ACTG Acacia Research Technologies

Company Further Rationalizes Expense Structure, Positioning Acacia to Leverage Strategic Partnership with Starboard Value to Pursue Investment Opportunities

Acacia Research Corporation (“we”, "Acacia" or "the Company") (Nasdaq: ACTG) today reported results for the three and 12-month periods ended December 31, 2019.

Clifford Press, Chief Executive Officer, stated, “We finished 2019 with a substantially expanded capital base, leaner cost structure, and the opportunity to build an exceptional platform for investing in unique transactions. We are gratified that our shareholders strongly endorsed our strategic partnership with Starboard Value, an ideal partner for Acacia as we work to leverage our substantial net tax assets and implement our absolute return investment strategy. We continue to build out our investment team and the opportunity to put this exceptional platform to work is only enhanced by current market conditions.”

Al Tobia, President and Chief Investment Officer, added, “Our next area of focus is to leverage the Starboard partnership to pursue investment opportunities with greater scale and flexibility that can systematically grow Acacia’s book value. As we actively explore a wide range of investment opportunities that include new revenue streams, royalty streams, intellectual property and other undervalued assets, we are prudently managing our cash. Acacia maintains a unique position, with strong capitalization and significant expertise to identify, evaluate, and monetize a wide range of asset classes. We expect 2020 will be a year of growth as we take concrete steps to turn this position, and our relationships, into tangible value.”

Full-Year 2019 Financial Summary:

• Cash and short-term investments totaled $168.3 million as of December 31, 2019, an increase from $165.5 million as of December 31, 2018.
• Gross revenues were $11.2 million.
• General and administrative expenses declined 12.6% as new management rationalized the company’s cost structure, including reducing rent and duplicative salaries.
• Operating loss was $23.4 million.
• GAAP net loss to common shareholders was $17.4 million or $(0.35) per basic share.

Fourth Quarter Financial Summary:

• Gross revenues were $688,000.
• Operating loss was $7.4 million.
• GAAP net income to common shareholders was $327,000 or $0.01 per basic share.

Investor Conference Call:

The Company will host a conference call today, Thursday, March 12, 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 (800) 367-2403 (U.S. and Canada) or (334) 777-6978 (international) and reference conference ID 5163391. 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 CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)  

December 31,

 

December 31,

 

2019

 

 

 

2018

 

  ASSETS

Current assets:

Cash and cash equivalents

$

57,359

 

$

128,809

 

Trading securities - debt

 

93,843

 

 

33,642

 

Trading securities - equity

 

17,140

 

 

3,012

 

Accounts receivable

 

511

 

 

32,884

 

Prepaid expenses and other current assets

 

2,912

 

 

3,125

 

Total current assets

 

171,765

 

 

201,472

 

 

Long-term restricted cash

 

35,000

 

 

-

 

Investment at fair value

 

1,500

 

 

7,459

 

Other investments

 

-

 

 

8,195

 

Patents, net of accumulated amortization

 

7,814

 

 

6,587

 

Leased right-of-use assets

 

1,264

 

 

-

 

Other non-current assets

 

818

 

 

236

 

Total assets

$

218,161

 

$

223,949

 

   

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

1,765

 

$

3,698

 

Accrued expenses and other current liabilities

 

7,265

 

 

4,299

 

Accrued compensation

 

507

 

 

350

 

Royalties and contingent legal fees payable

 

2,178

 

 

22,688

 

Total current liabilities

 

11,715

 

 

31,035

 

 

Series A warrant liabilities

 

3,568

 

 

-

 

Series A embedded derivative liabilities

 

17,974

 

 

-

 

Long-term lease liabilities

 

1,264

 

 

-

 

Other long-term liabilities

 

593

 

 

1,674

 

Total liabilities

 

35,114

 

 

32,709

 

 

Series A redeemable convertible preferred stock, par value $100 per share; 350,000 shares authorized, issued and outstanding as of December 31, 2019; no shares authorized, issued or outstanding as of December 31, 2018

 

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; 100,000,000 shares authorized; 50,370,987 and 49,639,319 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively

 

50

 

 

50

 

Treasury stock, at cost, 2,919,828 shares as of December 31, 2019 and December 31, 2018

 

(39,272

)

 

(39,272

)

Additional paid-in capital

 

652,003

 

 

651,156

 

Accumulated deficit

 

(439,656

)

 

(422,541

)

Total Acacia Research Corporation stockholders' equity

 

173,125

 

 

189,393

 

 

Noncontrolling interests

 

1,833

 

 

1,847

 

 

Total stockholders' equity

 

174,958

 

 

191,240

 

 

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

$

218,161

 

$

223,949

 

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

Three Months Ended

 

Years Ended

December 31,

 

December 31,

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

Revenues

$

688

 

$

49,203

 

$

11,246

 

$

131,506

 

 

Portfolio operations:

Inventor royalties

 

192

 

 

11,002

 

 

4,944

 

 

35,168

 

Contingent legal fees

 

4

 

 

11,756

 

 

591

 

 

31,501

 

Patent acquisition expenses

 

-

 

 

-

 

 

-

 

 

4,000

 

Litigation and licensing expenses - patents

 

1,160

 

 

1,689

 

 

7,803

 

 

8,866

 

Amortization of patents

 

857

 

 

11,560

 

 

3,194

 

 

27,120

 

Other portfolio expenses

 

1,581

 

 

400

 

 

1,756

 

 

2,602

 

Total portfolio operations

 

3,794

 

 

36,407

 

 

18,288

 

 

109,257

 

Net portfolio income (loss)

 

(3,106

)

 

12,796

 

 

(7,042

)

 

22,249

 

General and administrative expenses

 

4,328

 

 

2,754

 

 

16,376

 

 

18,728

 

Impairment of patent-related intangible assets

 

-

 

 

-

 

 

-

 

 

28,210

 

Operating income (loss)

 

(7,434

)

 

10,042

 

 

(23,418

)

 

(24,689

)

 

Other income (expense):

Change in fair value of investment, net

 

277

 

 

(5,142

)

 

9,899

 

 

(59,103

)

Loss on sale of investment

 

(1,083

)

 

(15,390

)

 

(9,230

)

 

(19,095

)

Impairment of other investment

 

-

 

 

-

 

 

(8,195

)

 

(1,000

)

Gain on disposal of other investment

 

-

 

 

-

 

 

2,000

 

 

-

 

Other expense

 

(32

)

 

(629

)

 

(32

)

 

(629

)

Change in fair value of the Series A warrant and embedded derivative

 

4,518

 

 

-

 

 

4,518

 

 

-

 

Interest income and other

 

2,241

 

 

149

 

 

5,505

 

 

847

 

Total other income (expense)

 

5,921

 

 

(21,012

)

 

4,465

 

 

(78,980

)

 

Loss before income taxes

 

(1,513

)

 

(10,970

)

 

(18,953

)

 

(103,669

)

 

Income tax benefit (expense)

 

2,147

 

 

(397

)

 

1,824

 

 

(1,179

)

 

Net income (loss) including noncontrolling interests in subsidiaries

 

634

 

 

(11,367

)

 

(17,129

)

 

(104,848

)

 

Net (income) loss attributable to noncontrolling interests in subsidiaries

 

-

 

 

(2

)

 

14

 

 

(181

)

 

Net income (loss) attributable to Acacia Research Corporation

$

634

 

$

(11,369

)

$

(17,115

)

$

(105,029

)

 

Less: Accretion of redeemable preferred stock

 

(307

)

 

-

 

 

(307

)

 

-

 

Net income (loss) attributable to common stockholders - basic

$

327

 

$

(11,369

)

$

(17,422

)

$

(105,029

)

Basic net income (loss) per common share

$

0.01

 

$

(0.23

)

$

(0.35

)

$

(2.10

)

Weighted average number of shares outstanding - basic

 

49,875,750

 

 

49,639,172

 

 

49,764,002

 

 

49,969,062

 

 

Add: Accretion of redeemable preferred stock

 

307

 

 

-

 

 

307

 

 

-

 

Less: Mark-to-market adjustment for preferred stock embedded derivative

 

(3,258

)

 

-

 

 

(3,258

)

 

-

 

Net loss attributable to common stockholders - diluted

$

(2,624

)

$

(11,369

)

$

(20,373

)

$

(105,029

)

Diluted net income (loss) per common share

$

(0.05

)

$

(0.23

)

$

(0.40

)

$

(2.10

)

Weighted average number of shares outstanding - diluted

 

54,406,835

 

 

49,639,172

 

 

50,896,773

 

 

49,969,062

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200312005240/en/

Acacia Research Investor Contact: FNK IR Rob Fink, 646-809-4048 rob@fnkir.com