patent Licensing and Enforcement
- Patent Litigation Trial Dates and Related Trials As of the date of this report, our operating subsidiaries have one
pending patent infringement case with a scheduled trial date in the next twelve months. Patent infringement trials are components of our
overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities for us.
Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may
occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates.
In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for
reasons that are beyond our control. While scheduled trial dates provide an indication of the timing of possible future revenue generating
opportunities for us, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities.
These future opportunities can result in varying outcomes. In fact, it is difficult to predict the outcome of patent enforcement litigation
at the trial level and outcomes can be unfavorable. It can be difficult to understand complex patented technologies, and as a result,
this may lead to a higher rate of unfavorable litigation outcomes. Moreover, in the event of a favorable outcome, there is, in our experience,
a higher rate of successful appeals in patent enforcement litigation than more standard business litigation. Such appeals are expensive
and time consuming, resulting in increased costs and a potential for delayed or foregone revenue opportunities in the event of modification
or reversal of favorable outcomes. Although we diligently pursue enforcement litigation, we cannot predict with reliability the decisions
made by juries and trial courts. Please refer to Item 1A. “Risk Factors” for additional information regarding trials, patent
litigation and related risks.
- Litigation and Licensing Expense We expect patent-related legal expenses to continue to fluctuate from
period to period based on the factors summarized herein, in connection with future trial dates, international enforcement, strategic patent
portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement activities. The pursuit
of enforcement actions in connection with our licensing and enforcement programs can involve certain risks and uncertainties, including
the following:
· Increases in patent-related legal expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants, re-exam and inter partes review costs, case-related audio/video presentations and other litigation support and administrative costs, could increase our operating costs and decrease our profit generating opportunities;
· Our patented technologies and enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order to successfully enforce our patents. Moreover, such appeals may not be successful;
· New legislation, regulations or rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating costs and decrease our profit generating opportunities. Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks of asserting patent enforcement actions;
· Courts may rule that our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions, which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our financial position;
· The complexity of negotiations and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to increased intervals of time between the filing of litigation and potential revenue events (i.e., markman dates, trial dates), which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios; and
· Fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above could harm our operating results and our financial position. Investments in Patent Portfolios With respect to our licensing, enforcement and overall business, neither
we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and investment in patents,
inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology companies
and others. If our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then we
may not be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth. Our current or future relationships may not provide the volume or quality
of technologies necessary to sustain our licensing, enforcement and overall business. In some cases, universities and other technology
sources compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research
in exchange for the exclusive right to commercialize resulting inventions. These and other strategies employed by potential partners may
reduce the number of technology sources and potential clients to whom we can market our solutions. If we are unable to maintain current
relationships and sources of technology or to secure new relationships and sources of technology, such inability may have a material adverse
effect on our revenues, operating results, financial condition and ability to maintain our licensing and enforcement business. Patent Portfolio Intake One of the significant challenges in our industry continues to be quality
patent intake due to the challenges and complexity associated with the current patent environment. During the six months ended June 30, 2021, we acquired one new patent
portfolio consisting of Wi-Fi 6 standard essential patents. The patents and patent rights acquired during the six months ended June 30,
2021 have estimated economic useful lives of approximately five years. In fiscal year 2020, we acquired five patent portfolios. Starboard Securities In 2019, as part of its strategy to grow, the Company began evaluating
a wide range of strategic opportunities that culminated in the strategic investment in the Company by certain funds and accounts, or the
Buyers, affiliated with, or managed by, Starboard Value LP, or Starboard. On November 18, 2019, the Company entered into a Securities
Purchase Agreement with Starboard and the Buyers, or the Securities Purchase Agreement, pursuant to which the Buyers purchased (i) 350,000
shares of the Company’s newly designated Series A Convertible Preferred Stock, or Series A Preferred Stock, at an aggregate purchase
price of $35 million, and warrants to purchase up to 5,000,000 shares of the Company’s common stock, or Series A Warrants. The Securities
Purchase Agreements also established the terms of certain senior secured notes, or Notes, and additional warrants, or the Series B Warrants,
which may be issued to the Buyers in the future. Refer to Notes 2 and 9 to the consolidated financial statements elsewhere herein for
more information related to the Series A Preferred Stock, Series A Warrants and Series B Warrants. In connection with the Buyer’s
investment, Starboard was granted certain corporate governance rights, including the right to appoint Jonathan Sagal, Managing Director
of Starboard, as a director of the Company and recommend two additional directors for appointment to our Board of Directors. The investment
by the Buyers is referred to herein as the “Starboard Investment,” and the Series A Preferred Stock, Series A Warrants and
Series B Warrants are referred to herein as, collectively, the “Starboard Securities.” On February 14, 2020, the Company’s stockholders approved, for
purposes of Nasdaq Rules 5635(b) and 5635(d), as applicable, (i) the voting of the Series A Preferred Stock on an as-converted basis and
(ii) the issuance of the maximum number of shares of common stock issuable in connection with the potential future (A) conversion of the
Series A Preferred Stock and (B) exercise of the Series A and Series B Warrants, in each case, without giving effect to the exchange cap
set forth in the Series A Preferred Stock Certificate of Designations and in the Series A Warrants, issued pursuant to the Securities
Purchase Agreement dated November 18, 2019. Refer to Note 9 to the consolidated financial statements elsewhere herein for additional information.
The Company’s stockholders also approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to
increase the total number of authorized shares of common stock by 200,000,000 shares, from 100,000,000 shares to 300,000,000 shares. On February 25, 2020, pursuant to the terms of the Securities Purchase
Agreement with Starboard and the Buyers, the Company issued Series B Warrants to purchase up to 100 million shares of the Company’s
common stock at an exercise price of either (i) $5.25 per share, if exercising by cash payment, or (ii) $3.65 per share, if exercising
by cancellation of a portion of Notes. The Company issued the Series B Warrants for an aggregate purchase price of $4.6 million. Refer
to Note 9 to the consolidated financial statements elsewhere herein for additional information. Pursuant to the terms of the Securities Purchase Agreement with Starboard
and the Buyers, on June 4, 2020, the Company issued $115 million in Notes to the Buyers. Also on June 4, 2020, in connection with the
issuance of the Notes, the Company entered into a Supplemental Agreement with Starboard, or the Supplemental Agreement, through which,
the Company agreed to redeem $80 million aggregate principal amount of the Notes by September 30, 2020, and $35 million aggregate principal
amount of the Notes by December 31, 2020, resulting in the total principal outstanding being paid by December 31, 2020. Per the Supplemental
Agreement, interest is payable semiannually at a rate of 6.00% per annum, and in an event of default, the interest rate is increased to
10% per annum. The Notes outlined certain financial and non-financial covenants. Additionally, all or any portion of the principal amount
outstanding under the Notes may, at the election of the holders, be surrendered to the Company for cancellation in payment of the exercise
price upon the exercise of the Series B Warrants. On June 30, 2020, the Company entered into an Exchange Agreement, or
the Exchange Agreement, with Merton Acquisition HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company,
or Merton, and Starboard, on behalf of itself and on behalf of the Buyers, including the holders of the Notes. Pursuant to the Exchange
Agreement, the holders of the Notes exchanged the entire outstanding principal amount of the Notes for new senior notes, or the New Notes,
issued by Merton and having an aggregate outstanding original principal amount of $115 million. The New Notes bear interest at a rate
of 6.00% per annum and will mature December 31, 2020. The New Notes are fully guaranteed by the Company and are secured by an all-assets
pledge of the Company and Merton and non-recourse equity pledges of each of the Company’s material subsidiaries. Pursuant to the
Exchange Agreement, the New Notes (i) are deemed to be “Notes” for purposes of the Securities Purchase Agreement, (ii) are
deemed to be “June 2020 Approved Investment Notes” for purposes of the Supplemental Agreement, and therefore the Company agreed
to redeem $80 million principal amount of the New Notes by September 30, 2020 and $35 million principal amount of the New Notes by December
31, 2020, and (iii) are deemed to be “Notes” for the purposes of the Series B Warrants, and therefore may be tendered pursuant
to a Note Cancellation under the Series B Warrants on the terms set forth in the Series B Warrants and the New Notes. Delivery of notes
in the form of the New Notes will satisfy the delivery of Exchange Notes pursuant to Section 16(i) of the Certificate of Designations
of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share. The New Notes will not be deemed to be “Notes”
for the purposes of the Registration Rights Agreement, dated as of November 18, 2019, by and between the Company, Starboard and the Buyers. On January 29, 2021, the Company redeemed $50 million of the New Notes.
On March 31, 2021, the Company reissued $50 million of the New Notes. On June 30, 2021, the Company issued $30 million of June 2021 Merton
Notes, due October 15, 2021 and amended the maturity date of the New Notes to October 15, 2021. The June 2021 Merton Notes cannot be used
to exercise Series B Warrants issued to Starboard Value. The total principal amount outstanding of New Notes, including the June 2021
Merton Notes, as of June 30, 2021 was $145 million. Refer to Note 9 to the consolidated financial statements elsewhere herein for additional
information. LF Equity Income Fund Portfolio Investment On April 3, 2020, the Company entered into an Option Agreement with
LF Equity Income Fund (“Seller”) to purchase equity securities in the Portfolio Companies, for an aggregate purchase price
of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020. On June 4, 2020, the Company executed the Transaction Agreement between
Link Fund Solutions Limited, or Link, Seller, and the Company. Pursuant to the Transaction Agreement, the Company will purchase from Seller
and Seller will transfer to the Company the specified equity securities of all Portfolio Companies at set prices at various future dates.
In accordance with the Transaction Agreement, the Company transferred the total purchase price of £223.9 million into an escrow
account. As each of the equity securities in the Portfolio are transferred to the Company, the associated funds will be released from
the escrow account to Seller based on the consideration amount assigned to the equity securities in the Transaction Agreement. The Transaction Agreement includes an initial consideration amount
for each of the equity securities as noted above, which represents the amount of cash that will be withdrawn from the escrow account upon
the transfer of each security to the Company. Refer to Note 10 to the consolidated financial statements elsewhere herein for additional
information. Operating Activities Our revenues historically have fluctuated quarterly, and can vary significantly,
based on a number of factors including the following:
· the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee;
· the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments;
· fluctuations in the total number of agreements executed each period;
· the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs;
· the relative maturity of licensing programs during the applicable periods;
· other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors;
· the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approached a court determined trial date; and
· fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above. Our management does not attempt to manage for smooth sequential periodic
growth in revenues from period to period, and therefore, periodic results can be uneven. Unlike most operating businesses and industries,
licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or
both continue into subsequent periods, and depending on a number of other factors, such potential revenues may be pushed into subsequent
fiscal periods. Revenues for the six months ended June 30, 2021 and 2020 included fees
from the following technology licensing and enforcement programs:
• Bone Wedge technology (1)(2) • Wireless Mesh Networking technology (1)
• Flash Memory technology (1) • MIPI DSI technology (2)
• Internet search, advertising and cloud computing technology (1)(2) • Semiconductor and Memory-Related technology (2)
• Speech codecs used in wireless and wireline systems technology (1)(2) • Super Resolutions Microscopy technology (2)
• Wireless Infrastructure and User Equipment technology (1) • Video Conferencing technology (2)
• Networking and Security technology (1)
__________________________
(1) Licensing and enforcement program generating revenue in fiscal year 2021
(2) Licensing and enforcement program generating revenue in fiscal year 2020 Consolidated Results of Operations Summary for the Three and Six Months Ended June 30, 2021 and 2020
Three Months Ended Six Months Ended
June
30, June
30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
(In thousands, except percentage change values)
Revenues $ 17,400 $ 2,118 $ 15,282 722% $ 23,203 $ 5,933 $ 17,270 291%
Operating costs and expenses 15,756 8,866 6,890 78% 27,235 16,250 10,985 68%
Operating income (loss) 1,644 (6,748 ) 8,392 (124% ) (4,032 ) (10,317 ) 6,285 (61% )
Other income (expense)* 18,379 12,894 5,485 43% (139,653 ) 3,834 (143,487 ) N/A
Income (loss) before income taxes* 20,023 6,146 13,877 226% (143,685 ) (6,483 ) (137,202 ) N/A
Income tax (expense) benefit* (510 ) 2 (512 ) N/A (520 ) 1,340 (1,860 ) (139% )
Net income (loss) attributable to Acacia Research Corporation* 19,507 6,148 13,359 217% (145,111 ) (5,143 ) (139,968 ) N/A * Percent change not meaningful due to change. Results of Operations – Three months ended June 30, 2021
compared with the three months ended June 30, 2020 Revenues increased $15.3 million to $17.4 million for the three months
ended June 30, 2021, as compared to $2.1 million in the comparable prior year quarter, primarily due to an increase in revenues from the
new agreements executed during the quarter. Refer to “ Investments in Patent Portfolios” Income before income taxes was $20.0 million for the three months ended
June 30, 2021, and $6.1 million for the three months ended June 30, 2020. The net change was comprised of the change in revenues described
above and other changes in operating expenses and other income and expenses as follows: · Paid-up
revenue increased $14.8 million due to increase in revenue from newly executed licensing agreements during the quarter, supplemented by
an increase of $0.5 million in recurring revenue that provides for quarterly sales-based license fees. Refer to Note 2 to the consolidated
financial statements elsewhere herein for additional information regarding certain sales-based revenue contracts that provide for the
payment of quarterly license fees based on quarterly sales of applicable product units by licensees. · Inventor
royalties and contingent legal fees, on a combined basis, increased $4.1 million, from $0.7 million to $4.8 million, primarily due to
increase in revenues as describe above. · Litigation
and licensing expenses - patents increased to $1.8 million, primarily due to a net increase in litigation support and third-party technical
consulting expenses associated with ongoing litigation. · Amortization
of patents expense increased to $2.6 million, due to an increase in scheduled amortization resulting from the new portfolios acquired
in 2020 and 2021. · Other
patent portfolio income decreased $0.1 million, due to reversal of expenses for settlement and contingency accruals recorded in the comparable
prior year quarter. · General
and administrative expenses, excluding non-cash stock compensation, increased $0.9 million, from $5.1 million to $6.0 million, primarily
due to higher personnel cost and board fees, and to a lesser extent from corporate, general and administrative costs related to legal
and other business development expenses. · Net
non-cash stock compensation expense increased $0.1 million, from $0.4 million to $0.5 million, primarily due to stock grants issued to
employees and the Board of Directors in 2021. · There
was no unrealized gain or loss on our equity investment for the three months ended June 30, 2021, as compared to an unrealized gain of
$2.7 million for the three months ended June 30, 2020. There was no realized gain or loss on our equity investment for the three months
ended June 30, 2021, as compared to a realized gain of $0.6 million for the three months ended June 30, 2020. Refer to Note 5 to the consolidated
financial statements elsewhere herein for additional information. · Unrealized
gain from equity securities decreased to $11.2 million for the three months ended June 30, 2021, as compared to an unrealized gain of
$85.1 million for the three months ended June 30, 2020. Refer to Notes 2 and 10 to the consolidated financial statements elsewhere herein
for additional information. · Realized
gain or loss from the sale of our equity securities increased from a loss of $7.1 million for the three months ended June 30, 2020 to
a gain of $14.6 million for the three months ended June 30, 2021. Refer to Notes 2 and 10 to the consolidated financial statements elsewhere
herein for additional information regarding our investment in equity securities. · Interest
income and other decreased to $0.1 million for the three months ended June 30, 2021 from $0.3 million for the three months ended June
30, 2020, mainly due to a decrease in interest income from our investment in debt securities. Refer to Note 2 to the consolidated financial
statements elsewhere herein for additional information regarding our investment in equity securities. · We
incurred interest expense of $1.8 million during the three months ended June 30, 2021 from the Notes issued in June 2020, as compared
to $0.8 million during the three months ended June 30, 2020. Refer to Note 9 to the consolidated financial statements elsewhere herein
for additional information regarding the Starboard Senior Secured Notes. · We
incurred losses on foreign currency exchange of $0.2 million and $4.9 million during the three months ended June 30, 2021 and 2020, respectively. · We
incurred an unrealized net loss of $5.6 million from the fair value measurements of the Series A and Series B warrants and the em |
