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DELAWARE
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95-4405754
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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ACACIA RESEARCH CORPORATION
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Table Of Contents
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Part I.
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Financial Information
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Item 1.
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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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Other Information
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Item 1A.
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Risk Factors
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Item 6.
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Signatures
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Exhibit Index
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September 30,
2017 |
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December 31,
2016 |
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ASSETS
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||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
101,081
|
|
|
$
|
127,540
|
|
Restricted cash
|
—
|
|
|
11,512
|
|
||
Short-term investments
|
57,487
|
|
|
19,443
|
|
||
Accounts receivable
|
300
|
|
|
26,750
|
|
||
Prepaid expenses and other current assets
|
3,520
|
|
|
3,245
|
|
||
Total current assets
|
162,388
|
|
|
188,490
|
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||
|
|
|
|
||||
Investment at fair value
(1)
|
208,796
|
|
|
—
|
|
||
Investment - equity method
(1)
|
2,284
|
|
|
—
|
|
||
Loan receivable and accrued interest
(1)
|
—
|
|
|
18,616
|
|
||
Investment in warrants and shares
(1)
|
—
|
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|
1,960
|
|
||
Patents, net of accumulated amortization
|
67,360
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|
|
86,319
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Other assets
|
382
|
|
|
618
|
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||
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$
|
441,210
|
|
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$
|
296,003
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
|
|
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Accounts payable and accrued expenses
|
$
|
7,691
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|
|
$
|
14,283
|
|
Royalties and contingent legal fees payable
|
19,824
|
|
|
13,908
|
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Total current liabilities
|
27,515
|
|
|
28,191
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|
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Other liabilities
|
8,752
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|
369
|
|
||
Total liabilities
|
36,267
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|
28,560
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Commitments and contingencies (Note 6)
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Stockholders’ equity:
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Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding
|
—
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—
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|
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Common stock, par value $0.001 per share; 100,000,000 shares authorized; 50,604,782 and 50,476,042 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
51
|
|
|
50
|
|
||
Treasury stock, at cost, 1,729,408 shares as of September 30, 2017 and December 31, 2016
|
(34,640
|
)
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(34,640
|
)
|
||
Additional paid-in capital
|
647,930
|
|
|
642,453
|
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||
Accumulated comprehensive loss
|
(38
|
)
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|
(76
|
)
|
||
Accumulated deficit
|
(209,815
|
)
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|
(342,198
|
)
|
||
Total Acacia Research Corporation stockholders’ equity
|
403,488
|
|
|
265,589
|
|
||
Noncontrolling interests
|
1,455
|
|
|
1,854
|
|
||
Total stockholders’ equity
|
404,943
|
|
|
267,443
|
|
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$
|
441,210
|
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$
|
296,003
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2017
|
|
2016
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2017
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2016
|
||||||||
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Revenues
|
$
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36,633
|
|
|
$
|
64,658
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$
|
61,944
|
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$
|
130,730
|
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Operating costs and expenses:
|
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Cost of revenues:
|
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|
||||
Inventor royalties
|
—
|
|
|
17,844
|
|
|
4,939
|
|
|
19,417
|
|
||||
Contingent legal fees
|
12,173
|
|
|
7,709
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|
|
16,036
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|
|
22,236
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|
||||
Litigation and licensing expenses - patents
|
4,073
|
|
|
7,348
|
|
|
14,593
|
|
|
22,895
|
|
||||
Amortization of patents
|
5,625
|
|
|
6,467
|
|
|
16,711
|
|
|
27,986
|
|
||||
General and administrative expenses
(2)
|
12,715
|
|
|
8,334
|
|
|
26,365
|
|
|
23,863
|
|
||||
Other expenses - business development
|
241
|
|
|
666
|
|
|
994
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|
|
2,522
|
|
||||
Impairment of patent-related intangible assets
|
2,248
|
|
|
—
|
|
|
2,248
|
|
|
40,165
|
|
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Total operating costs and expenses
|
37,075
|
|
|
48,368
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|
|
81,886
|
|
|
159,084
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|
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Operating income (loss)
|
(442
|
)
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|
16,290
|
|
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(19,942
|
)
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(28,354
|
)
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||||
Other income (expense):
|
|
|
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|
|
|
|
||||||||
Gain on conversion of loans and accrued interest
(1)
|
—
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|
|
—
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|
|
2,671
|
|
|
—
|
|
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Gain on exercise of Primary Warrant
(1)
|
—
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|
|
—
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|
|
4,616
|
|
|
—
|
|
||||
Change in fair value of investment, net
(1)
|
158,979
|
|
|
—
|
|
|
146,281
|
|
|
—
|
|
||||
Equity in earnings (losses) of investee
(1)
|
(116
|
)
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
||||
Interest income and other
|
164
|
|
|
261
|
|
|
1,423
|
|
|
206
|
|
||||
Total other income (expense)
|
159,027
|
|
|
261
|
|
|
154,861
|
|
|
206
|
|
||||
Income (loss) before provision for income taxes
|
158,585
|
|
|
16,551
|
|
|
134,919
|
|
|
(28,148
|
)
|
||||
Provision for income taxes
|
(216
|
)
|
|
(9,655
|
)
|
|
(2,935
|
)
|
|
(15,774
|
)
|
||||
Net income (loss) including noncontrolling interests in subsidiaries
|
158,369
|
|
|
6,896
|
|
|
131,984
|
|
|
(43,922
|
)
|
||||
Net loss attributable to noncontrolling interests in subsidiaries
|
96
|
|
|
186
|
|
|
399
|
|
|
466
|
|
||||
Net income (loss) attributable to Acacia Research Corporation
|
$
|
158,465
|
|
|
$
|
7,082
|
|
|
$
|
132,383
|
|
|
$
|
(43,456
|
)
|
|
|
|
|
|
|
|
|
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|
||||
Net income (loss) attributable to common stockholders - basic
|
$
|
158,326
|
|
|
$
|
7,043
|
|
|
$
|
132,142
|
|
|
$
|
(43,456
|
)
|
Net income (loss) attributable to common stockholders - diluted
|
$
|
158,326
|
|
|
$
|
7,043
|
|
|
$
|
132,143
|
|
|
$
|
(43,456
|
)
|
Basic net income (loss) per common share
|
$
|
3.13
|
|
|
$
|
0.14
|
|
|
$
|
2.62
|
|
|
$
|
(0.87
|
)
|
Diluted net income (loss) per common share
|
$
|
3.13
|
|
|
$
|
0.14
|
|
|
$
|
2.61
|
|
|
$
|
(0.87
|
)
|
Weighted average number of shares outstanding - basic
|
50,554,234
|
|
|
50,124,302
|
|
|
50,462,990
|
|
|
50,024,047
|
|
||||
Weighted average number of shares outstanding - diluted
|
50,599,974
|
|
|
50,618,757
|
|
|
50,684,725
|
|
|
50,024,047
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
General and administrative expenses
|
$
|
3,262
|
|
|
$
|
5,790
|
|
|
$
|
13,297
|
|
|
$
|
18,109
|
|
Non-cash stock compensation expense - G&A
|
1,272
|
|
|
2,544
|
|
|
4,833
|
|
|
5,754
|
|
||||
Non-cash stock compensation expense - Profits Interests (Note 7)
|
8,181
|
|
|
—
|
|
|
8,235
|
|
|
—
|
|
||||
Total general and administrative expenses
|
$
|
12,715
|
|
|
$
|
8,334
|
|
|
$
|
26,365
|
|
|
$
|
23,863
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) including noncontrolling interests
|
$
|
158,369
|
|
|
$
|
6,896
|
|
|
$
|
131,984
|
|
|
$
|
(43,922
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gain on short-term investments, net of tax of $0
|
15
|
|
|
16
|
|
|
20
|
|
|
42
|
|
||||
Unrealized gain on foreign currency translation, net of tax of $0
|
9
|
|
|
96
|
|
|
18
|
|
|
92
|
|
||||
Reclassification adjustment for losses included in net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Total other comprehensive income (loss)
|
158,393
|
|
|
7,008
|
|
|
132,022
|
|
|
(43,766
|
)
|
||||
Comprehensive loss attributable to noncontrolling interests
|
96
|
|
|
186
|
|
|
399
|
|
|
466
|
|
||||
Comprehensive income (loss) attributable to Acacia Research Corporation
|
$
|
158,489
|
|
|
$
|
7,194
|
|
|
$
|
132,421
|
|
|
$
|
(43,300
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net gain (loss) including noncontrolling interests
|
$
|
131,984
|
|
|
$
|
(43,922
|
)
|
Adjustments to reconcile net gain (loss) including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
||
Gain on conversion of loans and accrued interest
(1)
|
(2,671
|
)
|
|
—
|
|
||
Gain on exercise of Primary Warrant
(1)
|
(4,616
|
)
|
|
—
|
|
||
Change in fair value of investment, net
(1)
|
(146,281
|
)
|
|
—
|
|
||
Depreciation and amortization
|
16,780
|
|
|
28,105
|
|
||
Non-cash stock compensation
|
13,068
|
|
|
5,754
|
|
||
Impairment of patent-related intangible assets
|
2,248
|
|
|
40,165
|
|
||
Other
|
(473
|
)
|
|
(81
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
|||
Restricted cash
|
11,512
|
|
|
(3,316
|
)
|
||
Accounts receivable
|
26,450
|
|
|
(20,200
|
)
|
||
Prepaid expenses and other assets
|
(874
|
)
|
|
1,191
|
|
||
Accounts payable and accrued expenses
|
(6,608
|
)
|
|
5,392
|
|
||
Royalties and contingent legal fees payable
|
5,916
|
|
|
10,131
|
|
||
Net cash provided by operating activities
|
46,435
|
|
|
23,219
|
|
||
|
|
|
|
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Investments in Investees
(1)
|
(31,514
|
)
|
|
—
|
|
||
Advances to Investee
(1)
|
(4,000
|
)
|
|
(10,000
|
)
|
||
Purchases of available-for-sale investments
|
(424,945
|
)
|
|
(62,633
|
)
|
||
Maturities and sales of available-for-sale investments
|
386,920
|
|
|
32,352
|
|
||
Patent portfolio investment costs
|
—
|
|
|
(1,000
|
)
|
||
Purchases of property and equipment
|
—
|
|
|
(4
|
)
|
||
Net cash used in investing activities
|
(73,539
|
)
|
|
(41,285
|
)
|
||
|
|
|
|
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Repurchased restricted common stock
|
(35
|
)
|
|
(25
|
)
|
||
Distributions to noncontrolling interests
|
—
|
|
|
(1,358
|
)
|
||
Proceeds from exercises of stock options
|
680
|
|
|
242
|
|
||
Net cash provided by (used in) financing activities
|
645
|
|
|
(1,141
|
)
|
||
|
|
|
|
|
|
||
Decrease in cash and cash equivalents
|
(26,459
|
)
|
|
(19,207
|
)
|
||
Cash and cash equivalents, beginning
|
127,540
|
|
|
135,223
|
|
||
Cash and cash equivalents, ending
|
$
|
101,081
|
|
|
$
|
116,016
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Noncash investing activities:
|
|
|
|
||||
Conversion of loan receivable and accrued interest from investee into common stock
(1)
|
$
|
23,061
|
|
|
$
|
—
|
|
(i)
|
Level 1
- Observable Inputs: Quoted prices in active markets for identical investments;
|
(ii)
|
Level 2
- Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and
|
(iii)
|
Level 3
- Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Assets as of September 30, 2017:
|
|
|
|
|
|
||||||
Short-term investments
|
$
|
57,487
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment at fair value (Note 5)
|
—
|
|
|
—
|
|
|
208,796
|
|
|||
Total recurring fair value measurements
(1)
|
$
|
57,487
|
|
|
$
|
—
|
|
|
$
|
208,796
|
|
|
Investment at Fair Value
|
||||||||||
|
Common Stock
|
|
Warrants
|
|
Total
|
||||||
Opening balance as of January 1, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total gains and losses included in earnings for the period
(1)
|
|
|
|
|
|
||||||
Gain on conversion of loans and accrued interest
|
2,671
|
|
|
—
|
|
|
2,671
|
|
|||
Gain on exercise of Primary Warrant
|
—
|
|
|
4,616
|
|
|
4,616
|
|
|||
Change in fair value of investment, net
|
115,381
|
|
|
30,900
|
|
|
146,281
|
|
|||
Purchases, issues, sales and settlements
|
|
|
|
|
|
|
|
||||
Purchases and issues
|
54,202
|
|
|
1,026
|
|
|
55,228
|
|
|||
Total recurring fair value measurements
(1)
|
$
|
172,254
|
|
|
$
|
36,542
|
|
|
$
|
208,796
|
|
|
|
|
Gross Unrealized
|
|
|
||||||||||
Security Type
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
||||||||
September 30, 2017:
|
|
|
|
|
|
|
|
||||||||
U.S. government fixed income securities
|
$
|
57,427
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
57,487
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
U.S. government fixed income securities
|
$
|
19,403
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
19,443
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
Numerator (in thousands):
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Basic and Diluted
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
158,465
|
|
|
$
|
7,082
|
|
|
$
|
132,383
|
|
|
$
|
(43,456
|
)
|
Undistributed earnings allocated to participating securities
|
|
(139
|
)
|
|
(39
|
)
|
|
(241
|
)
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders - basic
|
|
$
|
158,326
|
|
|
$
|
7,043
|
|
|
$
|
132,142
|
|
|
$
|
(43,456
|
)
|
Additional undistributed earnings allocated to unvested shareholders
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders - diluted
|
|
$
|
158,326
|
|
|
$
|
7,043
|
|
|
$
|
132,143
|
|
|
$
|
(43,456
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic
|
|
50,554,234
|
|
|
50,124,302
|
|
|
50,462,990
|
|
|
50,024,047
|
|
||||
Potentially dilutive options and restricted stock units
|
|
45,740
|
|
|
494,455
|
|
|
221,735
|
|
|
—
|
|
||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted
|
|
50,599,974
|
|
|
50,618,757
|
|
|
50,684,725
|
|
|
50,024,047
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per common share
|
|
$
|
3.13
|
|
|
$
|
0.14
|
|
|
$
|
2.62
|
|
|
$
|
(0.87
|
)
|
Diluted net income (loss) per common share
|
|
$
|
3.13
|
|
|
$
|
0.14
|
|
|
$
|
2.61
|
|
|
$
|
(0.87
|
)
|
Anti-dilutive equity-based incentive awards excluded from the computation of diluted income (loss) per share
|
|
6,029,156
|
|
|
3,593,708
|
|
|
4,618,618
|
|
|
4,410,974
|
|
||||
Maximum price of awards excluded from the computation of diluted income (loss) per share
|
|
$
|
6.75
|
|
|
$
|
13.38
|
|
|
$
|
6.75
|
|
|
$
|
13.38
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30, |
||||
|
|
2017
|
|
2017
|
||||
Gain on conversion of loans and accrued interest
(1)
|
|
$
|
—
|
|
|
$
|
2,671
|
|
Gain on exercise of warrant
(2)
|
|
—
|
|
|
4,616
|
|
||
Change in fair value of investment, warrants
|
|
31,829
|
|
|
30,900
|
|
||
Change in fair value of investment, common stock
|
|
127,150
|
|
|
115,381
|
|
||
Net unrealized gain on investment at fair value
|
|
$
|
158,979
|
|
|
$
|
153,568
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30,
|
||||
|
|
2017
|
|
2017
|
||||
Revenues
|
|
$
|
4,087
|
|
|
$
|
7,195
|
|
Gross profit
|
|
3,751
|
|
|
6,663
|
|
||
Operating expenses
|
|
11,599
|
|
|
21,142
|
|
||
Other income (expense), net
|
|
(13,746
|
)
|
|
(12,960
|
)
|
||
Net loss attributable to common stockholders
|
|
(24,992
|
)
|
|
(31,912
|
)
|
||
|
|
|
|
|
||||
Net loss per share attributable to common stockholders - basic and diluted
|
|
$
|
(2.94
|
)
|
|
$
|
(5.82
|
)
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Current assets
|
|
$
|
88,831
|
|
|
$
|
21,367
|
|
Noncurrent assets
|
|
440
|
|
|
981
|
|
||
Total Assets
|
|
$
|
89,271
|
|
|
$
|
22,348
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
33,746
|
|
|
$
|
44,501
|
|
Noncurrent liabilities
|
|
18
|
|
|
22
|
|
||
Total liabilities
|
|
33,764
|
|
|
44,523
|
|
||
Preferred stock
|
|
—
|
|
|
23,350
|
|
||
Total stockholder's equity (deficit)
|
|
55,507
|
|
|
(45,525
|
)
|
||
Total liabilities, preferred stock and stockholders’ equity
|
|
$
|
89,271
|
|
|
$
|
22,348
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues (in thousands)
|
$
|
36,633
|
|
|
$
|
64,658
|
|
|
$
|
61,944
|
|
|
$
|
130,730
|
|
New agreements executed
|
3
|
|
|
11
|
|
|
18
|
|
|
30
|
|
||||
Licensing and enforcement programs generating revenues
|
7
|
|
|
14
|
|
|
13
|
|
|
27
|
|
•
|
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.
|
•
|
Bone Wedge technology
|
|
•
|
Semiconductor and Memory-Related technology
|
•
|
Cardiology and Vascular Device technology
|
|
•
|
Shared Memory for Multimedia Processing technology
|
•
|
DisplayPort and MIPI DSI technology
|
|
•
|
Speech Codes Used in Wireless and Wireline Systems technology
|
•
|
Electronic Access Control technology
|
|
•
|
Super Resolutions Microscopy technology
|
•
|
Innovative Display technology
|
|
•
|
Video Conferencing technology
|
•
|
Online Auction Guarantee technology
|
|
•
|
Wireless Infrastructure and User Equipment technology
|
•
|
Optical Networking technology
|
|
|
|
•
|
4G Wireless technology
|
|
•
|
Lighting Ballast technology
|
•
|
Audio Communications Fraud Detection technology
|
|
•
|
Oil and gas drilling technology
|
•
|
Bone Wedge technology
|
|
•
|
Online Auction Guarantee technology
|
•
|
Broadband Communications technology
|
|
•
|
Optical Networking technology
|
•
|
Cardiology and Vascular Device technology
|
|
•
|
Reflective and Radiant Barrier Insulation technology
|
•
|
Diamond and Gemstone Grading technology
|
|
•
|
Semiconductor 3D die stacking technology
|
•
|
DisplayPort and MIPI DSI technology
|
|
•
|
Semiconductor memory circuit and manufacturing processes technology
|
•
|
DRAM and Flash Memory technology
|
|
•
|
Shared Memory for Multimedia Processing technology
|
•
|
Electronic spreadsheet, data analysis and software development technology
|
|
•
|
Speech codes used in wireless and wireline systems technology
|
•
|
Flash Memory technology
|
|
•
|
Super Resolutions Microscopy technology
|
•
|
Gas Modulation Control Systems technology
|
|
•
|
Telematics technology
|
•
|
High Speed Circuit Interconnect and Display Control technology
|
|
•
|
Variable Data Printing technology
|
•
|
Interstitial and Pop-Up Internet Advertising technology
|
|
•
|
Wireless Infrastructure and User Equipment technology
|
•
|
Knee Replacement technology
|
|
|
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
36,633
|
|
|
$
|
64,658
|
|
|
(43
|
)%
|
|
$
|
61,944
|
|
|
$
|
130,730
|
|
|
(53
|
)%
|
Operating costs and expenses
|
37,075
|
|
|
48,368
|
|
|
(23
|
)%
|
|
81,886
|
|
|
159,084
|
|
|
(49
|
)%
|
||||
Operating income (loss)
|
(442
|
)
|
|
16,290
|
|
|
(103
|
)%
|
|
(19,942
|
)
|
|
(28,354
|
)
|
|
(30
|
)%
|
||||
Other income (expense), net
|
159,027
|
|
|
261
|
|
|
>300%
|
|
|
154,861
|
|
|
206
|
|
|
>300%
|
|
||||
Income (loss) before provision for income taxes
|
158,585
|
|
|
16,551
|
|
|
>300%
|
|
|
134,919
|
|
|
(28,148
|
)
|
|
>(300%)
|
|
||||
Provision for income taxes
|
(216
|
)
|
|
(9,655
|
)
|
|
(98
|
)%
|
|
(2,935
|
)
|
|
(15,774
|
)
|
|
(81
|
)%
|
||||
Net income (loss) attributable to Acacia Research Corporation
|
158,465
|
|
|
7,082
|
|
|
>300%
|
|
|
132,383
|
|
|
(43,456
|
)
|
|
>(300%)
|
|
•
|
Revenues decreased
$28.0 million
, or
43%
, to
$36.6 million
for the three months ended
September 30, 2017
, as compared to
$64.7 million
in the comparable prior year quarter,
due primarily to a decrease in
the number of license agreements executed during the quarter. Refer to “
Investments in Patent Portfolios”
below for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
|
•
|
Income before provision for income taxes was
$158.6 million
for the three months ended
September 30, 2017
, as compared to
$16.6 million
for the three months ended
September 30, 2016
. The net change was comprised of the change in revenues described above, and a
$159.0 million
unrealized gain on our equity investment in Veritone, an
$8.2 million
non-cash stock compensation charge for our Veritone related profits interest units and a net decrease in operating expenses as follows:
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, decreased
$13.4 million
, or
52%
, compared to the
43%
decrease in related revenues for the same periods, primarily due to no inventor royalty obligations on revenues recognized in the third quarter of 2017, as compared to average inventory royalty rates of 28% in the third quarter of 2016.
|
•
|
Litigation and licensing expenses-patents decreased
$3.3 million
, or
45%
, to
$4.1 million
,
due primarily to a net decrease in litigation support and third-party technical consulting expenses associated with ongoing licensing and enforcement programs and a decrease in portfolio related enforcement activities.
Refer to “
Investments in Patent Portfolios”
below for additional information regarding the impact of portfolio acquisition trends on licensing and enforcement activities and current and future licensing and enforcement related revenues.
|
•
|
Amortization expense decreased
$842,000
, or
13%
, to
$5.6 million
, due to a decrease in scheduled amortization resulting from patent portfolio impairment charges previously recorded in the fourth quarter of 2016.
|
•
|
General and administrative expenses, excluding non-cash stock compensation, decreased
$2.5 million
or
44%
, to
$3.3 million
,
due primarily to a reduction in personnel costs in connection with headcount reductions in 2016 and 2017, a decrease in variable performance based compensation costs and a decrease in corporate, general and administrative costs.
|
•
|
Net non-cash stock compensation expense increased
$6.9 million
, or
272%
, due to the increase in the fair value of our Veritone related profits interest units consistent with the increase in the underlying Veritone stock price, and the impact of the full vesting of the profits interest units, both occurring during the third quarter of 2017. Excluding non-cash stock compensation related to the profits interest units, non-cash stock compensation expense decreased $1.3 million, or 50%.
|
•
|
Impairment of patent-related intangible asset charges increased
$2.2 million
, reflecting the impact of reductions in expected estimated future net cash flows for certain patent portfolios that management determined it would no longer allocate resources to in future periods.
|
•
|
Results for the three months ended
September 30, 2017
included an unrealized gain on our investment in Veritone totaling
$159.0 million
, related to the application of the fair value method of accounting to our investment in Veritone as of
September 30, 2017
.
|
•
|
Results for the three months ended September 30, 2017 included pretax net income of
$158.6 million
, primarily comprised of an unrealized gain on our investment in Veritone totaling
$159.0 million
. The unrealized gain created a deferred tax liability totaling approximately $54.1 million at September 30, 2017. The future anticipated reversal of this deferred tax liability provides for a source of taxable income that allows for the realizability of existing deferred tax assets that have been reduced by a valuation allowance for the periods presented. The effective tax rate reflects both the recognition of the deferred tax liability and the reversal of valuation allowance, resulting in the
0%
tax rate for the three months ended September 30, 2017, respectively. Tax expense for the three months ended September 30, 2017 primarily reflects the impact of state taxes. The effective rates for the 2016 period primarily reflects the impact of foreign withholding taxes related to certain revenue agreements executed with third party licensees domiciled in foreign jurisdictions.
|
•
|
Revenues decreased
$68.8 million
, or
53%
, to
$61.9 million
for the
nine months
ended
September 30, 2017
, as compared to
$130.7 million
in the comparable prior year period,
due primarily to a decrease in the number of agreements executed and a decrease in average revenue per
agreement. Refer to “
Investments in Patent Portfolios”
below for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
|
•
|
Income before provision for income taxes was
$134.9 million
for the
nine months
ended
September 30, 2017
, as compared to a loss before provision for income taxes of
$28.1 million
for the
nine months
ended
September 30, 2016
. The net change was comprised of the change in revenues described above, and a net
$153.6 million
unrealized gain on our equity investment in Veritone, an
$8.2 million
non-cash stock compensation charge for our Veritone related profits interest units and a net decrease in operating expenses, as follows:
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, decreased
$20.7 million
, or
50%
, compared to the
53%
decrease in related revenues for the same periods, primarily due to lower average inventor royalty rates for the portfolios generating revenues during the nine months ended September 30, 2017, partially offset by higher average contingent legal fee rates for the portfolios generating revenues during the
nine months
ended
September 30, 2017
.
|
•
|
Litigation and licensing expenses-patents decreased
$8.3 million
, or
36%
, to
$14.6 million
,
due primarily to a net decrease in litigation support and third-party technical consulting expenses associated with ongoing licensing and enforcement programs and a decrease in portfolio related enforcement activities.
Refer to “
Investments in Patent Portfolios”
below for additional information regarding the impact of portfolio acquisition trends on licensing and enforcement activities and current and future licensing and enforcement related revenues.
|
•
|
Amortization expense decreased
$11.3 million
, or
40%
, to
$16.7 million
, due to a decrease in scheduled amortization resulting from patent portfolio impairment charges previously recorded in the second and fourth quarters of 2016.
|
•
|
General and administrative expenses, excluding non-cash stock compensation, decreased
$4.8 million
or
27%
, to
$13.3 million
,
due primarily to a reduction in personnel costs in connection with headcount reductions in 2016 and 2017, a decrease in variable performance based compensation costs and a decrease in corporate, general and administrative costs.
|
•
|
Net non-cash stock compensation expense increased
$7.3 million
, or
127%
, due to the increase in the fair value of our Veritone related profits interest units consistent with the increase in the underlying Veritone stock price and the impact of the full vesting of the profits interest units, both occurring during the third quarter of 2017. Excluding non-cash stock compensation related to the profits interest units, non-cash stock compensation expense decreased
$921,000
, or
16%
.
|
•
|
Impairment of patent-related intangible asset charges decreased
$37.9 million
. Impairment charges for the
nine months
ended
September 30, 2017
and 2016 reflect the impact of reductions in expected estimated future net cash flows for certain patent portfolios and / or the impairment of certain portfolios that management determined it would no longer allocate resources to in future periods.
|
•
|
Results for the nine months ended
September 30, 2017
included a net unrealized gain on our investment in Veritone totaling
$153.6 million
, comprised of an unrealized gain on conversion of our Veritone loans to equity of
$2.7 million
, an unrealized gain on the exercise of our Primary Warrant of
$4.6 million
and an unrealized gain related to the application of the fair value method of accounting to our equity investment in Veritone as of
September 30, 2017
of
$146.3 million
.
|
•
|
Results for the nine months ended September 30, 2017 included pretax net income of
$134,919,000
primarily comprised of an unrealized gain on our investment in Veritone totaling $153.6 million. The unrealized gain created a deferred tax liability totaling approximately $54.1 million at September 30, 2017. The future anticipated reversal of this deferred tax liability provides for a source of taxable income that allows for the realizability of existing deferred tax assets that have been reduced by a valuation allowance for the periods presented. The effective tax rate reflects both the recognition of the deferred tax liability and the reversal of valuation allowance, resulting in the
2%
tax rate for the nine months ended September 30, 2017, respectively. Tax expense for the nine month periods presented primarily reflects the impact of state taxes and foreign withholding taxes incurred on revenue agreements executed with third-party licensees domiciled in foreign jurisdictions.
|
•
|
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.
|
|
|
Veritone Common Stock
|
|
Veritone Warrants
|
||||
|
|
IPO Date
|
|
September 30, 2017
|
|
IPO Date
|
|
September 30, 2017
|
Estimated DLOM applied
|
|
5.7%
|
|
8%
|
|
5.7%
|
|
5%
|
Volatility assumptions
|
|
35%
|
|
100%
|
|
35%
|
|
45%
|
Term assumptions
|
|
6-months
|
|
1.5 months
|
|
6-months
|
|
3 to 6 months
|
|
|
Three Months Ended
September 30, |
|
Change
|
|
Nine Months Ended
September 30, |
|
Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues (in thousands, except percentage change values)
|
|
$
|
36,633
|
|
|
$
|
64,658
|
|
|
$
|
(28,025
|
)
|
|
(43
|
)%
|
|
$
|
61,944
|
|
|
$
|
130,730
|
|
|
$
|
(68,786
|
)
|
|
(53
|
)%
|
New agreements executed
|
|
3
|
|
|
11
|
|
|
|
|
|
|
18
|
|
|
30
|
|
|
|
|
|
||||||||||
Average revenue per agreement (in thousands)
|
|
$
|
12,211
|
|
|
$
|
5,878
|
|
|
|
|
|
|
$
|
3,441
|
|
|
$
|
4,358
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
|
|
2017 vs. 2016
|
|
2017 vs. 2016
|
||||
|
|
|
||||||
Decrease in number of agreements executed
|
|
$
|
(47,024
|
)
|
|
$
|
(52,292
|
)
|
Increase (decrease) in average revenue per agreement executed
|
|
18,999
|
|
|
(16,494
|
)
|
||
Total change in revenues
|
|
$
|
(28,025
|
)
|
|
$
|
(68,786
|
)
|
|
|
Three Months Ended
September 30, |
|
Change
|
|
Nine Months Ended
September 30, |
|
Change
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||
Income (loss) before provision for income taxes
|
|
$
|
158,585
|
|
|
$
|
16,551
|
|
|
$
|
142,034
|
|
|
>300%
|
|
$
|
134,919
|
|
|
$
|
(28,148
|
)
|
|
$
|
163,067
|
|
|
>300%
|
|
Three Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
||||||
|
2017 vs. 2016
|
|
%
|
|
2017 vs. 2016
|
|
%
|
||||||
|
(in thousands, except percentage values)
|
||||||||||||
Decrease in revenues
|
$
|
(28,025
|
)
|
|
(20
|
)%
|
|
$
|
(68,786
|
)
|
|
(42
|
)%
|
Decrease in inventor royalties and contingent legal fees
|
13,380
|
|
|
9
|
%
|
|
20,678
|
|
|
13
|
%
|
||
Decrease in general and administrative expenses
|
2,528
|
|
|
2
|
%
|
|
4,812
|
|
|
3
|
%
|
||
Increase in non-cash stock compensation expenses
|
(6,909
|
)
|
|
(5
|
)%
|
|
(7,314
|
)
|
|
(4
|
)%
|
||
Decrease in litigation and licensing expenses
|
3,275
|
|
|
2
|
%
|
|
7,802
|
|
|
5
|
%
|
||
Decrease in patent amortization expenses
|
842
|
|
|
1
|
%
|
|
11,275
|
|
|
7
|
%
|
||
(Increase) decrease in patent-related impairment charges
|
(2,248
|
)
|
|
(2
|
)%
|
|
37,917
|
|
|
23
|
%
|
||
Increase in gain on fair value investment
|
158,979
|
|
|
113
|
%
|
|
153,568
|
|
|
94
|
%
|
||
Other
|
212
|
|
|
—
|
%
|
|
3,115
|
|
|
1
|
%
|
||
Total change in income (loss) before provision for income taxes
|
$
|
142,034
|
|
|
100
|
%
|
|
$
|
163,067
|
|
|
100
|
%
|
|
|
Three Months Ended
September 30, |
|
Change
|
|
Nine Months Ended
September 30, |
|
Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||||
Inventor royalties
|
|
$
|
—
|
|
|
$
|
17,844
|
|
|
$
|
(17,844
|
)
|
|
(100%)
|
|
|
$
|
4,939
|
|
|
$
|
19,417
|
|
|
$
|
(14,478
|
)
|
|
(75
|
)%
|
Contingent legal fees
|
|
$
|
12,173
|
|
|
$
|
7,709
|
|
|
$
|
4,464
|
|
|
58
|
%
|
|
$
|
16,036
|
|
|
$
|
22,236
|
|
|
$
|
(6,200
|
)
|
|
(28
|
)%
|
|
|
Three Months Ended
September 30, |
|
%
|
|
Nine Months Ended
September 30, |
|
%
|
||||||
|
|
2017 vs. 2016
|
|
|
2017 vs. 2016
|
|
||||||||
Inventor Royalties:
|
|
|
||||||||||||
Decrease in total revenues
|
|
$
|
(11,534
|
)
|
|
65
|
%
|
|
$
|
(25,080
|
)
|
|
173
|
%
|
Decrease in inventor royalty rates
|
|
—
|
|
|
—
|
%
|
|
(4,138
|
)
|
|
29
|
%
|
||
(Increase) decrease in revenues without inventor royalty obligations primarily due to upfront advance related preferred returns
|
|
(6,310
|
)
|
|
35
|
%
|
|
14,740
|
|
|
(102
|
)%
|
||
Total change in inventor royalties expense
|
|
$
|
(17,844
|
)
|
|
100
|
%
|
|
$
|
(14,478
|
)
|
|
100
|
%
|
Contingent Legal Fees:
|
|
|
|
|
|
|
|
|
||||||
Decrease in total revenues
|
|
$
|
(3,600
|
)
|
|
(81
|
)%
|
|
$
|
(12,334
|
)
|
|
199
|
%
|
Increase in contingent legal fee rates
|
|
7,718
|
|
|
173
|
%
|
|
5,402
|
|
|
(87
|
)%
|
||
Decrease in revenues without contingent legal fee obligations
|
|
346
|
|
|
8
|
%
|
|
732
|
|
|
(12
|
)%
|
||
Total change in contingent legal fees expense
|
|
$
|
4,464
|
|
|
100
|
%
|
|
$
|
(6,200
|
)
|
|
100
|
%
|
|
|
Three Months Ended
September 30, |
|
Change
|
|
Nine Months Ended
September 30, |
|
Change
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||||
Litigation and licensing expenses - patents
|
|
$
|
4,073
|
|
|
$
|
7,348
|
|
|
$
|
(3,275
|
)
|
|
(45
|
)%
|
|
$
|
14,593
|
|
|
$
|
22,895
|
|
|
$
|
(8,302
|
)
|
|
(36
|
)%
|
Amortization of patents
|
|
$
|
5,625
|
|
|
$
|
6,467
|
|
|
$
|
(842
|
)
|
|
(13
|
)%
|
|
$
|
16,711
|
|
|
$
|
27,986
|
|
|
$
|
(11,275
|
)
|
|
(40
|
)%
|
Impairment of patent-related intangible assets
|
|
$
|
2,248
|
|
|
$
|
—
|
|
|
$
|
2,248
|
|
|
100
|
%
|
|
$
|
2,248
|
|
|
$
|
40,165
|
|
|
$
|
(37,917
|
)
|
|
(94
|
)%
|
|
Three Months Ended
September 30, |
|
Change
|
|
Nine Months Ended
September 30, |
|
Change
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|
2017
|
|
2016
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
General and administrative expenses
|
$
|
3,262
|
|
|
$
|
5,790
|
|
|
$
|
(2,528
|
)
|
|
(44
|
)%
|
|
$
|
13,297
|
|
|
$
|
18,109
|
|
|
$
|
(4,812
|
)
|
|
(27
|
)%
|
Non-cash stock compensation expense - G&A
|
1,272
|
|
|
2,544
|
|
|
(1,272
|
)
|
|
(50
|
)%
|
|
4,833
|
|
|
5,754
|
|
|
(921
|
)
|
|
(16
|
)%
|
||||||
Non-cash stock compensation expense - Veritone Profits Interests
|
$
|
8,181
|
|
|
$
|
—
|
|
|
$
|
8,181
|
|
|
100
|
%
|
|
$
|
8,235
|
|
|
$
|
—
|
|
|
$
|
8,235
|
|
|
100
|
%
|
Total general and administrative expenses
|
$
|
12,715
|
|
|
$
|
8,334
|
|
|
$
|
4,381
|
|
|
53
|
%
|
|
$
|
26,365
|
|
|
$
|
23,863
|
|
|
$
|
2,502
|
|
|
10
|
%
|
|
Three Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
||||||
|
2017 vs. 2016
|
|
%
|
|
2017 vs. 2016
|
|
%
|
||||||
|
|
|
|
||||||||||
Personnel cost reductions due to headcount reductions
|
$
|
(752
|
)
|
|
(17
|
)%
|
|
$
|
(2,287
|
)
|
|
(91
|
)%
|
Variable performance-based compensation costs
|
(844
|
)
|
|
(19
|
)%
|
|
(2,049
|
)
|
|
(82
|
)%
|
||
Corporate, general and administrative costs
|
(894
|
)
|
|
(20
|
)%
|
|
(1,213
|
)
|
|
(48
|
)%
|
||
Non-cash stock compensation expense
|
6,909
|
|
|
158
|
%
|
|
7,314
|
|
|
292
|
%
|
||
Non-recurring employee severance costs
|
(38
|
)
|
|
(2
|
)%
|
|
737
|
|
|
29
|
%
|
||
Total change in general and administrative expenses
|
$
|
4,381
|
|
|
100
|
%
|
|
$
|
2,502
|
|
|
100
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes (in thousands)
|
$
|
(216
|
)
|
|
$
|
(9,655
|
)
|
|
$
|
(2,935
|
)
|
|
$
|
(15,774
|
)
|
Effective tax rate
|
—
|
%
|
|
(58
|
)%
|
|
(2
|
)%
|
|
56
|
%
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
46,435
|
|
|
$
|
23,219
|
|
Investing activities
|
(73,539
|
)
|
|
(41,285
|
)
|
||
Financing activities
|
645
|
|
|
(1,141
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Investments in Investees
|
$
|
(31,514
|
)
|
|
$
|
—
|
|
Advances to Investee
|
(4,000
|
)
|
|
(10,000
|
)
|
||
Available-for-sale investments, net
|
(38,025
|
)
|
|
(30,281
|
)
|
||
Investments in patents/ patent rights
|
—
|
|
|
(1,000
|
)
|
||
Purchases of property and equipment
|
—
|
|
|
(4
|
)
|
||
Net cash used in investing activities
|
$
|
(73,539
|
)
|
|
$
|
(41,285
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
||
Distributions to noncontrolling interests
|
—
|
|
|
(1,358
|
)
|
||
Repurchased restricted common stock
|
$
|
(35
|
)
|
|
$
|
(25
|
)
|
Proceeds from exercises of stock options
|
680
|
|
|
242
|
|
||
Net cash provided by (used in) financing activities
|
$
|
645
|
|
|
$
|
(1,141
|
)
|
|
Payments Due by Period (In thousands)
|
||||||||||||||
Contractual Obligations
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Operating leases, net of guaranteed sublease income
|
$
|
2,919
|
|
|
$
|
212
|
|
|
$
|
2,692
|
|
|
$
|
15
|
|
EXHIBIT
NUMBER
|
EXHIBIT
|
10.1
|
|
31.1
|
|
31.2
|
|
32.1**
|
|
32.2**
|
|
101
|
*
|
Filed herewith.
|
**
|
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the Registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.
|
|
ACACIA RESEARCH CORPORATION
|
|
|
|
/
s/ Robert Stewart
|
|
By:
Robert Stewart
|
|
President
|
|
(Principal Executive Officer and Duly Authorized Signatory)
|
|
|
|
/s/ Clayton J. Haynes
|
|
By: Clayton J. Haynes
|
|
Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
EXHIBIT
NUMBER
|
EXHIBIT
|
10.1
|
|
31.1
|
|
31.2
|
|
32.1**
|
|
32.2**
|
|
101
|
*
|
Filed herewith.
|
**
|
The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the Registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.
|
|
Company
:
ACACIA RESEARCH GROUP LLC
By:
________________________________
Name:
Title:
|
|
Executive
:
___________________________________
Robert Stewart, Sr.
|
Company
:
Acacia Research Group LLC
By: ____________________________
Name:
Its:
Executive
:
_______________________________
Name:
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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 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 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.
|
November 7, 2017
|
/s/ Robert Stewart
|
|
|
Robert Stewart
President
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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;
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3.
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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;
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4.
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The registrant’s other certifying officer 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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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The registrant’s other certifying officer 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):
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a.
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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
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b.
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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.
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November 7, 2017
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/s/ Clayton J. Haynes
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Clayton J. Haynes
Chief Financial Officer and Treasurer
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By:
/s/ Robert Stewart
Robert Stewart
President
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November 7, 2017
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By:
/s/ Clayton J. Haynes
Clayton J. Haynes
Chief Financial Officer and Treasurer
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November 7, 2017
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