10q10k10q10k.net

What changed in ACACIA RESEARCH CORP's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ACACIA RESEARCH CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+677 added−390 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-15)

Top changes in ACACIA RESEARCH CORP's 2024 10-K

677 paragraphs added · 390 removed · 314 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

59 edited+145 added−4 removed21 unchanged
Biggest changeWe believe the Company has the potential to develop advantaged opportunities due to its: • disciplined focus on identifying opportunities where the Company can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price; • willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity discount; • relationships and partnership abilities across functions and sectors; and • strong expertise in corporate governance and operational transformation. 2 Table of Contents Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors.
Biggest changeWe believe the Company has the potential to develop advantaged opportunities due to its: • experienced management team, which has spearheaded robust book value per share growth, with compensation tied to this metric to ensure alignment with shareholders; • disciplined focus on identifying opportunities where the Company can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price; • deep and experienced operating executive network which supports sourcing and evaluation of acquisition opportunities; • significant resources and the flexibility to take advantage of uncertain environments and dislocated situations; 5 Table of Contents • willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity discount; • relationships and partnership abilities across functions and sectors; and • strong expertise in corporate governance and operational transformation.
We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such Special Purpose Acquisition Companies, which are narrowly focused on completing one singular, defining acquisition.
We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.
We are particularly attracted to situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations is masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.
Title to Oil and Natural Gas Properties It is customary in the oil and natural gas industry to make only a preliminary review of title to undeveloped oil and natural gas leases at the time they are acquired and to obtain more extensive title examinations at the time one is preparing to develop the undeveloped leases and when acquiring producing properties.
Title to Oil and Natural Gas Properties It is customary in the oil and natural gas industry to make only a preliminary review of title to undeveloped oil and natural gas leases at the time they are acquired and to obtain more extensive title examinations when preparing to develop the undeveloped leases and when acquiring producing properties.
Where appropriate, this empowers us to unlock value through, but not limited to, identifying opportunities for improved execution, identifying opportunities where the sum-of-the-parts may be greater than the whole, and acquiring non-core strategic assets. Once we identify a favorable public market acquisition opportunity, we may purchase a strategic block of shares in the target company.
This approach empowers us to unlock value through, but not limited to, identifying opportunities for improved execution, identifying opportunities where the sum-of-the-parts may be greater than the whole, and acquiring non-core strategic assets. Once we identify a favorable public market acquisition opportunity, we may purchase a strategic block of shares in the target company.
Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. Executive Officers and Directors Information About our Executive Officers Name Position Martin ("MJ") D. McNulty, Jr.
Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. Executive Officers and Directors Information About our Executive Officers Name Position Martin (“MJ”) D. McNulty, Jr.
Our expertise in, and experience with, complex situations enables us to discover and structure opportunities that are attractive for our shareholders and the leadership of the businesses we purchase. We utilize our capabilities across Research, Transactions and Execution, and Operations and Management to drive the discovery, investment, acquisition and integration of such target opportunities.
Our expertise in, and experience with, complex situations enable us to discover and structure opportunities that are attractive for our shareholders and the leadership of the businesses we purchase. We utilize our capabilities across Research, Transactions and Execution, and Operations and Management to drive the discovery, investment, acquisition and integration of such target opportunities.
We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire.
We focus on identifying, pursuing, and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value of the businesses that we acquire.
The oil and natural gas industry also competes with other energy-related industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers. Information Security We are highly dependent on informational and operational technology networks and systems to securely process, transmit and store electronic information. Cyberattacks on such systems continue to grow in frequency, complexity and sophistication.
The oil and natural gas industry also competes with other energy-related industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers. Information Security We are highly dependent on information and operation technology networks and systems to securely process, transmit and store electronic information. Cyberattacks on such systems continue to grow in frequency, complexity and sophistication.
Printronix’s products are primarily sold through Printronix’s global network of channel partners, such as dealers and distributors, to end‐users. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its execution of strategic partnerships to generate growth. Refer to Item 7.
Printronix’s products are primarily sold through Printronix’s global network of channel partners, such as dealers and distributors, to end‐users. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its execution of strategic partnerships to generate growth.
Further to the terms of the Recapitalization Agreement and in accordance with the terms of the Company’s Series B Warrants (the “Series B Warrants”), on July 13, 2023, Starboard also exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 shares of common stock (the “Series B Warrants Exercise” and, together with the Preferred Stock Conversion, the “Recapitalization Transactions”), the cancellation of $60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (as described further in Note 10, the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $55.0 million.
Further to the terms of the Recapitalization Agreement and in accordance with the terms of the Company’s Series B Warrants (the “Series B Warrants”), on July 13, 2023, Starboard also exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 6 Table of Contents shares of common stock (the “Series B Warrants Exercise” and, together with the Preferred Stock Conversion, the “Recapitalization Transactions”), the cancellation of $60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (as described further in Note 12, the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $55.0 million.
Through our public market activities, we aim to initiate shareholding positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value.
Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value.
We will also leverage the extensive networks of our operating partners, who are essential partners in identifying and executing acquisitions and managing for value creation. Operations and Management Our operational strategy involves identifying critical operating management either within the businesses or divisions we acquire or from our extensive executive network.
We will also leverage the extensive networks of our operating partners, who are essential partners in identifying and executing acquisitions and supporting value creation. Operations and Management Our operational strategy involves identifying critical operating management either within the businesses or divisions we acquire or from our extensive executive network.
This includes both capital expenditures and operating expenses on hardware, software, personnel and consulting services. As the primary products and services of our operating subsidiaries and unconsolidated affiliates evolve, we apply a comprehensive approach to the 7 Table of Contents mitigation of identified security risks.
This includes both capital expenditures and operating expenses on hardware, software, personnel and consulting services. As the primary products and services of our operating subsidiaries and unconsolidated affiliates evolve, we apply a comprehensive approach to the mitigation of identified security risks.
The information on our website is not part of this Annual Report on Form 10-K and is not incorporated herein by reference. 8 Table of Contents
The information on our website is not part of this Annual Report on Form 10-K and is not incorporated herein by reference. 18 Table of Contents
Lastly, our Energy Operations Business faces intense competition in identifying, evaluating, and executing attractive oil and gas asset acquisitions from other entities having similar business objectives, including major and independent oil and natural gas companies and private equity groups.
Our Energy Operations Business faces intense competition in identifying, evaluating, and executing attractive oil and gas asset acquisitions from other entities with similar business objectives, including major and independent oil and natural gas companies and private equity groups.
Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities.
Starboard provides ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities.
Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.
Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of 4 Table of Contents other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.
We compete with financial firms, corporate buyers and others investing in strategic opportunities. Many of these competitors may have greater financial and human capital resources than we have. Additionally, our Patent Licensing, Enforcement and Technologies Business faces intense competition in identifying, evaluating and executing strategic acquisitions from other entities having similar business objectives.
These competitors may have greater financial and human capital resources than we have. Additionally, our Patent Licensing, Enforcement and Technologies Business faces intense competition in identifying, evaluating and executing strategic acquisitions from other entities with similar business objectives. We compete with financial firms, corporate buyers and others investing in strategic opportunities and acquiring IP.
These attacks can create system disruptions, shutdowns or unauthorized disclosure of confidential information, including non-public personal information, consumer data and proprietary business information. We remain focused on making strategic investments in information security to protect the clients and informational and operational technology systems of our operating subsidiaries and unconsolidated affiliates.
These attacks can create system disruptions, shutdowns or unauthorized disclosure of confidential information, including non-public personal information, consumer data and proprietary business information. We remain focused on making strategic investments in information security to protect information and operation technology systems of our operating subsidiaries and unconsolidated affiliates.
Core Corporate Development and Investment Approach Going forward, we plan to continue focusing on creating transactions where we are able to acquire operating businesses and strategic assets that we believe are undervalued.
Core Corporate Development and Investment Approach Going forward, we will continue to focus on creating transactions where we are able to acquire operating businesses and strategic assets that we believe are undervalued.
Chief Executive Officer Jason Soncini General Counsel Robert Rasamny Chief Administrative Officer Kirsten Hoover Interim Chief Financial Officer Name Position Gavin Molinelli Senior Partner and Co-Portfolio Manager of Starboard Value LP Martin ("MJ") D. McNulty, Jr. Chief Executive Officer of the Company Isaac T.
Chief Executive Officer Jason Soncini General Counsel Robert Rasamny Chief Administrative Officer Kirsten Hoover Interim Chief Financial Officer Information About our Directors Name Position Gavin Molinelli Senior Partner and Co-Portfolio Manager of Starboard Value LP Martin (“MJ”) D. McNulty, Jr. Chief Executive Officer of the Company Isaac T.
Our research process focuses on, though is not limited to, the below considerations: • engaging in a substantial amount of detailed fundamental research, both internally and in conjunction with third-parties; • critically evaluating management teams; • identifying and assessing financial and operational strengths and weaknesses absolutely and relative to industry competitors; • researching and evaluating relevant industry information; and • thoughtfully negotiating acquisition terms and conditions.
Our research process focuses on, though is not limited to, the following considerations: • completing substantial and detailed fundamental research, both internally and in conjunction with third parties; • critically evaluating management teams; • identifying and assessing financial and operational strengths and weaknesses absolutely and relative to industry competitors; • researching and evaluating relevant industry information; and 7 Table of Contents • thoughtfully negotiating acquisition terms and conditions.
We are uniquely positioned to catalyze change with the support of our long-term capital base, depth of industry relationships and differentiated approach to transaction structuring. 4 Table of Contents Private Market Acquisitions Acacia is focused on acquiring businesses across the private market landscape.
Transactions and Execution Acacia is focused on the identification, acquisition and integration of both public and private companies. We are uniquely positioned to catalyze change with the support of our long-term capital base, depth of industry relationships and differentiated approach to transaction structuring. Private Market Acquisitions Acacia is focused on acquiring businesses across the private market landscape.
Our Energy Operations Business also competes for drilling rigs and other equipment and labor required to drill, complete, operate and develop its properties. Many of our Energy Operations Business’ competitors have substantially greater financial resources, staffs, facilities and other resources.
Our Energy Operations Business also competes for drilling rigs and other equipment and labor required to drill, complete, operate and develop its properties. Competitors in the Energy Operations sector may have substantially greater financial resources, staff, facilities and other resources.
Additionally, we have a strategic relationship with Starboard that has provided, and we expect will continue to provide, us access to industry expertise and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.
Additionally, we have a strategic relationship with Starboard that has enhanced, and we expect will continue to enhance, our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses.
Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring and seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
Kohlberg Senior Associate Provost and Chief Technology Development Officer at Harvard University Maureen O' Connell Member of the Board of Directors of Board of ISACA and HH Global Ltd.
Kohlberg Senior Associate Provost and Chief Technology Development Officer at Harvard University Maureen O’Connell Member of the Board of Directors of ISACA and HH Global Ltd. Geoff Ribar Member of the Board of Directors of MACOM Technology and Everspin Technologies, Inc.
Relationship with Starboard Value, LP Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company's controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.
Relationship with Starboard Value, LP Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company’s controlling shareholder, expands our sourcing and operating network and resources; and enhances our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses.
Many of these competitors may have greater financial and human capital resources than we have. We may find more companies entering the market for similar technology opportunities, which may reduce our market share in one or more technology industries that we currently or in the future may rely upon to generate future revenue.
We may find more companies entering the market for similar technology opportunities, which may reduce our market share in one or more technology industries that we currently or in the future may rely upon to generate future revenue.
Refer to Note 10 to the consolidated financial statements for a detailed description of the Recapitalization and the Recapitalization Transactions. 3 Table of Contents Services Agreement On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services.
Services Agreement On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services.
Certain of our Energy Operations Business oil and natural gas properties may be subject to certain imperfections in title, encumbrances, easements, servitudes or other restrictions, none of which, in management's opinion, will in the aggregate materially restrict its operations. Human Capital As of December 31, 2023, on a consolidated basis, we had 170 full-time employees and two contractors.
Certain of our Energy Operations Business oil and natural gas properties may be subject to certain imperfections in title, encumbrances, easements, servitudes or other restrictions, none of which, in management’s opinion, will in the aggregate materially restrict its operations.
On February 16, 2024, Benchmark entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”).
On April 17, 2024, Benchmark consummated the transaction contemplated in the Purchase and Sale Agreement (the “Revolution Purchase Agreement”), dated February 16, 2024, by and among Benchmark and Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”).
We compete with financial firms, corporate buyers and others investing in strategic opportunities and acquiring IP. Additionally, universities and other technology sources compete against us as they seek to develop and commercialize technologies and may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions.
Additionally, universities and other technology sources compete with us as they seek to develop and commercialize technologies and may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These competitors may have greater financial and human capital resources than we have.
We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon. People, Process and Performance Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions.
People, Process and Performance Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions.
In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, 5 Table of Contents (iv) internet search, advertising and cloud computing technology and (v) GPS navigation. The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years.
During 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents. In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, (iv) internet search, advertising and cloud computing technology and (v) GPS navigation.
Geoff Ribar Member of the Board of Directors of Director of MACOM Technology Ajay Sundar Managing Director at Starboard Value LP Katharine Wolanyk Managing Director at Burford Capital, LLC Where You Can Find Additional Information For further details of the development of our business, refer to our website at www.acaciaresearch.com .
Ajay Sundar Managing Director at Starboard Value LP Michelle Felman Member of Board of Directors of Cushman Wakefield For Additional Information For further details of the development of our business, refer to our website at www.acaciaresearch.com .
We believe we have good relations with our employees. As of December 31, 2023, our parent company had 12 full-time employees and one contractor, our Intellectual Property Operations Business had seven full-time employees and no contractors; our Industrial Operations Business had 145 full-time employees and no contractors; and our Energy Operations Business had six full-time employees and one contractor.
As of December 31, 2024, our parent company had 13 full-time employees and one contractor, our Intellectual Property Operations Business had six full-time employees and two contractors; our Industrial Operations Business had 134 full-time employees and no contractors; our Energy Operations Business had 41 full-time employees and no contractors; and our Manufacturing Operations Business had 842 full-time employees and three contractors.
ITEM 1. BUSINESS General Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or "our") is focused on acquiring and managing companies across industries including but not limited to the industrial, energy, technology, and healthcare verticals.
ITEM 1. BUSINESS General Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is a disciplined value-oriented acquirer and operator of businesses across public and private markets and industries including but not limited to the industrial, energy and technology sectors.
Overall, we believe our acquisition pipeline is robust, and is a product of our public market research expertise, as well as our private market sourcing process. The success of our strategy depends on our ability to properly identify acquisition candidates.
Our team is focused on identifying acquisition opportunities across the public and private markets where we are positioned to generate enduring shareholder value. Overall, we believe our acquisition pipeline is robust and is a product of our public market research expertise, as well as our private market sourcing process.
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.
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.
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.
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. 8 Table of Contents On a consolidated basis, we currently own or control the rights to multiple patent portfolios, including U.S. patents and certain foreign counterparts, which cover technologies used in a variety of industries.
We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of December 31, 2023, across nearly 200 patent portfolio licensing and enforcement programs. As of December 31, 2023, we have generated gross licensing revenue of approximately $1.8 billion, and have returned $865.2 million to our patent partners.
The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years. We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of December 31, 2024, across nearly 200 patent portfolio licensing and enforcement programs.
Our Operations Intellectual Property Operations - Patent Licensing, Enforcement and Technologies Business We invest in intellectual property ("IP") and related absolute return assets and engage in the licensing and enforcement of patented technologies.
Our Operations Intellectual Property Operations - Patent Licensing, Enforcement and Technologies Business We invest in intellectual property (“IP”) and engage in the licensing and enforcement of patented technologies, in each case through our wholly-owned subsidiary Acacia Research Group LLC and its wholly owned subsidiaries.
The remainder of the Purchase Price is expected to be funded by a combination of borrowings by Benchmark under a new revolving credit agreement of approximately $72.5 million and the remaining being funded through a cash contribution of approximately $15 million from McArron Partners, the other investor in Benchmark.
The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility (as defined in Note 11 to the consolidated financial statements contained elsewhere herein) and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners.
Research We seek to identify companies, both public and private, at an appreciable discount to intrinsic value. We have a broad mandate, with a particular interest in businesses operating in the industrial, energy, technology, and healthcare sectors. Our team is focused on identifying acquisition opportunities across the public and private markets where we are positioned to generate enduring shareholder value.
We also retain the flexibility to make opportunistic acquisitions with higher risk-adjusted return characteristics and unlock value in long-hold, non-core or complex situations. Research We seek to identify companies, both public and private, at an appreciable discount to intrinsic value. We have a broad mandate, with a particular interest in businesses operating in the industrial, energy, and technology sectors.
Printronix’s line matrix printers are used for mission critical applications within these industries, including labeling and inventory management, build sheets, invoicing, manifests and bills of lading, and reporting. In China, India and other developing countries in Asia and Africa, our printers are also prevalent in the banking and government sectors.
Printers consist of hardware and embedded software and may be sold with maintenance service agreements, which are serviced by outside contractors. Printronix’s line matrix printers are used for mission critical applications within these industries, including labeling and inventory management, build sheets, invoicing, manifests and bills of lading, and reporting.
During the past five calendar years ending on December 31, 2023, we generated gross licensing revenue of approximately $225.7 million and returned approximately $84.9 million to our patent partners. Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information concerning our Patent Licensing, Enforcement and Technologies business.
As of December 31, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $881.0 million to our patent partners. During the past five calendar years ending on December 31, 2024, we generated gross licensing revenue of approximately $234.0 million and returned approximately $91.2 million to our patent partners.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional Industrial Operations information. Competition We face intense competition in identifying, evaluating and executing strategic acquisitions from other entities having a business objective similar to ours, including private equity groups and operating businesses seeking strategic acquisitions.
Refer to Note 4 to the consolidated financial statements elsewhere herein for more information Competition We face intense competition in identifying, evaluating and executing strategic acquisitions from other entities with similar business objectives, including private equity groups and operating businesses seeking strategic acquisitions. We compete with financial firms, corporate buyers and others looking to invest in strategic opportunities.
Pursuant to the Purchase and Sale Agreement, Benchmark has agreed to purchase and Revolution has agreed to sell certain upstream assets and related facilities (the “Assets”) in Texas and Oklahoma, upon the terms and subject to the conditions of the Purchase and Sale Agreement (such purchase and sale, together with the other transactions contemplated by the Purchase Sale Agreement, the “Revolution Transaction”).
Pursuant to the Deflecto Stock Purchase Agreement, Deflecto Purchaser purchased all of the issued and outstanding equity interests of Deflecto, upon the terms and subject to the conditions of the Deflecto Stock Purchase Agreement (such purchase and sale, together with the other transactions contemplated by the Deflecto Stock Purchase Agreement, the “Deflecto Transaction”).
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company's consolidated financial statements include Benchmark's consolidated operations from November 13, 2023 through December 31, 2023. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information.
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. Benchmark’s current position is concentrated in the Anadarko Basin region of Western Oklahoma and the Texas panhandle.
Benchmark expects the Revolution Transaction to close in the second quarter of 2024 subject to customary closing conditions. The Company’s expected contribution to Benchmark to fund its portion of the Purchase Price, is $57.5 million, which the Company anticipates will be funded from cash on hand.
The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fee was $59.9 million, which was funded from cash on hand.
We may also provide upfront capital to patent owners as an advance against future licensing revenue. During the years ended December 31, 2023 and 2022, we did not acquire any new patent portfolios. Dur ing 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents.
When applicable, we share licensing revenue, net of costs, with our patent partners after we have achieved our agreed upon minimum return threshold. We may also provide upfront capital to patent owners as an advance against future licensing revenue. We did not acquire any new patent portfolios in calendar years 2024, 2023 and 2022.
Following the Revolution Transaction, the Company’s interest in Benchmark is expected to be approximately 73.1%. Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional Energy Operations information. 6 Table of Contents Industrial Operations Business In October 2021, we consummated our first operating company acquisition of Printronix Holding Corp. (“Printronix”).
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information about our Energy Operations. 10 Table of Contents Industrial Operations Business In October 2021, we acquired Printronix Holding Corp. (“Printronix”). Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services.
While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program. When applicable we share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis.
While we partner from time to time with inventors and patent owners, ranging in size and including large corporations, we control and assume all responsibility in pursuing patent licensing and enforcement programs, and for the related operating expenses.
Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. Benchmark’s existing assets consist of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated.
Prior to Benchmark’s acquisition of the Revolution assets in April 2024, Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 135 gross (89 net) wells, the majority of which are operated.
Energy Operations Business In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC ("Benchmark"). Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma.
Headquartered in Austin, Texas, Benchmark is an independent oil and gas company focused on the acquisition, production and development of operated and non-operated oil and natural gas assets in Texas and Oklahoma.
Following completion of the transactions contemplated by the Recapitalization Agreement, Starboard beneficially owns 61,123,595 shares of common stock as of March 11, 2024, representing approximately 61.2% of the common stock based on 99,895,473 shares of common stock issued and outstanding. No shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding.
No shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding. Refer to Note 12 to the consolidated financial statements for a detailed description of the Recapitalization and the Recapitalization Transactions.
Under the terms and conditions of the Purchase and Sale Agreement, which has an economic effective date of March 1, 2024, the aggregate consideration to be paid to Revolution in the Revolution Transaction will consist of $145.0 million in cash (the “Purchase Price”), subject to customary post-closing adjustments.
Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the Deflecto Sellers in the Deflecto Transaction consisted of $103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement (the “Deflecto Purchase Price”).
Removed
Our focus is companies with market values in the sub-$2 billion range and particularly on businesses valued at $1 billion or less. We are, however, opportunistic, and may pursue acquisitions that are larger under the right circumstances.
Added
We acquire businesses with a view towards strong free cash flow generation and with an ability to scale where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance. We are focused on sourcing, execution, and improvement.
Removed
Transactions and Execution Acacia is focused on the identification, acquisition and integration of both public and private companies.
Added
We find unique situations, bring a flexible and creative approach to transacting, and relationships and expertise to drive continual improvement in operating performance. We approach transactions as business owners and operators rather than purely as financial investors and we believe it is our differentiator for creating long-term value for shareholders and partners.
Removed
The Assets include approximately 140,000 net acres and approximately 470 operated producing wells in the Western Anadarko Basin throughout the Texas Panhandle and Western Oklahoma.
Added
We define value through free cash flow generation, book value appreciation, and stock price growth. These are the pillars of the Acacia story. Acacia creates value by building relationships and providing transaction expertise to create acquisition opportunities where we can meaningfully improve performance.
Removed
Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. Printers consist of hardware and embedded software and may be sold with maintenance service agreements, which are serviced by outside contractors.
Added
We adhere closely to our philosophy of building strong and like-minded relationships with business leaders and, importantly, finding opportunities to make our return owning a business, rather through selling a business. We run several different valuation models and metrics when we evaluate a business.
Added
One metric we rely heavily on is the durability and scalability of a target’s annual earnings stream, rather than its ‘exit year’ earnings, and the impact of these earnings on our income statement.
Added
Specifically, we underwrite to an acceptable range of unlevered and levered earnings yields, relative to the purchase price of the business and related equity required to fund the acquisition.
Added
It is distinct from the ‘leveraged buyout model’ where the purchase price is heavily financed with a credit package, enabling small enhancements to earnings, and potential valuation multiple expansion, to generate returns.
Added
Both models work, as private equity has shown; however, in the private equity model the gains are heavily back weighted and thus carry a higher discount rate and incremental leverage risk. Our model, instead, targets similar returns without requiring an exit event for the business to generate those returns.
Added
When we acquire a business at a ‘good multiple’, it means that we believe we are acquiring an attractive earnings stream relative to the price we paid to acquire that business, and that we believe there is an inherent valuation benefit relative to where similarly situated assets might trade in the market.
Added
We approach our acquisitions as long-term owners, though in our evaluation of capital allocation opportunities we may, from time to time, sell a business we own.
Added
As part of our operating philosophy, we endeavor, through our strong network of operating partners, to enhance the values of businesses we acquire, driving both the ability to generate incremental earnings and potentially enhancing a company’s valuation multiple.
Added
Our focus is companies with total enterprise value of $1 billion or less, however, we may pursue larger acquisitions under the right circumstances. Broadly speaking, our potential acquisition targets are founder-owned or privately controlled businesses, entire public companies or carve-outs of specific segments, which show a path to consistent profitability, free cash flow generation, and higher risk-adjusted return expectations.
Added
We buy businesses to create platforms. We grow them organically and through M&A, with a clear focus on free cash flow generation and defined expectations on return on invested capital. Acacia then has the optionality to grow and reinvest free cash flow or look to monetize and build new platforms.
Added
The Company remains focused on acquiring and building businesses that have stable cash flow generation with an ability to scale, while retaining the flexibility to make opportunistic acquisitions with high risk-adjusted return characteristics.
Added
We regularly evaluate potential value-accretive opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth.
Added
Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon.
Added
The success of our strategy depends on our ability to properly identify acquisition candidates.

… 128 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

118 edited+82 added−33 removed190 unchanged
Biggest changePotential difficulties that may be encountered in the integration process include, among others: • the inability to successfully integrate the Assets operationally, in a manner that permits us to achieve the full revenue, expected cash flows and cost savings anticipated from the Revolution Transaction; • not realizing anticipated operating synergies; and • potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Revolution Transaction. 9 Table of Contents Risks Related to Our Business and Business Strategy We intend to grow our company by acquiring additional operating businesses and intellectual property assets which may not occur, and any acquisitions that we complete will be costly and could negatively affect our results of operations, and dilute our stockholders’ ownership, or cause us to incur significant expense, and we may not realize the expected benefits of our operating businesses because of difficulties related to integration.
Biggest changeRisks Related to Our Business and Business Strategy We intend to grow our company by acquiring additional operating businesses and intellectual property assets which may not occur, and any acquisitions that we complete will be costly and could negatively affect our results of operations, and dilute our stockholders’ ownership, or cause us to incur significant expense, and we may not realize the expected benefits of our operating businesses because of difficulties related to integration.
Integration efforts between us and the acquired businesses will also require our management’s significant attention away from other opportunities that could have been beneficial to our stockholders.
Integration efforts between us and the acquired businesses will also require management’s significant attention away from other opportunities that could have been beneficial to our stockholders.
The inability to integrate successfully, or in a timely fashion, the business, technologies, products, personnel, or operations of any acquired business or utilization of any assets, could have a material adverse effect on our business, results of operations, and financial condition.
The inability to successfully, or in a timely fashion, integrate the business, technologies, products, personnel, or operations of any acquired business or utilization of any assets, could have a material adverse effect on our business, results of operations, and financial condition.
Our Energy Operations Business expects for the foreseeable future to experience supply chain constraints and inflationary pressure on its cost structure.
For the foreseeable future, our Energy Operations Business expects to experience supply chain constraints and inflationary pressure on its cost structure.
Provisions of Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company by means of a tender offer, proxy contest or otherwise, and the removal of incumbent officers and directors, more difficult.
The provisions of Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company by means of a tender offer, proxy contest or otherwise, and the removal of incumbent officers and directors more difficult.
Acquisitions involve numerous risks and uncertainties, including: • difficulties in integrating and managing the combined operations, technology platforms, or offerings of any business we acquire, and realizing the anticipated economic, operational and other benefits of the acquisition in a timely manner, which could result in substantial costs and delays; • failure to execute on the intended strategy and synergies; • failure of the acquired operating businesses to achieve anticipated revenue, earnings, or cash flow; • diversion of our management’s attention or other resources from our existing business; • higher-than-expected earn-out payments, unforeseen transaction-related costs or delays or other circumstances such as disputes with or the loss of key or other personnel from acquired businesses; • our inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired operating businesses; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective privacy, data protection and cybersecurity controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; • difficulties in or costs associated with assigning or transferring to us the acquired operating business’ intellectual property or its licenses to third-party intellectual property; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; • challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with Generally Accepted Accounting Principles; and 10 Table of Contents • potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value.
Acquisitions involve numerous risks and uncertainties, including: • difficulties in integrating and managing the combined operations, technology platforms, or offerings of any business we acquire, and realizing the anticipated economic, operational and other benefits of the acquisition in a timely manner, which could result in substantial costs and delays; • failure to execute on the intended strategy and synergies; • failure of the acquired operating businesses to achieve anticipated revenue, earnings, or cash flow; • diversion of management’s attention or other resources from our existing business; • higher-than-expected earn-out payments, unforeseen transaction-related costs or delays or other circumstances such as disputes with or the loss of key or other personnel from acquired businesses; • inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired operating businesses; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective privacy, data protection and cybersecurity controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; 19 Table of Contents • difficulties in or costs associated with assigning or transferring to us the acquired operating business’ intellectual property or its licenses to third-party intellectual property; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; • challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with Generally Accepted Accounting Principles; and • potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value.
The pursuit of enforcement actions in connection with our licensing and enforcement programs can involve certain risks and uncertainties, including the following: • Increases in patent-related legal expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants, re-exam and inter partes review costs, case-related audio/video presentations and other litigation support and administrative costs could increase our operating costs and decrease our profit generating opportunities; • Our patented technologies and enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order to successfully enforce our patents.
The pursuit of enforcement actions in connection with our licensing and enforcement programs can involve certain risks and uncertainties, including the following: • Increases in patent-related legal expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants, re-exam and inter partes review costs, case-related audio/video presentations and other litigation support and administrative costs could increase our operating costs and decrease our profit generating opportunities; • Our patented technologies and enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts to successfully enforce our patents.
It is possible that the integration process of our acquired businesses could result in the loss of key employees; the disruption of our ongoing business or the ongoing business of the acquired operating businesses; or inconsistencies in standards, controls, procedures or policies that could adversely affect our ability to maintain relationships with third parties and employees or to achieve the anticipated benefits of the acquisition.
It is possible that the integration process of acquired businesses could result in the loss of key employees; the disruption of Acacia’s ongoing business or the ongoing business of the acquired operating businesses; or inconsistencies in standards, controls, procedures or policies that could adversely affect our ability to maintain relationships with third parties and employees or to achieve the anticipated benefits of the acquisition.
Failure of our Industrial Operations Business to manage inventory levels or production capacity may negatively impact its results of operations. Printronix’s financial performance depends in part upon its ability to successfully forecast the timing and extent of customer demand and reseller demand to manage worldwide distribution and inventory levels.
Failure of our Industrial Operations Business to manage inventory levels or production capacity may negatively impact its operational results. Printronix’s financial performance depends in part upon its ability to successfully forecast the timing and extent of customer demand and reseller demand to manage worldwide distribution and inventory levels.
Furthermore, the operations of our Energy Operations Business may be curtailed, delayed or canceled as a result of other factors, including: high costs, shortages or delivery delays of equipment, labor or other services; unexpected operational events and conditions; adverse weather conditions and natural disasters; injection plant or other facility or equipment malfunctions and equipment failures or accidents; title disputes; unitization difficulties; pipe or cement failures, casing collapses or other downhole failures; compliance with environmental and other governmental requirements; lost or damaged oilfield service tools; unusual or unexpected geological formations and reservoir pressure; loss of injection fluid circulation; restrictions in access to, or disposal of, 20 Table of Contents water used or produced in oil and natural gas production; costs or delays imposed by or resulting from compliance with regulatory requirements; fires, blowouts, surface craterings, explosions and other hazards that could also result in personal injury and loss of life, pollution and suspension of operations; and uncontrollable flows of oil or well fluids.
Furthermore, the operations of our Energy Operations Business may be curtailed, delayed or canceled as a result of other factors, including: high costs, shortages or delivery delays of equipment, labor or other services; unexpected operational events and conditions; adverse weather conditions and natural disasters; injection plant or other facility or equipment malfunctions and equipment failures or accidents; title disputes; unitization difficulties; pipe or cement failures, casing collapses or other downhole failures; compliance with environmental and other governmental requirements; lost or damaged oilfield service tools; unusual or unexpected geological formations and reservoir pressure; loss of injection fluid circulation; restrictions in access to, or disposal of, water used or produced in oil and natural gas production; costs or delays imposed by or resulting from compliance with regulatory requirements; fires, blowouts, surface craterings, explosions and other hazards that could also result in personal injury and loss of life, pollution and suspension of operations; and uncontrollable flows of oil or well fluids.
Any acquisitions completed by our Energy Operations Business are subject to substantial risks that could adversely affect financial conditions and results of operations. One of the growth strategies of our Energy Operations Business is to capitalize on opportunistic acquisitions of oil and gas reserves.
Any acquisitions completed by our Energy Operations Business are subject to substantial risks that could adversely affect financial conditions and operational results. One of the growth strategies of our Energy Operations Business is to capitalize on opportunistic acquisitions of oil and gas reserves.
Our success is dependent on our ability to attract and retain employees and management teams of our operating businesses, the loss of any of whom could materially adversely affect our financial condition, business and results of operations.
Our success is dependent on our ability to attract and retain the employees and management teams of our operating businesses, the loss of whom could materially adversely affect our financial condition, business and results of operations.
Other Risks Related to our Industrial Operations Business Our Industrial Operations Business relies, or may rely in the future, on its intellectual property and licenses to use others’ intellectual property for competitive advantage.
Risks Related to our Industrial Operations Business Our Industrial Operations Business relies, or may rely in the future, on its intellectual property and licenses to use others’ intellectual property for competitive advantage.
Under the Recapitalization Agreement, we agreed with Starboard that for a period from the date of the Recapitalization Agreement until May 12, 2026 (the “Applicable Period”), the Board will include at least two directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Act of 1933, as amended) of, Starboard, with current Board members Maureen O’Connell and Isaac T.
Under the Recapitalization Agreement, we agreed with Starboard that for a period from the date of the Recapitalization Agreement until May 12, 2026, the Board will include at least two directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Act of 1933, as amended) of, Starboard, with current Board members Maureen O’Connell and Isaac T.
Obtaining and enforcing patents across various industries, including the life science industry, involves a high degree of technological and legal complexity. Our patent rights may be affected by developments or uncertainty in U.S. or foreign patent statutes, patent case law, U.S. Patent and Trademark Office ("USPTO") rules and regulations and the rules and regulations of foreign patent offices.
Obtaining and enforcing patents across various industries, including the life science industry, involves a high degree of technological and legal complexity. Our patent rights may be affected by developments or uncertainty in U.S. or foreign patent statutes, patent case law, U.S. Patent and Trademark Office (“USPTO”) rules and regulations and the rules and regulations of foreign patent offices.
The hedging strategy of our Energy Operations Business may be ineffective in mitigating the impact of commodity price volatility on cash flows, which could adversely affect its financial condition. Benchmark's hedging strategy is to enter into commodity derivative contracts covering a significant portion of its medium-term estimated hydrocarbon production.
Our Energy Operations Business’s hedging strategy may be ineffective in mitigating the impact of commodity price volatility on cash flows, which could adversely affect its financial condition. Benchmark’s hedging strategy is to enter into commodity derivative contracts covering a significant portion of its medium-term estimated hydrocarbon production.
Our Energy Operations Business might be unable to compete effectively with larger companies, which might adversely affect its business activities, financial condition and results of operations. The oil and natural gas industry is intensely competitive, and our Energy Operations Business competes with companies that possess and employ financial, technical and personnel resources substantially greater than theirs.
Our Energy Operations Business might be unable to effectively compete with larger companies, which might adversely affect its business activities, financial condition and operational results. The oil and natural gas industry is intensely competitive, and our Energy Operations Business competes with companies that possess and employ financial, technical and personnel resources substantially greater than theirs.
Market uncertainty and a variety of additional factors that are beyond the control of our Energy Operations Business, include: the domestic and foreign supply of and demand for oil; market expectations about future prices of oil; the price and quantity of imports of crude oil; overall domestic and global economic conditions; political and economic conditions in other oil producing countries, including embargoes and continued hostilities in the Middle East and other sustained military campaigns, acts of terrorism or sabotage, and world-wide epidemics, including the coronavirus; the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption; domestic and foreign governmental 18 Table of Contents regulations and taxes; the proximity, cost, availability and capacity of oil pipelines and other transportation facilities; the impact of the U.S. dollar exchange rates on oil prices; and the price and availability of alternative fuels.
Market uncertainty and a variety of additional factors that are beyond the control of our Energy Operations Business, include: the domestic and foreign supply of and demand for crude oil, natural gas and NGLs; market expectations about future prices of crude oil, natural gas and NGLs; the price and quantity of imports of crude oil, natural gas and NGLs; overall domestic and global economic conditions; political and economic conditions in other oil producing countries, including embargoes and continued hostilities in the Middle East and other sustained military campaigns, acts of terrorism or sabotage, and world-wide epidemics, including the coronavirus; the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption; domestic and foreign governmental regulations and taxes; the proximity, cost, availability and capacity of oil pipelines and other transportation facilities; the impact of the U.S. dollar exchange rates on oil prices; and the price and availability of alternative fuels.
Our Industrial Operations Business's success depend in part on its, or licenses to use others’, brand names, proprietary technology and manufacturing techniques. It relies on a combination of patents, trademarks, copyrights, trade secrets, confidentiality procedures and contractual provisions to protect these intellectual property rights.
Our Industrial Operations Business’s success depends in part on its, or licenses to use others’, brand names, proprietary technology and manufacturing techniques. It relies on a combination of patents, trademarks, copyrights, trade secrets, confidentiality procedures and contractual provisions to protect these intellectual property rights.
Legislative and regulatory initiatives intended to address these concerns may result in additional levels of regulation that could lead to operational delays, increases in operating and compliance costs or other adverse affects to the operations or Energy Operations Business. To date, these regulations have not adversely impacted such operations.
Legislative and regulatory initiatives intended to address these concerns may result in additional levels of regulation that could lead to operational delays, increases in operating and compliance costs or other adverse effects to the operations or Energy Operations Business. To date, these regulations have not adversely impacted such operations.
Our Industrial Operations Business's future results of operations and ability to effectively grow or maintain market share may be adversely affected if it is unable to address these issues on a timely basis. Decreased consumption of supplies could negatively impact the results of operations of certain of our Industrial Operations Business.
Our Industrial Operations Business’s future results of operations and ability to effectively grow or maintain market share may be adversely affected if it is unable to address these issues on a timely basis. Decreased consumption of supplies could negatively impact operational results of certain of our Industrial Operations Business.
Our operating businesses also need qualified and competent personnel to execute their business plans and serve their customers, suppliers and other stakeholders. In order to compete, we must attract, retain, and motivate both executives and other key employees, and our failure to do so could harm our financial performance.
Our operating businesses also need qualified and competent personnel to execute their business plans and serve their customers, suppliers and other stakeholders. To compete, we must attract, retain, and motivate both executives and other key employees, and our failure to do so could harm our financial performance.
Registered investment companies are subject to extensive, restrictive and potentially adverse regulations that impose, among other things, (i) limitations on capital structure, including the incurrence of indebtedness or the issuance of senior securities; (ii) restrictions on specified investments; (iii) prohibitions on transactions with affiliates; and (iv) compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our 12 Table of Contents operations.
Registered investment companies are subject to extensive, restrictive and potentially adverse regulations that impose, among other things, (i) limitations on capital structure, including the incurrence of indebtedness or the issuance of senior securities; (ii) restrictions on specified investments; (iii) prohibitions on transactions with affiliates; and (iv) compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.
There is a risk these counterparties may file inter-partes reviews, reexaminations or other proceedings with the USPTO or other government agencies in the United States or abroad in an attempt to invalidate, narrow the scope or render unenforceable the patents we own or control.
There is a risk these counterparties may file inter-partes reviews, reexaminations or other proceedings with the USPTO or other government agencies in the United States or abroad to invalidate, narrow the scope or render unenforceable the patents we own or control.
Nevertheless, when conducting due diligence and making an assessment regarding an acquisition, we rely on the resources available to us, including information provided by the target of the transaction and, in some circumstances, third party investigations.
Nevertheless, when conducting due diligence and making an assessment regarding acquisitions, we rely on the resources available to us, including information provided by the target of the transaction and, in some circumstances, third party investigations.
Our Industrial Operations Business has limited suppliers for key product components and services and any interruption in supply could impair its ability to make and deliver its signature products, adversely affecting its business, financial condition, and results of operations.
Our Industrial Operations Business has limited suppliers for key product components and services and any interruption in supply could impair its ability to make and deliver its signature products, adversely affecting its business, financial condition, and operational results.
Both we and our operating businesses outsource a number of services, including certain hosted software applications for confidential data storage and “cloud computing” technology for such storage to domestic and overseas third-party service providers. While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over the services rendered.
Both we and our operating businesses outsource several services, including certain hosted software applications for confidential data storage and “cloud computing” technology for such storage to domestic and overseas third-party service providers. While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over the services rendered.
Both we and our operating businesses outsource a number of services to third-party service providers, which are subject to risk of disruptions, delays, and decrease in our control, which could adversely impact our results of operations.
Both we and our operating businesses outsource a number of services to third-party service providers, which are subject to risk of disruptions, delays, and decrease in our control, which could adversely impact our operational results.
The hedging transactions of our Energy Operations Business expose it to counterparty credit risk and involve other risks. Benchmark's hedging transactions exposes it to risk of financial loss if a counterparty fails to perform under a commodity derivative contract.
Our Energy Operations Business’s hedging transactions expose it to counterparty credit risk and involve other risks. Benchmark’s hedging transactions exposes it to the risk of financial loss if a counterparty fails to perform under a commodity derivative contract.
If any of these risks are realized, our business, financial condition, results of operations, and prospects could be materially adversely affected, and the trading price of our common stock may decline significantly. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business.
If any of these risks are realized, our business, financial condition, results of operations, and prospects could be materially adversely affected, and the trading price of our common stock could significantly fluctuate. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business.
In addition, Starboard may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance an investment in our Company, even though such transactions might involve risks to our stockholders.
In addition, Starboard may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance an investment in our Company, even though such transactions might involve risks for our stockholders.
The adoption and implementation of any legislation or regulations to reduce GHG emissions or imposing additional GHG reporting obligations could require our Energy Operations Business to incur significant costs to reduce emissions of GHG associated with operations.
The adoption and implementation of any legislation or regulations to reduce GHG emissions or imposing additional GHG reporting obligations could require our Energy Operations Business to incur significant costs to reduce emissions of GHG associated with operations or comply with such reporting obligations.
The ultimate impact of GHG agreements, legislation and measures on our financial performance is highly uncertain because we are unable to predict, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and trade-offs that inevitably occur in connection with such processes.
The ultimate impact of 35 Table of Contents GHG agreements, legislation and measures on our financial performance is highly uncertain because we are unable to predict, for a multitude of individual jurisdictions, the outcome of political decision-making processes and the variables and trade-offs that inevitably occur in connection with such processes.
The total amount our Energy Operations Business is able to borrow under its revolving credit facility is limited by a borrowing base, which is primarily based on the estimated value of its oil and natural gas properties and its commodity derivative contracts, as determined by its lenders in their sole discretion.
The total amount our Energy Operations Business can borrow under its revolving credit facility is limited by a borrowing base, which is primarily based on the estimated value of its oil and natural gas properties and its commodity derivative contracts, as determined by its lenders in their sole discretion.
Additionally, although our operating businesses have adequate personnel for the current business environment, unpredictable increases in demand for goods and services may exacerbate the risk of not having sufficient numbers of trained or qualified personnel, which could have a negative impact on our results of operations, financial condition and liquidity.
Additionally, although our operating businesses have adequate personnel for the current business environment, unpredictable increases in demand for goods and services may exacerbate the risk of not having enough trained or qualified personnel, which could have a negative impact on our results of operations, financial condition and liquidity.
We cannot ensure that any of our current or prospective patent prosecution or litigation matters will result in a favorable outcome for us. 17 Table of Contents We may experience delays in successful prosecution, enforcement, and licensing of our patent portfolio. The value of our patent portfolios is dependent upon the issuance of patents in a timely manner.
We cannot ensure that any of our current or prospective patent prosecution or litigation matters will result in a favorable outcome for us. We may experience delays in successful prosecution, enforcement, and licensing of our patent portfolio. The value of our patent portfolios is dependent upon the issuance of patents in a timely manner.
In addition, these lawsuits, regardless of their merits, could be time consuming and expensive to resolve and could divert management’s time and attention. The costs associated with any of these actions could be substantial and could have a material adverse effect on our Industrial Operations Business's financial condition, business, and results of operations.
In addition, these lawsuits, regardless of their merits, could be time consuming and expensive to resolve and could divert management’s time and attention. The costs associated with any of these actions could be substantial and 37 Table of Contents could have a material adverse effect on our Industrial Operations Business’s financial condition, business, and results of operations.
Throughout 2022 and 2023, energy companies experienced significant increases in the costs of certain oilfield services, materials and equipment, including diesel, steel, labor, trucking, sand, personnel and completion costs, among others, as a result of the recent increases in oil and natural gas prices, as well as availability constraints, supply chain disruptions, increased demand, labor shortages and wage inflation associated with a low U.S unemployment rate, inflation and other factors.
Energy companies have experienced significant increases in the costs of certain oilfield services, materials and equipment, including diesel, steel, labor, trucking, sand, personnel and completion costs, among others, as a result of recent increases in oil and natural gas prices, as well as availability constraints, supply chain disruptions, increased demand, labor shortages and wage inflation associated with a low U.S unemployment rate, inflation and other factors.
Any future exploration and 24 Table of Contents development activities and equipment could also be adversely affected by severe weather conditions such as hurricanes or freezing temperatures, which may cause a loss of production from temporary cessation of activity from regional power outages or lost or damaged facilities and equipment.
Any future exploration and development activities and equipment could also be adversely affected by severe weather conditions such as hurricanes or freezing temperatures, which may cause a loss of production from temporary cessation of activity from regional power outages or lost or damaged facilities and equipment.
Our Industrial Operations Business must also address production and supply constraints, including product disruptions caused by quality issues, and delays or disruptions in the supply of key components necessary for production. Such delays, disruptions or shortages may result in lost revenue or in additional costs to meet customer demand.
Our Industrial Operations Business must also address production and supply constraints, including product disruptions caused by quality issues, and delays or disruptions in the 38 Table of Contents supply of key components necessary for production. Such delays, disruptions or shortages may result in lost revenue or in additional costs to meet customer demand.
This is because, from time to time, the counterparties to our litigation matters have previously engaged world class law firms that are specialized to the industries of the patents at issue in such matters. These previous engagements may have, or may in the future, result in these firms being conflicted out of representing us.
This is because, from time to time, the counterparties to our litigation matters have previously engaged world class law firms that specialize in the industries of the patents at issue in such matters. These previous engagements may have, or may in the future, result in these firms being conflicted out of representing us.
Additionally, our Energy Operations Business may elect not to obtain insurance if it believes that the cost of available insurance is excessive relative to the perceived risks presented. Losses could, therefore, occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage.
Additionally, our Energy Operations Business may elect not to obtain insurance if it believes that the cost of available insurance is excessive relative to the perceived 33 Table of Contents risks presented. Losses could, therefore, occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage.
Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of cleanup and site restoration costs and liens, liability for natural resource damages, and to a lesser extent, issuance of injunctions to limit or 25 Table of Contents cease operations.
Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of cleanup and site restoration costs and liens, liability for natural resource damages, and to a lesser extent, issuance of injunctions to limit or cease operations.
In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.
In addition to increasing uncertainty regarding our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.
In addition, the obligations of our Energy Operations Business under its revolving credit facility are secured by substantially all of its assets, and if it is unable to repay our indebtedness under the revolving credit facility, the lenders could seek to foreclose on its assets.
In addition, the obligations of our Energy Operations Business under its revolving credit 32 Table of Contents facility are secured by substantially all of its assets, and if it is unable to repay its indebtedness under its revolving credit facility, the lenders could seek to foreclose on its assets.
If we make significant investments in businesses we do not operate or control, or cease to operate and control our operating businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
If we make significant investments in businesses we do not operate or control, or cease to operate and control our operating businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as 21 Table of Contents amended (the “Investment Company Act”).
Historically, oil prices have been extremely volatile. The volatility of the energy markets makes it extremely difficult to predict future oil price movements with any certainty. While our Energy Operations Business hedges a significant portion of its production, lower oil prices may decrease revenues and therefore, cash flows from operations.
Historically, crude oil, natural gas and NGL prices have been extremely volatile. The volatility of the energy markets makes it extremely difficult to predict future oil price movements with any certainty. While our Energy Operations Business hedges a significant portion of its production, lower crude oil, natural gas and NGL prices may decrease revenues and therefore, cash flows from operations.
Rules regulating air emissions from oil and natural gas operations could result in increased capital expenditures and operating costs of our Energy Operations Business.
Rules regulating air emissions from oil and natural gas operations could result in increased capital expenditures and operating costs for our Energy Operations Business.
If the total costs of the integration or utilization of our businesses or assets exceed the anticipated benefits of the acquisition, our financial results could be adversely affected. Accordingly, we may not succeed in addressing the risks associated with our acquisition of Printronix, Benchmark, or any other operating business we acquire in the future.
If the total costs of the integration or utilization of our businesses or assets exceed the anticipated benefits of the acquisition, our financial results could be adversely affected. Accordingly, we may not succeed in addressing the risks associated with our recent acquisitions or any other operating business we acquire in the future.
We expect to incur additional costs integrating the operations of any operating business and utilizing any intellectual property assets we acquire, as we incur higher development and regulatory costs, as the case may be, and must hire relevant personnel.
We expect to incur additional costs integrating the operations of any operating business and utilizing any intellectual property assets we acquire, as we incur higher development and regulatory costs, and must hire relevant personnel.
The borrowing base is subject to redetermination on a semi-annual basis and more frequent redetermination in certain circumstances. If its lenders were to decrease the borrowing base to a level below the then outstanding borrowings, the amount exceeding the revised borrowing base could 22 Table of Contents become immediately due and payable.
The borrowing base is subject to redetermination on a semi-annual basis and more frequent redetermination in certain circumstances. If its lenders were to decrease the borrowing base to a level below the then outstanding borrowings, the amount exceeding the revised borrowing base could become immediately due and payable.
The due diligence investigation that we carry out with respect to any opportunity may not reveal or highlight all relevant facts (including fraud) that may be necessary or helpful in evaluating such opportunity. Moreover, such an investigation will not necessarily result in the acquisition being successful.
The due diligence investigation that we carry out regarding any opportunity may not reveal or highlight all relevant facts (including fraud) that may be necessary or helpful in evaluating such opportunity. Moreover, such an investigation will not necessarily result in the acquisition being successful.
Our Industrial Operations Business's inability to develop new products and enhance existing products to meet customer product requirements on a cost competitive basis may negatively impact its results of operations.
Our Industrial Operations Business’s inability to develop new products and enhance existing products to meet customer product requirements on a cost competitive basis may negatively impact operational results.
Moreover, such appeals may not be successful; 16 Table of Contents • New legislation, regulations or rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating costs and decrease our profit generating opportunities.
Moreover, such appeals may not be successful; • New legislation, regulations or rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating costs and decrease our profit generating opportunities.
As a result, Starboard and its affiliates are able to determine the outcome of all matters requiring stockholder approval and are able to cause or prevent a change of control of our Company or a change in the composition of our Board and could preclude any acquisition of our Company.
As a result, Starboard and its affiliates can determine the outcome of all matters requiring stockholder approval 43 Table of Contents and are able to cause or prevent a change of control of our Company or a change in the composition of our Board and could preclude any acquisition of our Company.
Such diminished control could have an effect on the quality or quantity of products delivered or services rendered, on our ability to quickly respond to changing market conditions, or our ability to ensure compliance with all applicable domestic and foreign laws and regulations.
Such diminished control could influence the quality or quantity of products delivered or services rendered, on our ability to quickly respond to changing market conditions, or our ability to ensure compliance with all applicable domestic and foreign laws and regulations.
Potential adverse effects could include damages to facilities, or to transportation, pipeline and refinery owned by others on which its operations depend, from powerful winds or rising waters in low-lying areas, disruption of production, less efficient or non-routine operating practices necessitated by climate effects and increased costs for insurance coverage in the aftermath of such effects.
Potential adverse effects could include damages to the assets or facilities of our Energy Operations Business, or to transportation, pipeline and refinery owned by others on which their operations depend, from powerful winds or rising waters in low-lying areas, disruption of production, less efficient or non-routine operating practices necessitated by climate effects and increased costs for insurance coverage in the aftermath of such effects.
As producing or development projects become uneconomic, Benchmark's reserve estimates will be adjusted downward, which could negatively impact its borrowing base under its current revolving credit facility and its ability to fund operations.
As producing or development 28 Table of Contents projects become uneconomic, Benchmark's reserve estimates will be adjusted downward, which could negatively impact its borrowing base under its current revolving credit facility and its ability to fund operations.
We intend to grow our company by acquiring additional operating businesses and intellectual property assets. A significant portion of growth and success will be dependent on identifying and acquiring operating companies and intellectual property at attractive prices to realize their intrinsic value.
We intend to grow our company by acquiring additional operating businesses and intellectual property assets. Our growth and success will be dependent on identifying and acquiring operating companies and intellectual property at attractive prices to realize their intrinsic value.
Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data could result in significant harm to our reputation or the reputation of any of our operating businesses. The security and protection of our and their data is one of our top priorities.
Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data could result in significant harm to our reputation or the reputation of any of our operating businesses. The security and protection of our and their data is a top priority.
In addition, Starboard and its affiliates are able to determine the outcome of all matters requiring stockholder approval and are able to cause or prevent a change of control of our Company or a change in the composition of our Board and could preclude any acquisition of our Company.
In addition, Starboard and its affiliates can determine the outcome of all matters requiring stockholder approval and can cause or prevent a change of control of our Company or a change in the composition of our Board and could preclude any acquisition of our Company.
Our Energy Operations Business's operations are subject to environmental and operational safety laws and regulations that may expose it to significant costs and liabilities. Our Energy Operations Business may incur significant costs and liabilities as a result of environmental and safety requirements applicable to oil and natural gas development and production activities.
Our Energy Operations Business’s operations are subject to environmental and operational safety laws and regulations that may expose it to significant costs and liabilities. Our Energy Operations Business may incur significant costs and liabilities due to environmental and safety requirements applicable to oil and natural gas development and production activities.
Although we have adopted a provision in our certificate of incorporation designed to discourage investors from acquiring ownership of our common stock in a manner that could trigger a Code Section 382 ownership change, and we have completed studies to provide reasonable assurance that a Code Section 382 ownership change limitation has not occurred, we cannot be certain that a taxing authority would reach the same conclusion.
Although we have adopted a provision in our certificate of incorporation designed to discourage investors from acquiring ownership 22 Table of Contents of our common stock in a manner that could trigger a Code Section 382 ownership change, and we have completed studies to provide reasonable assurance that a Code Section 382 ownership change has not occurred to date for our existing businesses, we cannot be certain that a taxing authority would reach the same conclusion.
In addition, the United States may, at any time, enact changes to U.S. patent law and regulations, including by legislation, by regulatory 15 Table of Contents rulemaking, or by judicial precedent, that adversely affect the scope of patent protection available and weaken the rights of patent owners to obtain patents, enforce against patent infringement and obtain injunctions and/or damages.
In addition, the United States may, at any time, enact changes to U.S. patent law and regulations, including by legislation, by regulatory rulemaking, or by judicial precedent, that adversely affects the scope of patent protection available and weakens the rights of patent owners to obtain patents, enforce against patent infringement and obtain injunctions and/or damages.
Our stockholders should carefully consider the risks described below, together with all of the other information included in this Annual Report, as well as in our other filings with the Securities and Exchange Commission (the “SEC”), in evaluating our business.
In evaluating our business, our stockholders are encouraged to carefully consider the risks described below, together with all other information included in this Annual Report, as well as in our other filings with the Securities and Exchange Commission (the “SEC”).
In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S.
In addition to increasing uncertainty regarding our ability to obtain patents in the future, 25 Table of Contents this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S.
Recent earthquakes in northern and central Oklahoma and elsewhere have prompted concerns about seismic activity and possible relationships with the energy industry, in particular a possible connection between the operation of injection wells used for produced water disposal and the increased occurrence of seismic activity.
An increase in seismic activity in northern and central Oklahoma and elsewhere have prompted concerns about possible relationships between such seismic activity and the energy industry, in particular a possible connection between the operation of injection wells used for produced water disposal and the increased occurrence of seismic activity.
Complying with such numerous and complex regulations can be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and liability.
Complying 23 Table of Contents with such numerous and complex regulations can be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and liability.
Such appeals are expensive and time consuming, resulting in increased costs and a potential for delayed or foregone revenue opportunities in the event of modification or reversal of favorable outcomes. Although we diligently pursue enforcement litigation, we cannot predict with reliability the decisions made by juries and trial courts.
Such appeals are expensive and time consuming, resulting in increased costs and a potential for delayed or foregone revenue opportunities in the event of modification or reversal of favorable outcomes. Although we diligently pursue enforcement litigation, we cannot predict with reliability the decisions made by juries and trial courts. We expect patent-related legal expenses to continue to fluctuate.
We expect patent-related legal expenses to continue to fluctuate from period to period. Our patent-related legal expenses may fluctuate based on the factors summarized herein, in connection with future trial dates, international enforcement, strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement activities.
Our patent-related legal expenses may fluctuate based on the factors summarized herein, in connection with future trial dates, international enforcement, strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement activities.
Enforcement actions divert our managerial, technical, legal and financial resources from business operations and there are no assurances that such enforcement actions will result in favorable results for us.
The costs are typically substantial, and the outcomes are unpredictable. Enforcement actions divert our managerial, technical, legal and financial resources from business operations and there are no assurances that such enforcement actions will result in favorable results for us.
The prices at which it is able to enter into commodity derivative contracts covering 19 Table of Contents its production in the future will be dependent upon commodity futures prices at the time it enters into these transactions, which may be substantially higher or lower than current prices.
The prices at which it can enter into commodity derivative contracts covering its production in the future will be dependent upon commodity futures prices at the time it enters into these transactions, which may be substantially higher or lower than current prices.
If the anticipated value of such incentive awards does not materialize, or if the total compensation package ceases to be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened, which could harm our results of operations.
If the anticipated value of such incentive awards does not materialize, or if the total compensation package ceases to be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened, which could harm our results of operations. Our success substantially depends on our ability to attract and retain key members of our management team and officers.
Losses and liabilities from uninsured and under-insured events and delay in the payment of insurance proceeds could have a material adverse effect on the business, financial condition, results of operations and ability of our Energy Operations Business to make distributions. Our Energy Operations Business depends in part on transportation, pipelines and refining facilities owned by others.
Losses and liabilities from uninsured and under-insured events and delay in the payment of insurance proceeds could have a material adverse effect on the business, financial condition, results of operations and ability of our Energy Operations Business to make distributions.
We believe it is likely that scientific and political attention to issues concerning the extent, causes of and responsibility for climate change will continue, with the potential for further regulations and litigation that could affect the operations of our Energy Operations Business. Our Energy Operations Business operations result in greenhouse gas (“GHG”) emissions.
We believe it is likely that scientific, political and public attention to issues concerning the extent, causes of and responsibility for climate change will continue, with the potential for regulatory changes and litigation that could affect the operations of our Energy Operations Business. Our Energy Operations Business operations result GHG emissions.
Should these conditions persist, it may impact our Energy Operations Business’ ability to procure services, materials and equipment on a cost-effective basis, or at all, and, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Should these conditions persist, it may impact our Energy Operations Business’ ability to procure services, materials and equipment on a cost-effective basis, or at all, and, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected. Inflation in the U.S. has been much more significant in recent years.
Prices for oil may fluctuate widely in response to relatively minor changes in supply of and demand for oil.
Prices for crude oil, natural gas and NGL may fluctuate widely in response to relatively minor changes in supply of and demand for crude oil, natural gas and NGLs.
Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks of asserting patent enforcement actions; • Courts may rule that our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions, which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our financial position; • The complexity of negotiations and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to increased intervals of time between the filing of litigation and potential revenue events (i.e., markman dates, trial dates), which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios; and • Fluctuations in overall patent portfolio related enforcement activities, which are impacted by the portfolio intake challenges discussed above that could harm our operating results and our financial position.
Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks of asserting patent enforcement actions; • Courts may rule that our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions, which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our financial position; • The complexity of negotiations and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to increased intervals of time between the filing of litigation and potential revenue events (i.e., markman dates, trial dates), which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios; and • Fluctuations in overall patent portfolio related enforcement activities, which are impacted by the portfolio intake challenges discussed above that could harm our operating results and our financial position. 26 Table of Contents Patent litigation is inherently risky because courts may find our patents invalid, not infringed, or unenforceable, and the USPTO, or other relevant patent office, may either invalidate our patents or materially narrow the scope of their claims during a reexamination, opposition or other such proceeding.
Many of its commodity derivative contracts requires Benchmark to make cash payments to the extent the applicable index exceeds a predetermined price, thereby limiting its ability to realize the benefit of increases in oil prices.
Benchmark’s hedging strategy may limit its ability to realize cash flows from commodity price increases. Many of its commodity derivative contracts require Benchmark to make cash payments to the extent the applicable index exceeds a predetermined price, thereby limiting its ability to realize the benefit of increases in oil prices.
Due to the completion of the transactions pursuant to the Recapitalization Agreement, Starboard controls a majority of the voting power of our outstanding common stock. As of March 11, 2024, Starboard controlled approximately 61.2% of the voting power of our common stock.
Due to the completion of the transactions pursuant to the Recapitalization Agreement, Starboard controls a majority of the voting power of our outstanding common stock. As of March 12, 2025, Starboard controlled approximately 63.6% of the voting power of our common stock.

… 153 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+1 added−0 removed12 unchanged
Biggest changeThe control group is comprised of members of senior leadership, including in-house legal counsel, and multiple independent third-party Certified Information Systems Security Professional (CISSP) Information Technology and Cybersecurity consultants. Specifically, we have retained a Virtual Cheif Information Security Officer and other members of our cybersecurity control group, each of whom supports our cybersecurity risk management and governance practices.
Biggest changeGovernance Management Personnel Our internal cybersecurity control group has responsibility for assessing, monitoring, and managing risks related to cybersecurity threats. The control group is comprised of members of senior leadership, including in-house legal counsel, and multiple independent third-party Certified Information Systems Security Professional (CISSP) Information Technology and Cybersecurity consultants.
A senior member of our internal group attends all scheduled Audit Committee meetings and provides in-depth reports to the committee on cybersecurity risks and updates on the status of projects to strengthen the Company's cybersecurity systems and improve cyber readiness.
A senior member of our internal control group attends all scheduled Audit Committee meetings and provides in-depth reports to the committee on cybersecurity risks and updates on the status of projects to strengthen the Company’s cybersecurity systems and improve cyber readiness.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We have developed and implemented various processes to oversee and manage the cybersecurity risks that may impact our business and have integrated this cybersecurity risk management framework into our Company’s broader risk management framework.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We have developed and implemented various processes to oversee and manage cybersecurity risks that may impact our business and have integrated this cybersecurity risk management framework into our Company’s broader risk management framework.
We also have processes in place to stay informed of and monitor prevention, detection, mitigation, and remediation of cybersecurity risks, including but not limited to: employing appropriate incident prevention and detection software where appropriate; employing industry-standard encryption protocols where appropriate; conducting regular vulnerability scans; applying patches in a timely manner; conducting penetration tests and implementing recommended corrective actions in a timely manner; maintaining a well-defined incident response plan and supporting procedures; conducting regular phishing simulations and tabletop exercises; and requiring employees to complete cybersecurity training.
We also have processes in place to stay informed of and monitor prevention, detection, mitigation, and remediation of cybersecurity risks, including but not limited to: employing appropriate incident prevention and detection software where appropriate; employing industry-standard encryption protocols where appropriate; conducting regular vulnerability scans; applying patches in a timely manner; conducting penetration tests and implementing recommended corrective actions in a 44 Table of Contents timely manner; maintaining a well-defined incident response plan and supporting procedures; conducting regular phishing simulations and tabletop exercises; and requiring employees to complete cybersecurity training.
Monitor Cybersecurity Incidents Our internal cybersecurity control group meets on a monthly or more frequent basis to discuss and assess risks related to cybersecurity threats and review any reported cybersecurity incidents.
Monitor Cybersecurity Incidents Our internal cybersecurity control group meets monthly or on a more frequent basis if needed, to discuss and assess risks related to cybersecurity threats and review any reported cybersecurity incidents.
Certain members of our Audit Committee have specific experience in information security and cybersecurity, and the Company has made cybersecurity training available to members of the Audit Committee.
Certain members of our Audit Committee have specific experience in 45 Table of Contents information security and cybersecurity, and the Company has made cybersecurity training available to members of the Audit Committee.
Material Impact from Cybersecurity Incidents While we have experienced and will continue to experience varying cyber incidents in the normal conduct of our business, thus far to our knowledge, such incidents have not materially affected, and are not reasonably likely to materially affect, the Company, including its business strategy, results of operations, or financial condition. 30 Table of Contents Governance Management Personnel Our internal cybersecurity control group has responsibility for assessing, monitoring, and managing risks related to cybersecurity threats.
Material Impact from Cybersecurity Incidents While we have experienced and will continue to experience varying cyber incidents in the normal conduct of our business, thus far to our knowledge, such incidents have not materially affected, and are not reasonably likely to materially affect, the Company, including its business strategy, results of operations, or financial condition.
Added
Specifically, we have retained a Virtual Chief Information Security Officer and other members of our cybersecurity control group, each of whom supports our cybersecurity risk management and governance practices.

Item 2. Properties

Properties — owned and leased real estate

6 edited+60 added−2 removed0 unchanged
Biggest changePrintronix has a manufacturing site located in Malaysia and third-party configuration sites 31 Table of Contents located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances.
Biggest changePrintronix's principal executive office is located in Irvine, California, under a lease agreement that expires in 2026. Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances.
We believe that our Patent Licensing, Enforcement and Technologies Business's facilities are adequate, suitable and of sufficient capacity to support its immediate needs. Industrial Operations Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through 2028.
We believe that our Patent Licensing, Enforcement and Technologies Business’s facilities are adequate, suitable and of sufficient capacity to support its immediate needs. Industrial Operations Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through 2026.
ITEM 2. PROPERTIES Corporate Our principal executive office is located in New York, New York, where we lease approximately 8,600 square feet of office space, under a lease agreement that expires in 2027.
ITEM 2. PROPERTIES Corporate Our principal executive office is located in New York, New York, where we lease approximately 4,600 square feet of office space, under a lease agreement that expires in 2027.
We believe that Printronix's facilities are adequate, suitable and of sufficient capacity to support its immediate needs. Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information.
We believe that Printronix’s facilities are adequate, suitable and of sufficient capacity to support its immediate needs. Refer to Note 15 to the consolidated financial statements elsewhere herein for additional information.
Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information. Intellectual Property Operations Our Patent Licensing, Enforcement and Technologies Business, is based in Frisco, Texas, where we lease office space under a lease agreement that expires in 2024. One additional subsidiary leases office space in Austin, Texas that also expires in 2024.
Refer to Note 15 to the consolidated financial statements elsewhere herein for additional information. Intellectual Property Operations Our Patent Licensing, Enforcement and Technologies Business, is based in Frisco, Texas, where we lease office space under a lease agreement that expires in 2025. One additional subsidiary leases office space in Austin, Texas that expires in 2025.
We also have an office for operational and administrative functions located in Irvine, California, where we lease approximately 8,293 square feet of office space, under a lease agreement that expires in 2024. We believe that our facilities are adequate, suitable and of sufficient capacity to support our immediate needs.
We also have an office for operational and administrative functions located in Costa Mesa, California, where we lease approximately 1,820 square feet of office space, under a lease agreement that expires in August 2027. We believe that our facilities are adequate, suitable and of sufficient capacity to support our immediate needs.
Removed
Printronix's principal executive office is located in Irvine, California, under a lease agreement that expires in 2026.
Added
Energy Operations The following discussion of our Energy Operations properties should be read in conjunction with the accompanying audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Removed
Energy Operations Benchmark is based in Austin, Texas, and has assets of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. We believe that our energy operations' facilities are adequate, suitable and of sufficient capacity to support its immediate needs.
Added
Please see the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Results of Operations” for information on our production, prices, and production cost. Our Energy Operations Business consists of the Company’s approximately 73.5% interest in Benchmark.
Added
Benchmark’s current position is concentrated in the Anadarko Basin region of Western Oklahoma and the Texas panhandle, where it has a production base comprising approximately 156,000 net acres located primarily in Ellis and Roger Mills counties, Oklahoma and Lipscomb, Hemphill, Ochiltree and Roberts counties, Texas.
Added
Within its operating areas, Benchmark’s assets are prospective for multiple formations, most notably the Cleveland, Granite Wash and Cherokee formations.
Added
As of December 31, 2024, Benchmark’s operated assets consisted of 551 gross (472 net) operated wells, and its non-operated assets consisted of an average working interest of 13% in 64 gross (8 net) wells including the assets acquired in the Revolution Transaction (as defined below).
Added
Production from Benchmark’s operated and non-operated wells during the year ended December 31, 2024 totaled 1,680 Mboe, or an average of 4.6 Mboe per day. 46 Table of Contents The following table presents certain production and operating information for Benchmark as of or for the year ended December 31, 2024, as applicable.
Added
As of December 31, 2024 Productive Wells (1) Average Daily Production (2) Estimated Proved Reserves (3) Total Net Acreage Gross Net (Boe/d) (Mboe) Texas/Oklahoma Anadarko Basin 155,861 615 480 4,601 25,279 _________________________ (1) Benchmark’s operated and non-operated productive wells. (2) Represents the average daily production for the year ended December 31, 2024 from Benchmark’s operated and non-operated producing wells.
Added
(3) In connection with our investment in Benchmark in November 2023 and Benchmark’s subsequent acquisition of the Revolution assets in 2024, we commenced an evaluation of the development potential of Benchmark’s unproved properties.
Added
Benchmark had not adopted a long-term development plan as of December 31, 2024 or 2023 and, in accordance with SEC rules, its unproved and unevaluated properties could not be classified as having proved undeveloped reserves for such periods. As a result, Benchmark’s estimated net proved reserves at December 31, 2024 consist entirely of proved developed reserves.
Added
Oil and Natural Gas Reserves Summary of Net Proved Reserves The table below presents Benchmark’s estimated net proved reserves for the periods indicated based on reports prepared by Cawley, Gillespie & Associates (“CGA”), Benchmark’s third-party independent reserve engineers.
Added
In preparing its reports, CGA evaluated properties representing all of Benchmark’s proved developed reserves at December 31, 2024 and 2023 in accordance with current SEC rules and regulations regarding oil and natural gas reserve reporting. Benchmark’s proved developed reserves accounted for 100% of its total proved reserves for such periods.
Added
The estimated reserves shown are for proved reserves only and do not include any unproved reserves classified as probable or possible reserves that might exist 47 Table of Contents for Benchmark’s properties, nor do they include any consideration that could be attributable to interests in unproved and unevaluated acreage beyond those tracts for which proved reserves have been estimated.
Added
Estimated Reserves at SEC Pricing (1) December 31, 2024 2023 Estimated Proved Reserves: Crude Oil (MBbls) 5,315 361 NGLs (MBbls) 68,110 18,444 Natural gas (MMcf) 8,613 1,156 Total (MBoe) 25,279 4,591 Percent Proved Developed (2) 100 % 100 % Estimated Proved Developed Reserves: Crude Oil (MBbls) Producing 5,134 251 Non-Producing 181 110 Total 5,315 361 Natural gas (MMcf) Producing 66,173 14,119 Non-Producing 1,937 4,325 Total 68,110 18,444 NGLs (MBbls) Producing 8,373 924 Non-Producing 240 232 Total 8,613 1,156 Total Proved Developed Reserves (MBoe) (2) 25,279 4,591 Estimated Proved Undeveloped Reserves: Total Proved Undeveloped Reserves (MBoe) (2) — — _________________________ (1) Prices for natural gas, oil and NGLs, respectively, used in preparing Benchmark’s estimated proved reserves based on SEC rules and regulations regarding oil and natural gas reserve reporting (i) at December 31, 2024 were $72.01 per Bbl for crude oil, $0.86 per Mcf for natural gas and $25.16 per Bbl for NGLs, and (ii) at December 31, 2023 were $75.73 per Bbl for crude oil, $1.65 per Mcf for natural gas and $28.16 per Bbl for NGLs.
Added
(2) In connection with our investment in Benchmark in November 2023 and Benchmark’s subsequent acquisition of the Revolutions assets in 2024, we commenced an evaluation of the development potential of Benchmark’s undrilled assets.
Added
Benchmark had not adopted a long-term development plan as of December 31, 2024 or 2023 and, in accordance with SEC rules, its undrilled assets could not be classified as having proved undeveloped reserves for such periods.
Added
As a result, Benchmark’s estimated net proved reserves at December 31, 2024 and 2023 consist entirely of proved developed reserves. 48 Table of Contents Changes in Proved Reserves The following table summarizes changes in our estimated proved reserves at December 31, 2024: Proved Reserves (1) (MBoe) Balance at December 31, 2023 4,591 Production (1,680) Revisions of previous estimates (298) Purchase of reserves 22,666 Balance at December 31, 2024 25,279 _________________________ (1) Benchmark’s estimated net proved reserves at December 31, 2024 and 2023 consist entirely of proved developed reserves.
Added
Benchmark’s estimated proved reserves increased 451% from 4,591 MBoe at December 31, 2023 to 25,279 MBoe at December 31, 2024. This increase in proved reserves was primarily attributable to the Revolution Acquisition in April 2024, which increased our proved reserves by 22,666 Mboe during 2024.
Added
This increase was partially offset by production in 2024 of 1,680 Mboe, as well as net downward revisions of prior estimates for proved reserves of 298 Mboe. 789 Mboe of the downward revisions are due to price decreases in the trailing 12-month averages for oil, gas and NGLs that was partially offset by 491 Mboe of positive revisions due to the performance of our wells due to the positive impact of our 2024 worker programs.
Added
Standardized Measure The following table sets forth the standardized measure of discounted future net cash flows (the “Standardized Measure”) of Benchmark proved reserves as of the period presented.
Added
The Standardized Measure represents the present value of estimated future net cash flows from proved reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% to reflect the timing of future cash flows. The Standardized Measure is not an estimate of the fair market value of Benchmark’s properties.
Added
Refer to the Unaudited Supplemental Information on Oil and Natural Gas Properties included elsewhere in this Annual Report for additional discussion of the Standardized Measure and changes thereto: December 31, 2024 (in thousands) Standardized measure of discounted future net cash flows $166,159 Independent Petroleum Engineers We have engaged CGA to independently certify our estimated net proved reserves.
Added
CGA is a reservoir-evaluation consulting firm who evaluates oil and natural gas properties and independently certifies petroleum reserves quantities. CGA was founded in 1961 and performs consulting petroleum engineering services under Texas Board of Professional Engineers Registration No. F-693. Within CGA, the technical expert primarily responsible for certifying the estimates set forth in the CGA 2024 Reserve Report is Mr.
Added
Todd Brooker, a Licensed Professional Engineer in the State of Texas (No. 83462), has been practicing consulting petroleum engineering at CGA since 1992 and has over 35 years of industry experience. He graduated with honors from the University of Texas at Austin in 1989 with a Bachelor of Science Degree in Petroleum Engineering. Mr.
Added
Brooker meets or exceeds the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers; he is proficient in judiciously applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserves definitions and guidelines.
Added
He is a member of the Society of Petroleum Engineers and Society of Petroleum Evaluation Engineers. 49 Table of Contents In accordance with applicable requirements of the SEC, estimates of our net proved reserves and future net revenues are made using average prices at the beginning of each month in the 12-month period prior to the date of such reserve estimates and are held constant throughout the life of the properties (except to the extent a contract specifically provides for escalation).
Added
The reserves set forth in CGA’s reports for Benchmark’s properties are estimated by performance methods or analogy. In general, reserves attributable to producing were based on a combination of forecasting methods including decline curve analysis regional type curve analysis and analogy to offset production.
Added
Certain new producing properties were forecast using a combination of production performance and analogy to similar production, both of which are considered to provide a relatively high degree of accuracy. Non-producing and behind pipe reserve estimates were forecast using either production performance, volumetric or analogy methods, or a combination of each.
Added
These methods provide a relatively high degree of accuracy for predicting proved developed non-producing and proved developed behind pipe reserves due to the mature nature of their properties targeted for development and an abundance of subsurface control data.
Added
CGA concluded that the assumptions, data, methods and procedures used in connection with its reports were appropriate for the purpose served by its reports. The estimates of the reserves, future production, and income attributable to our oil and natural gas properties are prepared using widely industry-accepted petroleum economic software packages, as well as CGA’s own proprietary petroleum economic software.
Added
To estimate economically recoverable oil and natural gas reserves and related future net cash flows, Cawley considers many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates.
Added
Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be demonstrated to be economically producible based on existing economic conditions including the prices and costs at which economic productivity from a reservoir is to be determined as of the effective date of the report.
Added
With respect to the property interests we own, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, production taxes, recompletion and development costs and product prices are based on the SEC regulations, geological maps, well logs, core analyses, and pressure measurements.
Added
The reserve data set forth in the CGA reports represent only estimates and should not be construed as being exact quantities. They may or may not be actually recovered, and if recovered, the actual revenues and costs could be more or less than the estimated amounts. Moreover, estimates of reserves may increase or decrease as a result of future operations.
Added
Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. There are numerous uncertainties inherent in estimating oil and natural gas reserves and their estimated values, including many factors beyond our control.
Added
The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geologic interpretation and judgment. As a result, estimates of different engineers, including those used by us, may vary.
Added
In addition, estimates of reserves are subject to revision based upon actual production, results of future development and exploration activities, prevailing oil and natural gas prices, operating costs and other factors. The revisions may be material.
Added
Accordingly, reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered and are highly dependent upon the accuracy of the assumptions upon which they are based. See “ Risk Factors — Our estimated reserves are based on many assumptions that may prove to be inaccurate.
Added
Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves .” Internal Controls Over Reserves Estimation Process Benchmark employs an external oil and gas consulting firm to manage the Company’s reservoir engineering. Rachel Henderson (VP of Reservoir Engineering) is responsible for overseeing the internal preparation of our reserves.
Added
Rachel received a Bachelor of Science in Biological Engineering with high distinction from the University of Arkansas in 2012 and a Masters of Business Administration from the University of Oklahoma in 2018. Mrs. Henderson has over 12 years of oil and gas experience, with her entire career focused on reservoir engineering.
Added
Benchmark’s reservoir engineering department meets with CGA to review properties and discuss evaluation methods and assumptions used in CGA’s proved reserves estimates, in accordance with Benchmark’s prescribed internal control procedures. Our controls over reserve estimation include engaging and retaining qualified independent petroleum and 50 Table of Contents geological firms with respect to reserves information.
Added
We provide information to our independent reserve engineers about our crude oil, natural gas and NGLs properties which includes, but is not limited to, production profiles, ownership and production sharing rights, prices, costs and future drilling plans. Our independent reserve engineers prepare their own estimates of the reserves attributable to our properties.
Added
The reserves estimates for our assets shown herein have been independently evaluated by CGA . As discussed in Item 9A, “Controls and Procedures,” we concluded our disclosure controls and procedures related to Benchmark were not effective as of December 31, 2024, resulting in a material weakness over financial reporting related to Benchmark.
Added
While the material weakness affects systems that provide input into the reserves process, there were no identified material misstatements to our current year financial statements, no restatements of prior period financial statements and no changes in previously released financial results required as a result of these control deficiencies, including to Benchmark’s reserve estimations.
Added
Production, Prices and Production Costs The price that Benchmark receives for the oil, natural gas and NGLs it produces is largely a function of market supply and demand. Demand has historically been affected by global economic conditions, including recession concerns, conflicts involving oil producing regions, and weather and other seasonal conditions.
Added
The following table sets forth Benchmark’s production volumes, average prices received and average production costs during the periods indicated. These amounts represent Benchmark’s historical results of operations without making pro forma adjustments for any acquisitions, divestitures or drilling activity that occurred during the respective years.
Added
Due to normal production declines, increases or decreases in drilling activity and the effects of acquisitions or divestitures, the historical information presented below should not be interpreted as being indicative of future results.
Added
Year Ended December 31, 2024 Net Production (1) Oil (MBbls) 364 Natural gas (MMcf) 4,678 NGLs (MBbls) 536 Total (MBoe) (2) 1,680 Average daily production (Boe/d) 4,601 Average Sales Prices (3) Oil (per Bbl) $ 72.62 Natural gas (per Mcf) $ 1.97 NGLs (per Bbl) $ 24.30 Average Production Costs (4) Total (per Boe) (4) $ 12.29 _________________________ (1) All of Benchmark’s production comes from the Anadarko Basin in Texas and Oklahoma.
Added
(2) Gas reserves are converted to Boe at a rate of six Mcf per Bbl of oil, NGL reserves are converted to a Boe on a one-to-one basis with oil. (3) Excludes impact of derivative settlements.
Added
(4) Excludes ad valorem taxes and oil and natural gas production taxes. 51 Table of Contents Drilling and Development Activity The table below sets forth the number of gross and net productive and non-productive wells in which we owned a working interest drilled in the periods indicated.
Added
The number of wells drilled refers to the number of wells completed at any time during the period, regardless of when drilling was initiated. Year Ended December 31, 2024 Gross Net Exploratory wells Productive 1.0 0.80 Development wells Productive (1) 11.0 0.40 Total wells 12.0 1.20 ________________________ (1) Represents non-operated wells in which Benchmark holds a working interest.
Added
At December 31, 2024, we did not have any development wells or exploration wells in the process of being drilled, being completed or awaiting completion operations. Productive Wells The following table presents information relating to Benchmark’s productive wells as of December 31, 2024. Wells are classified as oil wells or natural gas wells according to their predominant production stream.
Added
As of December 31, 2024 Benchmark had an approximate average working interest of 85.8% in all wells that it operated and an approximate average working interest of 13% in wells that it does not operate.
Added
In the table below, gross wells are the total number of producing wells in which Benchmark owns a working interest and net wells represent the total of Benchmark’s fractional working interests owned in the gross wells.
Added
Oil Wells Natural Gas Wells Total Wells Gross Net Gross Net Gross Net Anadarko Basin Operated Wells 245 205 306 267 551 472 Non-Operated Wells 42 4 22 4 64 8 Total 287 209 328 271 615 480 Acreage The following table summarizes Benchmark’s estimated gross and net developed and undeveloped acreage as of December 31, 2024.
Added
Developed Acreage Undeveloped Acreage (1) Total Acreage (in thousands) Gross Net Gross Net Gross Net Anadarko Basin 1,151 148 122 8 1,273 156 _________________________ (1) Represents acreage that is not allocated or assignable to productive wells.
Added
Acreage Expirations As a non-operator, we are subject to lease expirations if an operator does not commence the development of operations within the agreed terms of our leases.
Added
Our leases for undeveloped acreage will expire at the end of their respective primary terms, unless we renew the existing leases, establish commercial production from the acreage or some other “savings clause” is exercised.
Added
In addition, our leases typically provide that the lease does not expire at the end of the primary term if 52 Table of Contents drilling operations have been commenced. While we generally expect to establish production from most of our acreage prior to expiration of the applicable lease terms, there can be no guarantee they can do so.
Added
Manufacturing Operations Deflecto’s primary corporate and manufacturing offices are located in Indianapolis. Deflecto conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through 2031. Deflecto leases other warehouses and manufacturing sites located in the United States, United Kingdom, Canada and China.
Added
We believe that Deflecto’s facilities are adequate, suitable and of sufficient capacity to support its immediate needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+0 added−0 removed8 unchanged
Biggest changeWe believe that any liability arising from these actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. For information regarding certain pending litigation, see Note 13 to our consolidated financial statements.
Biggest changeWe believe that any liability arising from these actions will not have a material adverse effect on our consolidated financial position, operational results or cash flow. For information regarding certain pending litigation, see Note 15 to our consolidated financial statements.
Unfavorable or adverse outcomes may result in losses, exhaustion of financial resources or other adverse effects which could encumber our Intellectual Property Operations Business’s ability to effectively and efficiently monetize its assets. Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information related to current legal proceedings. ITEM 4.
Unfavorable or adverse outcomes may result in losses, exhaustion of financial resources or other adverse effects which could encumber our Intellectual Property Operations Business’s ability to effectively and efficiently monetize its assets. Refer to Note 15 to the consolidated financial statements elsewhere herein for additional information related to current legal proceedings. ITEM 4.
MINE SAFETY DISCLOSURES None. 32 Table of Contents PART II
MINE SAFETY DISCLOSURES None. 53 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−1 removed2 unchanged
Biggest changeAs of December 31, 2023, the remaining availability under the stock repurchase program was $20 million. Refer to Note 14 to the consolidated financial statements elsewhere herein for additional information related to past repurchase programs. ITEM 6. [Reserved] Not applicable. 33 Table of Contents
Biggest changeUnder the Repurchase Program as of December 31, 2024, we have repurchased a total of 4,358,361 shares at an average price per share of $4.61, 54 Table of Contents for a total of $20.0 million. As of December 31, 2024, the Repurchase Program has been completed. Refer to Note 16 to the consolidated financial statements elsewhere herein for additional information.
The repurchase authorization has no time limit and does not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
The Repurchase Program has no time limit and does not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act of 1934, as amended.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The Nasdaq Global Select Market under the symbol “ACTG.” Holders of Common Stock On March 11, 2024, there were 63 owners of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The Nasdaq Global Select Market under the symbol “ACTG.” Holders of Common Stock On March 12, 2025, there were 52 owners of record of our common stock.
Securities Authorized for Issuance under Equity Compensation Plans Information required by this item is incorporated by reference to our Definitive Proxy Statement for our 2024 Annual Meeting of Stockholders. Recent Sales of Unregistered Securities None. Stock Repurchases There were no stock repurchases during the quarter ended December 31, 2023.
The decision to institute a dividend is at the discretion of, and rests with Acacia’s Board of Directors. Securities Authorized for Issuance under Equity Compensation Plans Information required by this item is incorporated by reference to our Definitive Proxy Statement for our 2025 Annual Meeting of Stockholders. Recent Sales of Unregistered Securities None.
Removed
On November 9, 2023, the Board of Directors of the Company approved a stock repurchase program authorizing the Company to purchase up to an aggregate of $20 million of the Company’s common stock subject, to a cap of 5,800,000 shares of common stock.
Added
Stock Repurchases Issuer Purchases of Equity Securities (1) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Program (In thousands) October 1, 2024 - October 31, 2024 1,175,872 $ 4.64 1,175,872 $ 7,310 November 1, 2024 - November 30, 2024 798,398 $ 4.50 798,398 $ 3,721 December 3, 2024 - December 31, 2024 846,969 $ 4.50 846,969 $ — Total repurchases in the quarter 2,821,239 $ 4.56 2,821,239 (1) On November 9, 2023, the Board approved a stock repurchase program (the “Repurchase Program”) for up to $20.0 million of the Company’s common stock, subject to a cap of 5,800,000 shares of common stock.
Added
ITEM 6. [Reserved] Not applicable. 55 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+72 added−35 removed50 unchanged
Biggest changeCash Flows Summary The net change in cash and cash equivalents and restricted cash for the periods presented was comprised of the following: Years Ended December 31, 2023 2022 (In thousands) Net cash provided by (used in): Operating activities $ (22,506) $ (37,336) Investing activities 16,178 184,464 Financing activities 58,632 (166,137) Effect of exchange rates on cash and cash equivalents 1 (2,566) Increase (decrease) in cash and cash equivalents $ 52,305 $ (21,575) 47 Table of Contents Cash Flows from Operating Activities Cash flows from operating activities were comprised of the following for the periods presented: Years Ended December 31, 2023 2022 (In thousands) Net income (loss) including noncontrolling interests in subsidiaries $ 68,930 $ (110,939) Adjustments to reconcile net income (loss) including noncontrolling interests in subsidiaries to net cash used in operating activities: Depreciation, depletion and amortization 14,728 13,514 Amortization of debt discount and issuance costs — 90 Change in fair values Series A redeemable convertible preferred stock embedded derivatives, Series A warrants and Series B warrants (6,716) (15,106) Loss on exercise of Series A warrants — 2,004 Gain on exercise of Series B warrants (1,525) — Compensation expense for share-based awards 3,297 3,820 (Gain) loss on foreign currency exchange (53) 3,324 Change in fair value of equity securities (31,423) 263,695 Loss (gain) on sale of equity securities 10,930 (125,318) Unrealized gain on derivatives (781) — Earnings on equity investment in joint venture (4,167) (42,531) Deferred income taxes (3,657) (17,810) Changes in assets and liabilities: Accounts receivable (70,313) 998 Inventories 3,301 (5,291) Prepaid expenses and other assets (820) (5,986) Accounts payable and accrued expenses (4,651) (136) Royalties and contingent legal fees payable 751 (1,764) Deferred revenue (337) 100 Net cash used in operating activities $ (22,506) $ (37,336) Cash receipts from ARG's licensees totaled $12.2 million and $16.6 million for the years ended December 31, 2023 and 2022, respectively.
Biggest changeRefer to Note 11 to the accompanying consolidated financial statements for additional information. 71 Table of Contents Cash Flows Summary The net change in cash and cash equivalents for the periods presented was comprised of the following: Years Ended December 31, 2024 2023 (In thousands) Net cash (used in) provided by: Operating activities $ 50,122 $ (22,506) Investing activities (212,963) 16,178 Financing activities 97,556 58,632 Effect of exchange rates on cash and cash equivalents (926) 1 (Decrease) increase in cash and cash equivalents $ (66,211) $ 52,305 Cash Flows from Operating Activities Cash flows from operating activities were comprised of the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Net (loss) income including noncontrolling interests in subsidiaries $ (34,698) $ 68,930 Adjustments to reconcile net loss including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 33,574 14,728 Accretion of asset retirement obligation 986 — Change in fair values Series A redeemable convertible preferred stock embedded derivatives and Series B warrants — (6,716) Gain on exercise of Series B warrants — (1,525) Compensation expense for share-based awards 4,795 3,297 Loss (gain) on foreign currency exchange 370 (53) Change in fair value of equity securities 31,412 (31,423) (Gain) loss on sale of equity securities (28,861) 10,930 Unrealized loss (gain) on derivatives 610 (781) Earnings on equity investment in joint venture — (4,167) Deferred income taxes, net of acquired net deferred tax assets (6,051) (3,657) Changes in assets and liabilities: Accounts receivable 69,225 (70,313) Inventories 1,054 3,301 Prepaid expenses and other assets (9,329) (820) Accounts payable and accrued expenses (8,124) (4,651) Royalties and contingent legal fees payable (5,338) 751 Deferred revenue 497 (337) Net cash provided by (used in) operating activities $ 50,122 $ (22,506) 72 Table of Contents Cash receipts from ARG’s licensees totaled $91.3 million and $12.2 million for the years ended December 31, 2024 and 2023, respectively.
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations is masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.
Acacia has made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
Acacia made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such Special Purpose Acquisition Companies, which are narrowly focused on completing one singular, defining acquisition.
We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.
We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire.
We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value of the businesses that we acquire.
For additional information regarding ARG's patent portfolio valuation estimates, refer to Note 2 to the consolidated financial statements. The Company did not record any long-lived asset, patent or other intangible asset impairment charges for the years ended December 31, 2023 and 2022. Goodwill asset impairment reviews include determining the estimated fair values of our reporting units.
For additional information regarding ARG’s patent portfolio valuation estimates, refer to Note 2 to the consolidated financial statements. The Company did not record any long-lived asset, patent or other intangible asset impairment charges for the years ended December 31, 2024 and 2023. Goodwill asset impairment reviews include determining the estimated fair values of our reporting units.
Due to uncertainties related to our ability to utilize certain deferred tax assets in future periods, we have recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2023 and 2022. These assets primarily consist of foreign tax credits and net operating loss carryforwards.
Due to uncertainties related to our ability to utilize certain deferred tax assets in future periods, we have recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2024 and 2023. These assets primarily consist of foreign tax credits and net operating loss carryforwards.
We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated, including those set forth under Item 1A, “Risk Factors”. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available to us on favorable terms, or at all.
We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated, including those set forth under Item 1A, “Risk Factors.” Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available to us on favorable terms, or at all.
The decrease in Printronix's cost of revenues for the year ended December 31, 2023 is due to change in revenue described above. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix's cost of sales.
The decrease in Printronix's cost of revenues for the year ended December 31, 2024 is due to change in revenue described above. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix’s cost of sales.
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company’s consolidated financial statements include Benchmark’s consolidated operations from November 13, 2023 through December 31, 2023. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information.
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company’s consolidated financial statements include Benchmark’s consolidated operations from November 13, 2023 through December 31, 2024. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information.
Patent Licensing and Enforcement Patent Litigation Trial Dates and Related Trials As of the date of this Annual Report, our Patent Licensing, Enforcement and Technologies Business has one pending patent infringement case with scheduled trial dates in the next twelve months.
Patent Licensing and Enforcement Patent Litigation Trial Dates and Related Trials As of the date of this Annual Report, our Patent Licensing, Enforcement and Technologies Business has two pending patent infringement case with scheduled trial dates in the next twelve months.
We believe our priorities and skills underpin a compelling value proposition for operating businesses, partners and future acquisition targets, including: • the flexibility to consummate transactions using financing structures suited to the opportunity and involving third-party transaction structuring as needed; 34 Table of Contents • the ability to deliver ongoing financial and strategic support; and • the financial capacity to maintain a long-term outlook and remain committed to a multi-year business plan.
We believe our priorities and skills underpin a compelling value proposition for operating businesses, partners and future acquisition targets, including: • the flexibility to consummate transactions using financing structures suited to the opportunity and involving third-party transaction structuring as needed; • the ability to deliver ongoing financial and strategic support; and • the financial capacity to maintain a long-term outlook and remain committed to a multi-year business plan.
Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein. Refer to “Investments in Patent Portfolios” above for information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein. 65 Table of Contents Refer to “Investments in Patent Portfolios” above for information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the consolidated statements of operations. 51 Table of Contents Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and our valuation allowance.
To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the consolidated statements of operations. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and our valuation allowance.
Unlike most operating businesses and industries, licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or both continue into subsequent periods, and depending on a number of other factors, such potential revenues may be pushed into subsequent annual periods.
Unlike most operating businesses and industries, licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or both continue into subsequent periods, and depending on several other factors, such potential revenues may be pushed into subsequent annual periods.
The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years. Industrial Operations Business 38 Table of Contents Our Printronix subsidiary is a worldwide leader in multi‐technology supply‐chain printing solutions for a variety of industries, including manufacturing, transportation and logistics, retail distribution, food and beverage distribution, and pharmaceutical distribution.
The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years. Industrial Operations Business Our Printronix subsidiary is a worldwide leader in multi‐technology supply‐chain printing solutions for a variety of industries, including auto manufacturing, transportation and logistics, retail distribution, food and beverage distribution, and pharmaceutical distribution.
In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our 49 Table of Contents financial condition or results of operations.
In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.
Our management believes that our cash and cash equivalent balances and cash flows from operations will be sufficient to meet our cash requirements through at least twelve months from the date of this Annual Report and for the foreseeable 46 Table of Contents future.
Our management believes that our cash and cash equivalent balances and cash flows from operations will be sufficient to meet our cash requirements through at least twelve months from the date of this Annual Report and for the foreseeable future.
In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. At December 31, 2023, our primary sources of liquidity are cash and cash equivalents on hand and cash generated from our operating activities.
In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. At December 31, 2024, our primary sources of liquidity were cash and cash equivalents on hand and cash generated from our operating activities.
Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in Item 1A “Risk Factors,” and elsewhere herein.
Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in Item 1A. "Risk Factors," and elsewhere herein.
In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value.
In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of 75 Table of Contents the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value.
We discuss below the critical accounting assumptions, judgements and estimates associated with these policies. Historically, our critical accounting estimates relative to our significant accounting policies have not differed materially from actual results. For further information on the related significant accounting policies, refer to Note 2 to the consolidated financial statements.
We discuss below the critical accounting assumptions, judgements and estimates associated with these policies. Historically, our critical accounting estimates relative to our significant accounting policies have not differed materially 74 Table of Contents from actual results. For further information on the related significant accounting policies, refer to Note 2 to the consolidated financial statements.
The oil and natural gas industry and the broader U.S. economy have 37 Table of Contents experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.
The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.
Estimated crude oil and natural gas reserves affect the 50 Table of Contents carrying value of oil and gas properties, depreciation, depletion and amortizations, asset retirement obligations, and evaluation of impairment of oil and natural gas properties. Changes in the estimated reserves could have a significant impact on future results of operations.
Estimated crude oil, natural gas and NGL reserves affect the carrying value of oil and gas properties, depreciation, depletion and amortizations, asset retirement obligations, and evaluation of impairment of oil and natural gas properties. Changes in the estimated reserves could have a significant impact on future results of operations.
If we fail to obtain additional financing when needed, we may not be able to execute our business plans and our business, conducted by our operating subsidiaries, may suffer. Cash, Cash Equivalents and Investments Our consolidated cash, cash equivalents and equity securities totaled $403.2 million at December 31, 2023, compared to $349.4 million at December 31, 2022.
If we fail to obtain additional financing when needed, we may not be able to execute our business plans and our business, conducted by our operating subsidiaries, may suffer. Cash, Cash Equivalents and Investments Our consolidated cash, cash equivalents and equity securities totaled $297.0 million at December 31, 2024, compared to $403.2 million at December 31, 2023.
In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations and Energy Operations segment revenues, cost of revenues and cost of production may be found in Notes 2 and 19 to the consolidated financial statements.
In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations segment revenues may be found in Notes 2 and 21 to the consolidated financial statements.
Patent Portfolio Intake One of the significant challenges in the intellectual property industry continues to be quality patent intake due to the challenges and complexity associated with the current patent environment. During the years ended December 31, 2023 and 2022, we did not acquire any new patent portfolios.
Patent Portfolio Intake One of the significant challenges in the intellectual property industry continues to be quality patent intake due to the challenges and complexity associated with the current patent environment. We did not acquire any new patent portfolios in calendar years 2024 , 2023 and 2022 .
Energy Operations In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil 35 Table of Contents and gas assets in mature resource plays in Texas and Oklahoma.
Recent Acquisitions In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma.
During the fourth quarter of 2022, Acacia fully exited its position in Oxford Nanopore. Refer to periodic change explanations above. Refer to Notes 2 and 4 to the consolidated financial statements elsewhere herein for additional information regarding our investment in the Life Sciences Portfolio and other equity securities.
During the first quarter of 2024, Acacia fully exited its position in Arix. Refer to periodic change explanations above. Refer to Notes 2 and 4 to the consolidated financial statements elsewhere herein for additional information regarding our investment in the Life Sciences Portfolio and other equity securities.
Working Capital Our working capital related to cash flows from operating activities at December 31, 2023 increased to $87.0 million, compared to $15.1 million at December 31, 2022, which was comprised of the changes in assets and liabilities presented above.
Working Capital Our working capital related to cash flows from operating activities at December 31, 2024 decreased to $39.1 million, compared to $87.0 million at December 31, 2023, which was comprised of the changes in assets and liabilities presented above.
Refer to Note 17 to the consolidated financial statements for additional information.
Refer to Note 19 to the consolidated financial statements for additional information.
Liquidity and Capital Resources General Our foreseeable material cash requirements as of December 31, 2023, are recognized as liabilities or generally are otherwise described in Note 13, "Commitments and Contingencies," to the consolidated financial statements included elsewhere herein.
Liquidity and Capital Resources General Our foreseeable material cash requirements as of December 31, 2024, are recognized as liabilities or generally are otherwise described in Note 15, “Commitments and Contingencies,” to the consolidated financial statements included elsewhere herein.
For more information related to our Intellectual Property Operations, refer to additional detailed patent business discussion below. Industrial Operations In October 2021, we consummated our first operating company acquisition of Printronix. Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services.
For more information related to our Intellectual Property Operations, refer to additional detailed patent business discussion below. Industrial Operations In October 2021, we acquired Printronix Holding Corp. (“Printronix”). Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services.
Operating Activities Intellectual Property Operations Our Intellectual Property Operations revenues historically have fluctuated quarterly, and can vary significantly period to period, based on a number of factors including the following: • the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee; • the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments; • fluctuations in the total number of agreements executed each period; • the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs; • the relative maturity of licensing programs during the applicable periods; • other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors; • the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approached a court determined trial date; and • fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above. 39 Table of Contents Our management does not attempt to manage for smooth sequential periodic growth in revenues from period to period, and therefore, periodic results can be uneven.
Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China Operating Activities Intellectual Property Operations Our Intellectual Property Operations revenues historically have fluctuated quarterly, and can vary significantly period to period, based on several factors including the following: • the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee; • the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments; • fluctuations in the total number of agreements executed each period; • the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs; • the relative maturity of licensing programs during the applicable periods; • other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors; • the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approach a court determined trial date; and • fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above.
We believe that of the significant accounting policies discussed in Note 2 to the consolidated financial statements included elsewhere herein, the following accounting policies require our most difficult, subjective or complex assumptions, judgments and estimates: • revenue recognition; • estimates of crude oil and natural gas reserves • valuation of long-lived assets, goodwill and other intangible assets; • valuation of Series B Warrants; • valuation of embedded derivatives; and • accounting for income taxes.
We believe that of the significant accounting policies discussed in Note 2 to the consolidated financial statements included elsewhere herein, the following accounting policies require our most difficult, subjective or complex assumptions, judgments and estimates: • revenue recognition; • estimates of crude oil and natural gas reserves and values and standardized measure of discounted future net cash flows • valuation of long-lived assets, goodwill and other intangible assets; • accounting for income taxes.
The current period unrealized gain primarily relates to our Life Sciences Portfolio and trading securities portfolio. The current period realized loss primarily relates to sales activity from trading securities portfolio. During 2023, we recorded consolidated earnings on equity investment in joint venture, which is part of the Life Sciences Portfolio, of $4.2 million for two milestones earned during the period.
These changes were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss and realized gain primarily relates to the sale of Arix shares. During 2023, we recorded consolidated earnings on equity investment in joint venture, which is part of the Life Sciences Portfolio, of $4.2 million for two milestones earned during the period.
The increase in variable performance-based compensation costs was primarily due to fluctuations in performance-based compensation accruals. The decrease in other general and administrative costs, which relates to our parent company and Intellectual Property Operations business, were primarily due to lower legal fees.
The increase in variable performance-based compensation costs was primarily due to fluctuations in performance-based compensation. The increase in other general and administrative costs, which relates to our parent company and our Intellectual Property Operations, were primarily due to increases in accounting professional fees.
The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The prior year unrealized loss primarily relates to the reversal of unrealized gains previously recorded for shares sold during the year for realized gains.
The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss primarily relates to the reversal of unrealized gains previously recorded for Arix shares sold in January 2024 for realized gains.
Intellectual Property Operations The Company through its Patent Licensing, Enforcement and Technologies Business invests in IP and related absolute return assets and engage in the licensing and enforcement of patented technologies.
Intellectual Property Operations The Company through its Patent Licensing, Enforcement and Technologies Business invests in IP and engages in the licensing and enforcement of patented technologies.
The Company has recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2023 and 2022. Refer to Notes 2 and 17 to the consolidated financial statements elsewhere herein for additional income tax information.
The Company has recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2024 and 2023 on foreign tax credits and certain state net operating losses. Refer to Notes 2 and 19 to the consolidated financial statements elsewhere herein for additional income tax information.
Estimate of Crude Oil and Natural Gas Reserves Estimates of crude oil and natural gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors.
Estimate of Crude Oil and Natural Gas Reserves and Values and Standardized Measure of Discounted Future Net Cash Flows Estimates of crude oil, natural gas and NGL reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors.
Intellectual Property Operations Revenues ARG's revenue activity for the periods presented included the following: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values and count totals) Paid-up license revenue agreements $ 87,835 $ 17,788 $ 70,047 394 % Recurring license revenue agreements 1,321 1,720 (399) (23 %) Total revenues $ 89,156 $ 19,508 $ 69,648 357 % New license agreements executed 16 17 (1) (6 %) Licensing and enforcement programs generating revenues 7 8 (1) (13 %) For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries.
Intellectual Property Operations Revenues ARG’s revenue activity for the periods presented included the following: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values and count totals) Paid-up license revenue agreements $ 17,253 $ 87,835 $ (70,582) (80 %) Recurring license revenue agreements 2,272 1,321 951 72 % Total revenues $ 19,525 $ 89,156 $ (69,631) (78 %) New license agreements executed 9 16 (7) (44 %) Licensing and enforcement programs generating revenues 6 7 (1) (14 %) For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries.
Results of Operations The results reflected in this section with respect to Benchmark for the year ended December 31, 2023 include results for the period from November 13, 2023 to December 31, 2023 following our acquisition of Benchmark.
Results of Operations The results reflected in this section with respect to Deflecto for the year ended December 31, 2024 include results for the period from October 18, 2024 to December 31, 2024 following our acquisition of Deflecto.
As of December 31, 2023, we have generated gross licensing revenue of approximately $1.8 billion, and have returned $865.2 million to our patent partners. During the past five calendar years ending on December 31, 2023, we generated gross licensing revenue of approximately $225.7 million and returned approximately $84.9 million to our patent partners.
As of December 31, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $881.0 million to our patent partners. During the past five calendar years ending on December 31, 2024, we generated gross licensing revenue of approximately $234.0 million and returned approximately $91.2 million to our patent partners.
This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth. For more information related to our Industrial Operations, refer to the section entitled “ Industrial Operations Business ” below.
This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.
Our results included an unrealized gain from the change in fair value of our equity securities as compared to an unrealized loss in the prior year, and included realized loss from the sale of our equity securities as compared to a realized gain in the prior year. These changes were derived from our Life Sciences Portfolio and trading securities portfolio.
Our results included an unrealized loss from the change in fair value of our equity securities as compared to an unrealized gain in the comparable prior period, and included realized gain from the sale of our equity securities as compared to a realized loss in the prior year.
Cash receipts from Printronix's customers totaled $37.3 million and $40.5 million for the years ended December 31, 2023 and 2022, respectively. Cash receipts from Benchmark's customers totaled $1.8 million for the post acquisition period from November 13, 2023 through December 31, 2023.
Cash receipts from Printronix's customers totaled $31.0 million and $37.3 million for the years ended December 31, 2024 and 2023, respectively. Cash receipts from Benchmark’s customers totaled $61.7 million for the year ended December 31, 2024 and $1.8 million for the period from November 13, 2023 through December 31, 2023.
These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance.
We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance.
Cash requirements are generally derived from our operating and investing activities including expenditures for working capital (discussed below), human capital, business development, investments in equity securities and intellectual property, and business combinations. Our facilities lease obligations, guarantees and certain contingent obligations are further described in Note 13 to the consolidated financial statements.
The obligations of our Energy Operations Business related to the asset retirement obligations are further described in Note 10 to the accompanying consolidated financial statements. Additional cash requirements are generally derived from our operating and investing activities including expenditures for working capital (discussed below), human capital, business development, investments in equity securities and intellectual property, and business combinations.
Investments in Patent Portfolios With respect to our licensing, enforcement and overall business, neither we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and investment in patents, inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology companies and others.
Refer to Item 1A “Risk Factors” of this Annual Report for additional information regarding litigation and licensing expense risk. 60 Table of Contents Investments in Patent Portfolios With respect to our licensing, enforcement and overall business, neither we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and investment in patents, inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology companies and others.
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.
Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. 61 Table of Contents Manufacturing Operations Business In October 2024, we acquired Deflecto.
Refer to "Intellectual Property Operations – Cost of Revenues " below for further discussion. 40 Table of Contents • Contingent legal fees increased $8.6 million, from $2.4 million to $11.0 million in 2023, primarily due to the change in Intellectual Property Operations revenues described above.
Refer to “Intellectual Property Operations – Cost of Revenues” below for further discussion. • Contingent legal fees decreased $8.7 million, from $11.0 million to $2.3 million in 2024, primarily due to the change in Intellectual Property Operations revenues described above.
The decrease in cash used in operations was primarily due to net outflows from the total changes in assets and liabilities (refer to Working Capital discussion below), increase in accounts receivable and inventory related sales, and by the total change in net income (described above) and related noncash adjustments.
The increase in cash provided by operations was primarily due to net inflows from the total changes in assets and liabilities (refer to Working Capital discussion below), decrease in accounts receivable, decrease in inventories, increase in prepaid expense and other assets, decrease in accounts payable, decrease in royalties and contingent legal fees payable and by the total change in net income (described above) and related noncash adjustments.
Any changes in the judgments, assumptions and estimates associated with our analysis of the need for a valuation allowance in any future periods could materially impact our financial position and results of operations in the periods in which those determinations are made. Recent Accounting Pronouncements Refer to Note 2 to consolidated financial statements included elsewhere herein. 52 Table of Contents
Any changes in the judgments, assumptions and estimates associated with our analysis of the need for a valuation allowance in any future periods could materially impact our financial position and results of operations in the periods in which those determinations are made.
Relationship with Starboard Value, LP Our strategic relationship with Starboard provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.
Relationship with Starboard Value, LP Our strategic relationship with Starboard enhances our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses.
ARG revenues increased due to one patent portfolio that generated license revenue in the fourth quarter of 2023, which contributed to Intellectual Property Operations revenues increasing by $69.6 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
ARG revenues decreased due to a decrease in the number of license agreements executed and a decrease in average license fees, which contributed to Intellectual Property Operations revenues decreasing by $69.6 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
The Company's goodwill balance relates to primarily Printronix, which was acquired on October 7, 2021, and Benchmark, which was acquired on November 13, 2023, refer to Notes 1 and 3 to the consolidated financial statements for additional information. The Company did not record any goodwill impairment charges for the years ended December 31, 2023 and 2022.
The Company’s goodwill balance relates to primarily Printronix, which was acquired on October 7, 2021, Benchmark, which was acquired on November 13, 2023, and Deflecto, which was acquired on October 18, 2024, refer to Notes 1 and 3 to the consolidated financial statements for additional information.
Refer to Note 2 to the consolidated financial statements elsewhere herein for the additional information regarding the limited unsecured notes. The decrease in general and administrative costs of Industrial Operations is due to Printronix's initiative to reduce costs and operate more efficiently. Non-recurring employee severance costs fluctuate based on the severance arrangements of terminated employees.
The decrease in general and administrative costs of Industrial Operations is due to Printronix’s initiative to reduce costs and operate more efficiently. Non-recurring employee severance costs fluctuate based on the severance arrangements of terminated employees.
Industrial Operations Revenues Printronix's net revenues for the periods presented included the following: Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change value) Printers and parts $ 12,513 $ 16,118 $ (3,605) (22 %) Consumable products 19,091 19,314 (223) (1 %) Services 3,494 4,283 (789) (18 %) Total $ 35,098 $ 39,715 $ (4,617) (12 %) For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services.
Industrial Operations Revenues Printronix's net revenues for the periods presented included the following: Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change value) Printers and parts $ 10,021 $ 12,513 $ (2,492) (20 %) Consumable products 17,054 19,091 (2,037) (11 %) Services 3,346 3,494 (148) (4 %) Total $ 30,421 $ 35,098 $ (4,677) (13 %) For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services.
We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon. People, Process and Performance Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions.
People, Process and Performance Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions.
General and Administrative Expenses A summary of the main drivers of the change in general and administrative expenses is as follows: Years Ended December 31, 2023 vs. 2022 (In thousands) Personnel costs and board fees $ (1,005) Variable performance-based compensation costs 1,047 Other general and administrative costs (3,772) General and administrative costs - industrial operations (1,264) General and administrative costs - energy operations 264 Compensation expense for share-based awards (523) Non-recurring employee severance costs (3,733) Total change in general and administrative expenses $ (8,986) General and administrative expenses include employee compensation and related personnel costs, including variable performance based compensation and compensation expense for share-based awards, office and facilities costs, legal and accounting professional fees, public relations, stock administration, business development, fixed asset depreciation, amortization of Industrial Operations intangible assets, state taxes based on gross receipts and other corporate costs.
Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix’s and Deflecto’s operating expenses. 68 Table of Contents General and Administrative Expenses A summary of the main drivers of the increases (decreases) in general and administrative expenses is as follows: Years Ended December 31, 2024 vs. 2023 (In thousands) Personnel costs and board fees $ (285) Variable performance-based compensation costs 1,375 Other general and administrative costs 1,065 General and administrative costs - industrial operations (1,435) General and administrative costs - energy operations 3,163 General and administrative costs - manufacturing operations 4,158 Amortization of industrial operations intangible assets 2 Amortization of manufacturing operations intangible assets 609 Compensation expense for share-based awards 1,498 Non-recurring employee severance costs 784 Total change in general and administrative expenses $ 10,934 General and administrative expenses include employee compensation and related personnel costs, including variable performance based compensation and compensation expense for share-based awards, office and facilities costs, legal and accounting professional fees, public relations, stock administration, business development, fixed asset depreciation, amortization of Industrial Operations and Manufacturing Operations’ intangible assets, state taxes based on gross receipts and other corporate costs.
Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
Refer to Note 16 to the consolidated financial statements elsewhere herein for additional information regarding the repurchase of common stock. Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.
For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” General We are focused on acquiring and managing companies across industries – including but not limited to the industrial, energy, technology, and healthcare verticals.
For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” General We are a disciplined value-oriented acquirer and operator of businesses across public and private markets and industries including, but not limited to, the industrial, energy and technology sectors.
Refer to "Intellectual Property Operations – Cost of Revenues " below for further discussion. • Litigation and licensing expenses increased $6.8 million, from $4.0 million to $10.8 million in 2023, primarily due to a net increase in litigation support and third-party technical consulting expenses associated with ongoing litigation.
Refer to “Intellectual Property Operations – Cost of Revenues” below for further discussion. 63 Table of Contents • Litigation and licensing expenses decreased $6.3 million, from $10.8 million to $4.4 million in 2024, primarily due to a net decrease in litigation support expenses associated with ongoing litigation.
The Company’s expected contribution to Benchmark to fund its portion of the Purchase Price for the Revolution Transaction is $57.5 million, which the Company anticipates will be funded from cash on hand.
The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees for the Benchmark Transaction was $59.9 million, which was funded from cash on hand.
Other Income/Expense Equity Securities Investments Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Change in fair value of equity securities $ 31,423 $ (263,695) $ 295,118 (112 %) (Loss) gain on sale of equity securities (10,930) 125,318 (136,248) (109 %) Earnings on equity investment in joint venture 4,167 42,531 (38,364) (90 %) Total net realized and unrealized gain (loss) $ 24,660 $ (95,846) $ 120,506 (126 %) Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date.
Other Income/Expense Equity Securities Investments Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Change in fair value of equity securities $ (31,412) $ 31,423 $ (62,835) (200 %) Gain (loss) on sale of equity securities 28,861 (10,930) 39,791 (364 %) Earnings on equity investment in joint venture — 4,167 (4,167) (100 %) Total net realized and unrealized gain $ (2,551) $ 24,660 $ (27,211) (110 %) 69 Table of Contents Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date.
Cost of Revenues Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Inventor royalties $ 1,025 $ 1,212 $ (187) (15 %) Contingent legal fees 10,998 2,444 8,554 350 % Litigation and licensing expenses 10,771 3,970 6,801 171 % Amortization of patents 11,370 10,403 967 9 % Total $ 34,164 $ 18,029 $ 16,135 89 % Refer to detailed change explanations above for the year ended December 31, 2023 and 2022 regarding cost of revenues for our Intellectual Property Operations.
Cost of Revenues Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Inventor royalties $ 1,731 $ 1,025 $ 706 69 % Contingent legal fees 2,285 10,998 (8,713) (79 %) Litigation and licensing expenses 4,438 10,771 (6,333) (59 %) Amortization of patents 16,097 11,370 4,727 42 % Total $ 24,551 $ 34,164 $ (9,613) (28 %) Refer to detailed change explanations above for the years ended December 31, 2024 and 2023 regarding cost of revenues for our Intellectual Property Operations.
That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition. Through the end of 2023, we have received proceeds of $507.1 million as we monetized the Life Sciences portfolio.
Life Sciences Portfolio In June 2020 we acquired a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”). That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition.
We retained an investment in the Life Sciences Portfolio consisting of public and private securities valued at $82.8 million at December 31, 2023.
Through the end of December 31, 2024, we have received proceeds of $564.1 million as we monetized the Life Sciences portfolio. We retained an investment in the Life Sciences Portfolio consisting of public and private securities valued at $25.7 million at December 31, 2024.
Income Taxes Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Income tax benefit $ 1,504 $ 16,211 $ (14,707) (91 %) Effective tax rate (2) % (13) % n/a 11 % Our income tax benefit for the year ended December 31, 2023 is primarily attributable to the use of tax attributes against 2023 earnings and the release of valuation allowance on the remaining federal net operating losses.
Our income tax benefit for the year ended December 31, 2023 is primarily attributable to the use of tax attributes against 2023 earnings and the release of valuation allowance on the remaining federal net operating losses.
The fluctuations in cash receipts for the periods presented primarily reflects the corresponding fluctuations in revenues recognized during the same periods, as described above, and the related timing of payments received from licensees and customers. Our reported cash used in operations for the year ended December 31, 2023 was $22.5 million, compared to $37.3 million in the prior year.
Cash receipts from Deflecto’s customers totaled $24.3 million for the post acquisition period from October 18, 2024 through December 31, 2024. The fluctuations in cash receipts for the periods presented primarily reflects the corresponding fluctuations in revenues recognized during the same periods, as described above, and the related timing of payments received from licensees and customers.
Cash Flows from Financing Activities Cash flows from financing activities included the following for the periods presented: Years Ended December 31, 2023 2022 (In thousands) Repurchase of common stock $ — $ (50,988) Paydown of Revolving Credit Facility (7,700) — Paydown of Senior Secured Notes (60,000) (120,000) Dividend on Series A Redeemable Convertible Preferred Stock (1,400) (2,799) Taxes paid related to net share settlement of share-based awards (614) (1,600) Proceeds from Rights Offering 79,111 — Proceeds from exercise of Series A warrants — 9,250 Proceeds from exercise of Series B warrants 49,000 — Proceeds from exercise of stock options 235 — Net cash provided by (used in) financing activities $ 58,632 $ (166,137) Cash inflows from financing activities for the year ended December 31, 2023 increased to $58.6 million, as compared to cash outflow of $166.1 million in the prior year, primarily due to activity related to the Rights Offering and Concurrent Private Rights Offering.
Refer to “Other Income/Expense – Equity Securities Investments ” above and Note 4 to the consolidated financial statements elsewhere herein for additional information related to Life Sciences Portfolio. 73 Table of Contents Cash Flows from Financing Activities Cash flows from financing activities included the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Repurchase of common stock $ (20,288) $ — Paydown of Senior Secured Notes — (60,000) Contributions from noncontrolling interest 15,250 — Borrowings on the Revolving credit facility 86,010 — Paydown of Revolving Credit Facility (30,035) (7,700) Borrowings on the Term Loan 47,488 — Dividend on Series A Redeemable Convertible Preferred Stock — (1,400) Taxes paid related to net share settlement of share-based awards (1,092) (614) Proceeds from Rights Offering — 79,111 Proceeds from exercise of Series B warrants — 49,000 Proceeds from exercise of stock options 223 235 Net cash provided by financing activities $ 97,556 $ 58,632 Cash inflows from financing activities for the year ended December 31, 2024 increased to $97.6 million, as compared to cash inflows of $58.6 million in the prior year, primarily due to net cash inflows from borrowings on the Benchmark Revolving Credit Facility and Deflecto Term Loan and contributions from noncontrolling interest related to the Revolution Transaction.
Cost of Revenues Years Ended December 31, 2023 2022 $ Change % Change (In thousands, except percentage change values) Cost of revenues - industrial operations $ 18,009 $ 19,359 $ (1,350) (7 %) Refer to detailed change explanations above for the years ended December 31, 2023 and 2022 regarding cost of revenues for our Industrial Operations.
Refer to “Industrial Operations Business” above for additional information related to Printronix’s operating activities. 66 Table of Contents Cost of Revenues Years Ended December 31, 2024 2023 $ Change % Change (In thousands, except percentage change values) Cost of revenues - industrial operations $ 14,912 $ 18,009 $ (3,097) (17 %) Refer to detailed change explanations above for the years ended December 31, 2024 and 2023 regarding cost of revenues for our Industrial Operations.
Income before income taxes was $67.4 million for the year ended December 31, 2023, as compared to loss of $127.2 million in the prior year.
Refer to “Energy Operations - Revenues” and “Manufacturing Operations - Revenues” below for further discussion. Loss before income taxes was $38.1 million for the year ended December 31, 2024, as compared to income before income taxes of $67.4 million for the year ended December 31, 2023.
Industrial Operations Refer to "Industrial Operations Business" above for information related to Printronix's operating activities. Energy Operations Refer to "Energy Operations Business" above for information related to Benchmark's operating activities.
Industrial Operations Refer to “Industrial Operations Business” above for information related to Printronix’s operating activities. Energy Operations Refer to “Energy Operations Business” above for information related to Benchmark’s operating activities. 62 Table of Contents Manufacturing Operations Refer to “Manufacturing Operations Business” above for information related to Deflecto’s operating activities.
The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period. 42 Table of Contents Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly basis or a contingent fee basis.
The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.
The decrease in Industrial Operations revenue of $4.6 million is due to lower units of printers sold. Refer to “Industrial Operations – Revenues ” below for further detailed discussion. In addition, post-acquisition revenues from Benchmark for the period from November 13, 2023 to December 31, 2023 contributed $848,000. Refer to “Energy Operations – Revenues ” below for further discussion.
The decrease in Industrial Operations revenue of $4.7 million is due to lower units of printers sold. Refer to “Industrial Operations – Revenues” below for further detailed discussion.
The net increase was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense as follows: • Inventor royalties decreased $187,000, from $1.2 million to $1.0 million in 2023, primarily due to license agreement activity and related revenues generated in 2023 with no inventor royalty obligations.
The net decrease was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the year ended December 31, 2024 as compared to the year ended December 31, 2023 as follows: • Inventor royalties increased $706,000, from $1.0 million to $1.7 million in 2024, primarily due to a higher mix of portfolios generating revenue in 2024 with inventor royalties.
The increase is primarily due to change in accounts receivable, which is related to the timing of the cash receipts related to Intellectual Property Operations Business. 48 Table of Contents Cash Flows from Investing Activities Cash flows from investing activities were comprised of the following for the periods presented: Years Ended December 31, 2023 2022 (In thousands) Acquisition, net of cash acquired (Note 3) $ (9,409) $ — Cash reinvested 9,965 — Patent acquisition (6,000) (5,000) Purchases of equity securities (13,072) (112,142) Sales of equity securities 32,106 273,934 Distributions received from equity investment in joint venture 2,777 28,404 Purchases of property and equipment (189) (732) Net cash provided by investing activities $ 16,178 $ 184,464 Cash flows from investing activities for the year ended December 31, 2023 decreased to $16.2 million, as compared to cash flow of $184.5 million in the prior year, primarily due to net cash inflows from our Life Sciences Portfolio, trading securities portfolio equity securities transactions and Acacia's acquisition of Benchmark in 2023.
Cash Flows from Investing Activities Cash flows from investing activities were comprised of the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Acquisition, net of cash acquired (Note 3) $ (87,678) $ (9,409) Cash reinvested — 9,965 Patent acquisition $ (14,000) $ (6,000) Purchases of equity securities $ (20,472) $ (13,072) Sales of equity securities 57,854 32,106 Distributions received from equity investment in joint venture — 2,777 Net purchases of property and equipment and additions to oil and gas properties (148,667) (189) Net cash (used in) provided by investing activities $ (212,963) $ 16,178 Cash outflows from investing activities for the year ended December 31, 2024 was $213.0 million, as compared to cash inflows of $16.2 million in the prior year, primarily due to the net effect of the acquisition of oil and gas properties in the Revolution Transaction, the acquisition of Deflecto, and net cash inflows from our trading securities portfolio equity securities transactions and sale of Arix shares.
Refer to "Industrial Operations – Cost of Revenues " and "Operating Expenses" below for further discussion. • Post-acquisition cost of production from Benchmark for the period from November 13, 2023 through December 31, 2023 added operating expenses in the amount of $656,000 in 2023.
Refer to “Energy Operations – Cost of Production ” below for further discussion. • Post-acquisition cost of sales, engineering and development expenses, and sales and marketing expenses from Deflecto for the period from October 18, 2024 to December 31, 2024 added operating expenses in the amount of $18.6 million.

… 140 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−1 removed10 unchanged
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and related financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Biggest changeAs of December 31, 2024, we did not have any foreign denominated equity securities. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and related financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference. ITEM 9.
These investments are subject to significant fluctuations in fair value due to the volatility of the securities markets and of the underlying businesses. As of December 31, 2023 and 2022, the carrying value of our equity investments in public and private companies was $99.8 million and $98.4 million, respectively.
These investments are subject to significant fluctuations in fair value due to the volatility of the securities markets and of the underlying businesses. As of December 31, 2024 and 2023, the carrying value of our equity investments in public and private companies was $59.9 million and $99.8 million, respectively.
We record our equity investments in publicly traded companies at fair value, which are subject to market price volatility. As of December 31, 2023, a hypothetical 10% adverse change in the market price of our investments in publicly traded common stock would have resulted in a decrease of approximately $599,000 in such equity investments.
We record our equity investments in publicly traded companies at fair value, which are subject to market price volatility. As of December 31, 2024, a hypothetical 10% adverse change in the market price of our investments in publicly traded common stock would have resulted in a decrease of approximately $2.3 million in such equity investments.
Foreign Currency Exchange Risk Although we historically have not had material foreign operations, we are also exposed to market risks related to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts, a note receivable and certain equity security investments.
Foreign Currency Exchange Risk Although we historically have not had material foreign operations, we are also exposed to market risks related to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts.
Removed
As of December 31, 2023, a hypothetical 10% change in exchange rates related to our at risk foreign denominated equity securities would have approximately a $5.7 million effect on our financial position and results of operations. ITEM 8.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

Other ACTG 10-K year-over-year comparisons