DELAWARE
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95-4405754
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation organization)
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Identification No.)
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520 NEWPORT CENTER DRIVE, 12TH FLOOR
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NEWPORT BEACH, CA
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92660
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 par value
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The NASDAQ Stock Market, LLC
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Large accelerated filer
£
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Accelerated filer
R
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Non-accelerated filer
£
(Do not check if a smaller reporting company)
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Smaller reporting company
£
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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our corporate code of conduct, our code of conduct for our board of directors and our fraud policy;
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•
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charters for our audit committee, nominating and corporate governance committee, disclosure committee and compensation committee; and
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•
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applicable dividend related tax forms.
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•
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Inventions that were ahead of the technology curve and hence, there is no existing ecosystem to support the patented products or services at the time they are introduced to market;
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•
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Inventions that can only be deployed in very capital-intensive industries, such as semiconductor fabrication, energy, or medical sectors, but whose owners do not have sufficient amounts of capital to deploy; and
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•
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Inventions that, for one reason or another, are no longer being practiced by the patent owner.
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•
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Patent Discovery
- Discover potentially valuable patents or patent portfolios.
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•
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Assessment of Economic Value -
Work internally and with external experts to evaluate the use of the patented invention(s) in the relevant marketplace and assess a patents or patent portfolios’ expected economic value.
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•
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Licensing and Enforcement
-
License those users wanting to utilize the patented invention with authorization. For unauthorized users of the patented invention, enter into license negotiations and, if necessary, litigation to monetize the patent based on its assessed value.
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•
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Infringement
. To determine infringement, we must first identify third-parties that are practicing the invention(s) covered by the patent without obtaining permission from the patent owner to do so. A key tool in determining whether or not a company is infringing a patent is a claim chart. A claim chart demonstrates how the manufacture, sale, or use of an existing product compares against the claims of the patent.
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•
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Invalidity.
The three main factors analyzed to determine invalidity are (1) anticipation, (2) obviousness, and (3) the existence of non-patentable subject matter.
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◦
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Anticipation occurs when the claims of the patent are entirely revealed within a single piece of prior art. “Prior art” is a technical term that generally refers to an invention that existed prior to the grant of the patent being analyzed.
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◦
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Even if the claims of the patent are not entirely revealed within a single piece of prior art, the patent may still be invalid if determined to be “obvious” under the law. “Obvious” essentially means that the differences between prior art and the patented invention are so slight such that they would have been obvious at the time of invention to one who is skilled in the subject matter being patented.
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◦
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Even if the patent lacks anticipation and obviousness, it may still be invalid if its subject matter is un-patentable by law. Un-patentable subject matter includes naturally occurring things, abstract concepts, or algorithms that perform an ordinary function.
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•
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Enforceability
. A myriad of factors are analyzed to determine whether or not a patent is enforceable, including whether or not there has been patent misuse, or whether or not there are antitrust violations associated with the patent. Due to the inherently complex nature of patent law, only a court or specific administrative body, such as the International Trade Commission, can make a decision whether a patent is infringed, valid and enforceable; however, we employ our wealth of expertise to make the best assessment possible given a specific fact pattern and set of circumstances.
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•
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Utilizing our staff of in-house patent attorneys, licensing, engineering and business development executives to conduct our tailored patent investment and evaluation processes and procedures. We may also leverage the expertise of external specialists and technology consultants.
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•
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Identifying emerging growth areas where patented technologies will play a vital role in connection with the manufacture or sale of products and services.
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•
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Identifying core, patented technologies that have been or are anticipated to be widely adopted by third-parties in connection with the manufacture or sale of products and services.
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•
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Considering the impact of subtleties in the language of a patent, recorded interactions with the patent office, evaluating prior art and literature and considering the impact on the potential licensing and enforcement revenue that can be derived from a patent or patent portfolio.
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•
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Evaluating the strength of a patent portfolio, including consideration of the types of claims and the number of claims potentially infringed by third-parties, and the results of any prior art searches or analysis, before the decision is made to allocate resources to a patent portfolio investment or an effective licensing and enforcement effort.
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•
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Identifying and considering potential problem areas, if any, and determining whether potential problem areas can be overcome prior to acquiring a patent portfolio or launching an effective licensing program.
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•
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Identifying potential infringers, industries within which the potential infringers exist, longevity of the patented technology, and a variety of other factors that directly impact the magnitude and potential success of a licensing and enforcement program.
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Operating Subsidiary
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Industry
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Description
|
American Vehicular Sciences, LLC
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Transportation And Automotive
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Patents from Automotive Technologies International, or ATI and Intelligent Technologies International, or ITI, relating to numerous automotive safety, navigation and diagnostics technologies.
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Body Science, LLC
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Peripheral Vascular Devices
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Patents relating to apparatus for use in wireless physiological monitoring.
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Cellular Communications Equipment, LLC
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Telecommunications / Smartphones
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Portfolio covers Wireless Infrastructure and User Equipment Technology relating to second (2G), third (3G) and fourth (4G) generation wireless technologies and to air interface technology used in 2G, 3G and 4G wireless networks.
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Endotach, LLC
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Peripheral Vascular Devices
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Patents relating to stent grafts.
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Innovative Display Technologies, LLC
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Telecommunications / Smartphones
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Portfolio generally relates to back-lighting for displays and the patented technology covers various improvements to LCD displays.
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Lambda Optical Solutions, LLC
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Communications
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Patents relating to Optical Switching Technology.
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LifePort Sciences, LLC
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Peripheral Vascular Devices
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Multiple patents and applications relating to, among other things, stent grafts, stent graft delivery systems and stent placement procedures.
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LifeScreen Sciences, LLC
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Peripheral Vascular Devices
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Portfolio consists of multiple patents and applications relating to, among other things, vena cava filters, embolic protection and associated delivery systems.
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LifeShield Sciences, LLC
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Peripheral Vascular Devices
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Portfolio consists of multiple patents and applications relating to stent grafts, and stent graft delivery systems.
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Limestone Memory Systems LLC
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Memory
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This portfolio covers both DRAM and flash memory technologies used in virtually all electronic communications and computing devices.
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Nexus Display Technologies, LLC
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Consumer Electronics
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Patent portfolio relating to high speed digital display interface technology used in industry standards such as DisplayPort and DisplayPort-related technologies and also MIPI DSI.
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Optimum Content Protection, LLC and Super Interconnect Technologies, LLC
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Telecommunications / Smartphones
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Portfolios relate to high speed circuit interconnect, display control technology and content security used in consumer electronics, PCs and mobile devices such as smartphones, tablets, and laptops.
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Parthenon Unified Memory Architecture, LLC
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Semiconductor
|
Patents relate to the use of shared memory in multimedia processing systems such as mobile phones, tablets and other consumer electronic devices.
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Power Optimized Memory Solutions LLC
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Memory
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This portfolio covers technologies and devices similar to those of the Limestone portfolio, as well as Solid State Drives (SSD’s).
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Rapid Completions LLC
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Energy Efficiency
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Patents related to multi-zonal completion of horizontal wells including ball-drop, sliding sleeve and packer technology for use in the hydraulic fracturing of both tight and conventional oil and gas reservoirs. This technology has been applied in oilfields across North America and worldwide and has contributed significantly to the growth in oil and gas production from unconventional shale formations.
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Roman Memory Solutions LLC
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Memory
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Patents covering circuits used in DRAM and Flash Memory.
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Saint Lawrence Communications, LLC
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Wireless
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Patents relating to Speech Codecs used in Wireless and Wireline Systems.
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Unified Messaging Solutions, LLC
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Communications
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Patent for Messaging Technology.
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•
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our inability to enter into a definitive agreement with respect to any potential patent portfolio investment, or if we are able to enter into such agreement, our inability to consummate the potential investment transaction;
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•
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difficulty integrating the operations, technology and personnel of the acquired entity;
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•
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our inability to achieve the anticipated financial and other benefits of the specific patent portfolio investment;
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•
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our inability to retain key personnel from the acquired company, if necessary;
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•
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difficulty in maintaining controls, procedures and policies during the transition and integration process;
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•
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diversion of our management’s attention from other business concerns; and
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•
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failure of our due diligence process to identify significant issues, including issues with respect to patented technologies and patent portfolios, and other legal and financial contingencies.
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•
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Section 203 of the Delaware General Corporation Law, which prohibits a merger with a 15%-or-greater stockholder, such as a party that has completed a successful tender offer, until three years after that party became a 15%-or-greater stockholder;
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•
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amendment of our bylaws by the stockholders requires a two-thirds approval of the outstanding shares;
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•
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the authorization in our certificate of incorporation of undesignated preferred stock, which could be issued without stockholder approval in a manner designed to prevent or discourage a takeover;
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•
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provisions in our bylaws eliminating stockholders’ rights to call a special meeting of stockholders, which could make it more difficult for stockholders to wage a proxy contest for control of our board of directors or to vote to repeal any of the anti-takeover provisions contained in our certificate of incorporation and bylaws; and
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•
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the division of our board of directors into three classes with staggered terms for each class, which could make it more difficult for an outsider to gain control of our board of directors.
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•
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the dollar amount of agreements executed in each period, which is primarily driven by the nature and characteristics of the technology being licensed and the magnitude of infringement associated with a specific licensee;
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•
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the specific terms and conditions of agreements executed in each period and the periods of infringement contemplated by the respective payments;
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•
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fluctuations in the total number of agreements executed;
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•
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fluctuations in the sales results or other royalty-per-unit activities of our licensees that impact the calculation of license fees due;
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•
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the timing of the receipt of periodic license fee payments and/or reports from licensees;
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•
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fluctuations in the net number of active licensees period to period;
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•
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costs related to investments, alliances, licenses and other efforts to expand our operations;
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•
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the timing of payments under the terms of any customer or license agreements into which our operating subsidiaries may enter;
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•
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expenses related to, and the timing and results of, patent filings and other enforcement proceedings relating to intellectual property rights, as more fully described in this section; and
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•
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new litigation or developments in current litigation and the unpredictability of litigation results or settlements or appeals.
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•
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announcements of developments in our patent enforcement actions;
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•
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developments or disputes concerning our patents;
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•
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our or our competitors’ technological innovations;
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•
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developments in relationships with licensees;
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•
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variations in our quarterly operating results;
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•
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our failure to meet or exceed securities analysts’ expectations of our financial results;
|
•
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a change in financial estimates or securities analysts’ recommendations;
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•
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changes in management’s or securities analysts’ estimates of our financial performance;
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•
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changes in market valuations of similar companies;
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•
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concerns about sovereign debt of the United States and the European Union;
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•
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announcements by us or our competitors of significant contracts, investments, strategic partnerships, joint ventures, capital commitments, new technologies, or patents; and
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•
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failure to complete significant transactions.
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|
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2016
|
|
2015
|
||||||||||||
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$7.68
|
|
$7.25
|
|
$5.64
|
|
$4.30
|
|
$9.97
|
|
$10.63
|
|
$12.51
|
|
$17.22
|
Low
|
|
$5.55
|
|
$4.20
|
|
$3.75
|
|
$2.82
|
|
$3.82
|
|
$7.88
|
|
$8.61
|
|
$10.18
|
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Acacia Research Corporation common stock
|
|
$70
|
|
$40
|
|
$46
|
|
$12
|
|
$18
|
Nasdaq Composite Index (IXIC)
|
|
$116
|
|
$160
|
|
$182
|
|
$192
|
|
$207
|
NASDAQ-100 Technology Sector Index (NDXT)
|
|
$107
|
|
$147
|
|
$182
|
|
$178
|
|
$221
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
152,699
|
|
|
$
|
125,037
|
|
|
$
|
130,876
|
|
|
$
|
130,556
|
|
|
$
|
250,727
|
|
Inventor royalties and contingent legal fees expense
|
|
49,204
|
|
|
34,631
|
|
|
44,233
|
|
|
54,508
|
|
|
50,679
|
|
|||||
Litigation and licensing expenses - patents
|
|
27,858
|
|
|
39,373
|
|
|
37,614
|
|
|
39,335
|
|
|
21,591
|
|
|||||
Amortization of patents
|
|
34,208
|
|
|
53,067
|
|
|
53,745
|
|
|
49,039
|
|
|
39,019
|
|
|||||
General and administrative expenses (excluding non-cash stock compensation expense)
|
|
23,857
|
|
|
27,128
|
|
|
30,439
|
|
|
31,335
|
|
|
28,426
|
|
|||||
Non-cash stock compensation expense (included in G&A in the statements of operations)
|
|
9,062
|
|
|
11,048
|
|
|
18,115
|
|
|
27,894
|
|
|
25,657
|
|
|||||
Research, consulting and other expenses - business development
|
|
3,079
|
|
|
3,391
|
|
|
3,840
|
|
|
3,251
|
|
|
4,943
|
|
|||||
Impairment of patent-related intangible assets
|
|
42,340
|
|
|
74,731
|
|
|
3,497
|
|
|
4,619
|
|
|
—
|
|
|||||
Impairment of goodwill
|
|
—
|
|
|
30,149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
500
|
|
|
4,141
|
|
|
1,548
|
|
|
3,506
|
|
|
—
|
|
|||||
Operating income (loss)
|
|
$
|
(37,409
|
)
|
|
$
|
(152,622
|
)
|
|
$
|
(62,155
|
)
|
|
$
|
(82,931
|
)
|
|
$
|
80,412
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations before (provision for) benefit from income taxes
|
|
$
|
(36,611
|
)
|
|
$
|
(152,678
|
)
|
|
$
|
(62,750
|
)
|
|
$
|
(80,800
|
)
|
|
$
|
81,349
|
|
(Provision for) benefit from income taxes
|
|
(18,188
|
)
|
|
(4,800
|
)
|
|
(3,912
|
)
|
|
21,958
|
|
|
(22,060
|
)
|
|||||
Net income (loss) from continuing operations including noncontrolling interests in operating subsidiaries
|
|
$
|
(54,799
|
)
|
|
$
|
(157,478
|
)
|
|
$
|
(66,662
|
)
|
|
$
|
(58,842
|
)
|
|
$
|
59,289
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Acacia Research Corporation
|
|
$
|
(54,067
|
)
|
|
$
|
(160,036
|
)
|
|
$
|
(66,029
|
)
|
|
$
|
(56,434
|
)
|
|
$
|
59,453
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted income (loss) per common share
|
|
$
|
(1.08
|
)
|
|
$
|
(3.25
|
)
|
|
$
|
(1.37
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
—
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
0.375
|
|
|
$
|
—
|
|
|
|
At December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents, restricted cash and investments
|
|
$
|
158,495
|
|
|
$
|
145,948
|
|
|
$
|
193,024
|
|
|
$
|
256,702
|
|
|
$
|
311,279
|
|
Patents, net of accumulated amortization
|
|
86,319
|
|
|
162,642
|
|
|
286,636
|
|
|
288,432
|
|
|
313,529
|
|
|||||
Total assets
|
|
296,003
|
|
|
347,901
|
|
|
536,348
|
|
|
593,393
|
|
|
668,717
|
|
|||||
Total liabilities
|
|
28,560
|
|
|
33,746
|
|
|
47,300
|
|
|
31,195
|
|
|
50,239
|
|
|||||
Noncontrolling interests in operating subsidiaries
|
|
1,854
|
|
|
3,944
|
|
|
5,491
|
|
|
6,488
|
|
|
6,976
|
|
|||||
Acacia Research Corporation stockholders’ equity
|
|
265,589
|
|
|
310,211
|
|
|
483,557
|
|
|
555,710
|
|
|
611,502
|
|
•
|
Net deferred tax liabilities resulting from an acquisition in January 2012 created an additional source of income to utilize against the majority of our existing consolidated net deferred tax assets. In addition, we estimated that certain of our other
|
•
|
For the years ended December 31, 2016, 2015, 2014, 2013 and 2012, we paid patent related investment costs totaling
$1.2 million
,
$19.5 million
,
$42.7 million
, $25.1 million and $178.3 million (excluding business combinations of $150.0 million), respectively. Patent related investment costs are amortized using the straight-line method over the estimated economic useful life of the underlying patents.
|
•
|
For the years ended December 31, 2016, 2015, 2014 and 2013 we recognized patent impairment charges totaling
$42.3 million
,
$74.7 million
,
$3.5 million
and $4.6 million, respectively. The impairment charges for the periods presented reflect the impact of reductions in expected estimated future net cash flows for certain portfolios due to adverse legal outcomes and certain patent portfolios that management determined it would no longer allocate resources to in future periods. The impairment charges consisted of the excess of the asset’s carrying value over its estimated fair value as of the applicable measurement date.
|
•
|
We conducted an annual goodwill impairment test as of December 31, 2015. Based upon the difference between the implied fair value of goodwill and the historical carrying value of goodwill, due primarily to the sustained decline in the Company's stock price and adverse litigation outcomes in the fourth quarter of 2015, we recognized a goodwill impairment charge totaling $30.1 million.
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Revenues (in thousands)
|
$
|
152,699
|
|
|
$
|
125,037
|
|
|
$
|
130,876
|
|
New agreements executed
|
39
|
|
|
63
|
|
|
88
|
|
|||
Licensing and enforcement programs generating revenues - during the respective period
|
28
|
|
|
30
|
|
|
46
|
|
|||
Licensing and enforcement programs with initial revenues
|
7
|
|
|
4
|
|
|
15
|
|
|||
New patent portfolios
|
2
|
|
|
3
|
|
|
6
|
|
|||
Year end cash, cash equivalents, short-term investments and restricted cash balance
|
$
|
158,495
|
|
|
$
|
145,948
|
|
|
$
|
193,024
|
|
As of Date:
|
|
Trailing Twelve -Month Revenues
|
|
% Change
|
|||
|
|
|
|
|
|||
December 31, 2016
|
|
$
|
152,699
|
|
|
(9
|
)%
|
September 30, 2016
|
|
168,227
|
|
|
44
|
%
|
|
June 30, 2016
|
|
116,563
|
|
|
1
|
%
|
|
March 31, 2016
|
|
115,548
|
|
|
(8
|
)%
|
|
December 31, 2015
|
|
125,037
|
|
|
(4
|
)%
|
|
December 31, 2014
|
|
130,876
|
|
|
—
|
|
•
|
the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee;
|
•
|
the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments;
|
•
|
fluctuations in the total number of agreements executed each period;
|
•
|
the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs;
|
•
|
the relative maturity of licensing programs during the applicable periods;
|
•
|
other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors; and
|
•
|
historically, based on the merits and strength of our operating subsidiary’s patent infringement claims and other factors, many prospective licensees have elected to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as those patent infringement cases approached a court determined trial date.
|
|
Fiscal Year
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
152,699
|
|
|
$
|
125,037
|
|
|
$
|
130,876
|
|
|
22
|
%
|
|
(4
|
)%
|
Inventor royalties and contingent legal fees
|
49,204
|
|
|
34,631
|
|
|
44,233
|
|
|
42
|
%
|
|
(22
|
)%
|
|||
Litigation and licensing expenses - patents
|
27,858
|
|
|
39,373
|
|
|
37,614
|
|
|
(29
|
)%
|
|
5
|
%
|
|||
Amortization expense
|
34,208
|
|
|
53,067
|
|
|
53,745
|
|
|
(36
|
)%
|
|
(1
|
)%
|
|||
Impairment of patent-related intangible assets
|
42,340
|
|
|
74,731
|
|
|
3,497
|
|
|
(43
|
)%
|
|
*
|
|
|||
Impairment of goodwill
|
—
|
|
|
30,149
|
|
|
—
|
|
|
(100
|
)%
|
|
100
|
%
|
|||
Other operating costs and expenses
(1)
|
36,498
|
|
|
45,708
|
|
|
53,942
|
|
|
(20
|
)%
|
|
(15
|
)%
|
|||
Operating loss
|
(37,409
|
)
|
|
(152,622
|
)
|
|
(62,155
|
)
|
|
(75
|
)%
|
|
146
|
%
|
|||
Provision for income taxes
|
(18,188
|
)
|
|
(4,800
|
)
|
|
(3,912
|
)
|
|
279
|
%
|
|
23
|
%
|
|||
Net (income) loss attributable to noncontrolling interests
(2)
|
732
|
|
|
(2,558
|
)
|
|
633
|
|
|
(129
|
)%
|
|
*
|
|
|||
Net loss attributable to Acacia Research Corporation
|
(54,067
|
)
|
|
(160,036
|
)
|
|
(66,029
|
)
|
|
(66
|
)%
|
|
142
|
%
|
•
|
Revenues increased
$27.7 million
, or
22%
to
$152.7 million
for fiscal year
2016
, as compared to
fiscal year
2015
, due to an increase in average revenue per agreement, which was partially offset by a decrease in the number of agreements executed.
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, increased
$14.6 million
, or
42%
, due primarily to the
22%
increase in revenues in fiscal year 2016, and a 4% increase in average contingent legal fee rates for the portfolios generating revenues in fiscal year 2016, as compared to the portfolios generating revenues in fiscal year
2015
.
|
•
|
Litigation and licensing expenses-patents decreased
$11.5 million
, or
29%
, to
$27.9 million
,
due primarily to a net decrease in litigation support and third-party technical consulting expenses associated with patent trials and ongoing licensing and enforcement programs.
|
•
|
Amortization expense decreased
$18.9 million
, or
36%
, to
$34.2 million
, due to a decrease in scheduled amortization on existing patent portfolios resulting from various patent portfolio impairment charges previously recorded in the fourth quarter of 2015 and second quarter of 2016.
|
•
|
Impairment of patent-related intangible asset charges decreased
$32.4 million
, or
43%
, to
$42.3 million
. Impairment charges reflect the impact of reductions in expected estimated future net cash flows for certain patent portfolios and certain patent portfolios that management determined it would no longer allocate resources to in future periods. The impairment charges consisted of the excess of the asset’s carrying value over its estimated fair value as of the applicable measurement date.
|
•
|
In the fourth quarter of fiscal 2015, we performed an impairment analysis of goodwill. Based upon the difference between the implied fair value of goodwill and the historical carrying value of goodwill, due primarily to the sustained decline in the Company's stock price and adverse litigation outcomes occurring in the fourth quarter of 2015, we recognized a goodwill impairment charge totaling
$30.1 million
in the fourth quarter of 2015.
|
•
|
General and administrative expenses decreased
$5.3 million
, or
14%
, to
$32.9 million
,
due primarily to a net decrease in personnel costs in connection with the net reduction in headcount during 2016 and 2015 and a net decrease in non-cash stock compensation expense.
|
•
|
Fiscal year 2016 and 2015 operating expenses included expenses for court ordered attorney fees totaling
$500,000
and
$4.1 million
, respectively.
|
•
|
Tax expense for the periods presented reflects foreign taxes withheld on revenue agreements with licensees in foreign jurisdictions and other state taxes, and the impact of full valuation allowances recorded for net operating loss (2015 only)and foreign tax credit related tax assets generated during the periods. As such, no tax benefit was recognized for net operating loss and foreign tax credit related tax benefits generated during the applicable periods presented.
|
•
|
Revenues decreased
$5.8 million
, or
4%
to
$125.0 million
for fiscal year
2015
, as compared to
fiscal year
2014
.
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, decreased
$9.6 million
, or
22%
, due primarily to certain patent portfolios generating revenue in 2015 with a higher amount of cost recoveries and lower contingent fee rates, as compared to the portfolios generating revenues in fiscal year
2014
.
|
•
|
Litigation and licensing expenses-patents increased
$1.8 million
, or
5%
, to
$39.4 million
,
due primarily to a net increase in litigation support and third-party technical consulting expenses associated with trials occurring in 2015 and scheduled to occur in 2016, and ongoing and new licensing and enforcement programs commenced during fiscal year 2015.
|
•
|
Impairment of patent-related intangible asset charges increased
$71.2 million
, or +300%, to
$74.7 million
, reflecting the impact of reductions in expected estimated future net cash flows for certain patent portfolios and certain patent portfolios that management determined it would no longer allocate resources to in future periods. The impairment charges consisted of the excess of the asset’s carrying value over its estimated fair value as of the applicable measurement date.
|
•
|
In the fourth quarter of fiscal 2015, we performed an impairment analysis of goodwill. Based upon the difference between the implied fair value of goodwill and the historical carrying value of goodwill, due primarily to the sustained decline in the Company's stock price and adverse litigation outcomes occurring in the fourth quarter of 2015, we recognized a goodwill impairment charge totaling
$30.1 million
in the fourth quarter of 2015.
|
•
|
General and administrative expenses decreased
$10.4 million
, or
21%
, to
$38.2 million
,
due primarily to a net decrease in personnel costs in connection with the net reduction in headcount during 2014 and 2015, a decrease in variable performance-based compensation costs, and a net decrease in non-cash stock compensation expense.
|
•
|
Fiscal year 2015 operating expenses included expenses for court ordered attorney fees totaling
$4.1 million
. Fiscal year 2014 operating expenses included an expense accrual for court ordered attorney fees related to matters initiated in 2010 and 2011 totaling
$1.5 million
.
|
•
|
Tax expense for the periods presented reflects foreign taxes withheld on revenue agreements with licensees in foreign jurisdictions and other state taxes, and the impact of full valuation allowances recorded for net operating loss and foreign
|
•
|
360 Degree View Technology
(2)
|
|
•
|
Mobile Computer Synchronization technology
(2)(3)
|
•
|
3G & 4G Cellular Air Interface and Infrastructure technology
(2)(3)
|
|
•
|
Multi-Display Content Delivery and Data Aggregation technology
(3)
|
•
|
4G Wireless technology
(1)(2)(3)
|
|
•
|
Oil and Gas Drilling technology
(1)
|
•
|
Audio Communications Fraud Detection technology
(1)(2)(3)
|
|
•
|
Oil and Gas Production technology
(2)(3)
|
•
|
Automotive Safety, Navigation and Diagnostics technology
(2)(3)
|
|
•
|
Online Auction Guarantee technology
(1)(2)(3)
|
•
|
Bone Wedge technology
(1)(2)
|
|
•
|
Online Gaming technology
(3)
|
•
|
Broadband Communications technology
(1)(2)(3)
|
|
•
|
Optical Networking technology
(1)(2)(3)
|
•
|
Cardiology and Vascular Device technology
(1)(2)(3)
|
|
•
|
Optimized Microprocessor Operation technology
(2)(3)
|
•
|
Computer Aided Design Tools technology
(3)
|
|
•
|
Radio Frequency Modulation technology
(3)
|
•
|
Computer-Aided Design technology
(3)
|
|
•
|
Reflective and Radiant Barrier Insulation technology
(1)(2)(3)
|
•
|
Core Fiber Optic Network Architectures technology
(3)
|
|
•
|
Semiconductor 3D Die Stacking technology
(1)
|
•
|
Diamond and Gemstone Grading technology
(1)
|
|
•
|
Semiconductor Memory Circuit and Manufacturing Processes technology
(1)
|
•
|
DisplayPort and MIPI DSI technology
(1)(2)
|
|
•
|
Semiconductor Packaging technology
(3)
|
•
|
Distributed Data Management & Synchronization technology
(3)
|
|
•
|
Semiconductor Testing technology
(2)
|
•
|
DMT® technology
(3)
|
|
•
|
Shared Memory for Multimedia Processing
(1)(2)
|
•
|
DRAM and Flash Memory technology
(1)
|
|
•
|
Software Activation technology
(3)
|
•
|
Electronic Access Control technology
(2)(3)
|
|
•
|
Software Technology
(3)
|
•
|
Electronic spreadsheet, data analysis and software development technology
(1)
|
|
•
|
Speech codes used in wireless and wireline systems technology
(1)(2)(3)
|
•
|
Enhanced Mobile Communications technology
(2)(3)
|
|
•
|
Spinning and Jousting Toy Game technology
(2)(3)
|
•
|
Flash Memory technology
(1)
|
|
•
|
Super Resolutions Microscopy technology
(1)(2)(3)
|
•
|
Gas Modulation Control Systems technology
(1)(2)(3)
|
|
•
|
Surgical Access technology
(2)
|
•
|
High Speed Circuit Interconnect and Display Control technology
(1)(2)(3)
|
|
•
|
Suture Anchors technology
(2)(3)
|
•
|
Improved Lighting technology
(2)(3)
|
|
•
|
Telematics technology
(1)(2)(3)
|
•
|
Innovative Display technology
(2)(3)
|
|
•
|
Unicondylar Knee Replacement technology
(2)
|
•
|
Intercarrier SMS technology
(2)(3)
|
|
•
|
Variable Data Printing technology
(1)
|
•
|
Interstitial and Pop-Up Internet Advertising technology
(1)(2)(3)
|
|
•
|
Video Analytics for Security technology
(2)(3)
|
•
|
Knee Replacement technology
(1)
|
|
•
|
Voice-Over-IP technology
(2)(3)
|
•
|
Lighting Ballast technology
(1)
|
|
•
|
Wireless Data Synchronization & Data Transfer technology
(2)(3)
|
•
|
Location Based Services technology
(2)(3)
|
|
•
|
Wireless Infrastructure and User Equipment technology
(1)(2)(3)
|
•
|
Messaging technology
(2)(3)
|
|
•
|
Wireless Location Based Services technology
(2)(3)
|
•
|
Microprocessor and Memory technology
(1)(2)(3)
|
|
•
|
Wireless Monitoring technology
(2)(3)
|
(1)
|
Licensing and enforcement program generating revenue in 2016.
|
(2)
|
Licensing and enforcement program generating revenue in 2015.
|
(3)
|
Licensing and enforcement program generating revenue in 2014.
|
•
|
Increases in patent-related legal expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants, re-exam and i
nter partes review costs,
case-related audio/video presentations and other litigation support and administrative costs could increase our operating costs and decrease our profit generating opportunities;
|
•
|
Our patented technologies and enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order to successfully enforce our patents. Moreover, such appeals may not be successful;
|
•
|
New legislation, regulations or rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating costs and decrease our profit generating opportunities.
Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks of asserting patent enforcement actions. For instance, the United States House of Representatives passed a bill that would require non-practicing entities that bring patent infringement lawsuits to pay legal costs of the defendants, if the lawsuits are unsuccessful and certain standards are not met;
|
•
|
Courts may rule that our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions, which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our financial position; and
|
•
|
The complexity of negotiations and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to increased intervals of time between the filing of litigation and potential revenue events (i.e. markman dates, trial dates), which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios.
|
•
|
revenue recognition;
|
•
|
stock-based compensation expense;
|
•
|
valuation of long-lived and intangible assets including goodwill; and
|
•
|
accounting for income taxes.
|
•
|
In December 2015, we announced that our subsidiary Adaptix, Inc. received a jury verdict in its case against Alcatel Lucent USA, Inc., and others. The jury returned a verdict that the asserted claims of the applicable patent at issue were invalid and non-infringed. The Adaptix trial loss resulted in a reduction in estimated cash flows for the Adaptix portfolio expected to be realized from future licensing and enforcement activities, leading to impairment charges on the portfolio in the fourth quarter of 2015.
|
•
|
Management considered the impact of the fourth quarter 2015 adverse trial outcomes on our estimates of future cash flows that could be realized from future licensing and enforcement activities for other patent portfolios. Estimates of future cash flows for certain portfolios were reduced in part, in connection with our assessment of probabilities of realization given the recent adverse trial outcomes.
|
•
|
Patent impairment charges include the carrying value of other patent portfolios for which, in the fourth quarter of 2015, we experienced adverse litigation or trial outcomes, leading to a reduction in or elimination of expected future cash flows. In addition, headcount reductions and internal staff optimization efforts led to changes with respect to which patent portfolios we intend to allocate licensing and enforcement resources to in future periods. As such, certain portfolio programs were selected for termination due to a decision to no longer pursue or allocate resources, resulting in a write-off of any remaining carrying value in the fourth quarter of 2015.
|
•
|
significant consistent gradual decline in the Company's stock price for a sustained period;
|
•
|
significant underperformance relative to expected historical or projected future operating results;
|
•
|
significant changes in the manner of use of assets or the strategy for the Company's overall business;
|
•
|
significant negative industry or economic trends; and
|
•
|
significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments.
|
•
|
Adverse legal outcomes and changes in legal factors
. In December 2015, we announced that our subsidiary Adaptix, Inc. received a jury verdict in its case against Alcatel Lucent USA, et al., deciding that the claims of the applicable patent in suit were invalid and non-infringed. This adverse legal outcome and others in the fourth quarter of 2015 resulted in changes in estimates of realization related to litigation outcomes in future periods for certain patent portfolios.
|
•
|
Consistent gradual decline in the Company’s stock price
: Historically, our stock price has been volatile, and the volatility continued during fiscal 2015, declining from $16.72 as of January 2, 2015, to $4.29 as of December 31, 2015, a 74% decline. In addition, subsequent to December 31, 2015, our stock price volatility has continued, trending downward to $3.16 as of February 29, 2016. In the fourth quarter of 2015, given the continued decline in stock price up through December 31, 2015, and the impact of the December 2015 adverse trial outcomes noted above, the gradual consistent decline in our stock price was deemed to be sustained, and hence indicative of a reduction in the estimated fair value of our company, as reflected in our lower overall market capitalization.
|
•
|
Changes in Company Management and Resource Allocations
. In connection with certain resource allocation changes within the organization due to changes in our management in the fourth quarter of 2015, headcount reductions and internal staff optimization efforts occurred, which led to changes with respect to estimates of which patent portfolios we intend to continue to allocate licensing and enforcement resources to in future periods. As such, certain patent portfolio programs were selected for termination due to our decision to no longer allocate resources to those programs. In addition, we made changes in estimates regarding the best and highest use of certain patent portfolios, resulting in reductions in estimated future cash flows.
|
•
|
At December 31, 2015, the initial qualitative assessment included consideration of the factors described above, resulting in a conclusion that as of December 31, 2015, the consistent gradual decline in our stock price was sustained. We also considered the impact of the December 2015 adverse trial outcomes on our stock price and related estimates of fair value for remaining portfolio opportunities. Based on our assessment of these factors, we determined that it was more likely than not that goodwill was impaired, constituting a triggering event requiring a goodwill impairment test as of December 31, 2015.
|
•
|
We conducted the first step of the goodwill impairment test for our single reporting unit as of December 31, 2015. We utilized the market capitalization plus cost synergies approach to estimate the fair value of the Company. The estimated market capitalization was determined by multiplying our stock price and the common shares outstanding as of December 31, 2015. Management also considered a control premium in its estimate of fair value for our single reporting unit. The cost synergies were estimated based on the cost savings which could be achieved if the Company was acquired by a competitor in the same operating business.
|
•
|
Based on the analysis utilizing the market capitalization plus cost synergies approach, the estimated fair value of the reporting unit of $252 million was below its carrying value of $344.3 million as of December 31, 2015, and therefore, goodwill was determined to be more likely than not, impaired.
|
•
|
The purpose of step 2 of the analysis was to determine the estimated fair value of the assets and liabilities of our reporting unit, in order to determine the implied fair value of goodwill for the reporting unit. The excess, if any, of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. Based upon the analysis performed, the fair value of our reporting unit did not exceed the amounts assigned to our reporting unit assets and liabilities, resulting in a difference between the implied fair value of goodwill of zero and the historical carrying value of goodwill. As a result, we recognized a goodwill impairment charge totaling $30.1 million in the fourth quarter of 2015.
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
|
|
(in thousands, except percentage change values and number of agreements)
|
||||||||||||||||||||||||
Revenues
|
|
$
|
152,699
|
|
|
$
|
125,037
|
|
|
$
|
130,876
|
|
|
$
|
27,662
|
|
|
22
|
%
|
|
$
|
(5,839
|
)
|
|
(4
|
)%
|
New revenue agreements executed
|
|
39
|
|
|
63
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|||||||||
Average revenue per agreement
|
|
$
|
3,915
|
|
|
$
|
1,985
|
|
|
$
|
1,487
|
|
|
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||
|
|
(in thousands)
|
||||||
Decrease in number of agreements executed
|
|
$
|
(47,633
|
)
|
|
$
|
(37,181
|
)
|
Increase in average revenue per agreement executed
|
|
75,295
|
|
|
31,342
|
|
||
Total
|
|
$
|
27,662
|
|
|
$
|
(5,839
|
)
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Net loss attributable to Acacia Research Corporation
|
|
$
|
(54,067
|
)
|
|
$
|
(160,036
|
)
|
|
$
|
(66,029
|
)
|
|
$
|
105,969
|
|
|
(66
|
)%
|
|
$
|
(94,007
|
)
|
|
142
|
%
|
|
2016 vs. 2015
|
|
%
|
|
2015 vs. 2014
|
|
%
|
||||||
|
(in thousands, except percentage values)
|
||||||||||||
Increase (decrease) in revenues
|
$
|
27,662
|
|
|
26
|
%
|
|
$
|
(5,839
|
)
|
|
6
|
%
|
(Increase) decrease in inventor royalties and contingent legal fees combined
|
(14,573
|
)
|
|
(14
|
)%
|
|
9,602
|
|
|
(10
|
)%
|
||
Decrease in general and administrative expenses
|
5,257
|
|
|
5
|
%
|
|
10,378
|
|
|
(11
|
)%
|
||
(Increase) decrease in litigation and licensing expenses
|
11,515
|
|
|
11
|
%
|
|
(1,759
|
)
|
|
2
|
%
|
||
Decrease in patent amortization expenses
|
18,859
|
|
|
18
|
%
|
|
678
|
|
|
(1
|
)%
|
||
(Increase) decrease in impairment of patent-related intangible assets
|
32,391
|
|
|
31
|
%
|
|
(71,234
|
)
|
|
76
|
%
|
||
(Increase) decrease in impairment for goodwill
|
30,149
|
|
|
28
|
%
|
|
(30,149
|
)
|
|
32
|
%
|
||
Change in provision for income taxes
|
(13,388
|
)
|
|
(13
|
)%
|
|
(888
|
)
|
|
1
|
%
|
||
Other
|
8,097
|
|
|
8
|
%
|
|
(4,796
|
)
|
|
5
|
%
|
||
Net change in net loss
|
$
|
105,969
|
|
|
100
|
%
|
|
$
|
(94,007
|
)
|
|
100
|
%
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Inventor royalties
|
$
|
22,730
|
|
|
$
|
18,462
|
|
|
$
|
20,670
|
|
|
$
|
4,268
|
|
|
23
|
%
|
|
$
|
(2,208
|
)
|
|
(11
|
)%
|
Contingent legal fees
|
26,474
|
|
|
16,169
|
|
|
23,563
|
|
|
10,305
|
|
|
64
|
%
|
|
(7,394
|
)
|
|
(31
|
)%
|
|||||
Litigation and licensing expenses - patents
|
27,858
|
|
|
39,373
|
|
|
37,614
|
|
|
(11,515
|
)
|
|
(29
|
)%
|
|
1,759
|
|
|
5
|
%
|
|||||
Amortization of patents
|
34,208
|
|
|
53,067
|
|
|
53,745
|
|
|
(18,859
|
)
|
|
(36
|
)%
|
|
(678
|
)
|
|
(1
|
)%
|
|
2016 vs. 2015
|
|
% of Prior Period Balance
|
|
2015 vs. 2014
|
|
% of Prior Period Balance
|
||||||
Inventor Royalties:
|
(in thousands, except percentage change values)
|
||||||||||||
Increase (decrease) in inventor royalty rates
|
$
|
11,518
|
|
|
62
|
%
|
|
$
|
(3,995
|
)
|
|
(20
|
)%
|
Increase (decrease) in total revenues
|
4,729
|
|
|
26
|
%
|
|
(1,214
|
)
|
|
(6
|
)%
|
||
Decrease (increase) in revenues without inventor royalty obligations
|
(11,979
|
)
|
|
(65
|
)%
|
|
3,001
|
|
|
15
|
%
|
||
Total change - inventor royalties expense
|
$
|
4,268
|
|
|
23
|
%
|
|
$
|
(2,208
|
)
|
|
(11
|
)%
|
|
2016 vs. 2015
|
|
% of Prior Period Balance
|
|
2015 vs. 2014
|
|
% of Prior Period Balance
|
||||||
Contingent Legal Fees:
|
(in thousands, except percentage change values)
|
||||||||||||
Increase (decrease) in contingent legal fee rates
|
$
|
6,850
|
|
|
43
|
%
|
|
$
|
(6,400
|
)
|
|
(27
|
)%
|
Increase (decrease) in total revenues
|
3,719
|
|
|
23
|
%
|
|
(1,096
|
)
|
|
(4
|
)%
|
||
Decrease (increase) in revenues without contingent legal fee obligations
|
(264
|
)
|
|
(2
|
)%
|
|
102
|
|
|
—
|
%
|
||
Total change - contingent legal fees
|
$
|
10,305
|
|
|
64
|
%
|
|
$
|
(7,394
|
)
|
|
(31
|
)%
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||
|
(in thousands)
|
||||||
Amortization of patent portfolio investments made since the end of the prior year, not partially or fully recovered
|
$
|
—
|
|
|
$
|
402
|
|
Scheduled amortization related to patent portfolios owned or controlled as of the end of the prior year
|
(18,704
|
)
|
|
2,489
|
|
||
Accelerated amortization related to recovery of upfront advances
|
225
|
|
|
(1,247
|
)
|
||
Patent portfolio dispositions
|
(380
|
)
|
|
(2,322
|
)
|
||
Total change in patent amortization expense
|
$
|
(18,859
|
)
|
|
$
|
(678
|
)
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Impairment of patent-related intangible assets
|
$
|
42,340
|
|
|
$
|
74,731
|
|
|
$
|
3,497
|
|
|
$
|
(32,391
|
)
|
|
(43
|
)%
|
|
$
|
71,234
|
|
|
2,037
|
%
|
Impairment of goodwill
|
—
|
|
|
30,149
|
|
|
—
|
|
|
(30,149
|
)
|
|
(100
|
)%
|
|
30,149
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
General and administrative
|
|
$
|
23,857
|
|
|
$
|
27,128
|
|
|
$
|
30,439
|
|
|
$
|
(3,271
|
)
|
|
(12
|
)%
|
|
$
|
(3,311
|
)
|
|
(11
|
)%
|
Non-cash stock compensation
|
|
9,062
|
|
|
11,048
|
|
|
18,115
|
|
|
(1,986
|
)
|
|
(18
|
)%
|
|
(7,067
|
)
|
|
(39
|
)%
|
|||||
Total general and administrative expenses
|
|
$
|
32,919
|
|
|
$
|
38,176
|
|
|
$
|
48,554
|
|
|
$
|
(5,257
|
)
|
|
(14
|
)%
|
|
$
|
(10,378
|
)
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research, consulting and other expenses - business development
|
|
3,079
|
|
|
3,391
|
|
|
3,840
|
|
|
(312
|
)
|
|
(9
|
)%
|
|
(449
|
)
|
|
(12
|
)%
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||
|
(in thousands)
|
||||||
Net change in personnel costs
|
$
|
(5,841
|
)
|
|
$
|
(1,264
|
)
|
Variable performance-based compensation costs
|
1,839
|
|
|
(1,631
|
)
|
||
Corporate, general and administrative costs
|
1,594
|
|
|
(985
|
)
|
||
Non-cash stock compensation expense
(1)
|
(1,986
|
)
|
|
(7,067
|
)
|
||
Employee severance costs
|
(863
|
)
|
|
569
|
|
||
Total change in general and administrative expenses
|
$
|
(5,257
|
)
|
|
$
|
(10,378
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Provision for income taxes (in thousands)
|
$
|
(18,188
|
)
|
|
$
|
(4,800
|
)
|
|
$
|
(3,912
|
)
|
Effective tax rate
|
50
|
%
|
|
3
|
%
|
|
6
|
%
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
34,061
|
|
|
$
|
(9,949
|
)
|
|
$
|
4,184
|
|
Investing activities
|
|
(40,630
|
)
|
|
39,307
|
|
|
29,297
|
|
|||
Financing activities
|
|
(1,114
|
)
|
|
(28,601
|
)
|
|
(25,700
|
)
|
|||
|
|
$
|
(7,683
|
)
|
|
$
|
757
|
|
|
$
|
7,781
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Patent portfolio investment costs
|
|
$
|
(1,225
|
)
|
|
$
|
(19,504
|
)
|
|
$
|
(42,746
|
)
|
Advances to Investee
(1)
|
|
(20,000
|
)
|
|
—
|
|
|
—
|
|
|||
Net sale (purchase) of available-for-sale investments
|
|
(19,401
|
)
|
|
58,819
|
|
|
72,152
|
|
|||
Other
|
|
(4
|
)
|
|
(8
|
)
|
|
(109
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
$
|
(40,630
|
)
|
|
$
|
39,307
|
|
|
$
|
29,297
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Dividends paid to stockholders
|
|
$
|
—
|
|
|
$
|
(25,434
|
)
|
|
$
|
(25,039
|
)
|
Distributions to noncontrolling interests - Acacia IP Fund
|
|
(1,358
|
)
|
|
(4,105
|
)
|
|
(867
|
)
|
|||
Proceeds from the exercise of stock options
|
|
326
|
|
|
938
|
|
|
206
|
|
|||
Repurchases of common stock
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
|
$
|
(1,114
|
)
|
|
$
|
(28,601
|
)
|
|
$
|
(25,700
|
)
|
|
Payments Due by Period (In thousands)
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases, net of guaranteed sublease income
|
$
|
3,987
|
|
|
$
|
1,279
|
|
|
$
|
2,692
|
|
|
$
|
16
|
|
|
$
|
—
|
|
Investment Agreement - Primary Warrant Put Right, contingent obligation
(1)
|
30,000
|
|
|
—
|
|
|
30,000
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
33,987
|
|
|
$
|
1,279
|
|
|
$
|
32,692
|
|
|
$
|
16
|
|
|
$
|
—
|
|
•
|
The revised procedures apply to all material new, infrequent, unusual or complex transactions.
|
•
|
Implemented specific revised review procedures for material new, infrequent, unusual or complex transactions, including the specific assessment of whether the accounting for material new, infrequent, unusual or complex transactions should be conducted internally or outsourced to technical subject matter specialists, and enhanced review procedures involving both our chief financial officer and corporate controller with respect to the review and assessment of such transactions, designed to enhance our overall assessment and controls; and
|
•
|
Strengthening our material new, infrequent, unusual or complex transaction controls with improved documentation standards and technical oversight.
|
Plan Category
|
|
(a) Number of securities to be issued upon exercise of outstanding options
|
|
(b) Weighted-average exercise price of outstanding options
|
|
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
|
|
|
|
|
|
|
||||
Equity compensation plans approved by security holders
|
|
|
|
|
|
|
||||
2002 Acacia Technologies Stock Incentive Plan
(1)
|
|
15,000
|
|
|
$
|
13.38
|
|
|
—
|
|
2013 Acacia Research Stock Incentive Plan
(2)
|
|
2,021,000
|
|
|
3.45
|
|
|
—
|
|
|
2016 Acacia Research Stock Incentive Plan
(3)
|
|
3,560,000
|
|
|
5.74
|
|
|
1,754,000
|
|
|
Subtotal
|
|
5,596,000
|
|
|
4.93
|
|
|
1,754,000
|
|
(1)
|
The 2002 Stock Plan expired in December 2012. Column (a) excludes 32,000 in nonvested restricted stock units outstanding at December 31, 2016. Refer to Note
11
to our notes to consolidated financial statements included elsewhere herein.
|
(2)
|
The initial share reserve under the 2013 Acacia Research Stock Incentive Plan, or the 2013 Plan, was 4,750,000 shares of our common stock. Column (a) excludes 395,000 in nonvested restricted stock awards and restricted stock units outstanding at December 31, 2016. Refer to Note
11
to our notes to consolidated financial statements included elsewhere herein. In June 2016,
625,390
shares of common stock available for issuance under the 2013 Stock Plan were transferred into the 2016 Stock Plan.
|
(3)
|
The initial share reserve under the 2016 Stock Plan was
4,500,000
shares plus
625,390
shares of common stock available for issuance under the 2013 Plan. No new additional shares will be added to the 2016 Plan without security holder approval (except for shares subject to outstanding awards that are forfeited or otherwise returned to the 2016 Plan). Refer to Note
11
to our notes to consolidated financial statements included elsewhere herein.
|
(a)
|
The following documents are filed as part of this report.
|
(b)
|
Exhibits. The following exhibits are either filed herewith or incorporated herein by reference:
|
Exhibit
Number
|
Description
|
|
|
2.1
|
Agreement and Plan of Merger, dated November 22, 2011, by and among Acacia Research Group LLC, Apollo Patent Corp., Adaptix, Inc., and Baker Communications Fund II (QP), L.P., solely in its capacity as representative for the shareholders of Adaptix, Inc.(15)
|
3.1
|
Amended and Restated Certificate of Incorporation (1)
|
3.2
|
Amended and Restated Bylaws (21)
|
4.1
|
Tax Benefits Preservation Plan, dated as of March 16, 2016, by and between Acacia Research Corporation and Computershare Inc., as Rights Agent, which includes the form of Certificate of Designation of Series A Cumulative Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Terms as Exhibit C (24)
|
10.1*
|
Acacia Research Corporation 1996 Stock Option Plan, as amended (2)
|
10.2*
|
Form of Option Agreement constituting the Acacia Research Corporation 1996 Executive Stock Bonus Plan (3)
|
10.3*
|
2002 Acacia Technologies Stock Incentive Plan (4)
|
10.4*
|
2007 Acacia Technologies Stock Incentive Plan (5)
|
10.5*
|
Form of Acacia Technologies Stock Option Agreement under the 2007 Acacia Technologies Stock Incentive Plan (6)
|
10.6*
|
Form of Acacia Technologies Stock Issuance Agreement under the 2002 Acacia Technologies Stock Incentive Plan (6)
|
10.7*
|
Form of Acacia Technologies Stock Issuance Agreement under the 2007 Acacia Technologies Stock Incentive Plan (6)
|
10.8
|
Office Space Lease dated January 28, 2002, between Acacia Research Corporation and The Irvine Company (7)
|
10.9
|
Form of Indemnification Agreement (8)
|
10.10
|
Third Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (9)
|
10.11*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Edward Treska (20)
|
10.12
|
Fourth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (10)
|
10.13
|
Fifth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (10)
|
10.15*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Robert L. Harris (20)
|
10.16*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Clayton J. Haynes (20)
|
10.17*
|
Acacia Research Corporation Amended and Restated Executive Severance Policy (12)
|
10.18
|
Sixth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (14)
|
10.19
|
Form of Purchase Agreement (16)
|
10.20*
|
2013 Acacia Research Corporation Stock Incentive Plan (18)
|
10.21*
|
Form of Stock Issuance Agreement under the 2013 Acacia Research Corporation Stock Incentive Plan
(19)
|
10.22*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and
Matthew Vella (20)
|
10.23*
|
2016 Acacia Research Corporation Stock Incentive Plan (22)
|
10.24*
|
Form of Stock Option Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan
|
10.25*
|
Form of Stock Issuance Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan
|
10.26*
|
Director Service Agreement, dated February 29, 2016, by and between Acacia Research Corporation and Robert L. Harris (23)
|
18.1
|
Preferability Letter dated February 25, 2010 from Grant Thornton LLP, independent registered public accounting firm, regarding change in accounting principle (13)
|
21.1
|
List of Subsidiaries
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
24.1
|
Power of Attorney (included in the signature page hereto).
|
31.1†
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
31.2†
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
32.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
32.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
101
|
Interactive Date Files Pursuant to Rule 405 of Regulation S-T.
|
*
|
The referenced exhibit is a management contract, compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(c) of Form 10-K.
|
†
|
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Acacia Research Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language contained in any filing.
|
(1)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on June 5, 2008 (File No. 000-26068).
|
(2)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 20, 2000 (File No. 000-26068).
|
(3)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 26, 1996 (File No. 000-26068).
|
(4)
|
Incorporated by reference to Annex E to the Proxy Statement/Prospectus which formed part of Acacia Research Corporation’s Registration Statement on Form S-4 (File No. 333-87654) which became effective on November 8, 2002.
|
(5)
|
Incorporated by reference to Acacia Research Corporation’s Registration Statement on Form S-8 (File No. 333-144754) which became effective on July 20, 2007.
|
(6)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2007, filed on November 2, 2007 (File No. 000-26068).
|
(7)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10‑K for the year ended December 31, 2001, filed on March 27, 2002 (File No. 000‑26068).
|
(8)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended June 30, 2012, filed on July 30, 2012 (File No. 000-26068).
|
(9)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended March 31, 2006, filed on May 10, 2006 (File No. 000‑26068).
|
(10)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007, filed on March 14, 2008 (File No. 000-26068).
|
(11)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on April 2, 2008 (File No. 000-26068).
|
(12)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 26, 2009 (File No. 000-26068).
|
(13)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 26, 2010, as amended on March 1, 2010 (File No. 000-26068)
|
(14)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 28, 2011, as amended on March 24, 2011 (File No. 000-26068).
|
(15)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K/A filed on January 19, 2012 (File No. 000-26068). Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24-b-2 of the Securities Exchange Act of 1934, as amended. The omitted material has been separately filed with the Securities and Exchange Commission.
|
(16)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on February 16, 2012 (File No. 000-26068).
|
(17)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013 (File No. 000-26068).
|
(18)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 24, 2013 (File No. 000-26068).
|
(19)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on May 22, 2013 (File No. 000-26068).
|
(20)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q filed on November 9, 2015 (File No. 000-26068).
|
(21)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 28, 2016 (File No. 000-37721).
|
(22)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q filed on August 9, 2016 (File No. 001-37721).
|
(23)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 4, 2016 (File No. 000-26068).
|
(24)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 21, 2016 (File No. 000-26068).
|
|
|
|
ACACIA RESEARCH CORPORATION
|
|
|
|
|
|
|
Dated:
|
March 10, 2017
|
By:
|
/s/ Marvin Key
|
|
|
|
|
Marvin Key
|
|
|
|
|
Interim Chief Executive Officer
(Authorized Signatory)
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
|
Marvin Key
|
|
Interim Chief Executive Officer
|
|
March 10, 2017
|
|
Marvin Key
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
/s/
|
Clayton J. Haynes
|
|
Chief Financial Officer and Treasurer
|
|
March 10, 2017
|
|
Clayton J. Haynes
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
/s/
|
Fred A. de Boom
|
|
Director
|
|
March 10, 2017
|
|
Fred A. de Boom
|
|
|
|
|
|
|
|
|
|
|
/s/
|
Edward W. Frykman
|
|
Director
|
|
March 10, 2017
|
|
Edward W. Frykman
|
|
|
|
|
|
|
|
|
|
|
/s/
|
G. Louis Graziadio, III
|
|
Executive Chairman and Director
|
|
March 10, 2017
|
|
G. Louis Graziadio, III
|
|
|
|
|
|
|
|
|
|
|
/s/
|
William S. Anderson
|
|
Director
|
|
March 10, 2017
|
|
William S. Anderson
|
|
|
|
|
|
|
|
|
|
|
/s/
|
Frank E. Walsh, III
|
|
Director
|
|
March 10, 2017
|
|
Frank E. Walsh, III
|
|
|
|
|
|
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
127,540
|
|
|
$
|
135,223
|
|
Restricted cash
|
|
11,512
|
|
|
10,725
|
|
||
Short-term investments
|
|
19,443
|
|
|
—
|
|
||
Accounts receivable
|
|
26,750
|
|
|
33,500
|
|
||
Deferred income tax
|
|
—
|
|
|
210
|
|
||
Prepaid expenses and other current assets
|
|
3,245
|
|
|
4,219
|
|
||
Total current assets
|
|
188,490
|
|
|
183,877
|
|
||
Loan receivable and accrued interest (Note 8)
|
|
18,616
|
|
|
—
|
|
||
Investment in warrants (Note 8)
|
|
1,960
|
|
|
—
|
|
||
Property and equipment, net
|
|
127
|
|
|
272
|
|
||
Patents, net of accumulated amortization
|
|
86,319
|
|
|
162,642
|
|
||
Other assets
|
|
491
|
|
|
1,110
|
|
||
|
|
$
|
296,003
|
|
|
$
|
347,901
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
|
$
|
14,283
|
|
|
$
|
17,347
|
|
Accrued patent investment costs
|
|
—
|
|
|
1,000
|
|
||
Royalties and contingent legal fees payable
|
|
13,908
|
|
|
14,878
|
|
||
Total current liabilities
|
|
28,191
|
|
|
33,225
|
|
||
Deferred income taxes
|
|
—
|
|
|
210
|
|
||
Other liabilities
|
|
369
|
|
|
311
|
|
||
Total liabilities
|
|
28,560
|
|
|
33,746
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 50,476,042 shares issued and outstanding as of December 31, 2016 and 50,651,239 shares issued and outstanding as of December 31, 2015
|
|
50
|
|
|
51
|
|
||
Treasury stock, at cost, 1,729,408 shares as of December 31, 2016 and 2015
|
|
(34,640
|
)
|
|
(34,640
|
)
|
||
Additional paid-in capital
|
|
642,453
|
|
|
633,146
|
|
||
Accumulated comprehensive loss
|
|
(76
|
)
|
|
(215
|
)
|
||
Accumulated deficit
|
|
(342,198
|
)
|
|
(288,131
|
)
|
||
Total Acacia Research Corporation stockholders’ equity
|
|
265,589
|
|
|
310,211
|
|
||
Noncontrolling interests in operating subsidiaries
|
|
1,854
|
|
|
3,944
|
|
||
Total stockholders’ equity
|
|
267,443
|
|
|
314,155
|
|
||
|
|
$
|
296,003
|
|
|
$
|
347,901
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
152,699
|
|
|
$
|
125,037
|
|
|
$
|
130,876
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|||
Inventor royalties
|
|
22,730
|
|
|
18,462
|
|
|
20,670
|
|
|||
Contingent legal fees
|
|
26,474
|
|
|
16,169
|
|
|
23,563
|
|
|||
Litigation and licensing expenses - patents
|
|
27,858
|
|
|
39,373
|
|
|
37,614
|
|
|||
Amortization of patents
|
|
34,208
|
|
|
53,067
|
|
|
53,745
|
|
|||
General and administrative expenses (including non-cash stock compensation expense of $9,062 in 2016, $11,048 in 2015 and $18,115 in 2014)
|
|
32,919
|
|
|
38,176
|
|
|
48,554
|
|
|||
Research, consulting and other expenses - business development
|
|
3,079
|
|
|
3,391
|
|
|
3,840
|
|
|||
Impairment of patent-related intangible assets
|
|
42,340
|
|
|
74,731
|
|
|
3,497
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
30,149
|
|
|
—
|
|
|||
Other
|
|
500
|
|
|
4,141
|
|
|
1,548
|
|
|||
|
|
|
|
|
|
|
||||||
Total operating costs and expenses
|
|
190,108
|
|
|
277,659
|
|
|
193,031
|
|
|||
|
|
|
|
|
|
|
||||||
Operating loss
|
|
(37,409
|
)
|
|
(152,622
|
)
|
|
(62,155
|
)
|
|||
|
|
|
|
|
|
|
||||||
Total other income (expense)
|
|
798
|
|
|
(56
|
)
|
|
(595
|
)
|
|||
|
|
|
|
|
|
|
||||||
Loss from operations before provision for income taxes
|
|
(36,611
|
)
|
|
(152,678
|
)
|
|
(62,750
|
)
|
|||
Provision for income taxes
|
|
(18,188
|
)
|
|
(4,800
|
)
|
|
(3,912
|
)
|
|||
Net loss including noncontrolling interests in operating subsidiaries
|
|
(54,799
|
)
|
|
(157,478
|
)
|
|
(66,662
|
)
|
|||
Net (income) loss attributable to noncontrolling interests in operating subsidiaries
|
|
732
|
|
|
(2,558
|
)
|
|
633
|
|
|||
Net loss attributable to Acacia Research Corporation
|
|
$
|
(54,067
|
)
|
|
$
|
(160,036
|
)
|
|
$
|
(66,029
|
)
|
|
|
|
|
|
|
|
||||||
Net loss attributable to common stockholders - basic and diluted
|
|
$
|
(54,067
|
)
|
|
$
|
(160,730
|
)
|
|
$
|
(66,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|||
Basic and diluted loss per common share
|
|
$
|
(1.08
|
)
|
|
$
|
(3.25
|
)
|
|
$
|
(1.37
|
)
|
|
|
|
|
|
|
|
||||||
Weighted-average number of shares outstanding, basic and diluted
|
|
50,075,847
|
|
|
49,505,817
|
|
|
48,658,088
|
|
|||
|
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
|
$
|
—
|
|
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss including noncontrolling interests in operating subsidiaries
|
$
|
(54,799
|
)
|
|
$
|
(157,478
|
)
|
|
$
|
(66,662
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on short-term investments, net of tax of $0
|
40
|
|
|
(356
|
)
|
|
(1,488
|
)
|
|||
Unrealized gain (loss) on foreign currency translation, net of tax of $0
|
77
|
|
|
(123
|
)
|
|
(128
|
)
|
|||
Add: reclassification adjustment for losses included in net loss
|
22
|
|
|
617
|
|
|
2,210
|
|
|||
Total other comprehensive loss
|
(54,660
|
)
|
|
(157,340
|
)
|
|
(66,068
|
)
|
|||
Comprehensive income (loss) attributable to noncontrolling interests
|
732
|
|
|
(2,558
|
)
|
|
633
|
|
|||
Comprehensive loss attributable to Acacia Research Corporation
|
$
|
(53,928
|
)
|
|
$
|
(159,898
|
)
|
|
$
|
(65,435
|
)
|
|
|||||||||||||||||||||||||||||||
|
|
Common Shares
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Comprehensive Loss
|
|
Accumulated Deficit
|
|
Noncontrolling Interests in Operating Subsidiaries
|
|
Total
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2013
|
|
49,385,057
|
|
|
$
|
49
|
|
|
$
|
(34,640
|
)
|
|
$
|
653,314
|
|
|
$
|
(947
|
)
|
|
$
|
(62,066
|
)
|
|
$
|
6,488
|
|
|
$
|
562,198
|
|
Net loss attributable to Acacia Research Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,029
|
)
|
|
—
|
|
|
(66,029
|
)
|
|||||||
Dividends paid to stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,039
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,039
|
)
|
|||||||
Stock options exercised
|
|
44,506
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|||||||
Compensation expense for share-based awards, net of forfeitures
|
|
635,819
|
|
|
1
|
|
|
—
|
|
|
18,114
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,115
|
|
|||||||
Net loss attributable to noncontrolling interests in operating subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(633
|
)
|
|
(633
|
)
|
|||||||
Distributions to noncontrolling interests in operating subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(364
|
)
|
|
(364
|
)
|
|||||||
Unrealized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|||||||
Unrealized gain on short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
693
|
|
|
—
|
|
|
—
|
|
|
693
|
|
|||||||
Balance at December 31, 2014
|
|
50,065,382
|
|
|
50
|
|
|
(34,640
|
)
|
|
646,595
|
|
|
(353
|
)
|
|
(128,095
|
)
|
|
5,491
|
|
|
489,048
|
|
|||||||
Net loss attributable to Acacia Research Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160,036
|
)
|
|
—
|
|
|
(160,036
|
)
|
|||||||
Dividends paid to stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,434
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,434
|
)
|
|||||||
Stock options exercised
|
|
135,000
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
938
|
|
|||||||
Compensation expense for share-based awards, net of forfeitures
|
|
450,857
|
|
|
1
|
|
|
—
|
|
|
11,047
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,048
|
|
|||||||
Net income attributable to noncontrolling interests in operating subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,558
|
|
|
2,558
|
|
|||||||
Distributions to noncontrolling interests in operating subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,105
|
)
|
|
(4,105
|
)
|
|||||||
Unrealized loss on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|||||||
Unrealized gain on short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
261
|
|
|
—
|
|
|
—
|
|
|
261
|
|
|||||||
Balance at December 31, 2015
|
|
50,651,239
|
|
|
51
|
|
|
(34,640
|
)
|
|
633,146
|
|
|
(215
|
)
|
|
(288,131
|
)
|
|
3,944
|
|
|
314,155
|
|
|||||||
Net loss attributable to Acacia Research Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54,067
|
)
|
|
—
|
|
|
(54,067
|
)
|
|||||||
Stock options exercised
|
|
100,992
|
|
|
—
|
|
|
—
|
|
|
326
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
326
|
|
|||||||
Compensation expense for share-based awards, net of forfeitures
|
|
(262,660
|
)
|
|
(1
|
)
|
|
—
|
|
|
9,063
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,062
|
|
|||||||
Repurchase of restricted common stock
|
|
(13,529
|
)
|
|
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
(82
|
)
|
||||||||||||
Net loss attributable to noncontrolling interests in operating subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(732
|
)
|
|
(732
|
)
|
|||||||
Distributions to noncontrolling interests in operating subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,358
|
)
|
|
(1,358
|
)
|
|||||||
Unrealized gain on foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||||
Unrealized gain on short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|||||||
Balance at December 31, 2016
|
|
50,476,042
|
|
|
$
|
50
|
|
|
$
|
(34,640
|
)
|
|
$
|
642,453
|
|
|
$
|
(76
|
)
|
|
$
|
(342,198
|
)
|
|
$
|
1,854
|
|
|
$
|
267,443
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net loss including noncontrolling interests in operating subsidiaries
|
|
$
|
(54,799
|
)
|
|
$
|
(157,478
|
)
|
|
$
|
(66,662
|
)
|
Adjustments to reconcile net loss including noncontrolling interests in operating subsidiaries to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
34,355
|
|
|
53,289
|
|
|
54,049
|
|
|||
Non-cash stock compensation
|
|
9,062
|
|
|
11,048
|
|
|
18,115
|
|
|||
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
(1,736
|
)
|
|||
Impairment of patent-related intangible assets
|
|
42,340
|
|
|
74,731
|
|
|
3,497
|
|
|||
Impairment of goodwill
|
|
—
|
|
|
30,149
|
|
|
—
|
|
|||
Other
|
|
(477
|
)
|
|
(109
|
)
|
|
(28
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Restricted cash
|
|
(787
|
)
|
|
(10,725
|
)
|
|
—
|
|
|||
Accounts receivable
|
|
6,750
|
|
|
(13,332
|
)
|
|
(13,827
|
)
|
|||
Prepaid expenses and other assets
|
|
1,593
|
|
|
(619
|
)
|
|
3,154
|
|
|||
Accounts payable and accrued expenses / patent costs
|
|
(3,006
|
)
|
|
2,570
|
|
|
3,718
|
|
|||
Royalties and contingent legal fees payable
|
|
(970
|
)
|
|
527
|
|
|
3,904
|
|
|||
|
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
|
34,061
|
|
|
(9,949
|
)
|
|
4,184
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Patent portfolio investment costs
|
|
(1,225
|
)
|
|
(19,504
|
)
|
|
(42,746
|
)
|
|||
Advances to Investee (Note 8)
|
|
(20,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
|
(4
|
)
|
|
(8
|
)
|
|
(109
|
)
|
|||
Purchases of short-term investments
|
|
(62,633
|
)
|
|
(23,296
|
)
|
|
(109,963
|
)
|
|||
Sales and maturities of short-term investments
|
|
43,232
|
|
|
82,115
|
|
|
182,115
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net cash provided by (used in) investing activities
|
|
(40,630
|
)
|
|
39,307
|
|
|
29,297
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|||
Dividends paid to stockholders
|
|
—
|
|
|
(25,434
|
)
|
|
(25,039
|
)
|
|||
Distributions to noncontrolling interests in operating subsidiary
|
|
(1,358
|
)
|
|
(4,105
|
)
|
|
(867
|
)
|
|||
Proceeds from the exercise of stock options
|
|
326
|
|
|
938
|
|
|
206
|
|
|||
Repurchases of restricted common stock
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Net cash used in financing activities
|
|
(1,114
|
)
|
|
(28,601
|
)
|
|
(25,700
|
)
|
|||
|
|
|
|
|
|
|
||||||
Increase (decrease) in cash and cash equivalents
|
|
(7,683
|
)
|
|
757
|
|
|
7,781
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents, beginning
|
|
135,223
|
|
|
134,466
|
|
|
126,685
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents, ending
|
|
$
|
127,540
|
|
|
$
|
135,223
|
|
|
$
|
134,466
|
|
|
|
|
|
|
|
|
||||||
Supplemental schedule of noncash investing activities:
|
|
|
|
|
|
|
||||||
Patent portfolio investment costs included in accrued expenses / costs
|
|
$
|
—
|
|
|
$
|
1,000
|
|
|
$
|
16,700
|
|
|
●
|
Level 1 -
|
Observable Inputs: Quoted prices in active markets for identical investments;
|
|
●
|
Level 2 -
|
Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and
|
|
●
|
Level 3 -
|
Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments.
|
Furniture and fixtures
|
3 to 5 years
|
Computer hardware and software
|
3 to 5 years
|
Leasehold improvements
|
2 to 5 years (Lesser of lease term or useful life of improvement)
|
|
Weighted-Average Assumptions
|
|
|
Risk-free interest rate
|
1.1%
|
Term
|
3.06
|
Volatility
|
53%
|
Dividend yield
|
—%
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator (in thousands):
|
|
|
|
|
|
|
||||||
Basic and Diluted
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(54,067
|
)
|
|
$
|
(160,036
|
)
|
|
$
|
(66,029
|
)
|
Total dividends declared / paid
|
|
—
|
|
|
(25,434
|
)
|
|
(25,039
|
)
|
|||
Dividends attributable to common stockholders
|
|
—
|
|
|
24,740
|
|
|
24,313
|
|
|||
Net loss attributable to common stockholders – basic and diluted
|
|
$
|
(54,067
|
)
|
|
$
|
(160,730
|
)
|
|
$
|
(66,755
|
)
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders – basic and diluted
|
|
50,075,847
|
|
|
49,505,817
|
|
|
48,658,088
|
|
|||
|
|
|
|
|
|
|
||||||
Basic and diluted net loss per common share
|
|
$
|
(1.08
|
)
|
|
$
|
(3.25
|
)
|
|
$
|
(1.37
|
)
|
Anti-dilutive equity-based incentive awards excluded from the computation of diluted loss per share
|
|
3,682,532
|
|
|
71,468
|
|
|
27,760
|
|
|
December 31, 2016
|
||||||||||||||
Security Type
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
U.S. government fixed income securities
|
$
|
19,403
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
19,443
|
|
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Furniture and fixtures
|
|
$
|
733
|
|
|
$
|
739
|
|
Computer hardware and software
|
|
603
|
|
|
649
|
|
||
Leasehold improvements
|
|
131
|
|
|
145
|
|
||
|
|
1,467
|
|
|
1,533
|
|
||
Less: accumulated depreciation and amortization
|
|
(1,340
|
)
|
|
(1,261
|
)
|
||
|
|
$
|
127
|
|
|
$
|
272
|
|
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Payroll and other employee benefits
|
|
$
|
1,593
|
|
|
$
|
576
|
|
Accrued vacation
|
|
533
|
|
|
701
|
|
||
Accrued legal expenses - patent
|
|
6,564
|
|
|
10,135
|
|
||
Foreign taxes payable
(1)
|
|
3,150
|
|
|
3,960
|
|
||
Accrued consulting and other professional fees
|
|
1,967
|
|
|
1,592
|
|
||
Other accrued liabilities
|
|
476
|
|
|
383
|
|
||
|
|
$
|
14,283
|
|
|
$
|
17,347
|
|
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Gross carrying amount - patents
|
|
$
|
444,362
|
|
|
$
|
444,137
|
|
Accumulated amortization - patents
(1)
|
|
(358,043
|
)
|
|
(281,495
|
)
|
||
Patents, net
|
|
$
|
86,319
|
|
|
$
|
162,642
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Capitalized patent costs
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
3,000
|
|
Accumulated amortization
|
|
—
|
|
|
120
|
|
|
298
|
|
|||
Sales proceeds
|
|
—
|
|
|
750
|
|
|
3,500
|
|
•
|
significant consistent gradual decline in the Company's stock price for a sustained period;
|
•
|
significant underperformance relative to expected historical or projected future operating results;
|
•
|
significant changes in the manner of use of assets or the strategy for the Company's overall business;
|
•
|
significant negative industry or economic trends; and
|
•
|
significant adverse changes in legal factors or in the business climate, including adverse regulatory actions or assessments.
|
•
|
Adverse legal outcomes and changes in legal factors.
In December 2015, Acacia announced that its subsidiary Adaptix, Inc. received a jury verdict in its case against Alcatel Lucent USA, et al., deciding that the claims of the applicable patents in suit were invalid and non-infringed. This adverse legal outcome and others in the fourth quarter of 2015 resulted in changes in estimates of realization related to litigation outcomes in future periods for certain patent portfolios.
|
•
|
Significant consistent gradual decline in the Company’s stock price:
Historically, the Company's stock price has been volatile, and the volatility continued during fiscal 2015, declining from
$16.72
as of January 2, 2015, to
$4.29
as of December 31, 2015, a 74% decline. In addition, subsequent to December 31, 2015, the Company's stock price volatility has continued, trending downward to
$3.16
as of February 29, 2016. In the fourth quarter of 2015, given the continued decline in stock price up through December 31, 2015, and the impact of the December 2015 adverse trial outcomes noted above, the gradual consistent decline in the Company's stock price was deemed to be sustained, and hence indicative of a reduction in the estimated fair value of the Company, as reflected in its lower overall market capitalization.
|
•
|
Changes in Company Management and Resource Allocations.
In connection with certain resource allocation changes within the organization given a change in management in the fourth quarter of 2015, headcount reductions and internal staff optimization efforts occurred, which led to changes with respect to estimates of which patent portfolios the Company intends to continue to allocate licensing and enforcement resources to in future periods. As such, certain patent portfolio programs were selected for termination due to a decision to no longer allocate resources. In addition, changes in estimates regarding the best and highest use of certain patent portfolios were made, resulting in reductions in estimated future cash flows.
|
•
|
At December 31, 2015, the initial qualitative assessment included consideration of the factors described above, resulting in a conclusion that as of December 31, 2015, the consistent gradual decline in the Company’s stock price was sustained. The Company also considered the impact of the December 2015 adverse trial outcomes on the Company's stock price and related estimates of fair value for remaining portfolio opportunities. Based on the Company's assessment of these factors, the Company determined that it was more likely than not that goodwill was impaired, constituting a triggering event requiring a goodwill impairment test as of December 31, 2015.
|
•
|
The Company conducted the first step of the goodwill impairment test for its single reporting unit as of December 31, 2015. The Company utilized the market capitalization plus cost synergies approach to estimate the fair value of the Company. The estimated market capitalization was determined by multiplying the Company's stock price and the common shares outstanding as of December 31, 2015. Management also considered a control premium in its estimate of fair value for the Company's single reporting unit. The cost synergies were estimated based on the cost savings which could be achieved if the Company was acquired by a competitor in the same operating business.
|
•
|
Based on the analysis utilizing the market capitalization plus cost synergies approach, the estimated fair value of the reporting unit of
$252 million
was below its carrying value of
$344.3 million
as of December 31, 2015, and therefore, goodwill was determined to be more likely than not, impaired.
|
•
|
The purpose of step 2 of the analysis was to determine the estimated fair value of the assets and liabilities of the Company's reporting unit, in order to determine the implied fair value of goodwill for the reporting unit. The excess, if any, of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. Based upon the analysis performed, the fair value of the Company's single reporting unit did not exceed the amounts assigned to its reporting unit assets and liabilities, resulting in a difference between the implied fair value of goodwill of zero and the historical carrying value of goodwill. As a result, the Company recognized a goodwill impairment charge totaling
$30.1 million
in the fourth quarter of 2015.
|
Valuation Technique
|
|
Significant Unobservable Inputs
|
|
Range of Inputs
|
|||
Monte Carlo simulation model
|
|
Volatility
|
|
40
|
%
|
-
|
50%
|
|
|
Marketability discount
|
|
7%
|
|||
|
|
Funding scenario probabilities
|
|
25
|
%
|
-
|
75%
|
|
|
Recovery
|
|
100%
|
|
|
As of and For the Year Ended December 31, 2016
|
||
Face value of loan receivable
|
|
$
|
20,000
|
|
Unamortized loan discount
|
|
(1,384
|
)
|
|
Carrying value of loan receivable
|
|
18,616
|
|
|
Investment in warrants (initial loan discount)
|
|
1,960
|
|
|
Total
|
|
$
|
20,576
|
|
|
|
|
||
Interest receivable
|
|
$
|
286
|
|
Accretion of loan discount
|
|
576
|
|
|
Interest income
|
|
$
|
862
|
|
•
|
Shares Available
. The number of shares of our common stock initially reserved for issuance under the Plan shall be
4,500,000
shares plus any shares remaining available for issuance under our 2013 Acacia Research Corporation Stock Incentive Plan, or the 2013 Plan, as of the effective date of the Plan. As of the approval date of the Plan,
625,390
shares of our common stock were available for grant under the 2013 Plan.
|
•
|
Eligibility
. Options, restricted stock units and direct stock awards may be granted under the Plan. Options may be either “incentive stock options,” as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or the Code, or non-qualified stock options. Awards may be granted under the Plan to any employee, non-employee member of the Board of Directors, consultant or advisor who provides services to us or our subsidiaries, except for incentive stock options which may be granted only to our employees.
|
•
|
Administration
. Generally, the Plan will be administered by either the entire Acacia Board of Directors or a committee of the Board of Directors, which shall consist of at least two members of the Board, each of whom must qualify as a “non-employee director” under Rule 16b-3 under the Exchange Act, an “outside director” under Section 162(m) of the Code and an “independent director” under the Nasdaq Listing Rules.
|
•
|
Discretionary Option Awards
. The Plan administrator may grant either non-qualified stock options or incentive stock options. A stock option entitles the recipient to purchase a specified number of shares of our common stock at a fixed price subject to terms and conditions set by the Plan administrator, including conditions for exercise that must be satisfied, which typically will be based on continued provision of services. The exercise price of stock options granted under the Plan cannot be less than 100% of the fair market value of our common stock on the date the option is granted.
|
•
|
Direct Stock Awards
. Direct stock awards may be issued under the Stock Issuance Program (as defined in the Plan) either alone or in addition to other awards granted under the Plan. The Plan administrator determines the terms and conditions of direct stock awards, including the number of shares of common stock granted, and the conditions for vesting that must be satisfied, if any, which typically will be based on continued provision of services but may include a performance-based component. Unless otherwise provided in the award agreement, the holder of a restricted direct stock award will have the rights of a stockholder from the date of grant of the award, including the right to vote the shares of common stock and the right to receive distributions on the shares.
|
•
|
Discretionary Restricted Stock Unit Awards
. The Plan provides that the Plan administrator may grant restricted stock units to Plan participants. A restricted stock unit entitles the recipient to receive upon settlement thereof a specified number of shares of our common stock subject to terms and conditions set by the Plan administrator. The restricted stock units will vest as prescribed by the Plan administrator. The Plan permits payment of the purchase price of restricted stock units, if any, to be made by cash or cash equivalents, shares of our common stock previously acquired by the underlying optionee, cancellation of indebtedness, waiver of compensation due for services rendered or to be rendered, any other form of legal consideration determined by the Plan administrator, or any combination of the foregoing.
|
•
|
Termination of Employment
.
The Plan administrator will determine and set forth in the award agreement whether any awards will continue to be exercisable, and the terms of such exercise, on and after the date the participant ceases to be employed by, or to otherwise provide services to, us, whether by reason of death, disability, voluntary or involuntary termination of employment or service, or otherwise, but in no event shall any unvested awards vest after the date the participant ceases to be employed by, or otherwise provide services to, us.
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State taxes
|
|
262
|
|
|
379
|
|
|
289
|
|
|||
Foreign taxes
|
|
17,926
|
|
|
4,421
|
|
|
5,359
|
|
|||
Total current
|
|
18,188
|
|
|
4,800
|
|
|
5,648
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
—
|
|
|
—
|
|
|
(1,867
|
)
|
|||
State taxes
|
|
—
|
|
|
—
|
|
|
131
|
|
|||
Total deferred
|
|
—
|
|
|
—
|
|
|
(1,736
|
)
|
|||
Provision for income taxes
|
|
$
|
18,188
|
|
|
$
|
4,800
|
|
|
$
|
3,912
|
|
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss and capital loss carryforwards and credits
|
|
$
|
83,323
|
|
|
$
|
71,494
|
|
Stock compensation
|
|
2,416
|
|
|
1,385
|
|
||
Fixed assets and intangibles
|
|
14,343
|
|
|
1,359
|
|
||
Basis of investments in affiliates
|
|
2,195
|
|
|
499
|
|
||
Accrued liabilities and other
|
|
422
|
|
|
442
|
|
||
State taxes
|
|
90
|
|
|
81
|
|
||
Total deferred tax assets
|
|
102,789
|
|
|
75,260
|
|
||
Valuation allowance
|
|
(102,627
|
)
|
|
(75,179
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
|
162
|
|
|
81
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Fixed assets and intangibles
|
|
—
|
|
|
—
|
|
||
Other
|
|
(162
|
)
|
|
(81
|
)
|
||
Total deferred tax liabilities
|
|
(162
|
)
|
|
(81
|
)
|
||
|
|
|
|
|
||||
Net deferred tax assets (liabilities)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|
|||
Statutory federal tax rate - (benefit) expense
|
|
(35
|
)%
|
|
(35
|
)%
|
|
(35
|
)%
|
State income and foreign taxes, net of federal tax effect
|
|
50
|
%
|
|
3
|
%
|
|
9
|
%
|
Foreign tax credit
|
|
(49
|
)%
|
|
(3
|
)%
|
|
(8
|
)%
|
Noncontrolling interests in operating subsidiaries
|
|
1
|
%
|
|
(1
|
)%
|
|
—
|
%
|
Goodwill
|
|
—
|
%
|
|
7
|
%
|
|
—
|
%
|
Nondeductible permanent items
|
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
Expired capital loss carryforwards
|
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
Valuation allowance
|
|
83
|
%
|
|
31
|
%
|
|
39
|
%
|
|
|
50
|
%
|
|
3
|
%
|
|
6
|
%
|
•
|
Discretionary Option Grant Program
. Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than
85%
of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than
100%
of the fair market value of those shares on the grant date (not less than
110%
of fair market value if such employee actually or constructively owns more than
10%
of Acacia’s voting stock or the voting stock of any of its subsidiaries).
|
•
|
Stock Issuance Program
. Under the stock issuance program, eligible individuals may be issued shares of common stock directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. Under this program, the purchase price for the shares shall not be less than
100%
of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered. The eligible individuals shall have full stockholder rights with respect to any shares of Common Stock issued to them under the Stock Issuance Program, whether or not their interest in those shares is vested. Accordingly, the eligible individuals shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
|
•
|
Automatic Option Grant Program
. Each non-employee director will receive restricted stock units or stock options for the number of shares determined by dividing the annual retainer by the grant date fair value of Acacia’s common stock on the grant date, provided that such individual has served as a non-employee director for at least 6 months. In addition, each new non-employee director will receive restricted stock units or stock options for the number of shares determined by dividing the annual board of directors retainer by the grant date fair value of Acacia’s common stock on the commencement date. Restricted stock units and stock options vest in a series of twelve quarterly installments over the three year period following the grant date, subject to immediate acceleration upon a change in control. Acacia will deliver the restricted shares corresponding to the vested restricted stock units within thirty (30) days after the first to occur of the following events: (i) the fifth (5th) anniversary of the grant date; or (ii) termination of the non-employee director’s service as a member of the Company’s Board of Directors. The non-employee directors do not have any rights, benefits or entitlements with respect to any shares unless and until the shares have been delivered.
|
|
|
2016
|
|
2015
|
||||||||||
|
|
Shares
|
|
Aggregate fair value (in thousands)
|
|
Shares
|
|
Aggregate fair value (in thousands)
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Restricted stock awards with time-based service conditions
|
|
—
|
|
|
$
|
—
|
|
|
894,000
|
|
|
$
|
11,470
|
|
Restricted stock unit awards with time-based service conditions
|
|
—
|
|
|
—
|
|
|
28,000
|
|
|
468
|
|
||
Restricted stock awards with performance-based vesting conditions
|
|
138,000
|
|
|
431
|
|
|
—
|
|
|
—
|
|
||
Stock options with time-based service vesting conditions
|
|
3,434,000
|
|
|
5,704
|
|
|
—
|
|
|
—
|
|
||
Stock options with market-based vesting conditions
|
|
2,250,000
|
|
|
5,530
|
|
|
—
|
|
|
—
|
|
||
Stock options with performance-based vesting conditions
|
|
200,000
|
|
|
487
|
|
|
—
|
|
|
—
|
|
||
Total incentive awards granted
|
|
6,022,000
|
|
|
$
|
12,152
|
|
|
922,000
|
|
|
$
|
11,938
|
|
|
|
|
|
Weighted-Average
|
|
|
|||||||
|
|
Options
|
|
Exercise
Price
|
|
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
|||||
|
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2015
|
|
15,000
|
|
|
$
|
13.38
|
|
|
|
|
|
||
Granted
|
|
5,884,000
|
|
|
$
|
4.82
|
|
|
|
|
|
||
Exercised
|
|
(101,000
|
)
|
|
$
|
3.22
|
|
|
|
|
|
||
Expired/forfeited
|
|
(202,000
|
)
|
|
$
|
3.12
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
5,596,000
|
|
|
$
|
4.93
|
|
|
6.7 years
|
|
$
|
8,865,000
|
|
Vested
|
|
1,113,000
|
|
|
$
|
5.03
|
|
|
6.5 years
|
|
$
|
1,743,000
|
|
Exercisable at December 31, 2016
|
|
1,113,000
|
|
|
$
|
5.03
|
|
|
6.5 years
|
|
$
|
1,743,000
|
|
|
|
Nonvested
Restricted Shares
|
|
Weighted
Average Grant Date Fair Value
|
|||
|
|
|
|
|
|||
Nonvested restricted stock at December 31, 2015
|
|
829,000
|
|
|
$
|
14.41
|
|
Granted
|
|
138,000
|
|
|
$
|
3.12
|
|
Vested
|
|
(342,000
|
)
|
|
$
|
15.33
|
|
Canceled
|
|
(292,000
|
)
|
|
$
|
14.28
|
|
Nonvested restricted stock at December 31, 2016
|
|
333,000
|
|
|
$
|
8.90
|
|
|
|
Restricted
Stock Units
|
|
Weighted
Average Grant Date Fair Value
|
|||
|
|
|
|
|
|||
Nonvested restricted stock units outstanding at December 31, 2015
|
|
35,000
|
|
|
$
|
15.78
|
|
Vested
|
|
(21,000
|
)
|
|
$
|
15.43
|
|
Nonvested restricted stock units outstanding at December 31, 2016
|
|
14,000
|
|
|
$
|
16.27
|
|
Vested restricted stock units outstanding at December 31, 2016
|
|
80,000
|
|
|
$
|
20.99
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Restricted stock awards with time-based service conditions
|
|
$
|
—
|
|
|
$
|
10,575
|
|
|
$
|
17,631
|
|
Restricted stock unit awards with time-based service conditions
|
|
4,391
|
|
|
473
|
|
|
484
|
|
|||
Restricted stock awards with performance-based vesting conditions
|
|
197
|
|
|
—
|
|
|
—
|
|
|||
Stock options with time-based service vesting conditions
|
|
1,316
|
|
|
—
|
|
|
—
|
|
|||
Stock options with market-based vesting conditions
|
|
3,158
|
|
|
—
|
|
|
—
|
|
|||
Stock options with performance-based vesting conditions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total compensation expense
|
|
$
|
9,062
|
|
|
$
|
11,048
|
|
|
$
|
18,115
|
|
Years ending December 31,
|
|
||
2017
|
$
|
1,279
|
|
2018
|
1,323
|
|
|
2019
|
1,369
|
|
|
2020
|
16
|
|
|
Total minimum lease payments
|
$
|
3,987
|
|
|
|
2016
|
|
2015
|
||||
Cash and other assets
|
|
$
|
1,118
|
|
|
$
|
7,740
|
|
Patents, net of accumulated amortization
|
|
—
|
|
|
147
|
|
||
Investments - noncurrent
|
|
2,933
|
|
|
5,829
|
|
||
Total assets
|
|
$
|
4,051
|
|
|
$
|
13,716
|
|
|
|
|
|
|
||||
Accrued expenses and contributions
|
|
$
|
2,394
|
|
|
$
|
7,436
|
|
Net assets
|
|
$
|
1,657
|
|
|
$
|
6,280
|
|
|
|
2016
|
|
2015
|
||||
Revenues
|
|
$
|
16
|
|
|
$
|
18
|
|
Operating expenses
|
|
572
|
|
|
1,617
|
|
||
Loss from operations
|
|
(556
|
)
|
|
(1,599
|
)
|
||
Net gain (loss) in equity method investments
|
|
(1,013
|
)
|
|
6,922
|
|
||
Net income (loss)
|
|
$
|
(1,569
|
)
|
|
$
|
5,323
|
|
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sept. 30,
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sept. 30,
|
|
Dec. 31,
|
||||||||||||||||
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2015
|
|
2015
|
||||||||||||||||
|
|
(Unaudited, in thousands, except share and per share information)
|
||||||||||||||||||||||||||||||
Revenues
|
|
$
|
24,721
|
|
|
$
|
41,351
|
|
|
$
|
64,658
|
|
|
$
|
21,969
|
|
|
$
|
34,210
|
|
|
$
|
40,336
|
|
|
$
|
12,994
|
|
|
$
|
37,497
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Inventor royalties
|
|
1,573
|
|
|
—
|
|
|
17,844
|
|
|
3,313
|
|
|
9,325
|
|
|
1,265
|
|
|
116
|
|
|
7,756
|
|
||||||||
Contingent legal fees
|
|
4,109
|
|
|
10,418
|
|
|
7,709
|
|
|
4,238
|
|
|
4,784
|
|
|
5,512
|
|
|
1,972
|
|
|
3,901
|
|
||||||||
Litigation and licensing expenses - patents
|
|
7,723
|
|
|
7,324
|
|
|
7,348
|
|
|
5,463
|
|
|
8,675
|
|
|
9,012
|
|
|
10,345
|
|
|
11,341
|
|
||||||||
Amortization of patents
|
|
10,760
|
|
|
10,759
|
|
|
6,467
|
|
|
6,222
|
|
|
13,038
|
|
|
13,228
|
|
|
13,688
|
|
|
13,113
|
|
||||||||
General and administrative expenses (including non-cash stock compensation expense)
|
|
7,994
|
|
|
7,535
|
|
|
8,334
|
|
|
9,056
|
|
|
10,575
|
|
|
9,587
|
|
|
9,442
|
|
|
8,572
|
|
||||||||
Research, consulting and other expenses - business development
|
|
522
|
|
|
1,334
|
|
|
666
|
|
|
557
|
|
|
997
|
|
|
732
|
|
|
802
|
|
|
860
|
|
||||||||
Impairment of patent-related intangible assets
|
|
—
|
|
|
40,165
|
|
|
—
|
|
|
2,175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,731
|
|
||||||||
Impairment of goodwill
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,149
|
|
||||||||
Other
|
|
1,742
|
|
|
(1,242
|
)
|
|
—
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
3,465
|
|
|
250
|
|
||||||||
Total operating costs and expenses
|
|
34,423
|
|
|
76,293
|
|
|
48,368
|
|
|
31,024
|
|
|
47,820
|
|
|
39,336
|
|
|
39,830
|
|
|
150,673
|
|
||||||||
Operating income (loss)
|
|
(9,702
|
)
|
|
(34,942
|
)
|
|
16,290
|
|
|
(9,055
|
)
|
|
(13,610
|
)
|
|
1,000
|
|
|
(26,836
|
)
|
|
(113,176
|
)
|
||||||||
Total other income (expense)
|
|
(3
|
)
|
|
(52
|
)
|
|
261
|
|
|
592
|
|
|
228
|
|
|
(104
|
)
|
|
(180
|
)
|
|
—
|
|
||||||||
Income (loss) before (provision for) benefit from income taxes
|
|
(9,705
|
)
|
|
(34,994
|
)
|
|
16,551
|
|
|
(8,463
|
)
|
|
(13,382
|
)
|
|
896
|
|
|
(27,016
|
)
|
|
(113,176
|
)
|
||||||||
Provision for income taxes
|
|
(192
|
)
|
|
(5,927
|
)
|
|
(9,655
|
)
|
|
(2,414
|
)
|
|
(170
|
)
|
|
(119
|
)
|
|
(337
|
)
|
|
(4,174
|
)
|
||||||||
Net income (loss) including noncontrolling interests
|
|
(9,897
|
)
|
|
(40,921
|
)
|
|
6,896
|
|
|
(10,877
|
)
|
|
(13,552
|
)
|
|
777
|
|
|
(27,353
|
)
|
|
(117,350
|
)
|
||||||||
Net (income) loss attributable to noncontrolling interests in operating subsidiaries
|
|
(68
|
)
|
|
348
|
|
|
186
|
|
|
266
|
|
|
422
|
|
|
(4,463
|
)
|
|
43
|
|
|
1,440
|
|
||||||||
Net income (loss) attributable to Acacia Research Corporation
|
|
$
|
(9,965
|
)
|
|
$
|
(40,573
|
)
|
|
$
|
7,082
|
|
|
$
|
(10,611
|
)
|
|
$
|
(13,130
|
)
|
|
$
|
(3,686
|
)
|
|
$
|
(27,310
|
)
|
|
$
|
(115,910
|
)
|
Net loss per common share attributable to Acacia Research Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted income (loss) per share
|
|
$
|
(0.20
|
)
|
|
$
|
(0.81
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.21
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
(2.33
|
)
|
Weighted-average number of shares outstanding, basic
|
|
49,925,550
|
|
|
50,015,869
|
|
|
50,124,302
|
|
|
50,237,784
|
|
|
49,212,207
|
|
|
49,423,472
|
|
|
49,630,369
|
|
|
49,749,941
|
|
||||||||
Weighted-average number of shares outstanding, diluted
|
|
49,925,550
|
|
|
50,015,869
|
|
|
50,618,757
|
|
|
50,237,784
|
|
|
49,212,207
|
|
|
49,423,472
|
|
|
49,630,369
|
|
|
49,749,941
|
|
Exhibit
Number
|
Description
|
|
|
2.1
|
Agreement and Plan of Merger, dated November 22, 2011, by and among Acacia Research Group LLC, Apollo Patent Corp., Adaptix, Inc., and Baker Communications Fund II (QP), L.P., solely in its capacity as representative for the shareholders of Adaptix, Inc.(15)
|
3.1
|
Amended and Restated Certificate of Incorporation (1)
|
3.2
|
Amended and Restated Bylaws (21)
|
4.1
|
Tax Benefits Preservation Plan, dated as of March 16, 2016, by and between Acacia Research Corporation and Computershare Inc., as Rights Agent, which includes the form of Certificate of Designation of Series A Cumulative Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Terms as Exhibit C (24)
|
10.1*
|
Acacia Research Corporation 1996 Stock Option Plan, as amended (2)
|
10.2*
|
Form of Option Agreement constituting the Acacia Research Corporation 1996 Executive Stock Bonus Plan (3)
|
10.3*
|
2002 Acacia Technologies Stock Incentive Plan (4)
|
10.4*
|
2007 Acacia Technologies Stock Incentive Plan (5)
|
10.5*
|
Form of Acacia Technologies Stock Option Agreement under the 2007 Acacia Technologies Stock Incentive Plan (6)
|
10.6*
|
Form of Acacia Technologies Stock Issuance Agreement under the 2002 Acacia Technologies Stock Incentive Plan (6)
|
10.7*
|
Form of Acacia Technologies Stock Issuance Agreement under the 2007 Acacia Technologies Stock Incentive Plan (6)
|
10.8
|
Office Space Lease dated January 28, 2002, between Acacia Research Corporation and The Irvine Company (7)
|
10.9
|
Form of Indemnification Agreement (8)
|
10.10
|
Third Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (9)
|
10.11*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Edward Treska (20)
|
10.12
|
Fourth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (10)
|
10.13
|
Fifth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (10)
|
10.15*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Robert L. Harris (20)
|
10.16*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and Clayton J. Haynes (20)
|
10.17*
|
Acacia Research Corporation Amended and Restated Executive Severance Policy (12)
|
10.18
|
Sixth Amendment to Lease dated January 28, 2002 between Acacia Research Corporation and the Irvine Company (14)
|
10.19
|
Form of Purchase Agreement (16)
|
10.20*
|
2013 Acacia Research Corporation Stock Incentive Plan (18)
|
10.21*
|
Form of Stock Issuance Agreement under the 2013 Acacia Research Corporation Stock Incentive Plan
(19)
|
10.22*
|
Employment Agreement, dated September 22, 2015, by and between Acacia Research Group LLC and
Matthew Vella (20)
|
10.23*
|
2016 Acacia Research Corporation Stock Incentive Plan (22)
|
10.24*
|
Form of Stock Option Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan
|
10.25*
|
Form of Stock Issuance Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan
|
10.26
|
Director Service Agreement, dated February 29, 2016, by and between Acacia Research Corporation and Robert L. Harris (23)
|
18.1
|
Preferability Letter dated February 25, 2010 from Grant Thornton LLP, independent registered public accounting firm, regarding change in accounting principle (13)
|
21.1
|
List of Subsidiaries
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
24.1
|
Power of Attorney (included in the signature page hereto).
|
31.1†
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
31.2†
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
32.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
32.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
101
|
Interactive Date Files Pursuant to Rule 405 of Regulation S-T.
|
*
|
The referenced exhibit is a management contract, compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(c) of Form 10-K.
|
†
|
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Acacia Research Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language contained in any filing.
|
(1)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on June 5, 2008 (File No. 000-26068).
|
(2)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 20, 2000 (File No. 000-26068).
|
(3)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 26, 1996 (File No. 000-26068).
|
(4)
|
Incorporated by reference to Annex E to the Proxy Statement/Prospectus which formed part of Acacia Research Corporation’s Registration Statement on Form S-4 (File No. 333-87654) which became effective on November 8, 2002.
|
(5)
|
Incorporated by reference to Acacia Research Corporation’s Registration Statement on Form S-8 (File No. 333-144754) which became effective on July 20, 2007.
|
(6)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2007, filed on November 2, 2007 (File No. 000-26068).
|
(7)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10‑K for the year ended December 31, 2001, filed on March 27, 2002 (File No. 000‑26068).
|
(8)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended June 30, 2012, filed on July 30, 2012 (File No. 000-26068).
|
(9)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q for the period ended March 31, 2006, filed on May 10, 2006 (File No. 000‑26068).
|
(10)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007, filed on March 14, 2008 (File No. 000-26068).
|
(11)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on April 2, 2008 (File No. 000-26068).
|
(12)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 26, 2009 (File No. 000-26068).
|
(13)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 26, 2010, as amended on March 1, 2010 (File No. 000-26068)
|
(14)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 28, 2011, as amended on March 24, 2011 (File No. 000-26068).
|
(15)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K/A filed on January 19, 2012 (File No. 000-26068). Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24-b-2 of the Securities Exchange Act of 1934, as amended. The omitted material has been separately filed with the Securities and Exchange Commission.
|
(16)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on February 16, 2012 (File No. 000-26068).
|
(17)
|
Incorporated by reference to Acacia Research Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013 (File No. 000-26068).
|
(18)
|
Incorporated by reference to Appendix A to Acacia Research Corporation’s Definitive Proxy Statement on Schedule 14A filed on April 24, 2013 (File No. 000-26068).
|
(19)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on May 22, 2013 (File No. 000-26068).
|
(20)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q filed on November 9, 2015 (File No. 000-26068).
|
(21)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 28, 2016 (File No. 000-37721).
|
(22)
|
Incorporated by reference to Acacia Research Corporation’s Quarterly Report on Form 10-Q filed on August 9, 2016 (File No. 001-37721).
|
(23)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 4, 2016 (File No. 000-26068).
|
(24)
|
Incorporated by reference to Acacia Research Corporation’s Current Report on Form 8-K filed on March 21, 2016 (File No. 000-26068).
|
•
|
Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability, Voluntary Termination, which shall mean Optionee terminates employment voluntarily, or Misconduct) while this option is outstanding, then Optionee shall have a period of six (6) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.
|
•
|
Should Optionee voluntarily terminate Service while this option is outstanding, then Optionee shall have a period of three (3) months (commencing with the date of such Voluntary Termination) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.
|
•
|
Should Optionee die while this option is outstanding, then the personal representative of Optionee's estate or the person or persons to whom the option is transferred pursuant to Optionee's will or in accordance with the laws of descent and distribution or any person or trust to whom all or a portion of this option is transferred in accordance with Paragraph 3 hereof or the designated beneficiary or beneficiaries of this option shall have the right to exercise this option. Such right shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee's death or (ii) the Expiration Date.
|
•
|
Should Optionee cease Service by reason of Permanent Disability while this option is outstanding, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date.
|
•
|
cash or check made payable to the Corporation;
|
•
|
the surrender of shares of Common Stock owned by Optionee (provided that shares acquired pursuant to the exercise of options granted by the Corporation must have been held by Optionee for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such exercise;
|
•
|
the cancellation of indebtedness of the Corporation to Optionee;
|
•
|
provided that a public market for the Common Stock exists, a “same day sale” commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise this option and to sell a portion of the shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Corporation;
|
•
|
the waiver of compensation due or accrued for services rendered or to be rendered during a vesting period; or
|
•
|
any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law.
|
____
|
Cash Exercise (Purchase of the option shares with the intent to hold the shares for sale at a future date).
NOTE:
If you choose to do a cash exercise, you may not sell the acquired share without subsequent approval during a period when the trading window is open. Please refer to the Acacia Insider Trading Policy.
|
____
|
Cashless Exercise (Same-day purchase of the option shares and immediate sale of all the shares on the open market.)
|
____
|
Sell-to-Cover Exercise (Purchase of the option shares and immediate sale of less than all the shares).
NOTE:
If you choose to do a Sell-to-Cover exercise, you may not sell the remaining shares without subsequent approval during a period when the trading window is open. Please refer to the Acacia Insider Trading policy.
|
•
|
I have previously received and am familiar with the Corporation’s Insider Trading Policy;
|
•
|
I have complied with all procedures established by the Corporation’s Insider Trading Policy in connection with the transaction described above; and
|
•
|
To my knowledge, I am not in possession of any material nonpublic information about the Corporation and/or its affiliated companies.
|
A.
|
GRANT OF SHARES
|
B.
|
TRANSFER RESTRICTIONS
|
C.
|
FORFEITURE OF SHARES
.
|
D.
|
TAX PROVISIONS
.
|
E.
|
GENERAL PROVISIONS
|
|
Jurisdiction of
Incorporation
|
|
|
Acacia Global Acquisition LLC and subsidiaries
|
Delaware
|
|
|
Acacia Research Group, LLC, formerly Acacia Patent Acquisition, LLC and subsidiaries
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Acacia Research Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
March 10, 2017
|
/s/ Marvin Key
|
|
|
Marvin Key
Interim Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Acacia Research Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
March 10, 2017
|
/s/ Clayton J. Haynes
|
|
|
Clayton J. Haynes
Chief Financial Officer
(Principal Financial Officer)
|
|
By:
|
/s/ Marvin Key
|
|
|
Marvin Key
|
|
|
Interim Chief Executive Officer
|
|
|
March 10, 2017
|
|
By:
|
/s/ Clayton J. Haynes
|
|
|
Clayton J. Haynes
|
|
|
Chief Financial Officer
|
|
|
March 10, 2017
|