Acacia Research Corporation(1) (Nasdaq: ACTG) today reported
results for the three months ended June 30, 2017.
- Revenues for the second quarter of 2017
were $16,457,000, as compared to $41,351,000 in the comparable
prior year quarter.
- GAAP net loss(4) for the second quarter
of 2017 was $14,252,000, or $0.28 per diluted share, as compared to
a GAAP net loss, including impairment charges, of $40,573,000, or
$0.81 per diluted share for the comparable prior year quarter.
- Non-GAAP(4) net loss for the second
quarter of 2017 was $7,194,000, or $0.14 per diluted share, as
compared to non-GAAP net income of $11,826,000, or $0.23 per
diluted share for the comparable prior year quarter. See below for
information regarding non-GAAP financial measures.
- Cash and cash equivalents, restricted
cash and short-term investments totaled $118,272,000 as of
June 30, 2017, as compared to $158,495,000 as of
December 31, 2016.
Consolidated Financial Results - Overview
Financial highlights and operating activities during the periods
presented included the following:
Three Months Ended Six Months Ended
June 30, June 30, 2017 2016
2017 2016 Revenues (in thousands) $
16,457 $ 41,351 $ 25,311 $ 66,072 GAAP net loss (in thousands) $
(14,252 ) $ (40,573 ) $ (26,082 ) $ (50,538 ) Non-GAAP net income
(loss) (in thousands) $ (7,194 ) $ 11,826 $ (11,381 ) $ 14,356 GAAP
diluted loss per share $ (0.28 ) $ (0.81 ) $ (0.52 ) $ (1.01 )
Non-GAAP diluted earnings (loss) per
share
$ (0.14 ) $ 0.23 $ (0.23 ) $ 0.28 New agreements executed 9 7 15 19
Licensing and enforcement programs generating revenues 8 13 9 21
Summary Consolidated Financial Results
Three months ended June 30, 2017 compared with the three
months ended June 30, 2016
Revenues (in thousands):
Three Months Ended June 30,
Change 2017 2016 $
% Revenues $ 16,457 $ 41,351 $ (24,894 ) (60 )%
Second quarter 2017 revenues decreased $24,894,000, or 60%, to
$16,457,000, as compared to $41,351,000 in the comparable prior
year quarter. In the second quarter of 2017, one licensee
individually accounted for 85% of revenues recognized. In the
second quarter of 2016, a different licensee individually accounted
for 85% of revenues recognized.
Cost of Revenues (in thousands):
Three Months Ended June 30,
Change 2017 2016 $
% Inventor royalties $ 4,273 $ — $ 4,273 100 %
Contingent legal fees 3,236 10,418 (7,182 ) (69 )%
Total inventor royalties and contingent legal fees $ 7,509 $
10,418 $ (2,909 ) (28 )%
Second quarter 2017 inventor royalties expense increased to
$4,273,000, from zero in the comparable prior year quarter,
primarily due to no contractual inventor royalty obligations due on
revenues recognized in the second quarter of 2016. Second quarter
2017 contingent legal fee expense decreased 69%, relatively
consistent with 60% decrease in related revenues.
Second quarter 2017 total revenues, less inventor royalties
expense and contingent legal fees expense was $8,948,000, or 54% of
second quarter 2017 revenues, as compared to $30,933,000, or 75% of
revenues recognized in the comparable prior year quarter.
Three Months Ended June 30,
Change 2017 2016 $
% Litigation and licensing expenses - patents $ 4,134
$ 7,324 $ (3,190 ) (44 )%
Second quarter 2017 litigation and licensing expenses decreased
44%, due primarily to a net decrease in litigation support and
third-party technical consulting expenses associated with ongoing
licensing and enforcement programs and a decrease in portfolio
related enforcement activities. We expect litigation and licensing
expenses to continue to fluctuate period to period in connection
with our current and future patent licensing and enforcement
activities.
Three Months Ended June 30,
Change 2017 2016 $
% Amortization of patents $ 5,571 $ 10,759 $ (5,188 )
(48 )%
Second quarter 2017 non-cash patent amortization charges
decreased 48%, reflecting a decrease in scheduled amortization on
existing patent portfolios due primarily to various patent
portfolio impairment charges previously recorded in the second
quarter of 2016.
General and Administrative Expenses (in thousands):
Three Months Ended June 30,
Change 2017 2016 $
% General and administrative expenses $ 5,247 $ 6,060 $ (813
) (13 )% Non-cash stock compensation expense - G&A 1,487
1,475 12 1 % Total general and administrative
expenses $ 6,734 $ 7,535 $ (801 ) (11 )%
Second quarter 2017 general and administrative expenses
decreased due primarily to a reduction in personnel costs in
connection with our recent reductions in head count and a decrease
in variable performance based compensation costs. The decrease was
partially offset by an increase in non-recurring employee severance
costs. Non-cash stock compensation expense was relatively flat
quarter to quarter.
Research, Consulting and Other Expenses - Business Development
(in thousands):
Three Months Ended June 30,
Change 2017 2016 $
% Research, consulting and other expenses - business
development $ 433 $ 1,334 $ (901 ) (68 )%
Research, consulting and other expenses include third-party
business development related research, consulting and other costs
incurred in connection with business development activities. These
costs fluctuate period to period based on business development
related activities in each period.
Impairment of Patent-Related Intangible Assets (in
thousands):
Three Months Ended June 30,
Change 2017 2016 $
% Impairment of patent-related intangible assets $ —
$ 40,165 $ (40,165 ) (100 )%
The impairment charges for the second quarter of 2016 reflect
the impact of reductions in expected estimated future net cash
flows for certain patent portfolios and certain patent portfolios
that management determined it would no longer allocate resources to
in future periods. The impairment charges consisted of the excess
of the asset’s carrying value over its estimated fair value as of
the applicable measurement date.
Investment Gains (Losses)
Upon Veritone Inc.’s (“Veritone”) consummation of a qualified
initial public offering on May 17, 2017 (“IPO”), Acacia’s Loans and
Bridge Facilities provided to Veritone, including accrued interest,
were automatically converted into 1,819,186 shares of Veritone
common stock, pursuant to the underlying investment agreement, as
amended. In addition Acacia exercised its Primary Warrant,
acquiring 2,150,335 shares of Veritone common stock, pursuant to
the underlying investment agreement, as amended. As of the IPO
date, Acacia’s investment in Veritone was recorded utilizing the
fair value option, and is marked to market at each balance sheet
date, with related investment gains and losses reflected in the
consolidated statement of operations. Total net investment loss for
the second quarter of 2017 totaled $5,411,000, primarily comprised
of an unrealized loss on conversion of our Veritone loans to equity
and an unrealized loss related to the application of the fair value
method of accounting to our equity investment in Veritone and the
requirement to mark our investment to market as of June 30,
2017.
Please note that the Veritone transaction accounting reflected
in today’s second quarter 2017 earnings release is based on
preliminary estimates of the fair value of our investment in
Veritone as of the applicable valuation dates, with the final
valuation expected to be completed at the time of the filing of our
second quarter 2017 quarterly report on Form 10-Q. Please refer to
our second quarter 2017 quarterly report on Form 10-Q, which is
scheduled to be filed on or before August 8, 2017, for final
adjustments to the valuation of our investment in Veritone, if
any.
Provision for Income Taxes (in thousands):
Three Months Ended June 30,
Change 2017 2016 $
% Provision for income taxes $ (1,478 ) $ (5,927 ) $
4,449 (75 )%
The decrease in tax expense primarily reflects the impact of
foreign withholding taxes incurred related to certain revenue
agreements executed with third-party licensees domiciled in foreign
jurisdictions.
Financial Condition (in thousands)
Summary Balance Sheet Information:
June 30, 2017 December 31, 2016
Cash and cash equivalents, restricted cash and short-term
investments $ 118,272 $ 158,495 Accounts receivable 14,245 26,750
Investments 52,217 — Total assets
264,490
296,003 Accounts payable and accrued expenses 9,239 14,283
Royalties and contingent legal fees payable 9,427 13,908 Total
liabilities 19,243 28,560
Summary Cash Flow Information:
Three Months Ended Six Months Ended
June 30, June 30, 2017 2016
2017 2016 Net cash provided by (used
in): Operating activities $ 7,164 $ 26,683 $ 6,185 $ 37,793
Investing activities 1,351 (32,215 ) (71,119 ) (33,219 ) Financing
activities 384 (25 ) 614 (25 )
Investing Activities:
In May 2017, upon Veritone’s consummation of its IPO, Acacia’s
Loans and Bridge Facilities provided to Veritone, and related
accrued interest, totaling $24,757,000, were automatically
converted into shares of Veritone common stock. In addition, Acacia
invested an additional $29,264,000 in Veritone through the exercise
of its Primary Warrant.
In addition, in June 2017, we made an investment in Miso
Robotics, an innovative leader in robotics and artificial
intelligence solutions, totaling $2,250,000, as part of Miso
Robotics’ closing of a $3.1 million funding round.
Refer to the section below entitled “Summary Financial
Information” for additional summary consolidated balance sheet,
statements of operations and cash flow information as of and for
the applicable periods presented.
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. To supplement our
consolidated financial statements prepared and presented in
accordance with GAAP, this earnings release includes financial
measures, including (1) non-GAAP net income and (2) non-GAAP
Earnings Per Share (“EPS”), that are considered non-GAAP financial
measures as defined in Rule 101 of Regulation G promulgated by the
Securities and Exchange Commission. Generally, a non-GAAP financial
measure is a numerical measure of a company’s historical or future
performance, financial position, or cash flows that either excludes
or includes amounts that are not normally excluded or included in
the most directly comparable measure calculated and presented in
accordance with GAAP. The presentation of this non-GAAP financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
We use these non-GAAP, or pro forma, financial measures for
internal financial and operational decision making purposes and as
a means to evaluate period-to-period comparisons of the performance
and results of operations of our core business. Our management
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of our core
business by excluding non-cash stock compensation charges, non-cash
patent amortization charges, excess benefit related non-cash tax
expense and certain non-cash tax benefits, that may not be
indicative of our recurring core business operating results. These
non-GAAP financial measures also facilitate management’s internal
planning and comparisons to our historical performance and
liquidity. We believe these non-GAAP financial measures are useful
to investors as they allow for greater transparency with respect to
key metrics used by management in its financial and operational
decision making and are used by our institutional investors and the
analyst community to help them analyze the performance and
operational results of our core business.
Non-GAAP Net income and EPS. We define non-GAAP net income
as net income calculated in accordance with GAAP, plus non-cash
stock compensation charges, non-cash patent amortization charges
and excess benefit related non-cash tax expense, less certain
non-cash tax benefits included in tax expense. Non-GAAP EPS is
defined as non-GAAP net income divided by the weighted average
outstanding shares, on a fully-diluted basis, calculated in
accordance with GAAP, for the respective reporting period.
Due to the inherent volatility in stock prices, the use of
estimates and assumptions in connection with the valuation and
expensing of share-based awards and the variety of award types that
companies can issue under FASB ASC Topic 718, management believes
that providing a non-GAAP financial measure that excludes non-cash
stock compensation allows investors to make meaningful comparisons
between our recurring core business operating results and those of
other companies period to period, as well as providing our
management with a critical tool for financial and operational
decision making and for evaluating our own period-to-period
recurring core business operating results. Similarly, due to the
variability associated with the timing and amount of patent
acquisition payments and estimates inherent in the capitalization
and amortization of patent acquisition costs, management believes
that providing a non-GAAP financial measure that excludes non-cash
patent amortization charges allows investors to make meaningful
comparisons between our recurring core business operating results
and those of other companies, and also provides our management with
a useful tool for financial and operational decision making and for
evaluating our own period-to-period recurring core business
operating results. Management also believes that providing a
non-GAAP financial measure that excludes the impact of excess
benefit related non-cash tax expense and certain non-cash tax
benefits included in tax expense allows investors to assess our net
results and the economic impact of income taxes based largely on
cash tax obligations, make more meaningful comparisons between our
recurring core business net results and those of other companies
period to period, and also provides our management with a useful
tool for financial and operational decision making and for
evaluating our own period-to-period recurring core business net
results.
There are a number of limitations related to the use of non-GAAP
net income and EPS versus net income and EPS calculated in
accordance with GAAP. For example, non-GAAP net income excludes the
impact of significant non-cash stock compensation charges, non-cash
patent amortization charges, excess benefit related non-cash tax
expense and certain non-cash tax benefits included in tax expense
that are or may be recurring, and that may or will continue to be
recurring for the foreseeable future. In addition, non-cash stock
compensation is a critical component of our employee compensation
programs and non-cash patent amortization reflects the cost of
certain patent portfolio acquisitions, amortized on a straight-line
basis over the estimated economic useful life of the respective
patent portfolio, and may reflect the acceleration of amortization
related to recoupable up-front patent portfolio acquisition costs.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from non-GAAP net
income and EPS and evaluating non-GAAP net income and EPS in
conjunction with net income and EPS calculated in accordance with
GAAP.
The accompanying table below provides a reconciliation of the
non-GAAP financial measures presented to the most directly
comparable financial measures prepared in accordance with GAAP.
______________________________________________
A conference call is scheduled for today. The Acacia Research
presentation will start at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern).
To listen to the presentation by phone, dial (888) 206-4913 for
callers in the U.S. and Canada and (719) 325-4880 for international
callers, both of whom will need to enter the conference ID 6112027
when prompted.
There will be a live webcast hosted by NASDAQ that will be
available for 30 days and can be accessed at Acacia’s website at
www.acaciaresearch.com.
ABOUT ACACIA RESEARCH CORPORATION
Founded in 1993, Acacia Research Corporation (ACTG) is the
industry leader in patent licensing. An intermediary in the patent
marketplace, Acacia partners with inventors and patent owners to
unlock the financial value in their patented inventions. Acacia
bridges the gap between invention and application, facilitating
efficiency and delivering monetary rewards to the patent owner.
Information about Acacia Research Corporation and its
subsidiaries is available at www.acaciaresearch.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This news release contains forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based upon our
current expectations and speak only as of the date hereof. Our
actual results may differ materially and adversely from those
expressed in any forward-looking statements as a result of various
factors and uncertainties, including the ability to successfully
develop licensing programs and attract new business, rapid
technological change in relevant markets, changes in demand for
current and future intellectual property rights, legislative,
regulatory and competitive developments addressing licensing and
enforcement of patents and/or intellectual property in general and
general economic conditions. Our Annual Report on Form 10-K, recent
and forthcoming Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K, and any amendments to the forgoing, and other
SEC filings discuss some of the important risk factors that may
affect our business, results of operations and financial condition.
We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
The results achieved in the most recent quarter are not
necessarily indicative of the results to be achieved by us in any
subsequent quarters, as it is currently anticipated that Acacia
Research Corporation’s financial results will vary, and may vary
significantly, from quarter to quarter. This variance is expected
to result from a number of factors, including risk factors
affecting our results of operations and financial condition
referenced above, and the particular structure of our licensing
transactions, which may impact the amount of inventor royalties and
contingent legal fees expenses we incur period to period.
ACACIA RESEARCH CORPORATION SUMMARY FINANCIAL
INFORMATION (In thousands, except share and per share
information) (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended Six Months
Ended June 30, June 30, 2017
2016 2017 2016 Revenues $ 16,457
$ 41,351 $ 25,311 $ 66,072 Operating
costs and expenses: Cost of revenues: Inventor royalties 4,273 —
4,939 1,573 Contingent legal fees 3,236 10,418 3,863 14,527
Litigation and licensing expenses - patents 4,134 7,324 10,520
15,047 Amortization of patents 5,571 10,759 11,086 21,519 General
and administrative expenses (including non-cash stock compensation
expense of $1,487 and $3,615 for the three and six months ended
June 30, 2017 and $1,475 and $3,210 for the three and six months
ended June 30, 2016, respectively) 6,734 7,535 13,650 15,529
Research, consulting and other expenses - business development 433
1,334 753 1,856 Impairment of patent-related intangible assets —
40,165 — 40,165 Other expense — (1,242 ) — 500
Total operating costs and expenses 24,381 76,293
44,811 110,716 Operating loss (7,924 ) (34,942 )
(19,500 ) (44,644 ) Other income (expense): Loss on fair value
investment (5,411 ) — (5,411 ) — Equity in earnings (losses) of
investee (14 ) — (14 ) — Interest income 580 10 1,298 19 Other
income (expense) (17 ) (62 ) (39 ) (74 ) Total other income
(expense) (4,862 ) (52 ) (4,166 ) (55 ) Loss before provision for
income taxes (12,786 ) (34,994 ) (23,666 ) (44,699 ) Provision for
income taxes (1,478 ) (5,927 ) (2,719 ) (6,119 ) Loss including
noncontrolling interests in operating subsidiaries (14,264 )
(40,921 ) (26,385 ) (50,818 ) Net loss attributable to
noncontrolling interests in operating subsidiaries 12 348
303 280 Loss attributable to Acacia Research
Corporation $ (14,252 ) $ (40,573 ) $ (26,082 ) $ (50,538 )
Net loss attributable to common stockholders - basic and diluted $
(14,252 ) $ (40,573 ) $ (26,082 ) $ (50,538 ) Basic and
diluted loss per common share $ (0.28 ) $ (0.81 ) $ (0.52 ) $ (1.01
) Weighted average number of shares outstanding, basic and
diluted 50,499,248 50,015,869 50,416,611
49,970,709
Reconciliation of GAAP Net Loss
and EPS to Non-GAAP Net Income (Loss) and EPS (In thousands,
except share and per share data) Three Months
Ended Six Months Ended June 30, June
30, 2017 2016 2017
2016 GAAP net loss $ (14,252 ) $ (40,573 ) $ (26,082
) $ (50,538 ) Non-cash stock compensation 1,487 1,475 3,615
3,210 Non-cash patent amortization 5,571 10,759 11,086 21,519
Impairment of patent-related intangible assets — 40,165
— 40,165 Pro forma non-GAAP net income
(loss) $ (7,194 ) $ 11,826 $ (11,381 ) $ 14,356 Pro
forma non-GAAP net earnings (loss) per common share - diluted(3) $
(0.14 ) $ 0.23 $ (0.23 ) $ 0.28 GAAP weighted-average
shares — diluted 50,499,248 50,107,305 50,416,611
49,989,843
ACACIA RESEARCH
CORPORATION SUMMARY FINANCIAL INFORMATION, (CONTINUED)
(In thousands) (Unaudited)
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, December 31,
2017 2016 ASSETS Current assets: Cash and cash
equivalents $ 63,220 $ 127,540 Restricted cash — 11,512 Short-term
investments 55,052 19,443 Accounts receivable 14,245 26,750 Prepaid
expenses and other current assets 4,116 3,245 Total current
assets 136,633 188,490
Investment at fair value
49,817
—
Investment - equity method
2,400
—
Loan receivable and accrued interest — 18,616 Investment in
warrants — 1,960 Patents, net of accumulated amortization 75,233
86,319 Other assets 407 618 $ 264,490 $ 296,003
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable and accrued expenses $ 9,239 $ 14,283
Royalties and contingent legal fees payable 9,427 13,908
Total current liabilities 18,666 28,191 Other liabilities
577 369 Total liabilities 19,243 28,560 Total stockholders’
equity 245,247 267,443 $ 264,490 $ 296,003
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION, (CONTINUED) (In
thousands) (Unaudited)
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months Ended Six Months
Ended June 30, June 30, 2017
2016 2017 2016 Cash flows from
operating activities: Net loss including noncontrolling interests
in operating subsidiaries $ (14,264 ) $ (40,921 ) $ (26,385 ) $
(50,818 ) Adjustments to reconcile net loss including
noncontrolling interests in operating subsidiaries to net cash
provided by operating activities: Loss on investments 5,425 — 5,425
— Depreciation and amortization 5,594 10,801 11,134 21,604 Non-cash
stock compensation 1,487 1,475 3,615 3,210 Impairment of
patent-related intangible assets — 40,165 — 40,165 Other (264 ) (51
) (612 ) 18 Changes in assets and liabilities: Restricted cash
11,515 (2,513 ) 11,512 (3,311 ) Accounts receivable (6,464 ) 20,850
12,505 29,175 Prepaid expenses and other assets 264 788 (1,474 )
654 Accounts payable and accrued expenses (2,478 ) (3,147 ) (5,054
) (5,880 ) Royalties and contingent legal fees payable 6,349
(764 ) (4,481 ) 2,976 Net cash provided by operating
activities 7,164 26,683 6,185 37,793
Cash flows from investing activities:
Investments in Investees
(31,514 ) — (31,514 ) — Advances to Investee (3,000 ) — (4,000 ) —
Purchase of available-for-sale investments (157,260 ) (49,677 )
(331,412 ) (49,677 ) Maturities and sales of available-for-sale
investments 193,125 17,462 295,807 17,462 Patent portfolio
investment costs — — — (1,000 ) Purchases of property and equipment
— — — (4 ) Net cash provided by (used
in) investing activities 1,351 (32,215 ) (71,119 ) (33,219 )
Cash flows from financing activities: Repurchased restricted
common stock (10 ) (25 ) (35 ) (25 ) Proceeds from exercises of
stock options 394 — 649 — Net
cash provided by (used in) financing activities 384 (25 )
614 (25 ) Increase (decrease) in cash and cash
equivalents 8,899 (5,557 ) (64,320 ) 4,549 Cash and cash
equivalents, beginning 54,321 145,329 127,540
135,223 Cash and cash equivalents, ending $ 63,220
$ 139,772 $ 63,220 $ 139,772
Business Highlights and Recent
Developments(2)
Second quarter 2017 business highlights and recent developments
include the following:
- Delaware Display Group LLC and
Innovative Display Technologies LLC entered into an agreement with
VIZIO, Inc. This agreement resolved patent litigation, Civil Action
Nos. 1:13-cv-02112 and 1:15-cv-01221 pending in the United States
District Court for the District of Delaware and Civil Action No.
2:16-cv-00932 pending in the United States District Court for the
Eastern District of Texas.
- LifePort Sciences LLC entered into a
license agreement with Medtronic, Inc.
- Saint Lawrence Communications LLC and
Saint Lawrence Communications GmbH entered into a patent license
agreement with ZTE Corporation. The agreement resolved litigation
actions that were pending in the United States District Court for
the Eastern District of Texas and in the Mannheim district court of
Germany.
- Acacia Research Corporation made an
investment in Miso Robotics, an innovative leader in robotics and
artificial intelligence solutions, as part of Miso Robotics’
closing of a $3.1 million round of funding. Miso Robotics will use
the funding to deliver “Flippy,” an adaptable AI-driven robotic
kitchen assistant that will work alongside kitchen staff to improve
operational efficiency for the restaurant industry. Acacia’s
investment in Miso Robotics represents Acacia’s second investment
in companies seeking to transform the marketplace through
Artificial Intelligence.
- As previously reported, on August 15,
2016, Acacia entered into an Investment Agreement with Veritone,
Inc., a Delaware corporation (“Veritone”), that provided for Acacia
to invest up to $50 million in Veritone, consisting of both debt
and equity components. Pursuant to the Investment Agreement,
Veritone issued to Acacia a Secured Promissory Note (the “Note”)
whereby Veritone borrowed $20 million from Acacia through two $10
million advances. The Note provided that, immediately after the
closing of an initial public offering of common stock of Veritone,
all outstanding amounts of principal and accrued interest under the
Note would automatically convert into shares of common stock of
Veritone at a conversion price per share equal to the lesser of (i)
$8.1653 and (ii) the initial public offering price per share of
common stock of Veritone.
Pursuant to the Investment Agreement,
Veritone also issued to Acacia a five-year warrant (the “Primary
Warrant”) that, upon the closing of an initial public offering of
common stock of Veritone, would be automatically exercised in full
for a number of shares of common stock of Veritone determined by
dividing $50 million, less all converted amounts or payments under
the Note (including interest accrued thereon), by an exercise price
per share equal to the lesser of (i) $8.1653 and (ii) the initial
public offering price per share of common stock of Veritone.
On May 17, 2017, Veritone closed the initial
public offering of its common stock at an initial public offering
price per share of $15.00. As a result, on May 17, 2017, all
outstanding principal and accrued interest under the Note, which
totaled $20,736,438 on the conversion date, automatically converted
into 1,523,746 shares of common stock of Veritone at a conversion
price of $13.6088 per share, which represents the initial $8.1653
conversion price described above as adjusted for a 0.6-for-1.0
reverse stock split of Veritone’s common stock, which was effected
in April 2017 (the “Reverse Stock Split”). In addition, the Primary
Warrant was automatically exercised in full into 2,150,335 shares
of common stock of Veritone, which was determined by dividing
$29,263,562, or $50 million less all converted principal and
accrued interest under the Note on the conversion date, by an
exercise price of $13.6088 per share, which represents the initial
$8.1653 exercise price described above as adjusted for the Reverse
Stock Split. Following the automatic exercise of the Primary
Warrant, Veritone issued to Acacia an additional warrant (the “10%
Warrant”) that provides for the issuance of additional shares of
common stock of Veritone at an exercise price per share equal to
the lesser of $13.6088, which represents an initial conversion
price of $8.1653 as adjusted for the Reverse Stock Split, or the
initial public offering price per share of common stock of
Veritone, with 50% of the shares underlying the 10% Warrant vesting
as of the issuance date of the 10% Warrant and the remaining 50% of
the shares vesting on the first anniversary of the issuance date of
the 10% Warrant. Acacia also received 295,440 shares of common
stock of Veritone upon the automatic conversion of all outstanding
principal and accrued interest under a secured convertible
promissory note issued to Acacia by Veritone pursuant to a Note
Purchase Agreement dated March 15, 2017, which totaled $4,020,584
on the conversion date, at a conversion price of $13.6088 per
share, which represents an initial $8.1653 conversion price as
adjusted for the Reverse Stock Split.
______________
(1) As used herein, “Acacia Research Corporation,” “we,”
“us,” and “our” refer to Acacia Research Corporation and/or its
wholly and majority-owned operating subsidiaries. All intellectual
property acquisition, development, licensing and enforcement
activities are conducted solely by certain of Acacia Research
Corporation’s wholly and majority-owned operating subsidiaries. (2)
Innovative Display Technologies LLC, Delaware Display Group LLC,
LifePort Sciences LLC and Saint Lawrence Communications LLC are
wholly and majority-owned operating subsidiaries of Acacia Research
Corporation. (3)
Calculated based on pro forma non-GAAP net
income (loss) attributable to common stockholders - diluted, not
shown.
(4) Note that the Veritone transaction accounting reflected in
today’s second quarter 2017 earnings release is based on
preliminary estimates of the fair value of our investment in
Veritone as of the applicable valuation dates, with the final
valuation expected to be completed at the time of the filing of our
second quarter 2017 quarterly report on Form 10-Q. Please refer to
our second quarter 2017 quarterly report on Form 10-Q, which is
scheduled to be filed on or before August 9, 2017, for final
adjustments to the valuation of our investment in Veritone, if any.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006459/en/
Acacia Research CorporationRob Stewart1+ (949)
480-8311rs@acaciares.com
Acacia Research Technolo... (NASDAQ:ACTG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Acacia Research Technolo... (NASDAQ:ACTG)
Historical Stock Chart
From Apr 2023 to Apr 2024