ACACIA RESEARCH CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e)and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be 53 Table of Contents disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that this information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Rule 13a-15(f) under the Exchange Act. I nternal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth in the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. Exemption from Attestation Report of Independent Registered Public Accounting Firm This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only Management’s Annual Report because we are a non-accelerated filer. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION 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. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 54 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Except as provided below, 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 2024 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. Code of Conduct We have adopted a Code of Conduct that applies to all employees, including our principal executive officer and principal financial officer and any persons performing similar functions. Our Code of Conduct is provided on our internet website at www.acaciaresearch.com . ITEM 11. EXECUTIVE COMPENSATION 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. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 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. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 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. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 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. 55 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this report. (1) Financial Statements. Page Acacia Research Corporation Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm (GRANT THORNTON LLP; New York, NY; PCAOB ID# 248 ) F- 1 Consolidated Balance Sheets as of December 31, 2023 and 2022 F- 3 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 F- 4 Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2023 and 2022 F- 5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 F- 6 Notes to Consolidated Financial Statements F- 7 (2) Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or the Notes thereto. (3) Exhibits. Refer to Item 15(b) below. (b) Exhibits. The following exhibits are either filed herewith or incorporated herein by reference: Exhibit Number Description 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) 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) 3.3 Certificate of Retirement of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Current Report on Form 8-K filed on August 2, 2023) 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) 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) 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) 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) 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) 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) 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) 56 Table of Contents 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) 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. Booth (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 25, 2020) 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) 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) 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) 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) 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 ) 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 ) 10.16* Amended and Restated Employment Agreement, effective February 13, 2024, by and between Acacia Research Corporation and Martin D. McNulty, Jr. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on For m 8-K filed on February 1 4 , 2024 ) 10.17*# Employment Agreement, effective May 3, 2023, among Acacia Research Corporation and Robert Rasamny (filed herewith as Exhibit 10. 1 7 ) 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) 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) 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) 10.21# Services Agreement dated December 12, 2023 by and between Starboard Value LP and Acacia Research Corporation (filed herewith as Exhibit 10. 2 1 ) 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) 21.1# List of Subsidiaries 23.1# Consent of Independent Registered Public Accounting Firm, GRANT THORNTON LLP 24.1 Power of Attorney (included in the signature page hereto). 31.1# Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 31.2# Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 32.1† Certification of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 32.2† Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 97.1# Acacia Research Corporation Compensation Recovery Policy 57 Table of Contents 101# 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: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders' Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. 104# Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101). ____________________ * 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. ** 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; provided, however, that the registrant may request confidential treatment for any schedules or exhibits so furnished. # Filed herewith. † The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Acacia Research Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language contained in any filing. (c) Other financial statement schedules. Not applicable. ITEM 16. FORM 10-K SUMMARY Not applicable. 58 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACACIA RESEARCH CORPORATION Dated: March 14, 2024 By: /s/ Martin D. McNulty Jr. Martin D. McNulty Jr. Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory) POWER OF ATTORNEY We, the undersigned directors and officers of Acacia Research Corporation, do hereby constitute and appoint Martin D. McNulty Jr. and Kirsten Hoover, and each of them, as our true and lawful attorneys-in-fact and agents with power of substitution, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorney-in-fact and agent may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments hereto; and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and the capacities and on the dates indicated. Signature Title Date /s/ Martin D. McNulty Jr. Chief Executive Officer and Director March 14, 2024 Martin D. McNulty Jr. (Principal Executive Officer) /s/ Kirsten Hoover Interim Chief Financial Officer March 14, 2024 Kirsten Hoover (Principal Financial and Accounting Officer) /s/ Gavin Molinelli Director March 14, 2024 Gavin Molinelli /s/ Isaac Kohlberg Director March 14, 2024 Isaac Kohlberg /s/ Maureen O'Connell Director March 14, 2024 Maureen O'Connell /s/ Geoffrey Ribar Director March 14, 2024 Geoffrey Ribar /s/ Ajay Sundar Director March 14, 2024 Ajay Sundar /s/ Katharine Wolanyk Director March 14, 2024 Katharine Wolanyk 59 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Acacia Research Corporation Opinion on the financial statements 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”). 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. 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. 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. 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. 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. 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. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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 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. 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. F-1 Table of Contents 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. 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. 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. • With the assistance of our firm valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and assumptions by: (1) comparing selected assumptions against available market data and historical amounts and (2) validating the mathematical accuracy of the model by developing an independent calculation and comparing to management’s concluded valuations. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2022. New York, New York March 14, 2024 F-2 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 340,091 $ 287,786 Equity securities 63,068 61,608 Equity securities without readily determinable fair value 5,816 5,816 Equity method investments 30,934 30,934 Accounts receivable, net 80,555 8,231 Inventories 10,921 14,222 Prepaid expenses and other current assets 23,127 19,388 Total current assets 554,512 427,985 Property, plant and equipment, net 2,356 3,537 Oil and natural gas properties, net 25,117 — Goodwill 8,990 7,541 Other intangible assets, net 33,556 36,658 Operating lease, right-of-use assets 1,872 2,005 Deferred income tax assets, net 2,915 — Other non-current assets 4,227 5,202 Total assets $ 633,545 $ 482,928 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,261 $ 6,036 Accrued expenses and other current liabilities 8,405 14,058 Accrued compensation 4,207 4,737 Royalties and contingent legal fees payable 10,786 699 Deferred revenue 977 1,229 Senior secured notes payable — 60,450 Total current liabilities 27,636 87,209 Deferred revenue, net of current portion 458 568 Series A embedded derivative liabilities — 16,835 Series B warrant liabilities — 84,780 Long-term lease liabilities 1,736 1,873 Deferred income tax liabilities, net — 742 Revolving credit facility 10,525 — Other long-term liabilities 3,581 1,675 Total liabilities 43,936 193,682 Commitments and contingencies Series A redeemable convertible preferred stock, par value $ 0.001 per share; stated value $ 100 per share; zero and 350,000 shares authorized, issued and outstanding as of December 31, 2023 and 2022, respectively; aggregate liquidation preference of zero and $ 35,000 as of December 31, 2023 and 2022, respectively — 19,924 Stockholders' equity: Preferred stock, par value $ 0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock, par value $ 0.001 per share; 300,000,000 shares authorized; 99,895,473 and 43,484,867 shares issued and outstanding as of December 31, 2023 and 2022, respectively 100 43 Treasury stock, at cost, 16,183,703 shares as of December 31, 2023 and 2022 ( 98,258 ) ( 98,258 ) Additional paid-in capital 906,153 663,284 Accumulated deficit ( 239,729 ) ( 306,789 ) Total Acacia Research Corporation stockholders' equity 568,266 258,280 Noncontrolling interests 21,343 11,042 Total stockholders' equity 589,609 269,322 Total liabilities, redeemable convertible preferred stock, and stockholders' equity $ 633,545 $ 482,928 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Years Ended December 31, 2023 2022 Revenues: Intellectual property operations $ 89,156 $ 19,508 Industrial operations 35,098 39,715 Energy operations 848 — Total revenues 125,102 59,223 Costs and expenses: Cost of revenues - intellectual property operations 34,164 18,029 Cost of revenues - industrial operations 18,009 19,359 Cost of production - energy operations 656 — Engineering and development expenses - industrial operations 735 626 Sales and marketing expenses - industrial operations 6,908 8,621 General and administrative expenses 43,694 52,680 Total costs and expenses 104,166 99,315 Operating income (loss) 20,936 ( 40,092 ) Other income (expense): Equity securities investments: Change in fair value of equity securities 31,423 ( 263,695 ) (Loss) gain on sale of equity securities ( 10,930 ) 125,318 Earnings on equity investment in joint venture 4,167 42,531 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 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 Total other income (expense) 46,490 ( 87,058 ) Income (loss) before income taxes 67,426 ( 127,150 ) Income tax benefit 1,504 16,211 Net income (loss) including noncontrolling interests in subsidiaries 68,930 ( 110,939 ) Net income attributable to noncontrolling interests in subsidiaries ( 1,870 ) ( 14,126 ) Net income (loss) attributable to Acacia Research Corporation $ 67,060 $ ( 125,065 ) Income (loss) per share: 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 Basic net income (loss) per common share $ 0.73 $ ( 3.13 ) 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 Diluted net income (loss) per common share $ 0.58 $ ( 3.13 ) The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (In thousands, except share data) Year Ended December 31, 2023 Series A Redeemable Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interests in Operating Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2022 350,000 $ 19,924 43,484,867 $ 43 $ ( 98,258 ) $ 663,284 $ ( 306,789 ) $ 11,042 $ 269,322 Net income including noncontrolling interests in subsidiaries — — — — — — 67,060 1,870 68,930 Distributions to noncontrolling interests in subsidiaries — — — — — — — ( 1,390 ) ( 1,390 ) Accretion of Series A Redeemable Convertible Preferred Stock to redemption value — 3,230 — — — ( 3,230 ) — — ( 3,230 ) Dividend on Series A Redeemable Convertible Preferred Stock — — — — — ( 1,400 ) — — ( 1,400 ) Conversion of Series A Redeemable Convertible Preferred Stock to common stock ( 350,000 ) ( 23,154 ) 9,616,746 10 — 36,023 — — 36,033 Exercise of Series B warrants — — 31,506,849 32 — 129,462 — — 129,494 Stock options exercised — — 67,500 — — 235 — — 235 Issuance of common stock from the Rights Offering — — 15,068,753 15 — 79,096 — — 79,111 Issuance of common stock for vesting of restricted stock units — — 327,684 — — — — — — Issuance of common stock for unvested restricted stock awards, net of forfeitures — — ( 34,167 ) — — — — — — Shares withheld related to net share settlement of share-based awards — — ( 142,759 ) — — ( 614 ) — — ( 614 ) Compensation expense for share-based awards — — — — — 3,297 — — 3,297 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 Year Ended December 31, 2022 Series A Redeemable Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interests in Operating Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2021 350,000 $ 14,753 48,807,748 $ 49 $ ( 47,281 ) $ 648,389 $ ( 181,724 ) $ 11,042 $ 430,475 Net (loss) income including noncontrolling interests in subsidiaries — — — — — — ( 125,065 ) 14,126 ( 110,939 ) Distributions to noncontrolling interests in subsidiaries — — — — — — — ( 14,126 ) ( 14,126 ) Accretion of Series A Redeemable Convertible Preferred Stock to redemption value — 5,171 — — — ( 5,171 ) — — ( 5,171 ) Dividend on Series A Redeemable Convertible Preferred Stock — — — — — ( 2,799 ) — — ( 2,799 ) Exercise of Series A warrants — — 5,000,000 5 — 20,645 — — 20,650 Issuance of common stock for vesting of restricted stock units — — 646,668 — — — — — — Issuance of common stock for unvested restricted stock awards, net of forfeitures — — 197,999 — — — — — — Shares withheld related to net share settlement of share-based awards — — ( 372,314 ) — — ( 1,600 ) — — ( 1,600 ) Compensation expense for share-based awards — — — — — 3,820 — — 3,820 Repurchase of common stock — — ( 10,795,234 ) ( 11 ) ( 50,977 ) — — — ( 50,988 ) Balance at December 31, 2022 350,000 $ 19,924 43,484,867 $ 43 $ ( 98,258 ) $ 663,284 $ ( 306,789 ) $ 11,042 $ 269,322 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2023 2022 Cash flows from operating activities: Net income (loss) including noncontrolling interests in subsidiaries $ 68,930 $ ( 110,939 ) Adjustments to reconcile net income (loss) including noncontrolling interests in subsidiaries to net cash used in operating activities: Depreciation, depletion and amortization 14,728 13,514 Amortization of debt discount and issuance costs — 90 Change in fair value of Series A redeemable convertible preferred stock embedded derivatives ( 3,954 ) ( 1,613 ) Change in fair value of Series A warrants — ( 1,895 ) Change in fair value of Series B warrants ( 2,762 ) ( 11,598 ) Loss on exercise of Series A warrants — 2,004 Gain on exercise of Series B warrants ( 1,525 ) — Compensation expense for share-based awards 3,297 3,820 (Gain) loss on foreign currency exchange ( 53 ) 3,324 Change in fair value of equity securities ( 31,423 ) 263,695 Loss (gain) on sale of equity securities 10,930 ( 125,318 ) Earnings on equity investment in joint venture ( 4,167 ) ( 42,531 ) Unrealized gain on derivatives ( 781 ) — Deferred income taxes ( 3,657 ) ( 17,810 ) Changes in assets and liabilities: Accounts receivable ( 70,313 ) 998 Inventories 3,301 ( 5,291 ) Prepaid expenses and other assets ( 820 ) ( 5,986 ) Accounts payable and accrued expenses ( 4,651 ) ( 136 ) Royalties and contingent legal fees payable 751 ( 1,764 ) Deferred revenue ( 337 ) 100 Net cash used in operating activities ( 22,506 ) ( 37,336 ) Cash flows from investing activities: Acquisition, net of cash acquired (Note 3) ( 9,409 ) — Cash reinvested 9,965 — Patent acquisition ( 6,000 ) ( 5,000 ) Purchases of equity securities ( 13,072 ) ( 112,142 ) Sales of equity securities 32,106 273,934 Distributions received from equity investment in joint venture 2,777 28,404 Purchases of property and equipment ( 189 ) ( 732 ) Net cash provided by investing activities 16,178 184,464 Cash flows from financing activities: Repurchase of common stock — ( 50,988 ) Paydown of Revolving Credit Facility ( 7,700 ) — Paydown of Senior Secured Notes ( 60,000 ) ( 120,000 ) Dividend on Series A Redeemable Convertible Preferred Stock ( 1,400 ) ( 2,799 ) Taxes paid related to net share settlement of share-based awards ( 614 ) ( 1,600 ) Proceeds from Rights Offering 79,111 — Proceeds from exercise of Series A warrants — 9,250 Proceeds from exercise of Series B warrants 49,000 — Proceeds from exercise of stock options 235 — Net cash provided by (used in) financing activities 58,632 ( 166,137 ) Effect of exchange rates on cash and cash equivalents 1 ( 2,566 ) Increase (decrease) in cash and cash equivalents 52,305 ( 21,575 ) Cash and cash equivalents, beginning 287,786 309,361 Cash and cash equivalents, ending $ 340,091 $ 287,786 Supplemental schedule of cash flow information: Interest paid $ 2,513 $ 7,229 Income taxes paid 831 384 Noncash investing and financing activities: Accrued patent costs 4,000 9,000 Distribution to noncontrolling interests in subsidiaries 1,390 14,126 The accompanying notes are an integral part of these consolidated financial statements F-6 Table of Contents ACACIA RESEARCH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS 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. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value. We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations 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. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such 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. Relationship with Starboard Value, LP Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company's controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. Refer to Note 10 for additional information. Recapitalization On October 30, 2022, the Company entered into a Recapitalization Agreement (the “Recapitalization Agreement”) with Starboard and certain funds and accounts affiliated with, or managed by, Starboard (collectively, the “Investors”), pursuant to which, among other things, the Company and Starboard agreed to enter into a series of transactions (the “Recapitalization”) to restructure Starboard’s existing investments in the Company in order to simplify the Company’s capital structure. Under the Recapitalization Agreement, the Company and Starboard agreed to take certain actions in connection with the Recapitalization. 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”). 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. 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. No shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any F-7 Table of Contents Senior Secured Notes remain outstanding. Refer to Note 10 for a detailed description of the Recapitalization and the Recapitalization Transactions. Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business 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. 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. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own. Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others. If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth. During the years ended December 31, 2023 and 2022, ARG did not obtain control of any new patent portfolios. Industrial Operations Acquisition On October 7, 2021, we consummated our first operating company acquisition of Printronix Holding Corporation and subsidiaries (“Printronix”). Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth. We 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. The Company's consolidated financial statements include Printronix's consolidated operations. Energy Operations Acquisition In November 13, 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark Energy II, LLC ("Benchmark"). 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. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. Benchmark’s existing assets consist of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company's consolidated financial F-8 Table of Contents statements include Benchmark's consolidated operations from November 13, 2023 through December 31, 2023. Refer to Note 3 for additional information related to the Benchmark acquisition. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles 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. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for noncontrolling interests activity. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 4, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. In November 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark. Benchmark is included in the Company's consolidated financial statements because Benchmark is a variable interest entity ("VIE"). We determined that we have the power to direct the activities that most significantly impact Benchmark's economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it. 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. Refer to Note 19 for additional information regarding our three reportable business segments: Intellectual Property Operations, Industrial Operations and Energy Operations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 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. F-9 Table of Contents Revenue Recognition Intellectual Property Operations ARG's revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled IP Rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by ARG primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by ARG. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring License Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were generally perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to grant combined items to which the promised IP Rights are inputs and (ii) the Company's promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant IP Rights in the contract. Since the promised IP Rights are not individually distinct, ARG combined each individual IP Right in the contract into a bundle of IP Rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. ARG’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. ARG’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 15-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring License Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties from Recurring License Revenue Agreements, ARG includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they are granted to the licensee. In determining the transaction price, ARG adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, ARG does not adjust the promised amount of consideration for the effects of a significant financing component if ARG expects, at contract inception, that the period between when the entity grants promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the F-10 Table of Contents 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: Years Ended December 31, 2023 2022 (In thousands) Paid-up license revenue agreements $ 87,835 $ 17,788 Recurring License Revenue Agreements 1,321 1,720 Total $ 89,156 $ 19,508 Industrial Operations Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations. Printronix enters into contract arrangements that may include various combinations of tangible products (which include printers, consumables and parts) and services, which are generally capable of being distinct and accounted for as separate performance obligations. Printronix evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (i.e. capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e. distinct within the context of the contract). For contract arrangements that include multiple performance obligations, Printronix allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and standard software while standalone selling prices for repair and maintenance services are developed with an expected cost-plus margin or residual approach. Regional pricing, marketing strategies and business practices are evaluated to derive the estimated standalone selling price using a cost-plus margin methodology. Printronix recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes consideration of the following: (i) the customer simultaneously receives and consumes the benefits provided as Printronix performs its promises, (ii) the performance creates or enhances an asset that is under control of the customer, (iii) the performance does not create an asset with an alternative use to Printronix, and (iv) Printronix has an enforceable right to payment for its performance completed to date. Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. Service revenue commissions are tied to the revenue recognized during the current year of the related sale. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue. F-11 Table of Contents Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer. These agreements commence upon expiration of the standard warranty period. Printronix provides the point-of-customer-contact, dispatches calls and sells the parts used for printer repairs to service providers. Printronix contracts third parties to perform the on-site repair services at the time of sale which covers the period of service at a set amount. The maintenance service agreements are separately priced at a stand-alone value. For those transactions in which maintenance service agreements are purchased concurrently with the purchase of printers, the revenue is deferred based on the selling price, which approximates the stand-alone value for separately sold maintenance services agreements. Revenue from maintenance service contracts are recognized on a straight-line basis over the period of each individual contract, which is consistent with the pattern in which the benefit is consumed by the customer. Printronix's net revenues were comprised of the following for the periods presented: Years Ended December 31, 2023 2022 (In thousands) Printers, consumables and parts $ 31,604 $ 35,432 Services 3,494 4,283 Total $ 35,098 $ 39,715 Refer to Note 19 for additional information regarding net sales to customers by geographic region. 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. 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. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, Printronix has determined that its contracts do not include a significant financing component. Printronix's remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $ 567,000 and $ 681,000 as of December 31, 2023 and 2022, respectively. Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. On average, remaining performance obligations as of December 31, 2023 are expected to be recognized over a period of approximately two years . Energy Operations Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer. Benchmark's contracts' pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions. As a result, the price of the oil and natural gas fluctuate to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant. Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations. Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed upon delivery point, at which the customer takes custody, title, and risk of loss of the product. Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials. Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive. F-12 Table of Contents Benchmark's natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point. The midstream entity gathers, processes, and remits proceeds to Benchmark for the resulting sale of natural gas and natural gas liquids, and generally includes a reduction for contractual fees and for percent of proceeds. For the contracts where Benchmark maintains control through the outlet of the midstream processing facility, Benchmark recognizes revenue on a gross basis, with gathering, transportation, and processing fees presented as an expense on the consolidated statements of operations. Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues are based on the net amount of the proceeds received from the midstream processing entity as customer. Benchmark's proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark's proportionate share of sales proceeds, which is net of costs incurred by the operator, if any. Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive. Proceeds are generally received by Benchmark within two to three months after the month in which production occurs. Benchmark's revenue from November 13, 2023 through December 31, 2023 were comprised of the following (in thousands): Oil sales $ 256 Natural gas sales 372 Natural gas liquids sales 220 Total $ 848 Cost of Revenues and Cost of Production Intellectual Property Operations Cost of revenues include the costs and expenses incurred in connection with ARG’s patent licensing and enforcement activities, including inventor royalties paid to patent owners, patent maintenance and prosecution costs, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. Cost of revenues were comprised of the following for the periods presented: Years Ended December 31, 2023 2022 (In thousands) Inventor royalties $ 1,025 $ 1,212 Contingent legal fees 10,998 2,444 Litigation and licensing expenses 10,771 3,970 Amortization of patents 11,370 10,403 Total $ 34,164 $ 18,029 Inventor Royalties and Contingent Legal Expenses Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. Patent costs, including any upfront advances paid to patent owners by ARG’s operating subsidiaries, that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the consolidated statements of operations. Any unamortized upfront advances recovered from net revenues are expensed in the period recovered and included in amortization expense in the consolidated statements of operations. F-13 Table of Contents Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, ARG’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Inventor royalty and contingent legal agreements generally provide for payment by ARG of contractual amounts 30 days subsequent to the quarter end during which related license fee payments are received from licensees by ARG. Litigation and Licensing Expenses Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly basis or a contingent fee basis. Litigation and licensing expenses also includes third-party patent research, development, patent prosecution and maintenance fees, re-exam and inter partes reviews, consulting and other costs incurred in connection with the licensing and enforcement of patent portfolios. Industrial Operations 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. Warranty periods range from three months to two years . The provision for warranty costs is determined by applying the historical claims experience and estimated repair costs to the outstanding units under warranty. 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: Years Ended December 31, 2023 2022 (In thousands) Beginning balance $ 131 $ 222 Estimated future warranty expense 65 25 Warranty claims settled ( 100 ) ( 116 ) Ending balance $ 96 $ 131 Energy Operations Cost of production includes production costs, including lease operating expenses, production taxes, gathering transportation, and marketing costs, are expensed as incurred. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable. The Company places its cash equivalents primarily in highly rated money market funds, investments in U.S. treasury securities and investment grade marketable securities. 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 Two licensees individually accounted for 59 % and 26 % of revenues recognized during the year ended December 31, 2023. 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. 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 F-14 Table of Contents 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. Two licensees individually represented approximately 72 % and 26 % of accounts receivable at December 31, 2023. Two licensees individually represented approximately 57 % and 43 % of accounts receivable at December 31, 2022. Industrial Operations No single Printronix customer accounted for more than 10% of revenue for the years ended December 31, 2023 and 2022. Printronix has significant foreign operations, refer to Note 19 for additional information regarding net sales to customers by geographic region. 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. 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. 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. Energy Operations 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. Two Benchmark customers individually accounted for 27 % and 20 % of accounts receivable as of December 31, 2023. Benchmark does not have any foreign operations, refer to Note 19 for additional information regarding revenue from customers by geographic region. 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. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond Benchmark's control. 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 economic conditions, both foreign and domestic. Benchmark cannot predict future oil and natural gas prices with any degree of certainty. 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. 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 The Company considers all highly liquid securities with original maturities of three months or less when purchased to be cash equivalents. For the periods presented, Acacia’s cash equivalents are comprised of investments in U.S. treasury securities and AAA rated money market funds that invest in first-tier only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its agencies. Equity Securities Investments in equity securities are reported at fair value on a recurring basis, with related realized and unrealized gains and losses in the value of such securities recorded in the consolidated statements of operations in other income or (expense). Dividend income is included in other income or (expense). Refer to Note 4 for additional information. F-15 Table of Contents Equity Securities Without Readily Determinable Fair Value For equity securities that do not have a readily determinable fair value, the Company elected to report them under the measurement alternative. They are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in any adjustments for illiquidity or preference of these securities. Changes in fair value are reported in the consolidated statements of operations in other income or (expense). To date, the Company has not recorded any impairments nor upward or downward adjustments on our equity securities without readily determinable fair values held as of December 31, 2023 and 2022. Refer to Note 4 for additional information. Equity Method Investments Equity investments in common stock and in-substance common stock without readily determinable fair values in companies over which the Company has the ability to exercise significant influence, are accounted for using the equity method of accounting. Acacia includes its proportionate share of earnings and/or losses of its equity method investees in earnings on equity investment in joint venture in the consolidated statements of operations. Refer to Note 4 for additional information. Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity's common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee's losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee's receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Investment at Fair Value On an individual investment basis, Acacia may elect to account for investments in companies where the Company has the ability to exercise significant influence over operating and financial policies of the investee, at fair value. 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). 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 Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and a new cost basis in the investment is established. F-16 Table of Contents Accounts Receivable and Allowance for Credit Losses Intellectual Property Operations ARG performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for credit losses established as of December 31, 2023 and 2022. Industrial Operations Printronix's accounts receivable are recorded at the invoiced amount and do not bear interest. Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs. Receivable losses are charged against the allowance when management believes the account has become uncollectible. Subsequent recoveries, if any, are credited to the allowance. As of December 31, 2023 and 2022, Printronix's combined allowance for credit losses and allowance for sales returns was $ 56,000 and $ 22,000 , respectively. Energy Operations Benchmark's oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers. Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs. Benchmark's accounts receivable are recorded at the invoiced amount and do not bear interest. An allowance for credit losses may be established to reflect management's best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined by evaluating individual customer receivables based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for credit losses established as of December 31, 2023. Inventories Printronix's inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value. Cost is determined at standard cost adjusted on a first-in, first-out basis for variances. Cost includes shipping and handling fees and other costs, including freight insurance and customs duties for international shipments, which are subsequently expensed to cost of sales. Printronix evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions. Refer to Note 5 for additional information related to Printronix's inventories. Long-Term Notes Receivable 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. 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. 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. 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. F-17 Table of Contents Derivative Financial Instruments Benchmark records open derivative instruments at fair value as either commodity derivative assets or liabilities. 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. 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. 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. Refer to Note 11 for additional information. Property, Plant and Equipment Property and equipment are recorded at cost. Major additions and improvements that materially extend useful lives of property and equipment are capitalized. Maintenance and repairs are charged against the results of operations as incurred. When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the consolidated statements of operations for the period of sale or disposal. Refer to Note 6 for additional information. Depreciation and amortization is computed on a straight-line basis over the following estimated useful lives of the assets: Machinery and equipment 2 to 10 years Furniture and fixtures 3 to 5 years Computer hardware and software 3 to 5 years Leasehold improvements 2 to 5 years (Lesser of lease term or useful life of improvement) Oil and Natural Gas Properties Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities. Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves. If Benchmark determines that the wells do not find proved reserves, the costs are charged to expense. At December 31, 2023, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized. On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained. Capitalized costs of proved oil and natural gas 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. Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. Refer to Note 7 for additional information. Goodwill Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. We evaluate goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the excess is charged to earnings as an impairment loss. Refer to Note 8 for additional information. F-18 Table of Contents Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. The Company’s leases primarily consist of facility leases which are classified as operating leases. Lease expense is recognized on a straight-line basis over the lease term. As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Refer to Note 13 for additional information. Impairment of Long-lived Assets ARG's patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations. ARG's patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from two to five years . Refer to Note 8 for additional information. Printronix's intangible assets consist of trade names and trademarks, patents and customer and distributor relationships. These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization. Printronix currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives of seven years . Refer to Note 8 for additional information. The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over their estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Refer to Note 8 for additional information. Series B Warrants The fair value of the Series B Warrants was estimated using a Black-Scholes option-pricing model. Refer to Notes 10 and 11 for additional information related to the Series B Warrants and their fair value measurements. F-19 Table of Contents Embedded Derivatives Embedded derivatives that are required to be bifurcated from their host contract are valued separately from the host instrument. Refer to Notes 10 and 11 for additional information related to the embedded derivatives and their fair value measurements. Revolving Credit Facility 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. The Revolver has an initial borrowing base of $ 25,000,000 and $ 75,000,000 maximum borrowing capacity. The Revolver matures on September 16, 2025. The availability under the Credit Agreement is subject to the borrowing base, which is redetermined on April 1 and October 1 of each year. On April 11, 2023, the borrowing base was reduced to $ 20,075,000 and a letter of credit was issued for $ 2,500,000 . Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the credit agreement. The term loan had funding of $ 3,500,000 , which was paid in full between January 1 and April 28, 2023. Benchmark’s outstanding balance on the term loan was zero as of December 31, 2023. 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. As of December 31, 2023, Benchmark was in compliance with these financial covenants. In general, the borrowings under the credit facility bear interest at either the Alternate Base Rate (“ABR”) or Secured Overnight Financing Rate (“SOFR”). Either rate is adjusted upward by an applicable margin based on Benchmark's percentage of utilization of the credit facility. 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. The credit facility provides for a commitment fee of 0.5 percent on the unused borrowings. As of December 31, 2023 the outstanding balance on the Revolver was $ 10.5 million. Contingent Liabilities The Company, from time to time, is involved in certain legal proceedings. Based upon consultation with outside counsel handling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arising from such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its consolidated financial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptions and judgments, reflects the most likely outcome, is recorded as a contingent liability in the consolidated financial statements. In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these types of contingencies are recognized in the period in which the litigation services were provided. Refer to Note 13 for additional information. Fair Value of Financial Instruments 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. Fair Value Measurements U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. Refer to Note 11 for additional information. Treasury Stock Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any F-20 Table of Contents 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. Engineering and Development Engineering and development costs are expensed as incurred and consist of labor, supplies, consulting and other costs related to developing and improving Printronix's products. Advertising Printronix expenses advertising costs, including promotional literature, brochures and trade shows, as incurred. 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 . Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards ("PSUs") are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Forfeitures are accounted for as they occur. Refer to Note 15 for additional information. Foreign Currency Gains and Losses In connection with our Printronix business, the U.S. dollar is the functional currency for all of the foreign subsidiaries. Transactions that are recorded in currencies other than the U.S. dollar may result in transaction gains or losses at the end of the reporting period and when trade receipts and payments occur. For these subsidiaries, the assets and liabilities have been re-measured at the end of the period for changes in exchange rates, except inventories and property, plant and equipment, which have been remeasured at historical average rates. The consolidated statements of operations have been reevaluated at average rates of exchange for the reporting period, except cost of sales and depreciation, which have been reevaluated at historical rates. Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound 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. Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Under U.S. GAAP, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Refer to Note 17 for additional information. F-21 Table of Contents Income/Loss Per Share For periods in which the Company generates net income, the Company computes basic net income per share attributable to common stockholders using the two-class method required for capital structures that include participating securities. Under the two-class method, securities that participate in non-forfeitable dividends, such as the Company’s outstanding unvested restricted stock and Series A Redeemable Convertible Preferred Stock, are considered participating securities and are allocated a portion of the Company’s earnings. For periods in which the Company generates a net loss, net losses are not allocated to holders of the Company’s participating securities as the security holders are not contractually obligated to share in the Company’s losses. 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. 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. 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. Recent Accounting Pronouncements Recently Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to replace the incurred loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition to historical loss information, to determine expected credit losses. Pooling of assets with similar risk characteristics and the use of a loss model are also required. Also, in April 2019, the FASB issued ASU No. 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. The Company adopted the update on January 1, 2023. The adoption of the update did not have a material impact on the Company's financial position, results of operations or financial statement disclosures. In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): 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. The Company adopted the update on January 1, 2023. The adoption of the update did not have a material impact on the Company's financial position, results of operations or financial statement disclosures. Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” to simplify the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. This update reduces the number of accounting models for convertible instruments, revises the derivatives scope exception, and provides targeted improvements for earnings per share. Upon adoption, companies have the option to apply a modified or full retrospective transition approach. The amendments in this update will currently be effective for the Company on January 1, 2024, with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements. 3. ACQUISITION In November 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil F-22 Table of Contents and gas assets in mature resource plays in Texas and Oklahoma. 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. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The following unaudited pro forma summary presents consolidated information, as if the business combination had occurred on January 1, 2022: Years Ended December 31, 2023 2022 (Unaudited, in thousands) Pro forma: Revenues $ 131,712 $ 64,195 Net income (loss) attributable to Acacia Research Corporation 66,755 ( 123,316 ) We had material, nonrecurring pro forma adjustments directly attributable to the business combination included in the above pro forma revenues and net income. These adjustments included a decrease of $ 4.8 million in oil and natural gas properties related to the finalization of the valuation s. In 2023, we incurred $ 1.7 million of acquisition-related costs. These expenses are included in general and administrative expenses for the year ended December 31, 2023. 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): Fair value of consideration transferred: Cash $ 10,000 Total consideration $ 10,000 Identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 10,556 Trade receivables 1,385 Prepaid expenses and other current assets 1,644 Oil and natural gas properties, net 25,276 Other assets 361 Trade and other payables ( 2,349 ) Revolving credit facility ( 18,225 ) Other long-term liabilities ( 276 ) Noncontrolling interest ( 9,821 ) Total identifiable net assets $ 8,551 Goodwill $ 1,449 Intangible Assets and Liabilities As of December 31, 2023, management has preliminary assessed the valuations of all acquired assets and liabilities assumed in the acquisition. The fair value of the noncontrolling interest is based on contractual terms of the purchase agreement. Goodwill of $ 1.4 million represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed. None of the goodwill resulting from the acquisition is deductible for tax purposes. All of the goodwill acquired is allocated to the Benchmark reporting unit. Refer to Note 8 for additional information. F-23 Table of Contents 4. EQUITY SECURITIES Equity securities for the periods presented were comprised of the following: Security Type Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (In thousands) December 31, 2023: Equity securities - Life Sciences Portfolio $ 28,498 $ 28,600 $ ( 20 ) $ 57,078 Equity securities - other common stock 4,925 1,080 ( 15 ) 5,990 Total $ 33,423 $ 29,680 $ ( 35 ) $ 63,068 December 31, 2022: Equity securities - Life Sciences Portfolio $ 28,498 $ 14,815 $ ( 617 ) $ 42,696 Equity securities - other common stock 34,885 4 ( 15,977 ) 18,912 Total $ 63,383 $ 14,819 $ ( 16,594 ) $ 61,608 Equity Securities Portfolio Investment On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund, which included general terms through which the Company was provided the option to purchase the Life Sciences Portfolio for an aggregate purchase price of £ 223.9 million, approximately $ 277.5 million at the exchange rate on April 3, 2020. For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our consolidated balance sheets as of December 31, 2023 and 2022, the total fair value of the remaining Life Sciences Portfolio investment was $ 82.8 million and $ 68.4 million, respectively. 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. As of December 31, 2023 and 2022, the Company's investment in Arix was approximately 26 % of Arix. 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. 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. As of December 31, 2023, this investment did not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. 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. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd. (“RTW Bio”) to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP), 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 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. 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. On January 19, 2024, the Company completed such sale for $57.1 million. Following the completion of the share sale, the Company no longer owns any shares of Arix. F-24 Table of Contents 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: Years Ended December 31, 2023 2022 (In thousands) Change in fair value of equity securities of public companies $ 14,383 $ ( 247,126 ) Gain on sale of equity securities of public companies — 111,717 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. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0 % of outstanding shares of Viamet. As of December 31, 2023 and 2022, this investment did not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. 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. During the year ended December 31, 2023, MalinJ1 made distributions of $ 2.8 million to Acacia and $ 1.4 million to noncontrolling interests. During the year ended December 31, 2022, MalinJ1 made distributions of $ 28.4 million to Acacia and $ 14.1 million to noncontrolling interests. 5. INVENTORIES Printronix's inventories consisted of the following: December 31, 2023 2022 (In thousands) Raw materials $ 3,961 $ 4,335 Subassemblies and work in process 1,882 3,045 Finished goods 5,578 7,340 11,421 14,720 Inventory reserves ( 500 ) ( 498 ) Total inventories $ 10,921 $ 14,222 F-25 Table of Contents 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: December 31, 2023 2022 (In thousands) Machinery and equipment $ 3,035 $ 3,057 Furniture and fixtures 395 585 Computer hardware and software 312 660 Leasehold improvements 1,018 1,025 4,760 5,327 Accumulated depreciation and amortization ( 2,404 ) ( 1,790 ) Property, plant and equipment, net $ 2,356 $ 3,537 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. 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. 7. OIL AND NATURAL GAS PROPERTIES, NET Oil and natural gas properties consisted of the following at December 31, 2023: December 31, 2023 (In thousands) Total proved properties costs $ 25,276 Accumulated depletion and depreciation ( 159 ) Oil and natural gas properties, net $ 25,117 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. Benchmark determined no impairment to proved oil and natural gas properties was necessary as of December 31, 2023. 8. GOODWILL AND OTHER INTANGIBLE ASSETS, NET Changes in the carrying amount of Printronix's goodwill consisted of the following: Years Ended December 31, 2023 2022 (In thousands) Beginning balance $ 7,541 $ 7,470 Acquisition of business — — Tax adjustment — 71 Impairment losses — — Ending balance $ 7,541 $ 7,541 Changes in the carrying amount of Benchmark's goodwill consisted of the following: F-26 Table of Contents Years Ended December 31, 2023 (In thousands) Beginning balance $ — Acquisition of business 1,449 Impairment losses — Ending balance $ 1,449 The ending balance of goodwill includes no accumulated impairment losses to date. Refer to Note 3 for additional information related to the Benchmark acquisition. Other intangible assets, net consisted of the following: December 31, 2023 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Patents: Intellectual property operations 6 years $ 341,403 $ ( 316,114 ) $ 25,289 Industrial operations 7 years 3,400 ( 1,083 ) 2,317 Total patents 344,803 ( 317,197 ) 27,606 Customer relationships - industrial operations 7 years 5,300 ( 1,689 ) 3,611 Trade name and trademarks - industrial operations 7 years 3,430 ( 1,091 ) 2,339 Total $ 353,533 $ ( 319,977 ) $ 33,556 December 31, 2022 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Patents: Intellectual property operations 6 years $ 331,403 $ ( 304,744 ) $ 26,659 Industrial operations 7 years 3,400 ( 597 ) 2,803 Total patents 334,803 ( 305,341 ) 29,462 Customer relationships - industrial operations 7 years 5,300 ( 931 ) 4,369 Trade name and trademarks - industrial operations 7 years 3,430 ( 603 ) 2,827 Total $ 343,533 $ ( 306,875 ) $ 36,658 Total other intangible asset amortization expense in the consolidated statements of operations was $ 13.1 million and $ 12.1 million for the years ended December 31, 2023 and 2022, respectively. The Company did not record charges related to impairment of other intangible assets for the years ended December 31, 2023 and 2022. There was no accelerated amortization of other intangible assets for the years ended December 31, 2023 and 2022. Intellectual Property Operations amortization of patents is expensed in cost of revenues and Industrial Operations amortization is expensed in general and administrative expenses. F-27 Table of Contents The following table presents the scheduled annual aggregate amortization expense (in thousands): Years Ending December 31, 2024 14,830 2025 12,485 2026 3,173 2027 1,733 2028 1,335 Thereafter — Total $ 33,556 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. 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. 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). 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: December 31, 2023 2022 (In thousands) Accrued consulting and other professional fees $ 1,595 $ 1,173 Income taxes payable 619 474 Product warranty liability, current 30 36 Service contract costs, current 169 280 Short-term lease liability 1,248 1,559 Accrued patent cost (see Note 8) 4,000 9,000 Other accrued liabilities 744 1,536 Total $ 8,405 $ 14,058 10. STARBOARD INVESTMENT In order to establish a strategic and ongoing relationship between the Company and Starboard, on November 18, 2019, the Company and Starboard entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which Starboard acquired (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a stated value of $ 100 per share, (ii) Series A Warrants to purchase up to 5,000,000 shares of the Company's common stock (the “Series A Warrants”) and (iii) Series B Warrants to purchase up to 100,000,000 shares of the Company's common stock. 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. Management of the Company believed that the Company’s capital structure, with multiple different series of securities, made it difficult for investors to understand and value the Company and created an impediment to new public investment. As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into 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 F-28 Table of Contents 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. 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. Accordingly, no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding. 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 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. Further, the Series A Redeemable Convertible Preferred Stock accrued cumulative dividends quarterly at annual rate of 3.0 % on the stated value. Upon consummation of the Printronix acquisition in October 2021, the dividend rate increased to 8.0 % on the stated value. There were no accrued and unpaid dividends as of December 31, 2023 and 2022. 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"). 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. 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. 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. Proceeds received were allocated based on the fair value of the instrument without the Series A Warrants and of the Series A Warrants themselves at the time of issuance. The proceeds allocated to the Series A Redeemable Convertible Preferred Stock were then further allocated between the host preferred stock instrument and the embedded derivative, with the embedded derivative recorded at fair value and the Series A Redeemable Convertible Preferred Stock recorded at the residual amount. The portion of the proceeds allocated to the Series A Warrants, embedded derivative, and Series A Redeemable Convertible Preferred Stock was $ 4.8 million, $ 21.2 million, and $ 8.9 million, respectively. Transaction costs were also allocated between the Series A Redeemable Convertible Preferred Stock and the Series A Warrants on the same basis as the proceeds. The transaction costs allocated to the Series A Redeemable Convertible Preferred Stock were treated as a discount to the Series A Redeemable Convertible Preferred Stock. The transaction costs allocated to the Series A Warrants were expensed as incurred. 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. 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. The Company determined that upon entering into the Recapitalization F-29 Table of Contents 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. 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. The following features of the Series A Redeemable Convertible Preferred Stock are required to be bifurcated from the host preferred stock and accounted for separately as an embedded derivative: (i) the right of the holders to redeem the shares (the “put option”), (ii) the right of the holders to receive common stock upon conversion of the shares (the “conversion option”), (iii) the right of the Company to redeem the shares (the “call option”), and (iv) the change in dividend rate upon consummation of an approved investment or a triggering event (the “contingent dividend rate feature”). These features are required to be accounted for separately from the Series A Redeemable Convertible Preferred Stock because the features were determined to be not clearly and closely related to the debt-like host and also did not meet any other scope exceptions for derivative accounting. Therefore, these features are bundled together and are accounted for as a single, compound embedded derivative liability. Accordingly, we have recorded an embedded derivative liability representing the combined fair value of each of these features. 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. 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. 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. 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 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. 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. 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. As of December 31, 2023, no Series A Warrants were issued or outstanding. Series B Warrants 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); 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. 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. 31,506,849 of the Series B F-30 Table of Contents 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. In March 2023, the Unadjusted Series B Warrants were cancelled immediately following the completion of the Rights Offering (as described below). During the year ended December 31, 2023, the remaining 31,506,849 Series B Warrants were exercised. 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. 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. 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). The Recapitalization Payment effectively modified the exercise price of the Series B Warrants. 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. 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. As of December 31, 2023, no Series B warrants were issued or outstanding. 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 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. 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. The New Notes bore interest at a rate of 6.00 % per annum and had an initial maturity date of December 31, 2020. 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. 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. 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”). 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. F-31 Table of Contents 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. 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. On June 30, 2021, the Company issued $ 30.0 million in additional New Notes (the “June 2021 Merton Notes”) and amended the maturity date of the New Notes to October 15, 2021. 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. 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. On January 31, 2022, the Company amended the maturity date of the New Notes to April 15, 2022, and agreed to repay an aggregate of $ 15.0 million principal amount of the New Notes, resulting in a principal amount outstanding of $ 165.0 million. 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. 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). 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. As of December 31, 2023, no Senior Secured Notes were issued or outstanding. 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. 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. Therefore, the amendments are accounted for as a modification on a prospective basis. 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. 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. For the year ended December 31, 2022, $ 90,000 was amortized to interest expense. Rights Offering and Concurrent Private Rights Offering 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 (the “Rights Offering”). Under the terms of the Rights Offering, the Company distributed non-transferable subscription rights to record holders (“Eligible Securityholders”) of the Company’s common stock held as of 5 p.m. Eastern time on February 13, 2023, the record date for the Rights Offering. The subscription period for the Rights Offering terminated at 5 p.m. Eastern time on March 1, 2023 (the “Expiration Time”). 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. Each Subscription F-32 Table of Contents 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”). 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. 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. 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. Governance 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. Kohlberg satisfying this initial condition under the Recapitalization Agreement. 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. Wolanyk is unwilling or unable to serve as a director for any reason or resigns as a director). Additionally, the Company appointed Gavin Molinelli as a member and as Chair of the Board. 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 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). The Registration Rights Agreement also provides Starboard with additional rights to require that the Company file a registration statement in other circumstances. The Registration Rights Agreement includes other customary terms. The Recapitalization Agreement includes a “fair price” provision requiring, in addition to any other stockholder vote required by the Company’s Certificate of Incorporation or Delaware law, the affirmative vote of the holders of a majority of the outstanding voting stock held by stockholders of the Company other than Starboard and its affiliates, by or with whom or on whose behalf, directly or indirectly, a business combination is proposed, in order to approve such a business combination; provided, that the additional majority voting requirement would not be applicable if either (x) the business combination is approved by the Board by the affirmative vote of at least a majority of the directors who are unaffiliated with Starboard or (y) (i) the consideration to be received by stockholders other than Starboard and its affiliates meets certain minimum price conditions, and (ii) the consideration to be received by stockholders other than Starboard and its affiliates is of the same form and kind as the consideration paid by Starboard and its affiliates. 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 F-33 Table of Contents (the "Governance Agreement"), would be automatically terminated and of no further force and effect without any further action by any party thereto. 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. Services Agreement On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services. Starboard has agreed to provide the services on an expense reimbursement basis and no separate fee will be charged by Starboard for the services. During the year ended December 31, 2023 the Company reimbursed Starboard $216,000 under the Services Agreement. 11. FAIR VALUE MEASUREMENTS U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i) Level 1 - Observable Inputs : Quoted prices in active markets for identical investments; (ii) Level 2 - Pricing Models with Significant Observable Inputs : Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and (iii) Level 3 - Unobservable Inputs : Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs, including the entity’s own assumptions in determining the fair value of derivatives and certain investments. Whenever possible, the Company is required to use observable market inputs (Level 1) when measuring fair value. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. The Company held the following types of financial instruments at fair value on a recurring basis as of December 31, 2023 and 2022: Equity Securities. Equity securities includes investments in public company common stock and are recorded at fair value based on the quoted market price of each share on the valuation date. The fair value of these securities are within Level 1 of the valuation hierarchy. Equity investments that do not have regular market pricing, but for which fair value can be determined based on other data values or market prices, are recorded at fair value within Level 2 of the valuation hierarchy. T he Company has elected to apply the fair value method to one equity securities investment that would otherwise be accounted for under the equity method of accounting. 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). Commodity Derivative Instruments : Commodity derivative instruments are recorded at fair value using industry standard models using assumptions and inputs which are substantially observable in active markets throughout the full term of the instruments. These include market price curves, quoted market prices in active markets, credit risk adjustments, implied market volatility and discount factors. The fair value of these instruments are within Level 2 of the valuation hierarchy. During 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. As of December 31, 2023, the aggregate fair value of the open commodity derivatives F-34 Table of Contents 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). 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). The fair value of the remaining Series B Warrants as of July 13, 2023 was estimated based on the following significant assumptions: volatility of 120 percent, risk-free rate of 5.24 percent, term of 0.04 years and a dividend yield of 0 percent. 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 . Refer to the " Embedded derivative liabilities" discussion below for additional information on assumptions. Embedded derivative liabilities. Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the host instrument. 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. Prior to December 31, 2022, the selected volatility, as described herein, represented a haircut from the Company’s actual realized historical volatility. 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. 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. 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. 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). The fair value of the embedded derivative as of December 31, 2022 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 16.30 percent. F-35 Table of Contents Financial assets and liabilities measured at fair value on a recurring basis were as follows: Level 1 Level 2 Level 3 Total (In thousands) Assets December 31, 2023: Equity securities $ 63,068 $ — $ — $ 63,068 Commodity derivative instruments — 2,723 — 2,723 Total $ 63,068 $ 2,723 $ — $ 65,791 December 31, 2022: Equity securities $ 61,608 $ — $ — $ 61,608 Liabilities December 31, 2023: Series A embedded derivative liabilities $ — $ — $ — $ — Series B warrants — — — — Total $ — $ — $ — $ — December 31, 2022: Series A embedded derivative liabilities $ — $ — $ 16,835 $ 16,835 Series B warrants — — 84,780 84,780 Total $ — $ — $ 101,615 $ 101,615 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. 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: Series A Warrant Liabilities Series A Embedded Derivative Liabilities Series B Warrant Liabilities Total (In thousands) Balance at December 31, 2021 $ 11,291 $ 18,448 $ 96,378 $ 126,117 Exercise of warrants ( 9,396 ) — — ( 9,396 ) Remeasurement to fair value ( 1,895 ) ( 1,613 ) ( 11,598 ) ( 15,106 ) Balance at December 31, 2022 — 16,835 84,780 101,615 Exercise of warrants — — ( 82,018 ) ( 82,018 ) Conversion of redeemable convertible preferred stock — ( 12,881 ) — ( 12,881 ) Remeasurement to fair value — ( 3,954 ) ( 2,762 ) ( 6,716 ) Balance at December 31, 2023 $ — $ — $ — $ — In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of equity securities without readily determinable fair value, equity method investments and patents on a quarterly basis for indications of impairment, and other long-lived assets at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required. F-36 Table of Contents 12. RELATED PARTY TRANSACTIONS 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. 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. The Loan Facility bore an interest rate of 9.5 % per annum. We recorded $ 97,000 in interest income during the year ended December 31, 2023 . The receivable is included in other non-current assets in the consolidated balance sheets. Refer to Note 10 for information about the Recapitalization Agreement and Services Agreement with Starboard. 13. COMMITMENTS AND CONTINGENCIES Facility Leases 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. Pursuant to the lease, we have leased 8,293 square feet of office space in Irvine, California. The lease commenced on August 1, 2019. The term of the lease is 60 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. On January 7, 2020, Acacia entered into a building lease agreement with Sage Realty Corporation. Pursuant to the lease, as amended, we have leased approximately 8,600 square feet of office space for our corporate headquarters in New York, New York. The lease commenced on February 1, 2020. The term of the initial lease was 24 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. During August 2021, we entered into a first amendment of the New York office lease, to commence for a period of three years upon landlord's substantial completion of adequate substitution space. On January 25, 2022, the substitution space was substantially completed and the new expiration date is February 28, 2025. During July 2022, we entered into a second amendment of the New York office lease, to add space to the existing premises and increase the annual fixed rent through the existing expiration date. The new fixed rent commenced upon landlord's substantial completion of the additional space, which occurred on September 19, 2022. 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. In connection with such early termination election, the Company paid the landlord a termination payment as set forth in the lease. During September 2023, we entered into a fourth amendment of the New York office lease, which provides for (among other things): (a) the surrender a portion of the premises (Unit 602) effective as of March 31, 2024; (b) the rescission of the early termination election as it relates to the remaining portion of the premises (Unit 601); (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; 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. Printronix has leased 73,649 square feet of facilities space, of which the significant leases are as follows: • On November 10, 2020, Printronix entered into a building lease agreement with PPC Irvine Center Investment, LLC for 8,662 square feet of office space in Irvine, California. The lease commenced on April 1, 2021. The term of the lease is 65 months from the commencement date, provides for annual rent increases and provides the right to early terminate the lease under certain circumstances, as well as extend the lease term. • On September 30, 2019, Printronix entered into a building lease agreement with Dynamics Sing Sdn. Bhd for 52,000 square feet of warehouse/manufacturing space in Johor, Malaysia. The lease commenced on December 29, 2019. 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 our lease term. The Malaysia factory lease has two renewal options for an additional four years and one additional renewal option for two years . On July 26, 2023, Printronix entered into a lease agreement to renew the lease for another 24 months commencing on December 29, 2023. F-37 Table of Contents • 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. The lease commenced on June 13, 2022. The term of the lease is 36 months from the commencement date, has no annual rent increases and does not provide the right to early terminate or extend the lease term. • On November 28, 2019, Printronix entered into a building lease agreement with PF Grand Paris for 3,045 square feet of office space in Paris, France. The lease commenced on March 1, 2019. 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. The lease commenced on November 1, 2020. 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. 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): Years Ending December 31, 2024 $ 1,228 2025 932 2026 581 2027 243 Total minimum payments 2,984 Less: short-term lease liabilities ( 1,248 ) Long-term lease liabilities $ 1,736 Inventor Royalties and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. Patent Enforcement and Legal Proceedings The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows. Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights. In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. F-38 Table of Contents 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. (“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. Wolanyk, in acquiring a patent portfolio from Transpacific after Slingshot’s exclusive option to purchase the same patent portfolio from Transpacific had already expired. Slingshot seeks monetary damages, as well as equitable and injunctive relief related to its alleged right to own the portfolio. On March 15, 2021, the Court issued orders granting Monarch’s motion to dismiss for lack of personal jurisdiction and Ms. Wolanyk’s motion to dismiss for lack of subject matter jurisdiction. The remaining parties served written discovery requests and responses, exchanged their respective document productions, and completed depositions as of October 27, 2022. On November 18, 2022, the Acacia Entities and Transpacific filed motions for summary judgment on Slingshot’s claims. 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. On April 19, 2023, the Chancery Court heard oral argument and took the summary judgment motions under advisement. On July 26, 2023, the Court held a telephonic hearing during which it delivered its ruling on the motions for summary judgment. 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. 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. The case was subsequently assigned to Judge Eric M. Davis in the Complex Commercial Litigation Division of the Superior Court. 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. The Court scheduled the oral argument on the Acacia Entities' motion for summary judgment to take place on March 28, 2024. In the event that the Court denies the motion, it will set the case for trial. Guarantees and Indemnifications Acacia and certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases. Acacia indemnifies its directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, Acacia has a directors and officers insurance policy that may reduce its exposure in certain circumstances and may enable it to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make. To date, Acacia has made no material payments related to these guarantees and indemnities. Acacia estimates the fair value of its indemnification obligations to be immaterial based on this history and therefore, have not recorded any material liability for these guarantees and indemnities in the consolidated balance sheets. Additionally, no events or transactions have occurred that would result in a material liability as of 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. As of December 31, 2023 and December 31, 2022, Printronix had approximately $ 100,000 of these bonds outstanding. Environmental Cleanup Energy Operations Benchmark is engaged in oil and natural gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well production and may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to oil and natural gas wells and the operation thereof. In connection with Benchmark's acquisition of existing or previously drilled well bores, Benchmark may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated. Should it be determined that a liability exists with respect to any environmental cleanup F-39 Table of Contents or restoration, Benchmark would be responsible for curing such a violation. No claim has been made, nor is management aware of any liability that exists, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto for the year ended December 31, 2023. 14. STOCKHOLDERS’ EQUITY Repurchases of Common Stock On December 6, 2021, the Board approved a stock repurchase program, which authorized the purchase of up to $ 15.0 million of the Company’s common stock through open market purchases, through block trades, through 10b5-1 plans, or by means of private purchases, from time to time, through December 6, 2022. During February 2022, we completed the December 2021 program with total common stock purchases of 3,125,819 shares for the aggregate amount of $ 15.0 million. On March 31, 2022, the Board approved a stock repurchase program for up to $ 40.0 million of shares of common stock. The repurchase authorization had no time limit and did not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act. 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. 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. The repurchase authorization has no time limit and does not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act. 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. The authorization to repurchase shares provides an opportunity to reduce the outstanding share count and enhance stockholder value. 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. 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. 15. EQUITY-BASED INCENTIVE PLANS Stock-Based Incentive Plans 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. 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. 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. Acacia’s compensation committee administers the Plans. The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the 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. The exercise price of options is equal to the fair market value of Acacia’s common stock on the date of F-40 Table of Contents grant. Options generally begin to be exercisable one year after grant and expire ten years after grant. 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. The Plans provide for the following separate programs: Stock Issuance Program . Under the stock issuance program, eligible individuals may be issued shares of common stock directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. 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. 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. 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). Discretionary Restricted Stock Unit Grant Program . Under the discretionary restricted stock unit program, Acacia's compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service. During June 2023, Acacia's compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company's executive leadership team, for driving Acacia's performance over the longer-term and to align employees and shareholders. Under the long-term incentive program, Acacia's compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company's Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel. The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024). The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan. The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. In June 2016, 625,390 shares of common stock available for issuance under the 2013 Plan were transferred into the 2016 Plan. 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. At December 31, 2023, there were 1,355,726 shares available for grant under the 2016 Plan. Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock. The Board may amend or modify the 2016 Plan at any time, subject to any required stockholder approval. As of December 31, 2023, there are 5,853,868 shares of common stock reserved for issuance under the 2016 Plan. F-41 Table of Contents The following table summarizes stock option activity for the Plans: Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (In thousands) Outstanding at December 31, 2021 555,417 $ 5.61 $ 71 7.3 years Granted 1,155,000 $ 3.61 $ — Exercised — $ — $ — Forfeited/Expired ( 400,000 ) $ 4.17 $ 148 Outstanding at December 31, 2022 1,310,417 $ 4.29 $ 535 8.0 years Granted 243,319 $ 4.27 $ — Exercised ( 67,500 ) $ 3.48 $ 57 Forfeited/Expired ( 378,049 ) $ 4.76 $ 72 Outstanding at December 31, 2023 1,108,187 $ 4.18 $ 187 7.9 years Exercisable at December 31, 2023 309,999 $ 4.67 $ 51 6.4 years Vested and expected to vest at December 31, 2023 1,108,187 $ 4.18 $ 187 7.9 years Unrecognized stock-based compensation expense at December 31, 2023 (in thousands) $ 771 Weighted average remaining vesting period at December 31, 2023 1.9 years 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. The fair value was estimated based on the following weighted average assumptions: 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. 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). 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. The aggregate fair value of options vested during the years ended December 31, 2023 and 2022 was $ 309,000 and $ 235,000 , respectively. F-42 Table of Contents The following table summarizes nonvested restricted stock activity for the Plans: RSAs RSUs PSUs Shares Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Nonvested at December 31, 2021 517,569 $ 4.74 1,014,166 $ 3.73 — $ — Granted 296,000 $ 3.62 709,804 $ 3.73 — $ — Vested ( 309,567 ) $ 4.57 ( 646,668 ) $ 2.65 — $ — Forfeited ( 98,001 ) $ 4.87 ( 235,000 ) $ 4.21 — $ — Nonvested at December 31, 2022 406,001 $ 4.02 842,302 $ 4.42 — $ — Granted — $ — 1,116,875 $ 4.34 1,981,464 $ 4.61 Vested ( 178,169 ) $ 4.10 ( 327,684 ) $ 4.62 — $ — Forfeited ( 34,167 ) $ 4.38 ( 223,002 ) $ 4.38 — $ — Nonvested at December 31, 2023 193,665 $ 3.87 1,408,491 $ 4.31 1,981,464 $ 4.61 Unrecognized stock-based compensation expense at December 31, 2023 (in thousands) $ 392 $ 4,095 $ — Weighted average remaining vesting period at December 31, 2023 1.1 years 2.0 years zero years RSUs granted in 2023 are time-based and will vest in full after one to three years . The aggregate fair value of RSAs vested during the years ended December 31, 2023 and 2022 was $ 731,000 and $1.4 million, respectively. 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. 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. Compensation expense is recognized with a market-based vesting condition provided that the requisite service is rendered, regardless of when, if ever, the market condition is satisfied. Assumptions utilized in connection with the Monte Carlo valuation technique, that resulted in a fair value of $ 1.42 per unit, included: risk-free interest rate of 1.38 percent, term of 3.00 years, expected volatility of 38 percent and expected dividend yield of 0 percent . The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The expected dividend yield was based on expectations regarding dividend payments. During the year ended December 31, 2021, 450,000 RSUs were forfeited, leaving 450,000 units with market-based vesting conditions outstanding and unvested at prior period end. The remaining units fully vested on September 3, 2022. Compensation expense for RSUs with market-based vesting conditions for the years ended December 31, 2023 and 2022, was zero and $ 143,000 , respectively. 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. 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). Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date. The Company has not recorded any expense related to the PSUs based on the probability assessment performed as of December 31, 2023. F-43 Table of Contents Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following: Years Ended December 31, 2023 2022 (In thousands) Options $ 401 $ 488 RSAs 618 1,360 RSUs 2,278 1,972 Total compensation expense for share-based awards $ 3,297 $ 3,820 Total unrecognized stock-based compensation expense as of December 31, 2023 was $ 5.3 million, which will be amortized over a weighted average remaining vesting period of 1.9 years. Profits Interest Plan Profits Interest Units (“PIUs”) were accounted for in accordance with ASC 718, “Compensation - Stock Compensation.” The vesting conditions did not meet the definition of service, market or performance conditions, as defined in ASC 718. As such, the PIUs were classified as liability awards. Compensation expense was adjusted for changes in fair value prorated for the portion of the requisite service period rendered. Initially, compensation expense was recognized on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which was five years . Upon full vesting of the award, which occurred during the three months ended September 30, 2017, previously unrecognized compensation expense was immediately recognized in the period. The Company has a purchase option to purchase the vested PIUs that are not otherwise forfeited after termination of continuous service. The exercise price of the purchase option is the fair market value of the PIUs on the date of termination of continuous service. The individuals holding PIUs are no longer employed by the Company. 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. 16. RETIREMENT SAVINGS PLANS AND SEVERANCE Retirement Savings Plans Acacia has an employee savings and retirement plan under Section 401(k) of the Internal Revenue Code. 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. 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. employees, which is designed to be tax deferred in accordance with the provisions of Section 401(k). Printronix matches employee contributions dollar-for-dollar up to the first 1 percent of compensation, and then an additional $ 0.50 to-the-dollar on the next 1 percent of employee compensation. Printronix's contributions have graded-vesting annually and become fully vested to the employee after four full years of employment. 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. During the years ended December 31, 2023 and 2022, Printronix's total contribution overseas was $ 641,000 and $ 711,000 , respectively. Severance 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. 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. F-44 Table of Contents 17. INCOME TAXES The components of income (loss) before income taxes were as follows: Years Ended December 31, 2023 2022 (In thousands) Domestic $ 70,912 $ ( 126,810 ) Foreign ( 3,486 ) ( 340 ) Total $ 67,426 $ ( 127,150 ) 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, 2023 2022 Statutory federal tax rate - expense (benefit) 21 % ( 21 ) % Foreign rate differential 3 % — % Noncontrolling interests in operating subsidiaries ( 1 ) % ( 2 ) % Nondeductible permanent items ( 1 ) % — % Expired tax attributes 6 % 6 % Foreign tax credits ( 3 ) % — % Derivative fair value adjustment ( 3 ) % ( 2 ) % Valuation allowance ( 27 ) % 7 % Other 1 % ( 1 ) % Effective income tax rate ( 2 ) % ( 13 ) % Acacia’s income tax benefit for the periods presented consisted of the following: Years Ended December 31, 2023 2022 (In thousands) Current: Federal $ ( 215 ) $ ( 54 ) State 37 ( 482 ) Foreign ( 1,975 ) ( 606 ) Total current ( 2,153 ) ( 1,142 ) Deferred: Federal ( 14,041 ) 24,789 State ( 925 ) 259 Foreign 593 ( 28 ) Total deferred ( 14,373 ) 25,020 Change in valuation allowance 18,030 ( 7,667 ) Income tax benefit $ 1,504 $ 16,211 F-45 Table of Contents The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following: December 31, 2023 2022 (In thousands) Deferred tax assets: Net operating loss and capital loss carryforwards and credits $ 34,595 $ 47,386 Unrealized gain on investments held at fair value 146 35 Compensation expense for share-based awards 1,095 607 Accrued liabilities and other 1,453 1,551 Lease liability 689 784 State taxes 37 94 Total deferred tax assets 38,015 50,457 Valuation allowance ( 30,219 ) ( 48,250 ) Total deferred tax assets, net of valuation allowance 7,796 2,207 Deferred tax liabilities: ROU Asset ( 680 ) ( 782 ) Fixed assets and intangibles ( 1,841 ) ( 2,166 ) Basis of investment in affiliates ( 2,360 ) — Other — — Total deferred tax liabilities ( 4,881 ) ( 2,948 ) 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. This evaluation utilizes the framework contained in ASC 740, "Income Taxes," wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of the Company's deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more-likely-than-not that the asset will not be realized. In assessing the realization of the Company's deferred tax assets, management considers all available evidence, both positive and negative. Based upon available evidence, it was concluded on a more-likely-than-not basis that as of December 31, 2023 a valuation allowance of $ 30.2 million was needed for foreign tax credits and certain state tax attributes the Company estimates will expire prior to utilization. As of December 31, 2022, the Company recorded a full valuation allowance of $ 48.3 million. 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. 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. 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. $ 706,000 of our foreign NOLs and all of our federal losses can be carried forward indefinitely. 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. In general, foreign taxes withheld may be claimed as a deduction on future U.S. corporate income tax returns, or as a credit against future U.S. income tax liabilities, subject to certain limitations. F-46 Table of Contents The following changes occurred in the amount of unrecognized tax benefits: Years Ended December 31, 2023 2022 (In thousands) Beginning balance $ 760 $ 887 Additions for current year tax positions — — Additions included in purchase accounting for prior year positions — — Reductions for prior year tax positions ( 3 ) ( 127 ) Ending Balance (excluding interest and penalties) 757 760 Interest and penalties — — Total $ 757 $ 760 At December 31, 2023 and 2022, the Company had total unrecognized tax benefits of approximately $ 757,000 and $ 760,000 , respectively. At December 31, 2023 and 2022, $ 757,000 and $ 760,000 , respectively, of unrecognized tax benefits are recorded in other long-term liabilities. At December 31, 2023, if recognized, $ 757,000 of tax benefits would impact the Company’s effective tax rate. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months. Acacia is subject to taxation in the U.S. and in various state/foreign jurisdictions and incurs foreign tax withholdings on revenue agreements with licensees in certain foreign jurisdictions. The Company’s 2019 through 2023 tax years generally remain subject to examination by federal, state and foreign tax authorities. As the Company has incurred losses in most jurisdictions, the taxing authorities can generally challenge 2015 through 2022 either the amount of carryforward deduction reported in the open year or the amount of a net operating loss deduction that is absorbed in a closed year and supports the determination of the available net operating loss deduction for the open year under examination. Deferred income taxes have not been provided for undistributed earnings of the Company’s consolidated foreign subsidiaries, as earnings are permanently reinvested, however, no deferred tax liability would be necessary as the parent entity would not be required to include the distribution into income as the amount would be tax free under current law. TCJA subjects a US shareholder to tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5. Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. F-47 Table of Contents 18. INCOME/LOSS PER SHARE The following table presents the calculation of basic and diluted income/loss per share of common stock: Years Ended December 31, 2023 2022 (In thousands, except share and per share data) Numerator: 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 ) Return on settlement of Series A redeemable convertible preferred stock ( 3,377 ) — Undistributed earnings allocated to participating securities ( 3,913 ) — Net income (loss) attributable to common stockholders - Basic 55,140 ( 133,035 ) Less: Change in fair value and gain on exercise of dilutive Series B warrants ( 4,287 ) — Add: Interest expense associated with Starboard Notes, net of tax 1,518 — Add: Undistributed earnings allocated to participating securities 3,913 — Reallocation of undistributed earnings to participating securities ( 3,076 ) — Net income (loss) attributable to common stockholders - Diluted $ 53,208 $ ( 133,035 ) Denominator: 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: Employee stock options and restricted stock units 163,738 — Series B Warrants 16,952,055 — Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Diluted 92,411,818 42,460,504 Basic net income (loss) per common share $ 0.73 $ ( 3.13 ) Diluted net income (loss) per common share $ 0.58 $ ( 3.13 ) Anti-dilutive potential common shares excluded from the computation of diluted net income/loss per share: Equity-based incentive awards 2,098,747 2,558,720 Series B warrants — 100,000,000 Total 2,098,747 102,558,720 19. SEGMENT REPORTING As of December 31, 2023, the Company operates and reports its results in three reportable segments: 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. The management approach designates the internal reporting used by the chief operating decision maker for decision making and performance assessment as the basis for determining the Company’s reportable segments. The performance measure of the Company’s reportable segments is primarily income or (loss) from operations. Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment. Other than the Company's equity securities investments, specific asset information is not included in managements review at this time. F-48 Table of Contents The Company’s Intellectual Property Operations segment invests in IP and related absolute return assets, and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program. When applicable, we share net licensing revenue with our patent partners as that program matures, on a prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own. The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users. The Company's Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in Roberts and Hemphill Counties in Texas. Benchmark seeks to acquire predictable and shallow decline, cash flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. The 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. As of and for the year ended December 31, 2022, the consolidated results represented the results of the Company's two reporting segments: Intellectual Property Operations and Industrial Operations. F-49 Table of Contents The Company's segment information, including Benchmark's operations from November 13, 2023 through December 31, 2023, is as follows: Year Ended December 31, 2023 Intellectual Property Operations Industrial Operations Energy Operations Total (In thousands) Revenues: License fees $ 89,156 $ — $ — $ 89,156 Printers and parts — 12,513 — 12,513 Consumable products — 19,091 — 19,091 Services — 3,494 — 3,494 Oil sales — — 256 256 Natural gas sales — — 372 372 Natural gas liquids sales — — 220 220 Total revenues 89,156 35,098 848 125,102 Cost of revenues: Inventor royalties 1,025 — — 1,025 Contingent legal fees 10,998 — — 10,998 Litigation and licensing expenses 10,771 — — 10,771 Amortization of patents 11,370 — — 11,370 Cost of sales — 18,009 — 18,009 Cost of production — — 656 656 Total cost of revenues 34,164 18,009 656 52,829 Segment gross profit 54,992 17,089 192 72,273 Other operating expenses: Engineering and development expenses — 735 — 735 Sales and marketing expenses — 6,908 — 6,908 Amortization of intangible assets — 1,732 — 1,732 General and administrative expenses 7,402 6,990 264 14,656 Total other operating expenses 7,402 16,365 264 24,031 Segment operating income (loss) $ 47,590 $ 724 $ ( 72 ) 48,242 Parent general and administrative expenses 27,306 Operating income 20,936 Total other income 46,490 Income before income taxes $ 67,426 F-50 Table of Contents The Company's two reportable segment information for the year ended December 31, 2022 is as follows: Year Ended December 31, 2022 Intellectual Property Operations Industrial Operations Total (In thousands) Revenues: License fees $ 19,508 $ — $ 19,508 Printers and parts — 16,118 16,118 Consumable products — 19,314 19,314 Services — 4,283 4,283 Total revenues 19,508 39,715 59,223 Cost of revenues: Inventor royalties 1,212 — 1,212 Contingent legal fees 2,444 — 2,444 Litigation and licensing expenses 3,970 — 3,970 Amortization of patents 10,403 — 10,403 Cost of sales — 19,359 19,359 Total cost of revenues 18,029 19,359 37,388 Segment gross profit 1,479 20,356 21,835 Other operating expenses: Engineering and development expenses — 626 626 Sales and marketing expenses — 8,621 8,621 Amortization of intangible assets — 1,732 1,732 General and administrative expenses 5,428 8,254 13,682 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 Operating income loss ( 40,092 ) Total other expense ( 87,058 ) Loss before income taxes $ ( 127,150 ) F-51 Table of Contents The Company's reportable segment information as of December 31, 2023 and 2022 is as follows: December 31, 2023 December 31, 2022 (In thousands) Equity securities investments: Equity securities $ 63,068 $ 61,608 Equity securities without readily determinable fair value 5,816 5,816 Equity method investments 30,934 30,934 Total parent equity securities investments 99,818 98,358 Other parent assets 218,909 156,394 Segment total assets: Intellectual property operations 234,254 176,119 Industrial operations 47,854 52,057 Energy operations $ 32,710 $ — Total assets $ 633,545 $ 482,928 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. Printronix's net sales to external customers are attributed to geographic areas based upon the final destination of products shipped. The Company, primarily through its Printronix subsidiary, has identified three global regions for marketing its products and services: Americas, Europe, Middle East and Africa, and Asia-Pacific. Assets are summarized based on the location of held assets. Benchmark's sales are only attributed to the United States of America. Year Ended December 31, 2023 Intellectual Property Operations Industrial Operations Energy Operations Total (In thousands) Revenues by geographic area: United States $ 80,407 $ 14,128 $ 848 $ 95,383 Canada and Latin America 514 1,100 — 1,614 Total Americas 80,921 15,228 848 96,997 Europe, Middle East and Africa — 8,935 — 8,935 China 8,200 3,512 — 11,712 India — 2,849 — 2,849 Asia-Pacific, excluding China and India 35 4,574 — 4,609 Total Asia-Pacific 8,235 10,935 — 19,170 Total revenues $ 89,156 $ 35,098 $ 848 $ 125,102 F-52 Table of Contents Year Ended December 31, 2022 Intellectual Property Operations Industrial Operations Total (In thousands) Revenues by geographic area: United States $ 18,882 $ 15,541 $ 34,423 Canada and Latin America 11 2,145 2,156 Total Americas 18,893 17,686 36,579 Europe, Middle East and Africa 589 9,298 9,887 China — 5,207 5,207 India — 2,957 2,957 Asia-Pacific, excluding China and India 26 4,567 4,593 Total Asia-Pacific 26 12,731 12,757 Total revenues $ 19,508 $ 39,715 $ 59,223 December 31, 2023 Intellectual Property Operations Industrial Operations Energy Operations Total (In thousands) Long-lived tangible assets by geographic area: United States $ 201 $ 92 $ 25,117 $ 25,410 Malaysia — 1,949 — 1,949 Other foreign countries — 114 — 114 Total $ 201 $ 2,155 $ 25,117 $ 27,473 December 31, 2022 Intellectual Property Operations Industrial Operations Total (In thousands) Long-lived tangible assets by geographic area: United States $ 324 $ 302 $ 626 Malaysia — 2,703 2,703 Other foreign countries — 208 208 Total $ 324 $ 3,213 $ 3,537 20. SUBSEQUENT EVENTS On November 1, 2023, Merton entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd. ("RTW Bio") to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP), 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”). On January 19, 2024, Merton completed such sale for $57.1 million in aggregate F-53 Table of Contents (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, Merton and the Company no longer own any shares of Arix. On February 14, 2024, the Board appointed Mr. McNulty, the Company’s Interim Chief Executive Officer, as Chief Executive Officer of the Company on a permanent basis. In addition, the Board expanded the size of the Board from six to seven directors and the Board appointed Mr. 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. 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”). 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”). 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. Benchmark expects the Revolution Transaction to close in the second quarter of 2024 subject to customary closing conditions. F-54