What changed in this filing

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Item 9A. Controls and Procedures

2025-03-17 compared with 2024-03-15 · 892 added, 628 removed, 1198 unchanged (56% of the section changed)

1 unchanged sentence

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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.

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 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, 2024.

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.

Based on the evaluation of our disclosure controls and procedures, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2024, due to the material weakness in our internal control over financial reporting related to Benchmark described below.

Management’s Annual Report on Internal Control Over Financial Reporting

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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.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

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.

Our management, with the participation of our principal executive officer and our principal financial officer, conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the criteria set forth in the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Material Weakness Related to Benchmark

Based on the assessment, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2024, as a result of certain deficiencies in information technology (“IT”) general controls (“ITGCs”) for IT systems and applications utilized by Benchmark that are relevant to the preparation of the consolidated financial statements, including appropriate segregation of duties, appropriate restriction of user access and periodic reviews, and program change management controls.

These IT deficiencies also resulted in related manual IT-dependent and automated application controls being ineffective.

These deficiencies, in the aggregate, constitute a material weakness.

Because the material weakness relates to Benchmark, its impact is limited to our Energy Operations and does not impact our other operations.

There were no identified material misstatements to our current year financial statements, no restatements of prior period financial statements and no changes in previously released financial results required as a result of these control deficiencies.

In addition, notwithstanding the identified material weakness, management, including our principal executive officer and our principal financial officer, believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent, in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S.

Generally Accepted Accounting Principles.

Management has excluded Deflecto from its assessment of the internal control over financial reporting as of December 31, 2024, because it was acquired in a business combination during 2024.

Deflecto is a wholly-owned subsidiary whose total assets and total revenues represent appr oximately 18% and 19%, respectively, of our total conso lidated assets and revenues as of and for the year ended December 31, 2024.

Our independent registered public accounting firm, Grant Thornton LLP, who audited the 2024 consolidated financial statements and management’s assessment of the effectiveness of internal control over financial reporting included in this Annual Report on Form 10-K, has expressed an adverse opinion on the Company’s internal control over financial reporting as of December 31, 2024.

Plan for Remediation of Material Weakness

Management is developing a remediation plan to address the material weakness and to improve the design and operating effectiveness of the ITGCs at Benchmark.

The remediation plan includes, among other things:

• Reassessing the design and operating effectiveness of internal controls related to change management and user access;

• Expanding the management and governance over IT system controls.

We are in the process of developing the remediation activities as of the date of this report and believe that upon completion, we will have strengthened the ITGCs at Benchmark to address and successfully remediate the identified material weakness.

However, control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.

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, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Acacia Research Corporation

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Acacia Research Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, because of the effect of the material weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

The Company identified certain deficiencies in information technology (“IT”) general controls for IT systems and applications utilized by Benchmark that are relevant to the preparation of the consolidated financial statements, including appropriate segregation of duties, appropriate restriction of user access and periodic reviews, and program change management controls.

These IT deficiencies also resulted in related manual IT-dependent and automated application controls being ineffective.

These deficiencies, in the aggregate, constitute a material weakness.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024.

The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 17, 2025 which expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (“Management’s Report”).

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Deflecto Acquisition, Inc., a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 18 and 19 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

As indicated in Management’s Report, Deflecto Acquisition, Inc.

was acquired during 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Deflecto Acquisition, Inc.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process 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.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ GRANT THORNTON LLP

Houston, Texas

March 17, 2025

OTHER INFORMATION

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Acacia Research Corporation Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm (GRANT THORNTON LLP;

New York, NY;

PCAOB ID# 248 )

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

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Notes to Consolidated Financial Statements

Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited)

(2) Financial Statement Schedules.

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Number Description

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)

Stock Purchase Agreement dated as of October 18, 2024, by and among Deflecto Holdco LLC, as Purchaser, Deflecto Holdings, LLC and Evriholder Finance LLC (collectively, the “Sellers”), Deflecto Acquisition, Inc.

and the Sellers’ Representative named therein (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 21, 2024)

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)

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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)

4.1# Description of Acacia Research Corporation Capital Stock

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)

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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)

10.8* 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)

10.9* 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)

10.10* 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 )

10.11* 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, filed on August 3, 2023)

10.12* Amended and Restated Employment Agreement, effective February 13, 2024, by and between Acacia Research Corporation and Martin D.

(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.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 14, 2024)

10.13* Employment Agreement, effective May 3, 2023, among Acacia Research Corporation and Robert Rasamny ( incorporate d by reference to Exhibit 10.17 to the Company ’ s Annual Report on Form 10-K fo r the year ended December 31, 2023, filed on March 14, 2024 )

10.14* 2024 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed on April 19, 2024)

10.19 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)

10.20 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.

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)

Loan Agreement dated as of April 17, 2024, by and among BE Anadarko, as Borrower, Frost Bank, as Administrative Agent and LC Issuer, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 17, 2024)

10.22 Services Agreement dated December 12, 2023 by and between Starboard Value LP and Acacia Research Corporation ( incorporated by reference to Exhibit 10.21 to the Company ’ s Annual Report on Form 10-K for the year ended Decembe r 31, 2023, filed on March 14, 2024 )

Amended and Restated Credit Agreement dated October 18, 204, among Deflecto, LLC, as Borrower, the other Loan Parties thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1) to the Company’s Current Report 8-K filed on October 21, 2024)

19.1# Acacia Research Corporation Insider Trading Policy

List of Subsidiaries

Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP

23.2# Consent of Cawley, Gillespie & Associates, Inc.

24.1 Power of Attorney (included in the signature page hereto).

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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.

97.1# Acacia Research Corporation Compensation Recovery Policy

97.1 Acacia Research Corporation Compensation Recovery Policy (inc orporated by reference to Exhibit 97.1 to the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 14, 2024)

99.1# Report of Cawley, Gillespie & Associates, Inc.

as of December 31, 2024

99.2# Report of Cawley, Gillespie & Associates, Inc.

as of December 31, 2023

The following financial statements from the Company’s Annual Report on Form 10-K for the years ended December 31, 2024 and 2023, formatted in Inline Extensible Business Reporting Language (iXBRL) include:

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/s/ Ajay Sundar Director March 17, 2025

/s/ Katharine Wolanyk Director March 14, 2024

Katharine Wolanyk

/s/ Michelle Felman Director March 17, 2025

Michelle Felman

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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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.

We have audited the accompanying consolidated balance sheets of Acacia Research Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), Series A redeemable convertible preferred stock and stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 17, 2025 expressed an adverse opinion.

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.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the 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.

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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.

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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.

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.

The estimation of proved reserves used in the calculation of depletion, depreciation and amortization (“DD&A”) expense under the successful efforts method of accounting

As described further in Note 2 to the consolidated financial statements, the Company accounts for its oil and gas properties using the successful efforts method of accounting, which requires management to make estimates of proved reserve volumes and future net revenues to record DD&A expense.

To estimate the volume of proved reserves and future net revenue, management makes significant estimates and assumptions including forecasting the production decline rate of producing properties.

In addition, the estimation of proved reserves is also impacted by management’s judgments and estimates regarding the financial performance of wells associated with proved reserves to determine if wells are expected with reasonable certainty to be economical under the appropriate pricing assumptions required in the estimation of DD&A expense.

We identified the estimation of proved reserves of oil and natural gas properties as a critical audit matter.

The principal consideration for our determination that the estimation of proved reserves is a critical audit matter is that changes in certain inputs and assumptions necessary to estimate the volumes and future net revenues of the Company’s proved reserves requires a high degree of subjectivity necessary to estimate the volume and future revenues of the Company’s reserves, and could have a significant impact on the measurement of DD&A expense.

In turn, auditing those inputs and assumptions required subjective and complex auditor judgment.

Our audit procedures related to the estimation of proved reserves included the following, among others.

• We evaluated the level of knowledge, skill and ability of the Company’s reservoir engineering specialists and independent petroleum engineering specialists, made inquiries of those specialists regarding the process followed and judgments made to estimate the Company’s proved reserve volumes, and read the reserve report prepared by the Company’s specialists.

• Identified inputs and assumptions that were significant to the period end determination of proved reserve volumes and tested management’s process for determining the significant inputs and assumptions, as follows:

• We compared the estimated pricing differentials used in the reserve report to realized prices related to revenue transactions recorded in the current year and examined contractual support for the pricing differentials;

• We tested models used to estimate the future operating costs in the reserve report and compared amounts to historical operating costs;

• We vouched, on a sample basis, the working and net revenue interests used in the reserve report to land and division order records;

• We applied analytical procedures to production forecasts in the reserve report by comparing to historical actual results and to the prior year reserve report.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2022.

New York, New York

Houston, Texas

March 17, 2025

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Total assets $ 756,394 $ 633,545

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

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Accrued compensation 6,277 4,207

Current asset retirement obligation 1,546 —

Royalties and contingent legal fees payable 5,448 10,786

Deferred revenue 1,319 977

Senior secured notes payable — 60,450

Total current liabilities 47,239 27,636

Deferred revenue, net of current portion 458 568

Series A embedded derivative liabilities — 16,835

Series B warrant liabilities — 84,780

Asset retirement obligation 31,070 294

Long-term lease liabilities 6,778 1,736

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Revolving credit facility 66,500 10,525

Term loan 47,488 —

Other long-term liabilities 2,091 3,745

Total liabilities 203,775 43,936

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

Commitments and contingencies (Note 15)

Stockholders' equity:

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96,048,999 and 99,895,473 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Treasury stock, at cost, 16,183,703 shares as of December 31, 2023 and 2022

Treasury stock, at cost, 20,542,064 and 16,183,703 shares as of December 31, 2024 and 2023, respectively

( 118,542 ) ( 98,258 )

Accumulated other comprehensive income ( 1,180 ) —

Additional paid-in capital 910,237 906,153

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Total stockholders' equity 552,619 589,609

Total liabilities, redeemable convertible preferred stock, and stockholders' equity $ 633,545 $ 482,928

Total liabilities and stockholders' equity $ 756,394 $ 633,545

The accompanying notes are an integral part of these consolidated financial statements.

ACACIA RESEARCH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

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Energy operations 49,183 848

Manufacturing operations 23,183 —

Total revenues 122,312 125,102

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Cost of production - energy operations 36,291 656

Engineering and development expenses - industrial operations 735 626

Sales and marketing expenses - industrial operations 6,908 8,621

Cost of revenues - manufacturing operations 16,904 —

Sales and marketing expenses - industrial and manufacturing operations 7,217 6,908

General and administrative expenses 55,363 44,429

Total costs and expenses 155,238 104,166

Operating income (loss) 20,936 ( 40,092 )

Other income (expense):

Operating (loss) income ( 32,926 ) 20,936

Other (expense) income:

Equity securities investments:

Change in fair value of equity securities ( 31,412 ) 31,423

(Loss) gain on sale of equity securities ( 10,930 ) 125,318

Gain (loss) on sale of equity securities 28,861 ( 10,930 )

Earnings on equity investment in joint venture — 4,167

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 )

Net realized and unrealized (loss) gain ( 2,551 ) 24,660

Non-recurring legacy legal expense ( 14,857 ) —

Change in fair value of the Series B warrants and embedded derivatives — 8,241

Gain on derivatives - energy operations 2,016 1,177

(Loss) gain on foreign currency exchange ( 370 ) 53

Interest expense ( 6,439 ) ( 2,063 )

Interest income and other, net 16,980 14,422

Total other income (expense) 46,490 ( 87,058 )

Income (loss) before income taxes 67,426 ( 127,150 )

Total other (expense) income ( 5,221 ) 46,490

(Loss) income before income taxes ( 38,147 ) 67,426

Income tax benefit 3,449 1,504

Net income (loss) including noncontrolling interests in subsidiaries 68,930 ( 110,939 )

Net (loss) income including noncontrolling interests in subsidiaries ( 34,698 ) 68,930

Net income attributable to noncontrolling interests in subsidiaries ( 1,359 ) ( 1,870 )

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 )

Net (loss) income attributable to Acacia Research Corporation $ ( 36,057 ) $ 67,060

(Loss) income per share:

Net (loss) income attributable to common stockholders - Basic $ ( 36,057 ) $ 55,140

Weighted average number of shares outstanding - Basic 99,213,835 75,296,025

Basic net income (loss) per common share $ 0.73 $ ( 3.13 )

Net income (loss) attributable to common stockholders - Diluted $ 53,208 $ ( 133,035 )

Basic net (loss) income per common share $ ( 0.36 ) $ 0.73

Net (loss) income attributable to common stockholders - Diluted $ ( 36,057 ) $ 53,208

Weighted average number of shares outstanding - Diluted 99,213,835 92,411,818

Diluted net income (loss) per common share $ 0.58 $ ( 3.13 )

Diluted net (loss) income per common share $ ( 0.36 ) $ 0.58

Other comprehensive (loss) income:

Foreign currency translation $ ( 1,180 ) $ —

Total other comprehensive loss, net ( 1,180 ) —

Total comprehensive (loss) income ( 35,878 ) 68,930

Comprehensive income attributable to noncontrolling interests ( 1,359 ) ( 1,870 )

Comprehensive (loss) income attributable to Acacia Research Corporation $ ( 37,237 ) $ 67,060

The accompanying notes are an integral part of these consolidated financial statements.

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Series A Redeemable Convertible Preferred Stock Common Stock Treasury Stock Additional

Paid-in Capital Accumulated Deficit Noncontrolling

Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Noncontrolling

Operating Subsidiaries Total

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Balance at December 31, 2023 — $ — 99,895,473 $ 100 $ ( 98,258 ) $ 906,153 $ ( 239,729 ) $ — $ 21,343 $ 589,609

Net income including

Net (loss) income including

noncontrolling interests in

subsidiaries — — — — — — ( 36,057 ) — 1,359 ( 34,698 )

Distributions to noncontrolling

Other comprehensive loss — — — — — — — ( 1,180 ) — ( 1,180 )

Contributions from noncontrolling

interests in subsidiaries — — — — — — — — 15,250 15,250

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

Change in ownership percentage in

subsidiary — — — — — 158 — — ( 158 ) —

Stock options exercised — — 61,667 — — 223 — — — 223

Issuance of common stock from the

Rights Offering — — 15,068,753 15 — 79,096 — — 79,111

Issuance of common stock for

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share-based awards — — — — — 4,795 — — — 4,795

Acquisition of Benchmark — — — — — — $ — $ 9,821 $ 9,821

Repurchase of common stock — — ( 4,358,361 ) ( 4 ) ( 20,284 ) — — — — ( 20,288 )

Balance at December 31, 2024 — $ — 96,048,999 $ 96 $ ( 118,542 ) $ 910,237 $ ( 275,786 ) $ ( 1,180 ) $ 37,794 $ 552,619

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Balance at December 31, 2022 350,000 $ 19,924 43,484,867 $ 43 $ ( 98,258 ) $ 663,284 $ ( 306,789 ) $ 11,042 $ 269,322

Net (loss) income including

Net income including

noncontrolling interests in

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Redeemable Convertible

Preferred Stock to redemption value — 5,171 — — — ( 5,171 ) — — ( 5,171 )

Preferred Stock to redemption

value — 3,230 — — — ( 3,230 ) — — ( 3,230 )

Dividend on Series A Redeemable

Convertible Preferred Stock — — — — — ( 1,400 ) — — ( 1,400 )

Exercise of Series A warrants — — 5,000,000 5 — 20,645 — — 20,650

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

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share-based awards — — — — — 3,297 — — 3,297

Repurchase of common stock — — ( 10,795,234 ) ( 11 ) ( 50,977 ) — — — ( 50,988 )

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

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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

Net (loss) income including noncontrolling interests in subsidiaries $ ( 34,698 ) $ 68,930

Adjustments to reconcile net (loss) income including noncontrolling interests in subsidiaries to net cash provided by (used in)

operating activities:

Depreciation, depletion and amortization 33,574 14,728

Amortization of debt discount and issuance costs — 90

Accretion of asset retirement obligation 986 —

Change in fair value of Series A redeemable convertible preferred stock embedded derivatives — ( 3,954 )

Change in fair value of Series A warrants — ( 1,895 )

Change in fair value of Series B warrants — ( 2,762 )

Loss on exercise of Series A warrants — 2,004

Gain on exercise of Series B warrants — ( 1,525 )

Compensation expense for share-based awards 4,795 3,297

(Gain) loss on foreign currency exchange ( 53 ) 3,324

Loss (gain) on foreign currency exchange 370 ( 53 )

Change in fair value of equity securities 31,412 ( 31,423 )

Loss (gain) on sale of equity securities 10,930 ( 125,318 )

(Gain) loss on sale of equity securities ( 28,861 ) 10,930

Earnings on equity investment in joint venture — ( 4,167 )

Unrealized gain on derivatives ( 781 ) —

Deferred income taxes ( 3,657 ) ( 17,810 )

Unrealized loss (gain) on derivatives 610 ( 781 )

Deferred income taxes, net of acquired net deferred tax assets ( 6,051 ) ( 3,657 )

Changes in assets and liabilities:

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Deferred revenue 497 ( 337 )

Net cash used in operating activities ( 22,506 ) ( 37,336 )

Net cash provided by (used in) operating activities 50,122 ( 22,506 )

Cash flows from investing activities:

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Distributions received from equity investment in joint venture — 2,777

Purchases of property and equipment ( 189 ) ( 732 )

Net cash provided by investing activities 16,178 184,464

Net purchases of property and equipment and additions to oil and gas properties ( 148,667 ) ( 189 )

Net cash (used in) provided by investing activities ( 212,963 ) 16,178

Cash flows from financing activities:

Repurchase of common stock ( 20,288 ) —

Paydown of Revolving Credit Facility ( 7,700 ) —

Paydown of Senior Secured Notes — ( 60,000 )

Contributions from noncontrolling interest 15,250 —

Borrowings on the Revolving credit facility 86,010 —

Paydown of Revolving Credit Facility ( 30,035 ) ( 7,700 )

Borrowings on the Term Loan 47,488 —

Dividend on Series A Redeemable Convertible Preferred Stock — ( 1,400 )

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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 223 235

Net cash provided by (used in) financing activities 58,632 ( 166,137 )

Net cash provided by financing activities 97,556 58,632

Effect of exchange rates on cash and cash equivalents ( 926 ) 1

Increase (decrease) in cash and cash equivalents 52,305 ( 21,575 )

(Decrease) increase in cash and cash equivalents ( 66,211 ) 52,305

Cash and cash equivalents, beginning 340,091 287,786

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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.

Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is a disciplined value-oriented acquirer and operator of businesses across public and private markets and industries including but not limited to the industrial, energy and technology sectors.

We acquire businesses with a view towards strong free cash flow generation and with an ability to scale where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance.

We are focused on sourcing, execution, and improvement.

We find unique situations, bring a flexible and creative approach to transacting, and relationships and expertise to drive continual improvement in operating performance.

We approach transactions as business owners and operators rather than purely as financial investors and we believe it is our differentiator for creating long-term value for shareholders and partners.

We define value through free cash flow generation, book value appreciation, and stock price growth.

These are the pillars of the Acacia story.

Acacia creates value by building relationships and providing transaction expertise to create acquisition opportunities where we can meaningfully improve performance.

We focus on identifying, pursuing, and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value.

We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire.

We have a wide range of transactional and operational capabilities to realize the intrinsic value of the businesses that we acquire.

Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.

We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.

We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations is masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value.

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.

We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.

We regularly evaluate opportunities to acquire new businesses where our research, execution, and operating partners can drive attractive earnings and book value per share growth.

Our focus is companies with total enterprise value of $1 billion or less, however, we may pursue larger acquisitions under the right circumstances.

Broadly speaking, our potential acquisition targets are founder-owned or privately controlled businesses, entire public companies or carve-outs of specific segments, which show a path to consistent profitability, free cash flow generation and higher risk-adjusted return expectations.

We buy businesses to create platforms.

The Company remains focused on acquiring and building businesses that have stable cash flow generation with an ability to scale, while retaining the flexibility to make opportunistic acquisitions with high risk-adjusted return characteristics.

Acacia then has optionality to grow and reinvest free cash flow or look to monetize and build new platforms.

Relationship with Starboard Value, LP

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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

Senior Secured Notes remain outstanding.

Refer to Note 10 for a detailed description of the Recapitalization and the Recapitalization Transactions.

We have also entered into the Services Agreement (as defined below) with Starboard where Starboard has agreed to provide certain trade execution, research, due diligence, and other services on an expense reimbursement basis.

Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business

The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and 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.

The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and engages in the licensing and enforcement of patented technologies.

Through our Patent Licensing, Enforcement and 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.

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During the years ended December 31, 2024 and 2023, 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.

Industrial Operations

Our Industrial Operations Business consists of Printronix, a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services.

The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors.

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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.

We support existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.

Energy Operations 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.

On November 13, 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark Energy II, LLC (“Benchmark”).

Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma.

Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring.

Prior to the Transaction (as defined below), Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated.

Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.

Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.

The Company's consolidated financial

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.

The Company’s consolidated financial statements include Benchmark’s consolidated operations from November 13, 2023 through December 31, 2024.

On April 17, 2024, Benchmark consummated the transaction contemplated in the Purchase and Sale Agreement (the “Revolution Purchase Agreement”), dated February 16, 2024, by and among Benchmark and Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”).

Pursuant to the Revolution Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells (such purchase and sale, together with the other transactions contemplated by the Revolution Purchase Agreement, the “Revolution Transaction”) for a purchase price of $ 145 million in cash (the “Revolution Purchase Price”), subject to customary post-closing adjustments.

The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $ 59.9 million, which was funded from cash on hand.

The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility (as defined below) and a cash contribution of $ 15.25 million from other investors in Benchmark, including McArron Partners.

Following closing, the Company’s interest in Benchmark is approximately 73.5 %.

The Revolution Transaction has been accounted for as an asset acquisition in accordance with Accounting

Standards Codification (“ASC”) 805-50, “Business Combinations.” Refer to Notes 3 and 11 for additional information related to the Benchmark acquisition and the Benchmark Revolving Credit Facility, respectively.

Manufacturing Operations Acquisition

On October 18, 2024, Deflecto Holdco LLC (“Deflecto Purchaser”), a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc.

(“Deflecto”), pursuant to that certain Stock Purchase Agreement (the “Deflecto Stock Purchase Agreement”) entered into on the same day with Deflecto Holdings, LLC and Evriholder Finance LLC (collectively, the “Deflecto Sellers”), Deflecto and the Sellers’ Representative named therein.

Pursuant to the Deflecto Stock Purchase Agreement, Deflecto Purchaser purchased all of the issued and outstanding equity interests of Deflecto, upon the terms and subject to the conditions of the Deflecto Stock Purchase Agreement (such purchase and sale, together with the other transactions contemplated by the Deflecto Stock Purchase Agreement, the “Deflecto Transaction”).

Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC, and office markets.

The Deflecto Transaction closed simultaneously with the execution of the Deflecto Stock Purchase Agreement on October 18, 2024.

Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the Deflecto Sellers in the Deflecto Transaction consisted of $ 103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Stock Purchase Agreement (the “Deflecto Purchase Price”).

The Deflecto Purchase Price was funded with a combination of borrowings of a $ 48.0 million secured term loan (the “Deflecto Term Loan”) and cash on hand.

A portion of the Deflecto Purchase Price is being held in escrow to indemnify Deflecto Purchaser against certain claims, losses and liabilities.

The Company’s consolidated financial statements include Deflecto’s consolidated operations from October 18, 2024 through December 31, 2024.

Refer to Notes 3 and 11 for additional information related to the Deflecto acquisition and the Deflecto Term Loan, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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.

Reclassifications

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation.

These changes had no impact on the previously reported consolidated results of operations or cash flows.

Principles of Consolidation

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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.

Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations and comprehensive income (loss).

Refer to the Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for noncontrolling interests activity.

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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.

The Company holds a variable interest in Benchmark as the Company is obligated to absorb the loss and has the right to receive the benefit from Benchmark after the acquisition date and therefore, Benchmark is considered a variable interest entity (“VIE”).

We determined that we have the power to direct the activities that most significantly impact Benchmark’s

economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it.

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.

Refer to Note 21 for additional information regarding our four reportable business segments:

Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations.

Use of Estimates

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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.

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 discounts and customer rebates, product warranty liabilities, estimated crude oil and natural gas reserves, fair value of assets and liabilities acquired in a business combination, stock-based compensation expense, impairment of goodwill, patent-related and other intangible assets, the determination of the economic useful life of amortizable intangible assets, and income taxes and valuation allowances against net deferred tax assets, require its most difficult, subjective or complex judgments.

Revenue Recognition

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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.

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.

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In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers.

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.

Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties.

License revenues were comprised of the following for the periods presented:

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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.

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.

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Energy Operations

Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer.

Benchmark recognizes revenues from sales of oil and natural gas products.

The contractual performance obligation is satisfied at the point in time of 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.

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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 recognized when control transfers to the customer upon delivery to the contractually agreed delivery point, at which time the customer takes custody, title, and risk of loss of the product.

Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials.

Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive.

Oil revenue is recognized at the point in time in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive.

Benchmark’s natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point.

Benchmark recognizes revenue when control transfers to the purchaser at the point of delivery and it is probable the Company will collect the consideration it is entitled to receive.

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.

Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues based on the net amount of the proceeds received from the midstream processing entity as customer.

Benchmark’s other service sales include services that provides a variety of oilfield and land services to their customers.

Benchmark’s proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark’s proportionate share of sales proceeds, which is net of costs incurred by the operator, if any.

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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):

Benchmark’s realized and unrealized derivative gain or (loss) are included in other income or (expense) in the consolidated statements of operations and comprehensive income (loss).

Refer to Derivative Financial Instruments as described below.

Benchmark’s revenue were comprised of the following for the periods presented:

Year Ended December 31, 2024 November 13, 2023 to December 31, 2023

(In thousands)

Oil sales $ 26,468 $ 256

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Natural gas liquids sales 13,014 220

Other service sales 507 —

Total $ 49,183 $ 848

Manufacturing Operations

Deflecto recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services.

To determine the transaction price, Deflecto estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer.

Elements of variable consideration are estimated at the time of sale which primarily include incentives, discounts or rebates that occur under established sales programs.

These estimates are developed using the historical experience, anticipated performance and management’s best judgment at the time and are reviewed and updated, as necessary, at each reporting period.

Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods.

Deflecto enters into contract arrangements, which are generally capable of being distinct and accounted for as a single performance obligation.

Deflecto allocates the transaction price to each distinct performance obligation within the contract.

Substantially all of Deflecto’s revenues for products are recognized at the point in time in which the customer obtains control of the product, which is generally when product title passes to the customer upon shipment.

As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less.

All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.

Deflecto’s revenue from October 18, 2024 through December 31, 2024 were comprised of the following (in thousands):

Transportation Safety $ 7,782

Air Distribution 7,977

Office Product 7,424

Total $ 23,183

Cost of Revenues and Cost of Production

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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.

Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized.

Inventor royalties are expensed in the consolidated statements of operations and comprehensive income (loss) in the period that the related revenues are recognized.

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 and comprehensive income (loss).

Contingent legal fees are expensed in the consolidated statements of operations and comprehensive income (loss) 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;

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Cost of production includes production costs, including lease operating expenses, production taxes, gathering transportation, and marketing costs, are expensed as incurred.

Manufacturing Operations

Included in cost of revenues are inventory costs (refer to “Inventories” below), indirect labor and overhead costs.

Shipping and handling fees charged to customers are included in net sales with the corresponding costs included in cost of revenues in the consolidated statements of operations and comprehensive income (loss).

Concentrations

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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.

Three licensees individually accounted for 35 %, 17 % and 10 % of revenues recognized during the year ended December 31, 2024.

Two licensees individually accounted for 59 % to 26 % of revenues recognized during the year ended December 31, 2023.

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

2022, 10 % and 3 %, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions.

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, 2024 and 2023, 59 % and 10 %, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions.

Refer to Note 21 for additional information regarding revenue from customers by geographic region.

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Printronix has significant foreign operations, refer to Note 21 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.

One Printronix customer individually accounted for 12 % of accounts receivable as of December 31, 2024, and two customers individually accounted for 19 % and 10 % of accounts receivable as of December 31, 2023.

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.

One single Printronix vendor individually accounted for 10 % and 12 % of purchases for the years ended December 31, 2024 and 2023, respectively.

Accounts payable to eight vendors represented 12 % to 22 % of accounts payable as of December 31, 2024, and six vendors represented 24 % to 12 % of accounts payable as of December 31, 2023.

Energy Operations

Two Benchmark customers individually accounted for 25 % and 41 % of revenues recognized during the year ended December 31, 2024.

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.

Two Benchmark customers individually accounted for 40 % and 21 % of accounts receivable as of December 31, 2024, and two 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 21 for additional information regarding revenue from customers by geographic region.

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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.

Manufacturing Operations

No single Deflecto customer accounted for more than 10% of revenue during the period from October 18, 2024 through December 31, 2024.

Deflecto has significant foreign operations, refer to Note 21 for additional information regarding net sales to customers by geographic region.

No Deflecto customers individually accounted for more than 10% of accounts receivable as of December 31, 2024.

Exposure to credit risk is adequately covered by its allowance for expected credit losses estimated by Deflecto.

No Deflecto supplier individually accounted for more than 10% of purchases for the period from October 18, 2024 through December 31, 2024.

No vendors individually represented more than 10% of accounts payable as of December 31, 2024.

Cash and Cash Equivalents

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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).

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 other income or (expense) in the consolidated statements of operations and comprehensive income (loss).

Dividend income is included in other income or (expense).

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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).

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 other income or (expense) in the consolidated statements of operations and comprehensive income (loss).

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, 2024 and 2023.

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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.

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 and comprehensive income (loss).

We have made an accounting policy election to classify distributions received from equity investment in joint venture using the nature of distribution approach which classifies distributions received from investees as either cash inflows from operating activities or cash inflows from investing activities in the statement of cash flows based on the nature of the activities of the investee that generated the distribution.

Refer to Note 4 for additional information.

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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.

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 comprehensive income (loss) and a new cost basis in the investment is established.

Accounts Receivable and Allowance for Credit Losses

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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.

Allowance for credit losses was immaterial as of December 31, 2024 and 2023.

Industrial Operations

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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.

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 and comprehensive income (loss) 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.

As of December 31, 2024 and 2023, Benchmark’s allowance for credit losses was $ 225,000 and zero , respectively.

Manufacturing Operations

Deflecto’s accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance for credit losses is determined by evaluating past events and historical loss experience, current events and also future events based on the expectation as of the balance sheet date.

Deflecto’s receivables are written off when it is determined that such receivables are deemed uncollectible.

Deflecto pools its receivables based on similar risk characteristics in estimating its expected credit losses.

In situations where a receivable does not share the same risk characteristics with other receivables, Deflecto measures those receivables individually.

Deflecto also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change.

Deflecto utilizes the loss rate method in determining its lifetime expected credit losses on its receivables.

This method is used for calculating an estimate of losses based primarily on Deflecto’s historical loss experience.

In determining its loss rates, the Company evaluates information related to its historical losses, adjusted for current conditions and further adjusted for the period of time that can be reasonably forecasted.

Qualitative and quantitative adjustments related to current conditions and the reasonable and supportable forecast period consider the following:

past due receivables and the customer creditworthiness on the level of estimated credit losses in the existing receivables.

Deflecto’s allowance for expected credit losses and discounts was $ 669,000 and customer rebates was $ 4.2 million as of December 31, 2024, and are reported as a reduction of accounts receivable.

Industrial Operations

Printronix’s inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value.

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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.

Energy Operations

Benchmark’s inventory represents tangible assets such as drilling pipe, tubing, casing and operating supplies used in Benchmark’s future drilling program or repair operations.

Cost is determined using the first-in, first-out method and is valued at the lower of cost or net realizable value.

Refer to Note 5 for additional information related to Benchmark’s inventories.

Manufacturing Operations

Deflecto’s inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value.

Cost is determined on an average or a first-in, first out basis.

Deflecto evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions.

Refer to Note 5 for additional information related to Deflecto’s inventories.

Derivative Financial Instruments

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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.

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 and comprehensive income (loss) for the period as they occur.

Refer to Note 13 for additional information.

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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.

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Machinery and equipment 2 to 10 years

Vehicles 3 to 5 years

Furniture and fixtures 3 to 7 years

Computer hardware and software 3 to 5 years

Leasehold improvements 2 to 5 years (Lesser of lease term or useful life of improvement)

Building and leasehold improvements 2 to 40 years (Lesser of lease term or useful life of improvement)

Oil and Natural Gas Properties

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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.

If Benchmark determines that the wells do not find proved

reserves, the costs are charged to expense.

At December 31, 2024, as most of Benchmarks’ wells are producing, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves.

Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred.

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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 of proved oil and natural gas properties are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized drilling and development costs of producing oil and natural gas properties, including related equipment and facilities are depreciated based on the unit-of-production method over the estimated proved developed reserves.

Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows.

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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.

As permitted under GAAP, for some leases the Company does not separate lease components from non-lease component by class of asset and the Company does not record assets or liabilities for leases with terms of one year or less.

Refer to Note 15 for additional information.

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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.

Deflecto’s intangible assets consist of trade names and patents related to unique manufacturing technology and product design.

These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization.

Deflecto currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives from two months to 15 years.

Refer to Note 8 for additional information.

The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value.

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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.

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.

Asset Retirement Obligation

Asset retirement obligation (“ARO”) represents the future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from the leased acreage and land restoration in accordance with applicable local, state and federal laws.

The discounted fair value of an ARO liability is required to be recognized in the period in which it is incurred, with the associated asset retirement cost capitalized as part of the carrying cost of the oil and natural gas asset.

Significant inputs used to calculate the ARO include estimates and timing of costs to be incurred, the credit adjusted discount rates and inflation rates.

The Company has designated these inputs as Level 3 significant unobservable inputs.

The ARO is accreted to its present value each period, and the capitalized asset retirement costs are depleted with proved oil and natural gas properties using the units-of-production method.

If estimated future costs of ARO change, an adjustment is recorded to both the ARO and the long-lived asset.

Revisions to estimated ARO can result from changes in cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment.

Contingent Liabilities

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The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock.

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.

Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets.

Refer to Note 16 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.

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.

Advertising expense was approximately $ 589,000 and $ 636,000 during the years ended December 31, 2024 and 2023, respectively, and is included in sales and marketing expenses in the consolidated statements of operations and comprehensive income (loss).

Deflecto expenses advertising costs as incurred.

Advertising expense was approximately $ 159,000 during the period from October 18, 2024 through December 31, 2024.

Research and Development Costs

Deflecto research and development costs are charged to expense as incurred.

Research and development costs was approximately $ 37,000 during the period from October 18, 2024 through December 31, 2024.

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 .

The compensation cost for all time-based stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is currently one to four years .

Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition.

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Refer to Note 17 for additional information.

Foreign Currency Gains and Losses

Foreign Currency

In connection with our Printronix business, the U.S.

dollar is the functional currency for all of the foreign subsidiaries.

dollar is the functional currency for all of Printronix’s foreign subsidiaries.

Transactions that are recorded in currencies other than the U.S.

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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.

The consolidated statements of operations and comprehensive income (loss) have been reevaluated at average rates of exchange for the reporting period, except cost of sales and depreciation, which have been reevaluated at historical rates.

In connection with our Deflecto business, the local currency is the functional currency for each of Deflecto’s foreign subsidiaries.

Assets and liabilities of Deflecto’s foreign subsidiaries are translated from foreign currencies into U.S.

dollar at the exchange rates in effect at the balance sheet date, while income and expenses are translated at the weighted-average exchange rates for the year.

The net effects of translating the foreign currency financial statements of these subsidiaries are included in the shareholders’ equity as a component of accumulated other comprehensive income.

Gains and losses for all transactions denominated in a currency other than the functional currency are recognized in the period incurred and included in the consolidated statements of operations and comprehensive income (loss).

Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S.

dollar, and the British Pound 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.

All foreign currency exchange activity is recorded in the consolidated statements of operations and comprehensive income (loss).

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.

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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.

In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures”, which requires disclosures of significant expenses by segment and interim disclosure of items that were previously required on an annual basis.

ASU 2023-07 is to be applied on a retrospective basis and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted the update for the annual period beginning on January 1, 2024.

The adoption of the update did not have a material impact on the Company’s financial position, results of operations or financial statement disclosures.

The Company implemented and provided expanded segment disclosures as required under the new guidance on the notes to the consolidated financial statements.

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.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid.

ASU 2023-09 requires entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 also requires that entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions, subject to a five percent quantitative threshold.

ASU 2023-09 may be adopted on a prospective or

retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted.

the Company has not early adopted the new standard.

Management is currently evaluating the impact that the amendments in this update may have on the Company’s consolidated financial statements and related disclosures.

In November 2024, the FASB issued 2024-03, “Disaggregation of Income Statement Expenses” which requires entities to disclose additional information about specific expense categories in the notes to the financial statements.

ASU 2024-03 is effective annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 may be applied retrospectively or prospectively to the financial statements.

Management is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.

In November 2023, we invested $ 10.0 million to acquire a 50.4 % equity interest in Benchmark.

Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil

and gas assets in mature resource plays in Texas and Oklahoma.

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.

As of December 31, 2024, management has finalized the valuations of all acquired assets and liabilities assumed in the acquisition and no measurement period adjustments were recorded during the year ended December 31, 2024.

On April 17, 2024, Benchmark consummated the transaction contemplated in the Revolution Purchase Agreement.

At the closing of Revolution Transaction pursuant to the Revolution Purchase Agreement, among other things, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, upon the terms and subject to the conditions of the Revolution Purchase Agreement for a purchase price of $ 145 million in cash, subject to customary post-closing adjustments.

Acacia funded a portion of the Revolution Purchase Price and related fees amounting to $ 59.9 million with cash on hand.

The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and the remaining being funded through a cash contribution of $ 15.3 million from other investors.

Following closing, the Company’s interest in Benchmark is approximately 73.5 %.

The Revolution Transaction is being accounted for as an asset acquisition under ASC 805, Business Combinations as substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets.

The accounting for asset acquisitions is accounted for by using a cost accumulation model, where the cost of the acquisition is allocated to the assets acquired on the basis of relative fair values.

On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto pursuant to the Deflecto Stock Purchase Agreement.

Headquartered in Indianapolis, Indiana Deflecto operates domestically and internationally servicing a broad range of wholesale and retail markets within the highly-fragmented specialty plastics industry.

Deflecto primarily designs, manufactures and sells (i) “take-one” point of purchase brochure, folder and applications display holders, (ii) plastic injection-molded office supply and arts, crafts and education products, (iii) plastic and aluminum air venting and air control products, (iv) extruded vinyl chair mats, (v) safety reflectors for bicycles and (vi) mud flaps and splash guards for the heavy duty truck market.

Deflecto has subsidiaries located in the United States, Canada, United Kingdom, People’s Republic of China, Hong Kong and India to support its sales and services domestically and internationally.

The following unaudited pro forma summary presents consolidated information, as if the business combination had occurred on January 1, 2023:

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Revenues $ 246,644 $ 313,839

Net income (loss) attributable to Acacia Research Corporation 66,755 ( 123,316 )

Net (loss) income attributable to Acacia Research Corporation ( 24,540 ) 62,877

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.

These adjustments included an increase of $ 10.2 million in property and equipment and an increase of $ 6.9 million in intangible assets related to the finalization of the valuation s.

In 2024, we incurred $ 3.4 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):

These expenses are included in general and administrative expenses for the year ended December 31, 2024 and are reflected in pro forma net income for the year ended December 31, 2023, in the table above.

The following table summarizes the consideration transferred to acquire Deflecto and the recognized amounts of identifiable assets and acquired liabilities assumed at the acquisition date (in thousands):

Fair value of consideration transferred:

Cash $ 59,898

Closing indebtedness 21,391

Transaction expenses paid to Sellers

Adjustment and indemnity escrow amount 2,415

Total consideration $ 98,994

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Cash and cash equivalents $ 11,316

Trade receivables 1,385

Accounts receivables 15,705

Inventories 17,617

Prepaid expenses and other current assets 4,498

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 )

Deferred tax assets 11,273

Property, plant and equipment, net 23,203

Operating lease, right-of-use assets 8,841

Customer relationships 20,200

Trade names and trademarks 8,600

Developed technology 1,000

Favorable leases 704

Accounts payable ( 8,836 )

Accrued expenses ( 17,172 )

Liability for sales tax and fees ( 7,000 )

Current lease liabilities ( 2,614 )

Long-term lease liabilities ( 6,354 )

Deferred tax liabilities ( 2,615 )

Total identifiable net assets $ 78,366

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As of December 31, 2024, 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.

The preliminary estimates are subject to adjustments during the measurement period, not to exceed one year from the date of acquisition.

The final purchase price allocation, which is expected to be completed in 2025, will be based on the final working capital adjustments and other analysis of fair values of acquired assets and liabilities.

Goodwill of $ 20.6 million represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed.

The goodwill recognized is primarily attributed to the assembled workforce of Deflecto and new customer relationships that did not exist at the time of the transaction.

None of the goodwill resulting from the acquisition is deductible for tax purposes.

All of the goodwill acquired is allocated to the Benchmark reporting unit.

All of the goodwill acquired is allocated to the Deflecto reporting unit.

Other intangible assets include $ 20.2 million of customer relationships, $ 1.0 million of developed technology, $ 8.6 million of trade names and trademarks and $ 704,000 of favorable leases, with useful lives ranging from 2 months to 15 years.

Trade names and trademarks include indefinite lived intangible assets.

Refer to Note 8 for additional information.

The fair values of all intangibles were estimated using the income approach.

Specifically, the multi-period excess earnings method was applied in the valuation of the customer relationships, and the relief-from-royalty method was applied in the valuation of the trade names and trademarks.

These fair value measurements are based on significant inputs unobservable in the market and, therefore, represent a Level 3 measurement as defined in ASC 820.

The key assumptions in applying the multi-period excess earnings method include the discount rate of 22 %, growth rate, attrition rate, estimated profit margin and contributory asset charges.

The key assumptions in applying the relief-from-royalty method include the applicable projected revenues, discount rate of 22 %, remaining economic life or rate of obsolescence and estimated royalty rate.

Refer to Note 13 for additional information related to fair value measurements.

EQUITY SECURITIES

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December 31, 2024:

Equity securities - Life Sciences Portfolio $ 28,498 $ 28,600 $ ( 20 ) $ 57,078

Equity securities - other common stock $ 24,898 $ 118 $ ( 1,881 ) $ 23,135

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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.

On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund, which included general terms through which the Company was provided the option to purchase a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”) for an aggregate purchase price of £ 223.9 million, approximately $ 277.5 million at the exchange rate on April 3, 2020.

For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities.

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As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange.

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 November 1, 2023,

the Company, through a wholly owned subsidiary, entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd.

(“RTW Bio”) to sell its shares of Arix to RTW Bio for a purchase price of $ 57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP).

On January 19, 2024, the Company completed such sale for $ 57.1 million.

Following the completion of the share sale, the Company no longer owns any shares of Arix.

The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:

(In thousands)

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companies 28,581 —

Net realized and unrealized gain (loss) $ 14,383 $ ( 135,409 )

Net realized and unrealized gain $ — $ 14,383

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.

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As of December 31, 2024 and 2023, 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.

D uring the years ended December 31, 2024 and 2023 , our consolidated earnings on equity investment included in the consolidated statements of operations and comprehensive income (loss) was zero and $ 4.2 million, respectively.

No distributions were received during the year ended December 31, 2024.

During the year ended December 31, 2023, MalinJ1 made distributions of $ 2.8 million to Acacia and $ 1.4 million to noncontrolling interests.

Printronix's inventories consisted of the following:

Inventories consisted of the following:

(In thousands)

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Finished goods 17,429 5,448

11,421 14,720

Inventory reserves ( 500 ) ( 498 )

Total inventories $ 27,485 $ 10,921

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Machinery and equipment $ 14,687 $ 3,035

Vehicles 404 —

Furniture and fixtures 528 395

Computer hardware and software 1,218 312

Leasehold improvements 1,018 1,025

Building and leasehold improvements 9,078 1,018

Accumulated depreciation and amortization ( 4,926 ) ( 2,404 )

Property, plant and equipment, net $ 23,865 $ 2,356

Total depreciation and amortization expense in the consolidated statements of operations was $ 1.4 million for the years ended December 31, 2023 and 2022.

Total depreciation and amortization expense in the consolidated statements of operations and comprehensive income (loss) was $ 2.6 million and $ 1.4 million for the years ended December 31, 2024 and 2023, respectively.

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.

Our Manufacturing Operations include $1.5 million of depreciation and amortization in general and administrative expenses for the period from October 18, 2024 through December 31, 2024.

For the years ended December 31, 2024 and 2023, our Industrial Operations allocated depreciation and amortization, totaling $ 991,000 and $ 1.3 million, respectively, to all applicable operating expense categories, including cost of sales of $ 501,000 and $ 421,000 , respectively.

OIL AND NATURAL GAS PROPERTIES, NET

Oil and natural gas properties consisted of the following at December 31, 2023:

December 31, 2023

Benchmark’s oil and natural gas properties consisted of the following:

(In thousands)

Total proved properties costs $ 25,276

Proved oil and gas properties $ 199,559 $ 25,276

Unproved oil and gas properties 4,786 —

Accumulated depletion and depreciation ( 12,665 ) ( 159 )

Oil and natural gas properties, net $ 191,680 $ 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.

Total depletion and depreciation expense in the consolidated statements of operations and comprehensive income (loss) was $ 12.5 million for the year ended December 31, 2024 and $ 245,000 for the period from November 13, 2023 through December 31, 2023.

Our Energy Operations includes depletion and depreciation in cost of production.

Benchmark determined no impairment to proved oil and natural gas properties was necessary as of December 31, 2024 and 2023.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Changes in the carrying amount of Printronix's goodwill consisted of the following:

Years Ended December 31,

Changes in the carrying amount of goodwill consisted of the following:

December 31, 2024

Industrial Operations Energy Operations Manufacturing Operations Total

(In thousands)

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Acquisition of business — — 20,628 20,628

Tax adjustment — 71

Effect of foreign currency translation — — ( 279 ) ( 279 )

Impairment losses — — — —

Ending balance $ 7,541 $ 1,449 $ 20,349 $ 29,339

Changes in the carrying amount of Benchmark's goodwill consisted of the following:

Years Ended December 31, 2023

December 31, 2023

Industrial Operations Energy Operations Total

(In thousands)

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The ending balance of goodwill includes no accumulated impairment losses to date.

Refer to Note 3 for additional information related to the Benchmark acquisition.

Refer to Note 1 for additional information related to the Printronix and Benchmark acquisitions.

Refer to Note 3 for additional information related to the Deflecto acquisition.

Other intangible assets, net consisted of the following:

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Total patents 354,803 ( 333,779 ) 21,024

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

Customer relationships:

Industrial operations 7 years 5,300 ( 2,446 ) 2,854

Manufacturing operations 15 years 20,200 ( 269 ) 19,931

Total customer relationships 25,500 ( 2,715 ) 22,785

Trade name and trademarks

Industrial operations 7 years 3,430 ( 1,583 ) 1,847

Manufacturing operations 10 years 400 ( 8 ) 392

Manufacturing operations Indefinite 8,009 — 8,009

Total trade name and trademarks 11,839 ( 1,591 ) 10,248

Developed technology - manufacturing operations 10 years 1,000 ( 20 ) 980

Favorable leases - manufacturing operations 1.9 years 704 ( 312 ) 392

Total $ 393,846 $ ( 338,417 ) $ 55,429

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Total $ 353,533 $ ( 319,977 ) $ 33,556

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.

Total other intangible asset amortization expense in the consolidated statements of operations and comprehensive income (loss) was $ 18.4 million and $ 13.1 million for the years ended December 31, 2024 and 2023, respectively.

The Company did not record charges related to impairment of other intangible assets for the years ended December 31, 2024 and 2023.

There was no accelerated amortization of other intangible assets for the years ended December 31, 2024 and 2023.

Intellectual Property Operations amortization of patents is expensed in cost of revenues and Industrial Operations amortization is expensed in general and administrative expenses.

Intellectual Property Operations amortization of patents was $ 16.1 million and $ 11.4 million for the years ended December 31, 2024 and 2023, respectively, and is expensed in cost of revenues.

Industrial Operations amortization of intangible assets was $ 1.7 million and $ 1.7 million for the years ended December 31, 2024 and 2023, respectively.

Manufacturing Operations amortization of intangible assets was $ 609,000 for the period from October 18, 2024 through December 31, 2024.

Industrial Operations and Manufacturing Operations amortization of intangible assets is expensed in general and administrative expenses.

The following table presents the scheduled annual aggregate amortization expense (in thousands):

Years Ending December 31,

2025 $ 20,108

Thereafter 13,580

Total $ 47,420

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, 2024.

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).

During the years ended December 31, 2024 and 2023, ARG entered into agreements to obtain preferential future returns for existing patent portfolios for $ 10.0 million in each respective period, of which $ 6.0 million was paid in the fourth quarter of 2023 and $ 14.0 million was paid during the year ended December 31, 2024.

As of December 31, 2024 and 2023, zero and $ 4.0 million of certain patent and patent rights acquisition costs was accrued, respectively, and included in accrued expenses and other current liabilities (see Note 9).

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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Income taxes payable 3,832 619

Sales and tax and fees payable 4,818 —

Other tax payable 2,046 —

Revolving credit facility and Term loan interest accrual 1,162 106

Product warranty liability, current 59 30

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Total $ 20,575 $ 8,405

ASSET RETIREMENT OBLIGATIONS

The following is a summary of the asset retirement obligations in the consolidated balance sheets:

Year Ended December 31, 2024 November 13, 2023 to December 31, 2023

(In thousands)

Beginning balance $ 294 $ 276

Liabilities acquired 31,336 13

Accretion of discounts 986 5

Ending balance $ 32,616 $ 294

Current portion ( 1,546 ) —

Asset retirement obligation, long-term $ 31,070 $ 294

REVOLVING CREDIT FACILITY AND TERM LOAN

Benchmark Credit Agreement

On September 16, 2022, Benchmark entered into a credit agreement (the “Original Benchmark Credit Agreement”) for a revolving credit facility (the “Original Benchmark Revolver”) and a term loan with a bank.

The Original Benchmark Revolver had an initial borrowing base of $ 25 million and $ 75 million maximum borrowing capacity.

The Original Benchmark Revolver was set to mature on September 16, 2025.

The availability under the Original Benchmark Credit Agreement was subject to the borrowing base, which was redetermined on April 1 and October 1 of each year.

During 2023, the borrowing base was reduced to $ 17.5 million and payment was made, which further reduced the borrowing base to $ 10.5 million.

The Original Benchmark Revolver was paid in full during the second quarter of 2024.

As of December 31, 2024 and 2023 the outstanding balance on the Original Benchmark Revolver was zero and $ 10.5 million, respectively.

Additionally, Benchmark initially borrowed $ 3.5 million under a related term loan, which was paid in full during 2023.

Benchmark’s outstanding balance on that term loan was zero as of December 31, 2024 and 2023.

Benchmark Loan Agreement

On April 17, 2024 (the “Revolution Closing Date”), in connection with the Transaction, BE Anadarko II, LLC, a subsidiary of Benchmark, entered into a Loan Agreement (the “Benchmark Loan Agreement”) with Frost Bank, as Administrative

Agent and LC Issuer (“Frost Bank”) and the lenders from time to time party thereto (the “Benchmark Lenders”), governing a new revolving credit facility (the “Benchmark Revolving Credit Facility”), with a maximum aggregate credit amount of $ 150 million, of which approximately $ 85 million was available at the Revolution Closing Date, that Benchmark may draw upon from time to time subject to the terms and conditions set forth in the Benchmark Loan Agreement.

The Benchmark Revolving Credit Facility will mature April 17, 2027 and includes a letter of credit subfacility.

On the Closing Date, $ 82.7 million, including $ 660,000 related to letters of credit, was drawn under the Benchmark Revolving Credit Facility.

Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the Benchmark Loan Agreement.

During the year ended December 31, 2024, Benchmark made payment of $ 15.5 million under the Benchmark Revolving Credit Facility reducing the borrowing base.

As of December 31, 2024 the outstanding balance on the Benchmark Revolving Credit Facility was $ 66.5 million.

Borrowings under the Benchmark Revolving Credit Facility bear interest at a rate per annum equal to the “Adjusted Term Secured Overnight Financing Rate (“SOFR”) Margin Rate” (as defined in the Loan Agreement) plus a margin of 3.00 % to 4.00 %.

The applicable margin is determined based on a monthly utilization percentage, and the availability is determined by reference to a borrowing base calculation.

As of December 31, 2024, the weighted average interest rate associated with the outstanding balance on the Benchmark Revolving Credit Facility was 9 %.

Unused commitments under the Benchmark Revolving Credit Facility are subject to a commitment fee 0.5 % payable on a quarterly basis.

The Benchmark Loan Agreement contains customary covenants with respect to BE Anadarko and its subsidiaries, including, among others, limitations on indebtedness, liens, mergers, issuances of disqualified capital stock, dispositions, payment of dividends, investments and new businesses, amendments of organizational documents and other material contracts, hedging contracts, sale and lease back transactions and transactions with affiliates.

In addition, the Benchmark Loan Agreement contains covenants that require BE Anadarko to maintain certain financial ratios related to its consolidated current assets and leverage.

The Benchmark Loan Agreement also contains certain events of default, including, among others, nonpayment, inaccuracy of representations and warranties, violation of covenants, cross-default to other indebtedness, bankruptcy, material judgments, or a change of control.

Upon the occurrence of an event of default, the Benchmark Lenders may terminate the commitments under the Benchmark Loan Agreement and declare all loans due and payable.

As of December 31, 2024, the Company was in compliance with its covenants related to the Benchmark Loan Agreement

Deflecto Amended and Restated Credit Agreement

In connection with the Deflecto Transaction, on October 18, 2024, Deflecto, LLC (“Borrower”), a wholly-owned subsidiary of Deflecto, and certain of its subsidiaries as guarantors, entered into a $ 55.0 million amended and restated credit agreement (the “Deflecto Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A.

as administrative agent (the “Administrative Agent”).

The Deflecto Credit Agreement amended and restated Borrower’s prior credit agreement dated as of April 16, 2021.

The Deflecto Credit Agreement provides for (i) the $ 48.0 million Deflecto Term Loan with a maturity date of October 18, 2029 and (ii) a $ 7.0 million secured revolving credit facility (the “Deflecto Revolving Credit Facility” and, together with the Deflecto Term Loan, the “Deflecto Facility”) that expires on October 18, 2029.

The Deflecto Facility provides for an uncommitted accordion feature that could provide for an aggregate facility of up to $ 80.0 million.

The Deflecto Facility is secured by substantially all assets of Borrower and the guarantors party thereto (but excluding real property owned as of the closing date of the Deflecto Facility, and, subject to other customary exclusions and exceptions).

Borrowings under the Deflecto Facility bear interest at a rate per annum equal to, at the Borrower’s election, either (i) the “Adjusted Term SOFR Rate” (as defined in the Deflecto Credit Agreement) plus a margin ranging from 2.50 % to 3.25 % or (ii) the “Alternate Base Rate” (as defined in the Deflecto Credit Agreement) plus a margin ranging from 1.50 % to 2.25 %.

The applicable margin described in the immediately preceding sentence will be determined based on a quarterly total net leverage ratio test.

Unused commitments under the Deflecto Revolving Credit Facility are subject to a commitment fee of 0.35 % to 0.50 % payable on a quarterly basis.

The Deflecto Credit Agreement contains customary representations and warranties as well as customary affirmative and negative covenants.

The negative covenants include, among others, limitations on incurrence of indebtedness by Deflecto’s subsidiaries and limitations on incurrence of liens on assets of Deflecto and its subsidiaries.

In addition, the Deflecto Credit Agreement requires that Borrower maintain (a) a ratio of consolidated debt (net of up to $ 5.0 million of unrestricted cash) to consolidated annual earnings before interest, taxes, depreciation and amortization (subject to adjustments set forth in the Deflecto Credit Agreement, “EBITDA”) of (i) on or after December 31, 2024 and prior to December 31, 2025, not greater

than 3.25 to 1.00, (ii) on or after December 31, 2025 and prior to December 31, 2026, not greater than 3.00 to 1.00 and (iii) on or after December 31, 2026, not greater than 2.75 to 1.00 and (b) a ratio of consolidated annual EBITDA to fixed charges (including debt and tax cash charges) of not less than 1.20 to 1.00 (commencing with the fiscal quarter ending December 31, 2024).

The Deflecto Credit Agreement contains customary events of default, including, among others, nonpayment (with a grace period for interest payments), material inaccuracy of representations and warranties, violation of covenants (subject to certain grace periods), cross-default to other material indebtedness, bankruptcy, material judgments, or a change of control.

Upon the occurrence and during the continuance of an event of default, the lenders may declare the outstanding advances and all other obligations under the Deflecto Credit Agreement immediately due and payable.

As of December 31, 2024, the Company was in compliance with its covenants related to the Deflecto Credit Agreement.

On October 18, 2024, in connection with the closing of the Deflecto Transaction, Deflecto borrowed the $ 48.0 million under the Deflecto Term Loan to finance, in part, the Purchase Price for the Deflecto Transaction.

Borrower may borrow additional amounts under the Deflecto Facility from time to time as opportunities and needs arise, subject to the terms of the Deflecto Facility.

As of December 31, 2024, the interest rate associated with the outstanding balance on the Deflecto Term Loan was 8 %.

Deflecto’s outstanding balance on Deflecto Term Loan was $ 47.5 million as of December 31, 2024.

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.

In order to establish a strategic and ongoing relationship between the Company and Starboard, on November 18, 2019, the Company and Starboard entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which Starboard acquired (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a stated value of $ 100 per share, (ii) Series A Warrants to purchase up to 5,000,000 shares of the Company’s common stock (the “Series A Warrants”) and (iii) Series B Warrants to purchase up to 100,000,000 shares of the Company’s common stock (the “Series B Warrants”).

On November 12, 2021, the Board of Directors of the Company (the “Board”) formed a Special Committee comprised of directors not affiliated or associated with Starboard in order to explore the possibility of simplifying the Company’s capital structure.

Management of the Company believed that the Company’s capital structure, with multiple different series of securities, made it difficult for investors to understand and value the Company and created an impediment to new public investment.

As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into 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

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.

As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into a Recapitalization Agreement with Starboard (the "Recapitalization Agreement") in order to simplify the Company’s capital structure, pursuant to which, among other things, (1) effective as of November 1, 2022, Starboard exercised the Series A Warrants in full and received 5,000,000 shares of the Company’s common stock, (2) Starboard purchased 15,000,000 shares of the Company’s common stock pursuant to the Concurrent Private Rights Offering (as 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 (the “Preferred Stock Conversion”), and (b) Starboard exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 shares of common stock, the cancellation of $ 60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $ 55.0 million (the “Series B Warrants Exercise”).

Such transactions are referred to as the “Recapitalization Transactions.” As a result, Starboard owned 61,123,595 shares of common stock as of July 13, 2023, representing approximately 61.2 % of the common stock based on 99,886,322 shares of common stock issued and outstanding as of such date.

Accordingly, no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding.

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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.

(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 an 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.

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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.

Following Starboard’s conversion of its 350,000 shares of Series A Redeemable Convertible Preferred Stock, the Company no longer had any shares of Series A Redeemable Convertible Preferred Stock outstanding, which resulted in a fair value of zero .

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

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.

The Company determined that upon entering into the Recapitalization Agreement, the Series A Redeemable Convertible Preferred Stock was not modified related to the redemption, as such action 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.

Accretion for the years ended December 31, 2024 and 2023 was zero and $ 3.2 million, respectively.

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).

On February 25, 2020, pursuant to the terms of the Securities Purchase Agreement with Starboard, 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 Senior Secured Notes.

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

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”).

In connection with the issuance of the Senior Secured 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 Senior Secured Notes outstanding, at any time until the expiration date of 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 (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.

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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).

In 2023, the remaining 31,506,849 Series B Warrants were exercised.

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 effectively 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.

Upon the Series B Warrants Exercise, Starboard 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 Starboard in consideration of the cash payment and cancellation of any outstanding Senior Secured Notes.

The Series B Warrants were classified as a liability in accordance with ASC 480, “Distinguishing Liabilities from Equity”, as the agreement provided for net cash settlement upon a change in control, which was 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.

The Series B Warrants were recognized at fair value at each reporting period until exercised, which resulted in a fair value of zero , with changes in fair value recognized in other income or (expense) in the consolidated statements of operations and comprehensive income (loss).

As of December 31, 2024, 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.

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

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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

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.

Each Subscription 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”).

Starboard 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 Starboard 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 Concurrent Private 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.

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333-249984), filed with the SEC on February 14, 2023.

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.

Under the Recapitalization Agreement, the parties agreed that, among other things, for a period from the date of the Recapitalization Agreement until May 12, 2026, the Board of the Company will include at least two (2) directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Exchange Act of 1934, as amended) 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.

The Company and Starboard also agreed that until May 12, 2026, the number of directors serving on the Board will not exceed 10 members.

Other Provisions of the Recapitalization Agreement

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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 "Governance Agreement"), would be automatically terminated and of no further force and effect without any further action by any party thereto.

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 (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.

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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.

During the years ended December 31, 2024 and 2023 the Company reimbursed Starboard $ 476,000 and $ 216,000 , respectively, under the Services Agreement.

FAIR VALUE MEASUREMENTS

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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).

On November 1, 2023, the Company, through a wholly owned subsidiary, entered into the Arix Shares Purchase Agreement with RTW Bio to sell its shares of Arix to RTW Bio for a purchase price of $ 57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP).

On January 19, 2024, the Company completed such sale for $ 57.1 million.

As a result, as of December 31, 2024, the aggregate carrying amount of this investment was zero , and was included in equity securities, in the consolidated balance sheet ( r efer to Note 4 for additional information).

Commodity Derivative Instruments :

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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

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).

During 2024, Benchmark executed derivative contracts with counterparties and also executed an International Swap Dealers Association Master Agreement (“ISDA”) with its counterparties, the terms of which provide Benchmark and its counterparties with rights of offset.

There are no derivative assets that were subjected to offset for the year ended December 31, 2024.

The aggregate fair value of the open commodity derivatives was $ 2.1 million and $ 2.7 million as of December 31, 2024 and 2023, respectively.

The open commodity derivatives 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).

Series B Warrants were 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 12 for additional information).

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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 12 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 .

As of December 31, 2024, no Series B warrants were issued or outstanding.

Refer to the “ Embedded derivative liabilities ” discussion below for additional information on assumptions.

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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.

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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.

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 12 for additional information).

As of December 31, 2024, the Company no longer had any shares of Series A Redeemable Convertible Preferred Stock outstanding.

Financial assets and liabilities measured at fair value on a recurring basis were as follows:

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Equity securities $ 63,068 $ — $ — $ 63,068

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

Commodity derivative instruments — 2,723 — 2,723

Total $ 63,068 $ 2,723 $ — $ 65,791

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.

Benchmark’s realized derivative gain for the year ended December 31, 2024 was $ 2.6 million and for the period from November 13, 2023 through December 31, 2023 was $ 396,000 .

Benchmark’s unrealized derivative loss for the year ended December 31, 2024 was $ 610,000 and Benchmark’s unrealized derivative gain for the period from November 13, 2023 through December 31, 2023 was $ 781,000 .

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

The following table sets forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which were measured at fair value on a recurring basis.

There are no Level 3 liabilities as of December 31, 2024.

The changes in the estimated fair value of the Company’s Level 3 liabilities as of December 31, 2023 were as follows:

Series A Embedded Derivative Liabilities Series B Warrant Liabilities Total

(In thousands)

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Exercise of warrants — ( 82,018 ) ( 82,018 )

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 )

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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.

GAAP, from time to time, the Company measures certain assets and liabilities at fair value on a nonrecurring basis.

Assets and liabilities accounted for on a non-recurring basis include asset retirement obligations incurred by the drilling of new oil and natural gas wells, the change in estimated asset retirement obligations, and the carrying value of proved and unproved oil and natural gas properties following impairment.

The fair value of the asset retirement obligations is measured using valuation techniques consistent with the income approach, which converts future cash flows to a single discounted amount and significant inputs include the estimated plug and abandonment cost per well, the estimated life per well and the credit-adjusted risk-free rate.

The fair value of the asset retirement obligations are within Level 3 of the fair value hierarchy.

In connection with our Revolution asset acquisition, the fair value of the oil and gas properties is determined based upon estimated future discounted cash flow, a Level 3 input, using estimated production which we reasonably expect, and estimated prices adjusted for differentials.

Unobservable inputs include estimated future oil and natural gas production, prices, operating and development costs and a discount rate of 12%, all Level 3 inputs within the fair value hierarchy.

The Company also reviews the carrying value of equity securities without readily determinable fair value, equity method investments and patents on a quarterly basis for indications of impairment, and other long-lived assets at least annually.

When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined.

Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.

Any fair value determination would be based on valuation approaches, which are appropriate under the

circumstances and utilize Level 2 and Level 3 measurements as required.

In connection with our Deflecto acquisition, nonrecurring Level 3 valuations were performed for certain intangible assets, refer to Note 3 for additional information.

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 Company reimbursed an aggregate amount of $ 50,000 and $ 129,000 during the years ended December 31, 2024 and 2023, respectively, to former executive officers in connection with legal fees incurred following such officers’ respective departures from the Company.

In 2023, the Company entered into a Loan Facility (“Loan Facility”) with a related private portfolio company.

As of December 31, 2024 and 2023, the Loan Facility balance including interest receivable was $ 3.5 million and $ 2.2 million, respectively.

The Loan Facility is not impaired and no allowance for credit loss was deemed necessary as of December 31, 2024.

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 .

We recorded $ 295,000 and $ 97,000 in interest income during the years ended December 31, 2024 and 2023, respectively.

The receivable is included in other non-current assets in the consolidated balance sheets.

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Facility Leases

Acacia primarily leases office facilities under operating lease arrangements that will end in various years through July 2027.

Acacia primarily leases office facilities under operating lease arrangements that will end in various years through September 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.

Pursuant to the lease, we had leased 8,293 square feet of office space in Irvine, California.

The lease commenced on August 1, 2019.

The term of the lease was 60 months from the commencement date, provided for annual rent increases, and did not provide us the right to early terminate or extend our lease terms.

The lease expired on July 31, 2024, and was not renewed or extended.

On April 29, 2024, Acacia entered into a building lease agreement with Metro Pointe 13580 Lot Two, a California Limited Partnership.

Pursuant to the lease, we have leased 1,820 square feet of office space in Costa Mesa, California.

The lease commenced on July 1, 2024.

The term of the lease is 38 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.

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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.

The term of the initial lease was 24 months from the commencement date, provided for annual rent increases, and did 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.

On January 25, 2022, the substitution space was substantially completed and the new expiration date was 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.

The new fixed rent commenced upon the 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.

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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.

• 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.

On April 9, 2024, Benchmark entered into a building lease agreement with Luzzatto Oaks, LLC.

Pursuant to the lease, Benchmark has leased 2,663 square feet of office space in Austin, Texas.

The lease commenced on May 1, 2024.

of the lease is 39 months from the commencement date, provides for annual rent increases, and does not provide the right to early terminate or extend the lease terms.

Deflecto leases various land, buildings, offices and equipment.

Certain of these leases contain various options to renew and expire at varying dates through December 2031.

Leases are executed in the United States, United Kingdom, Canada and China.

The exercise of lease renewal options is at the Deflecto’s sole discretion.

Deflecto regularly evaluates the renewal options and when they are reasonably certain of exercise, Deflecto includes the renewal period in the lease term.

Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through November 2026.

Leases are executed in the United States, Europe, China, Singapore and Malaysia.

Printronix has leased 73,649 square feet of facilities space.

Lease term varies and may provide for annual rent increases and provide the right to early termination under certain circumstances or extend the lease.

Balance at Weighted-Average Remaining Term Weighted-Average Discount Rate

Balance at December 31, 2023

Operating leases 2.9 years 6 %

Balance at December 31, 2024

Operating leases 3.8 years 6 %

Finance leases 3.2 years 7 %

The Company’s operating lease costs were $ 1.8 million and $ 2.1 million for the years ended December 31, 2024 and 2023, respectively.

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Years Ending December 31,

Thereafter 1,196

Total minimum payments 11,739

short-term lease liabilities ( 3,563 )

present value discount ( 1,398 )

Long-term lease liabilities $ 6,778

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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.

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.

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”), former Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd.

(“Transpacific”).

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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.

The Chancery Court removed from the 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.

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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.

The oral arguments on the Acacia Entities’ motion for summary judgment took place on March 28, 2024.

On June 20, 2024, the Court issued its ruling denying the Acacia Entities’ motion for summary judgment.

On October 15, 2024, the parties entered into a settlement agreement, after which they filed a stipulation of dismissal, concluding the litigation.

The expenses related to the settlement agreement are included in non-recurring legacy legal expense in the consolidated statements of operations and comprehensive income (loss).

In February 2017, AIP Operation LLC, or AIP, an indirect subsidiary of the Company, at the direction of prior management and the Board of Directors at that time, adopted a Profits Interests Plan that granted a profit interest in Veritone 10% Warrants held by AIP to certain members of that management team and the Board of Directors of the Company as compensation for services rendered.

Those members of management and the Board separated from Acacia in 2018 and 2019 and the Veritone 10% Warrants were subsequently exercised in 2020 and 2021.

We had been engaged in a dispute involving those former executives’ profit interests in AIP (the “AIP Matter”) and on August 2, 2024 the AIP Matter was settled, which resulted in a $ 14.5 million payment by Acacia during the year ended December 31, 2024 .

Accordingly, for the year ended December 31, 2024 , non-recurring legacy legal expense includes an aggregate additional expense of $ 12.9 million, which is incremental to amounts expensed in prior periods.

Guarantees and Indemnifications

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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.

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.

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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.

As of December 31, 2024 and 2023, 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.

Benchmark is engaged in oil and natural gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well production and also may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to oil and natural gas wells and the operation thereof.

In connection with Benchmark’s acquisition of existing or previously drilled well bores, Benchmark may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated.

Should it be determined that a liability exists with respect to any environmental cleanup

or restoration, Benchmark would be responsible for curing such a violation.

Should it be determined that a liability exists with respect to any environmental cleanup or restoration, Benchmark would be responsible for curing such a violation.

No claim has been made, nor is management aware of any liability that exists, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto for the year ended December 31, 2024.

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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.

On November 9, 2023, the Board approved a stock repurchase program (the “Repurchase Program”) for up to $ 20.0 million of the Company's common stock, subject to a cap of 5,800,000 shares of common stock.

The Repurchase Program has no time limit and does not require the repurchase of a minimum number of shares.

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.

During the year ended December 31, 2024, we completed the Repurchase Program with total common stock purchases of 4,358,361 shares for the aggregate amount of $ 20.0 million.

The Repurchase Program has been substantially completed.

Stock repurchases during the year ended December 31, 2024, all of which were purchased pursuant to the Repurchase Program, were as follows:

Purchased Average

Share Approximate Dollar

Value of Shares that

May Yet be Purchased

under the Program

(In thousands)

August 1, 2024 - August 31, 2024 676,775 $ 4.68 $ 16,833

September 1, 2024 - September 30, 2024 860,347 $ 4.72 $ 12,769

Total repurchases in the quarter 1,537,122 $ 4.70

October 1, 2024 - October 31, 2024 1,175,872 $ 4.64 $ 7,310

November 1, 2024 - November 29, 2024 798,398 $ 4.50 $ 3,721

December 3, 2024 - December 27, 2024 846,969 $ 4.50 $ —

Total repurchases in the quarter 2,821,239 $ 4.56

Total program repurchases 4,358,361 $ 4.61

Tax Benefits Preservation Charter Provision

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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.

The 2024 Acacia Research Corporation Stock Incentive Plan (“2024 Plan”), the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) and the 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) (collectively, the “Plans”) were approved by the stockholders of Acacia in June 2024, June 2016 and May 2013, respectively.

The Plans allow grants of stock options, restricted stock units, and in the case of the 2013 Plan, allowed stock awards with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants.

The 2013 Plan expired in May 2023, and as of the effective date of the 2024 Plan, the remaining shares available for issuance under the 2016 Plan were transferred to the 2024 Plan.

Therefore, Acacia exclusively grants awards under the 2024 Plan.

Acacia’s compensation committee administers the Plans.

The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the 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

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:

The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the 2024 Plan, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant, stock issuance or restricted stock units and the maximum term for which any granted option is to remain outstanding.

The 2024 Plans terminates no later than the tenth anniversary of the approval of the plan by Acacia’s stockholders.

The 2024 Plan provides for the following separate programs:

Stock Issuance Program .

Under the stock issuance program, eligible individuals may be issued shares of common stock directly, 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.

Under the stock issuance program, eligible individuals may be issued shares of common stock directly, as determined by the 2024 Plan administrator.

The terms and conditions of such direct stock awards include the number of shares of common stock granted, and the conditions for vesting that must be satisfied, if any, which typically will be based on continued provision of services but may include performance-based vesting requirements.

Until the time at which the applicable restricted direct stock award vests, the holder of a restricted direct stock award will not have the rights of a stockholder provided, however, that any regular cash dividends with respect to unvested awards will be accrued by the

Company and will be subject to the same restrictions as the award.

The eligible individuals receiving awards under the 2016 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them under once those shares are vested.

The eligible individuals receiving awards under the 2013 Plan stock issuance program had full stockholder rights with respect to any shares of common stock issued to them, whether or not their interest in those shares was vested.

Discretionary Option Grant Program .

Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than 100 % of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100 % of the fair market value of those shares on the grant date (not less than 110 % of fair market value if such employee actually or constructively owns more than 10 % of Acacia’s voting stock or the voting stock of any of its subsidiaries).

Fair market value is generally equal to the closing price per share of the Company’s common stock on the principal securities exchange on which the common stock is traded on the date the option is granted (or if there was no closing price on that date, on the last preceding date on which a closing price was reported).

Stock options will generally have a term of ten years from the date of grant;

provided, that, the term of an incentive stock option granted to a 10% shareholder may not exceed five years from the date of grant.

Discretionary Restricted Stock Unit Grant Program .

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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.

As of the effective date of the 2016 Plan, 625,390 shares of common stock remained available for issuance under the 2013 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.

As of the effective date of the 2024 Plan, 1,421,848 shares of common stock remained available for issuance under the 2016 Plan.

The number of shares of common stock reserved for issuance under the 2024 Plan was 11,168,000 shares plus the 1,421,848 shares of common stock available for issuance under the 2016 Plan, which were transferred into the 2024 Plan as of the effective date of the 2024 Plan.

As of December 31, 2024, there were 12,428,239 shares of common stock remain available for grant under the 2024 Plan.

Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock.

The 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.

The plan administrator may amend or modify the 2024 Plan at any time, subject to any required stockholder approval.

As of December 31, 2024, there are 16,244,418 shares of common stock reserved for issuance under the Plans.

The following table summarizes stock option activity for the Plans:

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Outstanding at December 31, 2024 1,001,520 $ 4.16 $ 437 7.3 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, 2024 551,064 $ 4.39 $ 225 7.2 years

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Weighted average remaining vesting period at December 31, 2024 1.1 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.

During the year ended December 31, 2024, there were no stock options granted.

The aggregate fair value of options vested during the years ended December 31, 2024 and 2023 was $ 521,000 and $309,000.

The following table summarizes nonvested restricted stock activity for the Plans:

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Nonvested at December 31, 2024 67,668 $ 3.63 833,195 $ 4.42 1,981,464 $ 4.61

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, 2024 (in thousands) $ 45 $ 2,135 $ —

Weighted average remaining vesting period at December 31, 2024 0.2 years 1.2 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.

RSAs and RSUs granted in 2024 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, 2024 and 2023 was $ 623,000 and $ 731,000 .

The aggregate fair value of RSUs vested during the years ended December 31, 2024 and 2023 was $ 2.9 million and $1.5 million.

During the year ended December 31, 2024 , RSAs and RSUs totaling 803,593 shares were vested and 227,376 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).

The number of PSUs granted in 2023 that can be earned ranges from 0% to 200% of the target number of PSUs granted (up to a maximum of 750,000 shares of Acacia’s common stock per recipient).

Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date.

The Company has not recorded any expense related to the PSUs based on the probability assessment performed as of December 31, 2023.

The Company has expensed $ 1.4 million related to the PSUs based on the probability assessment performed as of December 31, 2024.

Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:

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Options $ 481 $ 401

RSAs 618 1,360

RSUs 2,457 2,278

Total compensation expense for share-based awards $ 4,795 $ 3,297

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.

Total unrecognized stock-based compensation expense for time-based awards as of December 31, 2024 was $ 2.5 million, which will be amortized over a weighted average remaining vesting period of 1.1 years.

RETIREMENT SAVINGS PLANS AND SEVERANCE

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During the years ended December 31, 2024 and 2023, Printronix’s total contribution overseas was $ 561,000 and $ 641,000 , respectively.

Deflecto has a defined contribution plan under Section 401(k) for salaried and hourly employees.

During the period from October 18, 2024 through December 31, 2024, Deflecto’s total contribution to the plan was $ 223,000 .

In addition, Deflecto contributes to a state sponsored retirement plan for its resident employees of China.

Contributions are based on approximately 15 % of participant base salaries during the period from October 18, 2024 through December 31, 2024.

During the years ended December 31, 2024 and 2023, 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.

The components of income (loss) before income taxes were as follows:

During the year ended December 31, 2024, Acacia’s total severance expense was $ 203,000 and during the year ended December 31, 2023, total severance expense was a (credit) of $( 580,000 ) due to a reversal of a prior period accrued expense.

The components of (loss) income before income taxes were as follows:

Years Ended December 31,

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Total $ ( 38,147 ) $ 67,426

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:

For purposes of reconciling the Company’s provision for income taxes at the statutory rate a notional 21 % tax rate was applied as follows:

Years Ended December 31,

Statutory federal tax rate - expense (benefit) 21 % ( 21 ) %

Statutory federal tax rate 21 % 21 %

Foreign rate differential ( 5 ) % 3 %

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Derivative fair value adjustment — % ( 3 ) %

Transaction Costs ( 2 ) % — %

Valuation allowance 13 % ( 27 ) %

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Effective income tax rate 9 % ( 2 ) %

Acacia’s income tax benefit for the periods presented consisted of the following:

Acacia’s income tax benefit (expense) for the periods presented consisted of the following:

Years Ended December 31,

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Net operating loss and capital loss carryforwards and credits $ 50,453 $ 34,595

Unrealized gain on investments held at fair value 146 35

Unrealized loss on investments held at fair value 1,025 146

Compensation expense for share-based awards 693 1,095

Accrued liabilities and other 1,453 1,551

Accrued expenses 3,677 1,453

Lease liability 2,010 689

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Total deferred tax liabilities ( 14,001 ) ( 4,881 )

Net deferred tax assets (liabilities) $ 2,915 $ ( 742 )

Net deferred tax assets $ 17,624 $ 2,915

As of December 31, 2024 and 2023, management assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets on a jurisdictional basis.

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Based upon available evidence, it was concluded on a more-likely-than-not basis that as of December 31, 2024 a valuation allowance of $ 26.3 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.

As of December 31, 2023, the Company recorded a partial valuation allowance of $ 30.2 million.

The valuation allowance decreased by $ 4.0 million for the year ended December 31, 2024.

The $ 4.0 million decrease included a decrease of $ 5.1 million for expired foreign tax credits, an increase of $ 800,000 recorded in purchase accounting for state net operating losses and an increase of $ 300,000 for state net operating losses generated in the current year.

The valuation allowance decreased by $ 18.0 million for the year ended December 31, 2023 as a result of the use of tax attributes 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.

At December 31, 2024, Acacia had U.S.

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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.

$ 2.2 million of our foreign NOLs, $1.9 million of our state NOLs and all of our federal losses can be carried forward indefinitely.

The remaining $ 2.7 million of foreign NOLs and $ 56.8 million of state NOLs will expire in varying amounts through 2044.

Pursuant to Section 382 and 383 of the Internal Revenue Code (“IRC”), annual use of the Company’s NOL and credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period.

upon the occurrence of an ownership change under Section 382 as outlined above, utilization of the tax attributes including the Company’s NOL and credit carryforwards are subject to an annual limitation, which is determined by first

multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, which could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization.

The Company has completed an analysis through December 31, 2024 and no such ownership change has occurred however ownership changes may occur in the future.

An ownership change did occur for Deflecto upon Acacia’s acquisition on October 18, 2024.

Approximately $ 48.8 million of pre-acquisition tax attributes including NOLs are subject to annual limitations under Section 382.

The federal NOLs can be carried forward indefinitely but will be subject to a taxable income limitation.

The limitation on these attributes have been considered in the Company’s valuation allowance.

As of December 31, 2024, Acacia had approximately $ 23.4 million of foreign tax credits, expiring between 2025 and 2034.

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.

In general, foreign taxes withheld may be claimed as a deduction on U.S.

corporate income tax returns, or as a credit against U.S.

income tax liabilities, subject to certain limitations.

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The Company’s 2020 through 2024 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.

However, the Company utilized losses dating back to 2006 within the general statute of limitation periods and therefore tax returns from 2006 through 2024 are still subject to challenge by the taxing authorities.

The Company has not been notified by an tax authority for income tax audits.

The Company analyzes undistributed earnings of each foreign subsidiary and has accrued withholding tax of $ 600,000 for earnings that are not permanently reinvested.

No additional deferred tax liability has been provided for 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.

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The following table presents the calculation of basic and diluted income/loss per share of common stock:

Years Ended December 31,

(In thousands, except share and per share data)

Net income (loss) attributable to Acacia Research Corporation $ 67,060 $ ( 125,065 )

Net (loss) income attributable to Acacia Research Corporation $ ( 36,057 ) $ 67,060

Dividend on Series A redeemable convertible preferred stock — ( 1,400 )

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Undistributed earnings allocated to participating securities — ( 3,913 )

Net income (loss) attributable to common stockholders - Basic 55,140 ( 133,035 )

Net (loss) income attributable to common stockholders - Basic ( 36,057 ) 55,140

Change in fair value and gain on exercise of dilutive

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securities — ( 3,076 )

Net income (loss) attributable to common stockholders - Diluted $ 53,208 $ ( 133,035 )

Net (loss) income attributable to common stockholders - Diluted $ ( 36,057 ) $ 53,208

Weighted average shares used in computing net income (loss)

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per share attributable to common stockholders - Diluted 99,213,835 92,411,818

Basic net income (loss) per common share $ 0.73 $ ( 3.13 )

Diluted net income (loss) per common share $ 0.58 $ ( 3.13 )

Basic net (loss) income per common share $ ( 0.36 ) $ 0.73

Diluted net (loss) income per common share $ ( 0.36 ) $ 0.58

Anti-dilutive potential common shares excluded from the

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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.

As of December 31, 2024, the Company operates and reports its results in four reportable segments:

Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations.

The Company reports segment information based on the management approach and organizes its businesses based on products and services.

The 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 Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, and the management approach designates the internal reporting used by the Chief Executive Officer for decision making, allocating resources and performance assessment as the basis for determining the Company’s reportable segments.

The performance measure of the Company’s reportable segments is primarily income or (loss) from operations.

Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment.

Other than the Company's equity securities investments, specific asset information is not included in managements review at this time.

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.

Specific asset information is not included in management’s review at this time.

The Company’s Intellectual Property Operations segment invests in IP and engages in the licensing and enforcement of patented technologies.

Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright.

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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.

The Company’s Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in Texas and Oklahoma.

Benchmark seeks to acquire predictable and shallow decline, cash flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage.

The 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.

The Company's segment information, including Benchmark's operations from November 13, 2023 through December 31, 2023, is as follows:

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 for the full year ended December 31, 2024, which include post-asset acquisition earnings related to the Revolution Transaction, compared to an approximate two month period ended December 31, 2023.

The Company’s Manufacturing Operations segment generates operating income by serving a broad range of wholesale and retail markets within the highly-fragmented specialty plastics industry.

Deflecto primarily designs and manufactures (i) “take-one” point of purchase brochure, folder and applications display holders, (ii) plastic injection-molded office supply and arts, crafts and education products, (iii) plastic and aluminum air venting and air control products, (iv) extruded vinyl chair mats, (v) safety reflectors for bicycles and (vi) mud flaps and splash guards for the heavy duty truck market.

The Manufacturing Operations reporting segment did not exist prior to the acquisition of Deflecto in October 2024, accordingly, the periods presented below include Deflecto’s operations from October 18, 2024 through December 31, 2024.

As of and for the year ended December 31, 2023, the consolidated results represented the results of the Intellectual Property Operations and Industrial Operations and an approximate two month period ended December 31, 2023 results of the Energy Operations.

In addition to the reportable segments above, we have a Parent category that includes activities not directly attributable to a specific reportable segment and includes broad corporate functions, including legal, human resources, accounting, analytics, finance as well as other general business costs.

We regularly provided management reports to CODM that includes segment revenue and segment operating income (loss).

The significant segment expense regularly provided to CODM include cost of revenue and operating expenses.

There were no significant inter-segment transactions.

The Company’s reportable segment information, including Deflecto’s operations from October 18, 2024 through December 31, 2024, is as follows:

Year Ended December 31, 2024

Intellectual Property Operations Industrial Operations Energy Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Manufacturing Operations Total

(In thousands)

License fees $ 19,525 $ — $ — $ — $ 19,525

Printers and parts — 12,513 — 12,513

Consumable products — 19,091 — 19,091

Services — 3,494 — 3,494

Revenues - industrial operations — 30,421 — — 30,421

Oil sales — — 26,468 — 26,468

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Natural gas liquids sales — — 13,014 — 13,014

Other service sales — — 507 — 507

Air distribution — — — 7,782 7,782

Safety products — — — 7,977 7,977

Office products — — — 7,424 7,424

Total revenues 19,525 30,421 49,183 23,183 122,312

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 sales - intellectual property operations 24,551 — — — 24,551

Cost of sales - industrial operations — 14,912 — — 14,912

Cost of sales - manufacturing operations — — — 16,904 16,904

Cost of production — — 36,291 — 36,291

Total cost of revenues 24,551 14,912 36,291 16,904 92,658

Segment gross profit 54,992 17,089 192 72,273

Segment gross (loss) profit ( 5,026 ) 15,509 12,892 6,279 29,654

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 8,826 13,705 3,427 6,303 32,261

Total other operating expenses 8,826 13,705 3,427 6,303 32,261

Segment operating income (loss) $ 47,590 $ 724 $ ( 72 ) 48,242

Segment operating (loss) income $ ( 13,852 ) $ 1,804 $ 9,465 $ ( 24 ) ( 2,607 )

Parent general and administrative expenses 30,319

Operating income 20,936

Total other income 46,490

Income before income taxes $ 67,426

The Company's two reportable segment information for the year ended December 31, 2022 is as follows:

Operating loss ( 32,926 )

Total other expense ( 5,221 )

Loss before income taxes $ ( 38,147 )

Information for t he Company’s three reportable segments for the year ended December 31, 2023 is as follows:

Year Ended December 31, 2023

Intellectual Property Operations Industrial Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Total

(In thousands)

License fees $ 89,156 $ — $ — $ 89,156

Printers and parts — 16,118 16,118

Consumable products — 19,314 19,314

Services — 4,283 4,283

Revenues - industrial operations — 35,098 — 35,098

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 1,212 — 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

Cost of sales - intellectual property operations 34,164 — — 34,164

Cost of sales - industrial operations — 18,009 — 18,009

Cost of production — — 656 656

Total cost of revenues 34,164 18,009 656 52,829

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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 7,402 16,365 264 24,031

Total other operating expenses 7,402 16,365 264 24,031

Segment operating (loss) income $ ( 3,949 ) $ 1,123 ( 2,826 )

Segment operating income (loss) $ 47,590 $ 724 $ ( 72 ) 48,242

Parent general and administrative expenses 27,306

Operating income loss ( 40,092 )

Total other expense ( 87,058 )

Loss before income taxes $ ( 127,150 )

The Company's reportable segment information as of December 31, 2023 and 2022 is as follows:

December 31, 2023 December 31, 2022

Operating income 20,936

Total other income 46,490

Income before income taxes $ 67,426

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

(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

Total parent assets 150,033 318,727

Segment total assets:

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Energy operations 209,355 32,710

Manufacturing operations 134,714 —

Total assets $ 756,394 $ 633,545

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.

The Company’s revenues and long-lived tangible assets by geographic area are presented below.

Intellectual Property Operations revenues are attributed to licensees domiciled in foreign jurisdictions.

Printronix’s net sales to external customers are attributed to geographic areas based upon the final destination of products shipped.

The Company, primarily through its Printronix subsidiary, has identified three global regions for marketing its products and services:

The Company, primarily through its Printronix and Deflecto subsidiary, has identified three global regions for marketing its products and services:

Americas, Europe, Middle East and Africa, and Asia-Pacific.

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Year Ended December 31, 2024

Intellectual Property Operations Industrial Operations Energy Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Manufacturing Operations Total

(In thousands)

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Year Ended December 31, 2023

Intellectual Property Operations Industrial Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Total

(In thousands)

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December 31, 2024

Intellectual Property Operations Industrial Operations Energy Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Manufacturing Operations Total

(In thousands)

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United States $ 126 $ 220 $ 192,435 $ 7,685 $ 200,466

Malaysia — 1,949 — 1,949

Other foreign countries — 114 — 114

Canada — — — 7,225 7,225

Europe — 99 — 4,257 4,356

Asia-Pacific — 925 — 2,573 3,498

Total $ 126 $ 1,244 $ 192,435 $ 21,740 $ 215,545

December 31, 2023

Intellectual Property Operations Industrial Operations Total

Intellectual Property Operations Industrial Operations Energy Operations Total

(In thousands)

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United States $ 201 $ 92 $ 25,117 $ 25,410

Malaysia — 2,703 2,703

Other foreign countries — 208 208

Asia-Pacific — 2,063 — 2,063

Total $ 201 $ 2,155 $ 25,117 $ 27,473

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

(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.

The Company evaluated subsequent events and transactions through the filing of this Annual Report on Form 10-K, and determined that no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

Supplemental Information on Oil and Natural Gas Properties (Unaudited)

Oil and Gas Producing Activities

The following disclosures are made in accordance with definitions in Accounting Standards Codification (ASC) Topic 932 Extractive Industries – Oil and Gas, and the United States Securities and Exchange Commission’s (SEC) final rule on “Modernization of Oil and Gas Reporting.”

Oil and Gas Reserves.

Users of this information should be aware that the process of estimating quantities of “proved,” “proved developed” and “proved undeveloped” crude oil, natural gas liquids (NGLs) and natural gas reserves is complex, requiring significant subjective decisions in the evaluation of available geological, engineering and economic data for each reservoir.

The data for a given reservoir may also change substantially over time as a result of numerous factors, including, but not limited to, additional development activity;

evolving production history;

crude oil and condensate, NGLs and natural gas prices;

and continual reassessment of the viability of production under varying economic conditions.

Consequently, material revisions (upward or downward) to existing reserve estimates may occur from time to time.

Although reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures.

Proved reserves represent estimated quantities of crude oil, NGLs and natural gas, which, by analysis of geoscience and engineering data, can be estimated, with reasonable certainty, to be economically producible from a given date forward from known reservoirs under then-existing economic conditions, operating methods and government regulations before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

Proved developed reserves are proved reserves expected to be recovered under operating methods being utilized at the time the estimates were made, through wells and equipment in place or if the cost of any required equipment is relatively minor compared to the cost of a new well.

All of the oil and natural gas properties in which we have working interests and mineral and royalty interests are located within the continental U.S., within Texas and Oklahoma.

Therefore, the following disclosures about our costs incurred and proved reserves are presented on a combined and consolidated basis.

No major discovery or other favorable or adverse event subsequent to December 31, 2024, is believed to have caused a material change in the estimates of net proved reserves as of that date.

Costs Incurred

The following table reflects the costs incurred in oil and gas property acquisition, exploration and development activities.

Year Ended December 31, 2024

(in thousands)

Costs incurred during the year:

Acquisition of properties $ 170,702

Development costs 7,728

Total $ 178,430

Acquisition costs for 2024 in the table above relate primarily to the Revolution acquisition which closed in the second quarter of 2024.

Capitalized Costs Relating to Crude Oil, Natural Gas and NGLs Producing Activities

Capitalized costs pertain to the producing activities in the Anadarko basin:

Year Ended December 31, 2024

(in thousands)

Capitalized costs:

Properties not being amortized (1)

Properties being amortized (1)

Total capitalized costs $ 210,942

Less accumulated depletion, amortization and impairment (15,466)

Net capitalized costs $ 195,476

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(1) Includes the acquisition of property costs related to the Revolution acquisition.

Results of Operations

The following table includes revenues and expenses associated with Benchmark’s oil and gas producing activities.

It does not include any allocation of Benchmark’s interest costs or general corporate overhead and, therefore, is not necessarily indicative of the contribution to net earnings of Benchmark’s oil and gas operations.

Income tax expense has been calculated using statutory income tax rates, and then giving effect to permanent differences associated with oil and gas producing activities.

Year Ended December 31, 2024

(in thousands)

Crude oil and natural gas sales $ 48,676

Production costs and other expense (23,434)

Depreciation, depletion, amortization (12,882)

Other operating expense (3,181)

Results from crude oil and natural gas producing activities $ 9,179

Proved Reserves

The following table presents Benchmark’s estimated proved reserves by product.

(MBbl) Natural Gas

Proved reserves as of December 31, 2023 361 18,444 1,156 4,591

Revisions of previous estimates 126 (2,902) 60 (298)

Purchase of minerals in place 5,192 57,246 7,933 22,666

Production (364) (4,678) (536) (1,680)

Proved reserves as of December 31, 2024 5,315 68,110 8,613 25,279

Year-end proved developed reserves:

2023 361 18,444 1,156 4,591

2024 5,315 68,110 8,613 25,279

Year-end proved undeveloped reserves (1) :

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(1) In connection with our investment in Benchmark in November 2023 and Benchmark’s subsequent acquisition of the Revolution assets in 2024, we commenced an evaluation of the development potential of Benchmark’s undrilled assets.

Benchmark had not adopted a long-term development plan as of December 31, 2024 or 2023 and, in accordance with SEC rules, its undrilled assets could not be classified as having proved undeveloped reserves for such periods.

As a result, Benchmark’s estimated net proved reserves at December 31, 2024 and 2023 consist entirely of proved developed reserves.

Revisions of Previous Estimates

Benchmark had a downward revision of previous estimates of 298 MBoe in 2024.

789 MBoe of the downward revisions are due to price decreases in the trailing 12-month averages for oil, gas and NGLs that was partially offset by 491 MBoe of positive revisions due to the performance of its well due to the positive impact of the 2024 workover programs.

Purchase of Reserves

During 2024, Benchmark had reserve additions due to the acquisition of 22.7 MMBoe in the Anadarko Basin.

For additional information on these asset additions, see Note 1—Description of Business—“Energy Operations Acquisition.”

Standardized Measure

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves is not intended to provide an estimate of the replacement cost or fair market value of Benchmark’s oil and natural gas properties.

An estimate of fair market value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, potential improvements in industry technology and operating practices, the risks inherent in reserves estimates and perhaps different discount rates.

The following tables reflect Benchmark’s standardized measure of discounted future net cash flows from its proved reserves.

Year Ended December 31, 2024

(in thousands)

Future cash inflows $ 657,906

Future costs:

Production (337,377)

Development and abandonment (24,385)

Income taxes (2,497)

Future net cash inflows 293,647

10% annual discount factor (127,488)

Standardized measure of discounted future net cash flows $ 166,159

Future cash inflows, development costs and production costs were computed using the same assumptions for prices and costs that were used to estimate Benchmark’s proved oil and gas reserves at the end of each year.

For 2024 estimates, Benchmark’s future realized prices were assumed to be $72.01 per Bbl for oil, $0.86 per Mcf for natural gas and $25.16 per Bbl for NGLs.

Of the $24.4 million of future development and abandonment costs as of the end of 2024, $900,000, $900,000 and $2.4 million are estimated to be spent in 2025, 2026 and 2027, respectively.

Future development costs include not only development costs but also future asset retirement costs.

Included as part of the $24.4 million of future development costs are $22.3 million of future asset retirement costs.

The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax deductions and tax credits under current laws.

The principal changes in Benchmark’s standardized measure of discounted future net cash flows are as follows:

Year Ended December 31, 2024

(in thousands)

Balance at beginning of period $ 24,337

Sales of crude oil and natural gas, net of production costs (26,094)

Net changes in prices and production costs (23,579)

Revisions of previous quantity estimates (1,891)

Purchases 176,332

Changes in estimated future development costs 1,993

Accretion of discount 14,214

Net change of income taxes (1,174)

Change in production rates (timing) and other 2,021

Balance at end of period $ 166,159

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

What changed 10-K

Item 9A. Controls and Procedures