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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission file number: 001-37721
Acacia Research Corporation
(Name of registrant as specified in its charter)

Delaware | 95-4405754
(State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer identification No.)

767 Third Avenue, |
6th Floor |
New York, |
NY | 10017
(Address of principal executive offices) | (Zip Code)

(332) 236-8500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered
Common Stock | ACTG | The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated Filer | ☐ | Accelerated Filer | x
Non-accelerated Filer | ☐ | Smaller reporting company | x
|  | Emerging Growth Company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of May 7, 2025, was 96,171,702.

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ACACIA RESEARCH CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
March 31, 2025
TABLE OF CONTENTS

|  | Page
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1
PART I. | FINANCIAL INFORMATION | 3
Item 1. | Financial Statements | 3
| Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024 | 3
| Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 | 4
| Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2025 and 2024 | 5
| Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 | 6
| Notes to Unaudited Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 42
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 60
Item 4. | Controls and Procedures | 60
PART II. | OTHER INFORMATION | 62
Item 1. | Legal Proceedings | 62
Item 1A. | Risk Factors | 62
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 63
Item 3. | Defaults Upon Senior Securities | 63
Item 4. | Mine Safety Disclosures | 63
Item 5. | Other Information | 64
Item 6. | Exhibits | 64

i

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 (this “Quarterly Report”) contains forward-looking statements within the meaning of the federal securities laws. To the extent that statements in this Quarterly Report are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Throughout this Quarterly Report, we have attempted to identify forward-looking statements by using words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecasts,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” or other forms of these words or similar words or expressions or the negative thereof, although not all forward-looking statements contain these terms. Forward-looking statements include statements regarding, among other things, our business, operating, development, investment and finance strategies, our relationship with Starboard Value LP, acquisition and development activities, financial results of our operating businesses, other related business activities, capital expenditures, earnings, litigation, regulatory matters, remediation of a material weakness, markets for our services, liquidity and capital resources and accounting matters. Forward-looking statements are subject to substantial risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained herein. All of our forward-looking statements include assumptions underlying or relating to such statements and are subject to numerous factors that present considerable risks and uncertainties, including, without limitation:
•Any inability to acquire additional operating businesses and intellectual property assets;
•Costs related to acquiring additional operating businesses and intellectual property;
•Any inability to retain employees and management team(s) at the Company and our operating businesses or disruptions or uncertainty caused by changes to the management team(s) and employees of our operating businesses;
•Any inability to successfully integrate businesses we acquire;
•Any inability of our operating businesses to execute on their business strateg(ies) and adverse developments in their results of operations;
•Facts that are not revealed in the due diligence process in connection with new acquisitions;
•Changes to our relationship with Starboard Value LP;
•Any determination that we may be deemed to be an investment company under the Investment Company Act of 1940, as amended;
•Disruptions or delays caused by outsourcing services to third-party service providers;
•Any inability of our Energy Operations Business to execute its business and hedging strategy;
•The potential for oil and gas prices to decline or for the differential between benchmark prices of oil and the wellhead price to increase;
•Oil or natural gas production becoming uneconomic, causing write downs or adversely affecting our Energy Operations Business’ ability to borrow;
•Inflationary pressures, supply chain disruptions or labor shortages as well as the impact of tariffs and trade policy;
•Our Energy Operations Business’ ability to replace reserves and efficiently develop current reserves;
•Material inaccuracies in reserve estimates or underlying assumptions;
•Risks, operational hazards, unforeseen interruptions and other difficulties involved in the production of oil and natural gas;
•The impact on our Energy Operations Business’ operations of seismic events;
•Climate change legislation, rules regulating air emissions, operational safety laws and regulations and any regulatory changes;
•Changes in legislation, regulations, and rules associated with patent and tax law;
•Cybersecurity incidents, including cyberattacks, breaches of security and unauthorized access to or disclosure of confidential information;
•Fluctuations in patent-related legal expenses;
•Findings by any relevant patent office that our patents are invalid or unenforceable;
•Our ability to retain legal counsel in connection with enforcement of our intellectual property;
•Delays in successful prosecution, enforcement, and licensing of our patent portfolio;
•Any inability of our operating businesses to protect their intellectual property;
•Any inability of our operating businesses to develop new products and enhance existing products;
•The loss of any of our operating businesses’ major customers that generates a large portion of their revenue or the decrease in demand for their products;
1

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•Any supply chain interruption or inability to manage inventory levels of our operating businesses;
•Printronix’s inability to perform satisfactorily under service contracts;
•The potential for negative impacts to our operating businesses as a result of competition, pricing, regulations, the political environment, or other economic or market related factors/conditions;
•Non-performance by third parties of contractual or legal obligations;
•Changes in the Company’s credit ratings; and
•Events that are outside of our control, such as political conditions and unrest in international markets, terrorist attacks, malicious human acts, hurricanes and other disasters, pandemics and other similar events.
We have based our forward-looking statements on management’s current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. For additional information related to the risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements described in this Quarterly Report, refer to “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 17, 2025 (our “2024 Annual Report”), as well as in our other public filings with the SEC. In addition, actual results may differ materially as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business.
The information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the SEC. You should read this Quarterly Report in its entirety, together with the documents that we file as exhibits to this Quarterly Report and the documents that we incorporate by reference into this Quarterly Report, with the understanding that our future results may be materially different from what we currently expect. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of The Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.
We qualify all of our forward-looking statements by these cautionary statements.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

| March 31, 2025 |  | December 31, 2024
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 271,964 |  |  | $ | 273,880 |
Equity securities | 18,064 |  |  | 23,135 |
Equity securities without readily determinable fair value | 5,816 |  |  | 5,816 |
Equity method investments | 30,934 |  |  | 30,934 |
Accounts receivable, net | 95,725 |  |  | 26,909 |
Inventories | 26,264 |  |  | 27,485 |
Prepaid expenses and other current assets | 15,866 |  |  | 31,987 |
Total current assets | 464,633 |  |  | 420,146 |
Property, plant and equipment, net | 23,354 |  |  | 23,865 |
Oil and natural gas properties, net | 189,104 |  |  | 191,680 |
Goodwill | 25,566 |  |  | 29,339 |
Other intangible assets, net | 67,739 |  |  | 55,429 |
Operating lease, right-of-use assets | 8,001 |  |  | 9,287 |
Deferred income tax assets, net | 17,231 |  |  | 20,233 |
Other non-current assets | 5,978 |  |  | 6,415 |
Total assets | $ | 801,606 |  |  | $ | 756,394 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 12,457 |  |  | $ | 12,074 |
Accrued expenses and other current liabilities | 24,084 |  |  | 20,575 |
Accrued compensation | 6,879 |  |  | 6,277 |
Current asset retirement obligation | 1,565 |  |  | 1,546 |
Royalties and contingent legal fees payable | 26,699 |  |  | 5,448 |
Deferred revenue | 1,403 |  |  | 1,319 |
Current portion of long-term debt, net | 2,400 |  |  | 2,400 |
Total current liabilities | 75,487 |  |  | 49,639 |
Asset retirement obligation | 31,401 |  |  | 31,070 |
Long-term lease liabilities | 5,872 |  |  | 6,778 |
Deferred income tax liabilities, net | 2,697 |  |  | 2,609 |
Revolving credit facility | 61,500 |  |  | 66,500 |
Term loan and revolving credit facility | 44,488 |  |  | 45,088 |
Other long-term liabilities | 2,901 |  |  | 2,091 |
Total liabilities | 224,346 |  |  | 203,775 |
Commitments and contingencies (Note 15) |  |  |
Stockholders' equity: |  |  |
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | — |  |  | — |
Common stock, par value $0.001 per share; 300,000,000 shares authorized; 96,171,702 and 96,048,999 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 96 |  |  | 96 |
Treasury stock, at cost, 20,542,064 and 20,542,064 shares as of March 31, 2025 and 2024, respectively | (118,542) |  |  | (118,542) |
Accumulated other comprehensive income | (518) |  |  | (1,180) |
Additional paid-in capital | 910,688 |  |  | 910,237 |
Accumulated deficit | (251,499) |  |  | (275,786) |
Total Acacia Research Corporation stockholders' equity | 540,225 |  |  | 514,825 |
Noncontrolling interests | 37,035 |  |  | 37,794 |
Total stockholders' equity | 577,260 |  |  | 552,619 |
Total liabilities and stockholders' equity | $ | 801,606 |  |  | $ | 756,394 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share data)

|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
Revenues: |  |  |  |  |  |  |
Intellectual property operations |  |  |  |  | $ | 69,905 |  |  | $ | 13,623 |
Industrial operations |  |  |  |  | 7,676 |  |  | 8,841 |
Energy operations |  |  |  |  | 18,306 |  |  | 1,856 |
Manufacturing operations |  |  |  |  | 28,535 |  |  | — |
Total revenues |  |  |  |  | 124,422 |  |  | 24,320 |
Costs and expenses: |  |  |  |  |  |  |
Cost of revenues - intellectual property operations |  |  |  |  | 27,912 |  |  | 7,001 |
Cost of revenues - industrial operations |  |  |  |  | 4,064 |  |  | 4,049 |
Cost of production - energy operations |  |  |  |  | 12,698 |  |  | 1,315 |
Cost of revenues - manufacturing operations |  |  |  |  | 20,811 |  |  | — |
Sales and marketing expenses - industrial and manufacturing operations |  |  |  |  | 3,312 |  |  | 1,555 |
General and administrative expenses |  |  |  |  | 17,320 |  |  | 12,487 |
Total costs and expenses |  |  |  |  | 86,117 |  |  | 26,407 |
Operating income (loss) |  |  |  |  | 38,305 |  |  | (2,087) |
Other (expense) income: |  |  |  |  |  |  |
Equity securities investments: |  |  |  |  |  |  |
Change in fair value of equity securities |  |  |  |  | (4,777) |  |  | (26,701) |
Gain on sale of equity securities |  |  |  |  | 1,605 |  |  | 28,861 |
Net realized and unrealized (loss) gain |  |  |  |  | (3,172) |  |  | 2,160 |
Non-recurring legacy legal expense |  |  |  |  | — |  |  | (6,243) |
Loss on derivatives - energy operations |  |  |  |  | (5,021) |  |  | 171 |
Gain (loss) on foreign currency exchange |  |  |  |  | 155 |  |  | (68) |
Interest expense |  |  |  |  | (2,451) |  |  | (326) |
Interest income and other, net |  |  |  |  | 1,793 |  |  | 5,095 |
Total other (expense) income |  |  |  |  | (8,696) |  |  | 789 |
Income (loss) before income taxes |  |  |  |  | 29,609 |  |  | (1,298) |
Income tax (expense) benefit |  |  |  |  | (6,081) |  |  | 1,109 |
Net income (loss) including noncontrolling interests in subsidiaries |  |  |  |  | 23,528 |  |  | (189) |
Net loss attributable to noncontrolling interests in subsidiaries |  |  |  |  | 759 |  |  | 3 |
Net income (loss) attributable to Acacia Research Corporation |  |  |  |  | $ | 24,287 |  |  | $ | (186) |
Income (loss) per share: |  |  |  |  |  |  |
Net income (loss) attributable to common stockholders - Basic |  |  |  |  | $ | 24,287 |  |  | $ | (186) |
Weighted average number of shares outstanding - Basic |  |  |  |  | 96,018,047 |  |  | 99,745,905 |
Basic net income per common share |  |  |  |  | $ | 0.25 |  |  | $ | — |
Net income (loss) attributable to common stockholders - Diluted |  |  |  |  | $ | 24,287 |  |  | $ | (186) |
Weighted average number of shares outstanding - Diluted |  |  |  |  | 96,981,413 |  |  | 99,745,905 |
Diluted net income per common share |  |  |  |  | $ | 0.25 |  |  | $ | — |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation |  |  |  |  | $ | 662 |  |  | $ | — |
Total other comprehensive income, net |  |  |  |  | 662 |  |  | — |
Total comprehensive income (loss) |  |  |  |  | 24,190 |  |  | (189) |
Comprehensive loss attributable to noncontrolling interests |  |  |  |  | 759 |  |  | 3 |
Comprehensive income (loss) attributable to Acacia Research Corporation |  |  |  |  | $ | 24,949 |  |  | $ | (186) |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)

|  |  |  |  |  | Three Months Ended March 31, 2025
|  |  |  | Common Stock |  | Treasury Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Noncontrolling Interests in Operating Subsidiaries |  | Total Stockholders' Equity
|  |  |  |  |  | Shares |  | Amount |  |  |  |  |  |
Balance at December 31, 2024 |  |  |  |  |  | 96,048,999 |  |  | $ | 96 |  |  | $ | (118,542) |  |  | $ | 910,237 |  |  | $ | (275,786) |  |  | $ | (1,180) |  |  | $ | 37,794 |  |  | $ | 552,619 |
Net income (loss) including noncontrolling interests in subsidiaries |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,287 |  |  | — |  |  | (759) |  |  | 23,528 |
Other comprehensive income |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 662 |  |  | — |  |  | 662 |
Issuance of common stock for vesting of restricted stock units |  |  |  |  |  | 244,629 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Shares withheld related to net share settlement of share-based awards |  |  |  |  |  | (121,926) |  |  | — |  |  | — |  |  | (471) |  |  | — |  |  | — |  |  | — |  |  | (471) |
Compensation expense for share-based awards |  |  |  |  |  | — |  |  | — |  |  | — |  |  | 922 |  |  | — |  |  | — |  |  | — |  |  | 922 |
Balance at March 31, 2025 |  |  |  |  |  | 96,171,702 |  |  | $ | 96 |  |  | $ | (118,542) |  |  | $ | 910,688 |  |  | $ | (251,499) |  |  | $ | (518) |  |  | $ | 37,035 |  |  | $ | 577,260 |

|  |  |  |  |  | Three Months Ended March 31, 2024
|  |  |  | Common Stock |  | Treasury Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  |  |  | Noncontrolling Interests in Operating Subsidiaries |  | Total Stockholders' Equity
|  |  |  |  |  | Shares |  | Amount |  |  |  |  |  |
Balance at December 31, 2023 |  |  |  |  |  | 99,895,473 |  |  | $ | 100 |  |  | $ | (98,258) |  |  | $ | 906,153 |  |  | $ | (239,729) |  |  |  |  | $ | 21,343 |  |  | $ | 589,609 |
Net loss including noncontrolling interests in subsidiaries |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (186) |  |  |  |  | (3) |  |  | (189) |
Issuance of common stock for vesting of restricted stock units |  |  |  |  |  | 275,244 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
Shares withheld related to net share settlement of share-based awards |  |  |  |  |  | (148,766) |  |  | — |  |  | — |  |  | (674) |  |  | — |  |  |  |  | — |  |  | (674) |
Compensation expense for share-based awards |  |  |  |  |  | — |  |  | — |  |  | — |  |  | 858 |  |  | — |  |  |  |  | — |  |  | 858 |
Balance at March 31, 2024 |  |  |  |  |  | 100,021,951 |  |  | $ | 100 |  |  | $ | (98,258) |  |  | $ | 906,337 |  |  | $ | (239,915) |  |  |  |  | $ | 21,340 |  |  | $ | 589,604 |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ACACIA RESEARCH CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

| Three Months Ended March 31,
| 2025 |  | 2024
Cash flows from operating activities: |  |  |
Net income (loss) including noncontrolling interests in subsidiaries | $ | 23,528 |  |  | $ | (189) |
Adjustments to reconcile net income (loss) including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: |  |  |
Depreciation, depletion and amortization | 10,610 |  |  | 4,568 |
Accretion of asset retirement obligation | 434 |  |  | — |
Compensation expense for share-based awards | 922 |  |  | 858 |
(Gain) loss on foreign currency exchange | (155) |  |  | 18 |
Change in fair value of equity securities | 4,777 |  |  | 26,701 |
Gain on sale of equity securities | (1,605) |  |  | (28,861) |
Unrealized loss on derivatives | 4,978 |  |  | 629 |
Deferred income taxes, net of acquired net deferred tax assets | 3,323 |  |  | (3,652) |
Changes in assets and liabilities: |  |  |
Accounts receivable | (68,814) |  |  | 65,156 |
Inventories | 1,220 |  |  | 1,041 |
Prepaid expenses and other assets | 728 |  |  | (10,752) |
Accounts payable and accrued expenses | 1,223 |  |  | 7,108 |
Royalties and contingent legal fees payable | 21,249 |  |  | (7,811) |
Deferred revenue | 7 |  |  | 25 |
Net cash provided by operating activities | 2,425 |  |  | 54,839 |
Cash flows from investing activities: |  |  |
Purchases of equity securities | (4,827) |  |  | (15,544) |
Sales of equity securities | 6,726 |  |  | 57,854 |
Acquisition, net of cash acquired and working capital adjustments (Note 3) | 1,230 |  |  | — |
Purchases of property and equipment and additions to oil and gas properties | (2,090) |  |  | (270) |
Net cash provided by investing activities | 1,039 |  |  | 42,040 |
Cash flows from financing activities: |  |  |
Borrowings on the Revolving credit facility | — |  |  | 2,500 |
Paydown of Revolving Credit Facility | (5,000) |  |  | — |
Paydown of Term Loan | (600) |  |  | — |
Taxes paid related to net share settlement of share-based awards | (471) |  |  | (674) |
Net cash (used in) provided by financing activities | (6,071) |  |  | 1,826 |
Effect of exchange rates on cash and cash equivalents | 691 |  |  | (34) |
(Decrease) increase in cash and cash equivalents | (1,916) |  |  | 98,671 |
Cash and cash equivalents, beginning | 273,880 |  |  | 340,091 |
Cash and cash equivalents, ending | $ | 271,964 |  |  | $ | 438,762 |
Supplemental schedule of cash flow information: |  |  |
Noncash investing and financing activities: |  |  |
Patent acquisition of prepaid option | 15,000 |  |  | — |
Accrued patent costs | — |  |  | (4,000) |

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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ACACIA RESEARCH CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
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. 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. We find unique situations and bring a flexible and creative approach to transacting, combining relationships and expertise to drive continual improvement in operating performance. We approach transactions as business owners and operators, rather than purely as financial investors. We believe this differentiates us in creating long-term value for shareholders and partners. 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. 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. 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.
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. 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 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 regularly evaluate opportunities to acquire new businesses where our research, execution, and operating partners can drive attractive earnings and book value per share growth. 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. We buy businesses to create platforms. 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. Acacia then has optionality to grow and reinvest free cash flow or look to monetize and build new platforms.
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. 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. We have also entered into the Services Agreement (as defined below) with Starboard where Starboard has agreed to provide certain trade execution, research, due diligence, and other services on an expense reimbursement basis.
Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business
The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and
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Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), 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. 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, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue.
Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own.
Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others. If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth.
During the three months ended March 31, 2025 and 2024, ARG obtained control of one and zero new patent portfolios, respectively.
Industrial Operations
Our Industrial Operations Business consists of Printronix, a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. 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 support existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.
Energy Operations
On November 13, 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. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. Prior to the Revolution Transaction (as defined below), Benchmark’s assets consisted 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. 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. 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.
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”). Pursuant to the Revolution Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells (such purchase and sale, together with the other transactions contemplated by the Revolution Purchase Agreement, the “Revolution Transaction”) for a purchase price of $145 million in cash (the “Revolution Purchase Price”), subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility (as defined below) and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately
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73.5%. Refer to Notes 3 and 11 for additional information related to the Benchmark acquisition and the Benchmark Revolving Credit Facility, respectively.
Manufacturing Operations
On October 18, 2024, Deflecto Holdco LLC (“Deflecto Purchaser”), a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc. (“Deflecto”) pursuant to the Deflecto Stock Purchase Agreement (defined and described below). Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its products include emergency warning triangles and vehicle mudguards used by the transportation industry, various airducts and air registers used by the HVAC market and literature, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the Deflecto Sellers (as defined below) in connection with the 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”). The Deflecto Purchase Price was funded with a combination of borrowings of a $48.0 million secured term loan (the “Deflecto Term Loan”) and cash on hand. Refer to Notes 3 and 11 for additional information related to the Deflecto acquisition and the Deflecto Term Loan, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles
The condensed consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Reclassifications
Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. These changes had no impact on the previously reported consolidated results of operations or cash flows.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the condensed consolidated statements of operations and comprehensive income (loss). Refer to the condensed consolidated statements of changes in stockholders’ equity for noncontrolling interests activity.
In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 4, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1.
The Company holds a variable interest in Benchmark as the Company is obligated to absorb the loss and has the right to receive the benefit from Benchmark after the acquisition date and therefore, Benchmark is considered a variable interest entity (“VIE”). We determined that we have the power to direct the activities that most significantly impact Benchmark’s economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it.
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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the SEC. These interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024, as reported by Acacia in its 2024 Annual Report, as well as in our other public filings with the SEC. The condensed consolidated interim financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia's consolidated financial position as of March 31, 2025, and results of operations and its cash flows for the interim periods presented. The consolidated results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the entire fiscal year.
Revenue Recognition
Intellectual Property Operations
ARG’s revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled IP Rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met.
For the periods presented, revenue contracts executed by ARG primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by ARG. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring License Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were generally perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to grant combined items to which the promised IP Rights are inputs and (ii) the Company’s promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant IP Rights in the contract.
Since the promised IP Rights are not individually distinct, ARG combined each individual IP Right in the contract into a bundle of IP Rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. ARG’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. ARG’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 15-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring License Revenue Agreements. Contractual payments made by licensees are generally non-refundable.
For sales-based royalties from Recurring License Revenue Agreements, ARG includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or
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all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available.
Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they are granted to the licensee. In determining the transaction price, ARG adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, ARG does not adjust the promised amount of consideration for the effects of a significant financing component if ARG expects, at contract inception, that the period between when the entity grants promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less.
In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties.
License revenues were comprised of the following for the periods presented:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (In thousands)
Paid-up license revenue agreements | $ | 69,490 |  |  | $ | 12,365 |  |  |  |  |
Recurring License Revenue Agreements | 415 |  |  | 1,258 |  |  |  |  |
Total | $ | 69,905 |  |  | $ | 13,623 |  |  |  |  |

Industrial Operations
Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations.
Printronix enters into contract arrangements that may include various combinations of tangible products (which include printers, consumables and parts) and services, which are generally capable of being distinct and accounted for as separate performance obligations. Printronix evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (i.e. capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e. distinct within the context of the contract).
For contract arrangements that include multiple performance obligations, Printronix allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and standard software while standalone selling prices for repair and maintenance services are developed with an expected cost-plus margin or residual approach. Regional pricing, marketing strategies and business practices are evaluated to derive the estimated standalone selling price using a cost-plus margin methodology.
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Printronix recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes consideration of the following: (i) the customer simultaneously receives and consumes the benefits provided as Printronix performs its promises, (ii) the performance creates or enhances an asset that is under control of the customer, (iii) the performance does not create an asset with an alternative use to Printronix, and (iv) Printronix has an enforceable right to payment for its performance completed to date.
Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. Service revenue commissions are tied to the revenue recognized during the current year of the related sale. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.
Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer. These agreements commence upon expiration of the standard warranty period. Printronix provides the point-of-customer-contact, dispatches calls and sells the parts used for printer repairs to service providers. Printronix contracts third parties to perform the on-site repair services at the time of sale which covers the period of service at a set amount. The maintenance service agreements are separately priced at a stand-alone value. For those transactions in which maintenance service agreements are purchased concurrently with the purchase of printers, the revenue is deferred based on the selling price, which approximates the stand-alone value for separately sold maintenance services agreements. Revenue from maintenance service contracts are recognized on a straight-line basis over the period of each individual contract, which is consistent with the pattern in which the benefit is consumed by the customer.
Printronix’s net revenues were comprised of the following for the periods presented:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (In thousands)
Printers, consumables and parts | $ | 6,903 |  |  | $ | 8,078 |  |  |  |  |
Services | 773 |  |  | 763 |  |  |  |  |
Total | $ | 7,676 |  |  | $ | 8,841 |  |  |  |  |

Refer to Note 19 for additional information regarding net sales to customers by geographic region.
Deferred revenue in the condensed consolidated balance sheets represents a contract liability under ASC 606 and consists of payments and billings in advance of the performance. Printronix recognized $703,000 and $578,000 in revenue that was previously included in the beginning balance of deferred revenue during the three months ended March 31, 2025 and 2024, respectively.
Printronix’s payment terms vary by the type and location of its customers and the products, solutions or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, Printronix has determined that its contracts do not include a significant financing component.
Printronix’s remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $556,000 and $627,000 as of March 31, 2025 and December 31, 2024, respectively. Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. On average, remaining performance obligations as of March 31, 2025 are expected to be recognized over a period of approximately two years.
Energy Operations
Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer. Benchmark’s contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among
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other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions. As a result, the price of the oil and natural gas fluctuates to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant.
Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations. Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed delivery point, at which time the customer takes custody, title, and risk of loss of the product. Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials. Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive.
Benchmark’s natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point. The midstream entity gathers, processes, and remits proceeds to Benchmark for the resulting sale of natural gas and natural gas liquids, and generally includes a reduction for contractual fees and for percent of proceeds. For the contracts where Benchmark maintains control through the outlet of the midstream processing facility, Benchmark recognizes revenue on a gross basis, with gathering, transportation, and processing fees presented as an expense on the condensed consolidated statements of operations. Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues based on the net amount of the proceeds received from the midstream processing entity as customer.
Benchmark’s other service sales include services that provides a variety of oilfield and land services to their customers.
Benchmark’s proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark’s proportionate share of sales proceeds, which is net of costs incurred by the operator, if any. Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive. Proceeds are generally received by Benchmark within two to three months after the month in which production occurs.
Benchmark’s realized and unrealized derivative gain or (loss) are included in other income or (expense) in the condensed consolidated statements of operations.
Benchmark’s revenue were comprised of the following for the periods presented:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (In thousands)
Oil sales | $ | 7,948 |  |  | $ | 661 |  |  |  |  |
Natural gas sales | 5,340 |  |  | 730 |  |  |  |  |
Natural gas liquids sales | 4,665 |  |  | 465 |  |  |  |  |
Other service sales | 353 |  |  | $ | — |  |  |  |  |
Total | $ | 18,306 |  |  | $ | 1,856 |  |  |  |  |

Manufacturing Operations
Deflecto recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Deflecto estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include incentives, discounts or rebates that occur under established sales programs. These estimates are developed using the historical experience, anticipated performance and management’s best judgment at the time and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods.
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Deflecto enters into contract arrangements, which are generally capable of being distinct and accounted for as a single performance obligation. Deflecto allocates the transaction price to each distinct performance obligation within the contract.
Substantially all of Deflecto’s revenues for products are recognized at the point in time in which the customer obtains control of the product, which is generally when product title passes to the customer upon shipment. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.

| Three Months Ended March 31, |  |
| 2025 |  |  |  |  |  |
| (In thousands) |  |
Transportation Safety | $ | 10,128 |  |  |  |  |  |  |
Air Distribution | 9,856 |  |  |  |  |  |  |
Office Product | 8,551 |  |  |  |  |  |  |
Total | $ | 28,535 |  |  |  |  |  |  |

Impairment of Investments
Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and a new cost basis in the investment is established.
Accounts Receivable and Allowance for Credit Losses
The opening balances of accounts receivable, net from contracts with customers for three months ended March 31, 2025 and 2024 was $26.9 million and $80.6 million, respectively.
Intellectual Property Operations
ARG performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. Allowance for credit losses was immaterial as of March 31, 2025 and December 31, 2024.
Industrial Operations
Printronix’s accounts receivable are recorded at the invoiced amount and do not bear interest. Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs. Receivable losses are charged against the allowance when management believes the account has become uncollectible. Subsequent recoveries, if any, are credited to the allowance. As of March 31, 2025 and December 31, 2024, Printronix’s combined allowance for credit losses and allowance for sales returns was $440,000 and $425,000, respectively.
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Energy Operations
Benchmark’s oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers. Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs. Benchmark’s accounts receivable are recorded at the invoiced amount and do not bear interest. An allowance for credit losses may be established to reflect management’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined by evaluating individual customer receivables based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2025 and December 31, 2024, Benchmark’s allowance for credit losses was $225,000 and $225,000, respectively.
Manufacturing Operations
Deflecto’s accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for credit losses is determined by evaluating past events and historical loss experience, current events and also future events based on the expectation as of the balance sheet date. Deflecto’s receivables are written off when it is determined that such receivables are deemed uncollectible. Deflecto pools its receivables based on similar risk characteristics in estimating its expected credit losses. In situations where a receivable does not share the same risk characteristics with other receivables, Deflecto measures those receivables individually. Deflecto also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change.
Deflecto utilizes the loss rate method in determining its lifetime expected credit losses on its receivables. This method is used for calculating an estimate of losses based primarily on Deflecto’s historical loss experience. In determining its loss rates, the Company evaluates information related to its historical losses, adjusted for current conditions and further adjusted for the period of time that can be reasonably forecasted. Qualitative and quantitative adjustments related to current conditions and the reasonable and supportable forecast period consider the following: past due receivables and the customer creditworthiness on the level of estimated credit losses in the existing receivables. Deflecto’s allowance for expected credit losses and discounts was $624,000 and $669,000 as of March 31, 2025 and December 31, 2024, respectively. Customer rebates was $2.9 million and $4.2 million as of March 31, 2025 and December 31, 2024, respectively, and are reported as a reduction of accounts receivable.
Inventories
Industrial Operations
Printronix's inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value. Cost is determined at standard cost adjusted on a first-in, first-out basis for variances. Cost includes shipping and handling fees and other costs, including freight insurance and customs duties for international shipments, which are subsequently expensed to cost of sales. Printronix evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions.
Energy Operations
Benchmark’s inventory represents tangible assets such as drilling pipe, tubing, casing and operating supplies used in Benchmark’s future drilling program or repair operations. Cost is determined using the first-in, first-out method and is valued at the lower of cost or net realizable value.
Manufacturing Operations
Deflecto’s inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value. Cost is determined on an average or a first-in, first out basis. Deflecto evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions.
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Oil and Natural Gas Properties
Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities. Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves. If Benchmark determines that the wells do not find proved reserves, the costs are charged to expense. At March 31, 2025, as most of Benchmark’s wells are producing, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized. On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained. Capitalized costs of proved oil and natural gas leasehold costs are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized drilling and development costs of producing oil and natural gas properties, including related equipment and facilities are depreciated based on the unit-of-production method over the estimated proved developed reserves.
Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. Refer to Note 7 for additional information.
Goodwill
Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. We evaluate goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the excess is charged to earnings as an impairment loss. Refer to Note 8 for additional information.
Leases
The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. The Company’s leases primarily consist of facility leases which are classified as operating leases. Lease expense is recognized on a straight-line basis over the lease term.
As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Refer to Note 15 for additional information.
Impairment of Long-lived Assets
ARG’s patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations. ARG’s patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from two to five years. Refer to Note 8 for additional information.
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Printronix’s intangible assets consist of trade names and trademarks, patents and customer and distributor relationships. These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization. Printronix currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives of seven years. Refer to Note 8 for additional information.
The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. 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. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows.
In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over their estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Refer to Note 8 for additional information.
Asset Retirement Obligation
Asset retirement obligation (“ARO”) represents the future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from the leased acreage and land restoration in accordance with applicable local, state and federal laws. The discounted fair value of an ARO liability is required to be recognized in the period in which it is incurred, with the associated asset retirement cost capitalized as part of the carrying cost of the oil and natural gas asset. Significant inputs used to calculate the ARO include estimates and timing of costs to be incurred, the credit adjusted discount rates and inflation rates. The Company has designated these inputs as Level 3 significant unobservable inputs. The ARO is accreted to its present value each period, and the capitalized asset retirement costs are depleted with proved oil and natural gas properties using the units-of-production method. If estimated future costs of ARO change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated ARO can result from changes in cost estimates and changes in the estimated timing of abandonment.
Treasury Stock
Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets.
Stock-Based Compensation
The compensation cost for all time-based stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is currently one to four years. Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards (“PSUs”) are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated
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on the date of grant using a Black-Scholes option-pricing model. Forfeitures are accounted for as they occur. Refer to Note 17 for additional information.
Foreign Currency Gains and Losses
In connection with our Printronix business, the U.S. dollar is the functional currency for all of Printronix’s foreign subsidiaries. Transactions that are recorded in currencies other than the U.S. dollar may result in transaction gains or losses at the end of the reporting period and when trade receipts and payments occur. For these subsidiaries, the assets and liabilities have been re-measured at the end of the period for changes in exchange rates, except inventories and property, plant and equipment, which have been remeasured at historical average rates. The consolidated statements of operations and comprehensive income (loss) have been reevaluated at average rates of exchange for the reporting period, except cost of sales and depreciation, which have been reevaluated at historical rates.
In connection with our Deflecto business, the local currency is the functional currency for each of Deflecto’s foreign subsidiaries. Assets and liabilities of Deflecto’s foreign subsidiaries are translated from foreign currencies into U.S. dollar at the exchange rates in effect at the balance sheet date, while income and expenses are translated at the weighted-average exchange rates for the year. The net effects of translating the foreign currency financial statements of these subsidiaries are included in the shareholders’ equity as a component of accumulated other comprehensive income. Gains and losses for all transactions denominated in a currency other than the functional currency are recognized in the period incurred and included in the condensed consolidated statements of operations and comprehensive income (loss).
Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound, Canadian Dollar, Chinese Yuan and Euro currency exchange rates, primarily related to foreign cash accounts and certain equity security investments. All foreign currency exchange activity is recorded in the condensed consolidated statements of operations and comprehensive income (loss).
Income Taxes
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made.
Under U.S. GAAP, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.
The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded.
Our income tax expense for the three months ended March 31, 2025 is primarily attributable to the statutory rate applied to our year to date earnings. Our income tax benefit for the three months ended March 31, 2024 is primarily attributable to recognizing an income tax benefit on losses incurred year-to-date offset by foreign withholding taxes.
The Company's effective tax rates was slightly lower than the U.S. federal statutory rate primarily due to non-controlling partnership earnings allocated to minority shareholders. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. The Company has recorded a partial valuation allowance against our net deferred tax assets as of March 31, 2025 and December 31, 2024. These assets primarily consist of foreign tax credits and state net operating loss carryforwards.
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At March 31, 2025 and December 31, 2024, the Company had total unrecognized tax benefits of approximately $935,000. At March 31, 2025 and December 31, 2024, $935,000 of unrecognized tax benefits were recorded in other long-term liabilities. No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. At March 31, 2025, if recognized, $935,000 of tax benefits would impact the Company’s effective tax rate subject to valuation allowance. The Company does not expect that the liability for unrecognized benefits will change significantly within the next 12 months. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months.
Recent Accounting Pronouncements
Recently Adopted
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires that entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The adoption of the standard will not have an impact on the Company’s consolidated statements of operations and balance sheets, as the standard is expected to result in enhanced disclosures only.
Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, that requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement. The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed. In addition, entities are required to disclose the nature and amount of selling expenses. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Management is currently evaluating the impact that the amendments in this update may have on the Company's consolidated financial statements.
3. ACQUISITIONS
Benchmark
In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark. As of December 31, 2024, management has finalized the valuations of all acquired assets and liabilities assumed in the acquisition and no measurement period adjustments were recorded during the year ended December 31, 2024.
On April 17, 2024, Benchmark consummated the transaction contemplated in the Revolution Purchase Agreement. At the closing of Revolution Transaction pursuant to the Revolution Purchase Agreement, among other things, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, upon the terms and subject to the conditions of the Revolution Purchase Agreement for a purchase price of $145 million in cash, subject to customary post-closing adjustments. Acacia funded a portion of the Revolution Purchase Price and related fees amounting to $59.9 million with cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and the remaining being funded through a cash contribution of $15.3 million from other investors. Following closing, the Company’s interest in Benchmark is approximately 73.5%.
The Revolution Transaction is being accounted for as an asset acquisition under ASC 805, Business Combinations as substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets. The accounting for asset acquisitions is accounted for by using a cost accumulation model, where the cost of the acquisition is allocated to the assets acquired on the basis of relative fair values.
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Deflecto
On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto, pursuant to that certain Stock Purchase Agreement (the “Deflecto Stock Purchase Agreement”) entered into on the same day with Deflecto Holdings, LLC and Evriholder Finance LLC (collectively, the “Deflecto Sellers”), Deflecto and the Sellers’ Representative named therein. 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”).
The Deflecto Transaction closed simultaneously with the execution of the Deflecto Stock Purchase Agreement on October 18, 2024. 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 was funded with a combination of borrowings of a $48.0 million secured term loan (the “Deflecto Term Loan”) and cash on hand. A portion of the Deflecto Purchase Price is being held in escrow to indemnify Deflecto Purchaser against certain claims, losses and liabilities.
The following table summarizes the consideration transferred to acquire Deflecto and the recognized amounts of identifiable assets and acquired liabilities assumed at the acquisition date (in thousands):

Fair value of consideration transferred: |
Cash | $ | 59,898 |
Closing indebtedness | 21,391 |
Transaction expenses paid to Sellers | 15,290 |
Adjustment and indemnity escrow amount | 1,184 |
Total consideration | $ | 97,763 |
Identifiable assets acquired and liabilities assumed: |
Cash and cash equivalents | $ | 11,316 |
Accounts receivables | 15,705 |
Inventories | 17,617 |
Prepaid expenses and other current assets | 4,498 |
Deferred tax assets | 11,588 |
Property, plant and equipment, net | 23,203 |
Operating lease, right-of-use assets | 8,841 |
Customer relationships | 22,400 |
Trade names and trademarks | 9,100 |
Developed technology | 1,000 |
Favorable leases | 704 |
Accounts payable | (8,836) |
Accrued expenses | (17,172) |
Liability for sales tax and fees | (7,000) |
Current lease liabilities | (2,614) |
Long-term lease liabilities | (6,354) |
Deferred tax liabilities | (3,031) |
Total identifiable net assets | $ | 80,965 |
Goodwill | $ | 16,798 |

During the three months ended March 31, 2025, the goodwill arising from the acquisition was decreased by $3.8 million due to measurement period adjustments. The measurement period adjustments were related to proceeds received from working capital adjustments of $1.2 million and increases in the preliminary valuations of the acquired assets and liabilities
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comprising: $2.2 million in customer relationships, $0.5 million in trade names and trademarks, $0.3 million in deferred tax assets, and $0.4 million in deferred tax liabilities.
The estimates for acquired assets and liabilities remain provisional and may be subject to further adjustments during the measurement period, not to exceed one year from the date of acquisition. The final purchase price allocation is expected to be completed by the end of 2025 and will be based on the final working capital adjustments and other analysis of fair values of acquired assets and liabilities.
Intangible Assets
Goodwill of $16.8 million represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed. The goodwill recognized is primarily attributed to the assembled workforce of Deflecto and new customer relationships that did not exist at the time of the transaction. None of the goodwill resulting from the acquisition is deductible for tax purposes. All of the goodwill acquired is allocated to the Deflecto reporting unit. Other intangible assets include $22.4 million of customer relationships, $1.0 million of developed technology, $9.1 million of trade names and trademarks and $704,000 of favorable leases, with useful lives ranging from 2 months to 15 years. Trade names and trademarks include indefinite lived intangible assets. Refer to Note 8 for additional information.
The fair values of all intangibles were estimated using the income approach. Specifically, the multi-period excess earnings method was applied in the valuation of the customer relationships, and the relief-from-royalty method was applied in the valuation of the trade names and trademarks. These fair value measurements are based on significant inputs unobservable in the market and, therefore, represent a Level 3 measurement as defined in ASC 820. The key assumptions in applying the multi-period excess earnings method include the discount rate of 22%, growth rate, attrition rate, estimated profit margin and contributory asset charges. The key assumptions in applying the relief-from-royalty method include the applicable projected revenues, discount rate of 22%, remaining economic life or rate of obsolescence and estimated royalty rate. Refer to Note 13 for additional information related to fair value measurements.
4. EQUITY SECURITIES
Equity securities for the periods presented were comprised of the following:

Security Type | Cost |  | Gross Unrealized Gain |  | Gross Unrealized Loss |  | Fair Value
| (In thousands)
March 31, 2025: |  |  |  |  |  |  |
Equity securities - other common stock | $ | 24,605 |  |  | $ | 20 |  |  | $ | (6,561) |  |  | $ | 18,064 |
Total | $ | 24,605 |  |  | $ | 20 |  |  | $ | (6,561) |  |  | $ | 18,064 |
December 31, 2024: |  |  |  |  |  |  |
Equity securities - other common stock | $ | 24,898 |  |  | $ | 118 |  |  | $ | (1,881) |  |  | $ | 23,135 |
Total | $ | 24,898 |  |  | $ | 118 |  |  | $ | (1,881) |  |  | $ | 23,135 |

Equity Securities Portfolio Investment
On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund, which included general terms through which the Company was provided the option to purchase a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”) for an aggregate purchase price of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020.
For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, the total fair value of the remaining Life Sciences Portfolio investment was $25.7 million and $25.7 million, respectively.
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As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd. (“RTW Bio”) to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). On January 19, 2024, the Company completed such sale for $57.1 million. Following the completion of the share sale, the Company no longer owns any shares of Arix.
The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the condensed consolidated statements of operations and comprehensive income (loss):

|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
|  |  |  |  | (In thousands)
Change in fair value of equity securities of public companies |  |  |  |  | $ | — |  |  | $ | (28,581) |
Gain on sale of equity securities of public companies |  |  |  |  | — |  |  | 28,581 |
Net realized and unrealized gain |  |  |  |  | $ | — |  |  | $ | — |

As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 (63.9%), which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0% of outstanding shares of Viamet. As of March 31, 2025 and December 31, 2024, this investment did not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. D uring the three months ended March 31, 2025 and 2024, there were no earnings on equity investments included in the condensed consolidated statements of operations and comprehensive income (loss). No distributions were received during the three months ended March 31, 2025 and 2024.
5. INVENTORIES
Inventories consisted of the following:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Raw materials | $ | 7,301 |  |  | $ | 8,575 |
Subassemblies and work in process | 1,245 |  |  | 1,481 |
Finished goods | 17,718 |  |  | 17,429 |
Total inventories | $ | 26,264 |  |  | $ | 27,485 |

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6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Machinery and equipment | $ | 15,173 |  |  | $ | 14,687 |
Vehicles | 525 |  |  | 404 |
Furniture and fixtures | 519 |  |  | 528 |
Computer hardware and software | 1,191 |  |  | 1,218 |
Land | 2,876 |  |  | 2,876 |
Building and leasehold improvements | 9,153 |  |  | 9,078 |
| 29,437 |  |  | 28,791 |
Accumulated depreciation and amortization | (6,083) |  |  | (4,926) |
Property, plant and equipment, net | $ | 23,354 |  |  | $ | 23,865 |

Total depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income (loss) was $1.3 million and $280,000 for the three months ended March 31, 2025 and 2024, respectively. Our Intellectual Property Operations and parent company include depreciation and amortization in general and administrative expenses. Our Manufacturing Operations include $1.1 million of depreciation and amortization in general and administrative expenses for the three months ended March 31, 2025. For the three months ended March 31, 2025 and 2024, our Industrial Operations allocated depreciation and amortization, totaling $117,000 and $252,000, respectively, to all applicable operating expense categories, including cost of sales of $80,000 and $106,000, respectively.
7. OIL AND NATURAL GAS PROPERTIES, NET
Benchmark’s oil and natural gas properties consisted of the following:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Proved oil and gas properties | $ | 200,961 |  |  | $ | 199,559 |
Unproved oil and gas properties | 4,786 |  |  | 4,786 |
Accumulated depletion and depreciation | (16,643) |  |  | (12,665) |
Oil and natural gas properties, net | $ | 189,104 |  |  | $ | 191,680 |

Total depletion and depreciation expense in the condensed consolidated statements of operations and comprehensive income (loss) was $4.0 million and $442,000 for the three months ended March 31, 2025 and 2024, respectively. Our Energy Operations includes depletion and depreciation in cost of production. Benchmark determined no impairment to proved oil and natural gas properties was necessary as of March 31, 2025 and December 31, 2024.
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8. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
The following table presents the changes in the carrying amount of goodwill for the three months ended March 31, 2025. The carrying amount of goodwill was $9.0 million as of March 31, 2024, and there were no changes in the carrying amount of goodwill during the three months ended March 31, 2024.

| March 31, 2025
| Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
| (In thousands)
Beginning balance | $ | 7,541 |  |  | $ | 1,449 |  |  | $ | 20,349 |  |  | $ | 29,339 |
Effect of foreign currency translation | — |  |  | — |  |  | 56 |  |  | 56 |
Measurement period adjustments | — |  |  | — |  |  | (3,829) |  |  | (3,829) |
Ending balance | $ | 7,541 |  |  | $ | 1,449 |  |  | $ | 16,576 |  |  | $ | 25,566 |

The ending balance of goodwill includes no accumulated impairment losses to date. Refer to Note 3 for additional information related to the Deflecto acquisition and measure period adjustments recorded during the three months ended March 31, 2025.
Other intangible assets, net consisted of the following:

| March 31, 2025
| Weighted Average Amortization Period |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Book Value
|  |  | (In thousands)
Patents: |  |  |  |  |  |  |
Intellectual property operations | 5 years |  | $ | 366,402 |  |  | $ | (336,730) |  |  | $ | 29,672 |
Industrial operations | 7 years |  | 3,400 |  |  | (1,691) |  |  | 1,709 |
Total patents |  |  | 369,802 |  |  | (338,421) |  |  | 31,381 |
Customer relationships: |  |  |  |  |  |  |
Industrial operations | 7 years |  | 5,300 |  |  | (2,634) |  |  | 2,666 |
Manufacturing operations | 15 years |  | 22,400 |  |  | (667) |  |  | 21,733 |
Total customer relationships |  |  | 27,700 |  |  | (3,301) |  |  | 24,399 |
Trade name and trademarks: |  |  |  |  |  |  |
Industrial operations | 7 years |  | 3,430 |  |  | (1,707) |  |  | 1,723 |
Manufacturing operations | 10 years |  | 400 |  |  | (18) |  |  | 382 |
Manufacturing operations | Indefinite |  | 8,546 |  |  | — |  |  | 8,546 |
Total trade name and trademarks |  |  | 12,376 |  |  | (1,725) |  |  | 10,651 |
Developed technology - manufacturing operations | 10 years |  | 1,000 |  |  | (45) |  |  | 955 |
Favorable leases - manufacturing operations | 1.9 years |  | 704 |  |  | (351) |  |  | 353 |
Total |  |  | $ | 411,582 |  |  | $ | (343,843) |  |  | $ | 67,739 |

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| December 31, 2024
| Weighted Average Amortization Period |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Book Value
|  |  | (In thousands)
Patents: |  |  |  |  |  |  |
Intellectual property operations | 6 years |  | $ | 351,403 |  |  | $ | (332,211) |  |  | $ | 19,192 |
Industrial operations | 7 years |  | 3,400 |  |  | (1,568) |  |  | 1,832 |
Total patents |  |  | 354,803 |  |  | (333,779) |  |  | 21,024 |
Customer relationships: |  |  |  |  |  |  |
Industrial operations | 7 years |  | 5,300 |  |  | (2,446) |  |  | 2,854 |
Manufacturing operations | 15 years |  | 20,200 |  |  | (269) |  |  | 19,931 |
Total customer relationships |  |  | 25,500 |  |  | (2,715) |  |  | 22,785 |
Trade name and trademarks: |  |  |  |  |  |  |
Industrial operations | 7 years |  | 3,430 |  |  | (1,583) |  |  | 1,847 |
Manufacturing operations | 10 years |  | 400 |  |  | (8) |  |  | 392 |
Manufacturing operations | Indefinite |  | 8,009 |  |  | — |  |  | 8,009 |
Total trade name and trademarks |  |  | 11,839 |  |  | (1,591) |  |  | 10,248 |
Developed technology - manufacturing operations | 10 years |  | 1,000 |  |  | (20) |  |  | 980 |
Favorable leases - manufacturing operations | 1.9 years |  | 704 |  |  | (312) |  |  | 392 |
Total |  |  | $ | 393,846 |  |  | $ | (338,417) |  |  | $ | 55,429 |

Total other intangible asset amortization expense in the condensed consolidated statements of operations and comprehensive income (loss) was $5.4 million and $3.9 million for the three months ended March 31, 2025 and 2024, respectively. The Company did not record charges related to impairment of other intangible assets for the three months ended March 31, 2025 and 2024. There was no accelerated amortization of other intangible assets for the three months ended March 31, 2025 and 2024. Intellectual Property Operations amortization of patents was $4.5 million and $3.4 million for the three months ended March 31, 2025 and 2024, respectively, and is expensed in cost of revenues. Industrial Operations amortization of intangible assets was $435,000 and $433,000 for the three months ended March 31, 2025 and 2024, respectively. Manufacturing Operations amortization of intangible assets was $472,000 for the three months ended March 31, 2025. Industrial Operations and Manufacturing Operations amortization of intangible assets is expensed in general and administrative expenses.
The following table presents the scheduled annual aggregate amortization expense (in thousands):

Years Ending December 31, |
Remainder of 2025 | $ | 18,853 |
2026 | 11,175 |
2027 | 8,736 |
2028 | 4,586 |
2029 | 2,003 |
2030 | 2,003 |
Thereafter | 11,837 |
Total | $ | 59,193 |

During the year ended December 31, 2022, ARG entered into an agreement granting ARG the exclusive option to acquire all rights to license and enforce a patent portfolio and all future patents and patent applications, and incurred $15.0 million of certain patent and patent rights costs, which was fully paid in 2023. The patent costs are included in prepaid expenses and other current assets in the condensed consolidated balance sheet as of December 31, 2024. During the three months
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ended March 31, 2025, ARG exercised the option to acquire all rights to license and enforce the portfolio and capitalized $15.0 million in patent and patent rights costs.
9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Benchmark derivative | $ | 2,607 |  |  | $ | — |
Accrued consulting and other professional fees | 893 |  |  | 2,602 |
Income taxes payable | 6,238 |  |  | 3,832 |
Sales and tax and fees payable | 6,084 |  |  | 4,818 |
Other tax payable | 1,049 |  |  | 2,046 |
Revolving credit facility and Term loan interest accrual | 1,749 |  |  | 1,162 |
Product warranty liability, current | 53 |  |  | 59 |
Service contract costs, current | 275 |  |  | 277 |
Short-term lease liability | 3,218 |  |  | 3,563 |
Other accrued liabilities | 1,918 |  |  | 2,216 |
Total | $ | 24,084 |  |  | $ | 20,575 |

10. ASSET RETIREMENT OBLIGATIONS
The following table presents the changes in asset retirement obligations in the condensed consolidated balance sheets:

|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
|  |  | (In thousands)
Beginning balance |  |  |  |  | $ | 31,070 |  |  | $ | 294 |
Liabilities acquired |  |  |  |  | 1,462 |  |  | — |
Accretion of discounts |  |  |  |  | 434 |  |  | — |
Ending balance |  |  |  |  | $ | 32,966 |  |  | $ | 294 |
Less: Current portion |  |  |  |  | (1,565) |  |  | — |
Asset retirement obligation, long-term |  |  |  |  | $ | 31,401 |  |  | $ | 294 |

11. REVOLVING CREDIT FACILITY AND TERM LOAN
Benchmark Loan Agreement
On April 17, 2024 (the “Revolution Closing Date”), in connection with the Revolution Transaction, BE Anadarko II, LLC, a subsidiary of Benchmark, entered into a Loan Agreement (the “Benchmark Loan Agreement”) with Frost Bank, as Administrative Agent and LC Issuer (“Frost Bank”) and the lenders from time to time party thereto (the “Benchmark Lenders”), governing the “Benchmark Revolving Credit Facility”, with a maximum aggregate credit amount of $150 million, of which approximately $85 million was available at the Revolution Closing Date, that Benchmark may draw upon from time to time subject to the terms and conditions set forth in the Benchmark Loan Agreement. The Benchmark Revolving Credit Facility will mature April 17, 2027 and includes a letter of credit subfacility. On the Revolution Closing Date, $82.7 million, including $660,000 related to letters of credit, was drawn under the Benchmark Revolving Credit Facility. Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the Benchmark Loan Agreement. During the three months ended March 31, 2025, Benchmark made payment of $5.0 million under the Benchmark Revolving Credit Facility reducing the borrowing base. The outstanding balance on the Benchmark Revolving Credit Facility was $61.5 million and $66.5 million as of March 31, 2025 and December 31, 2024, respectively.
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Borrowings under the Benchmark Revolving Credit Facility bear interest at a rate per annum equal to the “Adjusted Term Secured Overnight Financing Rate (“SOFR”) Margin Rate” (as defined in the Benchmark Loan Agreement) plus a margin of 3.00% to 4.00%. The applicable margin is determined based on a monthly utilization percentage, and the availability is determined by reference to a borrowing base calculation. As of March 31, 2025, the weighted average interest rate associated with the outstanding balance on the Benchmark Revolving Credit Facility was 9%. Unused commitments under the Benchmark Revolving Credit Facility are subject to a commitment fee of 0.5% payable on a quarterly basis.
The Benchmark Loan Agreement contains customary covenants with respect to BE Anadarko and its subsidiaries, including, among others, limitations on indebtedness, liens, mergers, issuances of disqualified capital stock, dispositions, payment of dividends, investments and new businesses, amendments of organizational documents and other material contracts, hedging contracts, sale and lease back transactions and transactions with affiliates. In addition, the Benchmark Loan Agreement contains covenants that require BE Anadarko to maintain certain financial ratios related to its consolidated current assets and leverage. The Benchmark Loan Agreement also contains certain events of default, including, among others, nonpayment, inaccuracy of representations and warranties, violation of covenants, cross-default to other indebtedness, bankruptcy, material judgments, or a change of control. Upon the occurrence of an event of default, the Benchmark Lenders may terminate the commitments under the Benchmark Loan Agreement and declare all loans due and payable. As of March 31, 2025, the Company was in compliance with its covenants related to the Benchmark Loan Agreement
Deflecto Amended and Restated Credit Agreement
In connection with the Deflecto Transaction, on October 18, 2024, Deflecto, LLC (“Borrower”), a wholly-owned subsidiary of Deflecto, and certain of its subsidiaries as guarantors, entered into a $55.0 million amended and restated credit agreement (the “Deflecto Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the “Administrative Agent”). The Deflecto Credit Agreement amended and restated Borrower’s prior credit agreement dated as of April 16, 2021.
The Deflecto Credit Agreement provides for (i) the $48.0 million Deflecto Term Loan with a maturity date of October 18, 2029 and (ii) a $7.0 million secured revolving credit facility (the “Deflecto Revolving Credit Facility” and, together with the Deflecto Term Loan, the “Deflecto Facility”) that expires on October 18, 2029. The Deflecto Facility provides for an uncommitted accordion feature that could provide for an aggregate facility of up to $80.0 million. The Deflecto Facility is secured by substantially all assets of Borrower and the guarantors party thereto (but excluding real property owned as of the closing date of the Deflecto Facility, and, subject to other customary exclusions and exceptions).
Borrowings under the Deflecto Facility bear interest at a rate per annum equal to, at the Borrower’s election, either (i) the “Adjusted Term SOFR Rate” (as defined in the Deflecto Credit Agreement) plus a margin ranging from 2.50% to 3.25% or (ii) the “Alternate Base Rate” (as defined in the Deflecto Credit Agreement) plus a margin ranging from 1.50% to 2.25%. The applicable margin described in the immediately preceding sentence will be determined based on a quarterly total net leverage ratio test. Unused commitments under the Deflecto Revolving Credit Facility are subject to a commitment fee of 0.35% to 0.50% payable on a quarterly basis.
The Deflecto Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants. The negative covenants include, among others, limitations on incurrence of indebtedness by Deflecto’s subsidiaries and limitations on incurrence of liens on assets of Deflecto and its subsidiaries. In addition, the Deflecto Credit Agreement requires that Borrower maintain (a) a ratio of consolidated debt (net of up to $5.0 million of unrestricted cash) to consolidated annual earnings before interest, taxes, depreciation and amortization (subject to adjustments set forth in the Deflecto Credit Agreement, “EBITDA”) of (i) on or after December 31, 2024 and prior to December 31, 2025, not greater than 3.25 to 1.00, (ii) on or after December 31, 2025 and prior to December 31, 2026, not greater than 3.00 to 1.00 and (iii) on or after December 31, 2026, not greater than 2.75 to 1.00 and (b) a ratio of consolidated annual EBITDA to fixed charges (including debt and tax cash charges) of not less than 1.20 to 1.00 (commencing with the fiscal quarter ending December 31, 2024).
The Deflecto Credit Agreement contains customary events of default, including, among others, nonpayment (with a grace period for interest payments), material inaccuracy of representations and warranties, violation of covenants (subject to certain grace periods), cross-default to other material indebtedness, bankruptcy, material judgments, or a change of control. Upon the occurrence and during the continuance of an event of default, the lenders may declare the outstanding advances and all other obligations under the Deflecto Credit Agreement immediately due and payable. As of March 31, 2025, the Company was in compliance with its covenants related to the Deflecto Credit Agreement.
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On October 18, 2024, in connection with the closing of the Deflecto Transaction, Deflecto borrowed the $48.0 million under the Deflecto Term Loan to finance, in part, the Purchase Price for the Deflecto Transaction. Borrower may borrow additional amounts under the Deflecto Facility from time to time as opportunities and needs arise, subject to the terms of the Deflecto Facility. As of March 31, 2025, the interest rate associated with the outstanding balance on the Deflecto Term Loan was 8%. Deflecto’s outstanding balance on Deflecto Term Loan was $46.9 million as of March 31, 2025.
12. STARBOARD INVESTMENT
In order to establish a strategic and ongoing relationship between the Company and Starboard, on November 18, 2019, the Company and Starboard entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which Starboard acquired (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a stated value of $100 per share, (ii) Series A Warrants to purchase up to 5,000,000 shares of the Company’s common stock (the “Series A Warrants”) and (iii) Series B Warrants to purchase up to 100,000,000 shares of the Company’s common stock (the “Series B Warrants”).
On November 12, 2021, the Board of Directors of the Company (the “Board”) formed a Special Committee comprised of directors not affiliated or associated with Starboard in order to explore the possibility of simplifying the Company’s capital structure. Management of the Company believed that the Company’s capital structure, with multiple different series of securities, made it difficult for investors to understand and value the Company and created an impediment to new public investment.
As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into a Recapitalization Agreement with Starboard (the "Recapitalization Agreement") in order to simplify the Company’s capital structure, pursuant to which, among other things, (1) effective as of November 1, 2022, Starboard exercised the Series A Warrants in full and received 5,000,000 shares of the Company’s common stock, (2) Starboard purchased 15,000,000 shares of the Company’s common stock pursuant to a concurrent private rights offering and certain of the Series B Warrants were cancelled, and (3) on July 13, 2023, (a) Starboard converted 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of the Company’s common stock (the “Preferred Stock Conversion”), and (b) Starboard 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 cancellation of $60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $55.0 million (the “Series B Warrants Exercise”). Such transactions are referred to as the “Recapitalization Transactions.” As a result of the Recapitalization Transactions, Starboard owned 61,123,595 shares of common stock as of July 13, 2023, representing approximately 61.2% of the common stock based on 99,886,322 shares of common stock issued and outstanding as of such date. Accordingly, following the Recapitalization Transactions no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding.
Governance
Under the Recapitalization Agreement, the parties agreed that, among other things, for a period from the date of the Recapitalization Agreement until May 12, 2026, the Board of the Company will include at least two (2) directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of, Starboard, with current Board members Maureen O’Connell and Isaac T. Kohlberg satisfying this initial condition under the Recapitalization Agreement. Additionally, the Company appointed Gavin Molinelli as a member and as Chair of the Board. The Company and Starboard also agreed that until May 12, 2026, the number of directors serving on the Board will not exceed 10 members.
Other Provisions of the Recapitalization Agreement
On February 14, 2023, the Company entered into an amended and restated Registration Rights Agreement with Starboard as contemplated by the Recapitalization Agreement.
Pursuant to the amended Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale of the shares of common stock, issuable or issued to Starboard pursuant to or in accordance with Section 1.1 of the Recapitalization Agreement, including the shares issued to Starboard in the Concurrent Private Rights Offering, within 90 days after a written request made prior to the first anniversary of the Closing Date (as defined in the Registration Rights
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Agreement). The Registration Rights Agreement also provides Starboard with additional rights to require that the Company file a registration statement in other circumstances. The Registration Rights Agreement includes other customary terms.
The Recapitalization Agreement includes a “fair price” provision requiring, in addition to any other stockholder vote required by the Company’s Certificate of Incorporation or Delaware law, the affirmative vote of the holders of a majority of the outstanding voting stock held by stockholders of the Company other than Starboard and its affiliates, by or with whom or on whose behalf, directly or indirectly, a business combination is proposed, in order to approve such a business combination; provided, that the additional majority voting requirement would not be applicable if either (x) the business combination is approved by the Board by the affirmative vote of at least a majority of the directors who are unaffiliated with Starboard or (y) (i) the consideration to be received by stockholders other than Starboard and its affiliates meets certain minimum price conditions, and (ii) the consideration to be received by stockholders other than Starboard and its affiliates is of the same form and kind as the consideration paid by Starboard and its affiliates.
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. Starboard has agreed to provide the services on an expense reimbursement basis and no separate fee will be charged by Starboard for the services. During the three months ended March 31, 2025 and 2024 the Company did not make any reimbursements to Starboard under the Services Agreement.
13. FAIR VALUE MEASUREMENTS
U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows:
(i)Level 1 - Observable Inputs: Quoted prices in active markets for identical investments;
(ii)Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and
(iii)Level 3 - Unobservable Inputs: Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs, including the entity’s own assumptions in determining the fair value of derivatives and certain investments.
Whenever possible, the Company is required to use observable market inputs (Level 1) when measuring fair value. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy.
The Company held the following types of financial instruments at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:
Equity Securities. Equity securities includes investments in public company common stock and are recorded at fair value based on the quoted market price of each share on the valuation date. The fair value of these securities are within Level 1 of the valuation hierarchy. Equity investments that do not have regular market pricing, but for which fair value can be determined based on other data values or market prices, are recorded at fair value within Level 2 of the valuation hierarchy. T he Company has elected to apply the fair value method to one equity securities investment that would otherwise be accounted for under the equity method of accounting. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into the Arix Shares Purchase Agreement with RTW Bio to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). On
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January 19, 2024, the Company completed such sale for $57.1 million. As a result, as of December 31, 2024, the aggregate carrying amount of this investment was zero, and was included in equity securities, in the consolidated balance sheet (r efer to Note 4 for additional information).
Commodity Derivative Instruments: Commodity derivative instruments are recorded at fair value using industry standard models using assumptions and inputs which are substantially observable in active markets throughout the full term of the instruments. These include market price curves, quoted market prices in active markets, credit risk adjustments, implied market volatility and discount factors. The fair value of these instruments are within Level 2 of the valuation hierarchy. During 2024, Benchmark executed derivative contracts with counterparties and also executed an International Swap Dealers Association Master Agreement (“ISDA”) with its counterparties. The net aggregate fair value of the open commodity derivatives liabilities was $2.9 million as of March 31, 2025 and was recorded in other current liabilities and other long-term liabilities in the condensed consolidated balance sheet, and as of December 31, 2024 the commodity derivative assets were $2.1 million and was included in prepaid expenses and other current assets and other non-current assets, in the condensed consolidated balance sheet (refer to Note 2 for additional information).
Financial assets and liabilities measured at fair value on a recurring basis were as follows:

| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (In thousands)
Assets |  |  |  |  |  |  |
March 31, 2025: |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Equity securities | $ | 18,064 |  |  | $ | — |  |  | $ | — |  |  | $ | 18,064 |
Liabilities: |  |  |  |  |  |  |
Commodity derivative instruments | $ | — |  |  | $ | (2,865) |  |  | $ | — |  |  | $ | (2,865) |
December 31, 2024: |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Equity securities | $ | 23,135 |  |  | $ | — |  |  | $ | — |  |  | $ | 23,135 |
Commodity derivative instruments | $ | — |  |  | $ | 2,114 |  |  | $ | — |  |  | $ | 2,114 |

Information about financial instruments that are eligible for offset in the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 were as follows:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Commodity derivative contracts |  |  |
Gross amounts of recognized assets | $ | 2,787 |  |  | $ | 3,220 |
Gross amounts offset on the balance sheet | (2,787) |  |  | (1,106) |
Net amount of assets on the balance sheet | $ | — |  |  | $ | 2,114 |
Commodity derivative liabilities |  |  |
Gross amounts of recognized liabilities | $ | 5,652 |  |  | $ | 1,106 |
Gross amount offset on the balance sheet | (2,787) |  |  | (1,106) |
Net amounts of liabilities on the balance sheet | $ | 2,865 |  |  | $ | — |

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Benchmark’s realized derivative loss for the three months ended March 31, 2025 was $43,000 and realized derivative gain was $800,000 for the three months ended March 31, 2024. Benchmark’s unrealized derivative loss for the three months ended March 31, 2025 and 2024 was $5.0 million and $629,000, respectively.
In accordance with U.S. GAAP, from time to time, the Company measures certain assets and liabilities at fair value on a nonrecurring basis. Assets and liabilities accounted for on a non-recurring basis include asset retirement obligations incurred by the drilling of new oil and natural gas wells, the change in estimated asset retirement obligations, and the carrying value of proved and unproved oil and natural gas properties following impairment. The fair value of the asset retirement obligations is measured using valuation techniques consistent with the income approach, which converts future cash flows to a single discounted amount and significant inputs include the estimated plug and abandonment cost per well, the estimated life per well and the credit-adjusted risk-free rate. The fair value of the asset retirement obligations are within Level 3 of the fair value hierarchy. In connection with our Revolution Transaction, the fair value of the oil and gas properties was determined based upon estimated future discounted cash flow, a Level 3 input, using estimated production which we reasonably expect, and estimated prices adjusted for differentials. Unobservable inputs include estimated future oil and natural gas production, prices, operating and development costs and a discount rate of 12%, all Level 3 inputs within the fair value hierarchy. The Company also reviews the carrying value of equity securities without readily determinable fair value, equity method investments and patents on a quarterly basis for indications of impairment, and other long-lived assets at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required. In connection with our Deflecto acquisition, nonrecurring Level 3 valuations were performed for certain intangible assets, refer to Note 3 for additional information.
14. RELATED PARTY TRANSACTIONS
In 2023, the Company entered into a Loan Facility (“Loan Facility”) with a related private portfolio company. As of March 31, 2025 and December 31, 2024, the Loan Facility balance including interest receivable was $3.9 million and $3.5 million, respectively. The Loan Facility is not impaired and no allowance for credit loss was deemed necessary as of March 31, 2025. The Loan Facility bore an interest rate of 9.5% per annum. We recorded $87,000 and $59,000 in interest income during the three months ended March 31, 2025 and 2024, respectively. The receivable is included in other non-current assets in the condensed consolidated balance sheets.
Refer to Note 12 for information about the Recapitalization Agreement and Services Agreement with Starboard.
15. COMMITMENTS AND CONTINGENCIES
Inventor Royalties and Contingent Legal Expenses
In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios.
ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.
Patent Enforcement and Legal Proceedings
The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights. In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the
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substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material.
Guarantees and Indemnifications
Acacia and certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases. Acacia indemnifies its directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, Acacia has a directors and officers insurance policy that may reduce its exposure in certain circumstances and may enable it to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make. To date, Acacia has made no material payments related to these guarantees and indemnities. Acacia estimates the fair value of its indemnification obligations to be immaterial based on this history and therefore, have not recorded any material liability for these guarantees and indemnities in the consolidated balance sheets. Additionally, no events or transactions have occurred that would result in a material liability as of March 31, 2025.
Printronix posted collateral in the form of a surety bond or other similar instruments, which are issued by independent insurance carriers (the “Surety”), to cover the risk of loss related to certain customs and employment activities. If any of the entities that hold such bonds should require payment from the Surety, Printronix would be obligated to indemnify and reimburse the Surety for all costs incurred. As of March 31, 2025 and December 31, 2024, Printronix had approximately $100,000 of these bonds outstanding.
Environmental Cleanup
Energy Operations
Benchmark is engaged in oil and natural gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well production and also may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to oil and natural gas wells and the operation thereof. In connection with Benchmark’s acquisition of existing or previously drilled well bores, Benchmark may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated. Should it be determined that a liability exists with respect to any environmental cleanup or restoration, Benchmark would be responsible for curing such a violation. No claim has been made, nor is management aware of any liability that exists, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto for the three months ended March 31, 2025.
16. STOCKHOLDERS’ EQUITY
Repurchases of Common Stock
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. The Repurchase Program had no time limit and did not require the repurchase of a minimum number of shares. The common stock may could 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. During the year ended December 31, 2024, the Company completed the Repurchase Program with total common stock purchases of 4,358,361 shares for the aggregate amount of $20.0 million, and accordingly there have been no stock repurchases under this repurchase program for the three months ended March 31, 2025.
17. EQUITY-BASED INCENTIVE PLANS
Stock-Based Incentive Plans
The 2024 Acacia Research Corporation Stock Incentive Plan (“2024 Plan”), the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) and the 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) (collectively,
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the “Plans”) were approved by the stockholders of Acacia in June 2024, June 2016 and May 2013, respectively. The Plans allow grants of stock options, restricted stock units, and in the case of the 2013 Plan, allowed stock awards with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants. The 2013 Plan expired in May 2023, and as of the effective date of the 2024 Plan, the remaining shares available for issuance under the 2016 Plan were transferred to the 2024 Plan. Therefore, Acacia exclusively grants awards under the 2024 Plan.
Acacia’s compensation committee administers the Plans. The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the 2024 Plan, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant, stock issuance or restricted stock units and the maximum term for which any granted option is to remain outstanding. The 2024 Plans terminates no later than the tenth anniversary of the approval of the plan by Acacia’s stockholders.
The 2024 Plan provides for the following separate programs:
Stock Issuance Program. Under the stock issuance program, eligible individuals may be issued shares of common stock directly, as determined by the 2024 Plan administrator. The terms and conditions of such direct stock awards include the number of shares of common stock granted, and the conditions for vesting that must be satisfied, if any, which typically will be based on continued provision of services but may include performance-based vesting requirements. Until the time at which the applicable restricted direct stock award vests, the holder of a restricted direct stock award will not have the rights of a stockholder provided, however, that any regular cash dividends with respect to unvested awards will be accrued by the Company and will be subject to the same restrictions as the award. The eligible individuals receiving awards under the 2016 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them under once those shares are vested. The eligible individuals receiving awards under the 2013 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them, whether or not their interest in those shares was vested.
Discretionary Option Grant Program. Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than 100% of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100% of the fair market value of those shares on the grant date (not less than 110% of fair market value if such employee actually or constructively owns more than 10% of Acacia’s voting stock or the voting stock of any of its subsidiaries (a 10% shareholder)). Fair market value is generally equal to the closing price per share of the Company’s common stock on the principal securities exchange on which the common stock is traded on the date the option is granted (or if there was no closing price on that date, on the last preceding date on which a closing price was reported). Stock options will generally have a term of ten years from the date of grant; provided, that, the term of an incentive stock option granted to a 10% shareholder may not exceed five years from the date of grant.
Discretionary Restricted Stock Unit Grant Program. Under the discretionary restricted stock unit program, Acacia’s compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service. During June 2023, Acacia’s compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company’s executive leadership team, for driving Acacia’s performance over the longer-term and to align employees and shareholders. Under the long-term incentive program, Acacia’s compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company’s Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel. The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024).
The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan. The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. As of the effective date of the 2016 Plan, 625,390 shares of common stock remained available for issuance under the 2013 Plan.
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The number of shares of common stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, which were transferred into the 2016 Plan as of the effective date of the 2016 Plan. In May 2022, security holders approved an increase of 5,500,000 shares of common stock authorized to be issued pursuant to the 2016 Plan. As of the effective date of the 2024 Plan, 1,421,848 shares of common stock remained available for issuance under the 2016 Plan.
The number of shares of common stock reserved for issuance under the 2024 Plan was 11,168,000 shares plus the 1,421,848 shares of common stock available for issuance under the 2016 Plan, which were transferred into the 2024 Plan as of the effective date of the 2024 Plan. As of March 31, 2025, there were 12,428,239 shares of common stock remain available for grant under the 2024 Plan.
Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock. The plan administrator may amend or modify the 2024 Plan at any time, subject to any required stockholder approval. As of March 31, 2025, there are 15,999,789 shares of common stock reserved for issuance under the Plans.
The following table summarizes stock option activity for the Plans:

| Options |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Life
|  |  |  |  | (In thousands) |  |
Outstanding at December 31, 2024 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | 437 |  |  | 7.3 years
Granted | — |  |  | $ | — |  |  | $ | — |  |  |
Exercised | — |  |  | $ | — |  |  | $ | — |  |  |
Forfeited/Expired | — |  |  | $ | — |  |  | $ | — |  |  |
Outstanding at March 31, 2025 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | — |  |  | 7.1 years
Exercisable at March 31, 2025 | 842,541 |  |  | $ | 4.19 |  |  | $ | — |  |  | 7.0 years
Vested and expected to vest at March 31, 2025 | 1,001,520 |  |  | $ | 4.16 |  |  | $ | — |  |  | 7.1 years
Unrecognized stock-based compensation expense at March 31, 2025 (in thousands) | $ | 191 |  |  |  |  |  |  |
Weighted average remaining vesting period at March 31, 2025 | 1.0 years |  |  |  |  |  |

During the three months ended March 31, 2025, there were no stock options granted. The aggregate fair value of options vested during the three months ended March 31, 2025 and 2024 was $420,000 and $420,000, respectively.
The following table summarizes nonvested restricted stock activity for the Plans:

| RSAs |  | RSUs |  | PSUs
| Shares |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value |  | Units |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2024 | 67,668 |  |  | $ | 3.63 |  |  | 833,195 |  |  | $ | 4.42 |  |  | 1,981,464 |  |  | $ | 4.61 |
Granted | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Vested | (67,668) |  |  | $ | 3.63 |  |  | (244,629) |  |  | $ | 3.97 |  |  | — |  |  | $ | — |
Forfeited | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Nonvested at March 31, 2025 | — |  |  | $ | — |  |  | 588,566 |  |  | $ | 4.61 |  |  | 1,981,464 |  |  | $ | 4.61 |
Unrecognized stock-based compensation expense at March 31, 2025 (in thousands) | $ | — |  |  |  |  | $ | 1,575 |  |  |  |  | $ | 1,052 |  |  |
Weighted average remaining vesting period at March 31, 2025 | zero years |  |  |  | 1.0 year |  |  |  | 1.2 years |  |

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RSAs and RSUs granted are time-based and will vest in full after one to three years. The aggregate fair value of RSAs vested during the three months ended March 31, 2025 and 2024 was $246,000 and $440,000. The aggregate fair value of RSUs vested during the three months ended March 31, 2025 and 2024 was $1.0 million and $1.1 million. During the three months ended March 31, 2025, RSAs and RSUs totaling 312,297 shares were vested and 121,926 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on th e vesting date.
PSUs granted can be earned based upon the level of achievement of the Company’s compound annual growth rate of its adjusted book value per share, measured over a three-year performance period beginning on January 1, 2023 and ending on December 31, 2025. The number of PSUs granted in 2023 that can be earned ranges from 0% to 200% of the target number of PSUs granted (up to a maximum of 750,000 shares of Acacia’s common stock per recipient). Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date. The Company has expensed $1.6 million related to the PSUs based on the probability assessment performed as of March 31, 2025.
Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:

|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
|  |  |  |  | (In thousands)
Options |  |  |  |  | $ | 99 |  |  | $ | 128 |
RSAs |  |  |  |  | 45 |  |  | 106 |
RSUs |  |  |  |  | 559 |  |  | 624 |
PSUs |  |  |  |  | 219 |  |  | — |
Total compensation expense for share-based awards |  |  |  |  | $ | 922 |  |  | $ | 858 |

Total unrecognized stock-based compensation expense for time-based awards as of March 31, 2025 was $1.8 million, which will be amortized over a weighted average remaining vesting period of 1.0 year.
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18. INCOME (LOSS) PER SHARE
The following table presents the calculation of basic and diluted income/loss per share of common stock:

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
| (In thousands, except share and per share data)
Numerator: |  |  |  |  |  |  |
Net income (loss) attributable to common stockholders - Basic | 24,287 |  |  | (186) |  |  |  |  |
Net income (loss) attributable to common stockholders - Diluted | $ | 24,287 |  |  | $ | (186) |  |  |  |  |
Denominator: |  |  |  |  |  |  |
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Basic | 96,018,047 |  |  | 99,745,905 |  |  |  |  |
Potentially dilutive common shares: |  |  |  |  |  |  |
Employee stock options, restricted stock units and performance stock units | 963,366 |  |  | — |  |  |  |  |
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Diluted | 96,981,413 |  |  | 99,745,905 |  |  |  |  |
Basic net income per common share | $ | 0.25 |  |  | $ | — |  |  |  |  |
Diluted net income per common share | $ | 0.25 |  |  | $ | — |  |  |  |  |
Anti-dilutive potential common shares excluded from the computation of diluted net income (loss) per share: |  |  |  |  |  |  |
Equity-based incentive awards | 5,804 |  |  | 4,231,699 |  |  |  |  |
Total | 5,804 |  |  | 4,231,699 |  |  |  |  |

19. SEGMENT REPORTING
As of March 31, 2025, the Company operates and reports its results in four reportable segments: Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations.
The Company reports segment information based on the management approach and organizes its businesses based on products and services. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, and the management approach designates the internal reporting used by the Chief Executive Officer for decision making, allocating resources and performance assessment as the basis for determining the Company’s reportable segments. The performance measure of the Company’s reportable segments is primarily income or (loss) from operations. Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment. Specific asset information is not included in management’s review at this time.
The Company’s Intellectual Property Operations segment invests in IP and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. 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 prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own.
The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in
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Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users.
The Company’s Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in Texas and Oklahoma. 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.
The Company’s Manufacturing Operations segment generates operating income by serving a broad range of wholesale and retail markets within the highly-fragmented specialty plastics industry. Deflecto primarily designs and manufactures (i) “take-one” point of purchase brochure, folder and applications display holders, (ii) plastic injection-molded office supply and arts, crafts and education products, (iii) plastic and aluminum air venting and air control products, (iv) extruded vinyl chair mats, (v) safety reflectors for bicycles and (vi) mud flaps and splash guards for the heavy duty truck market. The Manufacturing Operations reporting segment did not exist prior to the acquisition of Deflecto in October 2024.
In addition to the reportable segments above, we have a Parent category that includes activities not directly attributable to a specific reportable segment and includes broad corporate functions, including legal, human resources, accounting, analytics, finance as well as other general business costs.
We regularly provided management reports to CODM that includes segment revenue and segment operating income (loss). The significant segment expense regularly provided to CODM include cost of revenue and operating expenses. There were no significant inter-segment transactions.
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The Company’s reportable segment information is as follows:

|  | Three Months Ended March 31, 2025
|  | Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
|  | (In thousands)
Revenues: |  |  |  |  |  |  |  |  |  |
License fees |  | $ | 69,905 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 69,905 |
Revenues - industrial operations |  | — |  |  | 7,676 |  |  | — |  |  | — |  |  | 7,676 |
Oil sales |  | — |  |  | — |  |  | 7,948 |  |  | — |  |  | 7,948 |
Natural gas sales |  | — |  |  | — |  |  | 5,340 |  |  | — |  |  | 5,340 |
Natural gas liquids sales |  | — |  |  | — |  |  | 4,665 |  |  | — |  |  | 4,665 |
Other service sales |  | — |  |  | — |  |  | 353 |  |  | — |  |  | 353 |
Air distribution |  | — |  |  | — |  |  | — |  |  | 9,856 |  |  | 9,856 |
Safety products |  | — |  |  | — |  |  | — |  |  | 10,128 |  |  | 10,128 |
Office products |  | — |  |  | — |  |  | — |  |  | 8,551 |  |  | 8,551 |
Total revenues |  | 69,905 |  |  | 7,676 |  |  | 18,306 |  |  | 28,535 |  |  | 124,422 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |
Cost of sales - intellectual property operations |  | 27,912 |  |  | — |  |  | — |  |  | — |  |  | 27,912 |
Cost of sales - industrial operations |  | — |  |  | 4,064 |  |  | — |  |  | — |  |  | 4,064 |
Cost of sales - manufacturing operations |  | — |  |  | — |  |  | — |  |  | 20,811 |  |  | 20,811 |
Cost of production |  | — |  |  | — |  |  | 12,698 |  |  | — |  |  | 12,698 |
Total cost of revenues |  | 27,912 |  |  | 4,064 |  |  | 12,698 |  |  | 20,811 |  |  | 65,485 |
Segment gross (loss) profit |  | 41,993 |  |  | 3,612 |  |  | 5,608 |  |  | 7,724 |  |  | 58,937 |
Other operating expenses: |  |  |  |  |  |  |  |  |  |
General and administrative expenses and sales and engineering expenses |  | 3,485 |  |  | 3,310 |  |  | 1,607 |  |  | 7,453 |  |  | 15,855 |
Total other operating expenses |  | 3,485 |  |  | 3,310 |  |  | 1,607 |  |  | 7,453 |  |  | 15,855 |
Segment operating income (loss) |  | $ | 38,508 |  |  | $ | 302 |  |  | $ | 4,001 |  |  | $ | 271 |  |  | 43,082 |
Parent general and administrative expenses |  |  |  |  |  |  |  |  |  | $ | 4,777 |
Operating income (loss) |  |  |  |  |  |  |  |  |  | $ | 38,305 |
Total other (expense) income |  |  |  |  |  |  |  |  |  | $ | (8,696) |
Income (loss) before income taxes |  |  |  |  |  |  |  |  |  | $ | 29,609 |

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|  | Three Months Ended March 31, 2024
|  | Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
|  | (In thousands)
Revenues: |  |  |  |  |  |  |  |  |  |
License fees |  | $ | 13,623 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13,623 |
Revenues - industrial operations |  | — |  |  | 8,841 |  |  | — |  |  | — |  |  | 8,841 |
Oil sales |  | — |  |  | — |  |  | 661 |  |  | — |  |  | 661 |
Natural gas sales |  | — |  |  | — |  |  | 730 |  |  | — |  |  | 730 |
Natural gas liquids sales |  | — |  |  | — |  |  | 465 |  |  | — |  |  | 465 |
Total revenues |  | 13,623 |  |  | 8,841 |  |  | 1,856 |  |  | — |  |  | 24,320 |
Cost of revenues: |  |  |  |  |  |  |  |  |  |
Cost of sales - intellectual property operations |  | 7,001 |  |  | — |  |  | — |  |  | — |  |  | 7,001 |
Cost of sales - industrial operations |  | — |  |  | 4,049 |  |  | — |  |  | — |  |  | 4,049 |
Cost of production |  | — |  |  | — |  |  | 1,315 |  |  | — |  |  | 1,315 |
Total cost of revenues |  | 7,001 |  |  | 4,049 |  |  | 1,315 |  |  | — |  |  | 12,365 |
Segment gross (loss) profit |  | 6,622 |  |  | 4,792 |  |  | 541 |  |  | — |  |  | 11,955 |
Other operating expenses: |  |  |  |  |  |  |  |  |  |
General and administrative expenses and sales and engineering expenses |  | 3,340 |  |  | 3,580 |  |  | 385 |  |  | — |  |  | 7,305 |
Total other operating expenses |  | 3,340 |  |  | 3,580 |  |  | 385 |  |  | — |  |  | 7,305 |
Segment operating income (loss) |  | $ | 3,282 |  |  | $ | 1,212 |  |  | $ | 156 |  |  | $ | — |  |  | 4,650 |
Parent general and administrative expenses |  |  |  |  |  |  |  |  |  | $ | 6,737 |
Operating income (loss) |  |  |  |  |  |  |  |  |  | $ | (2,087) |
Total other (expense) income |  |  |  |  |  |  |  |  |  | $ | 789 |
Income (loss) before income taxes |  |  |  |  |  |  |  |  |  | $ | (1,298) |

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The Company’s reportable asset segment information is as follows:

| March 31, 2025 |  | December 31, 2024
| (In thousands)
Total parent assets | 137,414 |  |  | 150,033 |
Segment total assets: |  |  |
Intellectual property operations | 277,546 |  |  | 213,854 |
Industrial operations | 48,881 |  |  | 48,438 |
Energy operations | 203,693 |  |  | 209,355 |
Manufacturing operations | 134,072 |  |  | 134,714 |
Total assets | $ | 801,606 |  |  | $ | 756,394 |

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

| Three Months Ended March 31, 2025
| Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
Revenues by geographic area: |  |  |  |  |  |  |  |  |
United States | $ | 69,903 |  |  | $ | 2,938 |  |  | $ | 18,306 |  |  | $ | 17,799 |  |  | $ | 108,946 |
Canada and Latin America | — |  |  | 290 |  |  | — |  |  | 6,069 |  |  | 6,359 |
Total Americas | 69,903 |  |  | 3,228 |  |  | 18,306 |  |  | 23,868 |  |  | 115,305 |
Europe, Middle East and Africa | — |  |  | 2,330 |  |  | — |  |  | 1,124 |  |  | 3,454 |
China | — |  |  | 372 |  |  | — |  |  | 3,543 |  |  | 3,915 |
India | — |  |  | 624 |  |  | — |  |  | — |  |  | 624 |
Asia-Pacific, excluding China and India | 2 |  |  | 1,122 |  |  | — |  |  | — |  |  | 1,124 |
Total Asia-Pacific | 2 |  |  | 2,118 |  |  | — |  |  | 3,543 |  |  | 5,663 |
Total revenues | $ | 69,905 |  |  | $ | 7,676 |  |  | $ | 18,306 |  |  | $ | 28,535 |  |  | $ | 124,422 |

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| Three Months Ended March 31, 2024
| Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
Revenues by geographic area: |  |  |  |  |  |  |  |  |
United States | $ | 2,064 |  |  | $ | 3,159 |  |  | $ | 1,856 |  |  | $ | — |  |  | $ | 7,079 |
Canada and Latin America | 1 |  |  | 266 |  |  | — |  |  | — |  |  | 267 |
Total Americas | 2,065 |  |  | 3,425 |  |  | 1,856 |  |  | — |  |  | 7,346 |
Europe, Middle East and Africa | — |  |  | 2,478 |  |  | — |  |  | — |  |  | 2,478 |
China | 4,650 |  |  | 518 |  |  | — |  |  | — |  |  | 5,168 |
India | — |  |  | 918 |  |  | — |  |  | — |  |  | 918 |
Asia-Pacific, excluding China and India | 6,908 |  |  | 1,502 |  |  | — |  |  | — |  |  | 8,410 |
Total Asia-Pacific | 11,558 |  |  | 2,938 |  |  | — |  |  | — |  |  | 14,496 |
Total revenues | $ | 13,623 |  |  | $ | 8,841 |  |  | $ | 1,856 |  |  | $ | — |  |  | $ | 24,320 |

| March 31, 2025
| Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
| (In thousands)
Long-lived tangible assets by geographic area: |  |  |  |  |  |  |  |  |
United States | $ | 111 |  |  | $ | 209 |  |  | $ | 190,245 |  |  | $ | 7,219 |  |  | $ | 197,784 |
Canada | — |  |  | — |  |  | — |  |  | 7,069 |  |  | 7,069 |
Europe | — |  |  | 224 |  |  | — |  |  | 4,172 |  |  | 4,396 |
Asia-Pacific | — |  |  | 698 |  |  | — |  |  | 2,511 |  |  | 3,209 |
Total | $ | 111 |  |  | $ | 1,131 |  |  | $ | 190,245 |  |  | $ | 20,971 |  |  | $ | 212,458 |

| December 31, 2024
| Intellectual Property Operations |  | Industrial Operations |  | Energy Operations |  | Manufacturing Operations |  | Total
| (In thousands)
Long-lived tangible assets by geographic area: |  |  |  |  |  |  |  |  |
United States | $ | 126 |  |  | $ | 220 |  |  | $ | 192,435 |  |  | $ | 7,685 |  |  | $ | 200,466 |
Canada | — |  |  | — |  |  | — |  |  | 7,225 |  |  | 7,225 |
Europe | — |  |  | 99 |  |  | — |  |  | 4,257 |  |  | 4,356 |
Asia-Pacific | — |  |  | 925 |  |  | — |  |  | 2,573 |  |  | 3,498 |
Total | $ | 126 |  |  | $ | 1,244 |  |  | $ | 192,435 |  |  | $ | 21,740 |  |  | $ | 215,545 |

20. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions through the filing of this Quarterly Report on Form 10-Q, and determined that no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”). This discussion contains forward-looking statements that involve risks and uncertainties. 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" in or Annual Report on Form 10-K for the year ended December 31 2024 and elsewhere herein. 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. We acquire businesses with a view towards strong free cash flow generation and an ability to scale, and look to identify opportunities where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance. Our strategy centers around quality sourcing, execution, and improvement. We find unique situations, bring a flexible and creative approach to transacting, and rely on our 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 this is our core differentiator for creating long-term value for shareholders and partners. 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. 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. 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.
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. 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 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.
Our focus is companies with a 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. We buy businesses to create platforms. 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. Acacia then has optionality to grow and reinvest free cash flow or look to monetize and build new platforms.
We 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;
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•significant resources and the flexibility to take advantage of uncertain environments and dislocated situations;
•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 regularly evaluate opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth. 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.
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. 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.
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. 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.
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. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), 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. 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 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. 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. When applicable, 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.
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. Our current active patent portfolios are: our Atlas Technologies portfolio, which covers Wi-Fi 6 standard essential patents, our Avalon Technologies portfolio, which covers Wi-Fi 7 standard essential patents, our Unification Technologies portfolio, which covers flash memory technology; our Monarch Networking Technologies portfolio, which covers IP networking
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technology; our Stingray IP Solutions portfolio, which covers wireless networking; and our R2 Solutions portfolio, which covers internet search, advertising and cloud computing technology.
We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of March 31, 2025, across nearly 200 patent portfolio licensing and enforcement programs. As of March 31, 2025, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $897.5 million to our patent partners. During the past five calendar years ending on December 31, we generated gross licensing revenue of approximately $234.0 million and returned approximately $91.2 million to our patent partners.
As attractive opportunities become available, we remain open to opportunistically deploying additional capital into the IP business in the future, consistent with our mission to maximize value for shareholders. Our team is made up of well-respected leaders in the IP space, and intellectual property owners actively seek us out as a partner.
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. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. 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. 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.
We are supporting Printronix as it transitions its business mix from lower-margin printer sales to higher-margin consumable products including ink cartridges and specialty ribbons. Printronix’s dual hardware and consumables business model, combined with a streamlined operating structure, represents a steady source of cash flow for Acacia. The Printronix team is focused on topline initiatives and reducing general and administrative expenses, and we expect Printronix to continue to generate free cash flow on an annual basis.
For more information related to our Industrial Operations, refer to the section entitled “Industrial Operations Business” below.
Energy Operations
In November 2023, we acquired a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. Prior to Benchmark’s acquisition of additional 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 125 wells, the majority of which are operated. 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. 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. Refer to Note 1 to the condensed consolidated financial statements elsewhere herein for additional information.
On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement. Pursuant to the Revolution Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and a cash contribution of $15.25 million from
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other investors in Benchmark, including McArron Partners. Following closing of the Revolution Transaction, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 11 to the accompanying condensed consolidated financial statements for additional information regarding the Benchmark Revolving Credit Facility.
For more information, refer to the section entitled “Energy Operations Business” below.
Manufacturing Operations
On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc. (“Deflecto”) pursuant to the Deflecto Stock Purchase Agreement. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its products include emergency warning triangles and vehicle mudguards used by the transportation industry, various airducts and air registers used by the HVAC market and literature, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. 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”). The Deflecto Purchase Price was funded with a combination of borrowings of a $48.0 million secured term loan (the “Deflecto Term Loan”) and cash on hand. Refer to Notes 3 and 11 for additional information related to the Deflecto acquisition and the Deflecto Term Loan, respectively.
For more information, refer to the section entitled “Manufacturing Operations” below.
Recent Business Developments and Trends
Business Strategy
We intend to grow our Company by acquiring additional operating businesses, energy assets and intellectual property assets. However, we may not complete any acquisitions, 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 acquisitions.
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.
On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying condensed consolidated financial statements). Following closing, the Company’s interest in Benchmark is approximately 73.5%.
On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the 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 was funded with a combination of borrowings of a $48.0 million secured term loan and cash on hand. A portion of the Deflecto Purchase Price is being held in escrow to indemnify Purchaser against certain claims, losses and liabilities. Refer to Note 1 to the accompanying condensed consolidated financial statements for additional information.
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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. Through the end of March 31, 2025, 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 March 31, 2025. On January 19, 2024, we completed the sale of our 33,023,210 shares of Arix Bioscience PLC (“Arix”) to RTW Biotech Opportunities Operating Ltd, a subsidiary of RTW Biotech Opportunities Ltd, for $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, we no longer own any shares of Arix. Additionally, some of the businesses in which we continue to hold an interest generate income through the receipt of royalties and milestone payments. Refer to Note 4 to the condensed consolidated financial statements elsewhere herein for more information.
Inflation
Historically, inflation has not had a significant impact on us or any of our subsidiaries. We expect that our Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs and may also implement cost rationalization measures, as applicable. Additionally, our Energy Operations Business may experience inflation. 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.
Patent Licensing and Enforcement
Patent Litigation Trial Dates and Related Trials
As of the date of this Quarterly Report, our Patent Licensing, Enforcement and Technologies Business has two pending patent infringement cases with scheduled trial dates in the next twelve months. Patent infringement trials are components of its overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities. Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates. In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for reasons that are beyond the control of our Patent Licensing, Enforcement and Technologies Business. While scheduled trial dates provide an indication of the timing of possible future revenue generating opportunities, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities.
Litigation and Licensing Expense
We expect patent-related legal expenses to continue to fluctuate from period to period 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.
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. If our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then we may not be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth.
Our current or future relationships may not provide the volume or quality of technologies necessary to sustain our licensing, enforcement and overall business. In some cases, universities and other technology sources compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These and other strategies employed by potential partners may reduce the number of technology sources and potential clients to whom we can market our solutions. If we are unable to maintain current relationships and sources of technology or to secure new relationships and sources of technology, such
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inability may have a material adverse effect on our revenues, operating results, financial condition and ability to maintain our licensing and enforcement business.
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 acquired one new patent portfolio during the three months ended March 31, 2025 consisting of Wi-Fi 7 standard essential patents. Dur ing 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. The patents and patent rights acquired have estimated economic useful lives ranging from two to 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. 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. Printronix has manufacturing, configuration and/or distribution sites located in Malaysia, the United States, Singapore, China and the Netherlands, along with sales and support locations around the world to support its global network of users, channel partners, and strategic alliances. Printronix designs and manufactures printers and related consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements, which are serviced by outside contractors. Consumable products include inked ribbons which are used within Printronix’s printers. Printronix’s products are primarily sold through Printronix’s global network of channel partners, such as dealers and distributors, to end‐users.
Energy Operations Business
Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 156,000 net acres and an interest in approximately 615 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. 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.
Manufacturing Operations Business
In October 2024, we acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its products include emergency warning triangles and vehicle mudguards used by the transportation industry, various airducts and air registers used by the HVAC market and literature, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. While we believe our Manufacturing Operations Business has been reasonably protected from tariffs from a cost standpoint, we maintain a global production footprint, and have been re-shoring certain manufacturing functions and exploring sourcing alternatives to mitigate duty impacts. However, like many of its peers, our Manufacturing Operations Business has seen tariff-specific demand headwinds, particularly in its transportation unit, which provides safety-related and regulatory required components into the trucking industry. While this end market remains challenged due to purchasing delays, our Manufacturing Operations Business continues to invest to optimize its business in order to maximize cash flow when the cycle returns.
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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.
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. 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.
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.
Manufacturing Operations
Refer to “Manufacturing Operations Business” above for information related to Deflecto’s operating activities.
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 19 to the condensed consolidated financial statements.
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Results of Operations
Summary of Results of Operations

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values)
Total revenues |  |  |  |  |  |  |  |  | $ | 124,422 |  |  | $ | 24,320 |  |  | $ | 100,102 |  |  | 412 | %
Total costs and expenses |  |  |  |  |  |  |  |  | 86,117 |  |  | 26,407 |  |  | 59,710 |  |  | 226 | %
Operating income (loss) |  |  |  |  |  |  |  |  | 38,305 |  |  | (2,087) |  |  | 40,392 |  |  | (1,935 | %)
Total other (expense) income |  |  |  |  |  |  |  |  | (8,696) |  |  | 789 |  |  | (9,485) |  |  | (1,202 | %)
Income (loss) before income taxes |  |  |  |  |  |  |  |  | 29,609 |  |  | (1,298) |  |  | 30,907 |  |  | (2,381 | %)
Income tax (expense) benefit |  |  |  |  |  |  |  |  | (6,081) |  |  | 1,109 |  |  | (7,190) |  |  | (648 | %)
Net income (loss) attributable to Acacia Research Corporation |  |  |  |  |  |  |  |  | 24,287 |  |  | (186) |  |  | 24,473 |  |  | (13,158 | %)

Results of Operations - three months ended March 31, 2025 compared with the three months ended March 31, 2024
Total revenues increased $100.1 million to $124.4 million for the three months ended March 31, 2025, as compared to $24.3 million for the three months ended March 31, 2024, due to an increase in our Intellectual Property Operations revenues and our Manufacturing Operations revenue and Energy Operations revenue including the revenue from the recent acquisitions (refer to Note 3). Intellectual Property Operations revenues increased $56.3 million due to an increase in average license fees per agreement for the three months ended March 31, 2025. Industrial Operations revenues decreased $1.2 million due to decrease in the number of printer units and consumables products sold compared to the comparable prior period.
Income before income taxes was $29.6 million for the three months ended March 31, 2025, as compared to loss of $1.3 million in the comparable prior period. The net increase was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 as follows:
•Inventor royalties increased $15.9 million, from $606,000 to $16.5 million in the first quarter of 2025, primarily due to license agreement activity and related revenues generated with inventor royalty obligations.
•Litigation and licensing expenses increased $0.9 million, from $1.1 million to $2.1 million in the first quarter of 2025, primarily due to a net increase in litigation support and third-party technical consulting expenses associated with ongoing litigation.
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses remained relatively flat at $5.7 million in the first quarter of 2025 and the comparable prior period.
•Benchmark’s cost of production for the first quarter of 2025 added an additional $11.4 million to our consolidated operating expenses.
•General and administrative expenses increased $4.8 million, to $17.3 million in the first quarter of 2025 from $12.5 million in the first quarter of 2024, primarily due to expenses contributed from our new Manufacturing Operations of $5.7 million for the first quarter of 2025, offset by lower parent company legal fees.
•Compensation expense for share-based awards, included in general and administrative expenses above, increased $64,000, to $922,000 in the first quarter of 2025 from $858,000 in comparable prior year period, primarily due to expense recorded for the performance based awards.
•Unrealized loss from the change in fair value of our equity securities was $4.8 million in the first quarter of 2025, as compared to an unrealized gain of $26.7 million in the comparable prior year period. The unrealized loss and gain were derived from our Life Sciences Portfolio and our trading securities portfolio.
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•Non-recurring legacy legal expense of $6.2 million in the first quarter of 2024 is related to a dispute involving former executives (the “AIP Matter”).
•Loss on derivatives was $5.0 million in the first quarter of 2025, as compared to a $171,000 in the comparable prior year period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 13 for additional information regarding Benchmark’s commodity derivatives.
•Interest expense of $2.5 million for the three months ended March 31, 2025 related to the Benchmark Revolving Credit Facility and the Deflecto Term Loan.
Intellectual Property Operations
Revenues
ARG’s revenue activity for the periods presented included the following:

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values and count totals)
Paid-up license revenue agreements |  |  |  |  |  |  |  |  | $ | 69,490 |  |  | $ | 12,365 |  |  | $ | 57,125 |  |  | 462 | %
Recurring license revenue agreements |  |  |  |  |  |  |  |  | 415 |  |  | 1,258 |  |  | (843) |  |  | (67 | %)
Total revenues |  |  |  |  |  |  |  |  | $ | 69,905 |  |  | $ | 13,623 |  |  | $ | 56,282 |  |  | 413 | %
New license agreements executed |  |  |  |  |  |  |  |  | 2 |  |  | 6 |  |  | (4) |  |  | (67 | %)
Licensing and enforcement programs generating revenues |  |  |  |  |  |  |  |  | 6 |  |  | 6 |  |  | — |  |  | — | %

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. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Paid-up revenue increased $57.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to an increase in average license fees per agreement. Recurring revenue, that provides for quarterly sales-based license fees, decreased $0.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, from various on-going license arrangements.
Refer to Note 2 to the condensed 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.
Cost of Revenues

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values)
Inventor royalties |  |  |  |  |  |  |  |  | $ | 16,541 |  |  | $ | 606 |  |  | $ | 15,935 |  |  | 2,630 | %
Contingent legal fees |  |  |  |  |  |  |  |  | 4,798 |  |  | 1,824 |  |  | 2,974 |  |  | 163 | %
Litigation and licensing expenses |  |  |  |  |  |  |  |  | 2,054 |  |  | 1,138 |  |  | 916 |  |  | 80 | %
Amortization of patents |  |  |  |  |  |  |  |  | 4,519 |  |  | 3,433 |  |  | 1,086 |  |  | 32 | %
Total |  |  |  |  |  |  |  |  | $ | 27,912 |  |  | $ | 7,001 |  |  | $ | 20,911 |  |  | 299 | %

The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in certain patent portfolios without future patent partner royalty obligations. 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
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agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.
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. Litigation and licensing expenses also includes third-party patent research, development, patent prosecution and maintenance fees, re-exam and inter partes reviews, consulting and other costs incurred in connection with the licensing and enforcement of patent portfolios.
Industrial Operations
Revenues
Printronix's net revenues for the periods presented included the following:

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change value)
Printers and parts |  |  |  |  |  |  |  |  | $ | 2,897 |  |  | $ | 3,065 |  |  | $ | (168) |  |  | (5 | %)
Consumable products |  |  |  |  |  |  |  |  | 4,006 |  |  | 5,013 |  |  | (1,007) |  |  | (20 | %)
Services |  |  |  |  |  |  |  |  | 773 |  |  | 763 |  |  | 10 |  |  | 1 | %
Total |  |  |  |  |  |  |  |  | $ | 7,676 |  |  | $ | 8,841 |  |  | $ | (1,165) |  |  | (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. Revenue from printers and parts and consumable products for the three months ended decreased $0.2 million and $1.0 million, respectively compared to the three months ended March 31, 2024, due to a decrease in the number of printer units and consumable products sold. Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Printronix’s revenue arrangements and related concentrations.
Cost of Revenues

| Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change |  |  |  |  |  |  |  |
| (In thousands, except percentage change values)
Cost of revenues - industrial operations | $ | 4,064 |  |  | $ | 4,049 |  |  | $ | 15 |  |  | 0 | % |  |  |  |  |  |  |  |

Printronix’s cost of revenues remained relatively flat for the periods presented. Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Printronix’s cost of sales.
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Energy Operations
Revenues
The following table provides the components of Benchmark’s revenues for the periods indicated, as well as each period’s respective average realized prices and production volumes. This table shows production on a barrel of oil equivalent basis in which natural gas is converted to oil at the ratio of 6 thousand cubic feet (“Mcf”) of natural gas to one barrel of oil. This ratio may not be reflective of the current price ratio between two products.

| Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change |  |  |  |  |  |  |  |
| (In thousands, except per unit data and percentage change values) |  |  |  |  |  |  |  |
Production: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil (Bbl) | 114,388 |  |  | 8,868 |  |  | 105,520 |  |  | 1190 | % |  |  |  |  |  |  |  |
Natural gas (Mcf) | 1,466,349 |  |  | 292,190 |  |  | 1,174,159 |  |  | 402 | % |  |  |  |  |  |  |  |
Natural gas liquids (Bbl) | 7,047,446 |  |  | 775,316 |  |  | 6,272,130 |  |  | 809 | % |  |  |  |  |  |  |  |
Total (boe) | 526,576 |  |  | 76,026 |  |  | 450,550 |  |  | 593 | % |  |  |  |  |  |  |  |
Average daily production: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil (Bbl/day) | 1,271 |  |  | 97 |  |  | 1,174 |  |  | 1210 | % |  |  |  |  |  |  |  |
Natural gas (Mcf/day) | 16,293 |  |  | 3,211 |  |  | 13,082 |  |  | 407 | % |  |  |  |  |  |  |  |
Natural gas liquids (Bbl/day) | 78,305 |  |  | 8,520 |  |  | 69,785 |  |  | 819 | % |  |  |  |  |  |  |  |
Total (boe/day) | 5,851 |  |  | 835 |  |  | 5,016 |  |  | 601 | % |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil sales | $ | 7,948 |  |  | $ | 661 |  |  | $ | 7,287 |  |  | 1102 | % |  |  |  |  |  |  |  |
Natural gas sales | 5,340 |  |  | 730 |  |  | 4,610 |  |  | 632 | % |  |  |  |  |  |  |  |
Natural gas liquids sales | 4,665 |  |  | 465 |  |  | 4,200 |  |  | 903 | % |  |  |  |  |  |  |  |
Other service sales | 353 |  |  | — |  |  | 353 |  |  | n/a |  |  |  |  |  |  |  |
Total | $ | 18,306 |  |  | $ | 1,856 |  |  | $ | 16,450 |  |  | 886 | % |  |  |  |  |  |  |  |
Average Price: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oil (per Bbl) | $ | 69.48 |  |  | $ | 74.54 |  |  | $ | (5.05) |  |  | (7) | % |  |  |  |  |  |  |  |
Natural gas (per Mcf) | $ | 3.64 |  |  | $ | 2.50 |  |  | $ | 1.14 |  |  | 46 | % |  |  |  |  |  |  |  |
Natural gas liquids (per Bbl) | $ | 0.66 |  |  | $ | 0.60 |  |  | $ | 0.06 |  |  | 10 | % |  |  |  |  |  |  |  |

Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Benchmark’s revenue arrangements and related concentrations.
Cost of Production
Benchmark’s cost of production for the three months ended March 31, 2025 and 2024 was $12.7 million and $1.3 million, respectively, with the increase due to the assets acquired in the Revolution Transaction in April 2024.
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Manufacturing Operations
Revenues
The following table includes Deflecto’s revenues for the three months ended March 31, 2025, with no comparable prior year period information as the Deflecto Transaction closed in October 2024.

| Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
| 2025 |  | 2024 |  |  |  |  |  |  |  |  |  |  |  |
Air distribution | $ | 9,856 |  |  | $ | — |  |  |  |  |  |  |  |  |  |  |  |  |
Safety products | 10,128 |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |
Office products | 8,551 |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |
Total | $ | 28,535 |  |  | $ | — |  |  |  |  |  |  |  |  |  |  |  |  |

Cost of Revenues
Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Deflecto’s cost of revenues.
Operating Expenses

| Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
| 2025 |  | 2024 |  | $ Change |  | % Change |  |  |  |  |  |  |  |
| (In thousands, except percentage change values)
Sales and marketing expenses - industrial operations | $ | 1,567 |  |  | $ | 1,555 |  |  | $ | 12 |  |  | 1 | % |  |  |  |  |  |  |  |
Sales and marketing expenses - manufacturing operations | 1,745 |  |  | — |  |  | 1,745 |  |  | n/a |  |  |  |  |  |  |  |
General and administrative costs - intellectual property operations | 3,485 |  |  | 3,340 |  |  | 145 |  |  | 4 | % |  |  |  |  |  |  |  |
General and administrative costs - industrial operations | 1,743 |  |  | 2,025 |  |  | (282) |  |  | (14 | %) |  |  |  |  |  |  |  |
General and administrative costs - energy operations | 1,607 |  |  | 385 |  |  | 1,222 |  |  | 317 | % |  |  |  |  |  |  |  |
General and administrative costs - manufacturing operations | 5,708 |  |  | — |  |  | 5,708 |  |  | n/a |  |  |  |  |  |  |  |
Parent general and administrative expenses | 4,777 |  |  | 6,737 |  |  | (1,960) |  |  | (29 | %) |  |  |  |  |  |  |  |
Total general and administrative expenses | 17,320 |  |  | 12,487 |  |  | 4,833 |  |  | 39 | % |  |  |  |  |  |  |  |
Total | $ | 20,632 |  |  | $ | 14,042 |  |  | $ | 6,590 |  |  | 47 | % |  |  |  |  |  |  |  |

The operating expenses table above includes the Company’s general and administrative expenses by operation, Printronix’s sales and marketing expenses, and Benchmark’s general and administrative costs. The table also includes Deflecto’s sales and marketing expenses and general and administrative costs for the three months ended March 31, 2025, with no comparable year period information as the Deflecto Transaction closed in October 2024. Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Printronix’s and Deflecto’s operating expenses.
General and Administrative Expenses
A summary of the main drivers of the increases (decreases) in general and administrative expenses is as follows:

|  |  | Three Months Ended March 31,
|  |  | 2025 vs. 2024
|  |  | (In thousands)
Other general and administrative costs |  |  | (2,037) |
General and administrative costs - energy operations |  |  | 1,222 |
Depreciation and amortization - manufacturing operations |  |  | 1,544 |
Other general and administrative costs - manufacturing operations |  |  | 3,692 |

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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, and other corporate costs. The periods presented above include an increase in Energy Operations’ general administrative expenses for the quarter following our acquisition of Revolution in April 2024. The table above also includes our Manufacturing Operations general and administrative expenses for the three months ended March 31, 2025, with no comparable period as the transaction closed in October 2024.
The increase in variable performance-based compensation costs was primarily due to fluctuations in performance-based compensation. The decrease in other general and administrative costs, which relates to our parent company and our Intellectual Property Operations, were primarily due to a decrease in corporate legal fees. The increase in compensation expense for share-based awards was primarily due to compensation expense incurred related to PSUs granted in 2023 based on a probability assessment regarding their vesting performed as of March 31, 2025. Refer to Note 17 to the condensed consolidated financial statements elsewhere herein for additional information regarding compensation expense. The decrease in general and administrative costs of Industrial Operations is due to Printronix’s initiative to reduce costs and operate more efficiently. In addition, our Energy Operations related general and administrative costs contributed an increase of $1.2 million and Manufacturing Operations related general and administrative costs and amortization of intangible assets contributed $5.2 million and $472,000, respectively, in each case driven by the acquisitions of Revolution and Deflecto. Refer to additional general and administrative change explanations above.
Other Income/Expense
Equity Securities Investments

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values)
Change in fair value of equity securities |  |  |  |  |  |  |  |  | $ | (4,777) |  |  | $ | (26,701) |  |  | $ | 21,924 |  |  | (82 | %)
Gain on sale of equity securities |  |  |  |  |  |  |  |  | 1,605 |  |  | 28,861 |  |  | (27,256) |  |  | (94 | %)
Total net realized and unrealized gain |  |  |  |  |  |  |  |  | $ | (3,172) |  |  | $ | 2,160 |  |  | $ | (5,332) |  |  | (247 | %)

Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date. 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.
Our results included an unrealized loss from the change in fair value of our equity securities, and included realized gain from the sale of our equity securities. 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.
Non-recurring legacy legal expense

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values)
Non-recurring legacy legal expense |  |  |  |  |  |  |  |  | $ | — |  |  | $ | (6,243) |  |  | $ | 6,243 |  |  | (100 | %)

During the three months ended March 31, 2024, we recorded $6.2 million in connection with the AIP Matter in other income (expense) in the condensed consolidated statements of operations.
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Income Taxes

|  |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  |  |  |  |  | 2025 |  | 2024 |  | $ Change |  | % Change
|  |  |  |  |  |  |  |  | (In thousands, except percentage change values)
Income tax (expense) benefit |  |  |  |  |  |  |  |  | $ | (6,081) |  |  | $ | 1,109 |  |  | $ | (7,190) |  |  | (648 | %)
Effective tax rate |  |  |  |  |  |  |  |  | (21) | % |  | 85 | % |  | n/a |  | (106) | %

Our income tax expense for the three months ended March 31, 2025 is primarily attributable to the statutory rate applied to our earnings. Our income tax benefit for the three months ended March 31, 2024 primarily attributable to recognizing an income tax benefit on losses incurred to date offset by foreign withholding taxes.
Our 2025 effective tax rate was slightly lower than the U.S. federal statutory rate primarily due to non-controlling partnership earning allocated to minority shareholders. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets.
The Company has recorded a partial valuation allowance against our net deferred tax assets as of March 31, 2025 and December 31, 2024 on foreign tax credits and certain state net operating losses. Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional income tax information.
Liquidity and Capital Resources
General
Our foreseeable material cash requirements as of March 31, 2025, are recognized as liabilities or generally are otherwise described in Note 15, “Commitments and Contingencies,” to the condensed consolidated financial statements included elsewhere herein. In particular, our facilities lease obligations, guarantees and certain contingent obligations are further described in Note 15 to the accompanying condensed consolidated financial statements. Historically, we have not entered into off-balance sheet financing arrangements. In addition, the obligations of our Energy Operations Business related to the Benchmark Revolving Credit Facility and the obligations of our Manufacturing Operations Business related to the Deflecto Term Loan are further described in Note 11 to the accompanying condensed 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 condensed 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.
Certain of our operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of our operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. 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 March 31, 2025, our primary sources of liquidity were cash and cash equivalents on hand and cash generated from our operating activities.
Furthermore, we intend to grow our company by acquiring additional operating businesses and intellectual property assets. We expect to finance such acquisitions through cash on hand or by engaging in equity or debt financing.
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 Quarterly Report and for the foreseeable future. We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than
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anticipated, including those set forth under Item 1A, “Risk Factors” in our 2024 Annual Report. 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 capital and credit markets have experienced extreme volatility and disruption in recent years, and the volatility and impact of the disruption may continue. At times during this period, the volatility and disruption has reached unprecedented levels. In several cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers, and the commercial paper markets may not be a reliable source of short-term financing for us. 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 $290.0 million at March 31, 2025, compared to $297.0 million at December 31, 2024.
The Benchmark Revolving Credit Facility and Deflecto Revolving Credit Facility include covenants potentially limiting our borrowing capacity as determined by a leverage ratio. As of March 31, 2025, we were in compliance with all financial covenants applicable to our debt agreements. Refer to Note 11 to the accompanying condensed consolidated financial statements for additional information.
Cash Flows Summary
The net change in cash and cash equivalents for the periods presented was comprised of the following:

| Three Months Ended March 31,
| 2025 |  | 2024
| (In thousands)
Net cash (used in) provided by: |  |  |
Operating activities | $ | 2,425 |  |  | $ | 54,839 |
Investing activities | 1,039 |  |  | 42,040 |
Financing activities | (6,071) |  |  | 1,826 |
Effect of exchange rates on cash and cash equivalents | 691 |  |  | (34) |
(Decrease) increase in cash and cash equivalents | $ | (1,916) |  |  | $ | 98,671 |

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Cash Flows from Operating Activities
Cash flows from operating activities were comprised of the following for the periods presented:

| Three Months Ended March 31,
| 2025 |  | 2024
| (In thousands)
Net income (loss) including noncontrolling interests in subsidiaries | $ | 23,528 |  |  | $ | (189) |
Adjustments to reconcile net loss including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: |  |  |
Depreciation, depletion and amortization | 10,610 |  |  | 4,568 |
Accretion of asset retirement obligation | 434 |  |  | — |
Compensation expense for share-based awards | 922 |  |  | 858 |
(Gain) loss on foreign currency exchange | (155) |  |  | 18 |
Change in fair value of equity securities | 4,777 |  |  | 26,701 |
Gain on sale of equity securities | (1,605) |  |  | (28,861) |
Unrealized loss on derivatives | 4,978 |  |  | 629 |
Deferred income taxes, net of acquired net deferred tax assets | 3,323 |  |  | (3,652) |
Changes in assets and liabilities: |  |  |
Accounts receivable | (68,814) |  |  | 65,156 |
Inventories | 1,220 |  |  | 1,041 |
Prepaid expenses and other assets | 728 |  |  | (10,752) |
Accounts payable and accrued expenses | 1,223 |  |  | 7,108 |
Royalties and contingent legal fees payable | 21,249 |  |  | (7,811) |
Deferred revenue | 7 |  |  | 25 |
Net cash provided by operating activities | $ | 2,425 |  |  | $ | 54,839 |

Cash receipts from ARG’s licensees totaled $1.0 million and $77.5 million for the three months ended March 31, 2025 and 2024, respectively. Cash receipts from Printronix's customers totaled $8.1 million and $8.5 million for the three months ended March 31, 2025 and 2024, respectively. Cash receipts from Benchmark’s customers totaled $18.7 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively. Cash receipts from Deflecto’s customers totaled $27.8 million for the three months ended March 31, 2025. 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 provided by operations for the three months ended was $2.4 million, compared to $54.8 million in the comparable prior year period. The decrease 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), increase in accounts receivable, decrease in inventories, decrease in prepaid expense and other assets, increase in accounts payable, increase in royalties and contingent legal fees payable and by the total change in net income (described above) and related noncash adjustments.
Working Capital
Our working capital related to cash flows from operating activities at March 31, 2025 increased to $62.4 million, compared to $36.7 million at December 31, 2024, which was comprised of the changes in assets and liabilities presented above. The increase is primarily due to change in accounts receivable and royalties and contingent legal fees payable, which is related to the timing of the cash receipts related to Intellectual Property Operations Business. The increase in working capital is offset by a decrease in prepaid expenses.
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Cash Flows from Investing Activities
Cash flows from investing activities were comprised of the following for the periods presented:

| Three Months Ended March 31,
| 2025 |  | 2024
| (In thousands)
Purchases of equity securities | $ | (4,827) |  |  | $ | (15,544) |
Sales of equity securities | 6,726 |  |  | 57,854 |
Acquisition, net of cash acquired and working capital adjustments (Note 3) | 1,230 |  |  | — |
Purchases of property and equipment and additions to oil and gas properties | (2,090) |  |  | (270) |
Net cash provided by investing activities | $ | 1,039 |  |  | $ | 42,040 |

Cash inflows from investing activities for the three months ended March 31, 2025 was $1.0 million, as compared to cash inflows of $42.0 million in the prior year, primarily due to the net cash inflows from our trading securities portfolio equity securities transactions and sale of Arix shares. Refer to “Other Income/Expense – Equity Securities Investments” above and Note 4 to the condensed consolidated financial statements elsewhere herein for additional information related to Life Sciences Portfolio.
Cash Flows from Financing Activities
Cash flows from financing activities included the following for the periods presented:

| Three Months Ended March 31,
| 2025 |  | 2024
| (In thousands)
Borrowings on the Revolving credit facility | $ | — |  |  | $ | 2,500 |
Paydown of Revolving Credit Facility | (5,000) |  |  | — |
Paydown of Term Loan | (600) |  |  | — |
Taxes paid related to net share settlement of share-based awards | (471) |  |  | (674) |
Net cash (used in) provided by financing activities | $ | (6,071) |  |  | $ | 1,826 |

Cash outflows from financing activities for the three months ended March 31, 2025 increased to $6.1 million, as compared to cash inflows of $1.8 million in the prior year, primarily due to paydowns on the Benchmark Revolving Credit Facility and Deflecto Term Loan. Refer to Notes 11 to the condensed consolidated financial statements elsewhere herein for additional information regarding the Benchmark Revolving Credit Facility and Deflecto Term Loan.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. 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. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.
We believe that of the significant accounting policies discussed in Note 2 included in our 2024 Annual Report, 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; and
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•accounting for income taxes.
Our critical accounting estimates have not changed materially from those disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2024 Annual Report. For further information on the significant accounting policies related to the revenue recognition, estimates of crude oil and natural gas reserves, valuation of long-lived assets, goodwill and other intangible assets and income taxes, refer to Note 2 to the consolidated financial statements and other related significant account policies included in our 2024 Annual Report.
Recent Accounting Pronouncements
The effects of accounting standards adopted in 2024 and the potential effects of accounting standards to be adopted in the future are described in Note 2 to condensed consolidated financial statements included elsewhere herein.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our short-term investment activities is to preserve principal while concurrently maximizing the income we receive from our equity securities without significantly increasing risk. Some of the securities that we invest in may be subject to interest rate risk and/or market risk. This means that a change in prevailing interest rates, with respect to interest rate risk, or a change in the value of the United States equity markets, with respect to market risk, may cause the principal amount or market value of the equity securities to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the current value of the principal amount of our investment may decline. To minimize these risks in the future, we intend to maintain our portfolio of cash equivalents and equity securities in a variety of securities. Cash equivalents are comprised of investments in U.S. treasury securities and AAA rated money market funds that invest in first-tier only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its agencies. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate. Accordingly, a 100 basis point increase in interest rates or a 10% decline in the value of the United States equity markets would not be expected to have a material impact on the value of such money market funds. However, declines in interest rates over time will reduce our interest income.
Investment Risk
We are exposed to investment risks related to changes in the underlying financial condition of certain of our equity investments in technology companies. The fair value of these investments can be significantly impacted by the risk of adverse changes in securities markets generally, as well as risks related to the performance of the companies whose securities we have invested in, risks associated with specific industries, and other factors. 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 March 31, 2025 and 2024, the carrying value of our equity investments in public and private companies was $54.8 million and $59.9 million, respectively.
We record our equity investments in publicly traded companies at fair value, which are subject to market price volatility. As of March 31, 2025, 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 $1.8 million in such equity investments. We evaluate our equity investments in private companies for impairment when events and circumstances indicate that the decline in fair value of such assets below the carrying value is other-than temporary.
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, Canadian Dollar, Chinese Yuan and Euro currency exchange rates, primarily related to foreign cash accounts. As of March 31, 2025, we did not have any foreign denominated equity securities.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Based on this evaluation, our principal executive officer and principal financial officer concluded that as a result of the material weakness and control deficiencies as reported in our Annual Report on Form 10-K for the year ended December 31, 2024, our disclosure controls and procedures were not effective as of March 31, 2025.
Changes in Internal Control Over Financial Reporting
Other than planned remediation efforts previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, there were no changes in our internal control over financial reporting that occurred during the three
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months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, we or our various businesses and operations are the subject of, or party to, various pending or threatened legal actions, including various counterclaims in connection with patent enforcement activities. We 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. See Note 15 to the condensed consolidated financial statements elsewhere herein for additional information.
Intellectual Property Operations
Our Intellectual Property Operations Business is often required to engage in litigation to enforce its patents and patent rights. Certain of its operating subsidiaries are parties to ongoing patent enforcement related litigation, alleging infringement by third-parties of certain of the patented technologies owned or controlled by its operating subsidiaries.
In connection with any of its patent enforcement actions, it is possible that a defendant may claim and/or a court may rule that our Intellectual Property Operations Business has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against it or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if required to be paid by it or its operating subsidiaries, could materially harm its operating results and its financial position.
Our Intellectual Property Operations Business spends a significant amount of its financial and management resources to pursue its current litigation matters. These litigation matters and others that it may in the future determine to pursue could continue for years and continue to consume significant financial and management resources. The counterparties to its litigation matters are sometimes large, well-financed companies with substantially greater resources. We cannot assure you that any of our Intellectual Property Operations Business current or future litigation matters will result in a favorable outcome for it. In addition, in part due to the appeals process and other legal processes, even if our Intellectual Property Operations Business obtains favorable interim rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the dispute. Also, we cannot assure you that our Intellectual Property Operations Business will not be exposed to claims or sanctions against it which may be costly or impossible for it to defend. 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 legal proceedings.
ITEM 1A. RISK FACTORS
An investment in our common stock involves risks. Before making an investment decision, you should carefully consider all of the information in this Quarterly Report on Form 10-Q, including in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our condensed consolidated financial statements and the accompanying notes thereto. In addition, you should carefully consider the risks and uncertainties in “Item 1A. Risk Factors” in our 2024 Annual Report, as well as in our other public filings with the SEC. If any of the identified risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that case, the trading price of our common stock may decline, and you could lose all or part of your investment. In addition, other risks of which we are currently unaware, or which we do not currently view as material, could have a material adverse effect on our business, financial condition, operating results and prospects. There have been no material changes to the risk factors previously reported in our 2024 Annual Report, except as described below.
Our Manufacturing Operations Business’s operating results can be adversely affected by inflation, changes in the cost or availability of raw materials, labor, energy, transportation and other necessary supplies and services, as well as the impact of tariffs and changes in a country’s or region’s political or economic conditions.
Our Manufacturing Operations Business’s success is dependent, in part, on its continued ability to reduce its exposure to or mitigate the impact of increases in the cost of raw materials, finished goods, energy, transportation and other necessary supplies, while maintaining and improving margins and market share. Significant inflation in the costs of labor, finished goods, raw materials, energy and transportation has negatively impacted, and will likely continue to negatively impact results of operations. There is no assurance that we will be able to fully offset any such cost increases through cost
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reduction programs or price increases of our products, especially given the competitive environment. If we generally are not able to sufficiently increase our pricing to offset these increased costs or if increased costs and prolonged inflation were to occur, it could materially and adversely affect our business, operating results and profitability. Sustained price increases may lead to declines in volume as competitors may not adjust their prices or customers may decide not to pay the higher prices, which could lead to sales declines and loss of market share. While we seek to project tradeoffs between price increases and volume, our projections may not accurately predict the volume impact of price increases. Conversely, when raw material prices decline, customer demands for lower prices could result in lower sale prices and, to the extent our Manufacturing Operations Business has existing inventory, lower margins. As a result, fluctuations in raw material prices could have a material adverse effect on our Manufacturing Operations Business’s results of operations and financial condition.
In addition, some of the products our Manufacturing Operations Business manufactures require particular types of customized materials. Supply shortages for a particular type of material can delay production or cause increases in the cost of manufacturing our Manufacturing Operations Business’s products. Pricing and availability of finished goods, raw materials, energy, transportation and other necessary supplies and services for use in our Manufacturing Operations Business’s businesses can be volatile due to numerous factors beyond its control, including general, domestic and international economic conditions, natural disasters, labor costs, production levels, competition, consumer demand, import duties and tariffs, currency exchange rates, international treaties, and changes in laws, regulations, and related interpretations.
Specifically, evolving trade policies could continue to make sourcing products from foreign countries difficult and costly, as our Manufacturing Operations Business sources a significant amount of its products from outside of the United States. In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Our Manufacturing Operations Business operates 9 manufacturing facilities across the United States, Canada, the United Kingdom and China. Given our Manufacturing Operations Business’s reliance upon non-domestic suppliers, the rapidly evolving changes to United States’ trade policies (and those of other countries in response) may cause a material adverse effect on its ability to source products from other countries or the changes could significantly increase the costs of obtaining products, which could result in a material adverse effect on our financial results.
Further, a material increase in the cost of our Manufacturing Operations Business’s products may result in the products becoming less attractive relative to products offered by our competitors. In addition, the increased economic and operational uncertainty caused by the rapidly evolving international trade environment could reduce demand for our Manufacturing Operations Business’s products and result in a material adverse effect on our financial results. To date, we have seen tariffs and general macro-economic uncertainty cause some customers to delay purchasing decisions.
The foregoing changes, as well as any other changes in social, political, regulatory and economic conditions, or further changes to foreign or domestic laws and policies governing foreign trade (including export, import and sanctions), manufacturing and development and foreign direct investment in the territories and countries where we or our customers operate could adversely affect our operating results and our business including our ability to repatriate cash accumulated outside the United States in a tax efficient manner.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2025, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Acacia Research Corporation adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6. EXHIBITS

EXHIBIT NUMBER |  | EXHIBIT |
31.1# |  | Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 |
31.2# |  | Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 |
32.1† |  | Certification of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 |
32.2† |  | Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 |
101# |  | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2025 and 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. |
104# |  | Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101) |

_________________________
# Filed herewith.
† The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the Registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

| ACACIA RESEARCH CORPORATION
Date: May 9, 2025 | /s/ Martin D. McNulty Jr.
| By: Martin D. McNulty Jr.
| Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)
Date: May 9, 2025 | /s/ Kirsten Hoover
| By: Kirsten Hoover
| Interim Chief Financial Officer (Principal Financial Officer and Accounting Officer)

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