19 unchanged sentences
OTHER INFORMATION
−Removed: In connection with Lawrence Wesley Golby’s resignation in November 2022, Mr.
−Removed: Golby and ARG entered into a Separation Agreement and General Release of Claims (the “Golby Separation Agreement”), pursuant to which, Mr.
−Removed: Golby became entitled to receive (i) base salary continuation from November 28, 2022 through February 17, 2023, which totaled $512,000 (ii) a lump sum cash payment equal to $410,096.10, and (iii) payment for three months of both the employer and employee portions of monthly COBRA, which totaled $10,000.
−Removed: In exchange, Mr.
−Removed: Golby released ARG and the Company of any and all claims other than those that by law may not be waived or that relate to Mr.
−Removed: Golby’s vested benefits or the terms of the Golby Separation Agreement.
−Removed: Pursuant to the Golby Separation Agreement, Mr.
−Removed: Golby agreed to certain standstill provisions through February 17, 2023.
−Removed: This agreement is filed herewith, refer to Part IV, Item 15, “Exhibits” below.
+Added: During the three months ended December 31, 2023, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Acacia Research Group adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
8 unchanged sentences
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
−Removed: In accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2023 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year.
+Added: In accordance with General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2024 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
9 unchanged sentences
PCAOB ID# 248 )
−Removed: Report of Independent Registered Public Accounting Firm (BDO USA, LLP;
−Removed: New York, NY;
−Removed: PCAOB ID# 243 )
Consolidated Balance Sheets as of December 31, 2023 and 2022
10 unchanged sentences
Number Description
−Removed: 2.1** Agreement and Plan of Merger, dated November 22, 2011, by and among Acacia Research Group LLC, Apollo Patent Corp., Adaptix, Inc., and Baker Communications Fund II (QP), L.P., solely in its capacity as representative for the shareholders of Adaptix, Inc.
−Removed: (incorporated by reference to the Current Report on Form 8-K/A filed on January 19, 2012)
−Removed: 2.2 Transaction Agreement, dated as of June 4, 2020, between LF Equity Income Fund and Acacia Research Corporation (incorporated by reference to the Current Report on Form 8-K filed on June 10, 2020)
3.1 Third Amended and Restated Certificate of Incorporation of Acacia Research Corporation (incorporated by reference to the Current Report on Form 8-K filed on May 20, 2022)
−Removed: 3.2 Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock, as filed with the Delaware Secretary of State on January 7, 2020 (incorporated by reference to Appendix B to the Definitive Proxy Statement on Schedule 14A filed on January 17, 2020)
−Removed: 3.3 Fourth Amended and Restated Bylaws (incorporated by reference to the Current Report on Form 8-K filed on May 20, 2022)
−Removed: 4.1 Tax Benefits Preservation Plan, dated as of March 16, 2019, by and between Acacia Research Corporation and Computershare Inc., as Rights Agent, which includes the Form of Certificate of Designation, Preferences and Rights of Participating Preferred Stock as Exhibit A, the Form of Rights Certificate as Exhibit B and the Summary of Terms as Exhibit C (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 15, 2019)
−Removed: 4.2 Description of Acacia Research Corporation Capital Stock (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020)
−Removed: 4.3 Form of Senior Secured Note (incorporated by reference to the Current Report on Form 8-K filed on October 6, 2021 )
−Removed: 4.4 Form of Series A Warrant to Purchase Common Stock (incorporated by reference to Appendix C to the Definitive Proxy Statement on Schedule 14A filed on January 17, 2020)
−Removed: 4.5 Form of Series B Warrant to Purchase Common Stock (incorporated by reference to Appendix D to the Definitive Proxy Statement on Schedule 14A filed on January 17, 2020)
−Removed: 4.6 Form of Subscription Rights Certificate (incorporated by reference to the Current Report on Form 8-K filed on February 14, 2023)
−Removed: 4.7 Form of First Amendment to Series B Warrant to Purchase Common Stock (incorporated by reference to the Current Report on Form 8-K filed on August 24, 2022)
−Removed: 4.8 Form of Second Amendment to Series B Warrant to Purchase Common Stock (incorporated by reference to the Current Report on Form 8-K filed on September 15, 2022)
−Removed: 4.9 Form of Third Amendment to Series B Warrant to Purchase Common Stock (incorporated by reference to the Current Report on Form 8-K filed on September 30, 2022)
−Removed: 10.1* Form of Indemnification Agreement (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020)
−Removed: 10.2* Acacia Research Corporation Amended and Restated Executive Severance Policy (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 26, 2009)
−Removed: 10.3 Form of Purchase Agreement (incorporated by reference to the Current Report on Form 8-K filed on February 16, 2012)
−Removed: 10.4* 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Annex A to the Definitive Proxy Statement on Schedule 14A filed on April 24, 2013)
−Removed: 10.5* Form of Stock Issuance Agreement under the 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to the Current Report on Form 8-K on May 22, 2013)
−Removed: 10.6* 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to the Quarterly Report on Form 10-Q for the period ended June 30, 2016, filed on August 9, 2016)
−Removed: 10.7* Form of Stock Option Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 10, 2017)
−Removed: 10.8* Form of Stock Issuance Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 10, 2017)
−Removed: 10.9* Form of Profits Interest Agreement Under AIP Operation LLC Profits Interest Plan (incorporated by reference to the Quarterly Report on Form 10-Q for the period ended March 31, 2017, filed on May 10, 2017)
+Added: 3.2 Fifth Amended and Restated Bylaws of Acacia Research Corporation (incorporated by reference to Exhibit 3.1 to Amendment No.1 to the Company’s Current Report on Form 8-K filed on August 2, 2023)
+Added: 3.3 Certificate of Retirement of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Amendment No.
+Added: 1 to the Company’s Current Report on Form 8-K filed on August 2, 2023)
+Added: 4.1 Description of Acacia Research Corporation Capital Stock (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020)
+Added: 10.1* Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020)
+Added: 10.2* Acacia Research Corporation Amended and Restated Executive Severance Policy (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 26, 2009)
+Added: 10.3* 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Annex A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 24, 2013)
+Added: 10.4* Form of Stock Issuance Agreement under the 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K on May 22, 2013)
+Added: 10.5* 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2016, filed on August 9, 2016)
+Added: 10.6* Form of Stock Option Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 10, 2017)
+Added: 10.7* Form of Stock Issuance Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 10, 2017)
+Added: 10.8* Form of Profits Interest Agreement Under AIP Operation LLC Profits Interest Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2017, filed on May 10, 2017)
10.9* Employment Agreement, dated June 19, 2020, by and between Acacia Research Group, LLC and Marc W.
−Removed: Booth (incorporated by reference to the Current Report on Form 8-K filed on June 25, 2020)
−Removed: 10.11* Employment Agreement, dated September 3, 2019, by and among Acacia Research Group LLC, Acacia Research Corporation and Clifford Press (incorporated by reference to the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed on November 12, 2019)
−Removed: 10.12* Employment Agreement, dated September 3, 2019, by and among Acacia Research Group LLC, Acacia Research Corporation and Alfred Tobia (incorporated by reference to the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed on November 12, 2019)
−Removed: 10.13* Employment Agreement, dated June 4, 2020, by and between Acacia Research Group, LLC and Richard Rosenstein (incorporated by reference to the Current Report on Form 8-K filed on June 4, 2020)
−Removed: 10.14* Employment Agreement, dated June 4, 2020, by and between Acacia Research Group, LLC and Meredith Simmons (incorporated by reference to the Current Report on Form 8-K filed on June 4, 2020)
−Removed: 10.15* Employment Agreement, effective March 16, 2021, by and between Acacia Research Group, LLC and Jason Soncini (incorporated by reference to the Current Report on Form 8-K filed on March 22, 2021)
−Removed: 10.16* Employment Agreement, effective March 10, 2022, among Acacia Research Corporation, Acacia Research Group LLC, and Martin D.
−Removed: (incorporated by reference to the Current Report on Form 8-K filed on March 15, 2022)
−Removed: 10.17*# Separation Agreement and General Release of Claims, effective November 28, 2022, among Acacia Research Group LLC, and Lawrence Wesley Golby (filed herewith as Exhibit 10.1 pursuant to Part II, Item 9B)
−Removed: 10.18*# Consulting Agreement, effective January 28, 2023, among Acacia Research Corporation and Richard Rosenstein (filed herewith as Exhibit 10.2)
−Removed: 10.19 Securities Purchase Agreement dated November 18, 2019, by and among Acacia Research Corporation, Starboard Value LP and the investors listed on the Schedule of Buyers attached thereto (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A filed on January 17, 2020)
−Removed: 10.20 Supplemental Agreement, dated as of June 4, 2020, between Starboard Value, L.P.
−Removed: and Acacia Research Corporation (incorporated by reference to the Current Report on Form 8-K filed on June 10, 2020)
−Removed: 10.21 Exchange Agreement, dated June 30, 2020, among Acacia Research Corporation, Merton Acquisition HoldCo LLC and Starboard Value LP (incorporated by reference to the Current Report on Form 8-K filed on July 7, 2020)
−Removed: 10.22 Stock Pledge Agreement, dated June 30, 2020, entered into by Acacia Research Group LLC, Advanced Skeletal Innovations LLC and Saint Lawrence Communications LLC in favor of Starboard Value Intermediate Fund LP, as collateral agent (incorporated by reference to the Current Report on Form 8-K filed on July 7, 2020)
−Removed: 10.23 Guaranty, dated June 30, 2020, entered into by the Guarantors (as defined therein) in favor of the Holders (as defined therein) (incorporated by reference to the Current Report on Form 8-K filed on July 7, 2020)
−Removed: 10.24 Release of Security Interests in Patents, dated June 30, 2020, between the Releasees (as defined therein) and Starboard Value Intermediate Fund LP, as collateral agent.
−Removed: (incorporated by reference to the Current Report on Form 8-K filed on July 7, 2020)
−Removed: 10.25 Second Supplemental Agreement, dated as of March 31, 2021, between Starboard Value, L.P., Acacia Research Corporation, Merton Acquisition Holdco LLC and certain other direct and indirect subsidiaries of the Company (incorporated by reference to the Current Report on Form 8-K filed on April 6, 2021)
−Removed: 10.26 Third Supplemental Agreement, dated as of June 30, 2021, between Starboard Value, L.P., Acacia Research Corporation, Merton Acquisition Holdco LLC and certain other direct and indirect subsidiaries of the Company (incorporated by reference to the Current Report on Form 8-K filed on July 7, 2021)
−Removed: 10.27 Fourth Supplemental Agreement, dated as of September 30, 2021, between Starboard Value, L.P., Acacia Research Corporation, Merton Acquisition Holdco LLC and certain other direct and indirect subsidiaries of the Company (incorporated by reference to the Current Report on Form 8-K filed on October 6, 2021)
−Removed: 10.28 Note Amendment Agreement, dated as of November 15, 2021, between Starboard Value, L.P., on behalf of the Starboard Funds, Acacia Research Corporation and Merton Acquisition Holdco LLC (incorporated by reference to the Current Report on Form 8-K filed on November 19, 2021)
−Removed: 10.29 Supplement No.
−Removed: 5 and Amendment to the Stock Pledge Agreement, dated November 15, 2021, by and among certain direct and indirect subsidiaries of Acacia Research Corporation and Starboard Value Intermediate Fund LP, as Collateral Agent (incorporated by reference to the Current Report on Form 8-K filed on November 19, 2021)
−Removed: 10.30 Fifth Supplemental Agreement, dated as of November 30, 2021, between Starboard Value, L.P., on behalf of the Starboard Funds, Acacia Research Corporation and Merton Acquisition Holdco LLC (incorporated by reference to the Current Report on Form 8-K filed on December 6, 2021)
−Removed: 10.31 Governance Agreement dated November 18, 2019 and amended January 7, 2020, by and among Acacia Research Corporation and the entities and natural persons set forth on the signature pages thereto (incorporated by reference to Appendix G to the Definitive Proxy Statement on Schedule 14A filed on January 17, 2020)
−Removed: 10.32 Lease Agreement dated June 7, 2019, by and between Acacia Research Corporation and Jamboree Center 4 LLC (incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020)
−Removed: 10.33 First Amendment of Lease, dated as of August 5, 2021, between Sage Realty Corporation and Acacia Research Corporation (incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed on November 15, 2021)
−Removed: 10.34 Sixth Supplemental Agreement, dated as of January 31, 2022, among Starboard Value, L.P., on behalf of the Starboard Funds, Acacia Research Corporation and Merton Acquisition Holdco LLC (incorporated by reference to the Current Report on Form 8-K filed on February 4, 2022)
−Removed: 10.35 Seventh Supplemental Agreement, dated as of April 14, 2022, among Starboard Value, L.P., on behalf of the Starboard Funds, Acacia Research Corporation and Merton Acquisition Holdco LLC (incorporated by reference to the Current Report on Form 8-K filed on April 20, 2022)
−Removed: 10.36 Eighth Supplemental Agreement, dated as of July 15, 2022, among Starboard Value, L.P., on behalf of the Starboard Funds, Acacia Research Corporation and Merton Acquisition Holdco LLC (incorporated by reference to the Current Report on Form 8-K filed on July 19, 2022)
−Removed: 10.37 Recapitalization Agreement dated October 30, 2022, by and among Acacia Research Corporation, Starboard Value Partners LP and the investors listed on the Schedule of Investors attached thereto (incorporated by reference to the Current Report on Form 8-K filed on November 1, 2022)
−Removed: 10.38 Amended and Restated Registration Rights Agreement dated as of February 14, 2023, by and among Acacia Research Corporation and the investors listed on the Schedule of Buyers attached thereto (incorporated by reference to the Current Report on Form 8-K filed on February 14, 2023)
+Added: Booth (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 25, 2020)
+Added: 10.10* Employment Agreement, dated June 4, 2020, by and between Acacia Research Group, LLC and Richard Rosenstein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 4, 2020)
+Added: 10.11* Separation Agreement and General Release of Claims, effective November 28, 2022, among Acacia Research Group LLC, and Lawrence Wesley Golby (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 17, 2023)
+Added: 10.12* Consulting Agreement, effective January 28, 2023, among Acacia Research Corporation and Richard Rosenstein (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 17, 2023)
+Added: 10.13* Employment Agreement, effective March 16, 2021, by and between Acacia Research Group, LLC and Jason Soncini (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 22, 2021)
+Added: 10.14* Form of Restricted Stock Unit Award Agreement ( incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2023, filed on August 3, 2023 )
+Added: 10.15* Form of Performance-Based Restricted Stock Unit Award Agreement ( incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2023, file d on August 3, 2023 )
+Added: 10.16* Amended and Restated Employment Agreement, effective February 13, 2024, by and between Acacia Research Corporation and Martin D.
+Added: (incorporated by reference to Exhibit 10.1 to the Company's Current Report on For m 8-K filed on February 1 4 , 2024 )
+Added: 10.17*# Employment Agreement, effective May 3, 2023, among Acacia Research Corporation and Robert Rasamny (filed herewith as Exhibit 10.
+Added: 10.18 Recapitalization Agreement dated October 30, 2022, by and among Acacia Research Corporation, Starboard Value Partners LP and the investors listed on the Schedule of Investors attached thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 1, 2022)
+Added: 10.19 Amended and Restated Registration Rights Agreement dated as of February 14, 2023, by and among Acacia Research Corporation and the investors listed on the Schedule of Buyers attached thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 14, 2023)
+Added: 10.20 Purchase and Sale Agreement dated February 16, 2024 by and between Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC, as Sellers, and BE Anadarko II, LLC, as Buyer (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 20, 2024)
+Added: 10.21# Services Agreement dated December 12, 2023 by and between Starboard Value LP and Acacia Research Corporation (filed herewith as Exhibit 10.
16.1 Letter from BDO USA LLC to the SEC dated September 7, 2022 (incorporated by reference to the Current Report on Form 8-K filed on September 7, 2022)
1 unchanged sentence
Consent of Independent Registered Public Accounting Firm, GRANT THORNTON LLP
−Removed: Consent of Independent Registered Public Accounting Firm, BDO USA, LLP
24.1 Power of Attorney (included in the signature page hereto).
3 unchanged sentences
Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
+Added: 97.1# Acacia Research Corporation Compensation Recovery Policy
The following financial statements from the Company’s Annual Report on Form 10-K for the years ended December 31, 2023 and 2022, formatted in Inline Extensible Business Reporting Language (iXBRL) include:
3 unchanged sentences
* The referenced exhibit is a management contract, compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(a)(3) of Form 10-K.
−Removed: ** Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24-b-2 of the Securities Exchange Act of 1934, as amended.
−Removed: The omitted material has been separately filed with the Securities and Exchange Commission.
+Added: ** This filing excludes certain schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request;
+Added: provided, however, that the registrant may request confidential treatment for any schedules or exhibits so furnished.
# Filed herewith.
8 unchanged sentences
/s/ Martin D.
−Removed: Interim Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)
+Added: Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)
POWER OF ATTORNEY
5 unchanged sentences
/s/ Martin D.
−Removed: Interim Chief Executive Officer March 17, 2023
+Added: Chief Executive Officer and Director March 14, 2024
(Principal Executive Officer)
7 unchanged sentences
Maureen O'Connell
−Removed: /s/ Jonathan Sagal Director March 17, 2023
−Removed: Jonathan Sagal
+Added: /s/ Geoffrey Ribar Director March 14, 2024
+Added: Geoffrey Ribar
+Added: /s/ Ajay Sundar Director March 14, 2024
/s/ Katharine Wolanyk Director March 14, 2024
3 unchanged sentences
Acacia Research Corporation
−Removed: Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Acacia Research Corporation (the “Company”) as of December 31, 2021, the related consolidated statements of operations, series A redeemable convertible preferred stock and stockholders’ equity, and cash flows for the year then ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for the year then ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: Opinion on the financial statements
+Added: We have audited the accompanying consolidated balance sheets of Acacia Research Corporation and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, Series A redeemable convertible preferred stock and stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
−Removed: Our audit includes performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also includes evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
1 unchanged sentence
(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Fair value measurement of the embedded derivative in the Series A Redeemable Convertible Preferred Stock
−Removed: As described further in Notes 8 and 9 to the consolidated financial statements, on October 30, 2022, the Company entered into a Recapitalization Agreement with Starboard and the Investors, pursuant to which, among other things, the Company and Starboard agreed to enter into a series of transactions to restructure Starboard's existing investments in the Company in order to simplify the Company's capital structure.
−Removed: In connection with the Recapitalization Agreement, the Company changed its methodology to an as-converted value (Level 3), based on an expected Series A Convertible Preferred Stock conversion date on or prior to July 14, 2023.
+Added: As described further in Note 10 and Note 11 to the consolidated financial statements, certain features of the Series A Redeemable Convertible Preferred Stock should be bifurcated and accounted for as a derivative.
+Added: The Company determined that the embedded features would continue to be bifurcated from the host Series A Redeemable Convertible Preferred Stock and accounted for separately as a compound derivative until its conversion to common stock on July 13, 2023 in connection with Recapitalization agreement.
We identified the fair value measurement of the embedded derivative in the Series A Redeemable Convertible Preferred Stock as a critical audit matter.
−Removed: The principal consideration for our determination that the fair value measurement of the embedded derivative in the Series A Redeemable Convertible Preferred Stock is a critical audit matter are as follows.
−Removed: There is limited observable market data available for the embedded derivative as it is a complex financial instrument and, as such, the fair value measurement requires management to make complex judgments in order to identify and select the significant assumptions, which include the (i) coupon rate, (ii) conversion ratio, (iii) conversion date, and (iv) discount rate.
+Added: The principal consideration for our determination that the fair value measurement of the embedded derivative in the Series A Redeemable Convertible Preferred Stock as a critical audit matter is as follows.
+Added: There is limited observable market data available for the embedded derivative as it is a complex financial instrument and, as such, the fair value measurement requires management to make complex judgments in order to identify and select the significant assumptions, which include, among other things, the credit-risk adjusted discount rate.
In addition, the fair value measurement of the embedded derivative requires the use of complex financial models.
−Removed: As a result, obtaining sufficient appropriate audit evidence related to the fair value measurement requires significant auditor subjectivity.is management
+Added: As a result, obtaining sufficient appropriate audit evidence related to the fair value measurement requires significant auditor subjectivity.
Our audit procedures related to the fair value measurement of the embedded derivative included the following, among others.
−Removed: • We obtained an understanding of the design and tested the implementation of relevant controls over estimating the fair value of the embedded derivative.
• With the assistance of our firm valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and assumptions by:
1 unchanged sentence
/s/ GRANT THORNTON LLP
−Removed: We served as the Company’s auditor since 2022.
+Added: We have served as the Company’s auditor since 2022.
New York, New York
March 14, 2024
−Removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
−Removed: Shareholders and Board of Directors
ACACIA RESEARCH CORPORATION
−Removed: Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Acacia Research Corporation (the “Company”) as of December 31, 2021, the related consolidated statements of operations, series A redeemable convertible preferred stock and stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Basis for Opinion
−Removed: These consolidated financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ BDO USA, LLP
−Removed: We have served as the Company’s auditor from 2021 to 2022.
−Removed: March 31, 2022
−Removed: ACACIA RESEARCH CORPORATION
CONSOLIDATED BALANCE SHEETS
9 unchanged sentences
Total current assets 554,512 427,985
−Removed: Long-term restricted cash — 418
Property, plant and equipment, net 2,356 3,537
+Added: Oil and natural gas properties, net 25,117 —
Goodwill 8,990 7,541
Other intangible assets, net 33,556 36,658
−Removed: Leased right-of-use assets 2,005 2,027
+Added: Operating lease, right-of-use assets 1,872 2,005
+Added: Deferred income tax assets, net 2,915 —
Other non-current assets 4,227 5,202
10 unchanged sentences
Deferred revenue, net of current portion 458 568
−Removed: Series A warrant liabilities — 11,291
Series A embedded derivative liabilities — 16,835
2 unchanged sentences
Deferred income tax liabilities, net — 742
+Added: Revolving credit facility 10,525 —
Other long-term liabilities 3,581 1,675
3 unchanged sentences
stated value $ 100 per share;
−Removed: 350,000 shares authorized, issued and outstanding as of December 31, 2022 and 2021;
−Removed: aggregate liquidation preference of $ 35,000 as of December 31, 2022 and 2021
−Removed: 19,924 14,753
+Added: zero and 350,000 shares authorized, issued and outstanding as of December 31, 2023 and 2022, respectively;
+Added: aggregate liquidation preference of zero and $ 35,000 as of December 31, 2023 and 2022, respectively
Stockholders' equity:
5 unchanged sentences
99,895,473 and 43,484,867 shares issued and outstanding as of December 31, 2023 and 2022, respectively
−Removed: Treasury stock, at cost, 16,183,703 and 5,388,469 shares as of December 31, 2022 and 2021, respectively
+Added: Treasury stock, at cost, 16,183,703 shares as of December 31, 2023 and 2022
( 98,258 ) ( 98,258 )
12 unchanged sentences
Industrial operations 35,098 39,715
+Added: Energy operations 848 —
Total revenues 125,102 59,223
1 unchanged sentence
Cost of revenues - intellectual property operations 34,164 18,029
−Removed: Cost of sales - industrial operations 19,359 7,407
+Added: Cost of revenues - industrial operations 18,009 19,359
+Added: Cost of production - energy operations 656 —
Engineering and development expenses - industrial operations 735 626
2 unchanged sentences
Total costs and expenses 104,166 99,315
−Removed: Operating (loss) income ( 40,092 ) 14,545
−Removed: Other (expense) income:
+Added: Operating income (loss) 20,936 ( 40,092 )
+Added: Other income (expense):
Equity securities investments:
Change in fair value of equity securities 31,423 ( 263,695 )
−Removed: Gain on sale of equity securities 125,318 116,129
+Added: (Loss) gain on sale of equity securities ( 10,930 ) 125,318
Earnings on equity investment in joint venture 4,167 42,531
−Removed: Net realized and unrealized (loss) gain ( 95,846 ) 207,186
−Removed: Change in fair value of investment — ( 2,752 )
−Removed: Gain on sale of investment — 3,591
+Added: Net realized and unrealized gain (loss) 24,660 ( 95,846 )
Change in fair value of the Series A and B warrants and embedded derivatives 8,241 13,102
−Removed: Loss on foreign currency exchange ( 3,324 ) ( 89 )
+Added: Gain (loss) on foreign currency exchange 53 ( 3,324 )
Interest expense on Senior Secured Notes ( 1,930 ) ( 6,432 )
Interest income and other, net 15,466 5,442
−Removed: Total other (expense) income ( 87,058 ) 160,107
−Removed: (Loss) income before income taxes ( 127,150 ) 174,652
−Removed: Income tax benefit (expense) 16,211 ( 24,287 )
−Removed: Net (loss) income including noncontrolling interests in subsidiaries ( 110,939 ) 150,365
+Added: Total other income (expense) 46,490 ( 87,058 )
+Added: Income (loss) before income taxes 67,426 ( 127,150 )
+Added: Income tax benefit 1,504 16,211
+Added: Net income (loss) including noncontrolling interests in subsidiaries 68,930 ( 110,939 )
Net income attributable to noncontrolling interests in subsidiaries ( 1,870 ) ( 14,126 )
−Removed: Net (loss) income attributable to Acacia Research Corporation $ ( 125,065 ) $ 149,197
−Removed: (Loss) income per share:
−Removed: Net (loss) income attributable to common stockholders - Basic $ ( 133,035 ) $ 118,804
+Added: Net income (loss) attributable to Acacia Research Corporation $ 67,060 $ ( 125,065 )
+Added: Income (loss) per share:
+Added: Net income (loss) attributable to common stockholders - Basic $ 55,140 $ ( 133,035 )
Weighted average number of shares outstanding - Basic 75,296,025 42,460,504
−Removed: Basic net (loss) income per common share $ ( 3.13 ) $ 2.43
−Removed: Net (loss) income attributable to common stockholders - Diluted $ ( 133,035 ) $ 188,224
+Added: Basic net income (loss) per common share $ 0.73 $ ( 3.13 )
+Added: Net income (loss) attributable to common stockholders - Diluted $ 53,208 $ ( 133,035 )
Weighted average number of shares outstanding - Diluted 92,411,818 42,460,504
−Removed: Diluted net (loss) income per common share $ ( 3.13 ) $ 1.91
+Added: Diluted net income (loss) per common share $ 0.58 $ ( 3.13 )
The accompanying notes are an integral part of these consolidated financial statements.
9 unchanged sentences
Balance at December 31, 2022 350,000 $ 19,924 43,484,867 $ 43 $ ( 98,258 ) $ 663,284 $ ( 306,789 ) $ 11,042 $ 269,322
−Removed: Net (loss) income including
+Added: Net income including
noncontrolling interests in
4 unchanged sentences
Redeemable Convertible
−Removed: Preferred Stock to
−Removed: redemption value — 5,171 — — — ( 5,171 ) — — ( 5,171 )
−Removed: Dividend on Series A
+Added: Preferred Stock to redemption value — 3,230 — — — ( 3,230 ) — — ( 3,230 )
+Added: Dividend on Series A Redeemable
+Added: Convertible Preferred Stock — — — — — ( 1,400 ) — — ( 1,400 )
+Added: Conversion of Series A
Redeemable Convertible
−Removed: Preferred Stock — — — — — ( 2,799 ) — — ( 2,799 )
−Removed: Exercise of Series A warrants — — 5,000,000 5 — 20,645 — — 20,650
+Added: Preferred Stock to common stock ( 350,000 ) ( 23,154 ) 9,616,746 10 — 36,023 — — 36,033
+Added: Exercise of Series B warrants — — 31,506,849 32 — 129,462 — — 129,494
+Added: Stock options exercised — — 67,500 — — 235 — — 235
+Added: Issuance of common stock from the
+Added: Rights Offering — — 15,068,753 15 — 79,096 — — 79,111
Issuance of common stock for
−Removed: vesting of restricted stock
−Removed: units — — 646,668 — — — — — —
+Added: vesting of restricted stock units — — 327,684 — — — — — —
Issuance of common stock for
−Removed: unvested restricted
−Removed: stock awards, net of
−Removed: forfeitures — — 197,999 — — — — — —
+Added: unvested restricted stock awards,
+Added: net of forfeitures — — ( 34,167 ) — — — — — —
Shares withheld related to net
3 unchanged sentences
share-based awards — — — — — 3,297 — — 3,297
−Removed: Repurchase of common stock — — ( 10,795,234 ) ( 11 ) ( 50,977 ) — — — ( 50,988 )
+Added: Acquisition of Benchmark — — — — — — $ — $ 9,821 $ 9,821
Balance at December 31, 2023 — $ — 99,895,473 $ 100 $ ( 98,258 ) $ 906,153 $ ( 239,729 ) $ 21,343 $ 589,609
6 unchanged sentences
Balance at December 31, 2021 350,000 $ 14,753 48,807,748 $ 49 $ ( 47,281 ) $ 648,389 $ ( 181,724 ) $ 11,042 $ 430,475
−Removed: Net income including
+Added: Net (loss) income including
noncontrolling interests in
4 unchanged sentences
Redeemable Convertible
−Removed: Preferred Stock to
−Removed: redemption value — 3,829 — — — ( 3,829 ) — — ( 3,829 )
−Removed: Dividend on Series A
−Removed: Redeemable Convertible
−Removed: Preferred Stock — — — — — ( 1,452 ) — — ( 1,452 )
−Removed: Stock options exercised — — 60,000 1 — 201 — — 202
+Added: Preferred Stock to redemption value — 5,171 — — — ( 5,171 ) — — ( 5,171 )
+Added: Dividend on Series A Redeemable
+Added: Convertible Preferred Stock — — — — — ( 2,799 ) — — ( 2,799 )
+Added: Exercise of Series A warrants — — 5,000,000 5 — 20,645 — — 20,650
Issuance of common stock for
−Removed: vesting of restricted stock
−Removed: units — — 28,834 — — — — — —
+Added: vesting of restricted stock units — — 646,668 — — — — — —
Issuance of common stock for
−Removed: unvested restricted
−Removed: stock awards, net of
−Removed: forfeitures — — 223,565 — — — — — —
+Added: unvested restricted stock awards,
+Added: net of forfeitures — — 197,999 — — — — — —
+Added: Shares withheld related to net
+Added: share settlement of
+Added: share-based awards — — ( 372,314 ) — — ( 1,600 ) — — ( 1,600 )
Compensation expense for
8 unchanged sentences
Cash flows from operating activities:
−Removed: Net (loss) income including noncontrolling interests in subsidiaries $ ( 110,939 ) $ 150,365
−Removed: Adjustments to reconcile net (loss) income including noncontrolling interests in subsidiaries to net cash (used in) provided by
+Added: Net income (loss) including noncontrolling interests in subsidiaries $ 68,930 $ ( 110,939 )
+Added: Adjustments to reconcile net income (loss) including noncontrolling interests in subsidiaries to net cash used in
operating activities:
−Removed: Change in fair value of investment — 2,752
−Removed: Gain on sale of investment — ( 3,591 )
−Removed: Depreciation and amortization 13,514 10,688
+Added: Depreciation, depletion and amortization 14,728 13,514
Amortization of debt discount and issuance costs — 90
3 unchanged sentences
Loss on exercise of Series A warrants — 2,004
+Added: Gain on exercise of Series B warrants ( 1,525 ) —
Compensation expense for share-based awards 3,297 3,820
−Removed: Loss on foreign currency exchange 3,324 89
+Added: (Gain) loss on foreign currency exchange ( 53 ) 3,324
Change in fair value of equity securities ( 31,423 ) 263,695
−Removed: Gain on sale of equity securities ( 125,318 ) ( 116,129 )
+Added: Loss (gain) on sale of equity securities 10,930 ( 125,318 )
Earnings on equity investment in joint venture ( 4,167 ) ( 42,531 )
+Added: Unrealized gain on derivatives ( 781 ) —
Deferred income taxes ( 3,657 ) ( 17,810 )
6 unchanged sentences
Deferred revenue ( 337 ) 100
−Removed: Net cash (used in) provided by operating activities ( 37,336 ) 13,326
+Added: Net cash used in operating activities ( 22,506 ) ( 37,336 )
Cash flows from investing activities:
−Removed: Acquisition, net of cash acquired — ( 33,250 )
+Added: Acquisition, net of cash acquired (Note 3) ( 9,409 ) —
+Added: Cash reinvested 9,965 —
Patent acquisition ( 6,000 ) ( 5,000 )
−Removed: Sale of investment at fair value — 3,591
Purchases of equity securities ( 13,072 ) ( 112,142 )
Sales of equity securities 32,106 273,934
−Removed: Cash distributed for notes receivable — ( 4,021 )
Distributions received from equity investment in joint venture 2,777 28,404
3 unchanged sentences
Repurchase of common stock — ( 50,988 )
−Removed: Issuance of Senior Secured Notes, net of lender fee — 115,000
+Added: Paydown of Revolving Credit Facility ( 7,700 ) —
Paydown of Senior Secured Notes ( 60,000 ) ( 120,000 )
1 unchanged sentence
Taxes paid related to net share settlement of share-based awards ( 614 ) ( 1,600 )
+Added: Proceeds from Rights Offering 79,111 —
Proceeds from exercise of Series A warrants — 9,250
+Added: Proceeds from exercise of Series B warrants 49,000 —
Proceeds from exercise of stock options 235 —
−Removed: Net cash (used in) provided by financing activities ( 166,137 ) 59,738
+Added: Net cash provided by (used in) financing activities 58,632 ( 166,137 )
Effect of exchange rates on cash and cash equivalents 1 ( 2,566 )
−Removed: (Decrease) increase in cash and cash equivalents and restricted cash ( 21,575 ) 108,815
−Removed: Cash and cash equivalents and restricted cash, beginning 309,361 200,546
−Removed: Cash and cash equivalents and restricted cash, ending $ 287,786 $ 309,361
+Added: Increase (decrease) in cash and cash equivalents 52,305 ( 21,575 )
+Added: Cash and cash equivalents, beginning 287,786 309,361
+Added: Cash and cash equivalents, ending $ 340,091 $ 287,786
Supplemental schedule of cash flow information:
2 unchanged sentences
Noncash investing and financing activities:
−Removed: Patent acquisition in exchange of notes receivable — 4,000
Accrued patent costs 4,000 9,000
4 unchanged sentences
DESCRIPTION OF BUSINESS
−Removed: Acacia Research Corporation (the “Company,” "Acacia," “we,” “us,” or "our") is an opportunistic capital platform that purchases businesses based on the differentials between public and private market valuations.
−Removed: We use a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire.
+Added: Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is focused on acquiring and managing companies across industries including but not limited to the industrial, energy, technology, and healthcare verticals.
+Added: We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value.
+Added: We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire.
Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.
+Added: We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.
+Added: Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value.
+Added: We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such Special Purpose Acquisition Companies, which are narrowly focused on completing one singular, defining acquisition.
Our focus is companies with market values in the sub-$ 2 billion range and particularly on businesses valued at $ 1 billion or less.
We are, however, opportunistic, and may pursue acquisitions that are larger under the right circumstance.
−Removed: We operate our business based on three key principles of People, Process and Performance and have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions.
−Removed: We utilized these skill sets and resources to acquire a portfolio of equity securities of public and private life science businesses, or the “Life Sciences Portfolio,” in June 2020.
−Removed: As of December 31, 2022, we have monetized a majority of the portfolio while retaining an interest in a number of operating businesses, including a controlling interest in one of the companies in the portfolio.
−Removed: Further, some of the businesses in which we continue to hold an interest generate revenues through the receipt of royalties.
−Removed: Refer to Note 3 for additional information.
Relationship with Starboard Value, LP
−Removed: Our strategic relationship with Starboard Value, LP (“Starboard”) provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.
+Added: Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company's controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired.
Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities.
3 unchanged sentences
Under the Recapitalization Agreement, the Company and Starboard agreed to take certain actions in connection with the Recapitalization.
−Removed: Refer to Note 8 for a detailed description of the Recapitalization and the actions taken and contemplated to be taken in connection therewith.
+Added: Subsequently, and in accordance with the terms contained in the Second Amended and Restated Certificate of Designations and the Recapitalization Agreement, on July 13, 2023, Starboard converted an aggregate amount of 350,000 shares of Series A Convertible Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Redeemable Convertible Preferred Stock”) into 9,616,746 shares of common stock, which included 27,704 shares of common stock issued in respect of accrued and unpaid dividends (the “Preferred Stock Conversion”).
+Added: Further to the terms of the Recapitalization Agreement and in accordance with the terms of the Company’s Series B Warrants (the “Series B Warrants”), on July 13, 2023, Starboard also exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 shares of common stock (the “Series B Warrants Exercise” and, together with the Preferred Stock Conversion, the “Recapitalization Transactions”), the cancellation of $ 60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (as described further in Note 10, the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $ 55.0 million.
+Added: As a result of the Recapitalization Transactions, Starboard beneficially owned 61,123,595 shares of common stock as of July 13, 2023, representing approximately 61.2% of the common stock based on 99,886,322 shares of common stock issued and outstanding as of such date.
+Added: No shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any
+Added: Senior Secured Notes remain outstanding.
+Added: Refer to Note 10 for a detailed description of the Recapitalization and the Recapitalization Transactions.
Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business
−Removed: The Company invests in intellectual property and related absolute return assets and engages in the licensing and enforcement of patented technologies.
−Removed: Through our Patent Licensing, Enforcement and Technologies Business, operated under Acacia Research Group, LLC and its wholly-owned subsidiaries ("ARG"), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright.
−Removed: While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program.
−Removed: When applicable, we share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis.
+Added: The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and related absolute return assets and engages in the licensing and enforcement of patented technologies.
+Added: Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright.
+Added: While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis.
We may also provide upfront capital to patent owners as an advance against future licensing revenue.
1 unchanged sentence
patents and certain foreign counterparts, covering technologies used in a variety of industries.
−Removed: ARG generates
−Removed: revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own.
+Added: ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own.
Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others.
If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth.
−Removed: During the year ended December 31, 2022, ARG did not obtain control of any new patent portfolios.
−Removed: During the year ended December 31, 2021, ARG obtained control of one new patent portfolio.
+Added: During the years ended December 31, 2023 and 2022, ARG did not obtain control of any new patent portfolios.
Industrial Operations Acquisition
4 unchanged sentences
Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances.
−Removed: This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its execution of strategic partnerships to generate growth.
+Added: This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.
We acquired all of the outstanding stock of Printronix, for a cash purchase price of approximately $ 37.0 million, which included an initial $ 33.0 million cash payment and a $ 4.0 million working capital adjustment.
−Removed: The Company's consolidated financial statements include Printronix's consolidated operations from October 7, 2021 through December 31, 2022.
−Removed: As of December 31, 2021, management finalized the valuations of all acquired assets and liabilities assumed in the acquisition and there was no contingent consideration.
+Added: The Company's consolidated financial statements include Printronix's consolidated operations.
+Added: Energy Operations Acquisition
+Added: In November 13, 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark Energy II, LLC ("Benchmark").
+Added: Headquartered in Austin, TX, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma.
+Added: Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc.
+Added: Benchmark’s existing assets consist of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated.
+Added: Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
+Added: Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.
+Added: The Company's consolidated financial
+Added: statements include Benchmark's consolidated operations from November 13, 2023 through December 31, 2023.
+Added: Refer to Note 3 for additional information related to the Benchmark acquisition.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 unchanged sentence
The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S.
−Removed: Reclassifications
−Removed: Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation.
−Removed: These changes had no impact on the previously reported consolidated results of operations or cash flows.
Principles of Consolidation
5 unchanged sentences
In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 4, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”).
−Removed: MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control
−Removed: the operations and activities of MalinJ1.
+Added: MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1.
Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1.
+Added: In November 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark.
+Added: Benchmark is included in the Company's consolidated financial statements because Benchmark is a variable interest entity ("VIE").
+Added: We determined that we have the power to direct the activities that most significantly impact Benchmark's economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it.
Segment Reporting
The Company uses the management approach, which designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of the Company’s reportable segments.
−Removed: Refer to Note 17 for additional information regarding our two reportable business segments:
−Removed: Intellectual Property Operations and Industrial Operations.
+Added: Refer to Note 19 for additional information regarding our three reportable business segments:
+Added: Intellectual Property Operations, Industrial Operations and Energy Operations.
Use of Estimates
2 unchanged sentences
Actual results could differ from these estimates.
−Removed: Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, estimates of variable consideration for revenue, including sales returns, the valuation of equity securities without readily determinable fair value, the determination of excess and obsolete inventories, bad debt allowances and product warranty liabilities, the valuation of Series A redeemable convertible preferred stock (the “Series A Redeemable Convertible Preferred Stock”), embedded derivatives, Series A warrants (the “Series A Warrants”) and Series B warrants (the “Series B Warrants”), stock-based compensation expense, impairment of goodwill, patent-related and other intangible assets, the determination of the economic useful life of amortizable intangible assets, and income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments.
+Added: Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, estimates of variable consideration for revenue, including sales returns, the valuation of equity securities without readily determinable fair value, the determination of excess and obsolete inventories, allowance for credit losses and product warranty liabilities, the valuation of Series A redeemable convertible preferred stock, embedded derivatives, and Series B warrants, estimated crude oil and natural gas reserves, fair value of assets and liabilities acquired in a business combination, stock-based compensation expense, impairment of goodwill, patent-related and other intangible assets, the determination of the economic useful life of amortizable intangible assets, and income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments.
Revenue Recognition
14 unchanged sentences
The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract.
−Removed: Licensees legally obtain control of the IP Rights upon execution of the
+Added: Licensees legally obtain control of the IP Rights upon execution of the contract.
As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met.
8 unchanged sentences
In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers.
−Removed: Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties.
+Added: Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the
+Added: transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties.
License revenues were comprised of the following for the periods presented:
13 unchanged sentences
This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period.
−Removed: Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together
−Removed: with readily available resources (i.e.
+Added: Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (i.e.
capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e.
8 unchanged sentences
Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met.
−Removed: Incremental costs of obtaining a contract are expensed as incurred.
+Added: As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less.
Service revenue commissions are tied to the revenue recognized during the current year of the related sale.
+Added: All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.
Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer.
6 unchanged sentences
Printronix's net revenues were comprised of the following for the periods presented:
−Removed: Year Ended December 31, 2022 October 7, 2021 to December 31, 2021
(In thousands)
4 unchanged sentences
Deferred revenue in the consolidated balance sheets represents a contract liability under Accounting Standards Codification (“ASC”) 606 and consists of payments and billings in advance of the performance.
−Removed: Printronix recognized approximately $ 3.8 million and $ 800,000 in revenue that was previously included in the beginning balance of deferred revenue during the year ended December 31, 2022 and the period from October 7, 2021 through December 31, 2021, respectively.
+Added: Printronix recognized approximately $ 1.4 million and $ 1.7 million in revenue that was previously included in the beginning balance of deferred revenue during the years ended December 31, 2023 and 2022, respectively.
Printronix's payment terms vary by the type and location of its customers and the products, solutions or services offered.
2 unchanged sentences
Printronix's remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services.
−Removed: The aggregated transaction price allocated to remaining performance obligations for arrangements
−Removed: with an original term exceeding one year was $ 681,000 and $ 772,000 , inclusive of deferred revenue, as of December 31, 2022 and 2021, respectively.
+Added: The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $ 567,000 and $ 681,000 as of December 31, 2023 and 2022, respectively.
+Added: Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
On average, remaining performance obligations as of December 31, 2023 are expected to be recognized over a period of approximately two years .
−Removed: Cost of Revenues
+Added: Energy Operations
+Added: Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer.
+Added: Benchmark's contracts' pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions.
+Added: As a result, the price of the oil and natural gas fluctuate to remain competitive with other available oil and natural gas supplies.
+Added: To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts.
+Added: Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant.
+Added: Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations.
+Added: Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed upon delivery point, at which the customer takes custody, title, and risk of loss of the product.
+Added: Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials.
+Added: Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive.
+Added: Benchmark's natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point.
+Added: The midstream entity gathers, processes, and remits proceeds to Benchmark for the resulting sale of natural gas and natural gas liquids, and generally includes a reduction for contractual fees and for percent of proceeds.
+Added: For the contracts where Benchmark maintains control through the outlet of the midstream processing facility, Benchmark recognizes revenue on a gross basis, with gathering, transportation, and processing fees presented as an expense on the consolidated statements of operations.
+Added: Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues are based on the net amount of the proceeds received from the midstream processing entity as customer.
+Added: Benchmark's proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark's proportionate share of sales proceeds, which is net of costs incurred by the operator, if any.
+Added: Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive.
+Added: Proceeds are generally received by Benchmark within two to three months after the month in which production occurs.
+Added: Benchmark's revenue from November 13, 2023 through December 31, 2023 were comprised of the following (in thousands):
+Added: Oil sales $ 256
+Added: Natural gas sales 372
+Added: Natural gas liquids sales 220
+Added: Cost of Revenues and Cost of Production
Intellectual Property Operations
6 unchanged sentences
Amortization of patents 11,370 10,403
−Removed: Other patent portfolio expense — 162
Total $ 34,164 $ 18,029
11 unchanged sentences
Industrial Operations
−Removed: Included in cost of sales are inventory costs (refer to "Inventories" below), indirect labor, overhead and warranty costs.
+Added: Included in cost of revenues are inventory costs (refer to "Inventories" below), indirect labor, overhead and warranty costs.
Printronix offers both assurance-type and service-type product warranties with varying terms depending on the product, region and customer contracts.
2 unchanged sentences
The following is a summary of the accrued warranty liabilities, which are included in accrued expenses and other current liabilities, and other long-term liabilities in the consolidated balance sheets:
−Removed: Year Ended December 31, 2022 October 7, 2021 to December 31, 2021
(In thousands)
3 unchanged sentences
Ending balance $ 96 $ 131
+Added: Energy Operations
+Added: Cost of production includes production costs, including lease operating expenses, production taxes, gathering transportation, and marketing costs, are expensed as incurred.
Concentrations
2 unchanged sentences
treasury securities and investment grade marketable securities.
−Removed: Cash and cash equivalents are also invested in deposits with certain financial institutions and may, at times, exceed federally insured limits.
+Added: Cash and cash equivalents are also invested in deposits and other high quality money market instruments with certain financial institutions and majority of the bank accounts exceed federally insured limits.
The Company has not experienced any significant losses on its deposits of cash and cash equivalents.
Intellectual Property Operations
−Removed: Three licensees individually accounted for 15 %, 15 % and 27 % of revenues recognized during the year ended December 31, 2022.
Two licensees individually accounted for 59 % and 26 % of revenues recognized during the year ended December 31, 2023.
+Added: Three licensees accounted for more than 10% of total recognized revenue, ranging from 15 % to 27 %, during the year ended December 31, 2022.
Historically, ARG has not had material foreign operations.
−Removed: Based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable license revenue arrangement, for the years ended December 31, 2022 and 2021, 3 % and 69 %, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions.
+Added: Based on the jurisdiction of the entity obligated to satisfy payment obligations pursuant to the applicable license revenue arrangement, for the years ended December 31, 2023 and
+Added: 2022, 10 % and 3 %, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions.
Refer to Note 19 for additional information regarding revenue from customers by geographic region.
4 unchanged sentences
Printronix has significant foreign operations, refer to Note 19 for additional information regarding net sales to customers by geographic region.
−Removed: Two Printronix customers individually accounted for 15 % and 11 % of accounts receivable as of December 31, 2022, and one customer represented 11 % of accounts receivable as of December 31, 2021.
+Added: Two Printronix customers individually accounted for 19 % and 10 % of accounts receivable as of December 31, 2023, and two customers individually accounted for 15 % and 11 % of accounts receivable as of December 31, 2022.
Exposure to credit risk is limited by the large number of customers comprising the remainder of the Printronix customer base and by periodic customer credit evaluations performed by Printronix.
−Removed: No single Printronix vendor accounted for 10% or more of purchases for the years ended December 31, 2022 and 2021.
−Removed: Accounts payable to two vendors represented 21 % and 13 % of accounts payable as of December 31, 2022, and one vendor represented 14 % of accounts payable as of December 31, 2021.
+Added: One Printronix vendor individually accounted for 12 % of purchases for the year ended December 31, 2023 and no single Printronix vendor accounted for 10% or more of purchases for the year ended December 31, 2022.
+Added: Accounts payable to six vendors represented 12 % to 24 % of accounts payable as of December 31, 2023, and two vendors represented 21 % and 13 % of accounts payable as of December 31, 2022.
+Added: Energy Operations
+Added: Five Benchmark customers accounted for more than 10% of total revenues recognized, ranging from 11 % to 29 %, during the period from November 13, 2023 through December 31, 2023.
+Added: Two Benchmark customers individually accounted for 27 % and 20 % of accounts receivable as of December 31, 2023.
+Added: Benchmark does not have any foreign operations, refer to Note 19 for additional information regarding revenue from customers by geographic region.
+Added: Benchmark's financial condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and supply and demand for, crude oil and natural gas.
+Added: These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond Benchmark's control.
+Added: These factors include the level of global and regional supply and demand for the petroleum products, the establishment of and compliance with production quotas by oil exporting countries, weather conditions, the price and availability of alternative fuels, and overall
+Added: economic conditions, both foreign and domestic.
+Added: Benchmark cannot predict future oil and natural gas prices with any degree of certainty.
+Added: Sustained weakness in oil and natural gas prices may adversely affect the financial condition and results of operations and may also reduce the amount of net oil and natural gas reserves Benchmark can produce economically.
+Added: Similarly, any improvement in oil and natural gas prices can have a favorable impact on the Benchmark's financial condition, results of operations, and capital resources.
Cash and Cash Equivalents
28 unchanged sentences
If the fair value method is applied to an investment that would otherwise be accounted for under the equity method of accounting, it is applied to all of the financial interests in the same entity that are eligible items (i.e., common stock and warrants).
−Removed: As part of the Company’s equity securities in the Life Sciences Portfolio, the Company has elected to apply the fair value method to one investment, r efer to Note 3 for additional information.
−Removed: During 2016 and 2017, Acacia made certain investments in Veritone, Inc.
−Removed: (“Veritone”).
−Removed: As a result of these transactions, Acacia received shares of Veritone common stock and warrants.
−Removed: We elected the fair value method for our investment in Veritone upon acquisition.
−Removed: During 2018, Acacia began to divest its investments in Veritone.
−Removed: During 2020, Acacia sold its remaining shares of common stock.
−Removed: During the quarter ended March 31, 2021, included in the consolidated statement of operations, Acacia recorded an unrealized loss of $ 2.8 million from our investment in warrants, as reflected in the change in fair value of investment, and Acacia exercised all remaining warrants and recorded a realized gain on sale of investment of $ 3.6 million.
−Removed: Since March 2021, the Company no longer has an investment in Veritone common stock and warrants.
+Added: As part of the Company’s equity securities in the Life Sciences Portfolio, the Company has elected to apply the fair value method to one investment, refer to Note 4 for additional information.
Impairment of Investments
5 unchanged sentences
Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and a new cost basis in the investment is established.
−Removed: Accounts Receivable and Allowance for Doubtful Accounts
+Added: Accounts Receivable and Allowance for Credit Losses
Intellectual Property Operations
2 unchanged sentences
Collateral is not required.
−Removed: An allowance for doubtful accounts may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period.
+Added: An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period.
The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence.
−Removed: There was no allowance for doubtful accounts established as of December 31, 2022 and 2021.
+Added: There was no allowance for credit losses established as of December 31, 2023 and 2022.
Industrial Operations
1 unchanged sentence
Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness.
−Removed: The allowance for doubtful accounts is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs.
+Added: The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs.
Receivable losses are charged against the allowance when management believes the account has become uncollectible.
Subsequent recoveries, if any, are credited to the allowance.
−Removed: As of December 31, 2022 and 2021, Printronix's combined allowance for doubtful accounts and allowance for sales returns was $ 22,000 and $ 78,000 , respectively.
+Added: As of December 31, 2023 and 2022, Printronix's combined allowance for credit losses and allowance for sales returns was $ 56,000 and $ 22,000 , respectively.
+Added: Energy Operations
+Added: Benchmark's oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers.
+Added: Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs.
+Added: Benchmark's accounts receivable are recorded at the invoiced amount and do not bear interest.
+Added: An allowance for credit losses may be established to reflect management's best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period.
+Added: The allowance is determined by evaluating individual customer receivables based on known troubled accounts, historical experience, and other currently available evidence.
+Added: There was no allowance for credit losses established as of December 31, 2023.
Printronix's inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value.
2 unchanged sentences
Printronix evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions.
−Removed: Refer to Note 4 for additional information.
+Added: Refer to Note 5 for additional information related to Printronix's inventories.
Long-Term Notes Receivable
−Removed: On October 13, 2021, Adaptix Limited issued £ 2.95 million, approximately $ 4.0 million at the exchange rate on October 13, 2021, in limited unsecured notes due in 2026 to Radcliffe 2 Ltd., a subsidiary of Merton Healthcare Holdco II LLC.
+Added: On October 13, 2021, Adaptix Limited issued £ 2.95 million, approximately $ 4.0 million at the exchange rate on October 13, 2021, in limited unsecured notes due in 2026 to Radcliffe 2 Ltd., a subsidiary of the Company.
The interest rate on the notes is 8.0 % per year.
During the years ended December 31, 2023 and 2022, we recorded $ 146,000 and $ 291,000 , respectively, in interest income related to the notes.
−Removed: As of December 31, 2022 and 2021, the receivable including interest was $ 3.9 million and $ 4.0 million, respectively, and is included in other non-current assets in the consolidated balance sheets.
−Removed: Long-Term Restricted Cash
−Removed: Restricted cash related to a standby letter of credit, which expired and was cancelled in March 2022.
+Added: During September 2023, the Company assessed the collectability of the limited unsecured notes based on the Adaptix's capability of repaying the limited unsecured notes according to its terms.
+Added: As such, of the $ 3.8 million limited unsecured notes and $ 515,000 in interest receivable, the Company collected $ 2 million and wrote off the remaining limited unsecured notes totaling $ 2.3 million which is reflected in interest income and other, net on the consolidated statements of operations.
+Added: As of December 31, 2023 and 2022, the receivable including interest was zero and $ 3.9 million, respectively, and was included in other non-current assets in the consolidated balance sheets.
+Added: Derivative Financial Instruments
+Added: Benchmark records open derivative instruments at fair value as either commodity derivative assets or liabilities.
+Added: Benchmark has not designated any derivative instruments as cash-flow hedges, but uses these instruments to reduce exposure to fluctuations in commodity prices related to production.
+Added: Unrealized gains and losses, at fair value, are included in the consolidated balance sheets as prepaid expenses and other current assets or other non-current assets or liabilities based on the anticipated timing of cash settlements under the related contracts.
+Added: Realized and unrealized changes in the fair value of our commodity derivative contracts are included in other income or (expense) in the consolidated statements of operations for the period as they occur.
+Added: Refer to Note 11 for additional information.
Property, Plant and Equipment
9 unchanged sentences
Leasehold improvements 2 to 5 years (Lesser of lease term or useful life of improvement)
−Removed: Goodwill and Other Intangible Assets
+Added: Oil and Natural Gas Properties
+Added: Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities.
+Added: Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized.
+Added: Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves.
+Added: If Benchmark determines that the wells do not find proved reserves, the costs are charged to expense.
+Added: At December 31, 2023, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves.
+Added: Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred.
+Added: On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized.
+Added: On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained.
+Added: Capitalized costs of proved oil and natural gas properties are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized costs of wells and related equipment and facilities are depreciated based on the unit-of-production method over the estimated proved developed reserves.
+Added: Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows.
+Added: If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows.
+Added: Refer to Note 7 for additional information.
Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business.
4 unchanged sentences
Refer to Note 8 for additional information.
+Added: The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset.
+Added: Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.
+Added: Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term.
+Added: ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
+Added: The Company’s leases primarily consist of facility leases which are classified as operating leases.
+Added: Lease expense is recognized on a straight-line basis over the lease term.
+Added: As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments.
+Added: The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates.
+Added: The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities.
+Added: Refer to Note 13 for additional information.
+Added: Impairment of Long-lived Assets
ARG's patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations.
−Removed: ARG's patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from five to ten years .
+Added: ARG's patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from two to five years .
Refer to Note 8 for additional information.
3 unchanged sentences
Refer to Note 8 for additional information.
−Removed: The Company’s leases primarily consist of facility leases which are classified as operating leases.
−Removed: The Company assesses whether an arrangement contains a lease at inception.
−Removed: The Company recognizes a lease liability to make contractual payments under all leases with terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease term.
−Removed: Lease expense is recognized on a straight-line basis over the lease term.
−Removed: Refer to Note 11 for additional information.
−Removed: Impairment of Long-lived Assets
The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
5 unchanged sentences
Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors.
−Removed: Estimated cash inflows
−Removed: are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data.
+Added: Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data.
Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program.
1 unchanged sentence
Refer to Note 8 for additional information.
−Removed: Series A Warrants and Series B Warrants
−Removed: The fair value of the Series A Warrants and the Series B Warrants were estimated using a Black-Scholes option-pricing model.
−Removed: Refer to Notes 8 and 9 for additional information related to the Series A Warrants and the Series B Warrants and their fair value measurements.
+Added: Series B Warrants
+Added: The fair value of the Series B Warrants was estimated using a Black-Scholes option-pricing model.
+Added: Refer to Notes 10 and 11 for additional information related to the Series B Warrants and their fair value measurements.
Embedded Derivatives
1 unchanged sentence
Refer to Notes 10 and 11 for additional information related to the embedded derivatives and their fair value measurements.
+Added: Revolving Credit Facility
+Added: On September 16, 2022, Benchmark entered into a credit agreement ( the "Credit Agreement") for a revolving credit facility (the "Revolver") and a term loan with a bank.
+Added: The Revolver has an initial borrowing base of $ 25,000,000 and $ 75,000,000 maximum borrowing capacity.
+Added: The Revolver matures on September 16, 2025.
+Added: The availability under the Credit Agreement is subject to the borrowing base, which is redetermined on April 1 and October 1 of each year.
+Added: On April 11, 2023, the borrowing base was reduced to $ 20,075,000 and a letter of credit was issued for $ 2,500,000 .
+Added: Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the credit agreement.
+Added: The term loan had funding of $ 3,500,000 , which was paid in full between January 1 and April 28, 2023.
+Added: Benchmark’s outstanding balance on the term loan was zero as of December 31, 2023.
+Added: The Revolver contains customary financial and non-financial covenants, the most restrictive of which are (i) current assets to current liabilities of not less than 1.0 to 1.0 and (ii) total debt to EBITDAX (as defined in the Credit Agreement) of not greater than 3.5 to 1.0 for the rolling periods as defined in the Credit Agreement.
+Added: As of December 31, 2023, Benchmark was in compliance with these financial covenants.
+Added: In general, the borrowings under the credit facility bear interest at either the Alternate Base Rate (“ABR”) or Secured Overnight Financing Rate (“SOFR”).
+Added: Either rate is adjusted upward by an applicable margin based on Benchmark's percentage of utilization of the credit facility.
+Added: As of December 31, 2023, interest rate associated with the outstanding borrowings was 9.0 % for the Revolver and 11.0 % for the term loan.
+Added: The credit facility provides for a commitment fee of 0.5 percent on the unused borrowings.
+Added: As of December 31, 2023 the outstanding balance on the Revolver was $ 10.5 million.
Contingent Liabilities
7 unchanged sentences
Fair Value of Financial Instruments
−Removed: The carrying value of cash and cash equivalents, restricted cash, accounts receivables and current liabilities approximates their fair values due to their short-term maturities.
+Added: The carrying value of cash and cash equivalents, accounts receivables, current liabilities and revolving credit facility and term loan approximates their fair values due to their short-term maturities or the fact that the interest rate of the revolving credit facility is based upon current market rates.
Refer to Note 11 for additional information.
5 unchanged sentences
The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock.
−Removed: Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets.
+Added: excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets.
Refer to Note 14 for additional information.
2 unchanged sentences
Printronix expenses advertising costs, including promotional literature, brochures and trade shows, as incurred.
−Removed: Advertising expense was approximately $ 315,000 and $ 52,000 during the year ended December 31, 2022 and the period from October 7, 2021 through December 31, 2021, respectively, and is included in sales and marketing expenses in the consolidated statements of operations.
+Added: Advertising expense was approximately $ 636,000 and $ 315,000 during the years ended December 31, 2023 and 2022, respectively, and is included in sales and marketing expenses in the consolidated statements of operations.
Stock-Based Compensation
The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is currently one to four years .
−Removed: The fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock.
+Added: Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition.
+Added: Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved.
+Added: The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards ("PSUs") are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock.
The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model.
9 unchanged sentences
Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S.
−Removed: dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts, a note receivable and certain equity security investments.
+Added: dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts and certain equity security investments.
All foreign currency exchange activity is recorded in the consolidated statements of operations.
11 unchanged sentences
Basic net income/loss per share of common stock is computed by dividing net income/loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period.
−Removed: Diluted net income/loss per share of common stock is computed by dividing net income/loss attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury
−Removed: stock method or the as-converted method, or the two-class method for participating securities, whichever is more dilutive.
−Removed: Potentially dilutive common stock equivalents consist of stock options, restricted stock units, unvested restricted stock, Series A Redeemable Convertible Preferred Stock, Series A Warrants and Series B Warrants.
+Added: Diluted net income/loss per share of common stock is computed by dividing net income/loss attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury stock method or the as-converted method, or the two-class method for participating securities, whichever is more dilutive.
+Added: Potentially dilutive common stock equivalents consist of stock options, restricted stock units, unvested restricted stock, Series A Redeemable Convertible Preferred Stock and Series B Warrants.
Refer to Note 18 for additional information.
1 unchanged sentence
Recently Adopted
−Removed: In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
−Removed: 2022-03, “Fair Value Measurement (Topic 820):
−Removed: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” The amendments in this update clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
−Removed: As such, an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction (e.g.
−Removed: an entity cannot apply a discount to the price of an equity security subject to a lock-up agreement).
−Removed: The amendments also require the following disclosures for equity securities subject to contractual sale restrictions:
−Removed: (i) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (ii) the nature and remaining duration of the restriction(s), and (iii) the circumstances that could cause a lapse in the restriction(s).
−Removed: The amendments are to be applied prospectively and are effective on January 1, 2024 for public entities, with early adoption permitted.
−Removed: The Company adopted the update on June 30, 2022.
−Removed: The adoption of the update did not have an impact on the Company’s financial position, results of operations or financial statement disclosures.
−Removed: Not Yet Adopted
In June 2016, the FASB issued ASU No.
4 unchanged sentences
2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses.
−Removed: The amendments in these updates will be adopted by the Company on January 1, 2023.
−Removed: Management has completed its evaluation of the impact that the amendments in these updates will have on the Company’s consolidated financial statements and there are no significant implementation matters that still need to be addressed.
−Removed: Based on Management's evaluation of the new standard, the Company does not expect it to have a material effect on the Company’s consolidated financial statements or disclosures, accordingly, a cumulative-effect adjustment to the opening accumulated deficit as of January 1, 2023 is not expected.
+Added: The Company adopted the update on January 1, 2023.
+Added: The adoption of the update did not have a material impact on the Company's financial position, results of operations or financial statement disclosures.
+Added: In October 2021, the FASB issued ASU No.
+Added: 2021-08, “Business Combinations (Topic 805):
+Added: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with “Revenue from Contracts with Customers (Topic 606).” At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.
+Added: The Company adopted the update on January 1, 2023.
+Added: The adoption of the update did not have a material impact on the Company's financial position, results of operations or financial statement disclosures.
+Added: Not Yet Adopted
In August 2020, the FASB issued ASU No.
6 unchanged sentences
Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements.
−Removed: In October 2021, the FASB issued ASU No.
−Removed: 2021-08, “Business Combinations (Topic 805):
−Removed: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with “Revenue from Contracts with Customers (Topic 606).” At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.
−Removed: The amendments in this update will be applied prospectively and will be adopted by the Company on January 1, 2023.
−Removed: Management does not expect the adoption of this new standard to have a material effect on the Company’s consolidated financial statements.
+Added: In November 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark.
+Added: Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil
+Added: and gas assets in mature resource plays in Texas and Oklahoma.
+Added: Acacia has made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
+Added: Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.
+Added: The following unaudited pro forma summary presents consolidated information, as if the business combination had occurred on January 1, 2022:
+Added: (Unaudited, in thousands)
+Added: Revenues $ 131,712 $ 64,195
+Added: Net income (loss) attributable to Acacia Research Corporation 66,755 ( 123,316 )
+Added: We had material, nonrecurring pro forma adjustments directly attributable to the business combination included in the above pro forma revenues and net income.
+Added: These adjustments included a decrease of $ 4.8 million in oil and natural gas properties related to the finalization of the valuation s.
+Added: In 2023, we incurred $ 1.7 million of acquisition-related costs.
+Added: These expenses are included in general and administrative expenses for the year ended December 31, 2023.
+Added: The following table summarizes the consideration transferred to acquire Benchmark and the recognized amounts of identifiable assets acquired and liabilities assumed at the acquisition date (in thousands):
+Added: Fair value of consideration transferred:
+Added: Cash $ 10,000
+Added: Total consideration $ 10,000
+Added: Identifiable assets acquired and liabilities assumed:
+Added: Cash and cash equivalents $ 10,556
+Added: Trade receivables 1,385
+Added: Prepaid expenses and other current assets 1,644
+Added: Oil and natural gas properties, net 25,276
+Added: Other assets 361
+Added: Trade and other payables ( 2,349 )
+Added: Revolving credit facility ( 18,225 )
+Added: Other long-term liabilities ( 276 )
+Added: Noncontrolling interest ( 9,821 )
+Added: Total identifiable net assets $ 8,551
+Added: Goodwill $ 1,449
+Added: Intangible Assets and Liabilities
+Added: As of December 31, 2023, management has preliminary assessed the valuations of all acquired assets and liabilities assumed in the acquisition.
+Added: The fair value of the noncontrolling interest is based on contractual terms of the purchase agreement.
+Added: Goodwill of $ 1.4 million represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed.
+Added: None of the goodwill resulting from the acquisition is deductible for tax purposes.
+Added: All of the goodwill acquired is allocated to the Benchmark reporting unit.
+Added: Refer to Note 8 for additional information.
EQUITY SECURITIES
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As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange.
−Removed: During the year ended December 31, 2022, the Company increased its investment in Arix amounting to approximately 26 % as of December 31, 2022.
−Removed: In addition, two members of the Company's Board of Directors (the “Board”) have seats on the board of Arix, which is currently made up of five board members.
−Removed: Although the Company is presumed to have significant influence over operating and financial policies of Arix, we have elected to account for the investment under the fair value method.
+Added: As of December 31, 2023 and 2022, the Company's investment in Arix was approximately 26 % of Arix.
+Added: In addition, two members of the Company's Board of Directors (the “Board”) had seats on the board of Arix, which is currently made up of six board members.
+Added: Although the Company was presumed to have significant influence over operating and financial policies of Arix, we have elected to account for the investment under the fair value method.
To date, the Company has not received any dividends from Arix.
1 unchanged sentence
As of December 31, 2023, the aggregate carrying amount of our Arix investment was $ 57.1 million, and is included in equity securities in the consolidated balance sheet.
+Added: On November 1, 2023, the Company, through a wholly owned subsidiary, entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd.
+Added: (“RTW Bio”) to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP), conditioned solely upon RTW Bio receiving the necessary approval from the United Kingdom’s Financial Conduct Authority to acquire indirect control (as defined for the purposes of the UK change in control regime under the Financial Services and Markets Act 2000) in of Arix Capital Management Limited.
+Added: The Company determined that the Arix Shares Purchase Agreement met the characteristics of a forward contract and the fair market value was adjusted by $4.0 million to reflect the purchase agreement of $ 57.1 million.
+Added: The $4 million was recorded as other income or (expense) in "Change in fair value of equity securities" for the year ended December 31, 2023.
+Added: On January 19, 2024, the Company completed such sale for $57.1 million.
+Added: Following the completion of the share sale, the Company no longer owns any shares of Arix.
The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:
2 unchanged sentences
companies $ 14,383 $ ( 247,126 )
−Removed: Conversion of equity securities without readily
−Removed: determinable fair value to equity securities of
−Removed: public companies — ( 102,067 )
Gain on sale of equity securities of public
companies — 111,717
−Removed: Net realized and unrealized (loss) gain $ ( 135,409 ) $ 201,980
+Added: Net realized and unrealized gain (loss) $ 14,383 $ ( 135,409 )
As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 ( 63.9 %), which were transferred to the Company on December 3, 2020.
4 unchanged sentences
During the years ended December 31, 2023 and 2022 , our consolidated earnings on equity investment was $ 4.2 million and $ 42.5 million, respectively, included in the consolidated statements of operations.
−Removed: During the year ended December 31, 2022 , distributions received were $ 28.4 million to Acacia and $ 14.1 million to noncontrolling interests.
−Removed: Du ring the year ended December 31, 2021, distributions received were $ 2.4 million to Acacia and $ 1.2 million to noncontrolling interests.
−Removed: In April 2022, Viamet received a certain drug approval from the United States Food and Drug Administration ("FDA").
−Removed: In connection with the FDA approval, MalinJ1 was due a milestone payment in the amount of $ 40.0 million.
−Removed: The Company's portion of that milestone payment was received in November 2022 in the amount of $ 27.2 million, including interest accrued at 8.5 % per year.
−Removed: In June 2022, in connection with the submission to the European Medicines Agency, MalinJ1 was due an additional milestone payment in the amount of $ 1.8 million.
−Removed: The Company's portion of that milestone payment was received in July 2022 in the approximate amount of $ 1.2 million.
−Removed: During 2022, the Company has recorded consolidated earnings on equity investment of $ 42.5 million, including the two milestones and accrued interest.
+Added: During the year ended December 31, 2023, MalinJ1 made distributions of $ 2.8 million to Acacia and $ 1.4 million to noncontrolling interests.
+Added: During the year ended December 31, 2022, MalinJ1 made distributions of $ 28.4 million to Acacia and $ 14.1 million to noncontrolling interests.
Printronix's inventories consisted of the following:
3 unchanged sentences
Finished goods 5,578 7,340
+Added: 11,421 14,720
Inventory reserves ( 500 ) ( 498 )
9 unchanged sentences
Property, plant and equipment, net $ 2,356 $ 3,537
−Removed: Total depreciation and amortization expense in the consolidated statements of operations was $ 1.4 million and $ 438,000 for the years ended December 31, 2022 and 2021, respectively.
+Added: Total depreciation and amortization expense in the consolidated statements of operations was $ 1.4 million for the years ended December 31, 2023 and 2022.
Our Intellectual Property Operations and parent company include depreciation and amortization in general and administrative expenses.
−Removed: For the year ended December 31, 2022, our Industrial Operations allocated depreciation and amortization, totaling $ 1.3 million, to all applicable operating expense categories, including cost of sales of $ 1.1 million.
−Removed: For the period from October 7, 2021 through December 31, 2021, our Industrial Operations allocated depreciation and amortization, totaling $ 684,000 , to all applicable operating expense categories, including cost of sales of $ 257,000 .
+Added: For the years ended December 31, 2023 and 2022, our Industrial Operations allocated depreciation and amortization totaling $ 1.3 million to all applicable operating expense categories, including cost of sales of $ 421,000 and $ 474,000 , respectively.
+Added: OIL AND NATURAL GAS PROPERTIES, NET
+Added: Oil and natural gas properties consisted of the following at December 31, 2023:
+Added: December 31, 2023
+Added: (In thousands)
+Added: Total proved properties costs $ 25,276
+Added: Accumulated depletion and depreciation ( 159 )
+Added: Oil and natural gas properties, net $ 25,117
+Added: Total depletion and depreciation expense in the consolidated statements of operations was $ 245,000 for the period from November 13, 2023 through December 31, 2023 and includes depletion and depreciation in cost of production.
+Added: Benchmark determined no impairment to proved oil and natural gas properties was necessary as of December 31, 2023.
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
−Removed: Changes in the carrying amount of goodwill consisted of the following:
+Added: Changes in the carrying amount of Printronix's goodwill consisted of the following:
Years Ended December 31,
2 unchanged sentences
Acquisition of business — —
−Removed: Tax adjustment (Note 15) 71 —
+Added: Tax adjustment — 71
Impairment losses — —
Ending balance $ 7,541 $ 7,541
+Added: Changes in the carrying amount of Benchmark's goodwill consisted of the following:
+Added: Years Ended December 31, 2023
+Added: (In thousands)
+Added: Beginning balance $ —
+Added: Acquisition of business 1,449
+Added: Impairment losses —
+Added: Ending balance $ 1,449
The ending balance of goodwill includes no accumulated impairment losses to date.
−Removed: All goodwill is allocated to our Industrial Operations segment, refer to Note 1 for additional information related to the Printronix acquisition.
+Added: Refer to Note 3 for additional information related to the Benchmark acquisition.
Other intangible assets, net consisted of the following:
20 unchanged sentences
There was no accelerated amortization of other intangible assets for the years ended December 31, 2023 and 2022.
−Removed: During 2021, ARG reduced its gross patent costs and accumulated amortization by approximately $ 35.0 million for patents that were fully amortized.
Intellectual Property Operations amortization of patents is expensed in cost of revenues and Industrial Operations amortization is expensed in general and administrative expenses.
1 unchanged sentence
Years Ending December 31,
−Removed: 2023 $ 12,068
−Removed: Thereafter 1,334
Total $ 33,556
−Removed: During the year ended December 31, 2022, ARG entered into an agreement granting ARG the exclusive option to acquire all rights to license and enforce a patent portfolio and all future patents and patent applications, and incurred $ 15.0 million of certain patent and patent rights costs, of which $ 6.0 million was paid in 2022 and $ 9.0 million is accrued and included in
−Removed: accrued expenses and other current liabilities (see Note 7), and is due in three $ 3.0 million installments in February, April and June 2023.
+Added: During the year ended December 31, 2022, ARG entered into an agreement granting ARG the exclusive option to acquire all rights to license and enforce a patent portfolio and all future patents and patent applications, and incurred $ 15.0 million of certain patent and patent rights costs, of which $6.0 million was paid in 2022 and $9.0 million paid in 2023.
The patent costs are included in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023.
+Added: During the year ended December 31, 2023, ARG accrued certain patent and patent rights acquisition costs, of which $ 4.0 million is due January 31, 2024.
+Added: As of December 31, 2023 and 2022, $ 4.0 million and $ 9.0 million was accrued, respectively, and included in accrued expenses and other current liabilities (see Note 9).
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
2 unchanged sentences
Accrued consulting and other professional fees $ 1,595 $ 1,173
−Removed: Customer deposit — 3,000
Income taxes payable 619 474
6 unchanged sentences
STARBOARD INVESTMENT
−Removed: Recapitalization Agreement
−Removed: On October 30, 2022 the Company entered into the Recapitalization Agreement with Starboard and the Investors, pursuant to which, among other things, the Company and Starboard agreed to enter into a series of transactions to restructure Starboard’s existing investments in the Company in order to simplify the Company’s capital structure.
−Removed: As applicable, the following discussion of Starboard’s investments in the Company reflect the transactions effected or to be effected pursuant to the Recapitalization Agreement.
+Added: In order to establish a strategic and ongoing relationship between the Company and Starboard, on November 18, 2019, the Company and Starboard entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which Starboard acquired (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a stated value of $ 100 per share, (ii) Series A Warrants to purchase up to 5,000,000 shares of the Company's common stock (the “Series A Warrants”) and (iii) Series B Warrants to purchase up to 100,000,000 shares of the Company's common stock.
+Added: On November 12, 2021, the Board formed a Special Committee comprised of directors not affiliated or associated with Starboard in order to explore the possibility of simplifying the Company’s capital structure.
+Added: Management of the Company believed that the Company’s capital structure, with multiple different series of securities, made it difficult for investors to understand and value the Company and created an impediment to new public investment.
+Added: As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into the Recapitalization Agreement with Starboard and the Investors in order to simplify the Company’s capital structure, pursuant to which, among other things, (1) effective as of November 1, 2022, the Investors exercised the Series A Warrants in full and received 5,000,000 shares of the Company’s common stock, (2) the Investors purchased 15,000,000 shares of the Company’s common stock pursuant to the Concurrent Private Rights Offering (as
+Added: defined below) and the Unadjusted Series B Warrants (as defined below) were cancelled, and (3) on July 13, 2023, (a) Starboard converted 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of the Company’s common stock, and (b) Starboard exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 shares of common stock, the cancellation of $ 60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (as described further below, the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $ 55.0 million.
+Added: As a result, Starboard beneficially owned 61,123,595 shares of common stock as of July 13, 2023, representing approximately 61.2 % of the common stock based on 99,886,322 shares of common stock issued and outstanding as of such date.
+Added: Accordingly, no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding.
+Added: As applicable, the following discussion of Starboard’s investments in the Company reflect the transactions effected pursuant to the Recapitalization Agreement.
Series A Redeemable Convertible Preferred Stock
−Removed: On November 18, 2019, the Company entered into a Securities Purchase Agreement with the Investors pursuant to which the Company issued (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a par value of $ 0.001 per share and a stated value of $ 100 per share, and (ii) Series A Warrants to purchase up to 5 million shares of the Company’s common stock to the Investors.
−Removed: The Securities Purchase Agreement also established the terms of certain senior secured notes and additional Series B Warrants which may be issued to Starboard in the future.
−Removed: On June 4, 2020, the Company entered into a Supplemental Agreement, as defined below under “Senior Secured Notes”, with certain contractual agreements affecting the Series A Redeemable Convertible Preferred Stock, reflected below.
−Removed: The Series A Redeemable Convertible Preferred Stock can be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $ 3.65 (subject to certain anti-dilution adjustments).
−Removed: Holders may elect to convert the Series A Redeemable Convertible Preferred Stock into common stock at any time.
−Removed: The Company may elect to convert the Series A Redeemable Convertible Preferred Stock into shares of common stock any time on or after November 15, 2025, provided that the closing price of the Company’s common stock equals or exceeds 190 % of the conversion price for 30 consecutive trading days and assuming certain other conditions of the common stock have been met.
−Removed: Holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the period of May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $ 50.0 million aggregate principal of senior secured notes to the Investors pursuant to the Securities Purchase Agreement at the time of the redemption.
−Removed: Holders also have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock during the period of November 15, 2024 through February 15, 2025.
−Removed: Additionally, holders have the option to redeem all or a portion of the Series A Redeemable Convertible Preferred Stock upon the occurrence of (i) a change of control or (ii) various other triggering events, such as the suspension from trading or delisting of the Company’s common stock.
−Removed: Series A Redeemable Convertible Preferred Stock is redeemed at the option of the holders, the redemption price may include a make-whole amount or a stated premium, depending on the redemption scenario.
−Removed: The Company may redeem all, and not less than all, of the Series A Redeemable Convertible Preferred Stock (i) upon a change of control or (ii) during the period of May 15, 2022 through August 15, 2022, provided that there is not outstanding at least $ 50.0 million aggregate principal of the senior secured notes at the time of the redemption, and assuming certain conditions of the common stock have been met.
−Removed: If the Series A Redeemable Convertible Preferred Stock is redeemed at the option of the Company, the redemption price would include a make-whole amount or a 15 % premium depending on the circumstances.
−Removed: If any Series A Redeemable Convertible Preferred Stock remains outstanding on November 15, 2027, the Company shall redeem such Series A Redeemable Convertible Preferred Stock in cash.
−Removed: In all redemption scenarios, the redemption price for the Series A Redeemable Convertible Preferred Stock includes the stated value plus accrued and unpaid dividends.
−Removed: In addition, depending on the redemption scenario, the redemption price may also include a make-whole amount or stated premium as described above.
−Removed: When the Company issues Notes, the Holder may exchange the Series A Redeemable Convertible Preferred Stock for (i) Notes and (ii) Series B Warrants to purchase common stock.
−Removed: The Series A Redeemable Convertible Preferred Stock accrues cumulative dividends quarterly at annual rate of 3.0 % on the stated value.
−Removed: Upon certain triggering events, the dividend rate will increase to 7.0 % if the triggering event occurs before an approved investment or 10.0 % on the stated value if the triggering event occurs after an approved investment.
−Removed: In connection with the approved investment in June 2020, the Company and the Investors agreed that the dividend rate on the Series A Redeemable Convertible Preferred Stock would accrue at 3.0 % so long as no triggering event occurs and the Company maintains $ 35.0 million in escrow.
−Removed: Series A Redeemable Convertible Preferred Stock also participates on an as-converted basis in any regular or special dividends paid to common stockholders.
−Removed: During October 2021, the Company consummated a suitable acquisition, accordingly $ 35.0 million was released to the Company from escrow (refer to Note 1 for discussion related to the Printronix acquisition).
−Removed: Upon consummation of the approved acquisition in October 2021, the dividend rate increased to 8.0 % on the stated value.
−Removed: There are no accrued and unpaid dividends as of December 31, 2022 and 2021.
−Removed: Holders of the Series A Redeemable Convertible Preferred Stock have the right to vote with common stockholders on an as-converted basis on all matters.
−Removed: Holders of Series A Redeemable Convertible Preferred Stock will also be entitled to a separate class vote with respect to amendments to the Company’s organizational documents that generally have an adverse effect on the Series A Redeemable Convertible Preferred Stock.
−Removed: Upon liquidation of the Company, holders of Series A Redeemable Convertible Preferred Stock have a liquidation preference over holders of our common stock and will be entitled to receive, prior to any distribution to holders of our common stock, an amount equal to the greater of (i) the stated value plus accrued and unpaid dividends or (ii) the amount that would have been received if the Series A Redeemable Convertible Preferred Stock had been converted into common stock immediately prior to the liquidation event at the then effective conversion price.
−Removed: In connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company executed a Registration Rights Agreement with Starboard and the Investors and a Governance Agreement with Starboard and certain affiliates of Starboard.
−Removed: Under the Registration Rights Agreement, the Company agreed to provide certain registration rights with respect to the Series A Redeemable Convertible Preferred Stock and shares of common stock issued upon conversion.
−Removed: In accordance with the Recapitalization Agreement, subject to the receipt of stockholder approval at the Company’s next annual meeting of stockholders, (i) the Company will cause the Certificate of Designations to be amended and restated in the form attached to the Recapitalization Agreement in order to remove the “ 4.89 % blocker” provision and (ii) on or prior to July 14, 2023, the Investors will convert an aggregate amount of 350,000 shares of Preferred Stock into common stock in accordance with the terms of the Certificate of Designations.
+Added: Per its terms, the Series A Redeemable Convertible Preferred Stock could be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $ 3.65 (subject to certain anti-dilution adjustments) and holders of the Series A Redeemable Convertible Preferred Stock could elect to convert the Series A Redeemable Convertible Preferred Stock into common stock at any time.
+Added: Further, the Series A Redeemable Convertible Preferred Stock accrued cumulative dividends quarterly at annual rate of 3.0 % on the stated value.
+Added: Upon consummation of the Printronix acquisition in October 2021, the dividend rate increased to 8.0 % on the stated value.
+Added: There were no accrued and unpaid dividends as of December 31, 2023 and 2022.
+Added: Under the Recapitalization Agreement, the Company and Starboard agreed to take certain actions related to the Series A Preferred Stock in connection with the Recapitalization, including submitting a proposal for stockholder approval to remove the “4.89% blocker” provision contained in the Company's Amended and Restated Certificate of Designations (the "Amendment to the Amended and Restated Certificate of Designations").
+Added: The Company’s stockholders approved the Amendment to the Amended and Restated Certificate of Designations at the Company’s annual meeting of stockholders held on May 16, 2023 which became effective on June 30, 2023.
+Added: Subsequently, and in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, on July 13, 2023, Starboard converted an aggregate amount of 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of common stock, which included 27,704 shares of common stock issued in respect of accrued and unpaid dividends.
The Company determined that certain features of the Series A Redeemable Convertible Preferred Stock should be bifurcated and accounted for as a derivative.
−Removed: Each of these features are bundled together as a single, compound embedded derivative.
+Added: Each of these features were bundled together as a single, compound embedded derivative.
During 2019, total proceeds received and transaction costs incurred from the issuance of the Series A Redeemable Convertible Preferred Stock amounted to $ 35.0 million and $ 1.3 million, respectively.
5 unchanged sentences
The transaction costs allocated to the Series A Warrants were expensed as incurred.
−Removed: The Company classifies the Series A Redeemable Convertible Preferred Stock as mezzanine equity as the instrument would become redeemable at the option of the holder in various scenarios or otherwise on November 15, 2027.
−Removed: As it is probable that the Series A Redeemable Convertible Preferred Stock would become redeemable, the Company accretes the instrument to its redemption value using the effective interest method and recognizes any changes against additional paid in capital in the absence of retained earnings.
−Removed: The Company determined that upon entering into the Recapitalization Agreement, the Series A Redeemable Convertible Preferred Stock was not modified related to the redemption, as such action is subject to the receipt of stockholder approval at the Company’s next annual meeting of stockholders.
−Removed: Accordingly, the Series A Redeemable Convertible Preferred Stock will continue to be classified as temporary equity and will continue to be accreted to its redemption value to the earliest redemption date of November 15, 2024.
+Added: The Company classified the Series A Redeemable Convertible Preferred Stock as mezzanine equity as the instrument would become redeemable at the option of the holder in various scenarios or otherwise on November 15, 2027.
+Added: As it was probable that the Series A Redeemable Convertible Preferred Stock would become redeemable, the Company accreted the instrument to its redemption value using the effective interest method and recognized any changes against additional paid in capital in the absence of retained earnings.
+Added: The Company determined that upon entering into the Recapitalization
+Added: Agreement, the Series A Redeemable Convertible Preferred Stock was not modified related to the redemption, as such action was subject to the receipt of stockholder approval at the Company’s next annual meeting of stockholders.
+Added: Accordingly, the Series A Redeemable Convertible Preferred Stock continued to be classified as temporary equity and continued to be accreted to its redemption value to the earliest redemption date of November 15, 2024.
Accretion for the years ended December 31, 2023 and 2022 was $ 3.2 million and $ 5.2 million, respectively.
4 unchanged sentences
Accordingly, we have recorded an embedded derivative liability representing the combined fair value of each of these features.
−Removed: The embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded as other income or (expense) in the “Change in fair value of the Series A and B warrants and embedded derivatives” financial statement line item of the consolidated statements of operations.
−Removed: In connection with the Recapitalization Agreement, the Company determined that the embedded features will continue to be bifurcated from the host Series A Redeemable Convertible Preferred Stock and accounted for separately as a compound derivative.
−Removed: As of December 31, 2022 and 2021, the fair value of the Series A embedded derivative was $ 16.8 million and $ 18.4 million, respectively.
+Added: The embedded derivative liability was adjusted to reflect fair value at each period end with changes in fair value recorded as other income or (expense) in the “Change in fair value of the Series A and B warrants and embedded derivatives” financial statement line item of the consolidated statements of operations.
+Added: In connection with the Recapitalization Agreement, the Company determined that the embedded features would continue to be bifurcated from the host Series A Redeemable Convertible Preferred Stock and accounted for separately as a compound derivative.
+Added: Following Starboard’s conversion of its of 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of common stock, which included 27,704 shares of common stock issued in respect of accrued and unpaid dividends, on July 13, 2023, the Company no longer had any shares of Series A Redeemable Convertible Preferred Stock outstanding.
+Added: As a result, as of December 31, 2023 and 2022, the fair value of the Series A embedded derivative was zero and $ 16.8 million, respectively.
Series A Warrants
−Removed: On November 18, 2019, in connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company issued detachable Series A Warrants to acquire up to 5 million shares of common stock at a price of $ 3.65 per share (subject to certain anti-dilution adjustments) at any time during a period of eight years beginning on the instrument’s issuance date of the Series A Warrants.
+Added: On November 18, 2019, in connection with the issuance of the Series A Redeemable Convertible Preferred Stock, the Company issued detachable Series A Warrants to acquire up to 5,000,000 shares of common stock at a price of $ 3.65 per share (subject to certain anti-dilution adjustments) at any time during a period of eight years beginning on the instrument’s issuance date of the Series A Warrants.
The fair value of the Series A Warrants was $ 4.8 million upon issuance.
−Removed: As of December 31, 2022, the Series A Warrants have been fully exercised, as described below.
−Removed: In accordance with the terms of the Recapitalization Agreement, within five ( 5 ) business days following the date of the Recapitalization Agreement, the Investors were required to consummate the Series A Warrants Exercise, and the Company was to issue to the Investors shares of common stock in accordance with the terms of the Series A Warrants and to pay to Starboard an aggregate amount of $ 9.0 million representing a negotiated settlement of the foregone time value of the Series A Warrants (which amount was paid through a reduction in the exercise price of the Series A Warrants).
−Removed: Effective as of November 1, 2022, the Investors exercised the Series A Warrants in full and the Company issued an aggregate of
−Removed: 5,000,000 shares of the Company’s common stock to the Investors in consideration of their payment of the cash exercise price of $ 9.3 million, which amount represents a reduction in the exercise price to account for a negotiated settlement by the parties to account for the forgone time value of money of the Series A Warrants.
−Removed: The Series A Warrants were classified as a liability in accordance with ASC 480, "Distinguishing Liabilities from Equity", as the agreement provided for net cash settlement upon a change in control, which is outside the control of the Company.
−Removed: As a result of the Series A Warrants exercise on November 1, 2022 and related warrant modification, the Company recognized the common stock issued at its fair value in equity and an approximate $ 2.0 million charge as a component of the change in fair value of the Series A Warrants in other expense.
−Removed: The Series A Warrants were recognized at fair value at each reporting period until exercised, with changes in fair value recognized in other income or (expense) in the consolidated statements of operations.
−Removed: As of December 31, 2022 and 2021, the fair value of the Series A Warrants was zero and $ 11.3 million, respectively.
+Added: On November 1, 2022, the Series A Warrants were fully exercised, and the Company recognized the common stock issued at its fair value in equity and an approximate $ 2.0 million charge as a component of the change in fair value of the Series A Warrants in other expense, which resulted in a fair value of zero.
+Added: In accordance with the terms of the Recapitalization Agreement, effective as of November 1, 2022, the Investors consummated the Series A Warrants Exercise (exercising the Series A Warrants in full) and the Company issued an aggregate of 5,000,000 shares of the Company’s common stock to the Investors in consideration of their payment of the cash exercise price of $ 9.3 million, which amount represents a reduction in the exercise price to account for a negotiated settlement by the parties to account for the forgone time value of money of the Series A Warrants.
+Added: As of December 31, 2023, no Series A Warrants were issued or outstanding.
Series B Warrants
−Removed: On February 25, 2020, pursuant to the terms of the Securities Purchase Agreement with Starboard and the Investors, the Company issued Series B Warrants to purchase up to 100 million shares of the Company’s common stock at an exercise price (subject to certain price-based anti-dilution adjustments) of either (i) $ 5.25 per share, if exercising by cash payment, within 30 months from the issuance date (i.e., August 25, 2022);
−Removed: or (ii) $ 3.65 per share, if exercising by cancellation of a portion of Notes.
+Added: On February 25, 2020, pursuant to the terms of the Securities Purchase Agreement with Starboard and the Investors, the Company issued Series B Warrants to purchase up to 100,000,000 shares of the Company’s common stock at an exercise price (subject to certain price-based anti-dilution adjustments) of either (i) $ 5.25 per share, if exercising by cash payment, within 30 months from the issuance date (i.e., August 25, 2022);
+Added: or (ii) $ 3.65 per share, if exercising by cancellation of a portion of the Notes (as defined below).
The Company issued the Series B Warrants for an aggregate purchase price of $ 4.6 million.
−Removed: The Series B Warrants expire on November 15, 2027.
+Added: The Series B Warrants had an expiration date of November 15, 2027.
In connection with the issuance of the Notes on June 4, 2020, the terms of certain of the Series B Warrants were amended to permit the payment of the lower exercise price of $ 3.65 through the payment of cash, rather than only through the cancellation of Notes outstanding, at any time until the expiration date of November 15, 2027.
−Removed: 31,506,849 of the Series B Warrants are subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms (the Series B Warrants not subject to such adjustment, the “Unadjusted Series B Warrants”).
−Removed: As of December 31, 2022, the Series B Warrants have not been exercised.
+Added: 31,506,849 of the Series B
+Added: Warrants were subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms (the Series B Warrants not subject to such adjustment, the “Unadjusted Series B Warrants”).
During the third quarter of 2022, the cash exercise feature of the Unadjusted Series B Warrants expiration date of August 25, 2022 was extended to October 28, 2022.
On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for the related 68,493,151 warrants.
−Removed: In accordance with the terms of the Recapitalization Agreement, on or prior to July 14, 2023 (unless stockholder approval is required), the Company and Starboard will amend the Series B Warrant Agreement to remove the 4.89 % blocker, and Starboard will irrevocably exercise 31,506,849 of the Series B Warrants (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the common stock occurring after the date of the Recapitalization Agreement), through the Series B Warrants Exercise.
−Removed: In March 2023, the remaining Series B Warrants were cancelled immediately following the completion of the Rights Offering (as described below).
−Removed: At the closing of the Series B Warrants Exercise (the “Closing”), the Company will pay to Starboard an aggregate amount of $ 66.0 million (the “Recapitalization Payment”) representing a negotiated settlement of the foregone time value of the Series B Warrants and the Series A Redeemable Convertible Preferred Stock (which amount will be paid through a reduction in the exercise price of the Series B Warrants).
−Removed: As a result of the Recapitalization Agreement, the conversion of the Series A Redeemable Convertible Preferred Stock is probable (as discussed above), therefore, the Recapitalization Payment effectively modifies the exercise price of the Series B Warrants.
−Removed: Upon the Closing, the Investors will exercise the Series B Warrants at a reduced price and the Company will issue an aggregate of 31,506,849 shares of the Company’s common stock to the Investors in consideration of their cash payment and cancellation of any outstanding Notes.
−Removed: If stockholder approval for the amendment to the Certificate of Designations to remove the “ 4.89 % blocker” provision is not obtained, the Recapitalization Payment will be reduced by $ 12.7 million.
+Added: In March 2023, the Unadjusted Series B Warrants were cancelled immediately following the completion of the Rights Offering (as described below).
+Added: During the year ended December 31, 2023, the remaining 31,506,849 Series B Warrants were exercised.
+Added: As stated in Note 1 above, further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, on July 13, 2023, Starboard completed the Series B Warrants Exercise.
+Added: Pursuant to the Series B Warrants Exercise, the Company cancelled $ 60.0 million aggregate principal amount of Senior Secured Notes held by Starboard and received aggregate gross proceeds of approximately $ 55.0 million.
+Added: At the closing of the Series B Warrants Exercise, the Company paid to Starboard an aggregate amount of $ 66.0 million (the “Recapitalization Payment”) representing a negotiated settlement of the foregone time value of the Series B Warrants and the Series A Redeemable Convertible Preferred Stock (which amount was paid through a reduction in the exercise price of the Series B Warrants).
+Added: The Recapitalization Payment effectively modified the exercise price of the Series B Warrants.
+Added: Upon the Series B Warrants Exercise, the Investors exercised the Series B Warrants at a reduced price and the Company issued an aggregate of 31,506,849 shares of the Company’s common stock to the Investors in consideration of their cash payment and cancellation of any outstanding Senior Secured Notes.
The Series B Warrants are classified as a liability in accordance with ASC 480, "Distinguishing Liabilities from Equity", as the agreement provides for net cash settlement upon a change in control, which is outside the control of the Company.
In connection with the Recapitalization Agreement and related warrant modification, the Company recognized the incremental fair value as a component of the change in fair value of the Series B Warrants in other expense as of December 31, 2022.
−Removed: The Series B Warrants will be recognized at fair value at each reporting period until exercised or expiration, with changes in fair value recognized in other income or (expense) in the consolidated statements of operations.
−Removed: As of December 31, 2022 and 2021, the total fair value of the Series B Warrants was $ 84.8 million and $ 96.4 million, respectively.
+Added: The Series B Warrants were recognized at fair value at each reporting period until exercised, with changes in fair value recognized in other income or (expense) in the consolidated statements of operations.
+Added: As of December 31, 2023, no Series B warrants were issued or outstanding.
+Added: As of December 31, 2023 and 2022, the total fair value of the Series B Warrants was zero and $ 84.8 million, respectively.
Senior Secured Notes
−Removed: On June 4, 2020, pursuant to the Securities Purchase Agreement dated November 18, 2019 with Starboard and the Investors, the Company issued $ 115.0 million in Notes to the Investors.
+Added: On June 4, 2020, pursuant to the Securities Purchase Agreement dated November 18, 2019 with Starboard and the Investors, the Company issued $ 115.0 million in senior secured notes (the "Notes") to the Investors.
Also on June 4, 2020, in connection with the issuance of the Notes, the Company entered into a Supplemental Agreement with Starboard (the “Supplemental Agreement”), as discussed further below.
−Removed: On June 30, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Merton Acquisition HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merton”) and Starboard, on behalf of itself and on behalf of certain funds and accounts under its management, including the holders of the Notes.
+Added: On June 30, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Merton and Starboard, on behalf of itself and on behalf of certain funds and accounts under its management, including the holders of the Notes.
Pursuant to the Exchange Agreement, the holders of the Notes exchanged the entire outstanding principal amount for new senior notes (the “New Notes”) issued by Merton having an aggregate outstanding original principal amount of $ 115.0 million.
−Removed: The New Notes bear interest at a rate of 6.00 % per annum and had an initial maturity date of December 31, 2020.
−Removed: The New Notes are fully guaranteed by the Company and are secured by an all-assets pledge of the Company and Merton and non-recourse equity pledges of each of the Company’s material subsidiaries.
−Removed: Pursuant to the Exchange Agreement, the New Notes (i) are deemed to be “Notes” for purposes of the Securities Purchase Agreement, (ii) are deemed to be “June 2020 Approved Investment Notes” for purposes of the Supplemental Agreement, and with the Company agreeing to redeem $ 80.0 million principal amount of the New Notes by September 30, 2020 and $ 35.0 million principal amount of the New Notes by December 31, 2020, and (iii) are deemed to be “Notes” for the purposes of the Series B Warrants, and therefore may be tendered pursuant to a Note Cancellation under the Series B Warrants on the terms set forth in the Series B Warrants and the New Notes.
−Removed: Delivery of notes in the form of the New Notes will also satisfy the delivery of Exchange Notes pursuant to Section 16(i) of the Certificate of Designations of the Company’s Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Certificate of Designations”).
−Removed: The New Notes will not be deemed to be “Notes” for the purposes of the Registration Rights Agreement, dated as of November 18, 2019, by and among the Company, Starboard and the Investors.
−Removed: Because the New Notes are to be settled within twelve months pursuant to their terms, they are classified as current liabilities in the consolidated balance sheets.
+Added: The New Notes bore interest at a rate of 6.00 % per annum and had an initial maturity date of December 31, 2020.
+Added: The New Notes were fully guaranteed by the Company and were secured by an all-assets pledge of the Company and Merton and non-recourse equity pledges of each of the Company’s material subsidiaries.
+Added: Pursuant to the Exchange Agreement, the New Notes (i) were deemed to be “Notes” for purposes of the Securities Purchase Agreement, (ii) were deemed to be “June 2020 Approved Investment Notes” for purposes of the Supplemental Agreement, and with the Company agreeing to redeem $ 80.0 million principal amount of the New Notes by September 30, 2020 and $ 35.0 million principal amount of the New Notes by December 31, 2020, and (iii) were deemed to be “Notes” for the purposes of the Series B Warrants, and therefore could be tendered pursuant to a Note Cancellation under the Series B Warrants on the terms set forth in the Series B Warrants and the New Notes.
+Added: Delivery of notes in the form of the New Notes could also satisfy the delivery of "Exchange Notes" pursuant to Section 16(i) of the Certificate of Designations of the Company’s Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Certificate of Designations”).
+Added: The New Notes would not be deemed to be “Notes” for the purposes of the Registration Rights Agreement, dated as of November 18, 2019, by and among the Company, Starboard and the Investors.
+Added: Because the New Notes, as amended (as described below), were to be settled within twelve months pursuant to their terms, they are classified as current liabilities in the consolidated balance sheets.
The Company capitalized $ 4.6 million in lender fees associated with the issuance of the Notes and amortized such fees over the approximate seven month period ended December 31, 2020, which was the initial redemption date of the Notes.
−Removed: There was $ 0.5 million and $ 1.3 million accrued and unpaid interest on the New Notes as of December 31, 2022 and 2021, respectively.
+Added: There was zero and $ 450,000 of accrued and unpaid interest on the New Notes as of December 31, 2023 and 2022, respectively.
On January 29, 2021, the Company redeemed $ 50.0 million of the New Notes and on March 31, 2021, the Company reissued $ 50.0 million of the New Notes.
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On September 30, 2021, the Company issued $ 35.0 million in additional New Notes (the “September 2021 Merton Notes”) and amended the maturity date of the New Notes to December 1, 2021.
−Removed: The June 2021 Merton Notes and the September 2021 Merton Notes cannot be used to exercise Series B Warrants issued to Starboard.
+Added: The June 2021 Merton Notes and the September 2021 Merton Notes could not be used to exercise Series B Warrants issued to Starboard.
On November 30, 2021, the Company amended the maturity date of the New Notes to January 31, 2022.
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On April 14, 2022, the Company amended the New Notes to extend the maturity date to July 15, 2022, permit the investment in certain types of derivative instruments and permit certain guarantees in connection with such derivative instruments, each as defined therein, and agreed to repay an aggregate of $ 50.0 million principal amount of the New Notes, resulting in a principal amount outstanding of $ 115.0 million.
−Removed: On July 15, 2022, the Company amended the maturity date of the New Notes to July 14, 2023, and agreed to repay an aggregate of $ 55.0 million principal amount of the New Notes, resulting in a principal amount outstanding of $ 60.0 million.
−Removed: The total principal amount outstanding of New Notes as of December 31, 2022 and 2021 was $ 60.0 million and $ 180.0 million, respectively.
+Added: On July 15, 2022, the Company amended the maturity date of the New Notes to July 14, 2023, and agreed to repay an aggregate of $ 55.0 million principal amount of the New Notes, resulting in a principal amount outstanding of $ 60.0 million (such remaining New Notes also referred to as the Senior Secured Notes).
+Added: On July 13, 2023 pursuant to the Series B Warrants Exercise, the Company cancelled the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes.
+Added: As of December 31, 2023, no Senior Secured Notes were issued or outstanding.
+Added: As a result, the total principal amount outstanding of Senior Secured Notes as of December 31, 2023 and 2022 was zero and $ 60.0 million, respectively.
Modifications to Series A Redeemable Convertible Preferred Stock and Series B Warrants
The June 4, 2020 Supplemental Agreement also provided for (i) a waiver of increased dividends under the original terms of the Series A Redeemable Convertible Preferred Stock that would have otherwise accrued due to the Company’s use of the $ 35.0 million proceeds received from Starboard and the Investors upon the issuance of the Series A Redeemable Convertible Preferred Stock in November 2019, (ii) the replacement of original optional redemption rights for the Series A Redeemable Convertible Preferred Stock provided to both the Company and the holders that otherwise would have been nullified through the issuance of the Notes, and (iii) an amendment to the terms of the previously issued Series B Warrants to permit the payment of the lower exercise price of $ 3.65 through the payment of cash, rather than only through the cancellation of Notes outstanding, at any time until the expiration of the Series B Warrants on November 15, 2027.
−Removed: 31,506,849 of the Series B Warrants are subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms.
+Added: 31,506,849 of the Series B Warrants were subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms.
We analyzed the amendments to the Series A Redeemable Convertible Preferred Stock and determined that the amendments were not significant.
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The incremental fair value of the Series B Warrants associated with the modification of their terms in connection with the issuance of the Notes was $ 1.3 million and is recognized as a discount on the Notes and will be amortized to interest expense over the contractual life of the Notes.
−Removed: For the years ended December 31, 2022 and 2021, $ 90,000 and $ 103,000 , respectively, was amortized to interest expense.
−Removed: The discount was fully amortized during the quarter ended September 30, 2022.
+Added: For the year ended December 31, 2023, no amount was amortized to interest expense as the discount was fully amortized during the quarter ended September 30, 2022.
+Added: For the year ended December 31, 2022, $ 90,000 was amortized to interest expense.
Rights Offering and Concurrent Private Rights Offering
5 unchanged sentences
Pursuant to the Rights Offering, Eligible Securityholders received one non-transferable subscription right (a “Subscription Right”) for every four shares of common stock owned by such Eligible Securityholders.
−Removed: Each Subscription Right entitles an Eligible Securityholder to purchase, at such Eligible Securityholder’s election, one share of common stock at a price of $ 5.25 per share (the “Subscription Price”).
−Removed: The Investors received private subscription rights to purchase common stock at the Subscription Price pursuant to a concurrent private rights offering (the “Concurrent Private Rights Offering”) in connection with their ownership of common stock and, on an as-converted basis, the Company’s Series B Warrants and shares of the Company’s Series A Redeemable Convertible Preferred Stock.
+Added: Each Subscription
+Added: Right entitled an Eligible Securityholder to purchase, at such Eligible Securityholder’s election, one share of common stock at a price of $ 5.25 per share (the “Subscription Price”).
+Added: The Investors received private subscription rights to purchase up to 28,647,259 shares of common stock at the Subscription Price pursuant to a concurrent private rights offering (the “Concurrent Private Rights Offering”) in connection with their ownership of common stock and, on an as-converted basis, the Company’s Series B Warrants and shares of the Company’s Series A Redeemable Convertible Preferred Stock.
The private subscription rights provided to the Investors pursuant to the Concurrent Private Rights Offering were on substantially the same terms as the Subscription Rights, and were distributed substantially concurrently with the distribution of the Subscription Rights and expired at the Expiration Time.
+Added: In connection with the Rights Offering, Starboard purchased 15,000,000 shares of common stock.
The Company determined that upon entering into the Recapitalization Agreement on October 30, 2022, the Rights Offering and Concurrent Private Rights Offering and related commitment required no recognition in the Company's financial statements.
The Company recognized the proceeds received from the sale of the shares in equity when the sale occurred.
−Removed: The Company received aggregate gross proceeds of approximately $ 361,000 from the Rights Offering and aggregate gross proceeds of approximately $ 78.8 million from the Concurrent Private Rights Offering.
−Removed: After giving effect to the issuance of 68,753 shares of common stock in the Rights Offering and 15,000,000 shares of Common Stock in the Concurrent Private Rights Offering, the Company has 58,543,312 shares of common stock issued and outstanding.
−Removed: Following the Closing, Starboard may be deemed the beneficial owner of 20,000,000 shares of common stock, representing approximately 34.2 % of the issued and outstanding common stock as of March 6, 2023.
+Added: The Company received aggregate gross proceeds of approximately $ 361,000 from the Rights Offering and aggregate gross proceeds of approximately $ 78.8 million from the Concurrent Private Rights Offering and issued an aggregate of 15,068,753 shares of common stock.
The Rights Offering was made pursuant to a prospectus supplement to the Company’s shelf registration statement on Form S-3 (No.
333-249984), filed with the SEC on February 14, 2023.
+Added: Under the Recapitalization Agreement, the parties agreed that for a period from the date of the Recapitalization Agreement until May 12, 2026 (the “Applicable Period”), the Board of the Company will include at least two (2) directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Exchange Act of 1934, as amended) of, Starboard, with current Board members Maureen O’Connell and Isaac T.
+Added: Kohlberg satisfying this initial condition under the Recapitalization Agreement.
+Added: The parties also agreed that Katharine Wolanyk would continue to serve as a director of the Company until at least May 12, 2024 (or such earlier date if Ms.
+Added: Wolanyk is unwilling or unable to serve as a director for any reason or resigns as a director).
+Added: Additionally, the Company appointed Gavin Molinelli as a member and as Chair of the Board.
+Added: The Company and Starboard also agreed that, following the closing of the Series B Warrants Exercise until the end of the Applicable Period, the number of directors serving on the Board will not exceed 10 members.
Other Provisions of the Recapitalization Agreement
−Removed: On February 14, 2023, Company entered into an amended and restated Registration Rights Agreement with Starboard as contemplated by the Recapitalization Agreement.
+Added: On February 14, 2023, the Company entered into an amended and restated Registration Rights Agreement with Starboard as contemplated by the Recapitalization Agreement.
Pursuant to the amended Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale of the shares of common stock, issuable or issued to Starboard pursuant to or in accordance with Section 1.1 of the Recapitalization Agreement, including the shares issued to Starboard in the Concurrent Private Rights Offering, within 90 days after a written request made prior to the first anniversary of the Closing Date (as defined in the Registration Rights Agreement).
3 unchanged sentences
provided, that the additional majority voting requirement would not be applicable if either (x) the business combination is approved by the Board by the affirmative vote of at least a majority of the directors who are unaffiliated with Starboard or (y) (i) the consideration to be received by stockholders other than Starboard and its affiliates meets certain minimum price conditions, and (ii) the consideration to be received by stockholders other than Starboard and its affiliates is of the same form and kind as the consideration paid by Starboard and its affiliates.
−Removed: The consummation of the Series B Warrant Exercise is subject to certain conditions, including:
−Removed: (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;
−Removed: (ii) the absence of any law or order prohibiting the consummation of the Series B Warrant Exercise;
−Removed: (iii) the representations and warranties of the Company and Starboard being true and correct, subject to the materiality standards contained in the Recapitalization Agreement;
−Removed: and (iv) the Company and Starboard having complied in all material respects with their respective obligations under the Recapitalization Agreement.
−Removed: The Recapitalization Agreement may be terminated by either party under certain circumstances, including if (i) the parties agree to terminate by mutual consent, (ii) a governmental entity issues an order permanently prohibiting the Recapitalization, (iii) there is an uncured breach of the Recapitalization Agreement by the other party that results in a condition to Closing not being capable of being satisfied, or (iv) the Closing does not occur on or before July 31, 2023.
−Removed: The Recapitalization Agreement also provides that, effective as of the later of the Closing and the date on which no Notes remain outstanding, (i) the Securities Purchase Agreement and (ii) that certain Governance Agreement, dated as of November 18, 2019, as amended and restated on January 7, 2020, shall be automatically terminated and of no further force and effect without any further action by any party thereto.
+Added: The Recapitalization Agreement also provided that, effective as of the later of the closing of the Recapitalization Transactions and the date on which no Senior Secured Notes remain outstanding, (i) the Securities Purchase Agreement and (ii) that certain Governance Agreement, dated as of November 18, 2019, as amended and restated on January 7, 2020
+Added: (the "Governance Agreement"), would be automatically terminated and of no further force and effect without any further action by any party thereto.
+Added: As a result of the closing of the Recapitalization Transactions, the Securities Purchase Agreement and the Governance Agreement have been terminated and are of no further force and effect.
+Added: Services Agreement
+Added: On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services.
+Added: Starboard has agreed to provide the services on an expense reimbursement basis and no separate fee will be charged by Starboard for the services.
+Added: During the year ended December 31, 2023 the Company reimbursed Starboard $216,000 under the Services Agreement.
FAIR VALUE MEASUREMENTS
11 unchanged sentences
In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.
−Removed: The assessment of the significance of a particular input requires judgment and considers
−Removed: factors specific to the asset or liability being measured.
+Added: The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured.
In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy.
6 unchanged sentences
As of December 31, 2023, the aggregate carrying amount of this investment was $ 57.1 million, and is included in equity securities, in the consolidated balance sheet ( r efer to Note 4 for additional information).
−Removed: At December 31, 2021, our Level 2 equity securities included an investment measured with an applied pricing model that included significant observable inputs to the public company common stock value.
−Removed: The fair value of this Level 2 equity security investment as of December 31, 2021 was estimated based on a discount of 3 percent determined using the following significant inputs to the pricing model:
−Removed: expected term of restriction of 3 months and volatility of approximately 45 percent.
−Removed: Series A Warrants.
−Removed: Series A Warrants were recorded at fair value, using a Black-Scholes option-pricing model (Level 3).
−Removed: During the quarter ended March 31, 2021, there was a change in estimate with regard to the calculation of the volatility assumption used in the Black-Scholes option-pricing model.
−Removed: As a result, the Series A Warrants were measured as Level 3 as opposed to Level 2 as measured previously.
−Removed: On November 1, 2022, the Series A Warrants were exercised in full (refer to Note 8 for additional information).
−Removed: The fair value of the Series A Warrants as of December 31, 2021 was estimated based on the following significant assumptions:
−Removed: volatility of 30 percent, risk-free rate of 1.33 percent, term of 5.79 years and a dividend yield of 0 percent.
−Removed: Refer to the " Embedded derivative liabilities" discussion below for additional information on assumptions.
+Added: Commodity Derivative Instruments :
+Added: Commodity derivative instruments are recorded at fair value using industry standard models using assumptions and inputs which are substantially observable in active markets throughout the full term of the instruments.
+Added: These include market price curves, quoted market prices in active markets, credit risk adjustments, implied market volatility and discount factors.
+Added: The fair value of these instruments are within Level 2 of the valuation hierarchy.
+Added: During 2023, Benchmark executed derivative contracts with a single counterparty and also executed an International Swap Dealers Association Master Agreement ("ISDA") with its counterparty, the terms of which provide Benchmark and its counterparty with rights of offset.
+Added: As of December 31, 2023, the aggregate fair value of the open commodity derivatives
+Added: was $ 2.7 million and is included in prepaid expenses and other current assets and other non-current assets, in the consolidated balance sheet (refer to Note 2 for additional information).
Series B Warrants.
Series B Warrants are recorded at fair value, using a Black-Scholes option-pricing model (Level 3).
−Removed: During the quarter ended March 31, 2021, there was a change in methodology used to an acceptable Black-Scholes option-pricing model from a Monte Carlo valuation technique.
On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for such warrants (refer to Note 10 for additional information).
+Added: The fair value of the remaining Series B Warrants as of July 13, 2023 was estimated based on the following significant assumptions:
+Added: volatility of 120 percent, risk-free rate of 5.24 percent, term of 0.04 years and a dividend yield of 0 percent.
+Added: On July 13, 2023, further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the remaining Series B Warrants were exercised, which also resulted in a fair value of zero as of December 31, 2023 (refer to Note 10 for additional information).
The fair value of the remaining Series B Warrants as of December 31, 2022 was estimated based on the following significant assumptions:
volatility of 53 percent, risk-free rate of 4.76 percent, term of 0.54 years and a dividend yield of 0 percent .
−Removed: The fair value of the two Series B Warrants as of December 31, 2021 was estimated based on the following significant assumptions:
−Removed: (1) volatility of 30 percent, risk-free rate of 1.34 percent, term of 5.88 years and a dividend yield of 0 percent, and (2) volatility of 25 percent, risk-free rate of 0.25 percent, term of 0.65 years and a dividend yield of 0 percent.
Refer to the " Embedded derivative liabilities" discussion below for additional information on assumptions.
1 unchanged sentence
Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the host instrument.
−Removed: During the quarter ended December 31, 2022 in connection with the Recapitalization Agreement, the Company changed its methodology to an as-converted value (Level 3), based on an expected Series A Convertible Preferred Stock conversion date on or prior to July 14, 2023 (refer to Note 8 for additional information).
−Removed: As of September 30, 2022, a binomial lattice framework was used to estimate the fair value of the embedded derivative in the Series A Convertible Preferred Stock (Level 3).
−Removed: The binomial model utilizes the Tsiveriotis and Fernandes implementation in which a convertible instrument is split into two separate components within a single lattice framework:
−Removed: a cash-only component which is subject to the selected risk-adjusted discount rate and an equity component which is subject only to the risk-free rate.
−Removed: The binomial model considers the (i) implied volatility of the value of our common stock, (ii) appropriate risk-free interest rate, (iii) credit spread, (iv) dividend yield, (v) dividend accrual (and a step-up in rates), and (vi) event probabilities of the various conversion and redemption scenarios.
+Added: During the quarter ended December 31, 2022 in connection with the Recapitalization Agreement, the Company changed its methodology from a binomial lattice framework to an as-converted value (Level 3), based on an expected Series A Redeemable Convertible Preferred Stock conversion date on or prior to July 14, 2023 (refer to Note 10 for additional information).
The volatility of the Company’s common stock is estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage.
1 unchanged sentence
A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants and convertible debt is lower than historical actual realized volatility.
−Removed: Prior to December 31, 2022, the assumed base case term used in the valuation models was the period remaining
−Removed: until November 15, 2027, the Series A Redeemable Convertible Preferred Stock maturity date.
+Added: Prior to December 31, 2022, the assumed base case term used in the valuation models was the period remaining until November 15, 2027, the Series A Redeemable Convertible Preferred Stock maturity date.
The risk-free interest rate was based on the yield on the U.S.
Treasury with a remaining term equal to the expected term of the conversion and early redemption options.
−Removed: The significant assumptions utilized in the Company’s as-converted valuation of the embedded derivative at December 31, 2022 were as follows:
+Added: The fair value of the embedded derivative as of July 13, 2023 was estimated based on the following significant assumptions:
coupon rate of 8.00 percent, conversion ratio of 27.40 , conversion date of July 14, 2023 and a discount rate of 14.80 percent.
−Removed: The significant assumptions utilized in the Company’s binomial model valuation of the embedded derivative at December 31, 2021 were as follows:
−Removed: volatility of 30 percent, risk-free rate of 1.30 percent, term of 5.87 years, a dividend yield of 0 percent and a discount rate of 9.60 percent.
−Removed: The fair value measurement of the embedded derivative is sensitive to these assumptions and changes in these assumptions could result in a materially different fair value measurement.
+Added: On July 13, 2023, in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, Starboard converted the Series A Redeemable Convertible Preferred Stock into common stock, which resulted in a fair value of zero as of December 31, 2023 (refer to Note 10 for additional information).
+Added: The fair value of the embedded derivative as of December 31, 2022 was estimated based on the following significant assumptions:
+Added: coupon rate of 8.00 percent, conversion ratio of 27.40 , conversion date of July 14, 2023 and a discount rate of 16.30 percent.
Financial assets and liabilities measured at fair value on a recurring basis were as follows:
3 unchanged sentences
Equity securities $ 63,068 $ — $ — $ 63,068
+Added: Commodity derivative instruments — 2,723 — 2,723
+Added: Total $ 63,068 $ 2,723 $ — $ 65,791
December 31, 2022:
5 unchanged sentences
December 31, 2022:
−Removed: Series A warrants $ — $ — $ 11,291 $ 11,291
Series A embedded derivative liabilities $ — $ — $ 16,835 $ 16,835
1 unchanged sentence
Total $ — $ — $ 101,615 $ 101,615
+Added: Benchmark realized derivative gain of $ 396,000 and unrealized derivative gain of $ 781,000 for the period from November 13, 2023 through December 31, 2023 and the realized and unrealized derivative gain are included in other income or (expense) in the consolidated statements of operations.
+Added: No amounts are netted under the terms of the ISDA.
The following table sets forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which are measured at fair value as a on a recurring basis:
2 unchanged sentences
Balance at December 31, 2021 $ 11,291 $ 18,448 $ 96,378 $ 126,117
−Removed: Transfer to Level 3 6,640 — — 6,640
+Added: Exercise of warrants ( 9,396 ) — — ( 9,396 )
Remeasurement to fair value ( 1,895 ) ( 1,613 ) ( 11,598 ) ( 15,106 )
1 unchanged sentence
Exercise of warrants — — ( 82,018 ) ( 82,018 )
+Added: Conversion of redeemable convertible preferred stock — ( 12,881 ) — ( 12,881 )
Remeasurement to fair value — ( 3,954 ) ( 2,762 ) ( 6,716 )
6 unchanged sentences
RELATED PARTY TRANSACTIONS
−Removed: During 2019, Acacia purchased shares of common stock of Drive Shack, Inc.
−Removed: (“Drive Shack”) for an aggregate purchase price of $ 2.4 million.
−Removed: At the time, Drive Shack and our former Chief Executive Officer were related parties as he was a board member of Drive Shack until June 2021.
−Removed: During the quarter ended September 30, 2021, Acacia sold its investment receiving proceeds of $ 1.8 million and recognized a loss of $ 515,000 .
−Removed: The Company reimbursed an aggregate amount of $ 46,000 during the year ended December 31, 2022 to a former executive officer in connection with legal fees incurred following such officer’s departure from the Company.
−Removed: The Company reimbursed an aggregate amount of $ 408,000 during the quarter ended December 31, 2021.
−Removed: Refer to Note 8 for information about the Recapitalization Agreement with Starboard.
+Added: The Company reimbursed an aggregate amount of $ 123,000 and $ 46,000 during the years ended December 31, 2023 and 2022, respectively, to a former executive officer in connection with legal fees incurred following such officer’s departure from the Company.
+Added: During the year ended December 31, 2023 the Company entered into a Loan Facility ("Loan Facility") of $ 2.2 million with a private portfolio company.
+Added: The Loan Facility bore an interest rate of 9.5 % per annum.
+Added: We recorded $ 97,000 in interest income during the year ended December 31, 2023 .
+Added: The receivable is included in other non-current assets in the consolidated balance sheets.
+Added: Refer to Note 10 for information about the Recapitalization Agreement and Services Agreement with Starboard.
COMMITMENTS AND CONTINGENCIES
Facility Leases
−Removed: Acacia primarily leases office facilities under operating lease arrangements that will end in various years through February 2025.
+Added: Acacia primarily leases office facilities under operating lease arrangements that will end in various years through July 2027.
On June 7, 2019, Acacia entered into a building lease agreement with Jamboree Center 4 LLC.
10 unchanged sentences
The new fixed rent commenced upon landlord's substantial completion of the additional space, which occurred on September 19, 2022.
+Added: On June 23, 2023, the Company notified the landlord of its election to early terminate the lease effective as of March 31, 2024, pursuant to the terms set forth in the lease.
+Added: In connection with such early termination election, the Company paid the landlord a termination payment as set forth in the lease.
+Added: During September 2023, we entered into a fourth amendment of the New York office lease, which provides for (among other things):
+Added: (a) the surrender a portion of the premises (Unit 602) effective as of March 31, 2024;
+Added: (b) the rescission of the early termination election as it relates to the remaining portion of the premises (Unit 601);
+Added: (c) an extension of the lease term with respect to Unit 601 for 40 months commencing on April 1, 2024 and expiring on July 31, 2027;
+Added: and (d) annual rent increases, with no right to early terminate or extend the lease.
Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through February 2028.
8 unchanged sentences
The Malaysia factory lease has two renewal options for an additional four years and one additional renewal option for two years .
+Added: On July 26, 2023, Printronix entered into a lease agreement to renew the lease for another 24 months commencing on December 29, 2023.
• On June 2, 2022, Printronix entered into a building lease agreement with HSBC Institutional Trust Services (Singapore) Limited for 4,560 square feet of office space in Singapore.
3 unchanged sentences
The lease commenced on March 1, 2019.
−Removed: The term of the lease is 109 months from the commencement date, has no annual rent increases and provides the right to early terminate the lease under certain circumstances, however does not provide for an extension of the lease term.
+Added: The term of the lease is 109 months from the commencement date, has no annual rent increases and provides the right to early terminate the lease under certain circumstances, however it does not provide for an extension of the lease term.
• On November 1, 2020, Printronix entered into a building lease agreement with Shanghai SongYun Enterprise Management Center for 2,422 square feet of office space in Shanghai, China.
1 unchanged sentence
The term of the lease is 48 months from the commencement date, has no annual rent increases and provides the right to early terminate or extend the lease term.
−Removed: The Company's operating lease costs were $ 1.5 million, and $ 851,000 for the years ended December 31, 2022 and 2021, respectively.
+Added: The Company's operating lease costs were $ 1.3 million and $ 1.5 million for the years ended December 31, 2023 and 2022, respectively.
The table below presents aggregate future minimum lease payments due under the Company's leases discussed above, reconciled to long-term lease liabilities and short-term lease liabilities (included in accrued expenses and other current liabilities) included in the consolidated balance sheet as of December 31, 2023 (in thousands):
4 unchanged sentences
Inventor Royalties and Contingent Legal Expenses
−Removed: In connection with the investment in certain patents and patent rights, certain of Acacia’s operating subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios.
−Removed: Acacia’s operating subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities.
+Added: In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios.
+Added: ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities.
These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.
2 unchanged sentences
Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
−Removed: Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights.
−Removed: In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement
−Removed: In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material.
−Removed: In December 2017, the Federal Court of Canada allowed a counterclaim for invalidity of a patent asserted by Rapid Completions LLC and awarded costs payable by Rapid Completions LLC.
−Removed: During the year ended December 31, 2021, the Company made approximately $ 1.2 million in settlement payments.
−Removed: This settlement was fully paid as of December 31, 2021 and all claims were withdrawn.
−Removed: On September 6, 2019, Slingshot Technologies, LLC, or Slingshot, filed a lawsuit in Delaware Chancery Court against the Company and ARG, or collectively, the Acacia Entities, Monarch Networking Solutions LLC (“Monarch”), Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd., or Transpacific.
+Added: Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights.
+Added: In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions.
+Added: In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material.
+Added: On September 6, 2019, Slingshot Technologies, LLC (“Slingshot”), filed a lawsuit in Delaware Chancery Court against the Company and ARG (collectively, the “Acacia Entities”), Monarch Networking Solutions LLC (“Monarch”), Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd.
+Added: (“Transpacific”).
Slingshot alleges that the Acacia Entities and Monarch misappropriated its confidential and proprietary information, purportedly furnished to the Acacia Entities and Monarch by Ms.
5 unchanged sentences
On November 18, 2022, the Acacia Entities and Transpacific filed motions for summary judgment on Slingshot’s claims.
−Removed: As the Acacia Entities argue in their motion, discovery has confirmed that Slingshot’s allegations are baseless, the Acacia Entities neither had access to nor used Slingshot’s information in acquiring the portfolio, and the Acacia Entities acquired the portfolio as a result of the independent efforts of their IP licensing group.
Slingshot filed its opposition to the summary judgment motions on December 23, 2022, and the Acacia Entities and Transpacific filed their replies on January 10, 2023.
The Chancery Court took off calendar the two-day trial on liability that had been scheduled for April 18–19, 2023, and instead set the hearing on the summary judgment motions for April 19, 2023.
−Removed: The Company resolved a legal dispute with a third-party relating to an agreement entered into in connection with the Life Sciences Portfolio and paid $ 4.8 million in the fourth quarter of 2022 to the third-party.
+Added: On April 19, 2023, the Chancery Court heard oral argument and took the summary judgment motions under advisement.
+Added: On July 26, 2023, the Court held a telephonic hearing during which it delivered its ruling on the motions for summary judgment.
+Added: The Court granted Transpacific’s motion and deferred ruling on the Acacia Entities’ motion pending further briefing as to whether the Court has subject matter jurisdiction.
+Added: On September 14, 2023, the Acacia Entities and Slingshot filed a joint submission with the Chancery Court agreeing to proceed in Delaware Superior Court based on the Chancery Court’s apparent lack of subject matter jurisdiction over the remaining claims, and on September 21, 2023, the Chancery Court issued an order transferring the case to Delaware Superior Court.
+Added: The case was subsequently assigned to Judge Eric M.
+Added: Davis in the Complex Commercial Litigation Division of the Superior Court.
+Added: On January 8, 2024, Judge Davis held an initial status conference, during which he instructed the Acacia Entities and Slingshot to refile their respective summary judgment briefs in Superior Court for the Court's consideration.
+Added: The Court scheduled the oral argument on the Acacia Entities' motion for summary judgment to take place on March 28, 2024.
+Added: In the event that the Court denies the motion, it will set the case for trial.
Guarantees and Indemnifications
−Removed: Certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business.
+Added: Acacia and certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business.
In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases.
3 unchanged sentences
The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make.
−Removed: To date, Acacia has made no payments related to these guarantees and indemnities.
−Removed: Acacia estimates the fair value of its indemnification obligations to be insignificant based on this history and therefore, have not recorded any liability for these guarantees and indemnities in the consolidated balance sheets.
−Removed: Additionally, no events or transactions have occurred that would result in a material liability at December 31, 2022.
+Added: To date, Acacia has made no material payments related to these guarantees and indemnities.
+Added: Acacia estimates the fair value of its indemnification obligations to be immaterial based on this history and therefore, have not recorded any material liability for these guarantees and indemnities in the consolidated balance sheets.
+Added: Additionally, no events or transactions have occurred that would result in a material liability as of December 31, 2023.
Printronix posted collateral in the form of a surety bond or other similar instruments, which are issued by independent insurance carriers (the “Surety”), to cover the risk of loss related to certain customs and employment activities.
If any of the entities that hold such bonds should require payment from the Surety, Printronix would be obligated to indemnify and reimburse the Surety for all costs incurred.
−Removed: As of December 31, 2022 and 2021, Printronix had approximately $ 100,000 of these bonds outstanding.
+Added: As of December 31, 2023 and December 31, 2022, Printronix had approximately $ 100,000 of these bonds outstanding.
Environmental Cleanup
−Removed: Printronix maintained a manufacturing operation in a leased facility in Irvine, California from 1980 to 1994.
−Removed: The facility was used for similar manufacturing operations by another tenant from 1968 to 1977.
−Removed: The manufacturing operations employed by the previous tenant are believed to have resulted in the contamination of soil and groundwater under the facility which included chlorinated volatile organic compounds (“VOCs”).
−Removed: Evidence indicates that the VOCs requiring cleanup were used by the prior tenant and not by Printronix.
−Removed: Printronix worked with the prior tenant, which agreed to share
−Removed: the costs of the activities in an equal percentage with Printronix, and the state regulatory agencies, including the California Department of Toxic Substances Control, to investigate and cleanup the subsurface contamination.
−Removed: A significant soil cleanup project was completed in 2017.
−Removed: In 2020, Printronix executed an agreement with the prior tenant whereby the prior tenant would take 100% responsibility for the costs and process of the cleanup going forward.
−Removed: Printronix is in process of filing for release of such responsibility from a governmental agency and so may currently be found to be secondarily liable if the prior tenant cannot fulfil their responsibilities under the agreement.
−Removed: Accordingly, Printronix no longer takes part in monitoring or paying for any future investigation or cleanup activity.
−Removed: Printronix expects to have no such further costs associated with this facility.
−Removed: During 2020, Printronix was able to recover $ 24,000 from the prior tenant.
−Removed: Since that date and for the year ended December 31, 2022 , Printronix has incurred no related legal fees.
+Added: Energy Operations
+Added: Benchmark is engaged in oil and natural gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well production and may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to oil and natural gas wells and the operation thereof.
+Added: In connection with Benchmark's acquisition of existing or previously drilled well bores, Benchmark may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated.
+Added: Should it be determined that a liability exists with respect to any environmental cleanup
+Added: or restoration, Benchmark would be responsible for curing such a violation.
+Added: No claim has been made, nor is management aware of any liability that exists, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto for the year ended December 31, 2023.
STOCKHOLDERS’ EQUITY
6 unchanged sentences
During July 2022, we completed the March 2022 program with total common stock purchases of 8,453,519 shares for the aggregate amount of $ 40.0 million.
−Removed: Stock repurchases, all of which were purchased as part of a publicly announced plan or program, were as follows:
−Removed: Purchased Average
−Removed: Share Approximate Dollar
−Removed: Value of Shares that
−Removed: May Yet be Purchased
−Removed: under the Program
−Removed: (In thousands)
−Removed: December 1, 2021 - December 31, 2021 784,104 $ 5.12 $ 11,004
−Removed: January 1, 2022 - January 31, 2022 1,588,820 $ 4.85 $ 3,286
−Removed: February 1, 2022 - February 28, 2022 752,895 $ 4.36 $ —
−Removed: Total repurchases in the quarter 2,341,715 $ 4.69
−Removed: Total program repurchases 3,125,819 $ 4.80
−Removed: April 1, 2022 - April 30, 2022 692,538 $ 4.48 $ 36,901
−Removed: May 1, 2022 - May 31, 2022 2,192,238 $ 4.59 $ 26,832
−Removed: June 1, 2022 - June 30, 2022 3,262,043 $ 4.71 $ 11,480
−Removed: Total repurchases in the quarter 6,146,819 $ 4.64
−Removed: July 1, 2022 - July 31, 2022 2,306,700 $ 4.98 $ —
−Removed: Total program repurchases 8,453,519 $ 4.73
+Added: On November 9, 2023, the Board approved a stock repurchase program for up to $ 20.0 million, subject to a cap of 5,800,000 shares of common stock.
+Added: The repurchase authorization has no time limit and does not require the repurchase of a minimum number of shares.
+Added: The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act.
+Added: There have been no stock repurchases under the above mentioned repurchase program for the year ended December 31, 2023.
In determining whether or not to repurchase any shares of Acacia’s common stock, the Board considers such factors, among others, as the impact of the repurchase on Acacia’s cash position, as well as Acacia’s capital needs and whether there is a better alternative use of Acacia’s capital.
Acacia has no obligation to repurchase any amount of its common stock under its stock repurchase programs.
−Removed: Repurchases to date were made in the open market in compliance with applicable SEC rules.
−Removed: The authorizations to repurchase shares presented an opportunity to reduce the outstanding share count and enhance stockholder value.
−Removed: Tax Benefits Preservation Plan
+Added: The authorization to repurchase shares provides an opportunity to reduce the outstanding share count and enhance stockholder value.
+Added: Tax Benefits Preservation Charter Provision
The Company has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change.
−Removed: Like the Plan, the purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income.
−Removed: The Charter Provision was approved by the Company’s stockholders on July 15, 2019.
+Added: The purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income.
EQUITY-BASED INCENTIVE PLANS
1 unchanged sentence
The 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) and the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) (collectively, the “Plans”) were approved by the stockholders of Acacia in May 2013 and June 2016, respectively.
−Removed: The Plans allow grants of stock options, stock awards and performance shares with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants.
+Added: The Plans allow grants of stock options, stock awards and restricted stock units with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants.
+Added: The 2013 Plan expired in May 2023, therefore, Acacia exclusively grants awards under the 2016 Plan.
Except as noted below, the terms and provisions of the Plans are identical in all material respects.
−Removed: Acacia’s compensation committee administers the discretionary option grant and stock issuance programs.
−Removed: The compensation committee determines which eligible individuals are to receive option grants or stock issuances under those programs, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding.
−Removed: The exercise price of options is generally equal to the fair market value of Acacia’s common stock on the date of grant.
+Added: Acacia’s compensation committee administers the Plans.
+Added: The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the Plans, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant, stock issuance or restricted stock units and the maximum term for which any granted option is to remain outstanding.
+Added: The exercise price of options is equal to the fair market value of Acacia’s common stock on the date of
Options generally begin to be exercisable one year after grant and expire ten years after grant.
−Removed: Stock options with time-based vesting generally vest over three to four years and restricted shares with time-based vesting generally vest in full after one to four years (generally representing the requisite service period).
+Added: Stock options with time-based vesting generally vest over three years and restricted shares and restricted stock units with time-based vesting generally vest in full after one to three years (generally representing the requisite service period).
The Plans terminate no later than the tenth anniversary of the approval of the incentive plans by Acacia’s stockholders.
3 unchanged sentences
Under this program, the purchase price for the shares shall not be less than 100 % of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered.
−Removed: The eligible individuals receiving RSAs shall have full stockholder rights with respect to any shares of common stock issued to them under the Stock Issuance Program, whether or not their interest in those shares is vested.
−Removed: Accordingly, the eligible individuals shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
−Removed: The eligible individuals receiving RSUs shall not have full stockholder rights until they vest.
+Added: The eligible individuals receiving RSAs under the 2016 Plan shall have full stockholder rights with respect to any shares of common stock issued to them under the Stock Issuance Program once those shares are vested, and under the 2013 Plan, had full stockholder rights with respect to any shares of common stock issued to them under the Stock Issuance Program, whether or not their interest in those shares was vested.
+Added: Accordingly, once full stockholder rights are obtained, the eligible individuals shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
Discretionary Option Grant Program .
Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than 100 % of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100 % of the fair market value of those shares on the grant date (not less than 110 % of fair market value if such employee actually or constructively owns more than 10 % of Acacia’s voting stock or the voting stock of any of its subsidiaries).
+Added: Discretionary Restricted Stock Unit Grant Program .
+Added: Under the discretionary restricted stock unit program, Acacia's compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service.
+Added: During June 2023, Acacia's compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company's executive leadership team, for driving Acacia's performance over the longer-term and to align employees and shareholders.
+Added: Under the long-term incentive program, Acacia's compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company's Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel.
+Added: The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024).
The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares.
−Removed: No new additional shares will be added to the 2013 Plan without security holder approval (except for shares subject to outstanding awards that are forfeited or otherwise returned to the 2013 Plan).
−Removed: The stock issuable under the 2013 Plan shall be shares of
−Removed: authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market.
+Added: The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan.
+Added: The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market.
In June 2016, 625,390 shares of common stock available for issuance under the 2013 Plan were transferred into the 2016 Plan.
−Removed: At December 31, 2022, there were 175,119 shares available for grant under the 2013 Plan.
−Removed: The number of shares of common stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, as of the effective date of the 2016 Plan.
+Added: The number of shares of common stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, which were transferred into the 2016 Plan as of the effective date of the 2016 Plan.
In May 2022, security holders approved an increase of 5,500,000 shares of common stock authorized to be issued pursuant to the 2016 Plan.
1 unchanged sentence
Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock.
−Removed: The Board may amend or modify the Plans at any time, subject to any required stockholder approval.
−Removed: As of December 31, 2022, there are 8,868,208 shares of common stock reserved for issuance under the Plans.
+Added: The Board may amend or modify the 2016 Plan at any time, subject to any required stockholder approval.
+Added: As of December 31, 2023, there are 5,853,868 shares of common stock reserved for issuance under the 2016 Plan.
The following table summarizes stock option activity for the Plans:
15 unchanged sentences
Weighted average remaining vesting period at December 31, 2023 1.9 years
−Removed: Stock options granted in 2022 are time-based and will vest in full after three to four years .
+Added: Stock options granted in 2023 are time-based and will vest in full after three years .
During the year ended December 31, 2023 , the Company granted 243,319 stock options at a weighted average grant-date fair value of $ 2.10 per share using the Black-Scholes option-pricing model.
1 unchanged sentence
volatility of 46 percent, risk-free interest rate of 3.67 percent, term of 6.00 years and a dividend yield of 0 percent as the Company does not pay common stock dividends.
−Removed: The volatility of the Company’s common stock was estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage (refer to Note 9 " Embedded derivative liabilities" for additional information).
−Removed: The risk-free rate was based on the term assumption and U.S.
+Added: The volatility of the Company’s common stock is estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage (refer to Note 11 " Embedded derivative liabilities" for additional information).
+Added: The risk-free rate is based on the term assumption and U.S.
Treasury constant maturities as published by the Federal Reserve.
The Company currently uses the "simplified" method for determining the term, due to the limited option grant history, which assumes that the exercise date of an option would be halfway between its vesting date and the expiration date.
−Removed: The aggregate fair value of options vested during the year ended December 31, 2022 and 2021 was $ 235,000 and $ 18,000 .
+Added: The aggregate fair value of options vested during the years ended December 31, 2023 and 2022 was $ 309,000 and $ 235,000 , respectively.
The following table summarizes nonvested restricted stock activity for the Plans:
+Added: RSAs RSUs PSUs
Shares Weighted
2 unchanged sentences
Average Grant
+Added: Date Fair Value Units Weighted
+Added: Average Grant
Date Fair Value
9 unchanged sentences
Unrecognized stock-based compensation expense at December 31, 2023 (in thousands) $ 392 $ 4,095 $ —
−Removed: Weighted average remaining vesting period at December 31, 2022 1.7 years 1.8 years
−Removed: RSAs and RSUs granted in 2022 are time-based and will vest in full after one to four years .
−Removed: The aggregate fair value of RSAs vested during the year ended December 31, 2022 and 2021 was $ 1.4 million and $ 1.3 million.
−Removed: The aggregate fair value of RSUs vested during the year ended December 31, 2022 and 2021 was $ 1.7 million and $ 92,000 .
+Added: Weighted average remaining vesting period at December 31, 2023 1.1 years 2.0 years zero years
+Added: RSUs granted in 2023 are time-based and will vest in full after one to three years .
+Added: The aggregate fair value of RSAs vested during the years ended December 31, 2023 and 2022 was $ 731,000 and $1.4 million, respectively.
+Added: The aggregate fair value of RSUs vested during the years ended December 31, 2023 and 2022 was $ 1.5 million and $1.7 million, respectively.
During the year ended December 31, 2023, RSAs and RSUs totaling 505,853 shares were vested and 142,759 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on th e vesting date.
−Removed: Certain RSUs were granted in September 2019 with market-based vesting conditions that vest based upon the Company achieving specified stock price targets over a three-year period.
+Added: Certain RSUs granted in September 2019 with market-based vesting conditions that vest based upon the Company achieving specified stock price targets over a three-year period.
The effect of a market condition is reflected in the estimate of the grant-date fair value of the options utilizing a Monte Carlo valuation technique.
8 unchanged sentences
The remaining units fully vested on September 3, 2022.
−Removed: Compensation expense (credit) for RSUs with market-based vesting conditions for the years ended December 31, 2022 and 2021, was $ 143,000 and $( 71,000 ), respectively.
−Removed: Compensation expense (credit) for share-based awards recognized in general and administrative expenses was comprised of the following:
+Added: Compensation expense for RSUs with market-based vesting conditions for the years ended December 31, 2023 and 2022, was zero and $ 143,000 , respectively.
+Added: PSUs granted in 2023 can be earned based upon the level of achievement of the Company's compound annual growth rate of its adjusted book value per share, measured over a three-year performance period beginning on January 1, 2023 and ending on December 31, 2025.
+Added: The number of PSUs granted in 2023 that can be earned ranges from 0% to 200% of the target number of PSUs granted (up to a maximum of 750,000 shares per recipient of Acacia's common stock).
+Added: Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date.
+Added: The Company has not recorded any expense related to the PSUs based on the probability assessment performed as of December 31, 2023.
+Added: Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:
(In thousands)
13 unchanged sentences
The individuals holding PIUs are no longer employed by the Company.
−Removed: Included in other long-term liabilities in the consolidated balance sheets as of December 31, 2022 and 2021, the PIUs totaled $ 591,000 , which was their fair value as of December 31, 2018 after termination of service.
+Added: Included in other long-term liabilities in the consolidated balance sheets as of December 31, 2023 and 2022, the PIUs totaled $ 1.0 million and $ 591,000 , respectively, which was their fair value as of December 31, 2018 after termination of service including interest.
RETIREMENT SAVINGS PLANS AND SEVERANCE
2 unchanged sentences
The plan is a defined contribution plan in which eligible employees may elect to have a percentage of their compensation contributed to the plan, subject to certain guidelines issued by the Internal Revenue Service.
−Removed: During the years ended December 31, 2022 and 2021, Acacia's total contribution to the plan was $ 173,000 and zero .
+Added: During the years ended December 31, 2023 and 2022, Acacia's total contribution to the plan was $ 155,000 and $ 173,000 , respectively.
In the United States of America, Printronix has a 401(k) Savings and Investment Plan, for all eligible U.S.
2 unchanged sentences
Printronix's contributions have graded-vesting annually and become fully vested to the employee after four full years of employment.
−Removed: During the year ended December 31, 2022, Printronix's total contribution to the plan was $ 45,500 .
−Removed: For the period from October 7, 2021 through December 31, 2021, Printronix's total contribution to the plan was $ 9,000 .
+Added: During the years ended December 31, 2023 and 2022, Printronix's total contribution to the plan was $ 61,000 and $ 46,000 , respectively.
Printronix has statutory obligations to contribute to overseas employee retirement funds or the local social security pension funds in China, Malaysia, Singapore, France, Netherlands and the United Kingdom.
−Removed: During the year ended December 31, 2022, Printronix's total contribution overseas was $ 711,000 .
−Removed: For the period from October 7, 2021 through December 31, 2021, Printronix's total contribution overseas was $ 189,000 .
+Added: During the years ended December 31, 2023 and 2022, Printronix's total contribution overseas was $ 641,000 and $ 711,000 , respectively.
During the years ended December 31, 2023 and 2022, Acacia entered into separation agreements related to the termination of certain employees.
The separation agreements generally provide base salary continuation payments and payments of employee and employer portions of monthly COBRA for a specified period.
−Removed: During the years ended December 31, 2022 and 2021, Acacia's total severance expenses were $ 3.2 million and $ 473,000 , respectively.
−Removed: The components of (loss) income before income taxes were as follows:
+Added: During the years ended December 31, 2023 and 2022, Acacia's total severance expenses was a (credit) of $( 580,000 ) due to a reversal of a prior period accrued expense and an expense of $ 3.2 million, respectively.
+Added: The components of income (loss) before income taxes were as follows:
Years Ended December 31,
3 unchanged sentences
Total $ 67,426 $ ( 127,150 )
−Removed: For purposes of reconciling the Company’s provision for income taxes at the statutory rate and the Company’s income tax expense (benefit) at the effective tax rate, a notional 21% tax rate was applied as follows:
+Added: For purposes of reconciling the Company’s provision for income taxes at the statutory rate and the Company’s income tax (benefit) at the effective tax rate, a notional 21% tax rate was applied as follows:
Years Ended December 31,
4 unchanged sentences
Expired tax attributes 6 % 6 %
+Added: Foreign tax credits ( 3 ) % — %
Derivative fair value adjustment ( 3 ) % ( 2 ) %
2 unchanged sentences
Effective income tax rate ( 2 ) % ( 13 ) %
−Removed: Acacia’s income tax benefit (expense) for the periods presented consisted of the following:
+Added: Acacia’s income tax benefit for the periods presented consisted of the following:
Years Ended December 31,
9 unchanged sentences
Change in valuation allowance 18,030 ( 7,667 )
−Removed: Income tax benefit (expense) $ 16,211 $ ( 24,287 )
+Added: Income tax benefit $ 1,504 $ 16,211
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:
4 unchanged sentences
Compensation expense for share-based awards 1,095 607
−Removed: Fixed assets and intangibles — —
−Removed: Basis of investments in affiliates — 18
Accrued liabilities and other 1,453 1,551
7 unchanged sentences
Fixed assets and intangibles ( 1,841 ) ( 2,166 )
−Removed: Unrealized gain on investments held at fair value — ( 55,696 )
−Removed: Other — ( 23 )
+Added: Basis of investment in affiliates ( 2,360 ) —
Total deferred tax liabilities ( 4,881 ) ( 2,948 )
−Removed: Net deferred tax liabilities $ ( 742 ) $ ( 18,552 )
+Added: Net deferred tax assets (liabilities) $ 2,915 $ ( 742 )
As of December 31, 2023 and 2022, management assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets on a jurisdictional basis.
4 unchanged sentences
As of December 31, 2022, the Company recorded a full valuation allowance of $ 48.3 million.
−Removed: The valuation allowance increased by $ 7.7 million for the year ended December 31, 2022 as a result of the use of the NOLs against realized gains and unrealized losses.
−Removed: The valuation allowance decreased by $( 36.4 ) million for the year ended December 31, 2021 as a result of the use of the NOLs and increase in unrealized gains.
+Added: The valuation allowance decreased by $ 18.0 million for the year ended December 31, 2023 as a result of the use of tax attributes used against 2023 earnings and the release of valuation allowance on the remaining federal net operating losses for which positive evidence supported the realization as of December 31, 2023.
+Added: The valuation allowance increased by $ 7.7 million for the year ended December 31, 2022 as a result of the changes in realized/unrealized gains and losses.
At December 31, 2023, Acacia had U.S.
−Removed: federal and state income tax net operating loss carryforwards (“NOLs”) totaling approximately $ 63.8 million and $ 36.0 million, respectively.
+Added: federal, foreign and state income tax net operating loss carryforwards (“NOLs”) totaling approximately $ 18.3 million, $ 3.0 million and $ 26.7 million, respectively.
Pursuant to the Tax Cuts and Jobs Act ("TCJA") enacted by the U.S.
federal government in December 2017, for federal income tax purposes, NOL carryovers generated for our tax years beginning January 1, 2018 can be carried forward indefinitely but will be subject to a taxable income limitation.
−Removed: All federal losses are post TCJA NOLs, which do not expire.
−Removed: The $ 36.0 million of state NOLs will expire in varying amounts through 2040.
−Removed: As of December 31, 2022 Acacia had combined foreign NOLs available to reduce future taxable income of approximately $ 1.9 million.
−Removed: As of December 31, 2022 a valuation of $ 1.9 million had been recorded against the related deferred tax assets for those NOLs that are not more likely than not to be fully utilized in reducing future taxable income.
+Added: $ 706,000 of our foreign NOLs and all of our federal losses can be carried forward indefinitely.
+Added: The remaining $ 3.0 million of foreign NOLs and $ 26.7 million of state NOLs will expire in varying amounts through 2040.
As of December 31, 2023, Acacia had approximately $ 28.3 million of foreign tax credits, expiring between 2024 and 2033.
2 unchanged sentences
income tax liabilities, subject to certain limitations.
−Removed: During the fourth quarter of 2022, the Company finalized Printronix's pre-acquisition income tax returns and recorded an adjustment to the assets acquired and liabilities assumed.
−Removed: As a result, the Company recognized an increase in goodwill of $ 71,000 from the initial assessment as of the acquisition date.
The following changes occurred in the amount of unrecognized tax benefits:
16 unchanged sentences
and in various state/foreign jurisdictions and incurs foreign tax withholdings on revenue agreements with licensees in certain foreign jurisdictions.
−Removed: With no material exceptions, Acacia is no longer subject to U.S.
−Removed: federal or state examinations by tax authorities for years before 2018.
The Company’s 2019 through 2023 tax years generally remain subject to examination by federal, state and foreign tax authorities.
5 unchanged sentences
We have elected to account for GILTI in the year the tax is incurred.
−Removed: On March 11, 2021 the United States enacted the American Rescue Plan Act of 2021.
−Removed: This Act includes various income and payroll tax measures.
−Removed: The Company does not expect a material impact from the American Rescue Plan on its consolidated financial statements and related disclosures.
−Removed: On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes a 15% minimum tax on the adjusted financial statement income of corporations with a three taxable year average annual adjusted financial statement income in excess of $1 billion, a 1% excise tax on net stock repurchases made by publicly traded U.S.
−Removed: corporations and several tax incentives to promote clean energy.
−Removed: The alternative minimum tax and excise tax are effective in taxable years beginning after December 31, 2022.
−Removed: These tax law changes are not expected to significantly impact the Company’s consolidated financial statements.
−Removed: The Company will continue to evaluate its impact as further information becomes available.
INCOME/LOSS PER SHARE
1 unchanged sentence
(In thousands, except share and per share data)
−Removed: Net (loss) income attributable to Acacia Research Corporation $ ( 125,065 ) $ 149,197
+Added: Net income (loss) attributable to Acacia Research Corporation $ 67,060 $ ( 125,065 )
Dividend on Series A redeemable convertible preferred stock ( 1,400 ) ( 2,799 )
Accretion of Series A redeemable convertible preferred stock ( 3,230 ) ( 5,171 )
+Added: Return on settlement of Series A redeemable convertible
+Added: preferred stock ( 3,377 ) —
Undistributed earnings allocated to participating securities ( 3,913 ) —
−Removed: Net (loss) income attributable to common stockholders - Basic ( 133,035 ) 118,804
−Removed: Dividend on Series A redeemable convertible preferred
−Removed: stock — 1,452
−Removed: Accretion of Series A redeemable convertible preferred
−Removed: stock — 3,829
−Removed: Change in fair value of Series A redeemable
−Removed: convertible preferred stock embedded derivative — ( 8,280 )
−Removed: Change in fair value of Series A warrants — —
−Removed: Change in fair value of dilutive Series B warrants — 44,037
+Added: Net income (loss) attributable to common stockholders - Basic 55,140 ( 133,035 )
+Added: Change in fair value and gain on exercise of dilutive
+Added: Series B warrants ( 4,287 ) —
Interest expense associated with Starboard Notes,
4 unchanged sentences
securities ( 3,076 ) —
−Removed: Net (loss) income attributable to common stockholders - Diluted $ ( 133,035 ) $ 188,224
−Removed: Weighted average shares used in computing net (loss) income
+Added: Net income (loss) attributable to common stockholders - Diluted $ 53,208 $ ( 133,035 )
+Added: Weighted average shares used in computing net income (loss)
per share attributable to common stockholders - Basic 75,296,025 42,460,504
Potentially dilutive common shares:
−Removed: Series A Preferred Stock — 9,589,041
−Removed: Restricted stock units — 758,682
−Removed: Stock options — 37,167
−Removed: Series A Warrants — —
+Added: Employee stock options and restricted stock units 163,738 —
Series B Warrants 16,952,055 —
−Removed: Weighted average shares used in computing net (loss) income
+Added: Weighted average shares used in computing net income (loss)
per share attributable to common stockholders - Diluted 92,411,818 42,460,504
−Removed: Basic net (loss) income per common share $ ( 3.13 ) $ 2.43
−Removed: Diluted net (loss) income per common share $ ( 3.13 ) $ 1.91
+Added: Basic net income (loss) per common share $ 0.73 $ ( 3.13 )
+Added: Diluted net income (loss) per common share $ 0.58 $ ( 3.13 )
Anti-dilutive potential common shares excluded from the
1 unchanged sentence
Equity-based incentive awards 2,098,747 2,558,720
−Removed: Series A warrants — 5,000,000
Series B warrants — 100,000,000
1 unchanged sentence
SEGMENT REPORTING
−Removed: As of December 31, 2022, the Company operates and reports its results in two reportable segments:
−Removed: Intellectual Property Operations and Industrial Operations.
−Removed: Historically, the Company has managed and reported under a single reporting segment.
−Removed: In October 2021, the Company acquired Printronix, which comprises all of the operations of the Company’s Industrial Operations reportable segment and led to the identification of the additional reporting segment.
+Added: As of December 31, 2023, the Company operates and reports its results in three reportable segments:
+Added: Intellectual Property Operations, Industrial Operations and Energy Operations.
The Company reports segment information based on the management approach and organizes its businesses based on products and services.
15 unchanged sentences
Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users.
−Removed: The Industrial Operations reporting segment did not exist prior to the acquisition of Printronix in October 2021, accordingly, the periods presented below include Printronix's operations for the full year ended December 31, 2022 compared to an approximate three month period ended December 31, 2021.
−Removed: The Company's segment information is as follows:
−Removed: Years Ended December 31,
−Removed: Intellectual Property Operations Industrial Operations Total Intellectual Property Operations Industrial Operations Total
+Added: The Company's Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in Roberts and Hemphill Counties in Texas.
+Added: Benchmark seeks to acquire predictable and shallow decline, cash flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.
+Added: The Energy Operations reporting segment did not exist prior to the acquisition of Benchmark in November 2023, accordingly, the periods presented below include Benchmark's operations from November 13, 2023 through December 31, 2023.
+Added: As of and for the year ended December 31, 2022, the consolidated results represented the results of the Company's two reporting segments:
+Added: Intellectual Property Operations and Industrial Operations.
+Added: The Company's segment information, including Benchmark's operations from November 13, 2023 through December 31, 2023, is as follows:
+Added: Year Ended December 31, 2023
+Added: Intellectual Property Operations Industrial Operations Energy Operations Total
(In thousands)
3 unchanged sentences
Services — 3,494 — 3,494
+Added: Oil sales — — 256 256
+Added: Natural gas sales — — 372 372
+Added: Natural gas liquids sales — — 220 220
Total revenues 89,156 35,098 848 125,102
4 unchanged sentences
Amortization of patents 11,370 — — 11,370
−Removed: Other patent portfolio expense — — — 162 — 162
Cost of sales — 18,009 — 18,009
+Added: Cost of production — — 656 656
Total cost of revenues 34,164 18,009 656 52,829
6 unchanged sentences
Total other operating expenses 7,402 16,365 264 24,031
+Added: Segment operating income (loss) $ 47,590 $ 724 $ ( 72 ) 48,242
+Added: Parent general and administrative expenses 27,306
+Added: Operating income 20,936
+Added: Total other income 46,490
+Added: Income before income taxes $ 67,426
+Added: The Company's two reportable segment information for the year ended December 31, 2022 is as follows:
+Added: Year Ended December 31, 2022
+Added: Intellectual Property Operations Industrial Operations Total
+Added: (In thousands)
+Added: License fees $ 19,508 $ — $ 19,508
+Added: Printers and parts — 16,118 16,118
+Added: Consumable products — 19,314 19,314
+Added: Services — 4,283 4,283
+Added: Total revenues 19,508 39,715 59,223
+Added: Cost of revenues:
+Added: Inventor royalties 1,212 — 1,212
+Added: Contingent legal fees 2,444 — 2,444
+Added: Litigation and licensing expenses 3,970 — 3,970
+Added: Amortization of patents 10,403 — 10,403
+Added: Cost of sales — 19,359 19,359
+Added: Total cost of revenues 18,029 19,359 37,388
+Added: Segment gross profit 1,479 20,356 21,835
+Added: Other operating expenses:
+Added: Engineering and development expenses — 626 626
+Added: Sales and marketing expenses — 8,621 8,621
+Added: Amortization of intangible assets — 1,732 1,732
+Added: General and administrative expenses 5,428 8,254 13,682
+Added: Total other operating expenses 5,428 19,233 24,661
Segment operating (loss) income $ ( 3,949 ) $ 1,123 ( 2,826 )
Parent general and administrative expenses 37,266
−Removed: Operating (loss) income ( 40,092 ) 14,545
−Removed: Total other (expense) income ( 87,058 ) 160,107
−Removed: (Loss) income before income taxes $ ( 127,150 ) $ 174,652
+Added: Operating income loss ( 40,092 )
+Added: Total other expense ( 87,058 )
+Added: Loss before income taxes $ ( 127,150 )
+Added: The Company's reportable segment information as of December 31, 2023 and 2022 is as follows:
+Added: December 31, 2023 December 31, 2022
(In thousands)
8 unchanged sentences
Industrial operations 47,854 52,057
+Added: Energy operations $ 32,710 $ —
Total assets $ 633,545 $ 482,928
−Removed: The Company's revenues and long-lived tangible assets by geographic area are presented below.
+Added: The Company's revenues, including Benchmark's sales from November 13, 2023 through December 31, 2023, and long-lived tangible assets by geographic area are presented below.
Intellectual Property Operations revenues are attributed to licensees domiciled in foreign jurisdictions.
3 unchanged sentences
Assets are summarized based on the location of held assets.
−Removed: Years Ended December 31,
−Removed: Intellectual Property Operations Industrial Operations Total Intellectual Property Operations Industrial Operations Total
+Added: Benchmark's sales are only attributed to the United States of America.
+Added: Year Ended December 31, 2023
+Added: Intellectual Property Operations Industrial Operations Energy Operations Total
(In thousands)
9 unchanged sentences
Total revenues $ 89,156 $ 35,098 $ 848 $ 125,102
−Removed: December 31, 2022
+Added: Year Ended December 31, 2022
Intellectual Property Operations Industrial Operations Total
(In thousands)
+Added: Revenues by geographic area:
+Added: United States $ 18,882 $ 15,541 $ 34,423
+Added: Canada and Latin America 11 2,145 2,156
+Added: Total Americas 18,893 17,686 36,579
+Added: Europe, Middle East and Africa 589 9,298 9,887
+Added: China — 5,207 5,207
+Added: India — 2,957 2,957
+Added: Asia-Pacific, excluding China and India 26 4,567 4,593
+Added: Total Asia-Pacific 26 12,731 12,757
+Added: Total revenues $ 19,508 $ 39,715 $ 59,223
+Added: December 31, 2023
+Added: Intellectual Property Operations Industrial Operations Energy Operations Total
+Added: (In thousands)
Long-lived tangible assets by geographic area:
12 unchanged sentences
SUBSEQUENT EVENTS
−Removed: Change of Chief Financial Officer
−Removed: Effective January 27, 2023, Richard Rosenstein resigned as the Chief Financial Officer of the Company.
−Removed: Rosenstein’s departure is not the result of any dispute or disagreement with the Company, including with respect to matters related to the Company’s accounting practices, general policies or financial reporting.
−Removed: Acacia and Mr.
−Removed: Rosenstein entered into a consulting agreement upon his departure, in accordance with Mr.
−Removed: Rosenstein will serve as a consultant through April 30, 2023.
−Removed: Effective as of January 28, 2023, Kirsten Hoover, who currently serves as Acacia’s Corporate Controller and previously held other senior finance roles at the Company, assumed the role of interim Chief Financial Officer.
−Removed: The Board is currently searching for a permanent successor.
−Removed: Rights Offering and Concurrent Private Rights Offering
−Removed: On February 14, 2023, pursuant to the requirements of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the Company commenced a Rights Offering and Concurrent Private Rights Offering, which were completed on March 1, 2023.
−Removed: The Company received aggregate gross proceeds of approximately $ 361,000 from the Rights Offering and aggregate gross proceeds of approximately $ 78.8 million from the Concurrent Private Rights Offering.
−Removed: Refer to Note 8 for additional information.
+Added: On November 1, 2023, Merton entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd.
+Added: ("RTW Bio") to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP), conditioned solely upon RTW Bio receiving the necessary approval from the United Kingdom’s Financial Conduct Authority to acquire indirect control (as defined for the purposes of the UK change in control regime under the Financial Services and Markets Act 2000) in of Arix Capital Management Limited (the “Condition”).
+Added: On January 19, 2024, Merton completed such sale for $57.1 million in aggregate
+Added: (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP).
+Added: Following the completion of the share sale, Merton and the Company no longer own any shares of Arix.
+Added: On February 14, 2024, the Board appointed Mr.
+Added: McNulty, the Company’s Interim Chief Executive Officer, as Chief Executive Officer of the Company on a permanent basis.
+Added: In addition, the Board expanded the size of the Board from six to seven directors and the Board appointed Mr.
+Added: McNulty as a director of the Company to serve until the Company’s 2024 annual meeting of stockholders and until his successor is duly elected and qualified.
+Added: On February 16, 2024, Benchmark entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”).
+Added: Pursuant to the Purchase and Sale Agreement, Benchmark has agreed to purchase and Revolution has agreed to sell certain upstream assets and related facilities in Texas and Oklahoma, upon the terms and subject to the conditions of the Purchase and Sale Agreement (such purchase and sale, together with the other transactions contemplated by the Purchase Sale Agreement, the “Revolution Transaction”).
+Added: Under the terms and conditions of the Purchase and Sale Agreement, which has an economic effective date of March 1, 2024, the aggregate consideration to be paid to Revolution in the Revolution Transaction will consist of $145.0 million in cash, subject to customary post-closing adjustments.
+Added: Benchmark expects the Revolution Transaction to close in the second quarter of 2024 subject to customary closing conditions.
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.