Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 08, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-37721 | |
Entity Registrant Name | Acacia Research Corporation | |
Entity Central Index Key | 0000934549 | |
Entity Tax Identification Number | 95-4405754 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 767 THIRD AVENUE | |
Entity Address, Address Line Two | SUITE 602 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10017 | |
City Area Code | (949) | |
Local Phone Number | 480-8300 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 49,591,852 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 217,957 | $ 165,546 |
Restricted cash | 761 | 0 |
Equity securities at fair value | 387,120 | 109,103 |
Equity securities without readily determinable fair value | 5,816 | 143,257 |
Investment securities - equity method investments | 31,840 | 30,673 |
Investment at fair value | 0 | 2,752 |
Accounts receivable | 412 | 506 |
Other receivable (Note 3) | 21,539 | 0 |
Prepaid expenses and other current assets | 3,986 | 5,832 |
Total current assets | 669,431 | 457,669 |
Long-term restricted cash | 35,424 | 35,000 |
Patents, net of accumulated amortization | 39,826 | 16,912 |
Leased right-of-use assets | 671 | 951 |
Other non-current assets | 4,482 | 4,988 |
Total assets | 749,834 | 515,520 |
Current liabilities: | ||
Accounts payable | 2,196 | 1,019 |
Accrued expenses and other current liabilities | 5,586 | 3,707 |
Accrued compensation | 4,019 | 2,265 |
Royalties and contingent legal fees payable | 1,793 | 2,162 |
Accrued patent investment costs | 8,000 | 0 |
Senior Secured Notes Payable | 182,855 | 115,663 |
Total current liabilities | 204,449 | 124,816 |
Series A warrant liabilities | 18,527 | 6,640 |
Series A embedded derivative liabilities | 41,411 | 26,728 |
Series B warrant liabilities | 229,637 | 52,341 |
Long-term lease liabilities | 671 | 951 |
Other long-term liabilities | 5,591 | 591 |
Total liabilities | 500,286 | 212,067 |
Commitments and contingencies | ||
Series A redeemable convertible preferred stock, par value $0.001 per share; stated value $100 per share; 350,000 shares authorized, issued and outstanding as of September 30, 2021 and December 31, 2020; aggregate liquidation preference of $35,000 as of September 30, 2021 and December 31, 2020 | 13,686 | 10,924 |
Stockholders' equity: | ||
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 49,591,852 and 49,279,453 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 50 | 49 |
Treasury stock, at cost, 4,604,365 shares as of September 30, 2021 and December 31, 2020 | (43,270) | (43,270) |
Additional paid-in capital | 649,349 | 651,416 |
Accumulated deficit | (382,215) | (326,708) |
Total Acacia Research Corporation stockholders' equity | 223,914 | 281,487 |
Noncontrolling interests | 11,948 | 11,042 |
Total stockholders' equity | 235,862 | 292,529 |
Total liabilities, redeemable convertible preferred stock, and stockholders' equity | $ 749,834 | $ 515,520 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 49,591,852 | 49,279,453 |
Common stock, shares outstanding | 49,591,852 | 49,279,453 |
Treasury stock, shares | 4,604,365 | 4,604,365 |
Redeemable Preferred Stock [Member] | ||
Series A redeemable convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series A redeemable convertible preferred stock, value per share | $ 100 | $ 100 |
Series A redeemable convertible preferred stock, shares authorized | 350,000 | 350,000 |
Series A redeemable convertible preferred stock, liquidation preference | $ 35,000 | $ 35,000 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,582 | $ 19,466 | $ 24,785 | $ 25,399 |
Patent portfolio operations: | ||||
Inventor royalties | 280 | 5,772 | 823 | 6,843 |
Contingent legal fees | 285 | 6,609 | 5,735 | 6,855 |
Litigation and licensing expenses - patents | 782 | 1,001 | 4,881 | 3,497 |
Amortization of patents | 2,612 | 1,174 | 7,086 | 3,522 |
Other patent portfolio income | 0 | 0 | 0 | (308) |
Patent portfolio expenses | 3,959 | 14,556 | 18,525 | 20,409 |
Net patent portfolio (loss) income | (2,377) | 4,910 | 6,260 | 4,990 |
General and administrative expenses | 10,345 | 7,692 | 23,014 | 18,089 |
Operating loss | (12,722) | (2,782) | (16,754) | (13,099) |
Other income (expense): | ||||
Change in fair value of investment, net | 0 | (3,081) | (2,752) | 3,704 |
Gain (loss) on sale of investment | 0 | 0 | 3,591 | (2,762) |
Change in fair value of the Series A and B warrants and embedded derivatives | 619 | 20,672 | (203,866) | (46,612) |
Gain on sale of prepaid investment and derivative | 0 | 2,845 | 0 | 2,845 |
Change in fair value of equity securities | 66,502 | 20,488 | 115,509 | 99,449 |
Gain (loss) on sale of equity securities | 37,688 | 2,737 | 53,124 | (4,272) |
Earnings on equity investment in joint venture | 0 | 0 | 2,737 | 0 |
Loss on foreign currency exchange | (17) | (48) | (193) | (4,938) |
Interest expense on Senior Secured Notes | (2,531) | (2,410) | (5,601) | (3,178) |
Interest income and other | 76 | 10 | 135 | 811 |
Total other income (expense) | 102,337 | 41,213 | (37,316) | 45,047 |
Income (loss) before income taxes | 89,615 | 38,431 | (54,070) | 31,948 |
Income tax (expense) benefit | (11) | (83) | (531) | 1,257 |
Net income (loss) including noncontrolling interests in subsidiaries | 89,604 | 38,348 | (54,601) | 33,205 |
Net income attributable to noncontrolling interests in subsidiaries | 0 | 0 | (906) | 0 |
Net income (loss) attributable to Acacia Research Corporation | $ 89,604 | $ 38,348 | $ (55,507) | $ 33,205 |
Net income (loss) attributable to common stockholders - Basic | $ 72,984 | $ 30,529 | $ (59,054) | $ 24,838 |
Basic net income (loss) per common share | $ 1.49 | $ 0.63 | $ (1.21) | $ 0.51 |
Weighted average number of shares outstanding - Basic | 48,949,504 | 48,467,885 | 48,759,873 | 48,949,706 |
Net income (loss) attributable to common stockholders - Diluted | $ 80,171 | $ 29,204 | $ (59,054) | $ 21,380 |
Diluted net income (loss) per common share | $ 0.86 | $ 0.32 | $ (1.21) | $ 0.36 |
Weighted average number of shares outstanding - Diluted | 93,081,502 | 90,624,702 | 48,759,873 | 60,153,773 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Series A Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 8,089 | $ 50 | $ (39,272) | $ 652,003 | $ (439,656) | $ 1,833 | $ 174,958 |
Balance at beginning, shares at Dec. 31, 2019 | 350,000 | 50,370,987 | |||||
Net income attributable to Acacia Research Corporation | 33,205 | 33,205 | |||||
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value | 2,045 | (2,045) | (2,045) | ||||
Dividend on Series A Redeemable Convertible Preferred Stock | (1,119) | (1,119) | |||||
Stock options exercised | 48 | 48 | |||||
Stock options exercised, Shares | 13,333 | ||||||
Issuance of common stock for vesting of restricted stock units | |||||||
Issuance of common stock for vesting of restricted stock units, shares | 14,354 | ||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures | |||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures, shares | 565,316 | ||||||
Compensation expense for share-based awards | 1,243 | 1,243 | |||||
Repurchase of common stock | $ (1) | (3,998) | (3,999) | ||||
Repurchase of common stock, Shares | (1,684,537) | ||||||
Ending balance, value at Sep. 30, 2020 | $ 10,134 | $ 49 | (43,270) | 650,130 | (406,451) | 1,833 | 202,291 |
Balance at ending, shares at Sep. 30, 2020 | 350,000 | 49,279,453 | |||||
Beginning balance, value at Jun. 30, 2020 | $ 9,400 | $ 49 | (43,270) | 650,843 | (444,799) | 1,833 | 164,656 |
Balance at beginning, shares at Jun. 30, 2020 | 350,000 | 49,306,137 | |||||
Net income attributable to Acacia Research Corporation | 38,348 | 38,348 | |||||
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value | 734 | (734) | (734) | ||||
Dividend on Series A Redeemable Convertible Preferred Stock | (467) | (467) | |||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures | |||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures, shares | (26,684) | ||||||
Compensation expense for share-based awards | 488 | 488 | |||||
Ending balance, value at Sep. 30, 2020 | $ 10,134 | $ 49 | (43,270) | 650,130 | (406,451) | 1,833 | 202,291 |
Balance at ending, shares at Sep. 30, 2020 | 350,000 | 49,279,453 | |||||
Beginning balance, value at Dec. 31, 2020 | $ 10,924 | $ 49 | (43,270) | 651,416 | (326,708) | 11,042 | 292,529 |
Balance at beginning, shares at Dec. 31, 2020 | 350,000 | 49,279,453 | |||||
Net income attributable to Acacia Research Corporation | (54,601) | ||||||
Net (loss) income including noncontrolling interests in subsidiaries | (55,507) | 906 | (54,601) | ||||
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value | 2,762 | (2,762) | (2,762) | ||||
Dividend on Series A Redeemable Convertible Preferred Stock | (785) | (785) | |||||
Stock options exercised | $ 1 | 201 | 202 | ||||
Stock options exercised, Shares | 60,000 | ||||||
Issuance of common stock for vesting of restricted stock units | |||||||
Issuance of common stock for vesting of restricted stock units, shares | 28,834 | ||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures | |||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures, shares | 223,565 | ||||||
Compensation expense for share-based awards | 1,279 | 1,279 | |||||
Ending balance, value at Sep. 30, 2021 | $ 13,686 | $ 50 | (43,270) | 649,349 | (382,215) | 11,948 | 235,862 |
Balance at ending, shares at Sep. 30, 2021 | 350,000 | 49,591,852 | |||||
Beginning balance, value at Jun. 30, 2021 | $ 12,695 | $ 50 | (43,270) | 650,194 | (471,819) | 11,948 | 147,103 |
Balance at beginning, shares at Jun. 30, 2021 | 350,000 | 49,616,602 | |||||
Net income attributable to Acacia Research Corporation | 89,604 | ||||||
Net (loss) income including noncontrolling interests in subsidiaries | 89,604 | 89,604 | |||||
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value | 991 | (991) | (991) | ||||
Dividend on Series A Redeemable Convertible Preferred Stock | (262) | (262) | |||||
Stock options exercised | 108 | 108 | |||||
Stock options exercised, Shares | 30,000 | ||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures | |||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures, shares | (54,750) | ||||||
Compensation expense for share-based awards | 300 | 300 | |||||
Ending balance, value at Sep. 30, 2021 | $ 13,686 | $ 50 | $ (43,270) | $ 649,349 | $ (382,215) | $ 11,948 | $ 235,862 |
Balance at ending, shares at Sep. 30, 2021 | 350,000 | 49,591,852 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net (loss) income including noncontrolling interests in subsidiaries | $ (54,601) | $ 33,205 |
Adjustments to reconcile net (loss) income including noncontrolling interests in subsidiaries to net cash (used in) provided by operating activities: | ||
Change in fair value of investment, net | 2,752 | (3,704) |
(Gain) loss on sale of investment | (3,591) | 2,762 |
Depreciation and amortization | 7,198 | 3,609 |
Amortization of debt discount and issuance costs | 460 | 955 |
Change in fair value of Series A redeemable convertible preferred stock embedded derivative | 14,683 | 7,708 |
Change in fair value of Series A warrants | 11,887 | 2,036 |
Change in fair value of Series B warrants | 177,296 | 36,867 |
Non-cash stock compensation | 1,279 | 1,243 |
Loss on foreign currency exchange | 193 | 4,938 |
Change in fair value of equity securities | (115,509) | (99,449) |
(Gain) loss on sale of equity securities | (53,124) | 4,272 |
Gain on sale of prepaid investment and derivative | 0 | (2,845) |
Earnings on equity investment in joint venture, net of distributions received | (907) | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | 94 | 248 |
Prepaid expenses and other assets | (2,345) | 1,038 |
Accounts payable and accrued expenses | 7,002 | 614 |
Royalties and contingent legal fees payable | (369) | 12,052 |
Net cash (used in) provided by operating activities | (7,602) | 5,549 |
Cash flows from investing activities: | ||
Patent acquisition | (13,000) | (13,780) |
Sale of investment at fair value | 3,591 | 1,460 |
Purchases of equity securities | (57,978) | (33,800) |
Maturities and sales of equity securities | 64,235 | 316,746 |
Purchases of prepaid investment | 0 | (276,275) |
Equity securities derivative and forward contract acquisition cost | 0 | (3,989) |
Purchases of property and equipment | (67) | (177) |
Net cash used in investing activities | (3,219) | (9,815) |
Cash flows from financing activities: | ||
Repurchase of common stock | 0 | (3,998) |
Issuance of Senior Secured Notes, net of lender fee | 65,000 | 110,437 |
Senior Secured Notes issuance costs paid to other parties | 0 | (496) |
Dividend on Series A Redeemable Convertible Preferred Stock | (785) | (1,120) |
Issuance of Series B warrants | 0 | 4,600 |
Proceeds from exercise of stock options | 202 | 48 |
Paydown of Senior Secured Notes | (50,000) | 0 |
Reissuance of Senior Secured Notes | 50,000 | 0 |
Net cash provided by financing activities | 64,417 | 109,471 |
Increase in cash and cash equivalents and restricted cash | 53,596 | 105,205 |
Cash and cash equivalents and restricted cash, beginning | 200,546 | 92,359 |
Cash and cash equivalents and restricted cash, ending | 254,142 | 197,564 |
Supplemental schedule of cash flow information: | ||
Interest paid | 2,340 | 0 |
Income taxes paid | 9 | 164 |
Noncash investing activities: | ||
Trade date receivable from sale of equity securities (Note 3) | 21,539 | 0 |
Patent acquisition in exchange of notes receivable | 4,000 | 0 |
Patent acquisition accrued liability - short-term | 8,000 | 0 |
Patent acquisition accrued liability - long-term | 5,000 | 0 |
Acquisition of prepaid investment securities | $ 0 | $ 231,480 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
Description Of Business And Basis Of Presentation | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business As used herein, “we,” “us,” “our,” “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 was incorporated on January 25, 1993 under the laws of the State of California. In December 1999, Acacia changed its state of incorporation from California to Delaware. Acacia acquires businesses and operating assets that the Company believes to be undervalued and where the Company believes it can leverage its resources and skill sets to realize and unlock value. The Company intends to leverage its (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. Acacia seeks to identify opportunities where the Company believes it is an advantaged buyer, where the Company can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to the Company’s unique capabilities, relationships, or expertise, or where Acacia believes the target would be worth more to the Company than to other buyers. Acacia operates its business based on three key principles of People, Process and Performance and has built a management team with identified expertise in Research, Execution and Operation of the Company’s targeted acquisitions. Acacia, through its operating subsidiaries, also currently engages in its legacy business of investing in, licensing and enforcing patented technologies. Acacia’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. In recent years, Acacia has also invested in technology companies. Acacia leverages its experience, expertise, data and relationships developed as a leader in the intellectual property (“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 (hereinafter, “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. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. Neither Acacia nor its operating subsidiaries invent new technologies or products; rather, Acacia depends upon the identification and investment in new patents, inventions and companies that own 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, 2021, Acacia obtained control of one 1 5 Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited 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 note disclosures 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 unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020, as reported by Acacia in its Annual Report on Form 10-K filed with the SEC on March 29, 2021, as well as in our other public filings with the SEC. 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, 2021, 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, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year. Reclassifications Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. These changes had no impact on the previously reported consolidated results of operations or cash flows. COVID-19 Pandemic The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. While the Company does not expect the current situation to present direct risks to its business, and it has not had a material impact to date, the COVID-19 pandemic could adversely impact the Company’s operations, as well as the operations of its licensees and other business partners. Our cash is held in major financial institutions primarily in government instruments. Our business is fully able to operate in a socially distanced and/or remote capacity and in accordance with applicable laws, policies and best practices. Our workforce is provided ample paid sick leave, and we have in place robust disaster recovery and business continuity policies that have been revised to account for a long-term remote work contingency such as this. However, the ongoing pandemic may present risks that we do not currently consider material or risks that may evolve quickly that could have a materially adverse effect on our business, results of operations and financial condition. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with U.S. GAAP. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for total noncontrolling interests. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 3, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. A wholly-owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund has been included in the Company’s consolidated financial statements since 2010, as Acacia’s wholly-owned subsidiary, the general partner of Acacia IP Fund, has the ability to control the operations and activities of the Acacia IP Fund. The Acacia IP Fund was terminated as of December 31, 2017 and dissolved in 2020. Segment Reporting Acacia uses the management approach, which designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of Acacia’s reportable segments. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, the valuation of the equity instruments, the valuation of Series A redeemable convertible preferred stock (the “Series A Redeemable Convertible Preferred Stock”), embedded derivatives, Series A warrants (the “Series A Warrants”), Series B warrants (the “Series B Warrants”), stock-based compensation expense, impairment of patent-related intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. Revenue Recognition Revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled 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. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which 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 or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, 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 generally 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 grant combined items to which the promised IP Rights are inputs and (ii) the Company's promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant 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 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 within 15-90 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 are granted 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 grants 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: Disaggregation of revenue Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Paid-up revenue agreements $ 1,100 $ 19,385 $ 23,110 $ 24,477 Recurring Revenue Agreements 482 81 1,675 922 Total revenue $ 1,582 $ 19,466 $ 24,785 $ 25,399 Refer to “ Inventor Royalties and Contingent Legal Expenses Patent Portfolio Operations 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, patent maintenance and prosecution costs, 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 “Patent portfolio operations” in the consolidated statements of operations. Inventor Royalties and Contingent Legal Expenses Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. Patent costs, including any upfront advances paid to patent owners by Acacia’s operating subsidiaries, 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 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 consolidated statements of operations. Contingent legal fees are expensed in the 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 generally 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. Concentrations Financial instruments that potentially subject Acacia to concentrations of credit risk are cash equivalents, equity securities and accounts receivable. Acacia places its cash equivalents and equity securities primarily in highly rated money market funds and investment grade marketable securities. Cash and cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. Acacia has not experienced any significant losses on its deposits of cash and cash equivalents. Four licensees individually accounted for 32 25 22 13 98 50 19 12 75 9 The Company does not have any material foreign operations. 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, 2021, 8 15 0.1 5 Two licensees represented 100 62 21 Related Party Transactions During 2019, the Company purchased shares of common stock of Drive Shack, Inc. (“Drive Shack”) for an aggregate purchase price of $2.4 million. At the time, Drive Shack and Clifford Press, Chief Executive Officer and director of Acacia, were related parties as Mr. Press was a board member of Drive Shack until June 2021. The market value of the investment was $1.4 million as of December 31, 2020. During the nine months ended September 30, 2021, the Company sold its investment receiving proceeds of $ 1.8 515,000 Cash and Cash Equivalents Acacia considers all highly liquid, equity securities 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 and securities issued or guaranteed by the U.S. government or its agencies. Acacia’s cash equivalents are measured at fair value using observable inputs. Equity Securities at Fair Value Investments in equity securities are reported at fair value on a recurring basis, with related realized and unrealized gains and losses in the value of such securities recorded in the consolidated statements of operations in other income or (expense). Dividend income is included in the consolidated statements of operations in other income or (expense). Refer to Note 7 for additional information related to fair value measurements. Equity securities at fair value for the periods presented were comprised of the following: Schedule of equity securities Security Type Cost Gross Gross Fair Value (In thousands) September 30, 2021: Equity securities - Life Sciences Portfolio (Note 3) $ 62,042 $ 288,508 $ (1,812 ) $ 348,738 Equity securities - other equity 35,178 3,289 (85 ) 38,382 Total $ 97,220 $ 291,797 $ (1,897 ) $ 387,120 December 31, 2020: Equity securities - Life Sciences Portfolio (Note 3) $ 32,765 $ 72,689 $ (583 ) $ 104,871 Equity securities - other equity 4,086 1,410 (1,264 ) 4,232 Total $ 36,851 $ 74,099 $ (1,847 ) $ 109,103 Equity Securities Without Readily Determinable Fair Value For equity securities that do not have readily determinable fair value, the Company elected to report them under the measurement alternative. They are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in any adjustments for illiquidity or preference of these securities. Changes in fair value are reported in the consolidated statements of operations in other income or (expense). Refer to Note 3 for additional information. Equity Method 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 earnings on equity investment in joint venture in the consolidated statements of operations. Refer to Note 3 for additional information. Investment 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 method 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). We elected the fair value method for our investment in Veritone, Inc. (“Veritone”) upon acquisition of the investment. Since March 2021, we have no more investment in Veritone stocks and warrants. Refer to Note 4 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 consolidated statements of operations and a new cost basis in the investment is established. Long-Term Restricted Cash Restricted cash relates primarily to the proceeds received from the issuance of Series A Redeemable Convertible Preferred Stock which are held in an escrow account (refer to Note 6). The amounts are to be released to the Company upon, among other things, (i) the consummation of a suitable investment or acquisition by the Company or (ii) the conversion of Series A Redeemable Convertible Preferred Stock into common stock. During October 2021, the Company consummated a suitable acquisition, accordingly $35.0 million was released to the Company. Refer to Note 11 for additional information related to the subsequent period acquisition. Patents Patents include the cost of patents or patent rights 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. Refer to Note 5 for additional information. 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 in an amount 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 their 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. Series A and B Warrants The fair value of the Series A and B Warrants are estimated using a Black-Scholes option-pricing model. Refer to Notes 6 and 7 for additional information related to the Series A and B Warrants and their fair value measurements. Embedded derivatives Embedded derivatives that are required to be bifurcated from their host contract are valued separately from the host instrument. A binomial lattice framework is used to estimate the fair value of the embedded derivative in the Series A Redeemable Convertible Preferred Stock issued by the Company in 2019. Refer to Notes 6 and 7 for additional information related to the embedded derivatives and their 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. Refer to Note 7 for additional information. 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 in the consolidated balance sheets. Refer to Note 9 for additional information. 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 one to three years. The fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) are 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. Forfeitures are accounted for as they occur. RSUs granted in September 2019 with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a three-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. Assumptions utilized in connection with the Monte Carlo valuation technique, that resulted in a fair value of $1.42 per unit, included: estimated risk-free interest rate of 1.38 percent 3.00 years 38 percent 0 percent 450,000 450,000 During the nine months ended September 30, 2021, the Company granted 324,401 5.56 473,000 5.86 393,750 1.79 Stock-based compensation is reported in the consolidated statements of operations in general and administrative expenses. Total stock-based compensation for the three and nine months ended September 30, 2021 was $ 300,000 1,279,000 5,952,000 2.20 488,000 1,243,000 Profits Interest Units (“PIUs”) were accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The vesting conditions did not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the PIUs were classified as liability awards. Compensation expense was adjusted 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. The Company has a purchase option to purchase the vested PIUs that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the PIUs on the date of termination of continuous service. The individuals holding PIUs are no longer employed by the Company. Included in other long-term liabilities in the consolidated balance sheets as of September 30, 2021 and December 31, 2020, the PIUs totaled $591,000, which was their fair value as of December 31, 2018 after termination of service. 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 consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. The Company’s effective tax rates were 0 1 0 4 Recent Accounting Pronouncements Recently Adopted In December of 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The update removed certain exceptions to the general principles in Topic 740 in U.S. GAAP. The Company adopted the update on January 1, 2021. The adoption of the update did not have a material effect on the Company’s financial position, results of operations or financial statement disclosures. Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The amendments in these updates will currently be effective for the Company on January 1, 2023, with early adoption permitted. Management is currently evaluating the impact that the amendments in these updates may have on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” to simplify the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. This update reduces the number of accounting models for convertible instruments, revises the derivatives scope exception, and provides targeted improvements for earnings per share. Upon adoption, companies have the option to apply a modified or full retrospective transition approach. The amendments in this update will currently be effective for the Company on January 1, 2024, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with “Revenue from Contracts with Customers (Topic 606).” At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments in this update should be applied prospectively and will be effective for the Company on January 1, 2023, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements. |
EQUITY SECURITIES PORTFOLIO INV
EQUITY SECURITIES PORTFOLIO INVESTMENT | 9 Months Ended |
Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
EQUITY SECURITIES PORTFOLIO INVESTMENT | 3. EQUITY SECURITIES PORTFOLIO INVESTMENT On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund (“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 (“Life Sciences Portfolio”) 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 companies in the Life Sciences Portfolio at set prices at various future dates. The transfer dates would vary among the Life Sciences 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 Life Sciences 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 Life Sciences Portfolio 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 Life Sciences Portfolio company in the Transaction Agreement. As of December 31, 2020, all of the equity securities in the Life Sciences Portfolio were transferred to the Company pursuant to the Transaction Agreement. The Company has sold a portion of the equity securities of such Life Sciences Portfolio while retaining an interest in a number of operating businesses, including a controlling interest in one of the companies. For accounting purposes, the total purchase price of the Life Sciences 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. As of September 30, 2021 and December 31, 2020, the fair value of the Life Sciences Portfolio equity securities, excluding the equity method investment discussed below, was $354.6 million and $248.1 million, respectively. Changes in the fair value of Acacia’s investment in the Life Sciences Portfolio are recorded as unrealized gains or losses in the consolidated statements of operations. In late September 2021, the Company sold one security which resulted in a gain of $18.6 million. The proceeds of that sale were settled and received in early October 2021, and therefore the Company recorded a $21.5 million other receivable as included in the consolidated balance sheet as of September 30, 2021. Accordingly, this trade date receivable from the sale of equity securities has been reflected as a noncash investing activity in the consolidated statement of cash flows for the nine months ended September 30, 2021. For the three and nine months ended September 30, 2021 and 2020, the consolidated statements of operations reflected the following from the Life Sciences Portfolio: Schedule of unrealized gains or losses Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Change in fair value of equity securities $ 63,907 $ 84,299 $ 112,180 $ 83,230 Change in fair value of equity securities derivative – 10,651 – 17,542 Change in fair value of equity securities forward contract – (74,662 ) – – Gain (loss) on sale of equity securities 37,112 1,908 52,167 (4,202 ) Gain on sale of prepaid investment and derivative – 2,845 – 2,845 Net realized and unrealized gain $ 101,019 $ 25,041 $ 164,347 $ 99,415 As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 (63.9%), 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 MalinJ1 owns 41.0% of outstanding shares of Viamet. |
INVESTMENT AT FAIR VALUE
INVESTMENT AT FAIR VALUE | 9 Months Ended |
Sep. 30, 2021 | |
Schedule of Investments [Abstract] | |
INVESTMENT AT FAIR VALUE | 4. INVESTMENT AT FAIR VALUE During 2016 and 2017, Acacia made certain investments in Veritone. As a result of these transactions, Acacia received an aggregate total of 4,119,521 shares of Veritone common stock and warrants to purchase a total of 1,120,432 shares of Veritone common stock at an exercise price of $13.61 per share expiring between 2020 and 2027. During the nine months ended September 30, 2020, Acacia sold all remaining 298,450 shares Veritone common stock and recorded a realized loss of $3.3 million. During the nine months ended September 30, 2020, Acacia exercised 154,312 warrants, and recognized a realized gain of $554,000 on the sale of common stock. During the nine months ended September 30, 2021, Acacia exercised all remaining 156,720 warrants, and recognized a realized gain of $3.6 million on the sale of common stock. The Company no longer has an investment in Veritone common stock and warrants. Changes in the fair value of Acacia’s investment in Veritone are recorded as unrealized gains or losses in the consolidated statements of operations. For the three and nine months ended September 30, 2021 and 2020, the consolidated statements of operations reflected the following: Schedule of gain on investments Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Change in fair value of investment, warrants $ – $ (3,081 ) $ (2,752 ) $ 225 Change in fair value of investment, common stock – – – 3,479 Gain on sale of investment, warrants – – 3,591 554 Loss on sale of investment, common stock – – – (3,316 ) Net realized and unrealized (loss) gain $ – $ (3,081 ) $ 839 $ 942 |
PATENTS, NET OF ACCUMULATED AMO
PATENTS, NET OF ACCUMULATED AMORTIZATION | 9 Months Ended |
Sep. 30, 2021 | |
Patents Net Of Accumulated Amortization | |
PATENTS, NET OF ACCUMULATED AMORTIZATION | 5. PATENTS, NET OF ACCUMULATED AMORTIZATION Acacia’s only identifiable intangible assets as of September 30, 2021 and December 31, 2020 are patents and patent rights. Patent-related accumulated amortization totaled $ 291.6 319.9 The following table presents the scheduled annual aggregate amortization expense as of September 30, 2021: Schedule of intangible assets For the years ending December 31, (In thousands) Remainder of 2021 $ 2,612 2022 10,448 2023 10,381 2024 9,005 2025 6,630 Thereafter 750 Patents, net $ 39,826 For the nine months ended September 30, 2021, Acacia accrued patent and patent rights acquisition costs totaling $ 13.0 8.0 5.0 |
STARBOARD INVESTMENT
STARBOARD INVESTMENT | 9 Months Ended |
Sep. 30, 2021 | |
Starboard Investment | |
STARBOARD INVESTMENT | 6. STARBOARD INVESTMENT Series A Redeemable Convertible Preferred Stock On November 18, 2019, the Company entered into a Securities Purchase Agreement with Starboard Value LP (“Starboard”) and certain funds and accounts affiliated with, or managed by, Starboard (collectively, the “Buyers”) pursuant to which the Company issued (i) 350,000 5,000,000 The Series A Redeemable Convertible Preferred Stock can be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $ 3.65 Holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the periods of May 15, 2021 through August 15, 2021 and May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $50.0 million aggregate principal of senior secured notes to the Buyers pursuant to the Securities Purchase Agreement at the time of the redemption. Holders also have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the period of November 15, 2024 through February 15, 2025. Additionally, holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock upon the occurrence of (i) a change of control or (ii) various other triggering events, such as the suspension from trading or delisting of the Company’s common stock. If the Series A Redeemable Convertible Preferred Stock is redeemed at the option of the holders, the redemption price may include a make-whole amount or a stated premium, depending on the redemption scenario. The Company may redeem all, and not less than all, of the Series A Redeemable Convertible Preferred Stock (i) upon a change of control or (ii) during the period of May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $50.0 million aggregate principal of the senior secured notes at the time of the redemption, and assuming certain conditions of the common stock have been met. If the Series A Redeemable Convertible Preferred Stock is redeemed at the option of the Company, the redemption price would include a make-whole amount or a 15% premium depending on the circumstances. If any Series A Redeemable Convertible Preferred Stock remains outstanding on November 15, 2027, the Company shall redeem such Series A Redeemable Convertible Preferred Stock in cash. In all redemption scenarios, the redemption price for the Series A Redeemable Convertible Preferred Stock includes the stated value plus accrued and unpaid dividends. In addition, depending on the redemption scenario, the redemption price may also include a make-whole amount or stated premium as described above. When the Company issues Notes, the Holder may exchange the Series A Redeemable Convertible Preferred Stock for (i) Notes and (ii) Series B Warrants to purchase common stock. The Series A Redeemable Convertible Preferred Stock accrues cumulative dividends quarterly at annual rate of 3.0% on the stated value. Upon consummation of the approved investment in June 2020, the dividend rate increased to 8.0% on the stated value. Upon certain triggering events, the dividend rate will increase to 7.0% if the triggering event occurs before an approved investment or 10.0% on the stated value if the triggering event occurs after an approved investment. In connection with the approved investment in June 2020, the Company and the Buyers agreed that the dividend rate on the Series A Redeemable Convertible Preferred Stock would accrue at 3.0% so long as no triggering event occurs and the Company maintains $35.0 million in escrow. Series A Redeemable Convertible Preferred Stock also participates on an as-converted basis in any regular or special dividends paid to common stockholders. No accrued and unpaid dividends as of September 30, 2021. During October 2021, the Company consummated a suitable acquisition, accordingly $35.0 million was released to the Company. Upon consummation of the approved acquisition in October 2021, the dividend rate increased to 8.0% on the stated value. Refer to Note 11 for additional information related to the subsequent period acquisition. Holders of the Series A Redeemable Convertible Preferred Stock have the right to vote with common stockholders on an as-converted basis on all matters. Holders of Series A Redeemable Convertible Preferred Stock will also be entitled to a separate class vote with respect to amendments to the Company’s organizational documents that generally have an adverse effect on the Series A Redeemable Convertible Preferred Stock. Upon liquidation of the Company, holders of Series A Redeemable Convertible Preferred Stock have a liquidation preference over holders of our common stock and will be entitled to receive, prior to any distribution to holders of our common stock, an amount equal to the greater of (i) the stated value plus accrued and unpaid dividends or (ii) the amount that would have been received if the Series A Redeemable Convertible Preferred Stock had been converted into common stock immediately prior to the liquidation event at the then effective conversion price. The Company determined that certain features of the Series A Redeemable Convertible Preferred Stock should be bifurcated and accounted for as a derivative. Each of these features are bundled together as a single, compound embedded derivative. During 2019, total proceeds received and transaction costs incurred from the issuance of the Series A Redeemable Convertible Preferred Stock amounted to $ 35.0 1.3 The Company classifies the Series A Redeemable Convertible Preferred Stock as mezzanine equity as the instrument will become redeemable at the option of the holder in various scenarios or otherwise on November 15, 2027. As it is probable that the Series A Redeemable Convertible Preferred Stock will become redeemable, the Company accretes the instrument to its redemption value using the effective interest method and recognizes any changes against additional paid in capital in the absence of retained earnings. Accretion for the three and nine months ended September 30, 2021 was $ 991,000 2.8 In connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company executed a Registration Rights Agreement with Starboard and the Buyers and a Governance Agreement with Starboard and certain affiliates of Starboard. Under the Registration Rights Agreement, the Company agreed to provide certain registration rights with respect to the Series A Redeemable Convertible Preferred Stock and shares of Common Stock issued upon conversion. In accordance with the Governance Agreement, the Company agreed to (i) increase the size of the Board of Directors from six to seven members, (ii) appoint Jonathan Sagal as a director of the Company, (iii) grant Starboard the right to recommend two additional directors for appointment to the board, (iv) form a Strategic Committee of the Board tasked with sourcing and performing due diligence on potential acquisition targets, (v) appoint certain directors to the Strategic Committee, and (vi) appoint a director to the Nominating and Corporate Governance Committee. The following features of the Series A Redeemable Convertible Preferred Stock are required to be bifurcated from the host preferred stock and accounted for separately as an embedded derivative: (i) the right of the holders to redeem the shares (the “put option”), (ii) the right of the holders to receive common stock upon conversion of the shares (the “conversion option”), (iii) the right of the Company to redeem the shares (the “call option”), and (iv) the change in dividend rate upon consummation of an approved investment or a triggering event (the “contingent dividend rate feature”). These features are required to be accounted for separately from the Series A Redeemable Convertible Preferred Stock because the features were determined to be not clearly and closely related to the debt-like host and also did not meet any other scope exceptions for derivative accounting. Therefore, these features are bundled together and are accounted for as a single, compound embedded derivative liability. Accordingly, we have recorded an embedded derivative liability representing the combined fair value of each of these features. The embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded other income or (expense) in the “Change in fair value of the Series A and B warrants and embedded derivatives” financial statement line item of the consolidated statements of operations. As of September 30, 2021 and December 31, 2020, the fair value of the Series A embedded derivative liabilities was $ 41.4 26.7 Series A Warrants On November 18, 2019, in connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company issued a detachable Series A Warrants to acquire up to purchase 5 million shares of common stock at a price of $3.65 per share (subject to certain anti-dilution adjustments) at any time during a period of eight years beginning on the instrument’s issuance date of the Series A Warrants. The fair value of the Series A Warrants was $ 4.8 18.5 6.6 no The Series A Warrants are classified as a liability in accordance with ASC 480, “Distinguishing Liabilities from Equity”, as the agreement provides for net cash settlement upon a change in control, which is outside the control of the Company. Series B Warrants 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 4.6 In connection with the issuance of the Notes on June 4, 2020, the terms of certain of the Series B Warrants were amended to permit the payment of the lower exercise price of $3.65 through the payment of cash, rather than only through the cancellation of Notes outstanding, at any time until the expiration date of November 15, 2027. 31,506,849 of the Series B Warrants are subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms. As of September 30, 2021, the Series B Warrants have no The Series B Warrants will be recognized at fair value at each reporting period until exercised, with changes in fair value recognized in other income or (expense) in the consolidated statements of operations. As of September 30, 2021 and December 31, 2020, the fair value of the Series B Warrants was $ 229.6 52.3 The Series B Warrants are classified as a liability in accordance with ASC 480, “Distinguishing Liabilities from Equity”, as the agreement provides for net cash settlement upon a change in control, which is outside the control of the Company. Senior Secured Notes Pursuant to the Securities Purchase Agreement dated November 18, 2019 with Starboard and the Buyers, on June 4, 2020, the Company issued $ 115.0 80.0 35.0 6.00 10.00 On June 30, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Merton Acquisition HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merton”) and Starboard, on behalf of itself and on behalf of certain funds and accounts under its management, including the holders of the Notes. Pursuant to the Exchange Agreement, the holders of the Notes exchanged the entire outstanding principal amount for new senior notes (the “New Notes”) issued by Merton having an aggregate outstanding original principal amount of $ 115.0 The New Notes bear interest at a rate of 6.00% per annum and had a maturity date of 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 with the Company agreeing 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 also 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 among the Company, Starboard and the Buyers. Because the New Notes are to be settled within twelve months pursuant to their terms, they are classified as current liabilities in the consolidated balance sheets. The Company capitalized $ 4.6 0.5 863,000 On January 29, 2021, the Company redeemed $ 50.0 50.0 October 15, 2021 180.0 115.0 Modifications to Series A Redeemable Convertible Preferred Stock and Series B Warrants The June 4, 2020 Supplemental Agreement also provided for (i) a waiver of increased dividends under the original terms of the Series A Redeemable Convertible Preferred Stock that would have otherwise accrued due to the Company’s use of the $35.0 million proceeds received from Starboard and the Buyers upon the issuance of the Series A Redeemable Convertible Preferred Stock in November 2019, (ii) the replacement of original optional redemption rights for the Series A Redeemable Convertible Preferred Stock provided to both the Company and the holders that otherwise would have been nullified through the issuance of the Notes, and (iii) an amendment to the terms of the previously issued Series B Warrants to permit the payment of the lower exercise price of $3.65 through the payment of cash, rather than only through the cancellation of Notes outstanding, at any time until the expiration of the Series B Warrants on November 15, 2027. 31,506,849 of the Series B Warrants are subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms. We analyzed the amendments to the terms of the Series A Redeemable Convertible Preferred Stock and determined that the amendments were not significant. Therefore, the amendments are accounted for as a modification on a prospective basis. The incremental fair value of the Series B Warrants associated with the modification of their terms in connection with the issuance of the Notes was $ 1.3 1.2 151,000 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 7. 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 (ii) Level 2 - Pricing Models with Significant Observable Inputs (iii) Level 3 - Unobservable Inputs 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 may fall into different levels of the fair value hierarchy. Acacia holds the following types of financial instruments at September 30, 2021 and December 31, 2020: Equity Securities at Fair Value. Investments at Fair Value - Common Stock and Warrants. Series A Warrants. Series B Warrants. Embedded Derivative Liability. The volatility of the Company’s common stock is estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage. The selected volatility, as described below, represents a haircut from the Company’s actual realized historical volatility. A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants, and convertible debt is lower than historical actual realized volatility. The assumed base case term used in the valuation model is the period remaining until November 15, 2027, the Series A Redeemable Convertible Preferred Stock maturity date. The risk-free interest rate is based on the yield on the U.S. Treasury with a remaining term equal to the expected term of the conversion and early redemption options. The significant assumptions utilized in the Company’s valuation of the embedded derivative at September 30, 2021 are as follows: volatility of 30 percent, risk-free rate of 1.20 percent, term of 6.13 years, discount rate of 9.40 percent and a dividend yield of 0 percent. The fair value measurement of the embedded derivative is sensitive to these assumptions and changes in these assumptions could result in a materially different fair value measurement. Financial assets and liabilities measured at fair value on a recurring basis were as follows: Schedule of financial assets and liabilities at fair value Level 1 Level 2 Level 3 Total Assets (In thousands) September 30, 2021: Equity securities at fair value $ 119,280 $ 267,840 $ – $ 387,120 Total $ 119,280 $ 267,840 $ – $ 387,120 December 31, 2020: Equity securities at fair value $ 109,103 $ – $ – $ 109,103 Investment at fair value - warrants – 2,752 – 2,752 Total $ 109,103 $ 2,752 $ – $ 111,855 Liabilities September 30, 2021: Series A warrants $ – $ – $ 18,527 $ 18,527 Series A embedded derivative liabilities – – 41,411 41,411 Series B warrants – – 229,637 229,637 Total $ – $ – $ 289,575 $ 289,575 December 31, 2020: Series A warrants $ – $ 6,640 $ – $ 6,640 Series A embedded derivative liabilities – – 26,728 26,728 Series B warrants – – 52,341 52,341 Total $ – $ 6,640 $ 79,069 $ 85,709 The following tables set forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which are measured at fair value on a recurring basis: Schedule of changes in fair value Level 3 liabilities Series A Series A Series B Total (In thousands) Balance at January 1, 2021 $ – $ 26,728 $ 52,341 $ 79,069 Transfers to Level 3 6,640 – – 6,640 Remeasurement to fair value 11,824 14,463 178,198 204,485 Balance at June 30, 2021 18,464 41,191 230,539 290,194 Remeasurement to fair value 63 220 (902 ) (619 ) Balance at September 30, 2021 $ 18,527 $ 41,411 $ 229,637 $ 289,575 Series A Series A Series B Total (In thousands) Balance at January 1, 2020 $ 3,568 $ 17,974 $ – $ 21,542 Transfers to Level 3 – – 5,929 5,929 Remeasurement to fair value 3,384 11,539 52,361 67,284 Balance at June 30, 2020 6,952 29,513 58,290 94,755 Remeasurement to fair value (1,348 ) (3,831 ) (15,493 ) (20,672 ) Balance at September 30, 2020 $ 5,604 $ 25,682 $ 42,797 $ 74,083 In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of equity securities without readily determinable fair value, equity method investments and patents on a quarterly basis for indications of impairment, and other long-lived assets at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Facility Leases The Company primarily leases office facilities under operating lease arrangements that will end in various years through July 2024. On June 7, 2019, we entered into a building lease agreement (the “New Lease”) with Jamboree Center 4 LLC (the “Landlord”). Pursuant to the New Lease, we have leased approximately 8,293 square feet of office space in Irvine, California. The New Lease commenced on August 1, 2019. The term of the New Lease is 60 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. On January 7, 2020, we entered into a building lease agreement (the “New York Office Lease”) with Sage Realty Corporation (the “New York Office Landlord”). Pursuant to the New York Office Lease, we have leased approximately 4,000 square feet of office space for our corporate headquarters in New York, New York. The New York Office Lease commenced on February 1, 2020. The term of the New York Office Lease is 24 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. During August 2021, we entered into a first amendment of the New York Office Lease, to commence for a period of three years upon landlords’ substantial completion of adequate substitution space, as defined. To date, the substitution space is not ready for use, accordingly the term extension has not begun. Operating lease costs were $ 155,000 174,000 457,000 459,000 The table below presents aggregate future minimum payments due under the New Lease and the New York Office Lease discussed above, reconciled to long-term lease liabilities and short-term lease liabilities (included in accrued expenses and other current liabilities) included in the consolidated balance sheet as of September 30, 2021: Schedule of future minimum operating lease payments Operating Leases (In thousands) Remainder of 2021 $ 149 2022 370 2023 364 2024 218 Thereafter – Total minimum payments 1,101 Less: short-term lease liabilities (430 ) Long-term lease liabilities $ 671 Inventor Royalties and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, certain of Acacia’s operating subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. Acacia’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. 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. Acacia is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia’s consolidated financial position, results of operations or cash flows. In December 2017, the Federal Court of Canada allowed a counterclaim for invalidity of a patent asserted by Rapid Completions LLC and awarded costs payable by Rapid Completions LLC in amounts that are included in the 2021 and 2020 accrual balances discussed below. During the three months ended September 30, 2021, the Company made approximately $1.0 million in settlement payments. On September 6, 2019, Slingshot Technologies, LLC, or Slingshot, filed a lawsuit in Delaware Chancery Court against the Company and Acacia Research Group, LLC, or collectively, the Acacia Entities, Monarch Networking Solutions LLC (“Monarch”), Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd., or Transpacific. Slingshot alleges that the Acacia Entities and Monarch misappropriated its confidential and proprietary information, purportedly furnished to the Acacia Entities and Monarch by Ms. Wolanyk, in acquiring a patent portfolio from Transpacific after Slingshot’s exclusive option to purchase the same patent portfolio from Transpacific had already expired. Slingshot seeks monetary damages, as well as equitable and injunctive relief related to its alleged right to own the portfolio. On March 15, 2021, the court issued orders granting Monarch’s motion to dismiss for lack of personal jurisdiction and Ms. Wolanyk’s motion to dismiss for lack of subject matter jurisdiction. The remaining parties then commenced discovery, and have since served initial written requests and responses, and notices of the depositions of the parties’ corporate designees. The Acacia Entities maintain that Slingshot’s allegations are baseless, that the Acacia Entities neither had access to nor used Slingshot’s information in acquiring the portfolio, that the Acacia Entities acquired the portfolio as a result of the independent efforts of its IP licensing group, and that Slingshot suffered no damages given its exclusive option to purchase the portfolio had already ended and it has proven itself incapable of closing on the portfolio purchase. During the three months ended September 30, 2021 and 2020, there were no operating expenses related to settlement and contingency accruals. During the nine months ended September 30, 2021, we incurred $338,000 in operating expenses for settlement and contingency accruals. During the nine months ended September 30, 2020, operating expenses included a net income for settlement offset by contingency accruals totaling $ 308,000 587,000 1.3 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | 9. STOCKHOLDERS’ EQUITY Repurchases of Common Stock On August 5, 2019, Acacia’s Board of Directors approved a stock repurchase program, which authorized the purchase of up to $ 10.0 Schedule of repurchased shares Total Number Average Approximate Plan Expiration Date March 20, 2020 - March 31, 2020 576,898 $ 2.28 $ 8,686,000 July 31, 2020 April 1, 2020 - April 23, 2020 1,107,639 $ 2.42 $ 6,001,000 July 31, 2020 Total repurchases in 2020 1,684,537 $ 2.37 In determining whether or not to repurchase any shares of Acacia’s common stock, Acacia’s Board of Directors consider such factors, among others, 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. Tax Benefits Preservation Plan On March 12, 2019, Acacia’s Board of Directors announced that it had unanimously approved the adoption of a Tax Benefits Preservation Plan (the “Plan”). Our stockholders ratified the adoption of the Plan in July 2019. The purpose of the Plan is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income. The Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging (i) any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s outstanding common stock and (ii) any existing stockholders who, as of the time of the first public announcement of the adoption of the Plan, beneficially own more than 4.9% of the Company’s then-outstanding shares of the Company’s common stock from acquiring additional shares of the Company’s common stock (subject to certain exceptions). There is no guarantee, however, that the Plan will prevent the Company from experiencing an ownership change. In connection with the adoption of the Plan, Acacia’s Board of Directors authorized and declared a dividend distribution of one right for each outstanding share of the Company’s common stock to stockholders of record at the close of business on March 16, 2019. On or after the distribution date, each right would initially entitle the holder to purchase one one-thousandth of a share of the Company’s Series B Junior Participating Preferred Stock, $0.001 par value for a purchase price of $12.00. On March 15, 2021 the rights expired pursuant to their terms. The Company has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. Like the Plan, the purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income. The Charter Provision was approved by the Company’s stockholders on July 15, 2019. |
INCOME_LOSS PER SHARE
INCOME/LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
INCOME/LOSS PER SHARE | 10. INCOME/LOSS PER SHARE The following table presents the shares of common stock outstanding used in the calculation of basic and diluted net income (loss) per share: Calculation of basic and diluted net loss per share Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands, except share and per share information) Numerator: Net income (loss) attributable to Acacia Research Corporation $ 89,604 $ 38,348 $ (55,507 ) $ 33,205 Dividend on Series A redeemable convertible preferred stock (262 ) (467 ) (785 ) (1,118 ) Accretion of Series A redeemable convertible preferred stock (991 ) (733 ) (2,762 ) (2,045 ) Undistributed earnings allocated to participating securities (15,367 ) (6,619 ) – (5,204 ) Net income (loss) attributable to common stockholders - Basic 72,984 30,529 (59,054 ) 24,838 Add: Dividend on Series A redeemable convertible preferred stock – 467 – – Add: Accretion of Series A redeemable convertible preferred stock – 733 – – Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative – (3,831 ) – – Less: Change in fair value of Series A warrants 63 (1,348 ) – (1,348 ) Less: Change in fair value of dilutive Series B warrants (902 ) (5,557 ) – (5,557 ) Add: Interest expense associated with Starboard Notes, net of tax 1,536 1,889 – 1,889 Add: Undistributed earnings allocated to participating securities 15,367 6,619 – 5,204 Reallocation of undistributed earnings to participating securities (8,877 ) (296 ) – (3,645 ) Net income (loss) attributable to common stockholders - Diluted $ 80,171 $ 29,205 $ (59,054 ) $ 21,381 Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Basic 48,949,504 48,467,885 48,759,873 48,949,706 Potentially dilutive common shares: Series A Preferred Stock – 9,589,041 – – Restricted stock 798,356 728,936 – 598,328 Stock options 35,815 21,624 – – Series A Warrants 2,019,724 310,367 – 103,456 Series B Warrants 41,278,103 31,506,849 – 10,502,283 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Diluted 93,081,502 90,624,702 48,759,873 60,153,773 Basic net income (loss) per common share $ 1.49 $ 0.63 $ (1.21 ) $ 0.51 Diluted net income (loss) per common share $ 0.86 $ 0.32 $ (1.21 ) $ 0.36 Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: Equity-based incentive awards 398,168 191,312 2,230,624 310,083 Series A warrants – – 5,000,000 – Series B warrants – 68,493,151 100,000,000 68,493,151 Total 398,168 68,684,463 107,230,624 68,803,234 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | 11. SUBSEQUENT EVENT On October 8, 2021, the Company acquired all of the outstanding stock of a leading printing technology company, for a cash purchase price of $37.0 million, which includes an initial $33.0 million cash payment and a $4.0 million working capital adjustment. The business services a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. The acquisition triggered the release of $35.0 million held in escrow (refer to Note 2 “Long-Term Restricted Cash” for additional information). |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Description Of Business And Basis Of Presentation | |
Description of Business | Description of Business As used herein, “we,” “us,” “our,” “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 was incorporated on January 25, 1993 under the laws of the State of California. In December 1999, Acacia changed its state of incorporation from California to Delaware. Acacia acquires businesses and operating assets that the Company believes to be undervalued and where the Company believes it can leverage its resources and skill sets to realize and unlock value. The Company intends to leverage its (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. Acacia seeks to identify opportunities where the Company believes it is an advantaged buyer, where the Company can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to the Company’s unique capabilities, relationships, or expertise, or where Acacia believes the target would be worth more to the Company than to other buyers. Acacia operates its business based on three key principles of People, Process and Performance and has built a management team with identified expertise in Research, Execution and Operation of the Company’s targeted acquisitions. Acacia, through its operating subsidiaries, also currently engages in its legacy business of investing in, licensing and enforcing patented technologies. Acacia’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. In recent years, Acacia has also invested in technology companies. Acacia leverages its experience, expertise, data and relationships developed as a leader in the intellectual property (“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 (hereinafter, “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. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. Neither Acacia nor its operating subsidiaries invent new technologies or products; rather, Acacia depends upon the identification and investment in new patents, inventions and companies that own 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, 2021, Acacia obtained control of one 1 5 |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited 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 note disclosures 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 unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020, as reported by Acacia in its Annual Report on Form 10-K filed with the SEC on March 29, 2021, as well as in our other public filings with the SEC. 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, 2021, 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, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year. Reclassifications Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. These changes had no impact on the previously reported consolidated results of operations or cash flows. |
COVID-19 Pandemic | COVID-19 Pandemic The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. While the Company does not expect the current situation to present direct risks to its business, and it has not had a material impact to date, the COVID-19 pandemic could adversely impact the Company’s operations, as well as the operations of its licensees and other business partners. Our cash is held in major financial institutions primarily in government instruments. Our business is fully able to operate in a socially distanced and/or remote capacity and in accordance with applicable laws, policies and best practices. Our workforce is provided ample paid sick leave, and we have in place robust disaster recovery and business continuity policies that have been revised to account for a long-term remote work contingency such as this. However, the ongoing pandemic may present risks that we do not currently consider material or risks that may evolve quickly that could have a materially adverse effect on our business, results of operations and financial condition. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Accounting Principles | Accounting Principles The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with U.S. GAAP. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for total noncontrolling interests. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 3, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. A wholly-owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund has been included in the Company’s consolidated financial statements since 2010, as Acacia’s wholly-owned subsidiary, the general partner of Acacia IP Fund, has the ability to control the operations and activities of the Acacia IP Fund. The Acacia IP Fund was terminated as of December 31, 2017 and dissolved in 2020. |
Segment Reporting | Segment Reporting Acacia uses the management approach, which designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of Acacia’s reportable segments. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. |
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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, the valuation of the equity instruments, the valuation of Series A redeemable convertible preferred stock (the “Series A Redeemable Convertible Preferred Stock”), embedded derivatives, Series A warrants (the “Series A Warrants”), Series B warrants (the “Series B Warrants”), stock-based compensation expense, impairment of patent-related intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled 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. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which 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 or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, 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 generally 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 grant combined items to which the promised IP Rights are inputs and (ii) the Company's promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant 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 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 within 15-90 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 are granted 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 grants 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: Disaggregation of revenue Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Paid-up revenue agreements $ 1,100 $ 19,385 $ 23,110 $ 24,477 Recurring Revenue Agreements 482 81 1,675 922 Total revenue $ 1,582 $ 19,466 $ 24,785 $ 25,399 Refer to “ Inventor Royalties and Contingent Legal Expenses |
Patent Portfolio Operations | Patent Portfolio Operations 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, patent maintenance and prosecution costs, 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 “Patent portfolio operations” in the consolidated statements of operations. Inventor Royalties and Contingent Legal Expenses Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. Patent costs, including any upfront advances paid to patent owners by Acacia’s operating subsidiaries, 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 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 consolidated statements of operations. Contingent legal fees are expensed in the 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 generally 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. |
Concentrations | Concentrations Financial instruments that potentially subject Acacia to concentrations of credit risk are cash equivalents, equity securities and accounts receivable. Acacia places its cash equivalents and equity securities primarily in highly rated money market funds and investment grade marketable securities. Cash and cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits. Acacia has not experienced any significant losses on its deposits of cash and cash equivalents. Four licensees individually accounted for 32 25 22 13 98 50 19 12 75 9 The Company does not have any material foreign operations. 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, 2021, 8 15 0.1 5 Two licensees represented 100 62 21 |
Related Party Transactions | Related Party Transactions During 2019, the Company purchased shares of common stock of Drive Shack, Inc. (“Drive Shack”) for an aggregate purchase price of $2.4 million. At the time, Drive Shack and Clifford Press, Chief Executive Officer and director of Acacia, were related parties as Mr. Press was a board member of Drive Shack until June 2021. The market value of the investment was $1.4 million as of December 31, 2020. During the nine months ended September 30, 2021, the Company sold its investment receiving proceeds of $ 1.8 515,000 |
Cash and Cash Equivalents | Cash and Cash Equivalents Acacia considers all highly liquid, equity securities 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 and securities issued or guaranteed by the U.S. government or its agencies. Acacia’s cash equivalents are measured at fair value using observable inputs. |
Equity Securities at Fair Value | Equity Securities at Fair Value Investments in equity securities are reported at fair value on a recurring basis, with related realized and unrealized gains and losses in the value of such securities recorded in the consolidated statements of operations in other income or (expense). Dividend income is included in the consolidated statements of operations in other income or (expense). Refer to Note 7 for additional information related to fair value measurements. Equity securities at fair value for the periods presented were comprised of the following: Schedule of equity securities Security Type Cost Gross Gross Fair Value (In thousands) September 30, 2021: Equity securities - Life Sciences Portfolio (Note 3) $ 62,042 $ 288,508 $ (1,812 ) $ 348,738 Equity securities - other equity 35,178 3,289 (85 ) 38,382 Total $ 97,220 $ 291,797 $ (1,897 ) $ 387,120 December 31, 2020: Equity securities - Life Sciences Portfolio (Note 3) $ 32,765 $ 72,689 $ (583 ) $ 104,871 Equity securities - other equity 4,086 1,410 (1,264 ) 4,232 Total $ 36,851 $ 74,099 $ (1,847 ) $ 109,103 |
Equity Securities Without Readily Determinable Fair Value | Equity Securities Without Readily Determinable Fair Value For equity securities that do not have readily determinable fair value, the Company elected to report them under the measurement alternative. They are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in any adjustments for illiquidity or preference of these securities. Changes in fair value are reported in the consolidated statements of operations in other income or (expense). Refer to Note 3 for additional information. |
Equity Method Investments | Equity Method 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 earnings on equity investment in joint venture in the consolidated statements of operations. Refer to Note 3 for additional information. |
Investment at Fair Value | Investment 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 method 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). We elected the fair value method for our investment in Veritone, Inc. (“Veritone”) upon acquisition of the investment. Since March 2021, we have no more investment in Veritone stocks and warrants. Refer to Note 4 for additional information. |
Impairment of Investments | 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 consolidated statements of operations and a new cost basis in the investment is established. |
Long-Term Restricted Cash | Long-Term Restricted Cash Restricted cash relates primarily to the proceeds received from the issuance of Series A Redeemable Convertible Preferred Stock which are held in an escrow account (refer to Note 6). The amounts are to be released to the Company upon, among other things, (i) the consummation of a suitable investment or acquisition by the Company or (ii) the conversion of Series A Redeemable Convertible Preferred Stock into common stock. During October 2021, the Company consummated a suitable acquisition, accordingly $35.0 million was released to the Company. Refer to Note 11 for additional information related to the subsequent period acquisition. |
Patents | Patents Patents include the cost of patents or patent rights 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. Refer to Note 5 for additional information. |
Impairment of Long-lived Assets | 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 in an amount 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 their 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. |
Series A and B Warrants | Series A and B Warrants The fair value of the Series A and B Warrants are estimated using a Black-Scholes option-pricing model. Refer to Notes 6 and 7 for additional information related to the Series A and B Warrants and their fair value measurements. |
Embedded derivatives | Embedded derivatives Embedded derivatives that are required to be bifurcated from their host contract are valued separately from the host instrument. A binomial lattice framework is used to estimate the fair value of the embedded derivative in the Series A Redeemable Convertible Preferred Stock issued by the Company in 2019. Refer to Notes 6 and 7 for additional information related to the embedded derivatives and their fair value measurements. |
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. Refer to Note 7 for additional information. |
Treasury Stock | 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 in the consolidated balance sheets. Refer to Note 9 for additional information. |
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 one to three years. The fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) are 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. Forfeitures are accounted for as they occur. RSUs granted in September 2019 with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a three-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. Assumptions utilized in connection with the Monte Carlo valuation technique, that resulted in a fair value of $1.42 per unit, included: estimated risk-free interest rate of 1.38 percent 3.00 years 38 percent 0 percent 450,000 450,000 During the nine months ended September 30, 2021, the Company granted 324,401 5.56 473,000 5.86 393,750 1.79 Stock-based compensation is reported in the consolidated statements of operations in general and administrative expenses. Total stock-based compensation for the three and nine months ended September 30, 2021 was $ 300,000 1,279,000 5,952,000 2.20 488,000 1,243,000 Profits Interest Units (“PIUs”) were accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The vesting conditions did not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the PIUs were classified as liability awards. Compensation expense was adjusted 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. The Company has a purchase option to purchase the vested PIUs that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the PIUs on the date of termination of continuous service. The individuals holding PIUs are no longer employed by the Company. Included in other long-term liabilities in the consolidated balance sheets as of September 30, 2021 and December 31, 2020, the PIUs totaled $591,000, which was their fair value as of December 31, 2018 after termination of service. |
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 consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. The Company’s effective tax rates were 0 1 0 4 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted In December of 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The update removed certain exceptions to the general principles in Topic 740 in U.S. GAAP. The Company adopted the update on January 1, 2021. The adoption of the update did not have a material effect on the Company’s financial position, results of operations or financial statement disclosures. Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The amendments in these updates will currently be effective for the Company on January 1, 2023, with early adoption permitted. Management is currently evaluating the impact that the amendments in these updates may have on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” to simplify the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. This update reduces the number of accounting models for convertible instruments, revises the derivatives scope exception, and provides targeted improvements for earnings per share. Upon adoption, companies have the option to apply a modified or full retrospective transition approach. The amendments in this update will currently be effective for the Company on January 1, 2024, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with “Revenue from Contracts with Customers (Topic 606).” At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments in this update should be applied prospectively and will be effective for the Company on January 1, 2023, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | Disaggregation of revenue Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Paid-up revenue agreements $ 1,100 $ 19,385 $ 23,110 $ 24,477 Recurring Revenue Agreements 482 81 1,675 922 Total revenue $ 1,582 $ 19,466 $ 24,785 $ 25,399 |
Schedule of equity securities | Schedule of equity securities Security Type Cost Gross Gross Fair Value (In thousands) September 30, 2021: Equity securities - Life Sciences Portfolio (Note 3) $ 62,042 $ 288,508 $ (1,812 ) $ 348,738 Equity securities - other equity 35,178 3,289 (85 ) 38,382 Total $ 97,220 $ 291,797 $ (1,897 ) $ 387,120 December 31, 2020: Equity securities - Life Sciences Portfolio (Note 3) $ 32,765 $ 72,689 $ (583 ) $ 104,871 Equity securities - other equity 4,086 1,410 (1,264 ) 4,232 Total $ 36,851 $ 74,099 $ (1,847 ) $ 109,103 |
EQUITY SECURITIES PORTFOLIO I_2
EQUITY SECURITIES PORTFOLIO INVESTMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of unrealized gains or losses | Schedule of unrealized gains or losses Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Change in fair value of equity securities $ 63,907 $ 84,299 $ 112,180 $ 83,230 Change in fair value of equity securities derivative – 10,651 – 17,542 Change in fair value of equity securities forward contract – (74,662 ) – – Gain (loss) on sale of equity securities 37,112 1,908 52,167 (4,202 ) Gain on sale of prepaid investment and derivative – 2,845 – 2,845 Net realized and unrealized gain $ 101,019 $ 25,041 $ 164,347 $ 99,415 |
INVESTMENT AT FAIR VALUE (Table
INVESTMENT AT FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Schedule of Investments [Abstract] | |
Schedule of gain on investments | Schedule of gain on investments Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands) Change in fair value of investment, warrants $ – $ (3,081 ) $ (2,752 ) $ 225 Change in fair value of investment, common stock – – – 3,479 Gain on sale of investment, warrants – – 3,591 554 Loss on sale of investment, common stock – – – (3,316 ) Net realized and unrealized (loss) gain $ – $ (3,081 ) $ 839 $ 942 |
PATENTS, NET OF ACCUMULATED A_2
PATENTS, NET OF ACCUMULATED AMORTIZATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Patents Net Of Accumulated Amortization | |
Schedule of intangible assets | Schedule of intangible assets For the years ending December 31, (In thousands) Remainder of 2021 $ 2,612 2022 10,448 2023 10,381 2024 9,005 2025 6,630 Thereafter 750 Patents, net $ 39,826 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities at fair value | Schedule of financial assets and liabilities at fair value Level 1 Level 2 Level 3 Total Assets (In thousands) September 30, 2021: Equity securities at fair value $ 119,280 $ 267,840 $ – $ 387,120 Total $ 119,280 $ 267,840 $ – $ 387,120 December 31, 2020: Equity securities at fair value $ 109,103 $ – $ – $ 109,103 Investment at fair value - warrants – 2,752 – 2,752 Total $ 109,103 $ 2,752 $ – $ 111,855 Liabilities September 30, 2021: Series A warrants $ – $ – $ 18,527 $ 18,527 Series A embedded derivative liabilities – – 41,411 41,411 Series B warrants – – 229,637 229,637 Total $ – $ – $ 289,575 $ 289,575 December 31, 2020: Series A warrants $ – $ 6,640 $ – $ 6,640 Series A embedded derivative liabilities – – 26,728 26,728 Series B warrants – – 52,341 52,341 Total $ – $ 6,640 $ 79,069 $ 85,709 |
Schedule of changes in fair value Level 3 liabilities | Schedule of changes in fair value Level 3 liabilities Series A Series A Series B Total (In thousands) Balance at January 1, 2021 $ – $ 26,728 $ 52,341 $ 79,069 Transfers to Level 3 6,640 – – 6,640 Remeasurement to fair value 11,824 14,463 178,198 204,485 Balance at June 30, 2021 18,464 41,191 230,539 290,194 Remeasurement to fair value 63 220 (902 ) (619 ) Balance at September 30, 2021 $ 18,527 $ 41,411 $ 229,637 $ 289,575 Series A Series A Series B Total (In thousands) Balance at January 1, 2020 $ 3,568 $ 17,974 $ – $ 21,542 Transfers to Level 3 – – 5,929 5,929 Remeasurement to fair value 3,384 11,539 52,361 67,284 Balance at June 30, 2020 6,952 29,513 58,290 94,755 Remeasurement to fair value (1,348 ) (3,831 ) (15,493 ) (20,672 ) Balance at September 30, 2020 $ 5,604 $ 25,682 $ 42,797 $ 74,083 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating lease payments | Schedule of future minimum operating lease payments Operating Leases (In thousands) Remainder of 2021 $ 149 2022 370 2023 364 2024 218 Thereafter – Total minimum payments 1,101 Less: short-term lease liabilities (430 ) Long-term lease liabilities $ 671 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of repurchased shares | Schedule of repurchased shares Total Number Average Approximate Plan Expiration Date March 20, 2020 - March 31, 2020 576,898 $ 2.28 $ 8,686,000 July 31, 2020 April 1, 2020 - April 23, 2020 1,107,639 $ 2.42 $ 6,001,000 July 31, 2020 Total repurchases in 2020 1,684,537 $ 2.37 |
INCOME_LOSS PER SHARE (Tables)
INCOME/LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Calculation of basic and diluted net loss per share | Calculation of basic and diluted net loss per share Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (In thousands, except share and per share information) Numerator: Net income (loss) attributable to Acacia Research Corporation $ 89,604 $ 38,348 $ (55,507 ) $ 33,205 Dividend on Series A redeemable convertible preferred stock (262 ) (467 ) (785 ) (1,118 ) Accretion of Series A redeemable convertible preferred stock (991 ) (733 ) (2,762 ) (2,045 ) Undistributed earnings allocated to participating securities (15,367 ) (6,619 ) – (5,204 ) Net income (loss) attributable to common stockholders - Basic 72,984 30,529 (59,054 ) 24,838 Add: Dividend on Series A redeemable convertible preferred stock – 467 – – Add: Accretion of Series A redeemable convertible preferred stock – 733 – – Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative – (3,831 ) – – Less: Change in fair value of Series A warrants 63 (1,348 ) – (1,348 ) Less: Change in fair value of dilutive Series B warrants (902 ) (5,557 ) – (5,557 ) Add: Interest expense associated with Starboard Notes, net of tax 1,536 1,889 – 1,889 Add: Undistributed earnings allocated to participating securities 15,367 6,619 – 5,204 Reallocation of undistributed earnings to participating securities (8,877 ) (296 ) – (3,645 ) Net income (loss) attributable to common stockholders - Diluted $ 80,171 $ 29,205 $ (59,054 ) $ 21,381 Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Basic 48,949,504 48,467,885 48,759,873 48,949,706 Potentially dilutive common shares: Series A Preferred Stock – 9,589,041 – – Restricted stock 798,356 728,936 – 598,328 Stock options 35,815 21,624 – – Series A Warrants 2,019,724 310,367 – 103,456 Series B Warrants 41,278,103 31,506,849 – 10,502,283 Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Diluted 93,081,502 90,624,702 48,759,873 60,153,773 Basic net income (loss) per common share $ 1.49 $ 0.63 $ (1.21 ) $ 0.51 Diluted net income (loss) per common share $ 0.86 $ 0.32 $ (1.21 ) $ 0.36 Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: Equity-based incentive awards 398,168 191,312 2,230,624 310,083 Series A warrants – – 5,000,000 – Series B warrants – 68,493,151 100,000,000 68,493,151 Total 398,168 68,684,463 107,230,624 68,803,234 |
DESCRIPTION OF BUSINESS AND B_3
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - Integer | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Description Of Business And Basis Of Presentation | ||
Number of new patent portfolios acquired | 1 | 5 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Product Information [Line Items] | ||||
Revenues | $ 1,582 | $ 19,466 | $ 24,785 | $ 25,399 |
Paid Up Revenue Agreements [Member] | ||||
Product Information [Line Items] | ||||
Revenues | 1,100 | 19,385 | 23,110 | 24,477 |
Recurring Revenue Agreements [Member] | ||||
Product Information [Line Items] | ||||
Revenues | $ 482 | $ 81 | $ 1,675 | $ 922 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : Trading Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Equity securities - cost | $ 97,220 | $ 36,851 |
Available-for-sale Securities, Gross Unrealized Gain | 291,797 | 74,099 |
Available-for-sale Securities, Gross Unrealized Loss | (1,897) | (1,847) |
Equity securities at fair value | 387,120 | 109,103 |
Equity Securites Lf Fund Public Securities [Member] | ||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Equity securities - cost | 62,042 | 32,765 |
Available-for-sale Securities, Gross Unrealized Gain | 288,508 | 72,689 |
Available-for-sale Securities, Gross Unrealized Loss | (1,812) | (583) |
Equity securities at fair value | 348,738 | 104,871 |
Equity Securities Other Equity [Member] | ||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||
Equity securities - cost | 35,178 | 4,086 |
Available-for-sale Securities, Gross Unrealized Gain | 3,289 | 1,410 |
Available-for-sale Securities, Gross Unrealized Loss | (85) | (1,264) |
Equity securities at fair value | $ 38,382 | $ 4,232 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Product Information [Line Items] | |||||
Proceeds from sale of investment | $ 1,800 | ||||
Loss on sale of investment | 515 | ||||
Stock-based compensation | $ 300 | $ 488 | 1,279 | $ 1,243 | |
Unrecognized stock-based compensation expense | $ 5,952 | $ 5,952 | |||
Weighted-average remaining vesting period | 2 years 2 months 12 days | ||||
Effective tax rate | 0.00% | 0.00% | 1.00% | 4.00% | |
Restricted Stock Units (RSUs) [Member] | |||||
Product Information [Line Items] | |||||
Option Forfeited | 450 | ||||
Option Forfeited | $ 450 | ||||
Weighted Average Grant | $ 473,000 | ||||
Weighted average grant-date fair value | 5.86 | ||||
R S As [Member] | |||||
Product Information [Line Items] | |||||
Weighted Average Grant | 324,401 | ||||
Weighted average grant-date fair value | 5.56 | ||||
Non Qualified Stock Options [Member] | |||||
Product Information [Line Items] | |||||
Weighted Average Grant | 393,750 | ||||
Weighted average grant-date fair value | $ 1.79 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Black Scholes Method [Member] | Restricted Stock Units [Member] | |||||
Product Information [Line Items] | |||||
Assumptions used for derivatives | 1.38 percent | ||||
Measurement Input, Expected Term [Member] | Black Scholes Method [Member] | Restricted Stock Units [Member] | |||||
Product Information [Line Items] | |||||
Assumptions used for derivatives | 3.00 years | ||||
Measurement Input, Price Volatility [Member] | Black Scholes Method [Member] | Restricted Stock Units [Member] | |||||
Product Information [Line Items] | |||||
Assumptions used for derivatives | 38 percent | ||||
Measurement Input, Expected Dividend Rate [Member] | Black Scholes Method [Member] | Restricted Stock Units [Member] | |||||
Product Information [Line Items] | |||||
Assumptions used for derivatives | 0 percent | ||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 32.00% | 98.00% | 50.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 25.00% | 19.00% | 9.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 22.00% | 12.00% | |||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Licensee 2 [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 13.00% | ||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Licensee 3 [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 75.00% | ||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Foreign Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 8.00% | 0.10% | 15.00% | 5.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 100.00% | 62.00% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Licensee [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 100.00% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Licensee 2 [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk percentage | 21.00% |
EQUITY SECURITIES PORTFOLIO I_3
EQUITY SECURITIES PORTFOLIO INVESTMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Marketable Securities [Line Items] | ||||
Gain on sale of prepaid investment and derivative | $ 0 | $ 2,845 | ||
Net realized and unrealized gain (loss) on investment | $ 0 | $ 3,081 | 839 | 942 |
Equity Securites Lf Fund Securities [Member] | ||||
Marketable Securities [Line Items] | ||||
Change in fair value of investment | 63,907 | 84,299 | 112,180 | 83,230 |
Equity Securites Derivative [Member] | ||||
Marketable Securities [Line Items] | ||||
Change in fair value of investment | 0 | 10,651 | 0 | 17,542 |
Equity Securites Forward Contract [Member] | ||||
Marketable Securities [Line Items] | ||||
Change in fair value of investment | 0 | (74,662) | 0 | 0 |
Equity Securities L F Fund Trading Security [Member] | ||||
Marketable Securities [Line Items] | ||||
Loss on sale of trading security | 37,112 | 1,908 | 52,167 | (4,202) |
Gain on sale of prepaid investment and derivative | 0 | 0 | 2,845 | |
Gain on sale of prepaid investment and derivativey | 2,845 | |||
L F Fund Securities [Member] | ||||
Marketable Securities [Line Items] | ||||
Net realized and unrealized gain (loss) on investment | $ 101,019 | $ 25,041 | $ 164,347 | $ 99,415 |
EQUITY SECURITIES PORTFOLIO I_4
EQUITY SECURITIES PORTFOLIO INVESTMENT (Details Narrative) $ in Thousands | 3 Months Ended |
Apr. 03, 2020USD ($) | |
Option Agreement [Member] | Portfolio Companies [Member] | |
Offsetting Assets [Line Items] | |
Payment to acquire equity securities | $ 277,500 |
INVESTMENT AT FAIR VALUE (Detai
INVESTMENT AT FAIR VALUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Investment Holdings [Line Items] | ||||
Change in fair value of investment | $ 0 | $ (3,081) | $ (2,752) | $ 3,704 |
Change in fair value of investment | 0 | 3,081 | 2,752 | (3,704) |
Loss on sale of investment | 515 | |||
Loss on sale of investment | (515) | |||
Net realized and unrealized gain (loss) on investment | 0 | 3,081 | 839 | 942 |
Net realized and unrealized gain (loss) on investment | 0 | (3,081) | (839) | (942) |
Warrant Investment [Member] | ||||
Investment Holdings [Line Items] | ||||
Change in fair value of investment | 0 | 3,081 | 2,752 | 225 |
Change in fair value of investment | 0 | (3,081) | (2,752) | (225) |
Gain on sale of investment | 0 | 0 | 3,591 | 554 |
Common Stock Investment [Member] | ||||
Investment Holdings [Line Items] | ||||
Change in fair value of investment | 0 | 0 | 0 | 3,479 |
Change in fair value of investment | $ 0 | 0 | 0 | (3,479) |
Loss on sale of investment | 0 | 0 | 3,316 | |
Loss on sale of investment | $ 0 | $ 0 | $ (3,316) |
PATENTS, NET OF ACCUMULATED A_3
PATENTS, NET OF ACCUMULATED AMORTIZATION (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Patents Net Of Accumulated Amortization | ||
Remainder of 2021 | $ 2,612 | |
2022 | 10,448 | |
2023 | 10,381 | |
2024 | 9,005 | |
2025 | 6,630 | |
Thereafter | 750 | |
Patents, net  | $ 39,826 | $ 16,912 |
PATENTS, NET OF ACCUMULATED A_4
PATENTS, NET OF ACCUMULATED AMORTIZATION (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Patents Net Of Accumulated Amortization | ||
Accumulated amortization | $ 291,600 | $ 319,900 |
Accrued patent acquisition costs | 13,000 | |
Accrued patent acquisition costs due within a year | 8,000 | |
Accrued patent acquisition costs due within 2 years | $ 5,000 |
STARBOARD INVESTMENT (Details N
STARBOARD INVESTMENT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 9 Months Ended | 16 Months Ended | ||||
Jan. 29, 2021 | Feb. 25, 2020 | Nov. 18, 2019 | Sep. 30, 2021 | Jun. 04, 2020 | Jun. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Dec. 31, 2020 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Fair value of embedded derivative | $ 41,411 | $ 41,411 | $ 41,411 | $ 26,728 | ||||||
Proceeds from issuance of debt | 50,000 | $ 0 | ||||||||
Repayment of debt | 50,000 | 0 | ||||||||
New Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Long-term Debt | 180,000 | 180,000 | 180,000 | 115,000 | ||||||
Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Proceeds from issuance of debt | $ 115,000 | |||||||||
Debt stated interest rate | 10.00% | |||||||||
Series A Redeemable Convertible Stock [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Proceeds from issuance of preferred stock | 35,000 | |||||||||
Payment of stock issuance costs | 1,300 | |||||||||
Accretion expense | 991 | 2,800 | ||||||||
Fair value of embedded derivative | 41,400 | 41,400 | 41,400 | 26,700 | ||||||
September Redemption [Member] | Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Repayment of debt | $ 80,000 | |||||||||
December Redemption [Member] | Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Repayment of debt | 35,000 | |||||||||
Series B Warrants [Member] | Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Fair value of warrants | 1,300 | 1,300 | 1,300 | |||||||
Unamortized discount | 151 | 151 | 151 | |||||||
Amortization of discount | 1,200 | |||||||||
Starboard Value [Member] | Series A Preferred Stock [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Stock issued | 350,000 | |||||||||
Conversion price | $ 3.65 | |||||||||
Starboard Value [Member] | Series A Warrants [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Warrants issued, shares | 5,000,000 | |||||||||
Fair value of warrants | $ 4,800 | 18,500 | $ 18,500 | 18,500 | 6,600 | |||||
Warrants exercised | 0 | |||||||||
Starboard Value [Member] | Series B Warrants [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Warrants issued, shares | 100,000 | |||||||||
Proceeds from issuance of preferred stock | $ 4,600 | |||||||||
Fair value of warrants | 229,600 | $ 229,600 | 229,600 | $ 52,300 | ||||||
Warrants exercised | 0 | |||||||||
Merton [Member] | Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Proceeds from issuance of debt | $ 50,000 | |||||||||
Debt stated interest rate | 6.00% | |||||||||
Notes exchanged | $ 115,000 | |||||||||
Capitalized lender fees | $ 4,600 | |||||||||
Unamortized discount | $ 500 | |||||||||
Accrued interest | $ 863 | $ 863 | $ 863 | |||||||
Repayment of debt | $ 50,000 | |||||||||
Debt maturity date | Oct. 15, 2021 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details - Fair Value on a Recurring Basis) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | $ 387,120 | $ 111,855 |
Assets [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 387,120 | 109,103 |
Assets [Member] | Warrant Investment [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 2,752 | |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 119,280 | 109,103 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 119,280 | 109,103 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Warrant Investment [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | ||
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 267,840 | 2,752 |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 267,840 | 0 |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Warrant Investment [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 2,752 | |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Warrant Investment [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | |
Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 289,575 | 85,709 |
Liability [Member] | Series A Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 18,527 | 6,640 |
Liability [Member] | Series B Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 41,411 | 26,728 |
Liability [Member] | Series A Embedded Derivative Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 229,637 | 52,341 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Series A Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Series B Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Series A Embedded Derivative Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 6,640 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Series A Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 6,640 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Series B Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Series A Embedded Derivative Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 289,575 | 79,069 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Series A Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 18,527 | 0 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Series B Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | 41,411 | 26,728 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Series A Embedded Derivative Liability [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | $ 229,637 | $ 52,341 |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details - Changes to fair value measurement Level 3) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, beginning balance | $ 290,194 | $ 94,755 | $ 79,069 | $ 21,542 |
Transfers into Level 3 | 6,640 | 5,929 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Period Increase (Decrease) | (619) | (20,672) | 204,485 | 67,284 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | 289,575 | 74,083 | 290,194 | 94,755 |
Fair Value, Inputs, Level 3 [Member] | Series A Warrants Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, beginning balance | 18,464 | 6,952 | 0 | 3,568 |
Transfers into Level 3 | 6,640 | 0 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Period Increase (Decrease) | 63 | (1,348) | 11,824 | 3,384 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | 18,527 | 5,604 | 18,464 | 6,952 |
Fair Value, Inputs, Level 3 [Member] | Series A Embedded Derivative Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, beginning balance | 41,191 | 29,513 | 26,728 | 17,974 |
Transfers into Level 3 | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Period Increase (Decrease) | 220 | (3,831) | 14,463 | 11,539 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | 41,411 | 25,682 | 41,191 | 29,513 |
Fair Value, Inputs, Level 3 [Member] | Series B Warrants Liability [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, beginning balance | 230,539 | 58,290 | 52,341 | |
Transfers into Level 3 | 5,929 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Period Increase (Decrease) | (902) | (15,493) | 178,198 | 52,361 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | $ 229,637 | $ 42,797 | $ 230,539 | $ 58,290 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2021 | $ 149 | |
2022 | 370 | |
2023 | 364 | |
2024 | 218 | |
Thereafter | 0 | |
Total minimum payments | 1,101 | |
Less: short-term lease liabilities | (430) | |
Long-term lease liabilities | $ 671 | $ 951 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Operating lease costs, net of sublease income | $ 155 | $ 174 | $ 457 | $ 459 | |
Income from settlement | $ 308 | ||||
Contingency accruals | $ 587 | $ 587 | $ 1,300 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Common Stock [Member] - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2020 | Apr. 23, 2020 | Dec. 31, 2020 |
Class of Stock [Line Items] | |||
Number of shares repurchased | 576,898 | 1,107,639 | 1,684,537 |
Average price paid per share | $ 2.28 | $ 2.42 | $ 2.37 |
Approximate value of shares that may yet be purchased | $ 8,686 | $ 6,001 | |
Stock Repurchase Program Expiration Date | Jul. 31, 2020 | Jul. 31, 2020 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) $ in Thousands | Aug. 05, 2019USD ($) |
Stock Repurchase Program [Member] | |
Equity, Class of Treasury Stock [Line Items] | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 10,000 |
INCOME_LOSS PER SHARE (Details)
INCOME/LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||
Net income (loss) attributable to Acacia Research Corporation | $ 89,604 | $ 38,348 | $ (55,507) | $ 33,205 |
Dividend on Series A redeemable convertible preferred stock | (262) | (467) | (785) | (1,118) |
Accretion of Series A redeemable convertible preferred stock | (991) | (733) | (2,762) | (2,045) |
Undistributed earnings allocated to participating securities | (15,367) | (6,619) | 0 | (5,204) |
Net income (loss) attributable to common stockholders - Basic | 72,984 | 30,529 | (59,054) | 24,838 |
Add: Dividend on Series A redeemable convertible preferred stock | 0 | 467 | 0 | 0 |
Add: Accretion of Series A redeemable convertible preferred stock | 0 | 733 | 0 | 0 |
Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative | 0 | (3,831) | 0 | 0 |
Less: Change in fair value of Series A warrants | 63 | (1,348) | 0 | (1,348) |
Less: Change in fair value of dilutive Series B warrants | (902) | (5,557) | (5,557) | |
Add: Interest expense associated with Starboard Notes, net of tax | 1,536 | 1,889 | 1,889 | |
Add: Undistributed earnings allocated to participating securities | 15,367 | 6,619 | 0 | 5,204 |
Reallocation of undistributed earnings to participating securities | (8,877) | (296) | 0 | (3,645) |
Net income (loss) attributable to common stockholders - Diluted | $ 80,171 | $ 29,205 | $ (59,054) | $ 21,381 |
Denominator: | ||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Basic | 48,949,504 | 48,467,885 | 48,759,873 | 48,949,706 |
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 93,081,502 | 90,624,702 | 48,759,873 | 60,153,773 |
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - Diluted | 93,081,502 | 90,624,702 | 48,759,873 | 60,153,773 |
Basic net income (loss) per common share | $ 1.49 | $ 0.63 | $ (1.21) | $ 0.51 |
Diluted net income (loss) per common share | $ 0.86 | $ 0.32 | $ (1.21) | $ 0.36 |
Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: | ||||
Antidilutive shares | 398,168 | 68,684,463 | 107,230,624 | 68,803,234 |
Equity Based Incentive Awards [Member] | ||||
Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: | ||||
Antidilutive shares | 398,168 | 191,312 | 2,230,624 | 310,083 |
Series A Warrants [Member] | ||||
Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: | ||||
Antidilutive shares | 0 | 0 | 5,000,000 | 0 |
Series B Warrants [Member] | ||||
Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: | ||||
Antidilutive shares | 0 | 68,493,151 | 100,000,000 | 68,493,151 |
Series A Preferred Stock [Member] | ||||
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 0 | 9,589,041 | 0 | 0 |
Restricted Stock Units [Member] | ||||
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 798,356 | 728,936 | 0 | 598,328 |
Employee Stock Options [Member] | ||||
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 35,815 | 21,624 | 0 | 0 |
Series A Warrants [Member] | ||||
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 2,019,724 | 310,367 | 0 | 103,456 |
Series B Warrants [Member] | ||||
Potentially dilutive common shares: | ||||
Potentially dilutive common shares | 41,278,103 | 31,506,849 | 0 | 10,502,283 |