Good afternoon, and welcome ladies and gentlemen, to the Acacia Research Second Quarter 2017 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded. And then all participants are in a listen-only mode. [Operator Instructions] I will now turn the conference over to Mr. Rob Stewart. Please go ahead, sir.

Welcome and thank you for joining today's Second Quarter 2017 Shareholder Conference Call. I am Rob Stewart, President of Acacia Research. With me today are Clayton Haynes, our CFO; and Ed Treska, our General Counsel. Today, Clayton will review our financial performance and Ed will review the status of some of our current licensing and enforcement programs. I will then provide an overview, brief business update of Acacia. First, our Safe Harbor statement. Today's call may involve what the SEC considers to be forward-looking statements. Please refer to our earnings release filed with the SEC today as an exhibit to our 8-K for our forward-looking statement disclaimer. In today's call, the terms we, us and our refer to Acacia Research Corporation and its wholly and majority-owned operating subsidiaries. All rights, acquisitions, development, licensing and enforcement activities are conducted solely by certain Acacia Research Corporation's wholly and majority-owned operating subsidiaries. I will now turn the call over to Clayton Haynes for the financial review.

Thank you, Rob, and thank you to those joining us for today's Second Quarter 2017 Earnings Conference Call. Second quarter 2017 revenues totaled $16.5 million compared to $41.4 million in the comparable prior year quarter. For the second quarter of 2017, 1 licensee individually accounted for 85% of revenues recognized. In the comparable prior year quarter, a different licensee also individually accounted for 85% of revenues recognized. For the second quarter of 2017, we reported a GAAP net loss of $14.3 million or $0.28 per share versus a GAAP net loss of $40.6 million or $0.81 per share for the comparable prior year quarter. On a non-GAAP basis, excluding noncash stock compensation, patent amortization charges and patent impairment charges, if any, we reported a second quarter of 2017 net loss of $7.2 million or $0.14 per share as compared to non-GAAP net income of $11.8 million or $0.23 per share for the second quarter of 2016. Please refer to our disclosures regarding the presentation of non-GAAP financial measures and other notes in today's earnings release and 8-K filed with the SEC. The GAAP and non-GAAP second quarter 2017 net loss amount include a preliminary unrealized investment loss totaling $5.4 million, comprised of an unrealized loss on conversion of our Veritone loan to equity upon Veritone's consummation of its IPO on May 17 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. Second quarter 2017 Inventor Royalties expense increased to $4.3 million from zero in the 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 fees expense decreased…

Thank you, Clayton. Today, I will provide updates for the litigation activity in Acacia's St. Lawrence and CCE subsidiary. As we announced this past quarter, Acacia's subsidiary, St. Lawrence Communications LLC resolved its enforcement actions against ZTE, including the U.S. lawsuit which had been set for trial on May 22. With respect to the U.S. trial in March of this year against Motorola, the district court is currently considering St. Lawrence's post-trial motion based on willfulness for enhanced damages and attorney's fees. The St. Lawrence trial against Apple in the U.S. is still scheduled for February of 2018. And in Germany at a hearing last month, St. Lawrence prevailed in the lower court and was granted an injunction against Motorola which has now been appealed. Moving now to Cellular Communications Equipment or CCE. The trial is scheduled for July 31 as instated following an order in favor of summary judgment for Apple that was issued by the magistrate judge. CCE has filed the motion with the magistrate judge to reconsider the summary judgment order and filed objection to the order, which will be reviewed by the presiding judge in the matter. If the judge confirms the summary judgment, CCE will appeal the ruling to the Federal Circuit. With respect to the CCE verdict against Apple obtained last September, the court is still considering CCE post-trial motion for enhanced damages and attorney's fee as well as briefing concerning the impact, if any, on Apple's patent exhaustion defense stemming from the recent Supreme Court opinion in Impression Products versus Lexmark International. The court heard argument on the exhaustion briefing on July 18 and could rule on some or all depending motions at any time. There are two other active lawsuits pending against Apple in the Eastern District of Texas involving five patents. The most recent of these was filed this past April. These two lawsuits have since been consolidated into a single action. CCE's corresponding infringement case against Apple in Germany is scheduled to be tried in November of this year. And CCE has two other patent infringement cases pending in Germany also against Apple. There are also a number of other pending suits against HTC and ZTE. The Federal Circuit recently heard oral argument on HTC and ZTE appeals that were filed after CCE prevailed in three inter partes review trials before the patent trial in Appeal Board. The Federal Circuit has issued two rulings so far, both in CCE's favor affirming the board's ruling. This concludes the litigation update. We look forward to reporting on further developments in the cases just mentioned as well as litigation activity pending with other Acacia subsidiaries. Thank you.

Thank you, Clayton and Ed. For Ed's overview of our current litigation, we continue to be encouraged by current patent assets and licensing programs. The challenge as stated on the previous calls continues to be quality patent intake due to the current patent environment. In spite of the current challenges in the patent licensing business, we remain bullish on patent-related opportunities in the IP space in general. Patents continue to and will always be very important fundamental part of the U.S. and world economies. Acacia continues to be a believer and champion of patent and the patent system. We will continue to seek high quality patent licensing opportunities, but we are cognizant of the judicial and legislative developments, which challenge future patent licensing and IP litigation. Given this environment, we also intend to pursue alternate IP opportunities which are less reliant on direct IP licensing. We believe there are many potential avenues to leverage our IP expertise and unique position in the IP ecosystem to further enhance shareholder value. Our experience, knowledge and relationships position us to expand our business through new IP initiatives beyond traditional patent licensing. While patent licensing will continue to be an important part of our business, we feel this is a small subset of the entire patent and IP environment in which we are immersed. As we survey the patent landscape, we find exciting, high-growth technology companies that need our patent expertise, relationships and knowledge. Similar to partnerships we created with companies who need our expertise and experience in licensing their IP, we look to partner with high-growth tech companies that need our help with their patents and IP-related business strategies. An example is the investment and IP service agreement Acacia entered during Q2 with Miso Robotics. Miso robotics is revolutionizing the restaurant and food…

Ladies and gentlemen, this concludes our conference for today. Thank you all for participating, and have a nice day. All parties may now disconnect.