What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-31 compared with 2021-03-29 · 301 added, 774 removed, 6 unchanged (99% of the section changed)

An investment

in our common stock involves risks.

You should carefully consider the risks described below, together with all of the other information

included in this annual report, as well as in our other filings with the SEC, in evaluating our business.

The risks described

below are not the only risks we face.

Additional risks that we do not yet know of or that we currently believe are immaterial

may also impair our business operations.

If any of the following risks actually occur, our business, financial condition and results

of operations could be materially adversely affected, and the trading price of our common stock could decline significantly.

statements below may be considered forward-looking statements.

For additional information, see “Cautionary Note Regarding

Forward-Looking Statements.”

Risks Related

to Our Business

We have a history of losses

and may incur additional losses in the future .

a net income of $113.4 million (includes $176.2 million of unrealized gain from trading securities and investment securities and

$5.5 million unrealized equity investment gains), and a net loss of $17.1 million (including $9.9 million of unrealized equity

investment gains) for the years ended December 31, 2020 and 2019, respectively, and on a cumulative basis, we have sustained substantial

losses since our inception.

As of December 31, 2020, our accumulated deficit was $326.7 million.

As of December 31, 2020, we had

approximately $274.6 million in cash and cash equivalents and trading securities and working capital of $332.9 million.

we believe that our current cash and cash equivalents and investments will be sufficient to finance our anticipated capital and

operating requirements for at least the next twelve months, we expect to continue incurring significant legal, general and administrative

expenses in connection with our operations.

As a result, we anticipate that we may incur losses in the future.

Additional increases

in our expenses without commensurate increases in revenues could significantly increase our operating losses.

Any additional operating

losses may have a material adverse effect on our stockholders’

equity and overall financial condition.

tax legislation

may adversely affect our financial condition, results of operations and cash flows, including the ability to use net operating

losses and certain other tax attributes.

to use our federal and state net operating losses to offset potential future taxable income and related income taxes that would

otherwise be due is dependent upon our generation of future taxable income before the expiration dates of the net operating losses,

and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all or any portion of

our net operating losses.

In addition, utilization of net operating losses to offset potential future taxable income and related

income taxes that would otherwise be due is subject to annual limitations under the “ownership change”

of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions, which may

result in the expiration of net operating losses before future utilization.

In general, under the Code, if a corporation undergoes

an “ownership change,”

generally defined as a greater than 50% change (by value) in its equity ownership over a three-year

period, the corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes (such as

research and development credit carryforwards) to offset its post-change taxable income or taxes may be limited.

Changes in our

stock ownership, some of which may be outside of our control, could in the future result in an ownership change.

Although we have

adopted a Tax Benefits Preservation Plan and a provision in our certificate of incorporation, each of which are designed to discourage

investors from acquiring ownership of our common stock in a manner that could trigger an ownership change, and we have completed

studies to provide reasonable assurance that an ownership change limitation would not apply, we cannot be certain that a taxing

authority would reach the same conclusion.

If, after a review or audit, an ownership change limitation were to apply, utilization

of our domestic net operating losses and tax credit carryforwards could be limited in future periods and a portion of the carryforwards

could expire before being available to reduce future income tax liabilities.

If we encounter unforeseen

difficulties with our business or operations in the future that require us to obtain additional working capital, and we cannot

obtain additional working capital on favorable terms, or at all, our business may suffer .

Our consolidated

cash and cash equivalents and trading securities totaled $274.6 million and $168.3 million at December 31, 2020 and 2019, respectively.

To date, we have relied primarily upon net cash flows from our operations and from the public and private sale of equity securities

to generate the working capital needed to finance our operations.

We may encounter unforeseen difficulties with our business or

operations in the future that may deplete our capital resources more rapidly than anticipated.

As a result, we may be required

to obtain additional working capital in the future through bank credit facilities, public or private debt or equity financings,

or otherwise.

If we are required to raise additional working capital in the future, such financing may be unavailable to us on

favorable terms, if at all, or may be dilutive to our existing stockholders.

If we fail to obtain additional working capital,

as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition.

Failure to effectively manage

our operational changes could strain our managerial, operational and financial resources and could adversely affect our business

and operating results.

changes primarily relate to changes in our board of directors and senior management.

During 2018, we announced various changes

to our board of directors and senior management, including a reconstituted board of directors and the terminations of our President,

our Chief Financial Officer, Senior Vice President of Finance and Treasurer and our Executive Vice President, General Counsel

and Secretary.

We also announced in 2018 the appointment of our new Chief Intellectual Property Officer Marc W.

we appointed Clifford Press as our new Chief Executive Officer, and Alfred V.

as our new President and Chief Investment

In 2020 we appointed Richard Rosenstein as our new Chief Financial Officer.

Changes in leadership and key management

positions have inherent risks, and there are no assurances that any of our recent changes will not affect our financial condition.

If we fail to

manage our operational changes effectively or to develop, expand or otherwise modify our managerial, operational and financial

resources and systems, our business and financial results will be materially harmed.

Patent portfolio investments

may present risks, and we may be unable to achieve the financial or other goals intended at the time of any potential investment.

Our licensing

and enforcement business has depended, in part, on our ability to invest in patented technologies, patent portfolios, or companies

holding such patented technologies and patent portfolios.

Accordingly, historically we have engaged in patent portfolio investments

in an effort to expand our patent portfolio assets.

Such investments and potential investments are subject to numerous risks,

including the following:

our inability to enter into a

definitive agreement with respect to any potential patent portfolio investment, or if we are able to enter into such agreement,

our inability to consummate the potential investment transaction;

difficulty integrating the operations,

technology and personnel of the acquired entity;

our inability to achieve the anticipated

financial and other benefits of the specific patent portfolio investment;

our inability to retain key personnel

from the acquired company, if necessary;

difficulty in maintaining controls,

procedures and policies during the transition and integration process;

diversion of our management’s

attention from other business concerns;

failure of our due diligence process

to identify significant issues, including issues with respect to patented technologies and patent portfolios, and other legal

and financial contingencies.

If we are unable

to manage these risks effectively as part of any patent portfolio investment, our business could be adversely affected.

Our revenues are unpredictable,

and this may harm our financial condition .

Due to the nature

of our licensing business and uncertainties regarding the amount and timing of the receipt of license and other fees from potential

infringers, stemming primarily from uncertainties regarding the outcome of enforcement actions, rates of adoption of our patented

technologies, the growth rates of our existing licensees and certain other factors, our revenues may vary significantly from quarter

to quarter and period to period, which could make our business difficult to manage, adversely affect our business and operating

results, cause our quarterly and periodic results to fall below market expectations and adversely affect the market price of our

common stock.

Our operating subsidiaries

depend upon relationships with others to provide technology-based opportunities that can develop into profitable royalty-bearing

licenses, and if they are unable to maintain and generate new relationships, then they may not be able to sustain existing levels

of revenue or increase revenue .

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.

or future relationships may not provide the volume or quality of technologies necessary to sustain our licensing, enforcement

and overall business.

If we are unable to maintain current relationships and sources of technology or to secure new relationships

and sources of technology, such inability may have a material adverse effect on our revenues, operating results, financial condition

and ability to maintain our licensing and enforcement business.

The success of our operating

subsidiaries depends in part upon their ability to retain the best legal counsel to represent them in patent enforcement litigation

in order to achieve favorable outcomes from such litigation.

The outcome of such litigation is uncertain, and any unfavorable

outcomes may harm our financial condition.

of our licensing business depends upon our operating subsidiaries’

ability to retain the best legal counsel to prosecute

patent infringement litigation.

As our operations evolve and industry conditions increase in complexity, it will become more difficult

to find the best legal counsel to handle all of our cases.

This is due in part to many of the best law firms having conflicts

of interest that prevents their representation of our subsidiaries.

We spend a significant

amount of our financial and management resources to pursue our current litigation matters.

We believe that these litigation matters

and others that we may in the future determine to pursue could continue for years and continue to consume significant financial

and management resources.

The counterparties to our litigation are sometimes large, well-financed companies with substantially

greater resources than us.

We cannot assure you that any of our current or future litigation matters will result in a favorable

outcome for us.

In addition, in part due to the appeals process and other legal processes, even if we obtain favorable interim

rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the dispute.

we cannot assure you that we will not be exposed to claims or sanctions against us which may be costly or impossible for us to

The inability to retain the best legal counsel to represent our operating subsidiaries in infringement actions may result

in unfavorable or adverse outcomes, which may result in losses, exhaustion of financial resources or other adverse effects which

could encumber our ability to effectively operate our business or execute our business strategy.

Our operating subsidiaries,

in certain circumstances, rely on representations, warranties and opinions made by third-parties that, if determined to be false

or inaccurate, may expose us and our operating subsidiaries to certain material liabilities .

time, our operating subsidiaries may rely upon representations and warranties made by third-parties from whom our operating subsidiaries

acquired patents or the exclusive rights to license and enforce patents.

We also may rely upon the opinions of purported experts.

In certain instances, we may not have the opportunity to independently investigate and verify the facts upon which such representations,

warranties, and opinions are made.

By relying on these representations, warranties and opinions, our operating subsidiaries may

be exposed to liabilities in connection with the licensing and enforcement of certain patents and patent rights which could have

a material adverse effect on our operating results and financial condition.

In connection with patent

enforcement actions conducted by certain of our subsidiaries, a court may rule that we or our subsidiaries have violated certain

statutory, regulatory, federal, local or governing rules or standards, which may expose us and our operating subsidiaries to certain

material liabilities .

In connection

with any of our patent enforcement actions, it is possible that a defendant may request and/or a court may rule that we have 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, and if we or our operating

subsidiaries are required to pay such monetary sanctions, attorneys’

fees and/or expenses, such payment could materially

harm our operating results and our financial position.

In connection with patent

enforcement actions conducted by certain of our subsidiaries, a court may find the patents invalid, not infringed or unenforceable

and/or the U.S.

Patent and Trademark Office, or the USPTO, or other relevant patent office, may either invalidate the patents

or materially narrow the scope of their claims during the course of a reexamination, opposition or other such proceeding.

Patent litigation

is inherently risky and the outcome is uncertain.

Some of the parties that we believe infringe on our patents are large and well-financed

companies with substantially greater resources than ours.

We believe that these parties would devote a substantial amount of resources

in an attempt to avoid or limit a finding that they are liable for infringing on our patents or, in the event liability is found,

to avoid or limit the amount of associated damages.

In addition, there is a risk that these parties may file inter-partes reviews,

reexaminations or other proceedings with the USPTO or other government agencies in the United States or abroad in an attempt to

invalidate, narrow the scope or render unenforceable the patents we own or control.

If this were to occur, it may have a material

adverse effect on our operations.

Our short and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyond our control.

As a result, an investment in our common stock involves risks.

Our stockholders should carefully consider the risks described below, together with all of the other information included in this Annual Report, as well as in our other filings with the Securities and Exchange Commission (the “SEC”), in evaluating our business.

If any of these risks are realized, our business, financial condition, results of operations, and prospects could be materially adversely affected, and the trading price of our common stock may decline significantly.

Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business.

Certain statements below constitute “forward-looking statements,” which are subject to numerous risks and uncertainties, including those described in this section.

For additional information, refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements” within this Annual Report.

Risks Related to Our Business Operating Businesses, Platform and Industry

Our acquisitions of and investment in operating businesses and intellectual property assets are costly and could negatively affect our results of operations, dilute our stockholders’ ownership, or cause us to incur significant expense, and we may not realize the expected benefits of our operating businesses because of difficulties related to integration.

We have in the past acquired, and may in the future pursue acquisitions of, operating businesses and technologies, services, and other assets and strategic investments that complement our business.

In October 2021, we announced our acquisition of Printronix, a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services.

The success of any acquisition depends on, among other things, our ability to combine our business with the acquired business in a manner that does not materially disrupt existing relationships and allows us to achieve development and operational synergies.

Acquisitions involve numerous risks and uncertainties, including:

• difficulties in integrating and managing the combined operations, technology platforms, or offerings of any business we acquire, and realizing the anticipated economic, operational and other benefits of the acquisition in a timely manner, which could result in substantial costs and delays;

• failure to execute on the intended strategy and synergies;

• failure of the acquired operating businesses to achieve anticipated revenue, earnings, or cash flow;

• diversion of our management’s attention or other resources from our existing business;

• our inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired operating businesses;

• uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions;

• unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses;

• responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective privacy, data protection and cybersecurity controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws;

• difficulties in or costs associated with assigning or transferring to us the acquired operating business’ intellectual property or its licenses to third-party intellectual property;

• inability to maintain our culture and values, ethical standards, controls, procedures, and policies;

• challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies;

• challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with Generally Accepted Accounting Principles;

• potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value.

It is possible that the integration process of our acquired businesses could result in the loss of key employees;

the disruption of our ongoing business or the ongoing business of the acquired operating businesses;

or inconsistencies in standards, controls, procedures or policies that could adversely affect our ability to maintain relationships with third parties and employees or to achieve the anticipated benefits of the acquisition.

Integration efforts between us and the acquired businesses will also require our management’s significant attention from other opportunities that could have been beneficial to our stockholders.

An inability to realize the full extent of, or any of, the anticipated benefits of any acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our business and results of operations, which may affect the value of the shares of our common stock after the completion of our acquisitions.

If we are unable to achieve these objectives, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected.

In particular, our acquisitions may not be accretive to our stock value in the near or long term.

In addition, we may issue shares of our common stock or other equity securities in connection with future acquisitions of businesses and technologies.

Any such issuances of shares of our common stock could result in material dilution to our existing stockholders.

We expect to incur additional costs integrating the operations of any operating business and utilizing any intellectual property assets we acquire, as we incur higher development and regulatory costs, as the case may be, and must hire relevant personnel.

If the total costs of the integration or utilization of our businesses or assets exceed the anticipated benefits of the acquisition, our financial results could be adversely affected.

Accordingly, we may not succeed in addressing the risks associated with our acquisition of Printronix or any other acquisitions we undertake in the future.

The inability to integrate successfully, or in a timely fashion, the business, technologies, products, personnel, or operations of any acquired business or utilization of any assets, could have a material adverse effect on our business, results of operations, and financial condition.

Our platform’s success is dependent on our ability to attract and retain employees and management teams of our operating businesses, the loss of any of whom could materially adversely affect our financial condition, business and results of operations.

Our platform’s business model requires qualified and competent professionals and management teams to identify and develop advantaged opportunities and to direct day-to-day activities of our operating businesses, as the case may be.

Accordingly, recruiting and retaining qualified personnel is important to our platform and our operating businesses’ operations.

Additionally, although our operating businesses have adequate personnel for the current business environment, unpredictable increases in demand for goods and services may exacerbate the risk of not having sufficient numbers of trained or qualified personnel, which could have a negative impact on our results of operations, financial condition and liquidity.

Our operating businesses also need qualified and competent personnel to execute their business plans and serve their customers, suppliers and other stakeholders.

In order to compete, we must attract, retain, and motivate both executives and other key employees, and our failure to do so could harm our financial performance.

Hiring and retaining qualified executives, engineers, technical staff, sales, marketing and support positions are and will be critical to businesses, and competition for experienced employees in the industries of our operating businesses can be intense.

To help attract, retain, and motivate qualified employees, we must offer a competitive compensation package, including cash, cash-based incentive awards and share-based incentive awards, such as restricted stock units.

Because our cash-based and share-based incentive awards are dependent upon the performance conditions relating to our performance and the performance of the price our common stock, the future value of such awards are uncertain.

If the anticipated value of such incentive awards does not materialize, or if the total compensation package ceases to be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened, which could harm our results of operations.

Our success will further substantially depend on our ability to attract and retain key members of Acacia’s management team and officers.

If we lose one or more of these key employees, our results of operations, and in turn, the value of our common stock could be materially adversely affected.

Although we may enter into employment agreements with our officers, there can be no assurance that the entire term of any employment agreement will be served or that any employment agreement will be renewed upon expiration.

The success of our platform and the integration of our operating businesses is dependent on our relationship with Starboard.

Our strategic relationship with Starboard provides us access to capital, industry expertise, and a deep bench of operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.

As part of our relationship, Starboard assists with sourcing and evaluating appropriate acquisition opportunities.

If we were to discontinue our relationship with Starboard, we may not be able to continue to adequately source acquisition opportunities.

Additionally, the success of our platform depends on the continued availability of, and our access to, Starboard’s industry expertise and deep bench of operating partners and industry experts.

We do not have employment agreements with these individuals who are independent of Starboard and Starboard’s key personnel.

If these individuals do not maintain their

existing relationships with Starboard and its affiliates, we may not be able to identify appropriate replacements in order to continue to adequately source acquisition opportunities or manage our existing operating businesses.

The due diligence process we undertake in connection with new acquisitions of operating businesses or intellectual property assets may not reveal all material facts.

Before making acquisitions, we conduct due diligence that we deem reasonable and appropriate based on the facts and applicable circumstances.

When conducting due diligence, we may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues.

Outside consultants, legal advisers, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of business and transaction.

Nevertheless, when conducting due diligence and making an assessment regarding an acquisition, we rely on the resources available to us, including information provided by the target of the transaction and, in some circumstances, third party investigations.

The due diligence investigation that we carry out with respect to any opportunity may not reveal or highlight all relevant facts (including fraud) that may be necessary or helpful in evaluating such opportunity.

Moreover, such an investigation will not necessarily result in the acquisition being successful.

If we do not discover all material facts during due diligence, we may fail to integrate our operating businesses and execute our strategic goals, which may impact our financial performance.

Our acquisition strategy may include acquisitions of privately held companies, which provide more limited information, may be dependent on the talents and efforts of only a few key portfolio company personnel, and have greater vulnerability to economic downturns when compared to public company targets.

From time to time, we acquire, and may acquire, privately held companies.

Generally, little public information exists about these companies, and we are required to rely on diligence efforts to obtain adequate information to evaluate the potential returns from investing in these companies.

These companies and their financial information are not subject to the Sarbanes-Oxley Act of 2002 and other rules that govern public companies.

If we are unable to uncover all material information about these companies, we may not make a fully informed decision, and we may lose money on our acquisition.

If, in the future, we cease to control and operate our operating businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended.

From time to time, we have made, and we may continue to make, investments in businesses that we will not operate or control.

If we make significant investments in businesses we do not operate or control, or cease to operate and control our operating businesses, we may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

If we were deemed to be an investment company, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC, or modify our investments or organizational structure or our contract rights to fall outside the definition of an investment company.

Registering as an investment company could, among other things, materially adversely affect our business, results of operations, and financial condition, materially limit our ability to borrow funds or engage in other transactions involving leverage and otherwise will subject us to additional regulation that will be costly and time-consuming.

Both Acacia and our operating businesses outsource a number of services to third-party service providers, which are subject to disruptions, delays, and decrease in our control, which could adversely impact our results of operations.

Both we and our operating businesses outsource a number of services, including certain hosted software applications for confidential data storage and “cloud computing” technology for such storage (which refers to an information technology hosting and delivery system in which data is not stored within the user’s physical infrastructure but instead is delivered to and consumed by the user as an Internet-based service), to domestic and overseas third-party service providers.

While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over the services rendered.

It is uncertain what effect such diminished control will have on the quality or quantity of products delivered or services rendered, on our ability to quickly respond to changing market conditions, or on our ability to ensure compliance with all applicable domestic and foreign laws and regulations.

In addition, many of these outsourced service providers, including certain hosted software applications that we use for confidential data storage, employ “cloud computing” technology for such storage (which refers to an information technology hosting and delivery system in which data is not stored within the user’s physical infrastructure but instead is delivered to and consumed by the user as an Internet-based service).

These providers’ cloud computing systems may be

susceptible to “cyber incidents,” such as intentional cyber-attacks aimed at theft of sensitive data or inadvertent cyber-security compromises that are outside of our control.

If we do not effectively develop and manage our outsourcing strategies, if our third-party service providers do not perform as anticipated or do not adequately protect our data from cyber-related security breaches, or if there are delays or difficulties in enhancing business processes, we may experience operational difficulties (such as limitations on our ability to ship products), increased costs, service interruptions or delays, loss of intellectual property rights or other sensitive data, quality and compliance issues, and challenges in managing our product inventory or recording and reporting financial and management information, any of which could materially and adversely affect our business, financial condition and results of operations.

tax legislation may adversely affect our financial condition, results of operations and cash flows, including the ability to use net operating losses and certain other tax attributes.

Our ability to use our federal and state net operating losses to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon our generation of future taxable income before the expiration dates of the net operating losses, and we cannot predict with certainty when, or whether, we will generate sufficient taxable income to use all or any portion of our net operating losses.

In addition, utilization of net operating losses to offset potential future taxable income and related income taxes that would otherwise be due is subject to annual limitations under the “ownership change” provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions, which may result in the expiration of net operating losses before future utilization.

In general, under the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes (such as research and development credit carryforwards) to offset its post-change taxable income or taxes may be limited.

Changes in our stock ownership, some of which may be outside of our control, could in the future result in an ownership change.

Although we have adopted a provision in our certificate of incorporation designed to discourage investors from acquiring ownership of our common stock in a manner that could trigger an ownership change, and we have completed studies to provide reasonable assurance that an ownership change limitation would not apply, we cannot be certain that a taxing authority would reach the same conclusion.

If, after a review or audit, an ownership change limitation were to apply, utilization of our domestic net operating losses and tax credit carryforwards could be limited in future periods and a portion of the carryforwards could expire before being available to reduce future income tax liabilities.

Data security and integrity are critically important to our businesses, and cybersecurity incidents, including cyberattacks, breaches of security, unauthorized access to or disclosure of confidential information, business disruption, or the perception that confidential information is not secure, could result in a material loss of business, regulatory enforcement, substantial legal liability and/or significant harm to their reputation, which could have a material adverse effect on our business, financial condition and results of operations.

Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data could result in significant harm to our reputation or the reputation of us or of any of our operating businesses.

The security and protection of our and their data is our top priority.

Our business, including our operating businesses, have devoted significant resources to maintain and regularly upgrade the wide array of physical, technical and contractual safeguards that they employ to provide security around the collection, storage, use, access and delivery of information we and they possess.

We and they have implemented various measures to manage their risks related to system and network security and disruptions, but an actual or perceived security breach, a failure to make adequate disclosures to the public or law enforcement agencies following any such event or a significant and extended disruption in the functioning of its information technology systems could damage our or one of our operating businesses’ reputation and cause us to lose opportunities or them to lose clients, adversely impact our operations, sales and results of operations and require us or them to incur significant expense to address and remediate or otherwise resolve such issues.

Although neither we nor our businesses have incurred material losses or liabilities to date as a result of any breaches, unauthorized disclosure, loss or corruption of our or their data or inability of their clients to access their systems, such events could result in intellectual property or other confidential information being lost or stolen, including client, employee or business data, disrupt their operations, subject us or them to substantial regulatory and legal proceedings and potential liability and fines, result in a material loss of business and/or significantly harm our or their reputation.

If we are unable to efficiently manage the vulnerability of our systems and effectively maintain and upgrade system safeguards, we and they may incur unexpected costs and certain of our or their systems may become more vulnerable to unauthorized access.

Due to concerns regarding data security and integrity, a growing number of legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is accessed by unauthorized persons and additional regulations regarding the use, access, accuracy and security of such data are possible.

Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

In many jurisdictions, including North America and the European Union, Printronix is subject to laws and regulations relating to the collection, use, retention, security and transfer of this information including the European Union General Data Protection Regulation (“GDPR”).

California also enacted legislation, the California Consumer Privacy Act of 2018 (“CCPA”) and the related California Privacy Rights Act (“CPRA”) that afford California residents expanded privacy protections and a private right of action for security breaches affecting their personal information.

These and other similar laws and regulations are frequently changing and are becoming increasingly complex and sometimes conflict among the various jurisdictions and countries in which Printronix provides services both in terms of substance and in terms of enforceability.

This makes compliance challenging and expensive.

Printronix’s failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace.

If we are unable to protect our computer systems, software, networks, data and other technology assets it could have a material adverse effect on our business, financial condition and results of operations, and ultimately the value of our businesses.

Public health threats such as COVID-19 could have a material adverse effect on our operations, the operations of our business partners, and the global economy as a whole.

Public health threats and other highly communicable diseases, outbreaks of which have already occurred in various parts of the world, could adversely impact our operations, as well as the operations of our licensees and other business partners.

We have taken precautions in the operation of our own business and maintain an up-to-date disaster recovery and business continuity policy as well as have the systems and support to have our workforce work remotely for an indefinite period of time.

However, any further spread of the COVID-19 outbreak, or the occurrence of other similar outbreaks or epidemics, could have a material adverse effect on our business, operations and financial results.

Risks Related to our Intellectual Property Business and Industry

Our intellectual property business is reliant on the strength of our patent portfolios and is subject to evolving legislation, regulations, and rules associated with patent law.

The success of our intellectual property business is heavily dependent obtaining and enforcing patents.

Patent acquisition and enforcement is costly, time-consuming and inherently uncertain.

Obtaining and enforcing patents across various industries, including the life science industry, involves a high degree of technological and legal complexity.

Our patent rights may be affected by developments or uncertainty in U.S.

or foreign patent statutes, patent case law, USPTO rules and regulations and the rules and regulations of foreign patent offices.

In addition, the United States may, at any time, enact changes to U.S.

patent law and regulations, including by legislation, by regulatory rulemaking, or by judicial precedent, that adversely affect the scope of patent protection available and weaken the rights of patent owners to obtain patents, enforce against patent infringement and obtain injunctions and/or damages.

For example, over the past several years, the Court of Appeals for the Federal Circuit and the Supreme Court issued various opinions, and the USPTO modified its guidance for practitioners on multiple occasions, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.

Other countries may likewise enact changes to their patent laws in ways that adversely diminish the scope of patent protection and weaken the rights of patent owners to obtain patents, enforce against patent infringement, and obtain injunctions and/or damages.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents, and whether Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us.

Further, the United States and other governments may, at any time, enact changes to law and regulation that create new avenues for challenging the validity of issued patents.

For example, the America Invents Act created new administrative post-grant proceedings, including post-grant review, inter-partes review, and derivation proceedings that allow third parties to challenge the validity of issued patents.

This applies to all of our U.S.

patents, even those issued before March 16, 2013.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S.

federal courts

necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Depending on decisions by the U.S.

Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

After March 2013, under the America Invents Act, the United States transitioned to a “first inventor to file” system in which, assuming other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention.

A third party that files a patent application in the USPTO after March 2013, but before we file an application covering the same invention, could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party.

This change requires vigilance.

Because patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates and other proprietary technologies we may develop or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.

Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing the claimed invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license.

However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Finally, new rules regarding the burden of proof in patent enforcement actions could significantly increase the cost of our enforcement actions, and new standards or limitations on liability for patent infringement could negatively impact our revenue derived from such enforcement actions.

In addition, recent federal court decisions have lowered the threshold for obtaining attorneys’ fees in patent infringement cases and increased the level of deference given to a district court’s fee-shifting determination.

These decisions may make it easier for district courts to shift a prevailing party’s attorneys’ fees to a non-prevailing party if the district court believes that the case was weak or conducted in an abusive manner.

As a result, defendants in patent infringement actions brought by non-practicing entities may elect not to settle because these decisions make it much easier for defendants to get attorneys’ fees.

Patent litigation is inherently risky because courts may find our patents invalid, not infringed, or unenforceable, and the USPTO, or other relevant patent office, may either invalidate our patents or materially narrow the scope of their claims during the course of a reexamination, opposition or other such proceeding.

Patent litigation is inherently risky and may result in the invalidation of our patents, even if we are the plaintiff in an underlying action.

It is difficult to predict the outcome of patent enforcement litigation at any level.

In the United States, there is a higher

rate of appeals in patent enforcement litigation than standard business litigation.

The defendant to any case we bring, may file

as many appeals as allowed by right, including to the first, second and/or final courts of appeal (in the United States those

courts would be the Federal Circuit and Supreme Court, respectively).

Such appeals are expensive and time-consuming, and the outcomes

of such appeals are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue which could have a material

adverse effect on our operating results and financial condition.

Our licensing cycle is lengthy

and costly, and our legal and sales efforts may be unsuccessful.

We expect our

operating subsidiaries to incur significant general and administrative and legal expenses prior to entering into license agreements

and generating license revenues.

We also spend considerable resources educating prospective licensees on the benefits of a license

arrangement with us.

Although we diligently pursue enforcement litigation, we cannot predict with significant reliability the decisions made by juries and trial courts.

At the trial level, it is often difficult for juries and trial judges to understand complex, patented technologies, and as a result, there is a higher rate of successful appeals in patent enforcement litigation than more standard business litigation.

In the United States, there is a higher rate of appeals in patent enforcement litigation than standard business litigation.

The defendant to any case we bring may file as many appeals as allowed by right, including to District Court, the Federal Circuit and the Supreme Court.

Such appeals are expensive and time-consuming, and the outcomes of such appeals are sometimes unpredictable, resulting in increased costs and reduced or delayed revenue which could have a material adverse effect on our results of operations and financial condition.

These appeals may also result in the invalidation of our patents, which may have an adverse impact on our operations and financial performance.

The enforcement of our intellectual property depends in part upon our ability to retain the best legal counsel in order to achieve favorable outcomes from litigation, and we may become conflicted out of such representation.

The success of our intellectual property business depends in part upon our ability to retain the best legal counsel to coordinate our patent infringement litigation matters.

As our intellectual property business evolves, we expect it will become more difficult to find the best legal counsel to handle all of our patent matters due in part to potential conflicts of interest.

This is because, from time to time, the counterparties to our litigation matters have previously engaged world class

law firms that are specialized to the industries of the patents at issue in such matters.

These previous engagements may have, or may in the future, result in these firms being conflicted out of representing us.

In addition, counterparties in our patent litigation matters may devote a substantial amount of resources to avoid or limit a finding that they are liable for infringing on our patents or, in the event liability is found, to avoid or limit the amount of associated damages.

There is a risk these counterparties may file inter-partes reviews, reexaminations or other proceedings with the USPTO or other government agencies in the United States or abroad in an attempt to invalidate, narrow the scope or render unenforceable the patents we own or control.

If this were to occur, it may have a significant negative impact on the operations of our intellectual property business.

The inability to retain the best legal counsel to represent our operating businesses in infringement actions may result in unfavorable or adverse outcomes, which may result in losses, exhaustion of financial resources or other adverse effects which could encumber our ability to effectively operate our business or execute our business strategy.

We cannot ensure that any of our current or prospective patent prosecution or litigation matters will result in a favorable outcome for us.

We may experience delays in successful prosecution, enforcement, and licensing of our patent portfolio.

The value of our patent portfolios is dependent upon the issuance of patents in a timely manner.

More patent applications are filed each year, resulting in longer delays in getting patents issued by the USPTO.

We believe this increase in patent applications has resulted in longer delays in obtaining approval of pending patent applications.

If the USPTO experiences reductions in funding, it could have an adverse impact on the cost of processing pending patent applications and the value of those pending patent applications, negatively impacting the value of our patent portfolio pipeline.

Further, reductions in funding from Congress could result in higher patent application filing and maintenance fees charged by the USPTO, causing an increase in our expenses.

Application delays could cause delays in recognizing revenue from these patents and could cause us to miss opportunities to license patents before other competing technologies are developed or introduced into the market.

After prosecuting our patents, our operating businesses incur significant general and administrative and legal expense prior to entering into license agreements and generating license revenues.

We spend considerable resources educating prospective licensees on the benefits of a license arrangement with us.

As such, we may incur significant losses in any particular period before any associated revenue stream begins.

If our efforts

to educate prospective licensees on the benefits of a license arrangement are unsuccessful, we may need to pursue litigation or

other enforcement action to protect our patent rights.

We may also need to litigate to enforce the terms of our existing license

agreements, protect our trade secrets, or determine the validity and scope of the proprietary rights of others.

Enforcement proceedings

are typically protracted and complex.

We are frequently engaged in litigation to enforce the terms of our existing license agreements, protect our trade secrets, or determine the validity and scope of the proprietary rights of others.

Enforcement proceedings are typically protracted and complex.

The costs are typically substantial, and the outcomes are unpredictable.

Enforcement actions

will divert our managerial, technical, legal and financial resources from business operations and there are no assurances that

such enforcement actions will result in favorable results for us.

We expect patent-related legal

expenses to continue to fluctuate from period to period.

Our patent-related

legal expenses may fluctuate based on the factors summarized herein, in connection with future trial dates, international enforcement,

strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement

The pursuit of enforcement actions in connection with our licensing and enforcement programs can involve certain risks

and uncertainties, including the following:

Increases in patent-related legal

expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside

legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants,

re-exam and inter partes review costs, case-related audio/video presentations and other litigation support and administrative

costs could increase our operating costs and decrease our profit generating opportunities;

Our patented technologies and

enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order

to successfully enforce our patents.

Moreover, such appeals may not be successful;

New legislation, regulations or

rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating

costs and decrease our profit generating opportunities.

Increased focus on the growing number of patent-related lawsuits may

result in legislative changes which increase our costs and related risks of asserting patent enforcement actions;

Courts may rule that our subsidiaries

have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions,

which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our

financial position;

The complexity of negotiations

and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to

increased intervals of time between the filing of litigation and potential revenue events (i.e., markman dates, trial dates),

which may lead to increased legal expenses, consistent with the higher revenue potential of such portfolios;

Fluctuations in overall patent

portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above could harm

our operating results and our financial position.

Our equity investments are

subject to risks and we may experience significant financial losses.

Our equity investments

are subject to a high degree of risk and could diminish our financial condition.

The overall sustained economic uncertainty, as

well as financial, operational and other difficulties encountered by certain companies in which we have equity investments increases

the risk that the actual amounts realized in the future on our debt and equity investments will differ significantly from the

fair values currently assigned to them.

In addition, the companies in which we have equity investments may not be able to compete

effectively or there may be insufficient demand for the services and products offered by these companies.

These investments could

also expose us to significant financial losses and may limit alternative uses of our capital resources.

If our investees suffer

losses, our financial condition could be materially adversely affected.

In addition, applicable securities law restrictions and

other factors may result in an inability to liquidate any equity components of our equity investments.

may engage in strategic acquisitions of certain assets or businesses that could affect our business, results of

operations, financial condition and liquidity.

We intend to execute strategic acquisitions

of businesses with a focus on mature technology, healthcare, industrial and certain financial segments.

We intend to leverage our

investment and operations experience to identify and pursue such targets.

These may include acquisitions of entire companies, business

divisions or operating segments of companies or other operating assets, which may at times begin with an initial acquisition of

interests in companies.

We intend to operate such businesses independently of our IP business.

acquisitions inherently involve a number of risks and presents financial, managerial and operational challenges, including:

disruption of our ongoing business and distraction of management;

with integration of personnel and financial and other systems;

additional management and other critical personnel;

the scope, geographic diversity and complexity of our operations.

addition, we may encounter unforeseen obstacles or costs in the integration of acquired businesses.

For example, the presence

of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may have a material

adverse effect on our business.

We may also opportunistically pursue dispositions of certain assets and businesses, which may

involve material amounts of assets or lines of business, which could adversely affect our results of operations, financial condition

and liquidity.

addition, our strategic acquisitions and dispositions may also affect the diversity of our assets and our capital structure.

a result, our acquisitions and dispositions could affect our business, results of operations, financial condition, and liquidity.

Further, all the risks associated with our acquisitions and dispositions may not be immediately known to us, and the anticipated

benefits of such acquisition or disposition may not be fully realized.

could recognize losses on our equity securities, including equity securities in the Portfolio Companies.

beyond our control can significantly influence the value of our equity securities, including equity securities in the Portfolio

Companies, and can cause potential adverse changes to the value of these securities.

Relevant factors include, but are not limited

to, fluctuations in market price, changes in our own analysis of the value of the security or instability in the financial markets.

Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses.

process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the

future financial performance of the issuer.

Because of changing economic and market conditions and the financial condition of

issuers of the securities, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect

on our financial condition and results of operations.

may be subject to the risk of becoming an investment company under the Investment Company Act.

may be subject to the risk of inadvertently meeting the definition of an investment company, which could require us to register

as such under the Investment Company Act of 1940, as amended, or the Investment Company Act.

Registered investment companies are

subject to extensive, restrictive and potentially adverse regulations that impose, among other things, (i)

limitations on capital structure, including the incurrence of indebtedness or the issuance of senior securities;

(ii) restrictions

on specified investments;

(iii) prohibitions on transactions with affiliates;

and (iv) compliance with reporting, record keeping,

voting, proxy disclosure and other rules and regulations that would significantly change our operations .

Registered investment companies are not permitted to operate their business in the manner in which we currently operate and plan

to operate our business in the future.

plan to monitor the value of our investments and structure our operations and transactions to qualify for exclusions under the

Investment Company Act or to remain outside of the definition of an investment company .

Accordingly, we may structure transactions in a less advantageous manner than if we did not have Investment Company Act concerns,

or we may avoid otherwise economically desirable transactions due to those concerns.

In addition, adverse developments with respect

to our ownership of our operating subsidiaries, including significant appreciation or depreciation in the market value of certain

of our publicly traded holdings, could result in our inadvertently becoming an investment company.

If it were established that

we were required to register as an investment company and failed to do

so , there would be a risk, among other material adverse consequences, that we could

become subject to monetary penalties or injunctive relief, or both, in an action brought by the SEC and that we would be

prohibited from engaging in our business activities.

In addition, any contracts that we entered into during the period in which

we were deemed to be operating as an unregistered investment company would be

unenforceable unless a court were to require enforcement, and a court could appoint a receiver to take control of us and liquidate

our business.

Our being deemed to be required to register as an investment company could also be an event of default under the

terms of Notes that we have issued or may issue in the future or other material contracts .

Risks Related

to Our Industry

Our exposure to uncontrollable

outside influences, including new legislation, court rulings or actions by the USPTO, could adversely affect our licensing and

enforcement business and results of operations .

Our licensing

and enforcement business is subject to numerous risks from outside influences, including the following:

New legislation,

regulations or rules related to obtaining patents or enforcing patents could significantly increase our operating costs and decrease

Our operating

subsidiaries invest in patents with enforcement opportunities and spend a significant amount of resources to enforce those patents.

If new legislation, regulations or rules are implemented by Congress, the USPTO or the courts that impact the patent application

process, the patent enforcement process or the rights of patent holders, such changes could negatively affect our business.

States patent laws were amended with the enactment of the Leahy-Smith America Invents Act, or the America Invents Act, which took

effect on March 16, 2013.

The America Invents Act includes a number of significant changes to U.S.

In general, the

legislation attempts to address issues surrounding the enforceability of patents and the increase in patent litigation by, among

other things, establishing new procedures for patent litigation.

For example, the America Invents Act changes the way that parties

may be joined in patent infringement actions, increasing the likelihood that such actions will need to be brought against individual

allegedly-infringing parties by their respective individual actions or activities.

In addition, the America Invents Act enacted

a new inter-partes review process, or IPR process, at the USPTO which can be, and often is, used by defendants, and other individuals

and entities, to separately challenge the validity of any patent.

The IPR process of the America Invents Act has in many instances

increased costs for licensing and litigation and has resulted in the loss of certain portfolio patents which, in some cases, may

have negatively impacted the value of those portfolios.

The America Invents Act and its implementation has increased the uncertainties

and costs surrounding the enforcement of our patented technologies, which in certain circumstances could have a material adverse

effect on our business and financial condition.

rules regarding the burden of proof in patent enforcement actions could significantly increase the cost of our enforcement actions,

and new standards or limitations on liability for patent infringement could negatively impact our revenue derived from such enforcement

In addition, recent federal court decisions have lowered the threshold for obtaining attorneys’

fees in patent

infringement cases and increased the level of deference given to a district court’s fee-shifting determination.

These decisions

may make it easier for district courts to shift a prevailing party’s attorneys’

fees to a non-prevailing party if

the district court believes that the case was weak or conducted in an abusive manner.

As a result, defendants in patent infringement

actions brought by non-practicing entities may elect not to settle because these decisions make it much easier for defendants

to get attorneys’

patent law could adversely impact our business.

may continue to change, and may alter the historically consistent protections afforded to owners of patent rights.

may not be advantageous for us and may make it more difficult to obtain adequate patent protection to enforce our patents against

infringing parties.

Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase

our costs and related risks of asserting patent enforcement actions.

For instance, the United States Congress has considered a

bill that would require, among other things, non-practicing entities that bring patent infringement lawsuits to pay legal costs

of the defendants, if the lawsuits are unsuccessful and certain standards are not met.

and juries often find it difficult to understand complex patent enforcement litigation, and as a result, we may need to appeal

adverse decisions by lower courts in order to successfully enforce our patents.

It is difficult

to predict the outcome of patent enforcement litigation at the trial level.

It is often difficult for juries and trial judges

to understand complex, patented technologies, and as a result, there is a higher rate of successful appeals in patent enforcement

litigation than more standard business litigation.

Such appeals are expensive and time consuming, resulting in increased costs

and delayed revenue.

Although we diligently pursue enforcement litigation, we cannot predict with significant reliability the

decisions made by juries and trial courts.

applications are filed each year resulting in longer delays in getting patents issued by the USPTO.

Certain of our

operating subsidiaries hold and continue to invest in pending patents.

We have identified a trend of increasing patent applications

each year, which we believe is resulting in longer delays in obtaining approval of pending patent applications.

The application

delays could cause delays in recognizing revenue from these patents and could cause us to miss opportunities to license patents

before other competing technologies are developed or introduced into the market.

Federal courts

are becoming more crowded, and as a result, patent enforcement litigation is taking longer.

Our patent enforcement

actions are almost exclusively prosecuted in federal court.

Federal trial courts that hear our patent enforcement actions also

hear criminal cases.

Criminal cases always take priority over our actions.

As a result, it is difficult to predict the length

of time it will take to complete an enforcement action.

Moreover, we believe there is a trend in increasing numbers of civil lawsuits

and criminal proceedings before federal judges and, as a result, we believe that the risk of delays in our patent enforcement

actions will have a greater negative effect on our business in the future unless this trend changes.

Any reductions

in the funding of the USPTO could have an adverse impact on the cost of processing pending patent applications and the value of

those pending patent applications.

The assets of

our operating subsidiaries consist of patent portfolios, including pending patent applications before the USPTO.

our patent portfolios is dependent upon the issuance of patents in a timely manner, and any reductions in the funding of the USPTO

could negatively impact the value of our assets.

Further, reductions in funding from Congress could result in higher patent application

filing and maintenance fees charged by the USPTO, causing an increase in our expenses.

is intense in the industries in which our subsidiaries do business and as a result, we may not be able to grow or maintain our

market share for our technologies and patents.

encounter competition in the area of patent portfolio investments and enforcement.

This includes competitors seeking to invest

in the same or similar patents and technologies that we may seek to invest in.

As new technological advances occur, many of our

patented technologies may become obsolete before they are completely monetized.

If we are unable to replace obsolete technologies

with more technologically advanced patented technologies, then this obsolescence could have a negative effect on our ability to

generate future revenues.

Our licensing

business also competes with venture capital firms and various industry leaders for patent licensing opportunities.

Many of these

competitors may have more financial and human resources than we do.

As we become more successful, we may find more companies entering

the market for similar technology opportunities, which may reduce our market share in one or more technology industries that we

currently rely upon to generate future revenue.

technologies face uncertain market value.

Our operating

subsidiaries have invested in patents and technologies that may be in the early stages of adoption in the commercial and consumer

Demand for some of these technologies is untested and is subject to fluctuation based upon the rate at which our licensees

will adopt our patents and technologies in their products and services.

Further, significant

judgment is required in connection with estimates of the recoverability of the carrying value of our intangible patent assets,

including estimates of market values, estimates of the amount and timing of future cash flows, and estimates of other factors

that are used to determine the fair value and recoverability of the respective patent asset values.

Developments with respect

to ongoing patent litigation, patent challenges and re-exams, legislative and judicial decisions and other factors outside of

our control, may unfavorably impact the validity, applicability, and enforceability of our patent assets, and therefore, negatively

impact the future value of our patent portfolios.

If certain of these unfavorable events occur, our estimates or related projections

may change materially in future periods, and future intangible asset impairment tests may result in material charges to earnings.

Patent litigation

trials and scheduled trial dates are subject to routine delay, and any such delays could adversely impact our business, results

of operations and financial condition.

Patent infringement

trials are components of our overall patent licensing process and are one of many factors that contribute to the existence of

possible future revenue opportunities for us.

Patent litigation schedules in general, and in particular trial dates, are subject

to routine adjustment, and in most cases delay, as courts adjust their calendars or respond to requests from one or more parties.

Trial dates often are rescheduled by the court for various reasons that are often unrelated to the underlying patent assets and

typically for reasons that are beyond our control.

As a result, to the extent such events are an indicator of possible future

revenue opportunities for us, or other outcome determinative events, they may and often do change which can result in delay of

the expected scheduled event.

Any such delay could be significant and could affect the corresponding future revenue opportunities,

thus adversely impacting our business, results of operations and financial condition.

The markets served by our

operating subsidiaries are subject to rapid technological change, and if our operating subsidiaries are unable to develop and

invest in new technologies and patents, our ability to generate revenues could be substantially impaired .

served by our operating subsidiaries and their licensees frequently undergo transitions in which products rapidly incorporate

new features and performance standards on an industry-wide basis.

Products for communications applications and high-speed computing

applications, as well as other applications covered by our operating subsidiaries’

IP, are based on continually evolving

industry standards.

In addition, the communications industry is intensely competitive and has been impacted by price erosion,

rapid technological change, short product life cycles, cyclical market patterns and increasing foreign and domestic competition.

Our ability to compete in the future will depend on our ability to identify and ensure compliance with evolving industry standards.

This will require our continued efforts and success in acquiring new patent portfolios with licensing and enforcement opportunities.

If we are unable to invest in new patented technologies and patent portfolios, or to identify and ensure compliance with evolving

industry standards, our ability to generate revenues could be substantially impaired and our business and financial condition

could be materially harmed.

Uncertainty in global economic

conditions could negatively affect our business, results of operations and financial condition .

Our revenue-generating

opportunities depend on the use of our patented technologies by existing and prospective licensees, the overall demand for the

products and services of our licensees, and on the overall economic and financial health of our licensees.

If economic conditions

do not continue to improve, or if they deteriorate, many of our licensees’

customers, which may rely on credit financing,

may delay or reduce their purchases of our licensees’

products and services.

In addition, the use or adoption of our patented

technologies is often based on current and forecasted demand for our licensees’

products and services in the marketplace

and may require companies to make significant initial commitments of capital and other resources.

If negative conditions in the

global credit markets delay or prevent our licensees’

and their customers’

access to credit, overall consumer spending

on the products and services of our licensees may decrease and the adoption or use of our patented technologies may slow, respectively.

Further, if the markets in which our licensees’

participate do not continue to improve, or deteriorate further, this could

negatively impact our licensees’

long-term sales and revenue generation, margins and operating expenses, which could in

turn have an adverse effect on our business, results of operations and financial condition.

Public health threats such

as COVID-19 could have a material adverse effect on our operations, the operations of our business partners, and the global economy

Public health

threats and other highly communicable diseases, outbreaks of which have already occurred in various parts of the world, could

adversely impact our operations, as well as the operations of our licensees and other business partners.

For example, the outbreak

in December 2019 of a novel coronavirus (COVID-19) has resulted in decreased economic activity in China, as well as a number of

other countries, and the scope of the outbreak and its impacts is continuing to expand.

We have taken precautions in the operation

of our own business and maintain an up-to-date disaster recovery and business continuity policy as well as have the systems and

support to have our workforce work remotely for an indefinite period of time.

However, any further spread of the COVID-19 outbreak,

or the occurrence of other similar outbreaks or epidemics, could have a material adverse effect on our business, operations and

financial results.

date, COVID-19 has not had a material effect on our licensing efforts or litigation schedules.

Teleconferencing has effectively

replaced in-person meetings and, in most cases, courtroom proceedings.

Risks Related

to Our Common Stock

The availability of shares

for sale in the future could reduce the market price of our common stock .

In the future,

we may issue securities to raise cash for operations and patent portfolio investments.

We may also pay for interests in additional

subsidiary companies by using shares of our common stock or a combination of cash and shares of our common stock.

issue securities convertible into our common stock.

Any of these events may dilute stockholders’

ownership interests in

our company and have an adverse impact on the price of our common stock.

sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur, could reduce

the market price of our common stock.

Enforcement actions divert our managerial, technical, legal and financial resources from business operations and there are no assurances that such enforcement actions will result in favorable results for us.

Patent litigation schedules in general, and in particular trial dates, are subject to routine adjustment, and in most cases delay, as courts adjust their calendars or respond to requests from one or more parties.

Trial dates often are rescheduled by the court for various reasons that are often unrelated to the underlying patent assets and typically for reasons that are beyond our control.

As a result, to the extent such events are an indicator of possible future revenue opportunities for us, or other outcome determinative events, they may and often do change which can result in delay of the expected scheduled event.

Any such delay could be significant and could affect the corresponding future revenue opportunities, thus adversely impacting our business, results of operations and financial condition.

Further, federal courts are becoming more crowded, and as a result, patent enforcement litigation is taking longer.

Our patent enforcement actions are almost exclusively prosecuted in federal court.

Federal trial courts that hear our patent enforcement actions also hear criminal cases.

Criminal cases tend to take priority over our actions.

As a result, it is difficult to predict the length of time it will take to complete an enforcement action.

Moreover, we believe there is a trend in increasing numbers of civil lawsuits and criminal proceedings before federal judges and, as a result, we believe that the risk of delays in our patent enforcement actions will have a greater negative effect on our business in the future unless this trend changes.

Risks Related to our Operating Businesses

Certain of our operating businesses rely, or may rely in the future, on their intellectual property and licenses to use others’ intellectual property for competitive advantage.

If our operating businesses are unable to protect their intellectual property or obtain or retain licenses to use other’s intellectual property, or if they infringe upon or are alleged to have infringed upon others’ intellectual property, it could have a material adverse effect on our financial condition, business and results of operations.

Certain of our operating businesses’ success depend in part on their, or licenses to use others’, brand names, proprietary technology and manufacturing techniques.

These businesses rely on a combination of patents, trademarks, copyrights, trade secrets, confidentiality procedures and contractual provisions to protect their intellectual property rights.

The steps they have taken to protect their intellectual property rights may not prevent third parties from using their intellectual property and other proprietary information without their authorization or independently developing intellectual property and other proprietary information that is similar.

In addition, the laws of foreign countries may not protect our businesses’ intellectual property rights effectively or to the same extent as the laws of the United States.

Stopping unauthorized use of our operating businesses’ proprietary information and intellectual property and defending claims that they have made unauthorized use of others’ proprietary information or intellectual property, may be difficult, time consuming, and costly.

The use of their intellectual property and other proprietary information by others, and the use by others of their intellectual property and proprietary information, could reduce or eliminate any competitive advantage they have developed, cause them to lose sales or otherwise harm their business.

Our operating businesses may become involved in legal proceedings and claims in the future either to protect their intellectual property or to defend allegations that they have infringed upon others’ intellectual property rights.

These claims and any resulting litigation could subject them to significant liability for damages and invalidate their property rights.

In addition, these lawsuits, regardless of their merits, could be time consuming and expensive to resolve and could divert management’s time and attention.

The costs associated with any of these actions could be substantial and could have a material adverse effect on their financial condition, business, and results of operations.

Certain of our operating businesses’ inability to develop new products and enhance existing products to meet customer product requirements on a cost competitive basis may negatively impact our results of operations.

The future results of operations of our operating businesses, including Printronix, may be adversely affected if they are unable to continue to develop, manufacture and market products that are reliable, competitive, and meet customers’ needs.

The markets for matrix printers, associated supplies and software are aggressively competitive, especially with respect to pricing and the introduction of new technologies and products offering improved features and functionality.

In addition, the introduction of any significant new and/or disruptive technology or business model by a competitor that substantially changes the markets into which our operating businesses sell their products or demand for the products they sell could severely impact sales of their products and our results of operations.

The impact of competitive activities on the sales volumes or our revenue, or our inability to effectively deal with these competitive issues, could have a material adverse effect on our ability to attract and retain customers and maintain or grow market share.

The competitive pressure to develop technology and products and to increase our investment in research and development and marketing expenditures also could cause significant changes in the level of our operating expense.

Certain of our operating businesses are dependent on a limited number of customers to derive a large portion of their revenue, and the loss of one of these customers may adversely affect the financial condition, business and results of operations of these businesses.

Printronix derives a significant amount of revenue from a concentrated number of retailers, distributors, and manufacturers.

Any negative change involving these retailers, distributors, and manufacturers, including industry consolidation, store closings, reduction in purchasing levels or bankruptcies, could negatively impact the sales of these businesses and may have a material adverse effect on the results of operations, financial condition and cash flows of these businesses.

Certain of our operating businesses have limited suppliers for key product components and services they rely on and any interruption in supply could impair their ability to make and deliver their signature products, adversely affecting our business, financial condition, and results of operations.

Outsource providers and component suppliers have played, and will continue to play, a key role in Printronix’s manufacturing operations, field installation and support, and many of its transactional and administrative functions, such as information technology, facilities management, and certain elements of our finance organization.

These providers and suppliers might suffer financial setbacks, be acquired by third parties, become subject to exclusivity arrangements that preclude further business with us or be unable to meet our requirements or expectation due to their independent business decisions, or force majeure events that could interrupt or impair their continued ability to perform as we expect.

Although our operating businesses may attempt to select reputable providers and suppliers and attempt to secure their performance on terms documented in written contracts, it is possible that one or more of these providers or suppliers could fail to perform as we expect, or fail to secure or protect intellectual property rights, and such failure could have an adverse impact on our business.

In some cases, the requirements of our business mandate that we obtain certain components and sub-assemblies included in our products from a single supplier or a limited group of suppliers.

Where practical, we endeavor to establish alternative sources to mitigate the risk that the failure of any single provider or supplier will adversely affect our business, but this is not feasible in all circumstances.

There is therefore a risk that a prolonged inability to obtain certain components or secure key services could impair our ability to manage operations, ship products and generate revenues, which could adversely affect our results of operations and damage our customer relationships.

Failure of our operating businesses to manage inventory levels or production capacity may negatively impact our results of operations.

Printronix’s financial performance depends in part upon their ability to successfully forecast the timing and extent of customer demand and reseller demand to manage worldwide distribution and inventory levels.

Unexpected fluctuations in customer demand or in reseller inventory levels could disrupt ordering patterns and may adversely affect our financial results, inventory levels and cash flows.

In addition, the financial failure or loss of a key customer, reseller or supplier could have a material adverse impact on our financial results.

We must also address production and supply constraints, including product disruptions caused by quality issues, and delays or disruptions in the supply of key components necessary for production.

Such delays, disruptions or shortages may result in lost revenue or in additional costs to meet customer demand.

Our future results of operations and ability to effectively grow or maintain market share may be adversely affected if we are unable to address these issues on a timely basis.

Certain of our operating businesses’ inability to perform satisfactorily under service contracts for managed print services may negatively impact our financial performance and results of operations.

Printronix continuously seeks to develop new services and products that complement or leverage the underlying design or process technology of its traditional product and service offerings.

Printronix makes significant investments in service and product technologies and anticipate expending significant resources for new software-led services and product development over the next several years.

There can be no assurance that Printronix’s service and product development efforts will be successful, it will be able to cost effectively develop or manufacture these new services and products, or will be able to successfully market these services and products or that margins generated from sales of these services and products will recover costs of development efforts.

Further, Printronix’s inability to perform satisfactorily under service contracts for managed print services and other customer services may result in the loss of customers, loss of reputation and/or financial consequences that may have a material adverse impact our financial results and strategy.

Decreased consumption of supplies could negatively impact the results of operations of certain of our operating businesses.

Printronix expects approximately 48.8% of its revenue for its fiscal year ending March 31, 2022 will be derived from the sale of supplies.

Our future results of operations may be adversely affected if the consumption of Printronix’s supplies by end users of its products is lower than expected or declines, if there are declines in pricing, unfavorable mix and/or increased costs.

Further, changes of printing behavior driven by adoption of electronic processes and/or use of mobile devices such as tablets and smart phones by businesses could result in a reduction in printing, which could adversely impact consumption of supplies.

Due to the international nature of certain of our operating businesses, changes in a country’s or region’s political or economic conditions or other factors could negatively impact the results of operations of certain of our operating businesses.

We expect revenue derived from international sales will comprise approximately 58% of Printronix’s revenue for its fiscal year ending March 31, 2022.

Accordingly, Printronix’s future results could be adversely affected by a variety of factors, including changes in a specific country’s or region’s political or economic conditions;

foreign currency exchange rate fluctuations;

conflict and war;

trade protection measures;

local labor regulations;

import, export or other licensing requirements;

requirements related to making foreign direct investments;

and unexpected changes in legal or regulatory requirements.

As an example, in addition to indirectly raising transportation costs of the raw materials Printronix uses to manufacture its products, the invasion of Ukraine by Russia in March 2022 required Printronix to adapt its operations and require its customers in the region to pre-pay expenses such that Printronix can avoid accruing accounts receivable.

The duration and magnitude of the impacts of Russia’s invasion of Ukraine on Printronix’s business remain uncertain, and we will continue to monitor the situation and adapt our operations accordingly.

In addition, changes in tax laws and the ability to repatriate cash accumulated outside the United States in a tax efficient manner may adversely affect Printronix’s financial results, investment flexibility and operations.

Moreover, margins on international sales tend to be lower than those on domestic sales, and we believe international operations in emerging geographic markets will be less profitable than operations in the U.S.

and European markets, in part, because of the higher investment levels for marketing, selling and distribution required to enter these markets.

In many foreign countries, particularly those with developing economies, it is common for local business practices to be prohibited by laws and regulations applicable to Printronix, such as employment laws, fair trade laws or the Foreign Corrupt Practices Act.

Although Printronix implements policies and procedures designed to ensure compliance with these laws, our employees, contractors and agents, as well as those business partners to which Printronix outsources certain business operations, may take actions in violation of these policies.

Any such violation, even if prohibited by our policies, could have a material adverse effect on our business and reputation.

Because of the challenges in managing a geographically dispersed workforce, there also may be additional opportunities for employees to commit fraud or personally engage in practices which violate our policies and procedures.

Risks Related to our Common Stock

Our quarterly performance may be volatile, which in turn may adversely affect the trading price of our common stock.

Due to the nature of our intellectual property business and reliance on our operating businesses on intellectual property, legal expenses associated with acquisitions, uncertainties regarding the amount and timing of our receipt of license and other fees from potential infringers, stemming primarily from uncertainties regarding the outcome of enforcement actions, rates of adoption of our patented technologies, the growth rates of our existing licensees, and certain other factors, our revenues may vary significantly from quarter to quarter and period to period, which could make our business difficult to manage, adversely affect our business and results of operations, cause our quarterly and periodic results to fall below market expectations.

As a result of these factors, quarter-to-quarter comparisons of our financial results, especially in the short term, may have limited utility as an indicator of future performance.

Significant variation in our quarterly performance, compounded by the thin trading volume of our common stock, could significantly and adversely affect the trading price of our common stock.

Future sales of our common stock could reduce the market price of our common stock .

In the future, we may issue securities to raise cash for operations and patent portfolio investments, or pay for interests in additional subsidiary companies by using shares of our common stock or a combination of cash and shares of our common stock.

We may also issue securities convertible into our common stock.

Any of these events may dilute stockholders’ ownership interests in our company and have an adverse impact on the price of our common stock.

Sales of a substantial amount of our common stock in the public market, or the perception that these sales may occur, could reduce the market price of our common stock.

This could also impair our ability to raise additional capital through the sale of our securities.

Delaware law and our charter

documents contain provisions that could discourage or prevent a potential takeover of our company that might otherwise result

in our stockholders receiving a premium over the market price of their shares .

Provisions of

Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company by means of a tender offer,

proxy contest or otherwise, and the removal of incumbent officers and directors, more difficult.

Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover of our company that might otherwise result in our stockholders receiving a premium over the market price of their shares .

• Provisions of Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company by means of a tender offer, proxy contest or otherwise, and the removal of incumbent officers and directors, more difficult.

These provisions include:

Section 203 of the Delaware General

Corporation Law, which prohibits a merger with a 15%-or-greater stockholder, such as a party that has completed a successful

tender offer, until three years after that party became a 15%-or-greater stockholder;

amendment of our bylaws by the

stockholders requires a two-thirds approval of the outstanding shares;

the authorization in our certificate

of incorporation of undesignated preferred stock, which could be issued without stockholder approval in a manner designed

to prevent or discourage a takeover;

the general restriction in our

certificate of incorporation on any direct or indirect transfers of our common stock if the effect would be to (i) increase

the direct or indirect ownership of our common stock by any person or group from less than 4.899% to 4.899% or more of our

common stock;

or (ii) increase the percentage of our common stock owned directly or indirectly by a person or group owning

or deemed to own 4.899% or more of our common stock.

Together, these

provisions may make the removal of management more difficult and may discourage transactions that could otherwise involve payment

of a premium over prevailing market prices for our common stock.

Benefits Preservation Plan could inhibit a change in our control that may otherwise be favorable to our stockholders.

In March 2019,

our board of directors approved the adoption of a Tax Benefits Preservation Plan in order to protect our ability to utilize potential

tax assets, such as net operating loss carryforwards and tax credits, to offset potential future taxable income by discouraging

investors from acquiring ownership of our common stock in a manner that could trigger an “ownership change”

of Section 382 of the Code.

Our stockholders ratified the adoption of the Tax Benefits Preservation Plan in July 2019.

Under the terms

of the Tax Benefits Preservation Plan, in general, if a person or group acquires beneficial ownership of 4.9% or more of the outstanding

shares of our Common Stock without prior approval of our board of directors or without meeting certain exceptions, the rights

would become exercisable and our stockholders (other than the acquiring person) will have the right to purchase securities from

us at a discount to such securities’

fair market value, thus causing substantial dilution to the acquiring person.

result, the Tax Benefits Preservation Plan may have the effect of inhibiting or impeding a change in control not approved by our

board of directors and, notwithstanding its purpose, could adversely affect our stockholders’

ability to realize a premium

over the then-prevailing market price for our common stock in connection with such a transaction.

In addition, because our board

of directors may consent to certain transactions, the Tax Benefits Preservation Plan gives our board of directors significant

discretion over whether a potential acquirer’s efforts to acquire a large interest in us will be successful.

no assurance that the Tax Benefits Preservation Plan will prevent an “ownership change”

within the meaning of Section

382 of the Code, in which case we may lose all or most of the anticipated tax benefits associated with our prior losses.

We may fail to meet market

expectations because of fluctuations in quarterly operating results, which could cause the price of our common stock to decline .

revenues and operating results have fluctuated in the past and may continue to fluctuate significantly from quarter to quarter

in the future.

It is possible that in future periods, revenues could fall below the expectations of securities analysts or investors,

which could cause the market price of our common stock to decline.

The following are among the factors that could cause our operating

results to fluctuate significantly from period to period:

the dollar amount of agreements

executed in each period, which is primarily driven by the nature and characteristics of the technology being licensed and

the magnitude of infringement associated with a specific licensee;

the specific terms and conditions

of agreements executed in each period and the periods of infringement contemplated by the respective payments;

fluctuations in the total number

of agreements executed;

fluctuations in the sales results

or other royalty-per-unit activities of our licensees that impact the calculation of license fees due;

the timing of the receipt of periodic

license fee payments and/or reports from licensees;

fluctuations in the net number

of active licensees period to period;

costs related to investments,

alliances, licenses and other efforts to expand our operations;

the timing of payments under the

terms of any customer or license agreements into which our operating subsidiaries may enter;

we may elect to account for equity

investments in companies where our investment gives us the ability to exercise significant influence over the operating and

financial policies of the investee at fair value, which may result in significant fluctuations in operating results (unrealized

gains and losses) each period based on fluctuations in the stock price of our investments and the requirement to mark such

investments to market at each balance sheet date;

expenses related to, and the timing

and results of, patent filings and other enforcement proceedings relating to IP rights, as more fully described in this section;

new litigation or developments

in current litigation and the unpredictability of litigation results or settlements or appeals.

Technology company stock prices

are especially volatile, and this volatility may depress the price of our common stock .

The stock market

has experienced significant price and volume fluctuations, and the market prices of technology companies have been highly volatile.

We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including,

among others, the following:

announcements of developments

in our patent enforcement actions;

developments or disputes concerning

our or our competitors’

technological innovations;

developments in relationships

with licensees;

variations in our quarterly operating

our failure to meet or exceed

securities analysts’

expectations of our financial results;

a change in financial estimates

or securities analysts’

recommendations;

changes in management’s

or securities analysts’

estimates of our financial performance;

changes in market valuations of

similar companies;

concerns about sovereign debt

of the United States and the European Union;

announcements by us or our competitors

of significant contracts, investments, partnerships, joint ventures, capital commitments, new technologies, or patents;

failure to complete significant

transactions.

the NASDAQ-100 Technology Sector Index (NDXT) had a range of $4,030.77 - $7,563.77 during the 52 weeks ended December 31, 2020

and the NASDAQ Composite Index (IXIC) had a range of $6,860.67 - $12,899.42 over the same period.

Over the same period, our common

stock fluctuated within a range of $2.01 - $4.25.

As noted above,

our stock price, like many others, has fluctuated significantly in recent periods and if investors have concerns that our business,

operating results and financial condition will be negatively impacted by industry, global economic or other negative conditions,

our stock price could continue to fluctuate significantly in future periods.

we believe that fluctuations in our stock price during applicable periods can also be impacted by court rulings and/or other developments

in our patent licensing and enforcement actions.

Court rulings in patent enforcement actions are often difficult to understand,

even when favorable or neutral to the value of our patents and our overall business, and we believe that investors in the market

may overreact, causing fluctuations in our stock prices that may not accurately reflect the impact of court rulings on our business

operations and assets.

companies that have experienced volatility in the market price of their stock have been the objects of securities class action

If our common stock was the object of securities class action litigation, it could result in substantial costs and

a diversion of management’s attention and resources, which could materially harm our business and financial results.

We do not currently intend

to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment

will depend on appreciation in the price of our common stock.

23, 2016, our board of directors eliminated our dividend policy that provided for the discretionary payment of a total annual

cash dividend of $0.50 per share to holders of our common stock, payable in the amount of $0.125 per share per quarter, effective

as of February 23, 2016.

As a result, we do not anticipate paying any cash dividends to holders of our common stock in the foreseeable

Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the

only way to realize any future gains on their investments.

There is no guarantee that shares of our common stock will appreciate

in value or even maintain the price at which our stockholders have purchased their shares.

issuance of the Starboard Securities (defined below) to Starboard Value

LP, or Starboard, and its permitted transferees dilutes the ownership and relative voting power of holders of our common

stock and may adversely affect the market price of our common stock.

to a Securities Purchase Agreement with

Starboard, dated November 18, 2019, the Company sold to Starboard (i) 350,000 shares of its

newly designated Series A Preferred Stock and Series A Warrants to purchase up to 5,000,000 shares of common stock in 2019,

and (ii) Series B Warrants to purchase up to 100,000,000 shares of common stock in 2020.

investment by Starboard is referred to herein as the “Starboard Investment,”

and the Series A Preferred Stock, Series

A Warrants and Series B Warrants are referred to herein as, collectively, the “Starboard Securities.”

of December 31, 2020, the Series A Preferred Stock held by Starboard represents approximately 16% of our outstanding common stock

on an as-converted basis.

Because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together

with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series

A Preferred Stock to Starboard effectively reduces the relative voting power of the holders of our common stock.

addition, the conversion and/or exercise of the Starboard Securities into common stock would dilute the ownership interest of

existing holders of our common stock.

Furthermore, any sales in the public market of the common stock issuable upon conversion

or exercise of the Starboard Securities could adversely affect prevailing market prices of our common stock.

Pursuant to a customary

Registration Rights Agreement with Starboard, we have registered for resale under the

Securities Act of 1933 of 130% of the shares of common stock underlying Starboard Securities outstanding as of November 9, 2020.

In addition, we have agreed to provide (i) certain demand

registration rights with respect to the Starboard Securities and (ii) additional

registration rights with respect to the shares of common stock issued upon the conversion or exercise of the Starboard

Securities, to the extent not included in previous registration statements.

These registrations may facilitate the resale of such securities into the public market, and any such resale would increase

the number of shares of our common stock available for public trading.

Sales by Starboard of a substantial number of shares of

our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on

the price of our common stock.

Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of,

our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders

of our Series A Preferred Stock differing from those of our common stockholders and delay or prevent an attempt to take over the

Starboard and

the other holders of our Series A Preferred Stock have a liquidation preference entitling them to be paid, before any payment

may be made to holders of our common stock in connection with a liquidation event, an amount per share of Series A Preferred Stock

equal to the greater of (i) the stated value thereof plus accrued and unpaid dividends, and (ii) the amount that would have been

received had such share of Series A Preferred Stock been converted into common stock immediately prior to such liquidation event.

Holders of Series

A Preferred Stock are entitled to a preferential cumulative dividend at the rate of 3.0% per annum, payable quarterly in arrears.

Upon the consummation of a suitable investment or acquisition by the Company, such investment to be identified and approved by

each of the Company and Starboard, the dividend rate will increase to 8.0% per annum.

of our Series A Preferred Stock also have certain redemption rights, including the right to require us to repurchase all or any

portion of the Series A Preferred Stock during certain specified periods and subject to certain conditions set forth in the Certificate

of Designations, Preferences, and Rights of Series A Convertible Preferred Stock, or the Certificate of Designations.

of the Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion

of the Series A Preferred Stock upon certain change of control events.

These dividend

and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital,

capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The preferential rights could

also result in divergent interests between Starboard and holders of our common stock.

Furthermore, a sale of our Company, as a

change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition

of the Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.

has certain rights, including the ability to designate up to three members of our board of directors.

The transaction

documents entered into in connection with the Starboard Investment grant to Starboard consent rights with respect to certain actions

by us, including:

amending our organizational documents

in a manner that would have an adverse effect on the Series A Preferred Stock;

increasing the maximum number

of directors on our board to more than seven persons, subject to the terms of the Governance Agreement entered into in connection

with the Securities Purchase Agreement, or the Governance Agreement.

Securities Purchase Agreement also imposes a number of affirmative and negative covenants on us.

addition, the terms of the Governance Agreement grant Starboard certain rights to designate directors to be nominated for election

by holders of our common stock.

For so long as certain criteria set forth in the Governance Agreement are satisfied, including

that Starboard beneficially own, in the aggregate, at least 4.0% of the Company’s then-outstanding common stock (on an as-converted

basis, if applicable), Starboard has the right to designate up to three directors for election to our Board.

directors designated by Starboard also are entitled to serve on committees of our Board, subject to applicable law and stock exchange

• Section 203 of the Delaware General Corporation Law, which prohibits a merger with a 15%-or-greater stockholder, such as a party that has completed a successful tender offer, until three years after that party became a 15%-or-greater stockholder;

• the authorization in our certificate of incorporation of undesignated preferred stock, which could be issued without stockholder approval in a manner designed to prevent or discourage a takeover;

• the general restriction in our certificate of incorporation on any direct or indirect transfers of our common stock if the effect would be to (i) increase the direct or indirect ownership of our common stock by any person or group from less than 4.899% to 4.899% or more of our common stock;

or (ii) increase the percentage of our common stock owned directly or indirectly by a person or group owning or deemed to own 4.899% or more of our common stock.

Together, these provisions may make the removal of management more difficult and may discourage transactions that could otherwise involve payment of a premium over prevailing market prices for our common stock.

We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

On February 23, 2016, our board of directors eliminated our dividend policy that provided for the discretionary payment of a total annual cash dividend of $0.50 per share to holders of our common stock, payable in the amount of $0.125 per share per quarter, effective as of February 23, 2016.

As a result, we do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future.

Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

The issuance of the Starboard Securities (defined below) to Starboard and its permitted transferees dilutes the ownership and relative voting power of holders of our common stock and may adversely affect the market price of our common stock.

Pursuant to a Securities Purchase Agreement with Starboard, dated November 18, 2019, the Company sold to Starboard (i) 350,000 shares of its newly designated Series A Preferred Stock and Series A Warrants to purchase up to 5 million shares of common stock in 2019, and (ii) Series B Warrants to purchase up to 100 million shares of common stock in 2020.

The investment by Starboard is referred to herein as the “Starboard Investment,” and the Series A Preferred Stock, Series A Warrants and Series B Warrants are referred to herein as, collectively, the “Starboard Securities.”

As of December 31, 2021, the Series A Preferred Stock held by Starboard represents approximately 16% of our outstanding common stock on an as-converted basis.

Because holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our common stock on all matters submitted to a vote of the holders of our common stock, the issuance of the Series A Preferred Stock to Starboard effectively reduces the relative voting power of the holders of our common stock.

In addition, the conversion and/or exercise of the Starboard Securities into common stock would dilute the ownership interest of existing holders of our common stock.

Furthermore, any sales in the public market of the common stock issuable upon conversion or exercise of the Starboard Securities could adversely affect prevailing market prices of our common stock.

Pursuant to a customary Registration Rights Agreement with Starboard, we have registered for resale under the Securities Act of 1933 of 130% of the shares of common stock underlying Starboard Securities outstanding as of November 9, 2020.

In addition, we have agreed to provide (i) certain demand registration rights with respect to the Starboard Securities and (ii) additional registration rights with respect to the shares of common stock issued upon the conversion or exercise of the Starboard Securities, to the extent not included in previous registration statements.

These registrations may facilitate the resale of such securities into the public market, and any such resale would increase the

number of shares of our common stock available for public trading.

Sales by Starboard of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.

Our Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of, our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders of our Series A Preferred Stock differing from those of our common stockholders and delay or prevent an attempt to take over the Company.

Starboard and the other holders of our Series A Preferred Stock have a liquidation preference entitling them to be paid, before any payment may be made to holders of our common stock in connection with a liquidation event, an amount per share of Series A Preferred Stock equal to the greater of (i) the stated value thereof plus accrued and unpaid dividends, and (ii) the amount that would have been received had such share of Series A Preferred Stock been converted into common stock immediately prior to such liquidation event.

Holders of Series A Preferred Stock are entitled to a preferential cumulative dividend at the rate of 3.0% per annum, payable quarterly in arrears.

Upon the consummation of a suitable investment or acquisition by the Company, such investment to be identified and approved by each of the Company and Starboard, the dividend rate will increase to 8.0% per annum.

The holders of our Series A Preferred Stock also have certain redemption rights, including the right to require us to repurchase all or any portion of the Series A Preferred Stock during certain specified periods and subject to certain conditions set forth in the Certificate of Designations, Preferences, and Rights of Series A Convertible Preferred Stock, or the Certificate of Designations.

Holders of the Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series A Preferred Stock upon certain change of control events.

These dividend and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The preferential rights could also result in divergent interests between Starboard and holders of our common stock.

Furthermore, a sale of our Company, as a change of control event, may require us to repurchase Series A Preferred Stock, which could have the effect of making an acquisition of the Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.

Starboard has certain rights, including the ability to designate up to three members of our board of directors.

The transaction documents entered into in connection with the Starboard Investment grant to Starboard consent rights with respect to certain actions by us, including:

• amending our organizational documents in a manner that would have an adverse effect on the Series A Preferred Stock;

• increasing the maximum number of directors on our board to more than seven persons, subject to the terms of the Governance Agreement entered into in connection with the Securities Purchase Agreement, or the Governance Agreement.

The Securities Purchase Agreement also imposes a number of affirmative and negative covenants on us.

In addition, the terms of the Governance Agreement grant Starboard certain rights to designate directors to be nominated for election by holders of our common stock.

For so long as certain criteria set forth in the Governance Agreement are satisfied, including that Starboard beneficially own, in the aggregate, at least 4.0% of the Company’s then-outstanding common stock (on an as-converted basis, if applicable), Starboard has the right to designate up to three directors for election to our Board.

The directors designated by Starboard also are entitled to serve on committees of our Board, subject to applicable law and stock exchange rules.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors