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Investments (Notes) | 9 Months Ended
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Sep. 30, 2018
Investments, Debt and Equity Securities [Abstract] |
Cost and Equity Method Investments Disclosure [Text Block] | INVESTMENTS Investment at Fair Value Veritone Investment Agreement. On August 15, 2016, Acacia entered into an Investment Agreement with Veritone which provided for Acacia to invest up to $50 million in Veritone, consisting of both debt and equity components. Pursuant to the Investment Agreement, on August 15, 2016, Acacia entered into a secured convertible promissory note with Veritone (the “Veritone Loans”), which permitted Veritone to borrow up to $20 million through two $10 million advances, each bearing interest at the rate of 6.0% per annum (included in Other Income (Expense) in the condensed consolidated statements of operations). On August 15, 2016, Acacia funded the initial $10 million loan (the “First Loan”). On November 25, 2016, Acacia funded the second $10 million loan (the “Second Loan”). The First Loan and the Second Loan were due and payable on November 25, 2017. In conjunction with the First Loan and Second Loan, Veritone issued Acacia a total of three four-year $700,000 warrants to purchase shares of Veritone’s common stock at an exercise price of $13.6088 per share. Upon Veritone’s consummation of its public offering of its common stock on May 17, 2017 (“IPO”), all outstanding principal and accrued interest under the Veritone Loans, totaling $20.7 million, automatically converted into 1,523,746 shares of Veritone’s common stock based on a conversion price of $13.6088 per share. In addition, in August 2016, Veritone issued Acacia a five-year Primary Warrant to purchase up to $50.0 million, less all converted amounts or amounts repaid under the Veritone Loans, worth of shares of Veritone’s common stock at an exercise price of $13.6088 per share. Pursuant to an amendment to the Primary Warrant effective March 15, 2017, the Primary Warrant was exercised automatically upon the consummation of Veritone’s IPO, resulting in the purchase by Acacia of an additional 2,150,335 shares of Veritone common stock, at an aggregate purchase price of $29.3 million. Immediately following Acacia’s exercise of the Primary Warrant in full, Veritone issued to Acacia an additional 10% Warrant that provides for the issuance of an additional 809,400 shares of Veritone common stock at an exercise price of $13.6088 per share, 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 underlying the 10% Warrant vesting on the first anniversary of the issuance date of the 10% Warrant. Veritone Bridge Loan. On March 14, 2017, Acacia entered into an additional secured convertible promissory note with Veritone (the “Veritone Bridge Loan”), which permitted Veritone to borrow up to an additional $4.0 million, bearing interest at the rate of 8.0% per annum. On March 17, 2017, Acacia funded the initial $1.0 million advance (the “First Bridge Loan”). On April 14, 2017, Acacia funded the second $1.0 million advance (the “Second Bridge Loan”). All advances and accrued interest under the Veritone Bridge Loan were due and payable on November 25, 2017. In May 2017, pursuant to the terms of the Veritone Bridge Loan, Acacia elected to make an additional advance to Veritone totaling $2.0 million, representing all principal amounts not advanced upon Veritone’s consummation of its IPO. Upon consummation of Veritone’s IPO, the outstanding principal and accrued interest under the Veritone Bridge Loan of $4.0 million and $21,000, respectively, automatically converted into 295,440 shares of Veritone’s common stock at a conversion price of $13.6088 per share. In conjunction with the Veritone Bridge Loan, Veritone issued to Acacia (i) 60,000 shares of Veritone common stock (“Upfront Shares”), (ii) 90,000 shares of Veritone common stock (the “Bridge Installment Shares”), and (iii) 10-year warrants to purchase up to 157,000 shares of Veritone common stock with other terms and conditions similar to the warrants described above. All share amounts above have been adjusted to reflect a 0.6-for-1 reverse stock split of Veritone’s common stock, which was effected by Veritone in April 2017. The Company's shares of Veritone common stock and the shares of Veritone common stock underlying the warrants were subject to a lock-up agreement that expired on August 15, 2018, subsequent to which the shares may be sold pursuant to Rule 144, subject to volume limitations and Rule 144 filing requirements, as well as other restrictions under applicable securities laws. All of the Veritone common stock held by Acacia was unregistered as of the issue date and as of September 30, 2018. On October 5, 2018, a registration statement on Form S-3 registering all of Acacia’s shares of Veritone common stock was declared effective by the SEC. Accounting Prior to Veritone IPO. Prior to conversion, Acacia’s Investment Agreement and the Veritone Bridge Loan represented variable interests in Veritone for which Acacia was not the primary beneficiary, primarily due to a lack of a controlling interest in Veritone. In addition, the Veritone Loans and Veritone Bridge Loan (the “Loans”) were not considered in-substance common stock, the common stock purchase warrants were unexercised, and the right to receive the Upfront Shares and the Bridge Installment shares (“Veritone Shares”) were considered in-substance common stock, however, application of the equity method was not material, therefore, the equity method of accounting was not applied prior to the IPO. Prior to conversion, the Loans and the related common stock purchase warrants and Veritone Shares were accounted for as separate units of account based on the relative estimated fair values of the separate units as of the effective date of the respective transactions, with the face amount of the loans allocated to (1) the Loans, which were accounted for as long-term loan receivables and (2) the common stock purchase warrants and Veritone Shares. The estimated relative fair value allocation was determined using a Monte Carlo simulation model. Key inputs to the model included the estimated value of Veritone’s equity on the effective date of the transactions, related volatility of equity assumptions, discounts for lack of marketability, assumptions related to liquidity scenarios, and assumptions related to recovery scenarios on the Loans. Assumptions used in connection with estimating the relative fair values included: (1) volatility ranging from 40% to 50%, (2) financing probabilities ranging from 25% to 75%, (3) marketability discount of 7% and (4) 100% investment recovery assumption. The loan discount, representing the difference between the face amount of the Loans and the relative fair value allocated to the Loans, was accreted over the expected life of the Loans, using the effective interest method, with the related interest amounts reflected in other income (expense) in the condensed consolidated statements of operations. Interest income for the nine months ended September 30, 2017 was $1.1 million, including accretion of the loan discount of $630,000. The effective yield on the Loans for the nine months ended September 30, 2017 ranged from 9% to 53%. Accounting Subsequent to Veritone IPO. Upon Veritone’s consummation of its IPO on May 17, 2017, the Loans were converted into shares of Veritone common stock and the Primary Warrant was automatically exercised in full, as described above, resulting in a 20% ownership interest in Veritone (excluding warrants). Based on Acacia’s representation on the Veritone board of directors and Acacia’s 20% ownership interest in Veritone, Acacia management determined that the equity method of accounting was applicable. Upon becoming eligible for the equity method of accounting, Acacia elected to apply the fair value option to account for its equity investment in Veritone, including all of its investments in Veritone common stock and warrants, due to the availability of quoted prices in an active market for the Veritone common stock. On August 23, 2018, Acacia sold 1 million shares of Veritone common stock at $10.44 per share and recorded a realized loss of $5.5 million. As of September 30, 2018, Acacia’s ownership interest in Veritone, on a fully-diluted basis, was approximately 15%. Acacia’s equity investment in shares of Veritone common stock is recorded at fair value based on the quoted market price of Veritone’s common stock on The NASDAQ Global Market on the applicable valuation date. The fair value at December 31, 2017 was adjusted for an estimated discount for lack of marketability (“DLOM”) associated with the restricted nature of the common shares as of December 31, 2017 (Level 3 input). Acacia’s investment in Veritone warrants is recorded at fair value, as adjusted for an estimated DLOM, based on the Black-Scholes option-pricing model, utilizing the following assumptions at September 30, 2018: risk-free interest rates ranging from 2.81% to 3.03%; expected terms ranging from 2 years to 9 years; volatility of 70%; and a dividend yield of zero. The DLOM for the Veritone common stock and warrants was estimated utilizing a Finnerty model with the following results and assumptions:
|  | Veritone Common Stock |  | Veritone Warrants |  |
|  | IPO Date |  | December 31, 2017 |  | September 30, 2018 |  | IPO Date |  | December 31, 2017 |  | September 30, 2018
Estimated DLOM applied |  | 5.7% |  | 5% |  | — |  | 5.7% |  | 10% |  | 20% | - | 31%
Volatility assumptions |  | 35% |  | 37% |  | — |  | 35% |  | 72 | % | - | 87% |  | 70%
Term assumptions |  | 6 months |  | 2 months |  | — |  | 6 months |  | 5 months |  | 2 | - | 9 years
At September 30, 2018, the fair value of the 3,119,521 shares of Veritone common stock owned by Acacia totaled $32,538,000. At September 30, 2018, the fair value of the 1,120,432 common stock purchase warrants held by Acacia totaled $4,110,000. At September 30, 2018, the cumulative net realized and unrealized loss (since the IPO) on our Veritone investment was $8,140,000. A 10% increase in the DLOM assumptions utilized at all applicable valuation dates would result in an approximate 13% decrease in the fair value of our investment in Veritone warrants at September 30, 2018, and a corresponding decrease in the net investment gain or loss reflected in the condensed consolidated statements of operations for the applicable period. Changes in the fair value of Acacia’s investment in Veritone are recorded as unrealized gains or losses in the condensed consolidated statements of operations. Summarized financial information for Veritone, presented on a three month lag basis, is as follows (in thousands, except per share amounts):
|  | Three Months Ended June 30, 2018 |  | Six Months Ended June 30, 2018
Revenues |  | $ | 4,168 |  |  | $ | 8,556 |
Gross profit |  | 3,348 |  |  | 7,172 |
Operating expenses |  | 17,081 |  |  | 34,855 |
Other income (expense), net |  | 133 |  |  | 316 |
Net loss attributable to common stockholders |  | $ | (14,330 | ) |  | $ | (27,379 | )
Net loss per share attributable to common stockholders - basic and diluted |  | $ | (0.88 | ) |  | $ | (1.69 | )
|  | June 30, 2018 |  | December 31, 2017
Current assets |  | $ | 97,833 |  |  | $ | 83,805 |
Noncurrent assets |  | 7,190 |  |  | 4,753 |
Total Assets |  | $ | 105,023 |  |  | $ | 88,558 |
Current liabilities |  | $ | 32,027 |  |  | $ | 27,256 |
Noncurrent liabilities |  | 473 |  |  | — |
Total liabilities |  | 32,500 |  |  | 27,256 |
Preferred stock |  | — |  |  | — |
Total stockholder's equity (deficit) |  | 72,523 |  |  | 61,302 |
Total liabilities, preferred stock and stockholders’ equity |  | $ | 105,023 |  |  | $ | 88,558 |
Other Investment In June 2017, Acacia made an investment in the Series A Preferred financing round for Miso Robotics, Inc. (“Miso Robotics”), an innovative leader in robotics and artificial intelligence solutions, totaling $2,250,000, acquiring a 22.6% ownership interest in Series A preferred stock of Miso Robotics, and one board seat. In February 2018, Acacia made an additional equity investment in the Series B Preferred financing round for Miso Robotics totaling $6,000,000, increasing its ownership interest (Series B preferred stock) in Miso Robotics to approximately 30%, and acquiring an additional board seat. In addition, in June 2017, Acacia also entered into an IP services agreement with Miso Robotics to help Miso Robotics drive AI-based solutions for the restaurant industry. Miso Robotics will use the funding to deliver an adaptable AI-driven robotic kitchen assistant that will work alongside kitchen staff to improve operational efficiency for the restaurant industry. As of February 2018, the preferred stock was not deemed to be in-substance common stock due to the substantive liquidation preference associated with the preferred stock. As such, as of February 2018, the cumulative investment in Miso Robotics is recorded at cost and assessed for any impairment at each balance sheet date. Prior to February 2018, the equity method of accounting was applied.

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- Definition The entire disclosure for cost method and equity method investments included basis, impairment losses, recognized or unrecognized gains (losses). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2197087 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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