SEGMENT REPORTING

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTINGAs of June 30, 2022, the Company operates and reports its results in two reportable segments: Intellectual Property Operations and Industrial Operations. Historically, the Company has managed and reported under a single reporting segment. In October 2021, the Company acquired Printronix, which comprises all of the operations of the Company’s Industrial Operations reportable segment and led to the identification of the additional reporting segment. The Company reports segment information based on the management approach and organizes its businesses based on products and services. The management approach designates the internal reporting used by the chief operating decision maker for

decision making and performance assessment as the basis for determining the Company’s reportable segments. The performance measure of the Company’s reportable segments is primarily income or (loss) from operations. Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment. Other than the Company's equity securities investments, specific asset information is not included in managements review at this time.

The Company’s Intellectual Property Operations segment invests in IP and related absolute return assets, and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. We assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our 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 variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own.

The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users. The Industrial Operations reporting segment did not exist prior to the acquisition of Printronix in October 2021. Therefore, for the three and six months ended June 30, 2021, the consolidated results represented the results of the Company’s single reporting segment.

The Company's segment information is as follows:

	Three Months Ended June 30,
	2022
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Revenues:
License fees	$	8,062	$	—	$	8,062
Printers and parts	—		3,662		3,662
Consumable products	—		4,214		4,214
Services	—		779		779
Total revenues	8,062		8,655		16,717
Cost of revenues:
Inventor royalties	190		—		190
Contingent legal fees	755		—		755
Litigation and licensing expenses	1,089		—		1,089
Amortization of patents	2,600		—		2,600
Cost of sales	—		4,592		4,592
Total cost of revenues	4,634		4,592		9,226
Segment gross profit	3,428		4,063		7,491
Other operating expenses:
Engineering and development expenses	—		145		145
Sales and marketing expenses	—		2,294		2,294
Amortization of intangible assets	—		433		433
General and administrative expenses	1,807		2,253		4,060
Total other operating expenses	1,807		5,125		6,932
Segment operating income (loss)	$	1,621	$	(1,062)	559
Parent general and administrative expenses					6,229
Operating loss					(5,670)
Total other expense					(42,020)
Loss before income taxes					$	(47,690)

For comparability purposes, Acacia's three months ended June 30, 2021 general and administrative expenses, as reported in the consolidated statement of operations, were $6.5 million and included parent general and administrative expenses of $5.1 million, which derives a comparative Intellectual Property Operations general and administrative expense amount of approximately $1.4 million.

	Six Months Ended June 30,
	2022
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Revenues:
License fees	$	10,677	$	—	$	10,677
Printers and parts	—		7,916		7,916
Consumable products	—		9,598		9,598
Services	—		2,033		2,033
Total revenues	10,677		19,547		30,224
Cost of revenues:
Inventor royalties	360		—		360
Contingent legal fees	1,304		—		1,304
Litigation and licensing expenses	2,333		—		2,333
Amortization of patents	5,201		—		5,201
Cost of sales	—		8,784		8,784
Total cost of revenues	9,198		8,784		17,982
Segment gross profit	1,479		10,763		12,242
Other operating expenses:
Engineering and development expenses	—		335		335
Sales and marketing expenses	—		4,310		4,310
Amortization of intangible assets	—		866		866
General and administrative expenses	3,523		4,675		8,198
Total other operating expenses	3,523		10,186		13,709
Segment operating (loss) income	$	(2,044)	$	577	(1,467)
Parent general and administrative expenses					12,711
Operating loss					(14,178)
Total other expense					(121,656)
Loss before income taxes					$	(135,834)

For comparability purposes, Acacia's six months ended June 30, 2021 general and administrative expenses, as reported in the consolidated statement of operations, were $12.7 million and included parent general and administrative expenses of $10.2 million, which derives a comparative Intellectual Property Operations general and administrative expense amount of approximately $2.4 million.

	June 30, 2022		December 31, 2021
	(In thousands)
Equity securities investments:
Equity securities at fair value	$	126,345	$	361,778
Equity securities without readily determinable fair value	5,816		5,816
Investment securities - equity method investments	73,020		30,934
Total parent equity securities investments	205,181		398,528
Other parent assets	135,355		172,726
Segment total assets:
Intellectual property operations	169,561		175,286
Industrial operations	51,602		52,316
Total assets	$	561,699	$	798,856

The Company's revenues and long-lived tangible assets by geographic area are presented below. Intellectual Property Operations revenues are attributed to licensees domiciled in foreign jurisdictions. Printronix's net sales to external customers are attributed to geographic areas based upon the final destination of products shipped. The Company, primarily through its Printronix subsidiary, has identified three global regions for marketing its products and services: Americas, Europe, Middle East and Africa, and Asia-Pacific. Assets are summarized based on the location of held assets.

	Three Months Ended June 30,
	2022
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Revenues by geographic area:
United States	$	7,964	$	4,032	$	11,996
Canada and Latin America	4		180		184
Total Americas	7,968		4,212		12,180
Europe, Middle East and Africa	89		2,298		2,387
China	—		1,091		1,091
India	—		232		232
Asia-Pacific, excluding China and India	5		822		827
Total Asia-Pacific	5		2,145		2,150
Total revenues	$	8,062	$	8,655	$	16,717

	Six Months Ended June 30,
	2022
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Revenues by geographic area:
United States	$	10,061	$	7,881	$	17,942
Canada and Latin America	10		552		562
Total Americas	10,071		8,433		18,504
Europe, Middle East and Africa	589		4,806		5,395
China	—		2,224		2,224
India	—		1,981		1,981
Asia-Pacific, excluding China and India	17		2,103		2,120
Total Asia-Pacific	17		6,308		6,325
Total revenues	$	10,677	$	19,547	$	30,224

	June 30, 2022
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Long-lived tangible assets by geographic area:
United States	$	261	$	370	$	631
Malaysia	—		2,989		2,989
Other foreign countries	—		263		263
Total	$	261	$	3,622	$	3,883

	December 31, 2021
	Intellectual Property Operations		Industrial Operations		Total
	(In thousands)
Long-lived tangible assets by geographic area:
United States	$	204	$	473	$	677
Malaysia	—		3,203		3,203
Other foreign countries	—		303		303
Total	$	204	$	3,979	$	4,183