Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 24, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-37721 | ||
Entity Registrant Name | ACACIA RESEARCH CORP | ||
Entity Central Index Key | 0000934549 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 49,279,453 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
State of Incorporation | DE | ||
Entity Shell Company | false | ||
Entity Public Float | $ 199,263,000 | ||
Well Known Seasoned Issuer | No | ||
Entity Voluntary Filer | No |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 165,546 | $ 57,359 |
Trading securities - debt | 0 | 93,843 |
Trading securities - equity | 109,103 | 17,140 |
Investment securities - private equity | 143,257 | 0 |
Investment securities - equity method investments | 30,673 | 0 |
Investment at fair value (6) | 2,752 | 1,500 |
Accounts receivable | 506 | 511 |
Prepaid expenses and other current assets | 5,832 | 2,912 |
Total current assets | 457,669 | 173,265 |
Long-term restricted cash | 35,000 | 35,000 |
Patents, net of accumulated amortization | 16,912 | 7,814 |
Leased right-of-use assets | 951 | 1,264 |
Other non-current assets | 4,988 | 818 |
Total assets | 515,520 | 218,161 |
Current liabilities: | ||
Accounts payable | 1,019 | 1,765 |
Accrued expenses and other current liabilities | 3,707 | 7,265 |
Accrued compensation | 2,265 | 507 |
Royalties and contingent legal fees payable | 2,162 | 2,178 |
Senior Secured Notes Payable - short-term | 115,663 | 0 |
Total current liabilities | 124,816 | 11,715 |
Series A warrant liabilities | 6,640 | 3,568 |
Series A embedded derivative liabilities | 26,728 | 17,974 |
Series B warrant liabilities | 52,341 | 0 |
Long-term lease liabilities | 951 | 1,264 |
Other long-term liabilities | 591 | 593 |
Total liabilities | 212,067 | 35,114 |
Commitments and contingencies (Note 10) | ||
Series A redeemable convertible preferred stock, par value $0.001 per share; stated value $100 per share; 350,000 shares authorized, issued and outstanding as of December 31, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $35,000 as of December 31, 2020 and December 31, 2019, respectively | 10,924 | 8,089 |
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 49,279,453 and 50,370,987 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 49 | 50 |
Treasury stock, at cost, 4,604,365 and 2,919,828 shares as of December 31, 2020 and December 31, 2019, respectively | (43,270) | (39,272) |
Additional paid-in capital | 651,416 | 652,003 |
Accumulated deficit | (326,708) | (439,656) |
Total Acacia Research Corporation stockholders' equity | 281,487 | 173,125 |
Noncontrolling interests | 11,042 | 1,833 |
Total stockholders' equity | 292,529 | 174,958 |
Total liabilities, redeemable convertible preferred stock, and stockholders' equity | $ 515,520 | $ 218,161 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 49,279,453 | 50,370,987 |
Common stock, shares outstanding | 49,279,453 | 50,370,987 |
Treasury stock | 4,604,365 | 2,919,828 |
Redeemable Preferred Stock [Member] | ||
Series A redeemable convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series A redeemable convertible preferred stock, shares authorized | 350,000 | 350,000 |
Series A redeemable convertible preferred stock, shares issued | 350,000 | 350,000 |
Series A redeemable convertible preferred stock, shares outstanding | 350,000 | 350,000 |
Series A redeemable convertible preferred stock, value per share | $ 100 | $ 100 |
Series A redeemable convertible preferred stock, liquidation preference | $ 35,000 | $ 35,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 29,782 | $ 11,246 |
Portfolio operations: | ||
Inventor royalties | 7,349 | 4,944 |
Contingent legal fees | 7,419 | 591 |
Litigation and licensing expenses - patents | 5,683 | 7,803 |
Amortization of patents | 4,681 | 3,194 |
Other portfolio expenses (income) | (308) | 1,756 |
Total portfolio expenses | 24,824 | 18,288 |
Net portfolio income (loss) | 4,958 | (7,042) |
Acquisition of MalinJ1 | 24,476 | 16,376 |
Operating loss | (19,518) | (23,418) |
Other income (expense): | ||
Change in fair value of investment, net (Note 6) | 5,474 | 9,899 |
Gain (loss) on sale of investment (Note 6) | 8,187 | (9,230) |
Impairment of other investment | 0 | (8,195) |
Gain on disposal of other investment | 0 | 2,000 |
Change in fair value of the Series A and B warrants and embedded derivatives | (58,238) | 4,518 |
Gain on sale of prepaid investment and derivative | 2,845 | 0 |
Change in fair value of trading securities and equity securities | 176,173 | (145) |
Gain on sale of trading securities | 7,352 | 2,188 |
Loss on foreign currency exchange | (4,905) | (2) |
Interest expense on Senior Secured Notes | (5,923) | 0 |
Interest income and other | 838 | 3,432 |
Total other income | 131,803 | 4,465 |
Income (loss) before income taxes | 112,285 | (18,953) |
Income tax benefit | 1,159 | 1,824 |
Net income (loss) including noncontrolling interests in subsidiaries | 113,444 | (17,129) |
Net loss attributable to noncontrolling interests in subsidiaries | 0 | 14 |
Net income (loss) attributable to Acacia Research Corporation | 113,444 | (17,115) |
Net income (loss) attributable to common stockholders - basic | $ 90,330 | $ (17,422) |
Basic net income (loss) per common share | $ 1.85 | $ (0.35) |
Weighted average number of shares outstanding - basic | 48,840,829 | 49,764,002 |
Net income (loss) attributable to common stockholders - diluted | $ 88,471 | $ (20,373) |
Diluted net income (loss) per common share | $ 1.54 | $ (0.40) |
Weighted average number of shares outstanding - diluted | 57,435,128 | 50,896,773 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) (General and Admin Expenses) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
General and administrative expenses | $ 24,476 | $ 16,376 |
Non-cash stock compensation | 1,662 | 1,075 |
General and Administrative Expense [Member] | ||
General and administrative expenses | 22,814 | 15,301 |
Stock Compensation Expense - General and Admin [Member] | ||
Non-cash stock compensation | $ 1,662 | $ 1,075 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Series A Redeemable Convertible Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interests in Operating Subsidiaries | Total |
Beginning balance, shares at Dec. 31, 2018 | 49,639,319 | ||||||
Beginning balance, value at Dec. 31, 2018 | $ 50 | $ (39,272) | $ 651,156 | $ (422,541) | $ 1,847 | $ 191,240 | |
Net loss attributable to Acacia Research Corporation | (17,115) | (17,115) | |||||
Accretion of Series A redeemable convertible preferred stock to redemption value | $ 307 | (307) | (307) | ||||
Stock options exercised, shares | 25,136 | ||||||
Stock options exercised, value | 79 | 79 | |||||
Compensation expense for share-based awards, net of forfeitures, shares | 706,532 | ||||||
Compensation expense for share-based awards, net of forfeitures, value | 1,075 | 1,075 | |||||
Distributions to noncontrolling interests in subsidiaries | 0 | ||||||
Issuance of Series A Redeemable Convertible Preferred Shares, net of embedded derivative, Series A Warrant, and issuance costs, shares | 350,000 | ||||||
Issuance of Series A Redeemable Convertible Preferred Shares, net of embedded derivative, Series A Warrant, and issuance costs, value | $ 7,782 | ||||||
Net income (loss) attributable to noncontrolling interests in subsidiaries | (14) | (14) | |||||
Ending balance, shares at Dec. 31, 2019 | 350,000 | 50,370,987 | |||||
Ending balance, value at Dec. 31, 2019 | $ 8,089 | $ 50 | (39,272) | 652,003 | (439,656) | 1,833 | 174,958 |
Net loss attributable to Acacia Research Corporation | 113,444 | 113,444 | |||||
Accretion of Series A redeemable convertible preferred stock to redemption value | 2,835 | (2,835) | (2,835) | ||||
Dividend on Series A Redeemable Convertible Preferred Stock | (1,382) | (1,382) | |||||
Stock options exercised, shares | |||||||
Stock options exercised, value | 48 | 48 | |||||
Compensation expense for share-based awards, net of forfeitures, shares | 593,003 | ||||||
Compensation expense for share-based awards, net of forfeitures, value | 1,662 | 1,662 | |||||
Repurchase of common stock, shares | (1,684,537) | ||||||
Repurchase of common stock, value | $ (1) | (3,998) | (3,999) | ||||
Dissolution of Acacia Intellectual Property Fund, L.P. | 1,920 | (496) | (1,424) | ||||
Distributions to noncontrolling interests in subsidiaries | (409) | (409) | |||||
Acquisition of MalinJ1 | 11,042 | 11,042 | |||||
Net income (loss) attributable to noncontrolling interests in subsidiaries | 0 | ||||||
Ending balance, shares at Dec. 31, 2020 | 350,000 | 49,279,453 | |||||
Ending balance, value at Dec. 31, 2020 | $ 10,924 | $ 49 | $ (43,270) | $ 651,416 | $ (326,708) | $ 11,042 | $ 292,529 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) including noncontrolling interests in subsidiaries | $ 113,444 | $ (17,129) |
Adjustments to reconcile net income (loss) including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: | ||
Change in fair value of investment, net (Note 6) | (5,474) | (9,899) |
Loss (gain) on sale of investment (Note 6) | (8,187) | 9,230 |
Impairment of other investment | 0 | 8,195 |
Gain on disposal of other investment (Note 6) | 0 | (2,000) |
Depreciation and amortization | 4,800 | 3,227 |
Amortization of debt discount and issuance costs | 2,838 | 0 |
Change in fair value of Series A redeemable convertible preferred stock embedded derivative | 8,754 | (3,258) |
Change in fair value of Series A warrant | 3,072 | (1,260) |
Change in fair value of Series B warrants | 46,412 | 0 |
Non-cash stock compensation | 1,662 | 1,075 |
Loss on foreign currency exchange | 4,905 | 0 |
Change in value of trading securities and equity securities - private | (176,173) | (2,241) |
Gain on sale of trading securities | (7,352) | 0 |
Gain on sale of prepaid investment and derivative | (2,845) | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | 5 | 32,373 |
Prepaid expenses and other assets | (2,919) | (220) |
Accounts payable and accrued expenses | (2,546) | 109 |
Royalties and contingent legal fees payable | (16) | (20,510) |
Net cash used in operating activities | (19,620) | (2,308) |
Cash flows from investing activities: | ||
Patent acquisition | (13,780) | (4,420) |
Sale of investment at fair value (Note 6) | 12,409 | 6,628 |
Sale of other investments (Note 6) | 0 | 2,000 |
Purchases of trading securities | (46,492) | (147,178) |
Maturities and sales of trading securities | 347,332 | 75,090 |
Acquisition of LF Equity Income Fund equity securities | (280,263) | 0 |
Distributions to noncontrolling interests in operating subsidiary | (409) | 0 |
Purchases of property and equipment | (199) | (183) |
Net cash provided by (used in) investing activities | 18,598 | (68,063) |
Cash flows from financing activities: | ||
Repurchase of common stock | (3,998) | 0 |
Issuance of Senior Secured Notes, net of lender fee | 110,437 | 0 |
Senior Secured Notes issuance costs paid to other parties | (496) | 0 |
Dividend on Series A Redeemable Convertible Preferred Stock | (1,382) | 0 |
Issuance of Series A redeemable convertible preferred stock and Series A warrants, net of issuance costs | 0 | 33,842 |
Issuance of Series B warrants | 4,600 | 0 |
Proceeds from exercise of stock options | 48 | 79 |
Net cash provided by financing activities | 109,209 | 33,921 |
Increase (decrease) in cash and cash equivalents and restricted cash | 108,187 | (36,450) |
Cash and cash equivalents and restricted cash, beginning | 92,359 | 128,809 |
Cash and cash equivalents and restricted cash, ending | $ 200,546 | $ 92,359 |
1. Description of Business
1. Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 1. DESCRIPTION OF BUSINESS Description of Business. Acacia acquires businesses and operating assets that the Company believes to be undervalued and where the Company believes it can leverage its resources and skill sets to realize and unlock value. The Company intends to leverage its (i) access to flexible capital that can be deployed unconditionally, (ii) expertise in corporate governance and operational restructuring, (iii) willingness to invest in out of favor industries and businesses that suffer from a complexity discount and untangle complex, multi-factor situations, and (iv) expertise and relationships in certain sectors, to complete strategic acquisitions of businesses, divisions, and/or assets with a focus on mature technology, healthcare, industrial and certain financial segments. Acacia seeks to identify opportunities where the Company believes it is an advantaged buyer, where the Company can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to the Company’s unique capabilities, relationships, or expertise, or where Acacia believes the target would be worth more to the Company than to other buyers. Acacia operates its business based on three key principles of People, Process and Performance and have built a management team with identified expertise in Research, Execution and Operation of the Company’s targeted acquisitions. Acacia, through its operating subsidiaries, also currently engages in its legacy business of investing in, licensing and enforcing patented technologies. Acacia’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. In recent years, Acacia has also invested in technology companies. Acacia leverages its experience, expertise, data and relationships developed as a leader in the IP industry to pursue these opportunities. In some cases, these opportunities will complement and/or supplement Acacia’s primary licensing and enforcement business. Acacia’s operating subsidiaries generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own. Acacia’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies and, where necessary, with the enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. Acacia’s operating subsidiaries are principals in the licensing and enforcement effort, obtaining control of the rights in the patent portfolio, or control of the patent portfolio outright. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. Neither Acacia nor its operating subsidiaries invent new technologies or products; rather, Acacia depends upon the identification and investment in new patents, inventions and companies that own IP through its relationships with inventors, universities, research institutions, technology companies and others. If Acacia’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth. During fiscal year 2020, Acacia obtained control of five four Acacia was incorporated on January 25, 1993 under the laws of the State of California. In December 1999, Acacia changed its state of incorporation from California to Delaware. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles. Principles of Consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying consolidated statements of Series A redeemable convertible preferred stock and stockholders’ equity for total noncontrolling interests. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 17, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia (see Note 17), is the majority shareholder of MalinJ1. A wholly owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund is included in the Company’s consolidated financial statements since 2010, as Acacia’s wholly owned subsidiary, as the general partner, has the ability to control the operations and activities of the Acacia IP Fund. The Acacia IP Fund was terminated as of December 31, 2017 and dissolved in 2020. Revenue Recognition. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by Acacia (“Paid-up Revenue Agreements”). Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio ("Other Settlements") or sales of our patent portfolio ("Sales"). IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised IP Rights are inputs and (ii) the Company's promise to transfer each individual IP right described above to the customer is not separately identifiable from other promises to transfer IP Rights in the contract. Since the promised IP Rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. Acacia's subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. Acacia’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts with 30-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties, the Company includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they transfer to the licensee. In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the entity transfers promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, the Company is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. Revenues were comprised of the following for the periods presented: 2020 2019 (In thousands) Paid-up Revenue Agreements $ 28,389 $ 6,343 Recurring Revenue Agreements 1,393 4,903 Total Revenue $ 29,782 $ 11,246 Refer to “Inventor Royalties and Contingent Legal Expenses” below for information on related direct costs of revenues. Portfolio Operations. Inventor Royalties and Contingent Legal Expenses. Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Fair Value Measurements. Cash and Cash Equivalents Long Term Restricted Cash Trading Securities- Debt. Trading Securities - Equity. Investment Securities – Private Equity. Impairment of Investments. Concentration of Credit Risks. Three licensees individually accounted for 64%, 10% and 7%, respectively, of revenues recognized during the year ended December 31, 2020. Three licensees individually accounted for 43%, 22% and 15%, respectively, of revenues recognized during the year ended December 31, 2019. Two licensees individually represented approximately 62% and 21%, respectively, of accounts receivable at December 31, 2020. Two licensees individually represented approximately 70% and 17%, respectively, of accounts receivable at December 31, 2019. For 2020 and 2019, 8% and 39%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions, based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable revenue arrangement. The Company does not have any material foreign operations. Acacia performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for doubtful accounts may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheet and a charge to operating expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for doubtful accounts established for the periods presented. Fair Value of Financial Instruments. Property and Equipment. 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) Rental payments on operating leases are charged to expense in the consolidated statements of operations on a straight-line basis over the lease term. Patents. Leases. Investments at Fair Value Other Investments - equity method investments Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity's common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee's losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee's receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Refer to Notes 6 and 17 for additional information. Impairment of Long-lived Assets. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Contingent Liabilities. Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if required to be paid by Acacia or its operating subsidiaries, could materially harm the Company’s operating results and financial position. Stock-Based Compensation. Restricted stock units granted in September 2019 with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a three-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. Assumptions utilized in connection with the Monte Carlo valuation technique included: estimated risk-free interest rate of 1.38 percent; term of 3.00 years; expected volatility of 38 percent; and expected dividend yield of 0 percent. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The expected dividend yield was based on expectations regarding dividend payments. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described at Note 9, and therefore, the vesting conditions do not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the Units are classified as liability awards. Liability classified awards are measured at fair value on the grant date and re-measured each reporting period at fair value until the award is settled. Compensation expense is adjusted each reporting period for changes in fair value prorated for the portion of the requisite service period rendered. Initially, compensation expense was recognized on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which was five years. Upon full vesting of the award, which occurred during the three months ended September 30, 2017, previously unrecognized compensation expense was immediately recognized in the period, and will continue to be fully recognized for any changes in fair value, until the Units are settled. The Company has a purchase option to purchase the vested Units that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the Units on the date of termination of continuous service. At each reporting date, the value of the Units that are subject to the purchase option will be the measured at the fair value on the termination date. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying consolidated statements of operations. Series A Warrants. Series B Warrants. Embedded derivatives The binomial model utilizes the Tsiveriotis and Fernandes (“TF”) implementation in which a convertible instrument is split into two separate components: a cash-only component which is subject to the selected risk-adjusted discount rate and an equity component which is subject only to the risk-free rate. The model considers the (i) implied volatility of the value of our common stock, (ii) appropriate risk-free interest rate, (iii) credit spread, (iv) dividend yield, (v) dividend accrual (and a step-up in rates), and (vi) event probabilities of the various conversion and redemption scenarios. The implied volatility of the Company’s common stock is estimated based on a haircut applied to the historical volatility. A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants, and convertible debt is lower than historical actual realized volatility. The assumed base case term used in the valuation model is the period remaining until November 15, 2027 (the maturity date). The risk-free interest rate is based on the yield on the U.S. Treasury with a remaining term equal to the expected term of the conversion and early redemption options. The significant assumptions utilized in the Company’s valuation of the embedded derivative at December 31, 2020 are as follows: volatility of 29 percent, risk-free rate of 0.62 percent, a credit spread of 19 percent and a dividend yield of 0 percent. The significant assumptions utilized in the Company’s valuation of the embedded derivative at December 31, 2019 are as follows: volatility of 30 percent, risk-free rate of 1.86 percent, a credit spread of 25 percent and a dividend yield of 0 percent. The fair value measurement of the embedded derivative is sensitive to these assumptions and changes in these assumptions could result in a materially different fair value measurement. Income Taxes. Under U.S. generally accepted accounting principles, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Segment Reporting. Use of Estimates Income Per Share. Basic net income (loss) per share of common stock is computed by dividing net (income) loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share of common stock is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury stock method or the as-converted method, or the two-class method for participating securities, whichever is more dilutive. Potentially dilutive common stock equivalents consist of stock options, restricted stock units, unvested restricted stock, Series A Redeemable Convertible Preferred Stock, Series A Warrants, and Series B Warrants. The following table presents the calculation of basic and diluted income per share of common stock: Years Ended December 31, 2020 2019 (In thousands, except share and per share information) Numerator: Net income (loss) attributable to Acacia Research Corporation $ 113,444 $ (17,115 ) Dividend on Series A redeemable convertible preferred stock (1,381 ) – Accretion of Series A redeemable convertible preferred stock (2,835 ) (307 ) Undistributed earnings allocated to participating securities (18,898 ) – Net income (loss) attributable to common stockholders - basic 90,330 (17,422 ) Add: Accretion of Series A redeemable convertible preferred stock – 307 Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative – (3,258 ) Less: Change in fair value of Series A warrants (1,348 ) – Less: Change in fair value of dilutive Series B warrants (5,557 ) – Add: Interest expense associated with Starboard Notes, net of tax 1,889 – Add: Undistributed earnings allocated to participating securities 18,898 – Reallocation of undistributed earnings to participating securities (15,740 ) – Net income (loss) attributable to common stockholders - diluted $ 88,471 $ (20,373 ) Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 48,840,829 49,764,002 Potentially dilutive common shares: Series A Preferred Stock – 1,132,771 Restricted stock units 637,044 – Employee stock options 2,952 – Series A Warrants 77,592 – Series B Warrants 7,876,712 – Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted 57,435,128 50,896,773 Basic net income (loss) per common share $ 1.85 $ (0.35 ) Diluted net income (loss) per common share $ 1.54 $ (0.40 ) Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: Equity-based incentive awards 206,916 1,783,254 Series A warrants – 5,000,000 Series B warrants 68,493,151 – Total 68,700,067 6,783,254 Treasury Stock |
3. Trading Securities
3. Trading Securities | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Trading Securities | 3. TRADING SECURITIES Trading securities for the periods presented were comprised of the following: Cost Gross Gross Fair Value (In thousands) Security Type December 31, 2020: Trading securities - equity $ 36,851 $ 74,099 $ (1,847 ) $ 109,103 December 31, 2019: Trading securities - debt $ 93,712 $ 143 $ (12 ) $ 93,843 Trading securities - equity 17,674 211 (745 ) 17,140 $ 111,386 $ 354 $ (757 ) $ 110,983 Trading securities as of December 31, 2020 and 2019, were comprised of investments in equity securities of publicly held companies (equity securities) and investments in corporate bonds (debt securities). For the year ended December 31, 2020, proceeds from the sale and maturity of debt securities and equity securities were $118,459,000 and $46,383,000, respectively. For the year ended December 31, 2019, proceeds from the sale and maturity of debt securities and equity securities were $49,751,000 and $25,339,000, respectively. |
4. Accrued Expenses
4. Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 4. ACCRUED EXPENSES Accrued expenses consist of the following at December 31, 2020 and 2019: 2020 2019 (In thousands) Accrued legal expenses - patent $ 2,284 $ 6,181 Accrued consulting and other professional fees – 470 Short-term lease liability 589 435 Other accrued liabilities 834 179 $ 3,707 $ 7,265 |
5. Patents
5. Patents | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents | 5. PATENTS Acacia’s only identifiable intangible assets are patents and patent rights, with estimated remaining economic useful lives ranging from one to five years. For all periods presented, all of Acacia’s identifiable intangible assets were subject to amortization. The gross carrying amounts and accumulated amortization related to investments in intangible assets as of December 31, 2020 and 2019 are as follows (in thousands): 2020 2019 Gross carrying amount - patents $ 336,834 $ 330,588 Accumulated amortization - patents (1) (319,922 ) (322,774 ) Patents, net $ 16,912 $ 7,814 _____________ (1) The weighted-average remaining estimated economic useful life of Acacia’s patents and patent rights is 4 years. Scheduled annual aggregate amortization expense is estimated to $4,450,000 in 2021, $4,451,000 in 2022, $4,376,000 in 2023, $3,005,000 in 2024, and $630,000 thereafter. Acacia did not record charges related to the impairment of patent-related intangible assets for the years ended December 31, 2020 and December 31, 2019. There is no accelerated amortization or sales for patent-related assets for the years ended December 31, 2020 and December 31, 2019. |
6. Investment at Fair Value
6. Investment at Fair Value | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of Investments [Abstract] | |
Investment at fair value | 6. INVESTMENT AT FAIR VALUE During 2016 and 2017, Acacia made certain investments in Veritone, Inc. (“Veritone”). As a result of these transactions, Acacia received an aggregate total of 4,119,521 shares of Veritone common stock and warrants to purchase a total of 1,120,432 shares of Veritone common stock at an exercise price of $13.61 per share expiring between 2020 and 2027. During the year ended December 31, 2020, Acacia exercised 963,712 warrants, and recorded a realized gain of $11.5 million. At December 31, 2020, the fair value of the 156,720 remaining warrants held by Acacia totaled $2,752,000. During the year ended December 31, 2019, Acacia sold 1,121,071 shares Veritone common stock and recorded a realized loss of $9.2 million. During the three months ended March 31, 2020, Acacia sold all remaining 298,450 shares Veritone common stock and recorded a realized loss of $3.3 million. Changes in the fair value of Acacia’s investment in Veritone are recorded as unrealized gains or losses in the consolidated statements of operations. For the year ended December 31, 2020, and 2019, the accompanying consolidated statements of operations reflected the following: 2020 2019 (In thousands) Change in fair value of investment, warrants $ 1,996 $ (1,308 ) Change in fair value of investment, common stock 3,478 11,207 Gain on sale of investment, warrants 11,503 – Loss on sale of investment, common stock (3,316 ) (9,230 ) Net realized and unrealized gain on investment at fair value $ 13,661 $ 669 |
7. Stockholders' Equity
7. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 7. STOCKHOLDERS’ EQUITY Repurchases of Common Stock. In determining whether or not to repurchase any shares of Acacia’s common stock, Acacia’s Board of Directors consider such factors as the impact of the repurchase on Acacia’s cash position, as well as Acacia’s capital needs and whether there is a better alternative use of Acacia’s capital. Acacia has no obligation to repurchase any amount of its common stock under the Stock Repurchase Program. Repurchases to date were made in the open market in compliance with applicable SEC rules. The authorization to repurchase shares presented an opportunity to reduce the outstanding share count and enhance stockholder value. The repurchased shares are expected to be retired. Monthly stock repurchases for the periods presented, all of which were purchased as part of a publicly announced plan or program, were as follows: Total Number Average Approximate Dollar Plan Expiration Date March 20, 2020 - March 31, 2020 576,898 $ 2.28 $ 8,686,000 July 31, 2020 April 1, 2020 - April 23, 2020 1,107,639 $ 2.42 $ 6,001,000 July 31, 2020 Totals for 2020 1,684,537 $ 2.37 Tax Benefits Preservation Plan The Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging (i) any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s outstanding common stock and (ii) any existing stockholders who, as of the time of the first public announcement of the adoption of the Plan, beneficially own more than 4.9% of the Company’s then-outstanding shares of the Company’s common stock from acquiring additional shares of the Company’s common stock (subject to certain exceptions). There is no guarantee, however, that the Plan will prevent the Company from experiencing an ownership change. In connection with the adoption of the Plan, Acacia’s Board of Directors authorized and declared a dividend distribution of one right for each outstanding share of the Company’s common stock to stockholders of record at the close of business on March 16, 2019. On or after the distribution date, each right would initially entitle the holder to purchase one one-thousandth of a share of the Company’s Series B Junior Participating Preferred Stock, $0.001 par value for a purchase price of $12.00. The Company also has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. Like the Plan, the purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income. The Charter Provision was approved by the Company’s stockholders on July 15, 2019. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. INCOME TAXES Acacia’s income tax benefit (expense) for the fiscal periods presented consisted of the following: 2020 2019 (in thousands) Current: Federal $ – $ – State (66 ) (34 ) Foreign 1,225 1,858 Total current 1,159 1,824 Deferred: Federal – – State – – Total deferred – – Income tax benefit $ 1,159 $ 1,824 The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following at December 31, 2020 and 2019: 2020 2019 (in thousands) Deferred tax assets: Net operating loss and capital loss carryforwards and credits $ 113,561 $ 112,280 Unrealized loss on investments held at fair value 0 538 Stock compensation 497 358 Fixed assets and intangibles 677 1,316 Basis of investments in affiliates 254 300 Accrued liabilities and other 762 631 State taxes 15 25 Total deferred tax assets 115,766 115,448 Valuation allowance (76,969 ) (115,077 ) Total deferred tax assets, net of valuation allowance 38,797 371 Deferred tax liabilities: ROU Asset (330 ) (347 ) Unrealized loss on investments held at fair value (38,374 ) – Other (93 ) (24 ) Total deferred tax liabilities (38,797 ) (371 ) Net deferred tax assets (liabilities) $ – $ – A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows: 2020 2019 Statutory federal tax rate - (benefit) expense 21% 21% State income and foreign taxes, net of federal tax effect (1)% 7% Foreign tax credit –% –% Noncontrolling interests in operating subsidiaries –% –% Nondeductible permanent items 11% 1% Change in tax rate –% –% Expired capitalized loss –% (2)% Valuation allowance (33)% (13)% Other 1% (4)% (1)% 10% For the periods presented, the Company recorded full valuation allowances against its net deferred tax assets due to uncertainty regarding future realization pursuant to guidance set forth in ASC 740, “Income Taxes.” In future periods, if the Company determines it will more likely than not be able to realize certain of these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the consolidated statements of operations in the period the determination is made. At December 31, 2020, Acacia had U.S. federal and state income tax net operating loss carryforwards (“NOLs”) totaling approximately $274,283,000 and $13,809,000, respectively. For federal income tax purposes, our NOL carryovers generated for tax years beginning before January 1, 2018 will begin to expire in 2026. Pursuant to the Tax Cuts and Jobs Act enacted by the U.S. federal government in December 2017, for federal income tax purposes, NOL carryovers generated for our tax years beginning January 1, 2018 can be carried forward indefinitely but will be subject to a taxable income limitation. Our capital loss carryovers totaled $11,155,000 at December 31, 2020, expiring in 2029. For state income tax purposes, our NOLs will expire between 2028 and 2040. As of December 31, 2020, Acacia had approximately $50,973,000 of foreign tax credits, expiring between 2021 and 2026. In general, foreign taxes withheld may be claimed as a deduction on future U.S. corporate income tax returns, or as a credit against future U.S. income tax liabilities, subject to certain limitations. Tax expense (benefit) for the periods presented primarily reflects foreign taxes withheld and refunded on revenue agreements executed with licensees in foreign jurisdictions and other state taxes. Excluding the impact of the change in valuation allowance, annual effective tax rates were 32% for fiscal year 2020 and 23% for fiscal year 2019. Results for fiscal year 2020 included an unrealized gain on our investment in Veritone which created a deferred tax liability totaling approximately $590,000, and an unrealized gain on our investment in the LF equity income fund portfolio which created a deferred tax liability totaling approximately $37,706,000. Results for fiscal year 2019 included an unrealized loss on Acacia’s investment in Veritone which created a deferred tax asset totaling approximately $538,000. Acacia is subject to taxation in the U.S. and in various state jurisdictions and incurs foreign tax withholdings on revenue agreements with licensees in certain foreign jurisdictions. With no material exceptions, Acacia is no longer subject to U.S. federal or state examinations by tax authorities for years before 2016. The California Franchise Tax Board audited the 2011 through 2016 California combined income tax returns. The California Franchise Tax Board has proposed adjustments for 2011 through 2016 that will result in a reduction in our net operating loss carryforward deferred tax asset of $571,000. As those NOL’s have been subject to a full valuation allowance, the impact of these adjustments has no impact to the consolidated statements of operations for the periods presented. At both December 31, 2020 and 2019, the Company had total unrecognized tax benefits of approximately $731,000. No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. At December 31, 2020, if recognized, approximately $731,000 of tax benefits, net of valuation allowance, would impact the Company’s effective tax rate. The Company does not expect that the liability for unrecognized tax benefits will change significantly within the next 12 months. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months. |
9. Equity-Based Incentive Plans
9. Equity-Based Incentive Plans | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Equity-Based Incentive Plans | 9. EQUITY-BASED INCENTIVE PLANS Stock-Based Incentive Plans The 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) and the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) (collectively, the “Plans”) were approved by the stockholders of Acacia in May 2013 and June 2016, respectively. All Plans allow grants of stock options, stock awards and performance shares with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants. Except as noted below, the terms and provisions of the Plans are identical in all material respects. Acacia’s compensation committee administers the discretionary option grant and stock issuance programs. The compensation committee determines which eligible individuals are to receive option grants or stock issuances under those programs, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding. The exercise price of options is generally equal to the fair market value of Acacia’s common stock on the date of grant. Options generally begin to be exercisable six months to one year after grant and generally expire seven to ten years after grant. Stock options with time-based vesting generally vest over two to three years and restricted shares with time based vesting generally vest in full after one to three years (generally representing the requisite service period). The Plans terminate no later than the tenth anniversary of the approval of the incentive plans by Acacia’s stockholders. The Plans provide for the following separate programs: · Discretionary Option Grant Program · Automatic Option Grant Program · Stock Issuance Program The number of shares of Common Stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. No new additional shares will be added to the 2013 Plan without security holder approval (except for shares subject to outstanding awards that are forfeited or otherwise returned to the 2013 Plan). The stock issuable under the 2013 Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market. In June 2016, 625,390 shares of common stock available for issuance under the 2013 Plan were transferred into the 2016 Plan. At December 31, 2020, there were 378,270 shares available for grant under the 2013 Plan. The number of shares of Common Stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, as of the effective date of the Plan. At December 31, 2020, there were 4,068,308 shares available for grant under the 2016 Plan. Upon the exercise of stock options, the granting of restricted stock, or the delivery of shares pursuant to vested restricted stock units, it is Acacia’s policy to issue new shares of common stock. Acacia’s Board of Directors may amend or modify the Plans at any time, subject to any required stockholder approval. As of December 31, 2020, there are 6,509,469 shares of common stock reserved for issuance under the Plans. Stock-based award grant activity for the periods presented was as follows: 2020 2019 Shares Aggregate fair value (in thousands) Shares Aggregate fair value (in thousands) Restricted stock awards with time-based service conditions 592,000 $ 2,087 777,000 $ 2,332 Restricted stock units with market-based service conditions – – 900,000 1,280 Restricted stock units with time-based service conditions 86,500 276 – – Total incentive awards granted 678,500 $ 2,363 1,677,000 $ 3,612 The following table summarizes stock option activity for the Plans for the year ended December 31, 2020: Weighted-Average Options Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 326,000 $ 4.38 Granted – $ – Exercised (14,000 ) $ 3.60 Expired/forfeited (2,000 ) $ 3.99 Outstanding at December 31, 2020 310,000 $ 4.41 2.2 years $ – Vested 298,000 $ 4.44 2.1 years $ – Exercisable at December 31, 2020 298,000 $ 4.44 2.1 years $ – The aggregate intrinsic value of options exercised during the years ended December 31, 2020 and 2019 was $7,000 and $4,000, respectively. The aggregate intrinsic value of options vested during the year ended December 31, 2020 was $8,000. No options were granted during the year ended December 31, 2020. The aggregate fair value of options vested during the years ended December 31, 2020 and 2019 was $54,000 and $294,000, respectively. As of December 31, 2020, the total unrecognized compensation expense related to non-vested stock option awards was $9,000, which is expected to be recognized over a weighted-average term of approximately 4 months. The following table summarizes non-vested restricted share activity for the year ended December 31, 2020: Nonvested Weighted Nonvested restricted stock at December 31, 2019 476,000 $ – Granted 592,000 $ 3.52 Vested (353,000 ) $ 3.12 Canceled (31,000 ) $ 2.85 Nonvested restricted stock at December 31, 2020 684,000 $ 3.38 The weighted-average grant date fair value of non-vested restricted stock granted during the years ended December 31, 2020 and 2019 was $3.38 and $2.98, respectively. The aggregate fair value of restricted stock that vested during the years ended December 31, 2020 and 2019 was $1,101,000 and $672,000, respectively. As of December 31, 2020, unrecognized compensation expense related to non-vested restricted stock awards was $2,023,000, which is expected to be recognized over a weighted-average term of approximately 2 years. The following table summarizes restricted stock units activity for the year ended December 31, 2020: Nonvested Weighted Nonvested restricted stock units at December 31, 2019 900,000 $ 1.42 Granted 166,500 $ 3.19 Vested – $ – Canceled (80,000 ) $ 3.19 Nonvested restricted stock units at December 31, 2020 986,500 $ 1.58 Vested restricted stock units at December 31, 2020 14,000 $ 16.72 The weighted-average grant date fair value of restricted units granted during the years ended December 31, 2020 was $3.19. The aggregate fair value of restricted stock units granted during the year ended December 31, 2020 was $276,000. The aggregate fair value of restricted stock units granted during the year ended December 31, 2019 was $1,280,000. No restricted stock units were vested during the years ended December 31, 2020 and 2019. As of December 31, 2020, unrecognized compensation expense related to non-vested restricted stock units was $936,000, which is expected to be recognized over a weighted-average term of approximately 2 years. Profits Interest Plan On February 16, 2017, AIP Operation LLC, a Delaware limited liability company (“AIP”), and an indirect subsidiary of Acacia, adopted a Profits Interest Plan (the “Plan”) that provides for the grant of membership interests in AIP to certain members of management and the Board of Directors of Acacia as compensation for services rendered for or on behalf of AIP. Each profits interest unit granted pursuant to the Plan is intended to qualify as a “profits interest” for U.S. federal income tax purposes and will only have value to the extent the fair value of AIP increases beyond the fair value at the issuance date of the membership interests. The membership interests are represented by units (the “Units”) reserved for the issuance of awards under the Plan. The Units entitle the holders to share in or be allocated certain AIP profits and losses and to receive or share in AIP distributions pursuant to the AIP Limited Liability Company Operating Agreement entered into as of February 16, 2017 (the “LLC Agreement”). In connection with the adoption of the Plan, a form of Profits Interest Agreement was approved pursuant to which Units may be granted from time to time. Units vest upon AIP’s achievement of certain performance milestones (one-third upon 150% appreciation, and the remaining two-thirds upon 300% appreciation in value of Acacia’s aggregate investment in Veritone), subject to the continued service of the recipient, and are subject to the terms and conditions of the Plan, the Profits Interest Agreement and the LLC Agreement. The Units were fully vested in September 2017. Acacia owns 60% of the membership interests in AIP and at all times will control AIP. Profits interests totaling 400 Units, or 40% of the membership interests in AIP, were granted in February 2017, with an aggregate grant date fair value of $722,000. The carrying value of the Units totaled $591,000 as of December 31, 2020, based on the fair value of the Units at the recipient’s service termination date. Upon full vesting of the units in September 2017, all previously unrecognized compensation expense was immediately recognized. As of December 31, 2020, AIP holds the Veritone warrants described at Note 6. Stock compensation expense is recognized in general and administrative expenses. Compensation expense for the periods presented was comprised of the following: 2020 2019 (in thousands) Restricted stock awards with time-based service conditions $ 1,155 $ 907 Restricted stock units awards with time-based service conditions 43 – Restricted stock units with market-based vesting conditions 427 140 Stock options with time-based service vesting conditions 37 28 Total compensation expense $ 1,662 $ 1,075 |
10. Commitments and Contingenci
10. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. COMMITMENTS AND CONTINGENCIES Facility Leases The Company primarily leases office facilities under operating lease arrangements that will end in various years through July 2024. On June 7, 2019, we entered into a building lease agreement (the “New Lease”) with Jamboree Center 4 LLC (the “Landlord”). Pursuant to the New Lease, we have leased approximately 8,293 square feet of office space in Irvine, California. The New Lease commenced on August 1, 2019. The term of the New Lease is 60 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. The Company leased a facility under an operating lease agreement (the “Old Lease”), the term of which ended on January 31, 2020. The Company ceased using the facility in December 2018 and the subleased the facility for the remainder of the Old Lease term. All sublease income under the Old Lease was received and recorded in 2019. No sublease income on the Old Lease was recognized in 2020. On January 7, 2020, we entered into a building lease agreement (the “New York Office Lease”) with Sage Realty Corporation (the “New York Office Landlord”). Pursuant to the New York Office Lease, we have leased approximately 4,000 square feet of office space in New York, New York. The New York Office Lease commenced on February 1, 2020. The term of the New York Office Lease is 24 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. Operating lease costs, net of sublease income, were $603,000, and $426,000 for the years ended December 31, 2020 and 2019, respectively. The table below presents aggregate future minimum payments due under the New Lease and the Old Lease, reconciled to lease liabilities included in the consolidated balance sheet as of December 31, 2020: Operating Leases (In thousands) 2021 $ 588 2022 370 2023 364 2024 218 Thereafter – Total minimum payments $ 1,540 Less: short-term lease liabilities (589 ) Long-term lease liabilities $ 951 Inventor Royalties and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, certain of Acacia’s operating subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. Acacia’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. Patent Enforcement Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. Other Acacia is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. On December 6, 2017, the Federal Court of Canada allowed a counterclaim for invalidity of a patent asserted by Rapid Completions LLC and awarded costs payable by Rapid Completions LLC in an amount to be determined. On September 6, 2019, Slingshot Technologies, LLC (“Slingshot”) filed a lawsuit in Delaware Chancery Court against the Company and Acacia Research Group, LLC (collectively, the “Acacia Entities”), Monarch Networking Solutions LLC (“Monarch”), Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd. (“Transpacific”). Slingshot alleges that the Acacia Entities and Monarch misappropriated its confidential and proprietary information, purportedly furnished to the Acacia Entities and Monarch by Ms. Wolanyk, in acquiring a patent portfolio from Transpacific after Slingshot’s exclusive option to purchase the same patent portfolio from Transpacific had already expired. Slingshot seeks monetary damages, as well as equitable and injunctive relief related to its alleged right to own the portfolio. On March 15, 2021, the court issued orders granting Monarch’s motion to dismiss for lack of personal jurisdiction and Ms. Wolanyk’s motion to dismiss for lack of subject matter jurisdiction. The Acacia Entities maintain that Slingshot’s allegations are baseless, that the Acacia Entities neither had access to nor used Slingshot’s information in acquiring the portfolio, that the Acacia Entities acquired the portfolio as a result of the independent efforts of its IP licensing group, and that Slingshot suffered no damages given its exclusive option to purchase the portfolio had already ended and it has proven itself incapable of closing on the portfolio purchase. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia’s consolidated financial position, results of operations or cash flows. Fiscal year 2020 operating expenses included a net income for settlement offset by contingency accruals totaling $308,000, net of prior accruals. Refer to Note 4 for information on accrued expenses. Guarantees and Indemnifications Certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases. Acacia indemnifies its directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, Acacia has a directors and officers insurance policy that may reduce its exposure in certain circumstances and may enable it to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make. To date, Acacia has made no payments related to these guarantees and indemnities. Acacia estimates the fair value of its indemnification obligations to be insignificant based on this history and therefore, have not recorded any liability for these guarantees and indemnities in the accompanying consolidated balance sheets. Additionally, no events or transactions have occurred that would result in a material liability at December 31, 2020. |
11. Retirement Savings Plan and
11. Retirement Savings Plan and Executive Severance Policy | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Savings Plan and Executive Severance Policy | 11. RETIREMENT SAVINGS PLAN AND EXECUTIVE SEVERANCE POLICY Retirement Savings Plan. Executive Severance Policy. |
12. Supplemental Cash Flow Info
12. Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | 12. SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for state income taxes totaled $118,000 and $85,000 for the years ended December 31, 2020 and 2019, respectively. Foreign taxes refunded totaled $3,600,000 and foreign taxes withheld totaled $249,000 for the years ended December 31, 2020 and 2019, respectively. |
13. Recent Accounting Pronounce
13. Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 13. RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements - Not Yet Adopted. In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, to remove certain exceptions and improve consistency of application, including, among other things, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The amendments in this update will be effective for the Company beginning with fiscal year 2021, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. Management is currently evaluating the impact that the amendments in this update will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses. The amendments in this update will be effective for the Company in fiscal year 2023, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update will have on the Company’s consolidated financial statements. |
14. Fair Value Measurements
14. Fair Value Measurements | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 14. FAIR VALUE MEASUREMENTS U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i) Level 1 - Observable Inputs (ii) Level 2 - Pricing Models with Significant Observable Inputs (iii) Level 3 - Unobservable Inputs Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. Acacia holds the following types of financial instruments at December 31, 2020 and 2019. Trading securities - debt. Trading securities - equity. Investments at fair value - common stock Investments at fair value - warrants. Series A Warrants. Series B Warrants. Embedded derivative liability. Financial assets and liabilities measured at fair value on a recurring basis were as follows: Level 1 Level 2 Level 3 (In thousands) Assets as of December 31, 2020: Trading securities - equity $ 109,103 $ – $ – Investment at fair value - warrants (Note 6) – 2,752 – Total recurring fair value measurements as of December 31, 2020 $ 109,103 $ 2,752 $ – Assets as of December 31, 2019: Trading securities - debt $ – $ 93,843 $ – Trading securities - equity 17,140 – – Investment at fair value - warrants (Note 6) – 757 – Investment at fair value - common stock (Note 6) 743 – – Total recurring fair value measurements as of December 31, 2019 $ 17,883 $ 94,600 $ – Liabilities as of December 31, 2020: Series A warrants $ – $ 6,640 $ – Series B warrants – – 52,341 Embedded derivative liability – – 26,728 Total liabilities as of December 31, 2020 $ – $ 6,640 $ 79,069 Liabilities as of December 31, 2019: Series A warrants $ – $ 3,568 $ – Embedded derivative liability – – 17,974 Total liabilities as of December 31, 2019 $ – $ 3,568 $ 17,974 The following table sets forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which are measured at fair value as a on a recurring basis: Series A Preferred Stock Embedded Derivative Liability Series B Warrants Liability (In thousands) Opening balance as of January 1, 2019 Issuance of Series A warrants $ 21,232 $ Remeasurement to fair value (3,258 ) – Balance as of December 31, 2019 $ 17,974 $ – Issuance of Series B warrants 4,600 Remeasurement to fair value 8,754 47,741 Balance as of December 31, 2020 $ 26,728 $ 52,341 |
15. Related Party Transactions
15. Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15. RELATED PARTY TRANSACTIONS During the year ended December 31, 2019, the Company purchased shares of common stock of Drive Shack, Inc. (“Drive Shack”) for an aggregate purchase price of $2.4 million. Drive Shack and Clifford Press, Chief Executive Officer and director of Acacia, are related parties as Mr. Press is a board member of Drive Shack. The market value of the investment was $1.4 million and $2.1 million for the years ended December 31, 2020, and December 31, 2019, respectively. During the years ended December 31, 2020 and 2019, the Company recognized unrealized losses from the investment of $998,000 and $263,000, respectively. |
16. Starboard Investment
16. Starboard Investment | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
Starboard Investment | 16. STARBOARD INVESTMENT Series A Redeemable Convertible Preferred Stock. The Series A Redeemable Convertible Preferred Stock can be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $3.65 (subject to certain anti-dilution adjustments). Holders may elect to convert the Series A Redeemable Convertible Preferred Stock into common stock at any time. The Company may elect to convert the Series A Redeemable Convertible Preferred Stock into shares of Common Stock any time on or after November 15, 2025, provided that the closing price of the Company’s common stock equals or exceeds 190% of the conversion price for 30 consecutive trading days and assuming certain other conditions of the common stock have been met. Holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the periods of May 15, 2021 through August 15, 2021 and May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $50.0 million aggregate principal of senior secured notes to Starboard pursuant to the Securities Purchase Agreement at the time of the redemption. Holders also have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the period of November 15, 2024 through February 15, 2025. Additionally, holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock upon the occurrence of (i) a change of control or (ii) various other triggering events, such as the suspension from trading or delisting of the Company’s common stock. If the Series A Redeemable Convertible Preferred Stock is redeemed at the option of the holders, the redemption price may include a make-whole amount or a stated premium, depending on the redemption scenario. The Company may redeem all, and not less than all, of the Series A Redeemable Convertible Preferred Stock (i) upon a change of control or (ii) during the period of May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $50.0 million aggregate principal of the senior secured notes at the time of the redemption, and assuming certain conditions of the common stock have been met. If the Series A Redeemable Convertible Preferred Stock is redeemed at the option of the Company, the redemption price would include a make-whole amount or a 15% premium depending on the circumstances. If any Series A Redeemable Convertible Preferred Stock remains outstanding on November 15, 2027, the Company shall redeem such Series A Redeemable Convertible Preferred Stock in cash. In all redemption scenarios, the redemption price for the Series A Redeemable Convertible Preferred Stock includes the stated value plus accrued and unpaid dividends. In addition, depending on the redemption scenario, the redemption price may also include a make-whole amount or stated premium as described above. When the Company issues Notes, the Holder may exchange the Series A Redeemable Convertible Preferred Stock for (i) Notes and (ii) Series B Warrants to purchase common stock. The Series A Redeemable Convertible Preferred Stock accrues cumulative dividends quarterly at annual rate of 3.0% on the stated value. Upon consummation of the approved investment in June 2020, the dividend rate increased to 8.0% on the stated value. Upon certain triggering events, the dividend rate will increase to 7.0% if the triggering event occurs before an approved investment or 10.0% on the stated value if the triggering event occurs after an approved investment. In connection with the approved investment in June 2020, the Company and Starboard agreed that the dividend rate on the Series A Redeemable Convertible Preferred Stock would accrue at 3.0% so long as no triggering event occurs and the Company maintains $35 million in escrow. Series A Redeemable Convertible Preferred Stock also participates on an as-converted basis in any regular or special dividends paid to common stockholders. No accrued and unpaid dividends as of December 31, 2020. Holders of the Series A Redeemable Convertible Preferred Stock have the right to vote with common stockholders on an as-converted basis on all matters. Holders of Series A Redeemable Convertible Preferred Stock will also be entitled to a separate class vote with respect to amendments to the Company’s organizational documents that generally have an adverse effect on the Series A Redeemable Convertible Preferred Stock. Upon liquidation of the Company, holders of Series A Redeemable Convertible Preferred Stock have a liquidation preference over holders of our common stock and will be entitled to receive, prior to any distribution to holders of our common stock, an amount equal to the greater of (i) the stated value plus accrued and unpaid dividends or (ii) the amount that would have been received if the Series A Redeemable Convertible Preferred Stock had been converted into common stock immediately prior to the liquidation event at the then effective conversion price. The Company determined that certain features of the Series A Redeemable Convertible Preferred Stock should be bifurcated and accounted for as a derivative. Each of these features are bundled together as a single, compound embedded derivative. Total proceeds received and transaction costs incurred from the issuance of the Series A Redeemable Convertible Preferred Stock amounted to $35 million and $1.3 million, respectively. Proceeds received were allocated based on the fair value of the instrument without the Series A Warrants and of the Series A Warrants themselves at the time of issuance. The proceeds allocated to the Series A Redeemable Convertible Preferred Stock were then further allocated between the host preferred stock instrument and the embedded derivative, with the embedded derivative recorded at fair value and the Series A Redeemable Convertible Preferred Stock recorded at the residual amount. The portion of the proceeds allocated to the Series A Warrants, embedded derivative, and Series A Redeemable Convertible Preferred Stock was $4.8 million, $21.2 million, and $8.9 million, respectively. Transaction costs were also allocated between the Series A Redeemable Convertible Preferred Stock and the Series A Warrants on the same basis as the proceeds. The transaction costs allocated to the Series A Redeemable Convertible Preferred Stock were treated as a discount to the Series A Redeemable Convertible Preferred Stock. The transaction costs allocated to the Series A Warrants were expensed as incurred. The Company classifies the Series A Redeemable Convertible Preferred Stock as mezzanine equity as the instrument will become redeemable at the option of the holder in various scenarios or otherwise on November 15, 2027. As it is probable that the Series A Redeemable Convertible Preferred Stock will become redeemable, the Company accretes the instrument to its redemption value using the effective interest method and recognizes any changes against additional paid in capital in the absence of retained earnings. Accretion for the year ended December 31, 2020 was $2.8 million. In connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company executed a Registration Rights Agreement and a Governance Agreement with Starboard. Under the Registration Rights Agreement, the Company agreed to provide certain registration rights with respect to the Series A Redeemable Convertible Preferred Stock and shares of Common Stock issued upon conversion. In accordance with the Governance Agreement, the Company agreed to (i) increase the size of the Board of Directors from six to seven members, (ii) appoint a director of the Company, (iii) grant Starboard the right to recommend two additional directors for appointment to the board, (iv) form a Strategic Committee of the Board tasked with sourcing and performing due diligence on potential acquisition targets, (v) appoint certain directors to the Strategic Committee, and (vi) appoint a director to the Nominating and Corporate Governance Committee. The following features of the Series A Redeemable Convertible Preferred Stock are required to be bifurcated from the host preferred stock and accounted for separately as an embedded derivative: (i) the right of the holders to redeem the shares (the “put option”), (ii) the right of the holders to receive common stock upon conversion of the shares (the “conversion option”), (iii) the right of the Company to redeem the shares (the “call option”), and (iv) the change in dividend rate upon consummation of an approved investment or a triggering event (the “contingent dividend rate feature”). These features are required to be accounted for separately from the Series A Redeemable Convertible Preferred Stock because the features were determined to be not clearly and closely related to the debt-like host and also did not meet any other scope exceptions for derivative accounting. Therefore, these features are bundled together and are accounted for as a single, compound embedded derivative liability. Accordingly, we have recorded an embedded derivative liability representing the combined fair value of each of these features. The embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded in the “Change in fair value of redeemable preferred stock embedded derivative” financial statement line item of the accompanying consolidated statements of operations. As of December 31, 2020, the fair value of the Series A embedded derivative was $26.7 million. Series A Warrants. The Series A Warrants are classified as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity, as the agreement provides for net cash settlement upon a change in control, which is outside the control of the Company. Series B Warrants. In connection with the issuance of the Notes on June 4, 2020, the terms of certain of the Series B Warrants were amended to permit the payment of the lower exercise price of $3.65 through the payment of cash, rather than only through the cancellation of Notes outstanding, at any time until the expiration date of November 15, 2027. Only 31,506,849 of the Series B Warrants are subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms. As of December 31, 2020, the Series B Warrants have not been exercised. The Series B Warrants will be recognized at fair value at each reporting period until exercised, with changes in fair value recognized in the consolidated statements of operations in other income (expense). As of December 31, 2020, the fair value of the Series B Warrants was $52.3 million. The Series B Warrants are classified as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity, as the agreement provides for net cash settlement upon a change in control, which is outside the control of the Company. Senior Secured Notes. On June 30, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Merton Acquisition HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merton”) and Starboard, on behalf of itself and on behalf of certain funds and accounts under its management, including the holders of the Notes. Pursuant to the Exchange Agreement, the holders of the Notes exchanged the entire outstanding principal amount for new senior notes (the “New Notes”) issued by Merton having an aggregate outstanding original principal amount of $115 million. The New Notes bear interest at a rate of 6.00% per annum and had a maturity date of December 31, 2020. The New Notes are fully guaranteed by the Company and are secured by an all-assets pledge of the Company and Merton and non-recourse equity pledges of each of the Company’s material subsidiaries. Pursuant to the Exchange Agreement, the New Notes (i) are deemed to be “Notes” for purposes of the Securities Purchase Agreement, (ii) are deemed to be “June 2020 Approved Investment Notes” for purposes of the Supplemental Agreement, and therefore the Company has agreed to redeem $80 million principal amount of the New Notes by September 30, 2020 (the “Initial Redemption Date”) and $35 million principal amount of the New Notes by December 31, 2020 (the “Final Redemption Date”), and (iii) are deemed to be “Notes” for the purposes of the Series B Warrants, and therefore may be tendered pursuant to a Note Cancellation under the Series B Warrants on the terms set forth in the Series B Warrants and the New Notes. Delivery of notes in the form of the New Notes will also satisfy the delivery of Exchange Notes pursuant to Section 16(i) of the Certificate of Designations of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share. The New Notes will not be deemed to be “Notes” for the purposes of the Registration Rights Agreement, dated as of November 18, 2019, by and among the Company, Starboard and the Buyers. Because the New Notes will be settled within twelve months pursuant to their terms, they are classified as current liabilities on the balance sheet. The Company capitalized $4.6 million in lender fees and $0.5 million in other issuance costs associated with the issuance of the Notes. The $4.6 million of lender fees are recognized as long term deferred debt issuance cost and will be amortized to interest expense until November 15, 2027, the maturity date of Series A Redeemable Convertible Preferred Stock. The $0.5 million issuance costs are recognized as a discount on the Notes and will be amortized to interest expense over the contractual life of the Notes. There is $0.9 million accrued and unpaid interest on the New Note as of December 31, 2020. On January 29, 2021, the Company redeemed $50 million of the New Notes, and the parties agreed that the Company will redeem the remaining $65 million of the principal amount of the New Notes on or before July 15, 2021. Modifications to Series A Redeemable Convertible Preferred Stock and Series B Warrants. We analyzed the amendments to the Series A Redeemable Convertible Preferred Stock and determined that the amendments were not significant. Therefore, the amendments are accounted for as a modification on a prospective basis. The incremental fair value of the Series B Warrants associated with their modification in connection with the issuance of the Notes is $1.3 million and is recognized as a discount on the Notes and will be amortized to interest expense over the contractual life of the Notes. For the year ended December 31, 2020, $1,158,000 was amortized to interest expense. As of December 31, 2020, $171,000 is remaining to be amortized until the Final Redemption Date of July 15, 2021. |
17. LF Equity Income Fund Portf
17. LF Equity Income Fund Portfolio Investment | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
LF Equity Income Fund Portfolio Investment | 17. LF EQUITY INCOME FUND PORTFOLIO INVESTMENT On April 3, 2020, the Company entered into an Option Agreement with Seller, which included general terms through which the Company was provided the option to purchase life sciences equity securities in a portfolio of public and private companies (“Portfolio Companies”) for an aggregate purchase price of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020. On June 4, 2020, the Company executed the Transaction Agreement between Link Fund Solutions Limited, Seller, and the Company. Pursuant to the Transaction Agreement, the Company will purchase from Seller and Seller will transfer to the Company the specified equity securities of all Portfolio Companies at set prices at various future dates. The transfer dates will vary among the Portfolio Companies as the Transaction Agreement gives the Company the exclusive right to determine when to call for transfer of each security, and because each Portfolio Company (or its existing equity holders) may be required to approve the transfer due to rights of first refusals and other company-specific terms and conditions. Thus, the execution of the Transaction Agreement resulted in forward contracts for the Company to purchase equity securities in each public and private company at a specified price on a future date. In accordance with the Transaction Agreement, the Company transferred the total purchase price of £223.9 million into an escrow account. Upon the transfer Companies were for such Portfolio Companies As of December 31, 2020, all of the equity securities in the Portfolio Companies were transferred to the Company pursuant to the Transaction Agreement. The Company has sold a portion of the equity securities of such Portfolio Companies while retaining an interest in a number of operating businesses, including a controlling interest in one of the Portfolio Companies. For accounting purposes, the total purchase price of the portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. During the year ended December 31, 2020, Seller returned a total of £4.5 million of the Company’s prepaid investment upon the failure to obtain the approval of the existing equity holders, pursuant to their rights of first refusals, of one of the Portfolio Companies in connection with the transfer of its securities. In addition, due to an ownership restriction applicable to one of the Portfolio Companies, the Company sold a small portion of an equity securities derivative for £33,000 before the remaining shares of such Portfolio Company could be transferred to us. The Company recognized a net gain of $2.8 million related to the returned prepaid investments and sale of the derivative. Changes in the fair value of Acacia’s investment in the Portfolio Companies are recorded as unrealized gains or losses in the consolidated statements of operations. For the year ended December 31, 2020, the accompanying consolidated statements of operations reflected the following: Years Ended December 31, 2020 2019 (In thousands) Change in fair value of trading security - LF Fund public securities $ 72,104 $ – Change in fair value of investment security - LF Fund private securities 103,751 – Loss on sale of trading security - LF Fund public securities (3,930 ) – Gain on sale of prepaid investment and derivative 2,845 – Net realized and unrealized gain on investment in LF Fund securities $ 174,770 $ – As part of the Company’s acquisition of equity securities in the Portfolio Companies, the Company acquired a majority interest in the equity securities of MalinJ1, which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as it owns 37.9% of outstanding shares of Viamet. |
18. Quarterly Financial Data (U
18. Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | 18. QUARTERLY FINANCIAL DATA (unaudited) The following table sets forth unaudited consolidated statements of operations data for the eight quarters in the period ended December 31, 2020. This information has been derived from Acacia’s unaudited condensed consolidated financial statements that have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the information when read in conjunction with the audited consolidated financial statements and related notes thereto. Acacia’s quarterly results have been, and may in the future be, subject to significant fluctuations. As a result, Acacia believes that results of operations for interim periods should not be relied upon as any indication of the results to be expected in any future periods. Quarter Ended Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2020 2020 2020 2020 2019 2019 2019 2019 (Unaudited, in thousands, except share and per share information) Revenues $ 4,383 $ 19,466 $ 2,118 $ 3,815 $ 688 $ 1,711 $ 5,460 $ 3,387 Portfolio operations: Inventor royalties 506 5,772 645 426 192 776 2,623 1,353 Contingent legal fees 564 6,609 12 234 4 35 375 177 Patent acquisition expenses – – – – – – – – Litigation and licensing expenses - patents 2,186 1,001 1,459 1,037 1,160 987 1,855 3,801 Amortization of patents 1,159 1,174 1,305 1,043 857 863 818 656 Other portfolio expenses – – (74 ) (234 ) 1,581 (475 ) – 650 Total portfolio operations 4,415 14,556 3,347 2,506 3,794 2,186 5,671 6,637 Net portfolio income (loss) (32 ) 4,910 (1,229 ) 1,309 (3,106 ) (475 ) (211 ) (3,250 ) General and administrative expenses (including non-cash stock compensation expense) 6,387 7,692 5,519 4,878 4,328 4,630 3,763 3,655 Impairment of patent-related intangible assets – – – – – – – – Operating income (loss) (6,419 ) (2,782 ) (6,748 ) (3,569 ) (7,434 ) (5,105 ) (3,974 ) (6,905 ) Total other income (expense) 86,756 41,213 12,894 (9,060 ) 5,921 (2,503 ) (1,774 ) 2,821 Income (loss) before provision for income taxes 80,337 38,431 6,146 (12,629 ) (1,513 ) (7,608 ) (5,748 ) (4,084 ) Provision for income taxes (98 ) (83 ) 2 1,338 2,147 – (9 ) (314 ) Net income (loss) including noncontrolling interests 80,239 38,348 6,148 (11,291 ) 634 (7,608 ) (5,757 ) (4,398 ) Net (income) loss attributable to noncontrolling interests in subsidiaries – – – – – – – 14 Net income (loss) attributable to Acacia Research Corporation $ 80,239 $ 38,348 $ 6,148 ($ 11,291 ) $ 634 ($ 7,608 ) ($ 5,757 ) ($ 4,384 ) Net income (loss) attributable to common shareholders - basic $ 65,180 $ 30,529 $ 4,201 $ (12,185 ) $ 327 $ (7,608 ) $ (5,757 ) $ (4,384 ) Basic income (loss) per share $ 1.34 $ 0.63 $ 0.09 ($ 0.24 ) $ 0.01 ($ 0.15 ) ($ 0.12 ) ($ 0.09 ) Weighted-average number of shares outstanding, basic 48,508,903 48,467,885 48,457,620 49,875,396 49,875,750 49,828,361 49,696,016 49,655,881 Net loss attributable to common stockholders - diluted $ 65,352 $ 29,204 $ 4,201 $ (12,185 ) $ (2,624 ) $ (7,608 ) $ (5,757 ) $ (4,384 ) Diluted net income (loss) per common share $ 1.33 $ 0.32 $ 0.09 ($ 0.24 ) ($ 0.05 ) ($ 0.15 ) ($ 0.12 ) ($ 0.09 ) Weighted average number of shares outstanding - diluted 49,244,141 90,624,702 49,033,824 49,875,396 54,406,835 49,828,361 49,696,016 49,655,881 |
19. Subsequent Events
19. Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 19. SUBSEQUENT EVENTS On January 29, 2021, the Company redeemed $50 million of the New Notes, and the parties agreed that the Company will redeem the remaining $65 million of the principal amount of the New Notes on or before July 15, 2021. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounting Principles | Accounting Principles. |
Principles of Consolidation | Principles of Consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying consolidated statements of Series A redeemable convertible preferred stock and stockholders’ equity for total noncontrolling interests. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 17, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia (see Note 17), is the majority shareholder of MalinJ1. A wholly owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund is included in the Company’s consolidated financial statements since 2010, as Acacia’s wholly owned subsidiary, as the general partner, has the ability to control the operations and activities of the Acacia IP Fund. The Acacia IP Fund was terminated as of December 31, 2017 and dissolved in 2020. |
Revenue Recognition | Revenue Recognition. For the periods presented, revenue contracts executed by the Company primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by Acacia (“Paid-up Revenue Agreements”). Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio ("Other Settlements") or sales of our patent portfolio ("Sales"). IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to transfer combined items to which the promised IP Rights are inputs and (ii) the Company's promise to transfer each individual IP right described above to the customer is not separately identifiable from other promises to transfer IP Rights in the contract. Since the promised IP Rights are not individually distinct, the Company combined each individual IP right in the contract into a bundle of IP rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. Acacia's subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. Acacia’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant (i.e., transfer of control) of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts with 30-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties, the Company includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they transfer to the licensee. In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the entity transfers promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, the Company is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. Revenues were comprised of the following for the periods presented: 2020 2019 (In thousands) Paid-up Revenue Agreements $ 28,389 $ 6,343 Recurring Revenue Agreements 1,393 4,903 Total Revenue $ 29,782 $ 11,246 Refer to “Inventor Royalties and Contingent Legal Expenses” below for information on related direct costs of revenues. |
Portfolio Operations | Portfolio Operations. |
Inventor Royalties and Contingent Legal Expenses | Inventor Royalties and Contingent Legal Expenses. Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. |
Fair Value Measurements | Fair Value Measurements. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Long Term Restricted Cash | Long Term Restricted Cash |
Trading Securities- Debt | Trading Securities- Debt. |
Trading Securities - Equity | Trading Securities - Equity. |
Investment Securities - Private Equity | Investment Securities – Private Equity. |
Impairment of Investments | Impairment of Investments. |
Concentration of Credit Risk | Concentration of Credit Risks. Three licensees individually accounted for 64%, 10% and 7%, respectively, of revenues recognized during the year ended December 31, 2020. Three licensees individually accounted for 43%, 22% and 15%, respectively, of revenues recognized during the year ended December 31, 2019. Two licensees individually represented approximately 62% and 21%, respectively, of accounts receivable at December 31, 2020. Two licensees individually represented approximately 70% and 17%, respectively, of accounts receivable at December 31, 2019. For 2020 and 2019, 8% and 39%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions, based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable revenue arrangement. The Company does not have any material foreign operations. Acacia performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for doubtful accounts may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheet and a charge to operating expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for doubtful accounts established for the periods presented. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. |
Property and Equipment | Property and Equipment. 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) Rental payments on operating leases are charged to expense in the consolidated statements of operations on a straight-line basis over the lease term. |
Patents | Patents. |
Leases | Leases. |
Investments at Fair Value | Investments at Fair Value |
Other Investments | Other Investments - equity method investments Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity's common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee's losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee's receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Refer to Notes 6 and 17 for additional information. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. |
Contingent Liabilities | Contingent Liabilities. Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if required to be paid by Acacia or its operating subsidiaries, could materially harm the Company’s operating results and financial position. |
Stock-Based Compensation | Stock-Based Compensation. Restricted stock units granted in September 2019 with market-based vesting conditions vest based upon the Company achieving specified stock price targets over a three-year period. The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique. Compensation cost is recognized with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. Assumptions utilized in connection with the Monte Carlo valuation technique included: estimated risk-free interest rate of 1.38 percent; term of 3.00 years; expected volatility of 38 percent; and expected dividend yield of 0 percent. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The expected dividend yield was based on expectations regarding dividend payments. Profits Interest Units (“Units”) are accounted for in accordance with Accounting Standards Codification (“ASC”) 718-10, “Compensation - Stock Compensation.” The Units vest as described at Note 9, and therefore, the vesting conditions do not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the Units are classified as liability awards. Liability classified awards are measured at fair value on the grant date and re-measured each reporting period at fair value until the award is settled. Compensation expense is adjusted each reporting period for changes in fair value prorated for the portion of the requisite service period rendered. Initially, compensation expense was recognized on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which was five years. Upon full vesting of the award, which occurred during the three months ended September 30, 2017, previously unrecognized compensation expense was immediately recognized in the period, and will continue to be fully recognized for any changes in fair value, until the Units are settled. The Company has a purchase option to purchase the vested Units that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the Units on the date of termination of continuous service. At each reporting date, the value of the Units that are subject to the purchase option will be the measured at the fair value on the termination date. Non-cash stock compensation expense related to the Units is reflected in general and administrative expense in the accompanying consolidated statements of operations. |
Series A Warrants | Series A Warrants. |
Series B Warrants | Series B Warrants. |
Embedded Derivatives | Embedded derivatives The binomial model utilizes the Tsiveriotis and Fernandes (“TF”) implementation in which a convertible instrument is split into two separate components: a cash-only component which is subject to the selected risk-adjusted discount rate and an equity component which is subject only to the risk-free rate. The model considers the (i) implied volatility of the value of our common stock, (ii) appropriate risk-free interest rate, (iii) credit spread, (iv) dividend yield, (v) dividend accrual (and a step-up in rates), and (vi) event probabilities of the various conversion and redemption scenarios. The implied volatility of the Company’s common stock is estimated based on a haircut applied to the historical volatility. A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants, and convertible debt is lower than historical actual realized volatility. The assumed base case term used in the valuation model is the period remaining until November 15, 2027 (the maturity date). The risk-free interest rate is based on the yield on the U.S. Treasury with a remaining term equal to the expected term of the conversion and early redemption options. The significant assumptions utilized in the Company’s valuation of the embedded derivative at December 31, 2020 are as follows: volatility of 29 percent, risk-free rate of 0.62 percent, a credit spread of 19 percent and a dividend yield of 0 percent. The significant assumptions utilized in the Company’s valuation of the embedded derivative at December 31, 2019 are as follows: volatility of 30 percent, risk-free rate of 1.86 percent, a credit spread of 25 percent and a dividend yield of 0 percent. The fair value measurement of the embedded derivative is sensitive to these assumptions and changes in these assumptions could result in a materially different fair value measurement. |
Income Taxes | Income Taxes. Under U.S. generally accepted accounting principles, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. |
Segment Reporting | Segment Reporting. |
Use of Estimates | Use of Estimates |
Income Per Share | Income Per Share. Basic net income (loss) per share of common stock is computed by dividing net (income) loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share of common stock is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury stock method or the as-converted method, or the two-class method for participating securities, whichever is more dilutive. Potentially dilutive common stock equivalents consist of stock options, restricted stock units, unvested restricted stock, Series A Redeemable Convertible Preferred Stock, Series A Warrants, and Series B Warrants. The following table presents the calculation of basic and diluted income per share of common stock: Years Ended December 31, 2020 2019 (In thousands, except share and per share information) Numerator: Net income (loss) attributable to Acacia Research Corporation $ 113,444 $ (17,115 ) Dividend on Series A redeemable convertible preferred stock (1,381 ) – Accretion of Series A redeemable convertible preferred stock (2,835 ) (307 ) Undistributed earnings allocated to participating securities (18,898 ) – Net income (loss) attributable to common stockholders - basic 90,330 (17,422 ) Add: Accretion of Series A redeemable convertible preferred stock – 307 Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative – (3,258 ) Less: Change in fair value of Series A warrants (1,348 ) – Less: Change in fair value of dilutive Series B warrants (5,557 ) – Add: Interest expense associated with Starboard Notes, net of tax 1,889 – Add: Undistributed earnings allocated to participating securities 18,898 – Reallocation of undistributed earnings to participating securities (15,740 ) – Net income (loss) attributable to common stockholders - diluted $ 88,471 $ (20,373 ) Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 48,840,829 49,764,002 Potentially dilutive common shares: Series A Preferred Stock – 1,132,771 Restricted stock units 637,044 – Employee stock options 2,952 – Series A Warrants 77,592 – Series B Warrants 7,876,712 – Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted 57,435,128 50,896,773 Basic net income (loss) per common share $ 1.85 $ (0.35 ) Diluted net income (loss) per common share $ 1.54 $ (0.40 ) Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: Equity-based incentive awards 206,916 1,783,254 Series A warrants – 5,000,000 Series B warrants 68,493,151 – Total 68,700,067 6,783,254 |
Treasury Stock | Treasury Stock |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | Revenues were comprised of the following for the periods presented: 2020 2019 (In thousands) Paid-up Revenue Agreements $ 28,389 $ 6,343 Recurring Revenue Agreements 1,393 4,903 Total Revenue $ 29,782 $ 11,246 |
Schedule of useful lives of property and equipment | . Depreciation and amortization is computed on a straight-line basis over the following estimated useful lives of the assets: 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) |
Calculation of basic and diluted loss per common share | Years Ended December 31, 2020 2019 (In thousands, except share and per share information) Numerator: Net income (loss) attributable to Acacia Research Corporation $ 113,444 $ (17,115 ) Dividend on Series A redeemable convertible preferred stock (1,381 ) – Accretion of Series A redeemable convertible preferred stock (2,835 ) (307 ) Undistributed earnings allocated to participating securities (18,898 ) – Net income (loss) attributable to common stockholders - basic 90,330 (17,422 ) Add: Accretion of Series A redeemable convertible preferred stock – 307 Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative – (3,258 ) Less: Change in fair value of Series A warrants (1,348 ) – Less: Change in fair value of dilutive Series B warrants (5,557 ) – Add: Interest expense associated with Starboard Notes, net of tax 1,889 – Add: Undistributed earnings allocated to participating securities 18,898 – Reallocation of undistributed earnings to participating securities (15,740 ) – Net income (loss) attributable to common stockholders - diluted $ 88,471 $ (20,373 ) Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 48,840,829 49,764,002 Potentially dilutive common shares: Series A Preferred Stock – 1,132,771 Restricted stock units 637,044 – Employee stock options 2,952 – Series A Warrants 77,592 – Series B Warrants 7,876,712 – Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted 57,435,128 50,896,773 Basic net income (loss) per common share $ 1.85 $ (0.35 ) Diluted net income (loss) per common share $ 1.54 $ (0.40 ) |
Schedule of antidilutive shares | Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per common share: Equity-based incentive awards 206,916 1,783,254 Series A warrants – 5,000,000 Series B warrants 68,493,151 – Total 68,700,067 6,783,254 |
3. Trading Securities (Tables)
3. Trading Securities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of short-term investments | Trading securities for the periods presented were comprised of the following: Cost Gross Gross Fair Value (In thousands) Security Type December 31, 2020: Trading securities - equity $ 36,851 $ 74,099 $ (1,847 ) $ 109,103 December 31, 2019: Trading securities - debt $ 93,712 $ 143 $ (12 ) $ 93,843 Trading securities - equity 17,674 211 (745 ) 17,140 $ 111,386 $ 354 $ (757 ) $ 110,983 |
4. Accrued Expenses (Tables)
4. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | 2020 2019 (In thousands) Accrued legal expenses - patent $ 2,284 $ 6,181 Accrued consulting and other professional fees – 470 Short-term lease liability 589 435 Other accrued liabilities 834 179 $ 3,707 $ 7,265 |
5. Patents (Tables)
5. Patents (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | 2020 2019 Gross carrying amount - patents $ 336,834 $ 330,588 Accumulated amortization - patents (1) (319,922 ) (322,774 ) Patents, net $ 16,912 $ 7,814 |
6. Investment at Fair Value (Ta
6. Investment at Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of Investments [Abstract] | |
Schedule of gain on investments | 2020 2019 (In thousands) Change in fair value of investment, warrants $ 1,996 $ (1,308 ) Change in fair value of investment, common stock 3,478 11,207 Gain on sale of investment, warrants 11,503 – Loss on sale of investment, common stock (3,316 ) (9,230 ) Net realized and unrealized gain on investment at fair value $ 13,661 $ 669 |
7. Stockholders' Equity (Tables
7. Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of repurchased shares | The repurchased shares are expected to be retired. Monthly stock repurchases for the periods presented, all of which were purchased as part of a publicly announced plan or program, were as follows: Total Number Average Approximate Dollar Plan Expiration Date March 20, 2020 - March 31, 2020 576,898 $ 2.28 $ 8,686,000 July 31, 2020 April 1, 2020 - April 23, 2020 1,107,639 $ 2.42 $ 6,001,000 July 31, 2020 Totals for 2020 1,684,537 $ 2.37 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | Acacia’s income tax benefit (expense) for the fiscal periods presented consisted of the following: 2020 2019 (in thousands) Current: Federal $ – $ – State (66 ) (34 ) Foreign 1,225 1,858 Total current 1,159 1,824 Deferred: Federal – – State – – Total deferred – – Income tax benefit (expenses) $ 1,159 $ 1,824 |
Schedule of deferred taxes | 2020 2019 (in thousands) Deferred tax assets: Net operating loss and capital loss carryforwards and credits $ 113,561 $ 112,280 Unrealized loss on investments held at fair value 0 538 Stock compensation 497 358 Fixed assets and intangibles 677 1,316 Basis of investments in affiliates 254 300 Accrued liabilities and other 762 631 State taxes 15 25 Total deferred tax assets 115,766 115,448 Valuation allowance (76,969 ) (115,077 ) Total deferred tax assets, net of valuation allowance 38,797 371 Deferred tax liabilities: ROU Asset (330 ) (347 ) Unrealized loss on investments held at fair value (38,374 ) – Other (93 ) (24 ) Total deferred tax liabilities (38,797 ) (371 ) Net deferred tax assets (liabilities) $ – $ – |
Reconciliation of income tax rate | A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows: 2020 2019 Statutory federal tax rate - (benefit) expense 21% 21% State income and foreign taxes, net of federal tax effect (1)% 7% Foreign tax credit –% –% Noncontrolling interests in operating subsidiaries –% –% Nondeductible permanent items 11% 1% Change in tax rate –% –% Expired capitalized loss –% (2)% Valuation allowance (33)% (13)% Other 1% (4)% (1)% 10% |
9. Equity-Based Incentive Pla_2
9. Equity-Based Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of stock-based awards granted | Stock-based award grant activity for the periods presented was as follows: 2020 2019 Shares Aggregate fair value (in thousands) Shares Aggregate fair value (in thousands) Restricted stock awards with time-based service conditions 592,000 $ 2,087 777,000 $ 2,332 Restricted stock units with market-based service conditions – – 900,000 1,280 Restricted stock units with time-based service conditions 86,500 276 – – Total incentive awards granted 678,500 $ 2,363 1,677,000 $ 3,612 |
Schedule of stock option activity | The following table summarizes stock option activity for the Plans for the year ended December 31, 2020: Weighted-Average Options Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2019 326,000 $ 4.38 Granted – $ – Exercised (14,000 ) $ 3.60 Expired/forfeited (2,000 ) $ 3.99 Outstanding at December 31, 2020 310,000 $ 4.41 2.2 years $ – Vested 298,000 $ 4.44 2.1 years $ – Exercisable at December 31, 2020 298,000 $ 4.44 2.1 years $ – |
Schedule of non-vested restricted stock activity | The following table summarizes non-vested restricted share activity for the year ended December 31, 2020: Nonvested Weighted Nonvested restricted stock at December 31, 2019 476,000 $ – Granted 592,000 $ 3.52 Vested (353,000 ) $ 3.12 Canceled (31,000 ) $ 2.85 Nonvested restricted stock at December 31, 2020 684,000 $ 3.38 |
Schedule of restricted stock activity | The following table summarizes restricted stock units activity for the year ended December 31, 2020: Nonvested Weighted Nonvested restricted stock units at December 31, 2019 900,000 $ 1.42 Granted 166,500 $ 3.19 Vested – $ – Canceled (80,000 ) $ 3.19 Nonvested restricted stock units at December 31, 2020 986,500 $ 1.58 Vested restricted stock units at December 31, 2020 14,000 $ 16.72 |
Schedule of share-based compensation expense | 2020 2019 (in thousands) Restricted stock awards with time-based service conditions $ 1,155 $ 907 Restricted stock units awards with time-based service conditions 43 – Restricted stock units with market-based vesting conditions 427 140 Stock options with time-based service vesting conditions 37 28 Total compensation expense $ 1,662 $ 1,075 |
10. Commitments and Contingen_2
10. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating lease payments | The table below presents aggregate future minimum payments due under the New Lease and the Old Lease, reconciled to lease liabilities included in the consolidated balance sheet as of December 31, 2020: Operating Leases (In thousands) 2021 $ 588 2022 370 2023 364 2024 218 Thereafter – Total minimum payments $ 1,540 Less: short-term lease liabilities (589 ) Long-term lease liabilities $ 951 |
14. Fair Value Measurements (Ta
14. Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities on a recurring basis | Level 1 Level 2 Level 3 (In thousands) Assets as of December 31, 2020: Trading securities - equity $ 109,103 $ – $ – Investment at fair value - warrants (Note 6) – 2,752 – Total recurring fair value measurements as of December 31, 2020 $ 109,103 $ 2,752 $ – Assets as of December 31, 2019: Trading securities - debt $ – $ 93,843 $ – Trading securities - equity 17,140 – – Investment at fair value - warrants (Note 6) – 757 – Investment at fair value - common stock (Note 6) 743 – – Total recurring fair value measurements as of December 31, 2019 $ 17,883 $ 94,600 $ – Liabilities as of December 31, 2020: Series A warrants $ – $ 6,640 $ – Series B warrants – – 52,341 Embedded derivative liability – – 26,728 Total liabilities as of December 31, 2020 $ – $ 6,640 $ 79,069 Liabilities as of December 31, 2019: Series A warrants $ – $ 3,568 $ – Embedded derivative liability – – 17,974 Total liabilities as of December 31, 2019 $ – $ 3,568 $ 17,974 |
Summary of changes in finacial liability Level 3 | Series A Preferred Stock Embedded Derivative Liability Series B Warrants Liability (In thousands) Opening balance as of January 1, 2019 Issuance of Series A warrants $ 21,232 $ Remeasurement to fair value (3,258 ) – Balance as of December 31, 2019 $ 17,974 $ – Issuance of Series B warrants 4,600 Remeasurement to fair value 8,754 47,741 Balance as of December 31, 2020 $ 26,728 $ 52,341 |
17. LF Equity Income Fund Por_2
17. LF Equity Income Fund Portfolio Investment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
Schedule of unrealized gains or losses | Years Ended December 31, 2020 2019 (In thousands) Change in fair value of trading security - LF Fund public securities $ 72,104 $ – Change in fair value of investment security - LF Fund private securities 103,751 – Loss on sale of trading security - LF Fund public securities (3,930 ) – Gain on sale of prepaid investment and derivative 2,845 – Net realized and unrealized gain on investment in LF Fund securities $ 174,770 $ – |
18. Quarterly Financial Data (T
18. Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial data (Unaudited) | Acacia’s quarterly results have been, and may in the future be, subject to significant fluctuations. As a result, Acacia believes that results of operations for interim periods should not be relied upon as any indication of the results to be expected in any future periods. Quarter Ended Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2020 2020 2020 2020 2019 2019 2019 2019 (Unaudited, in thousands, except share and per share information) Revenues $ 4,383 $ 19,466 $ 2,118 $ 3,815 $ 688 $ 1,711 $ 5,460 $ 3,387 Portfolio operations: Inventor royalties 506 5,772 645 426 192 776 2,623 1,353 Contingent legal fees 564 6,609 12 234 4 35 375 177 Patent acquisition expenses – – – – – – – – Litigation and licensing expenses - patents 2,186 1,001 1,459 1,037 1,160 987 1,855 3,801 Amortization of patents 1,159 1,174 1,305 1,043 857 863 818 656 Other portfolio expenses – – (74 ) (234 ) 1,581 (475 ) – 650 Total portfolio operations 4,415 14,556 3,347 2,506 3,794 2,186 5,671 6,637 Net portfolio income (loss) (32 ) 4,910 (1,229 ) 1,309 (3,106 ) (475 ) (211 ) (3,250 ) General and administrative expenses (including non-cash stock compensation expense) 6,387 7,692 5,519 4,878 4,328 4,630 3,763 3,655 Impairment of patent-related intangible assets – – – – – – – – Operating income (loss) (6,419 ) (2,782 ) (6,748 ) (3,569 ) (7,434 ) (5,105 ) (3,974 ) (6,905 ) Total other income (expense) 86,756 41,213 12,894 (9,060 ) 5,921 (2,503 ) (1,774 ) 2,821 Income (loss) before provision for income taxes 80,337 38,431 6,146 (12,629 ) (1,513 ) (7,608 ) (5,748 ) (4,084 ) Provision for income taxes (98 ) (83 ) 2 1,338 2,147 – (9 ) (314 ) Net income (loss) including noncontrolling interests 80,239 38,348 6,148 (11,291 ) 634 (7,608 ) (5,757 ) (4,398 ) Net (income) loss attributable to noncontrolling interests in subsidiaries – – – – – – – 14 Net income (loss) attributable to Acacia Research Corporation $ 80,239 $ 38,348 $ 6,148 ($ 11,291 ) $ 634 ($ 7,608 ) ($ 5,757 ) ($ 4,384 ) Net income (loss) attributable to common shareholders - basic $ 65,180 $ 30,529 $ 4,201 $ (12,185 ) $ 327 $ (7,608 ) $ (5,757 ) $ (4,384 ) Basic income (loss) per share $ 1.34 $ 0.63 $ 0.09 ($ 0.24 ) $ 0.01 ($ 0.15 ) ($ 0.12 ) ($ 0.09 ) Weighted-average number of shares outstanding, basic 48,508,903 48,467,885 48,457,620 49,875,396 49,875,750 49,828,361 49,696,016 49,655,881 Net loss attributable to common stockholders - diluted $ 65,352 $ 29,204 $ 4,201 $ (12,185 ) $ (2,624 ) $ (7,608 ) $ (5,757 ) $ (4,384 ) Diluted net income (loss) per common share $ 1.33 $ 0.32 $ 0.09 ($ 0.24 ) ($ 0.05 ) ($ 0.15 ) ($ 0.12 ) ($ 0.09 ) Weighted average number of shares outstanding - diluted 49,244,141 90,624,702 49,033,824 49,875,396 54,406,835 49,828,361 49,696,016 49,655,881 |
1. Description of Business (Det
1. Description of Business (Details Narrative) - Integer | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Number of new patent portfolios acquired | 5 | 4 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details - Disaggregation of Revenue) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 4,383 | $ 19,466 | $ 2,118 | $ 3,815 | $ 688 | $ 1,711 | $ 5,460 | $ 3,387 | $ 29,782 | $ 11,246 |
Paid-up Revenue Agreements [Member] | ||||||||||
Revenues | 28,389 | 6,343 | ||||||||
Recurring Revenue Agreements [Member] | ||||||||||
Revenues | $ 1,393 | $ 4,903 |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details - Property and Equipment Useful Lives) | 12 Months Ended |
Dec. 31, 2020 | |
Furniture And Fixtures [Member] | |
Property and equipment useful life | 3 to 5 years |
Computer Equipment [Member] | |
Property and equipment useful life | 3 to 5 years |
Leasehold Improvements [Member] | |
Property and equipment useful life | 2 to 5 years (Lesser of lease term or useful life of improvement) |
2. Summary of Significant Acc_6
2. Summary of Significant Accounting Policies (Details - Basic and Diluted Loss Per Share) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | ||||||||||
Net income (loss) attributable to Acacia Research Corporation | $ 80,239 | $ 38,348 | $ 6,148 | $ (11,291) | $ 634 | $ (7,608) | $ (5,757) | $ (4,384) | $ 113,444 | $ (17,115) |
Dividend on Series A redeemable convertible preferred stock | (1,381) | 0 | ||||||||
Accretion of Series A redeemable convertible preferred stock | (2,835) | (307) | ||||||||
Undistributed earnings allocated to participating securities | (18,898) | 0 | ||||||||
Net income (loss) attributable to common stockholders - basic | 65,180 | 30,529 | 4,201 | (12,185) | 327 | (7,608) | (5,757) | (4,384) | 90,330 | (17,422) |
Add: Accretion of Series A redeemable convertible preferred stock | 0 | 307 | ||||||||
Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative | 0 | (3,258) | ||||||||
Less: Change in fair value of Series A warrants | (1,348) | 0 | ||||||||
Less: Change in fair value of dilutive Series B warrants | (5,557) | 0 | ||||||||
Add: Interest expense associated with Starboard Notes, net of tax | 1,889 | 0 | ||||||||
Add: Undistributed earnings allocated to participating securities | 18,898 | 0 | ||||||||
Reallocation of undistributed earnings to participating securities | (15,740) | 0 | ||||||||
Net income (loss) attributable to common stockholders - diluted | $ 65,352 | $ 29,204 | $ 4,201 | $ (12,185) | $ (2,624) | $ (7,608) | $ (5,757) | $ (4,384) | $ 88,471 | $ (20,373) |
Denominator: | ||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic | 48,508,903 | 48,467,885 | 48,457,620 | 49,875,396 | 49,875,750 | 49,828,361 | 49,696,016 | 49,655,881 | 48,840,829 | 49,764,002 |
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted | 49,244,141 | 90,624,702 | 49,033,824 | 49,875,396 | 54,406,835 | 49,828,361 | 49,696,016 | 49,655,881 | 57,435,128 | 50,896,773 |
Basic net income (loss) per common share | $ 1.34 | $ 0.63 | $ 0.09 | $ 0.24 | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.09 | $ 1.85 | $ (0.35) |
Diluted net income (loss) per common share | $ 1.33 | $ 0.32 | $ 0.09 | $ 0.24 | $ 0.05 | $ 0.15 | $ 0.12 | $ 0.09 | $ 1.54 | $ (0.40) |
Series A Preferred Stock [Member] | ||||||||||
Denominator: | ||||||||||
Potentially dilutive common shares | 0 | 1,132,771 | ||||||||
Restricted Stock Units [Member] | ||||||||||
Denominator: | ||||||||||
Potentially dilutive common shares | 637,044 | 0 | ||||||||
Employee Stock Options [Member] | ||||||||||
Denominator: | ||||||||||
Potentially dilutive common shares | 2,952 | 0 | ||||||||
Series A Warrants [Member] | ||||||||||
Denominator: | ||||||||||
Potentially dilutive common shares | 77,592 | 0 | ||||||||
Series B Warrants [Member] | ||||||||||
Denominator: | ||||||||||
Potentially dilutive common shares | 7,876,712 | 0 |
2. Summary of Significant Acc_7
2. Summary of Significant Accounting Policies (Details - Antidilutive shares) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive shares | 68,700,067 | 6,783,254 |
Equity Based Incentive Awards [Member] | ||
Antidilutive shares | 206,916 | 1,783,254 |
Series A Warrants [Member] | ||
Antidilutive shares | 0 | 5,000,000 |
Series B Warrants [Member] | ||
Antidilutive shares | 68,493,151 | 0 |
2. Summary of Significant Acc_8
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Patent acquisition expenses | $ 0 | $ 0 |
Measurement Input, Price Volatility [Member] | Embedded Derivative [Member] | ||
Assumptions used for derivatives | 29% | 30% |
Measurement Input, Price Volatility [Member] | Black Scholes Model [Member] | Series A Warrants [Member] | ||
Assumptions used for derivatives | 29% | 30% |
Measurement Input, Price Volatility [Member] | Monte Carlo Method [Member] | Restricted Stock Units [Member] | ||
Assumptions used for derivatives | 38% | |
Measurement Input, Price Volatility [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 1 [Member] | ||
Assumptions used for derivatives | 29% | |
Measurement Input, Price Volatility [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 2 [Member] | ||
Assumptions used for derivatives | 50% | |
Measurement Input, Risk Free Interest Rate [Member] | Embedded Derivative [Member] | ||
Assumptions used for derivatives | .62% | 1.86% |
Measurement Input, Risk Free Interest Rate [Member] | Black Scholes Model [Member] | Series A Warrants [Member] | ||
Assumptions used for derivatives | .62% | 1.85% |
Measurement Input, Risk Free Interest Rate [Member] | Monte Carlo Method [Member] | Restricted Stock Units [Member] | ||
Assumptions used for derivatives | 1.38% | |
Measurement Input, Risk Free Interest Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 1 [Member] | ||
Assumptions used for derivatives | .63% | |
Measurement Input, Risk Free Interest Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 2 [Member] | ||
Assumptions used for derivatives | .12% | |
Measurement Input, Expected Term [Member] | Black Scholes Model [Member] | Series A Warrants [Member] | ||
Assumptions used for derivatives | 6.79 years | 7.79 years |
Measurement Input, Expected Term [Member] | Monte Carlo Method [Member] | Restricted Stock Units [Member] | ||
Assumptions used for derivatives | 3.00 years | |
Measurement Input, Expected Term [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 1 [Member] | ||
Assumptions used for derivatives | 6.87 years | |
Measurement Input, Expected Term [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 2 [Member] | ||
Assumptions used for derivatives | 1.65 years | |
Measurement Input, Expected Dividend Rate [Member] | Embedded Derivative [Member] | ||
Assumptions used for derivatives | 0% | 0.00% |
Measurement Input, Expected Dividend Rate [Member] | Black Scholes Model [Member] | Series A Warrants [Member] | ||
Assumptions used for derivatives | 0% | 0.00% |
Measurement Input, Expected Dividend Rate [Member] | Monte Carlo Method [Member] | Restricted Stock Units [Member] | ||
Assumptions used for derivatives | 0% | |
Measurement Input, Expected Dividend Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 1 [Member] | ||
Assumptions used for derivatives | 0% | |
Measurement Input, Expected Dividend Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 2 [Member] | ||
Assumptions used for derivatives | 0% | |
Measurement Input, Discount Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 1 [Member] | ||
Assumptions used for derivatives | 10% | |
Measurement Input, Discount Rate [Member] | Monte Carlo Method [Member] | Series B Warrants [Member] | Scenario 2 [Member] | ||
Assumptions used for derivatives | 10% | |
Measurement Input, Credit Spread [Member] | Embedded Derivative [Member] | ||
Assumptions used for derivatives | 19% | 25% |
Revenue Benchmark [Member] | One Licensee [Member] | ||
Concentration risk percentage | 64.00% | 43.00% |
Revenue Benchmark [Member] | One Licensee 2 [Member] | ||
Concentration risk percentage | 10.00% | 22.00% |
Revenue Benchmark [Member] | One Licensee 3 [Member] | ||
Concentration risk percentage | 7.00% | 15.00% |
Accounts Receivable [Member] | One Licensee [Member] | ||
Concentration risk percentage | 62.00% | 70.00% |
Accounts Receivable [Member] | One Licensee 2 [Member] | ||
Concentration risk percentage | 21.00% | 17.00% |
Accounts Receivable [Member] | One Licensee 4 [Member] | ||
Concentration risk percentage | 3.00% |
3. Trading Securities (Details)
3. Trading Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Trading securities, cost | $ 111,386 | |
Gross unrealized gain | $ 74,099 | 354 |
Gross unrealized loss | (1,847) | (757) |
Fair value of trading securities | 110,983 | |
Trading securities - Equity [Member] | ||
Trading securities, cost | 36,851 | 17,674 |
Gross unrealized gain | 211 | |
Gross unrealized loss | (745) | |
Fair value of trading securities | $ 109,103 | 17,140 |
Trading securities - Debt [Member] | ||
Trading securities, cost | 93,712 | |
Gross unrealized gain | 143 | |
Gross unrealized loss | (12) | |
Fair value of trading securities | $ 93,843 |
3. Trading Securities (Details
3. Trading Securities (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Securities [Member] | ||
Proceeds from the sale of securities | $ 118,459 | $ 46,383 |
Equity Securities [Member] | ||
Proceeds from the sale of securities | $ 49,751 | $ 25,339 |
4. Accrued Expenses (Details)
4. Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued legal expenses - patent | $ 2,284 | $ 6,181 |
Accrued consulting and other professional fees | 0 | 470 |
Short-term lease liability | 589 | 435 |
Other accrued liabilities | 834 | 179 |
Total accrued expenses | $ 3,707 | $ 7,265 |
5. Patents (Details)
5. Patents (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Gross carrying amount - patents | $ 336,834 | $ 330,588 |
Accumulated amortization - patents | (319,922) | (322,774) |
Patents, net | $ 16,912 | $ 7,814 |
5. Patents (Details Narrative)
5. Patents (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||
Estimated useful lives | 4 years | |||||||||
2021 | $ 4,450 | $ 4,450 | ||||||||
2022 | 4,451 | 4,451 | ||||||||
2023 | 4,376 | 4,376 | ||||||||
2024 | 3,005 | 3,005 | ||||||||
2025 | 630 | 630 | ||||||||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | 0 | $ 0 |
Accelerated amortization of patents | $ 0 | $ 0 |
6. Investments at Fair Value (D
6. Investments at Fair Value (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net realized and unrealized gain (loss) on investment | $ 13,661 | $ 669 |
Veritone Warrants [Member] | ||
Change in fair value of investment | 1,996 | (1,308) |
Gain on sale of investment | 11,503 | 0 |
Veritone Common Stock [Member] | ||
Change in fair value of investment | 3,478 | 11,207 |
Loss on sale of investment | $ (3,316) | $ (9,230) |
6. Investments at Fair Value _2
6. Investments at Fair Value (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Veritone Warrants [Member] | |||
Investment owned, shares | 156,720 | ||
Warrants exercised | 963,712 | ||
Realized gain (loss) on investment | $ 11,500 | ||
Fair value of investment | $ 2,752 | ||
Veritone Common Stock [Member] | |||
Investment owned, shares | 0 | ||
Realized gain (loss) on investment | $ (3,300) | $ (9,200) | $ (19,100) |
Investment shares sold | 298,450 | 1,121,071 | 2,700,000 |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details) - Common Stock [Member] - USD ($) $ / shares in Units, $ in Thousands | Mar. 31, 2020 | Apr. 23, 2020 | Dec. 31, 2020 |
Class of Stock [Line Items] | |||
Number of shares repurchased | 576,898 | 1,107,639 | 1,684,537 |
Average price paid per share | $ 2.28 | $ 2.42 | $ 2.37 |
Approximate value of shares that may yet be purchased | $ 8,686,000 | $ 6,001,000 | |
Plan expiration date | Jul. 31, 2020 | Jul. 31, 2020 |
7. Stockholders' Equity (Deta_2
7. Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | Aug. 05, 2019 | Feb. 28, 2018 |
Stock Repurchase Program [Member] | ||
Value of shares authorized for repurchase | $ 10,000,000 | $ 20,000,000 |
8. Income Taxes (Details - Prov
8. Income Taxes (Details - Provision for Income Taxes) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | ||||||||||
Federal | $ 0 | $ 0 | ||||||||
State | (66) | (34) | ||||||||
Foreign | 1,225 | 1,858 | ||||||||
Total current | 1,159 | 1,824 | ||||||||
Deferred: | ||||||||||
Federal | 0 | 0 | ||||||||
State | 0 | 0 | ||||||||
Total deferred | 0 | 0 | ||||||||
Income tax (expense) benefit | $ (98) | $ (83) | $ 2 | $ 1,338 | $ 2,147 | $ 0 | $ (9) | $ (314) | $ 1,159 | $ 1,824 |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Net operating loss and capital loss carryforwards and credits | $ 113,561 | $ 112,280 |
Unrealized loss on investments held at fair value | 0 | 538 |
Stock compensation | 497 | 358 |
Fixed assets and intangibles | 677 | 1,316 |
Basis of investments in affiliates | 254 | 300 |
Accrued liabilities and other | 762 | 631 |
State taxes | 15 | 25 |
Total deferred tax assets | 115,766 | 115,448 |
Valuation allowance | (76,969) | (115,077) |
Total deferred tax assets, net of valuation allowance | 38,797 | 371 |
Deferred tax liabilities: | ||
ROU Asset | (330) | (347) |
Unrealized loss on investments held at fair value | (38,374) | 0 |
Other | (93) | (24) |
Total deferred tax liabilities | (38,797) | (371) |
Net deferred tax assets (liabilities) | $ 0 | $ 0 |
8. Income Taxes (Details - Reco
8. Income Taxes (Details - Reconciliation of tax rates) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal tax rate - (benefit) expense | 21.00% | 21.00% |
State income and foreign taxes, net of federal tax effect | (1.00%) | 7.00% |
Foreign tax credit | 0.00% | 0.00% |
Noncontrolling interests in operating subsidiaries | 0.00% | 0.00% |
Nondeductible permanent items | 11.00% | 1.00% |
Change in tax rate | 0.00% | 0.00% |
Expired capitalized loss | 0.00% | (2.00%) |
Valuation allowance | (33.00%) | (13.00%) |
Other | 1.00% | (4.00%) |
Net effective income tax rate | (1.00%) | 10.00% |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Capital loss carryforward | $ 11,155 | |
Capital loss carryforward beginning expiration date | Dec. 31, 2029 | |
Foreign tax credit | $ 50,973 | |
Foreign tax credit beginning expiration date | Dec. 31, 2021 | |
Unrecognized tax benefit | $ 731 | $ 731 |
Operating loss carryforward deferred tax asset | 571 | |
Deferred tax asset | 115,766 | 115,448 |
Unrealized Gain on Investment in Veritone [Member] | ||
Deferred tax liability | 590 | |
Unrealized Gain on Investment in LF Equity [Member] | ||
Deferred tax liability | 37,706 | |
Unrealized Loss on Investment in Veritone [Member] | ||
Deferred tax asset | $ 538 | |
Federal [Member] | ||
Net operating loss carryforward | $ 274,283 | |
NOL beginning expiration dates | Dec. 31, 2026 | |
State and Local Jurisdiction [Member] | ||
Net operating loss carryforward | $ 13,809 | |
NOL beginning expiration dates | Dec. 31, 2028 |
9. Equity-Based Incentive Pla_3
9. Equity-Based Incentive Plans (Details - Options Granted) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted Stock [Member] | Time Based Service [Member] | ||
Other than options granted | 592,000 | 777,000 |
Aggregate fair value awards granted | $ 2,087 | $ 2,332 |
Restricted Stock Units R S U [Member] | ||
Other than options granted | 166,500 | |
Restricted Stock Units R S U [Member] | Time Based Service [Member] | ||
Other than options granted | 86,500 | 0 |
Aggregate fair value awards granted | $ 276 | $ 0 |
Restricted Stock Units R S U [Member] | Market Based Service [Member] | ||
Other than options granted | 0 | 900,000 |
Aggregate fair value awards granted | $ 0 | $ 1,280 |
All Awards [Member] | ||
Other than options granted | 678,500 | 1,677,000 |
Aggregate fair value awards granted | $ 2,363 | $ 3,612 |
9. Equity-Based Incentive Pla_4
9. Equity-Based Incentive Plans (Details - Option Activity - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | ||
Number of Options Outstanding, Beginning | 326,000 | |
Number of Options Granted | 0 | 0 |
Number of Options Exercised | (14,000) | |
Number of Options Forfeited | (2,000) | |
Number of Options Outstanding, Ending | 310,000 | 326,000 |
Number of Options Vested | 298,000 | |
Number of Options Exercisable | 298,000 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 4.38 | |
Weighted Average Exercise Price Granted | ||
Weighted Average Exercise Price Exercised | 3.6 | |
Weighted Average Exercise Price Forfeited | 3.99 | |
Weighted Average Exercise Price Outstanding, Ending | 4.41 | $ 4.38 |
Weighted Average Exercise Price Vested | 4.44 | |
Weighted Average Exercise Price Exercisable | $ 4.44 | |
Remaining Contractual Term | ||
Options Outstanding | 2 years 2 months 12 days | |
Options Vested | 2 years 1 month 6 days | |
Options Exercisable | 2 years 1 month 6 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value options outstanding | $ 0 | |
Aggregate intrinsic value options vested | 0 | |
Aggregate intrinsic value options exercisable | $ 0 |
9. Equity-Based Incentive Pla_5
9. Equity-Based Incentive Plans (Details - Nonvested Restricted Stock Activity) - Restricted Stock [Member] | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of Nonvested Shares | |
Number of Nonvested Shares Outstanding, Beginning | shares | 476,000 |
Number of Nonvested Shares Granted | shares | 592,000 |
Number of Nonvested Shares Vested | shares | (353,000) |
Number of Nonvested Shares Cancelled | shares | (31,000) |
Number of Nonvested Shares Outstanding, Ending | shares | 684,000 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | |
Weighted Average Exercise Price Granted | $ / shares | 3.52 |
Weighted Average Exercise Price Vested | $ / shares | 3.12 |
Weighted Average Exercise Price Cancelled | $ / shares | 2.85 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 3.38 |
9. Equity-Based Incentive Pla_6
9. Equity-Based Incentive Plans (Details - Restricted Stock Units Activity) - Restricted Stock Units R S U [Member] | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Restricted Shares | |
Nonvested restricted stock outstanding, beginning balance | shares | 900,000 |
Restricted stock granted | shares | 166,500 |
Restricted stock vested | shares | 0 |
Restricted stock cancelled | shares | (80,000) |
Nonvested restricted stock outstanding, ending balance | shares | 986,500 |
Vested restricted stock outstanding | shares | 14,000 |
Weighted Average Grant Date Fair Value Per Share | |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 1.42 |
Restricted stock granted | $ / shares | 3.19 |
Restricted stock vested | $ / shares | |
Restricted stock cancelled | $ / shares | 3.19 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 1.58 |
Vested restricted stock outstanding | $ / shares | $ 16.72 |
9. Equity-Based Incentive Pla_7
9. Equity-Based Incentive Plans (Details - Share-based Compensation) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based compensation expense | $ 1,662 | $ 1,075 |
Restricted Stock [Member] | Time Based Service [Member] | ||
Share-based compensation expense | 1,155 | 907 |
Restricted Stock Units R S U [Member] | Time Based Service [Member] | ||
Share-based compensation expense | 43 | 0 |
Restricted Stock Units R S U [Member] | Market Based [Member] | ||
Share-based compensation expense | 427 | 140 |
Stock Options [Member] | Time Based Service [Member] | ||
Share-based compensation expense | $ 37 | $ 28 |
9. Equity-Based Incentive Pla_8
9. Equity-Based Incentive Plans (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options [Member] | ||
Intrinsic value of options exercised | $ 7 | $ 4 |
Intrinsic value of options vested | $ 8 | |
Options granted, shares | 0 | 0 |
Fair value of options vested | $ 54 | $ 294 |
Unrecognized compensation expense | $ 9 | |
Unrecognized compensation expense period for recognition | 4 months | |
Restricted Stock [Member] | Non-Vested [Member] | ||
Unrecognized compensation expense | $ 2,023 | |
Unrecognized compensation expense period for recognition | 2 years | |
Weighted-average grant date fair value per share | $ 3.38 | $ 2.98 |
Fair value of other than options vested | $ 1,101 | $ 672 |
Restricted Stock Units R S U [Member] | ||
Fair value of options vested | 0 | $ 0 |
Unrecognized compensation expense | $ 936 | |
Unrecognized compensation expense period for recognition | 2 years | |
Weighted-average grant date fair value per share | $ 3.19 | |
Fair value of other than options vested | $ 240 | $ 40 |
Fair value of restricted stock units granted | 276 | $ 1,280 |
Profits Interests [Member] | ||
Fair value of profits interests | $ 591 | |
2016 Plan [Member] | ||
Shares available for grant | 4,068,308 | |
All Plans [Member] | ||
Shares available for grant | 6,509,469 |
10. Commitments and Contingen_3
10. Commitments and Contingencies (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 588 | |
2022 | 370 | |
2023 | 364 | |
2024 | 218 | |
Thereafter | 0 | |
Total minimum payments | 1,540 | |
Less: short-term lease liabilities | (589) | $ (435) |
Long-term lease liabilities | $ 951 | $ 1,264 |
10. Commitments and Contingen_4
10. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Settlement and contingency related accrual | $ 308 | |
Operating lease cost | $ 603 | $ 426 |
11. Retirement Savings Plan a_2
11. Retirement Savings Plan and Executive Severance Policy (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Plan expenses | $ 304 | $ 420 |
12. Supplemental Cash Flow In_2
12. Supplemental Cash Flow Information (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
State and Local Jurisdiction [Member] | ||
State taxes paid | $ 118 | $ 85 |
Foreign Country [Member] | ||
State taxes paid | $ 3,600 | $ 249 |
14. Fair Value Disclosures (Det
14. Fair Value Disclosures (Details - Fair Value on a Recurring Basis) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Assets | $ 109,103 | $ 17,883 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Trading Securities - Equity [Member] | ||
Assets | 109,103 | 17,140 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Investment at fair value - warrants [Member] | ||
Assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Trading Securities - Debt [Member] | ||
Assets | 0 | |
Assets [Member] | Fair Value, Inputs, Level 1 [Member] | Investment at fair value - common stock [Member] | ||
Assets | 743 | |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Assets | 2,752 | 94,600 |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Trading Securities - Equity [Member] | ||
Assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Investment at fair value - warrants [Member] | ||
Assets | 2,752 | 757 |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Trading Securities - Debt [Member] | ||
Assets | 93,843 | |
Assets [Member] | Fair Value, Inputs, Level 2 [Member] | Investment at fair value - common stock [Member] | ||
Assets | 0 | |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Trading Securities - Equity [Member] | ||
Assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Investment at fair value - warrants [Member] | ||
Assets | 0 | 0 |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Trading Securities - Debt [Member] | ||
Assets | 0 | |
Assets [Member] | Fair Value, Inputs, Level 3 [Member] | Investment at fair value - common stock [Member] | ||
Assets | 0 | |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Liabilities | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Series A Warrants [Member] | ||
Liabilities | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Series B Warrants [Member] | ||
Liabilities | 0 | |
Liability [Member] | Fair Value, Inputs, Level 1 [Member] | Embedded Derivative Liability [Member] | ||
Liabilities | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Liabilities | 6,640 | 3,568 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Series A Warrants [Member] | ||
Liabilities | 6,640 | 3,568 |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Series B Warrants [Member] | ||
Liabilities | 0 | |
Liability [Member] | Fair Value, Inputs, Level 2 [Member] | Embedded Derivative Liability [Member] | ||
Liabilities | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Liabilities | 79,069 | 17,974 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Series A Warrants [Member] | ||
Liabilities | 0 | 0 |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Series B Warrants [Member] | ||
Liabilities | 52,341 | |
Liability [Member] | Fair Value, Inputs, Level 3 [Member] | Embedded Derivative Liability [Member] | ||
Liabilities | $ 26,728 | $ 17,974 |
14. Fair Value Disclosures (D_2
14. Fair Value Disclosures (Details - Changes to fair value measurement Level 3) - Liability [Member] - Fair Value, Inputs, Level 3 [Member] - Fair Value, Recurring [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Series A Embedded Derivative Liability [Member] | ||
Derivative liability, beginning balance | $ 17,974 | $ 0 |
Issuance of warrants | 0 | 21,232 |
Remeasurement to fair value | 8,754 | (3,258) |
Derviative liability, ending balance | 26,728 | 17,974 |
Series B Warrants Liability [Member] | ||
Derivative liability, beginning balance | 0 | 0 |
Issuance of warrants | 4,600 | 0 |
Remeasurement to fair value | 47,741 | 0 |
Derviative liability, ending balance | $ 52,341 | $ 0 |
15. Related Party Transactions
15. Related Party Transactions (Details Narrative) - Drive Shack, Inc. [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Purchase of investment shares | $ 2,400 | |
Market value of the investment | $ 1,400 | 2,100 |
Unrealized loss from investment | $ 998 | $ 263 |
16. Starboard Investment (Detai
16. Starboard Investment (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | 5 Months Ended | 9 Months Ended | 11 Months Ended | 12 Months Ended | |
Feb. 25, 2020 | Dec. 31, 2020 | Jun. 04, 2020 | Sep. 30, 2020 | Nov. 18, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Proceeds from issuance of preferred stock | $ 35,000 | ||||||
Payment of stock issuance costs | 1,300 | ||||||
Fair value of embedded derivative | $ 26,728 | 26,728 | $ 17,974 | ||||
Proceeds from issuance of warrants | 4,600 | 0 | |||||
Repayment of debt | 496 | $ 0 | |||||
Securities Purchase Agreement [Member] | Senior Secured Notes [Member] | |||||||
Proceeds from issuance of debt | $ 115,000 | ||||||
Repayment of debt | $ 80,000 | 35,000 | |||||
Interest Rate | 10.00% | ||||||
Embedded Derivative [Member] | |||||||
Proceeds from issuance of preferred stock | 21,200 | ||||||
Series A Redeemable Convertible Preferred Stock [Member] | |||||||
Proceeds from issuance of preferred stock | 8,900 | ||||||
Accrued and unpaid dividends | 0 | 0 | |||||
Accretion | 2,800 | ||||||
Fair value of embedded derivative | 26,700 | 26,700 | |||||
Warrants [Member] | |||||||
Proceeds from issuance of preferred stock | $ 4,800 | ||||||
Warrants exercised | 0 | ||||||
Series B Warrants [Member] | |||||||
Warrants issued, shares | 100,000,000 | ||||||
Conversion price | $ 5.25 | ||||||
Fair value of warrants | 52,300 | $ 52,300 | |||||
Warrants exercised | 0 | ||||||
Proceeds from issuance of warrants | $ 4,600 | ||||||
Warrant expiration date | Nov. 15, 2027 | ||||||
Amortization of Debt Discount | 1,158 | ||||||
Starboard [Member] | |||||||
Stock issued | 350,000 | ||||||
Warrants issued, shares | 5,000,000 | ||||||
Starboard [Member] | Series A Preferred Stock [Member] | |||||||
Conversion price | $ 3.65 | ||||||
Starboard [Member] | Warrants [Member] | |||||||
Warrants issued, shares | 5,000,000 | ||||||
Conversion price | $ 3.65 | ||||||
Fair value of warrants | $ 6,600 | $ 4,800 | $ 6,600 | ||||
Merton [Member] | Senior Secured Notes [Member] | |||||||
Interest Rate | 6.00% | ||||||
Maturity Date | Dec. 31, 2020 | ||||||
Series A redeemable convertible preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Discount | $ 500 | $ 500 | |||||
Merton [Member] | Exchange Agreement [Member] | Senior Secured Notes [Member] | |||||||
Repayment of debt | 80,000 | ||||||
Principal amount | 115,000 | 115,000 | |||||
Payment of lenders fees | 4,600 | ||||||
Payment of other issuance costs | 500 | ||||||
Merton [Member] | Exchange Agreement [Member] | Senior Secured Notes 1 [Member] | |||||||
Repayment of debt | 35,000 | ||||||
Merton [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Senior Secured Notes [Member] | |||||||
Accrued and unpaid dividends | 900 | 900 | |||||
Merton [Member] | Series B Warrants [Member] | Senior Secured Notes [Member] | |||||||
Original Issue Discount | 1,300 | 1,300 | |||||
Unamortized Discount | $ 171 | $ 171 |
17. LF Equity Income Fund Por_3
17. LF Equity Income Fund Portfolio Investment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Change in fair value of investment | $ 175,855 | $ 0 |
Loss on sale of trading security | (1,085) | 0 |
Net realized and unrealized gain (loss) on investment | 13,661 | 669 |
Trading Securites - LF Fund Public Securities [Member] | ||
Change in fair value of investment | 72,104 | 0 |
Loss on sale of trading security | (3,930) | 0 |
Equity Securities - LF Fund Private Securities [Member] | ||
Change in fair value of investment | 103,751 | 0 |
Equity Securities Forward Contract [Member] | ||
Loss on sale of trading security | 2,845 | 0 |
Trading Securites Lf Fund Securities [Member] | ||
Net realized and unrealized gain (loss) on investment | $ 174,770 | $ 0 |
17. LF Equity Income Fund Por_4
17. LF Equity Income Fund Portfolio Investment (Details Narrative) - Option Agreement [Member] - Portfolio Companies [Member] £ in Thousands, $ in Thousands | 3 Months Ended | 5 Months Ended | 12 Months Ended | |
Dec. 31, 2020USD ($) | Apr. 03, 2020USD ($) | Jun. 04, 2020GBP (£) | Dec. 31, 2020GBP (£) | |
Offsetting Liabilities [Line Items] | ||||
Payment to acquire equity securities | $ | $ 277,500 | |||
Gain on sale of deriviative | $ | $ 2,800 | |||
United Kingdom, Pounds | ||||
Offsetting Liabilities [Line Items] | ||||
Payment to acquire equity securities | £ 223,900 | |||
Return on prepayment | £ 4,500 | |||
Proceeds from sale of securities | £ 33 |
18. Quarterly Financial Data _2
18. Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Revenues | $ 4,383 | $ 19,466 | $ 2,118 | $ 3,815 | $ 688 | $ 1,711 | $ 5,460 | $ 3,387 | $ 29,782 | $ 11,246 |
Portfolio operations: | ||||||||||
Inventor royalties | 506 | 5,772 | 645 | 426 | 192 | 776 | 2,623 | 1,353 | 7,349 | 4,944 |
Contingent legal fees | 564 | 6,609 | 12 | 234 | 4 | 35 | 375 | 177 | 7,419 | 591 |
Patent acquisition expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
Litigation and licensing expenses - patents | 2,186 | 1,001 | 1,459 | 1,037 | 1,160 | 987 | 1,855 | 3,801 | 5,683 | 7,803 |
Amortization of patents | 1,159 | 1,174 | 1,305 | 1,043 | 857 | 863 | 818 | 656 | 4,681 | 3,194 |
Other portfolio expenses | 0 | 0 | (74) | (234) | 1,581 | (475) | 0 | 650 | ||
Total portfolio expenses | 4,415 | 14,556 | 3,347 | 2,506 | 3,794 | 2,186 | 5,671 | 6,637 | 24,824 | 18,288 |
Net portfolio income (loss) | (32) | 4,910 | (1,229) | 1,309 | (3,106) | (475) | (211) | (3,250) | 4,958 | (7,042) |
General and administrative expenses | 6,387 | 7,692 | 5,519 | 4,878 | 4,328 | 4,630 | 3,763 | 3,655 | 24,476 | 16,376 |
Impairment of patent-related intangible assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Operating income (loss) | (6,419) | (2,782) | (6,748) | (3,569) | (7,434) | (5,105) | (3,974) | (6,905) | (19,518) | (23,418) |
Total other income (expense) | 86,756 | 41,213 | 12,894 | (9,060) | 5,921 | (2,503) | (1,774) | 2,821 | 131,803 | 4,465 |
Income (loss) before provision for income taxes | 80,337 | 38,431 | 6,146 | (12,629) | (1,513) | (7,608) | (5,748) | (4,084) | 112,285 | (18,953) |
Income tax (expense) benefit | (98) | (83) | 2 | 1,338 | 2,147 | 0 | (9) | (314) | 1,159 | 1,824 |
Net income (loss) including noncontrolling interests in subsidiaries | 80,239 | 38,348 | 6,148 | (11,291) | 634 | (7,608) | (5,757) | (4,398) | 113,444 | (17,129) |
Net (income) loss attributable to noncontrolling interests in subsidiaries | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 14 | 0 | 14 |
Net loss attributable to Acacia Research Corporation | 80,239 | 38,348 | 6,148 | (11,291) | 634 | (7,608) | (5,757) | (4,384) | 113,444 | (17,115) |
Net income (loss) attributable to common shareholders – basic | $ 65,180 | $ 30,529 | $ 4,201 | $ (12,185) | $ 327 | $ (7,608) | $ (5,757) | $ (4,384) | $ 90,330 | $ (17,422) |
Basic net income (loss) per common share | $ 1.34 | $ 0.63 | $ 0.09 | $ 0.24 | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.09 | $ 1.85 | $ (0.35) |
Weighted average number of shares outstanding - basic | 48,508,903 | 48,467,885 | 48,457,620 | 49,875,396 | 49,875,750 | 49,828,361 | 49,696,016 | 49,655,881 | 48,840,829 | 49,764,002 |
Net loss attributable to common stockholders - diluted | $ 65,352 | $ 29,204 | $ 4,201 | $ (12,185) | $ (2,624) | $ (7,608) | $ (5,757) | $ (4,384) | $ 88,471 | $ (20,373) |
Diluted net loss per share of common share | $ 1.33 | $ 0.32 | $ 0.09 | $ 0.24 | $ 0.05 | $ 0.15 | $ 0.12 | $ 0.09 | $ 1.54 | $ (0.40) |
Weighted average number of shares outstanding - diluted | 49,244,141 | 90,624,702 | 49,033,824 | 49,875,396 | 54,406,835 | 49,828,361 | 49,696,016 | 49,655,881 | 57,435,128 | 50,896,773 |