Acacia Research Reports First Quarter 2020 Financial Results

Company Advances Absolute Return Strategy and Enhances IP Portfolio with Acquisition of Excalibur IP and Wireless Networking Patents from L3Harris

NEW YORK–(BUSINESS WIRE)–Acacia Research Corporation (“we”, “Acacia” or “the Company”) (Nasdaq: ACTG) today reported results for the three-month period ended March 31, 2020.

Clifford Press, Chief Executive Officer, stated, “Acacia has made significant progress in 2020 furthering our absolute return strategy. Subsequent to the end of the quarter, we acquired two attractive patent portfolios, bringing us to four acquisitions for the year. Adding these assets to our existing portfolio creates an attractive blend of licensing and litigation opportunities to pursue. We expect these additions to begin generating licensing revenues in the second quarter with significant contribution beginning in 2021.”

Al Tobia, President and Chief Investment Officer, added, “Recent market volatility has opened many corporate development opportunities and we are busy identifying, and evaluating these opportunities. Our focus remains on growing book value and leveraging our substantial net tax assets and capital partnership with Starboard Value.”

First Quarter 2020 Financial Summary:

  • Cash and trading securities totaled $158.1 million as of March 31, 2020, a decrease from $168.3 million as of December 31, 2019.
  • Gross revenues were $3.8 million.
  • Operating loss was $3.6 million.
  • GAAP net loss to common shareholders was $12.2 million or $0.24 per basic and diluted share.

IP Portfolio Acquisitions

Subsequent to the end of the first quarter, a subsidiary of Acacia acquired Excalibur IP, a portfolio of more than 2,500 patents that were spun out of Yahoo! prior to its sale to Verizon. The patents cover technologies including internet search, cloud computing, e-commerce, location-based services, mobile apps, media management and social networking. These patents have applicability to a variety of industries, including: enterprise software, web search and analytics, online shopping and advertising, and audio/video streaming among others.

In addition, the subsidiary also acquired a significant portfolio of nearly 150 patents from L3Harris. These patents cover commercial applications of Wi-Fi and Internet-of-Things technologies. These patents have applicability to a wide variety of products and markets, including consumer electronics, home and office wireless networking, home automation, smart metering, industrial wireless control systems and remote access systems.

Investor Conference Call:

The Company will host a conference call today, Monday, May 11, 2020, to discuss these results and provide a business update at 11 a.m. ET/ 8 a.m. PT.

To access the live call, please dial 877-407-0778 (U.S. and Canada) or 201-689-8565 (international) and reference conference ID 13703484. The conference call will also be simultaneously webcasted on the investor relations section of the Company’s website at http://acaciaresearch.com under the events and presentations tab. Following the conclusion of the live call, a replay of the webcast will be available on the Company’s website for at least 30 days.

About Acacia Research Corporation

Founded in 1993, Acacia Research Corporation (ACTG) invests in Intellectual Property Assets and partners with inventors and patent owners to realize 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 implement our strategic plan, the ability to successfully build out a new leadership team within a certain timeframe, the ability to streamline financial reporting, the ability to successfully develop licensing programs and attract new business, 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, general economic conditions and the success of our investments. 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 from period to period.

ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 

March 31,

December 31,

 

2020

 

 

2019

 

 

ASSETS

Current assets:
Cash and cash equivalents

$

58,678

 

$

57,359

 

Trading securities – debt

 

88,963

 

 

93,843

 

Trading securities – equity

 

10,470

 

 

17,140

 

Accounts receivable

 

621

 

 

511

 

Prepaid expenses and other current assets

 

3,653

 

 

2,912

 

Total current assets

 

162,385

 

 

171,765

 

 
Long-term restricted cash

 

35,000

 

 

35,000

 

Investment at fair value

 

1,387

 

 

1,500

 

Patents, net of accumulated amortization

 

12,550

 

 

7,814

 

Leased right-of-use assets

 

1,395

 

 

1,264

 

Other non-current assets

 

1,004

 

 

818

 

Total assets

$

213,721

 

$

218,161

 

 
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable

$

3,136

 

$

1,765

 

Accrued expenses and other current liabilities

 

4,376

 

 

7,265

 

Accrued compensation

 

1,127

 

 

507

 

Royalties and contingent legal fees payable

 

2,070

 

 

2,178

 

Total current liabilities

 

10,709

 

 

11,715

 

 
Series A warrant liabilities

 

2,610

 

 

3,568

 

Series A embedded derivative liabilities

 

21,682

 

 

17,974

 

Series B warrant liabilities

 

6,231

 

 

 

Long-term lease liabilities

 

1,395

 

 

1,264

 

Other long-term liabilities

 

583

 

 

593

 

Total liabilities

 

43,210

 

 

35,114

 

 
 
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 March 31, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $35,000 as of March 31, 2020 and December 31, 2019, respectively

 

8,720

 

 

8,089

 

 
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding

 

 

 

 

Common stock, par value $0.001 per share; 300,000,000 shares authorized; 49,813,443 and 50,370,987 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

 

50

 

 

50

 

Treasury stock, at cost, 3,496,726 and 2,919,828 shares as of March 31, 2020 and December 31, 2019, respectively

 

(40,586

)

 

(39,272

)

Additional paid-in capital

 

651,441

 

 

652,003

 

Accumulated deficit

 

(450,947

)

 

(439,656

)

Total Acacia Research Corporation stockholders’ equity

 

159,958

 

 

173,125

 

 
Noncontrolling interests

 

1,833

 

 

1,833

 

 
Total stockholders’ equity

 

161,791

 

 

174,958

 

 
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity

$

213,721

 

$

218,161

 

ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

 

 

Three Months Ended

 

March 31,

 

 

2020

 

 

2019

 

 

Revenues

$

3,815

 

$

3,387

 

 

Portfolio operations:

Inventor royalties

 

426

 

 

1,353

 

Contingent legal fees

 

234

 

 

177

 

Litigation and licensing expenses – patents

 

1,037

 

 

3,801

 

Amortization of patents

 

1,043

 

 

656

 

Other portfolio expenses (income)

 

(234

)

 

650

 

Total portfolio operations

 

2,506

 

 

6,637

 

Net portfolio income (loss)

 

1,309

 

 

(3,250

)

General and administrative expenses

 

4,878

 

 

3,655

 

Operating loss

 

(3,569

)

 

(6,905

)

 

Other income (expense):

Change in fair value of investment, net

 

4,108

 

 

6,908

 

Loss on sale of investment

 

(3,316

)

 

(5,590

)

Change in fair value of the Series A and B warrants and embedded derivatives

 

(4,382

)

 

 

Change in fair value of trading securities

 

(6,117

)

 

675

 

Gain (loss) on sale of trading securities

 

112

 

 

(43

)

Interest income and other

 

535

 

 

871

 

Total other income (expense)

 

(9,060

)

 

2,821

 

 

Loss before income taxes

 

(12,629

)

 

(4,084

)

 

Income tax benefit (expense)

 

1,338

 

 

(314

)

 

Net loss including noncontrolling interests in subsidiaries

 

(11,291

)

 

(4,398

)

 

Net loss attributable to noncontrolling interests in subsidiaries

 

 

 

14

 

 

Net loss attributable to Acacia Research Corporation

$

(11,291

)

$

(4,384

)

 

Less: Dividend on Series A redeemable convertible preferred stock

 

(263

)

 

 

Less: Accretion of Series A redeemable convertible preferred stock

 

(631

)

 

 

Net loss attributable to common stockholders – basic and diluted

$

(12,185

)

$

(4,384

)

Basic and diluted net loss per common share

$

(0.24

)

$

(0.09

)

Weighted average number of shares outstanding – basic and diluted

 

49,875,396

 

 

49,655,881

 

 

Contacts

Acacia Research Investor Contact:
FNK IR

Rob Fink, 646-809-4048

rob@fnkir.com

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