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Item 7. Management’s Discussion and Analysis

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 The following discussion should be read in conjunction with our consolidated financial statements included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in Item 1A. "Risk Factors," and elsewhere herein. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” 
 
 General 
 We are a disciplined value-oriented acquirer and operator of businesses across public and private markets and industries including, but not limited to, the industrial, energy and technology sectors. We acquire businesses with a view towards strong free cash flow generation and an ability to scale, and look to identify opportunities where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance. Our strategy centers around quality sourcing, execution, and improvement. We find unique situations, bring a flexible and creative approach to transacting, and rely on our relationships and expertise to drive continual improvement in operating performance. We approach transactions as business owners and operators rather than purely as financial investors, and we believe this is our core differentiator for creating long-term value for shareholders and partners. We define value through free cash flow generation, book value appreciation, and stock price growth. These are the pillars of the Acacia story. 
 Acacia creates value by building relationships and providing transaction expertise to create acquisition opportunities where we can meaningfully improve performance. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value of the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value. 
 We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations is masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition. 
 Our focus is companies with a total enterprise value of $1 billion or less. However, we may pursue larger acquisitions under the right circumstances. Broadly speaking, our potential acquisition targets are founder-owned or privately controlled businesses, entire public companies or carve-outs of specific segments, which show a path to consistent profitability, free cash flow generation and higher risk-adjusted return expectations. We buy businesses to create platforms. The Company remains focused on acquiring and building businesses that have stable cash flow generation with an ability to scale, while retaining the flexibility to make opportunistic acquisitions with high risk-adjusted return characteristics. Acacia then has optionality to grow and reinvest free cash flow or look to monetize and build new platforms. 
 We believe the Company has the potential to develop advantaged opportunities due to its: 
 • experienced management team, which has spearheaded robust book value per share growth, with compensation tied to this metric to ensure alignment with shareholders; 
 • disciplined focus on identifying opportunities where the Company can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price; 
 • deep and experienced operating executive network which supports sourcing and evaluation of acquisition opportunities; 
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 • significant resources and the flexibility to take advantage of uncertain environments and dislocated situations; 
 • willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity discount; 
 • relationships and partnership abilities across functions and sectors; and 
 • strong expertise in corporate governance and operational transformation. 
 We regularly evaluate opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth. Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon. 
 People, Process and Performance 
 Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted acquisitions. We believe our priorities and skills underpin a compelling value proposition for operating businesses, partners and future acquisition targets, including: 
 • the flexibility to consummate transactions using financing structures suited to the opportunity and involving third-party transaction structuring as needed; 
 • the ability to deliver ongoing financial and strategic support; and 
 • the financial capacity to maintain a long-term outlook and remain committed to a multi-year business plan. 
 Relationship with Starboard Value, LP 
 Our strategic relationship with Starboard enhances our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. 
 Intellectual Property Operations 
 The Company through its Patent Licensing, Enforcement and Technologies Business invests in IP and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ ARG ” ), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. On a consolidated basis, we currently own or control the rights to multiple patent portfolios, including U.S. patents and certain foreign counterparts, which cover technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own. While we partner from time to time with inventors and patent owners, ranging in size and including large corporations, we control and assume all responsibility in pursuing patent licensing and enforcement programs, and for the related operating expenses. When applicable, share licensing revenue, net of costs, with our patent partners after we have achieved our agreed upon minimum return threshold. We may also provide upfront capital to patent owners as an advance against future licensing revenue. 
 Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. Our current active patent portfolios are: our Atlas Technologies portfolio, which covers Wi-Fi 6 standard essential patents, our Unification Technologies portfolio, which covers flash memory technology; our Monarch Networking Technologies portfolio, which covers IP networking technology; our Stingray IP Solutions portfolio, which covers wireless networking; and our R2 Solutions portfolio, which covers internet search, advertising and cloud computing technology. 
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 We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of December 31, 2024, across nearly 200 patent portfolio licensing and enforcement programs. As of December 31, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $881.0 million to our patent partners. During the past five calendar years ending on December 31, 2024, we generated gross licensing revenue of approximately $234.0 million and returned approximately $91.2 million to our patent partners. 
 As attractive opportunities become available, we remain open to opportunistically deploying additional capital into the IP business in the future, consistent with our mission to maximize value for shareholders. Our team is made up of well-respected leaders in the IP space, and intellectual property owners actively seek us out as a partner. 
 For more information related to our Intellectual Property Operations, refer to additional detailed patent business discussion below. 
 Industrial Operations 
 In October 2021, we acquired Printronix Holding Corp. (“Printronix”). Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth. 
 We are supporting Printronix as it transitions its business mix from lower-margin printer sales to higher-margin consumable products including ink cartridges and specialty ribbons. Printronix’s dual hardware and consumables business model, combined with a streamlined operating structure, represents a steady source of cash flow for Acacia. The Printronix team is focused on topline initiatives and reducing G&A, and we expect Printronix to continue to generate free cash flow on an annual basis. 
 For more information related to our Industrial Operations, refer to the section entitled “ Industrial Operations Business ” below. 
 Energy Operations 
 In November 2023, we acquired a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. Prior to Benchmark’s acquisition of additional assets in April 2024, Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Acacia made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company’s consolidated financial statements include Benchmark’s consolidated operations from November 13, 2023 through December 31, 2024. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information. 
 On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement. Pursuant to the Revolution Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing of the Revolution Transaction, the 
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 Company’s interest in Benchmark is approximately 73.5%. Refer to Note 11 to the accompanying consolidated financial statements for additional information regarding the Benchmark Revolving Credit Facility. 
 For more information, refer to the section entitled “Energy Operations Business” below. 
 Manufacturing Operations 
 On October 18, 2024, Deflecto 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 to the consolidated financial statements elsewhere herein for additional information regarding the acquisition and the Deflecto Term Loan. 
 In October 2024, we acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its products include emergency warning triangles and vehicle mudguards used by the transportation industry, various airducts and air registers used by the HVAC market and literature, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. 
 For more information, refer to the section entitled “ Manufacturing Operations ” below. 
 
 Recent Business Developments and Trends 
 Business Strategy 
 We intend to grow our Company by acquiring additional operating businesses, energy assets and intellectual property assets. However, we may not complete any acquisitions, and any acquisitions that we complete will be costly and could negatively affect our results of operations, and dilute our stockholders’ ownership, or cause us to incur significant expense, and we may not realize the expected benefits of acquisitions. 
 Recent Acquisitions 
 In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma. 
 On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying consolidated financial statements). Following closing, the Company’s interest in Benchmark is approximately 73.5%. 
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 On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the sellers in the Deflecto Transaction consisted of $103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement. The Deflecto Purchase Price was funded with a combination of borrowings of a $48.0 million secured term loan and cash on hand. A portion of the Deflecto Purchase Price is being held in escrow to indemnify Purchaser against certain claims, losses and liabilities. Refer to Note 1 to the accompanying consolidated financial statements for additional information. 
 Life Sciences Portfolio 
 In June 2020 we acquired a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”). That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition. Through the end of December 31, 2024, we have received proceeds of $564.1 million as we monetized the Life Sciences portfolio. We retained an investment in the Life Sciences Portfolio consisting of public and private securities valued at $25.7 million at December 31, 2024. On January 19, 2024, we completed the sale of our 33,023,210 shares of Arix Bioscience PLC (“Arix”) to RTW Biotech Opportunities Operating Ltd, a subsidiary of RTW Biotech Opportunities Ltd, for $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, we no longer own any shares of Arix. Additionally, some of the businesses in which we continue to hold an interest generate income through the receipt of royalties and milestone payments. Refer to Note 4 to the consolidated financial statements elsewhere herein for more information. 
 
 Inflation 
 Historically, inflation has not had a significant impact on us or any of our subsidiaries. Our Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs and may also implement cost rationalization measures, as applicable. Additionally, our Energy Operations Business may experience inflation. The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures. 
 
 Patent Licensing and Enforcement 
 Patent Litigation Trial Dates and Related Trials 
 As of the date of this Annual Report, our Patent Licensing, Enforcement and Technologies Business has two pending patent infringement case with scheduled trial dates in the next twelve months. Patent infringement trials are components of its overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities. Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates. In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for reasons that are beyond the control of our Patent Licensing, Enforcement and Technologies Business. While scheduled trial dates provide an indication of the timing of possible future revenue generating opportunities, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities. Refer to Item 1A “Risk Factors — Risks Related to our Intellectual Property Business and Industry” of this Annual Report for additional information regarding patent litigation and related risks. 
 Litigation and Licensing Expense 
 We expect patent-related legal expenses to continue to fluctuate from period to period based on the factors summarized herein, in connection with future trial dates, international enforcement, strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement activities. Refer to Item 1A “Risk Factors” of this Annual Report for additional information regarding litigation and licensing expense risk. 
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 Investments in Patent Portfolios 
 With respect to our licensing, enforcement and overall business, neither we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and investment in patents, inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology companies and others. If our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then we may not be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth. 
 Our current or future relationships may not provide the volume or quality of technologies necessary to sustain our licensing, enforcement and overall business. In some cases, universities and other technology sources compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These and other strategies employed by potential partners may reduce the number of technology sources and potential clients to whom we can market our solutions. If we are unable to maintain current relationships and sources of technology or to secure new relationships and sources of technology, such inability may have a material adverse effect on our revenues, operating results, financial condition and ability to maintain our licensing and enforcement business. 
 Patent Portfolio Intake 
 One of the significant challenges in the intellectual property industry continues to be quality patent intake due to the challenges and complexity associated with the current patent environment. 
 We did not acquire any new patent portfolios in calendar years 2024 , 2023 and 2022 . Dur ing 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents. In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, (iv) internet search, advertising and cloud computing technology and (v) GPS navigation. The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years. 
 
 Industrial Operations Business 
 Our Printronix subsidiary is a worldwide leader in multi‐technology supply‐chain printing solutions for a variety of industries, including auto manufacturing, transportation and logistics, retail distribution, food and beverage distribution, and pharmaceutical distribution. Printronix’s line matrix printers are used for mission critical applications within these industries, including labeling and inventory management, build sheets, invoicing, manifests and bills of lading, and reporting. In China, India and other developing countries in Asia and Africa, our printers are also prevalent in the banking and government sectors. Printronix has manufacturing, configuration and/or distribution sites located in Malaysia, the United States, Singapore, China and the Netherlands, along with sales and support locations around the world to support its global network of users, channel partners, and strategic alliances. Printronix designs and manufactures printers and related consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements, which are serviced by outside contractors. Consumable products include inked ribbons which are used within Printronix’s printers. Printronix’s products are primarily sold through Printronix’s global network of channel partners, such as dealers and distributors, to end‐users. 
 
 Energy Operations Business 
 Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 156,000 net acres and an interest in approximately 615 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. 
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 Manufacturing Operations Business 
 In October 2024, we acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its products include emergency warning triangles and vehicle mudguards used by the transportation industry, various airducts and air registers used by the HVAC market and literature, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China 
 
 Operating Activities 
 Intellectual Property Operations 
 Our Intellectual Property Operations revenues historically have fluctuated quarterly, and can vary significantly period to period, based on several factors including the following: 
 • the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee; 
 • the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments; 
 • fluctuations in the total number of agreements executed each period; 
 • the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs; 
 • the relative maturity of licensing programs during the applicable periods; 
 • other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors; 
 • the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approach a court determined trial date; and 
 • fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above. 
 Our management does not attempt to manage for smooth sequential periodic growth in revenues from period to period, and therefore, periodic results can be uneven. Unlike most operating businesses and industries, licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or both continue into subsequent periods, and depending on several other factors, such potential revenues may be pushed into subsequent annual periods. 
 Industrial Operations 
 Refer to “Industrial Operations Business” above for information related to Printronix’s operating activities. 
 Energy Operations 
 Refer to “Energy Operations Business” above for information related to Benchmark’s operating activities. 
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 Manufacturing Operations 
 Refer to “Manufacturing Operations Business” above for information related to Deflecto’s operating activities. 
 In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations segment revenues may be found in Notes 2 and 21 to the consolidated financial statements. 
 
 Results of Operations 
 The results reflected in this section with respect to Deflecto for the year ended December 31, 2024 include results for the period from October 18, 2024 to December 31, 2024 following our acquisition of Deflecto. The results reflected in this section with respect to Benchmark include results for the full year ended December 31, 2024 compared to an approximate two month period ended December 31, 2023 following our acquisition of Benchmark. 
 Summary of Results of Operations 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Total revenues $ 122,312 $ 125,102 $ (2,790) (2 %) 
 Total costs and expenses 155,238 104,166 51,072 49 % 
 Operating (loss) income (32,926) 20,936 (53,862) (257 %) 
 Total other (expense) income (5,221) 46,490 (51,711) (111 %) 
 (Loss) income before income taxes (38,147) 67,426 (105,573) (157 %) 
 Income tax benefit 3,449 1,504 1,945 129 % 
 Net (loss) income attributable to Acacia Research Corporation (36,057) 67,060 (103,117) (154 %) 

 
 Results of Operations - year ended December 31, 2024 compared with the year ended December 31, 2023 
 Total revenues decreased $2.8 million to $122.3 million for the year ended December 31, 2024, as compared to $125.1 million for the year ended December 31, 2023, primarily due to a decrease in our Intellectual Property Operations revenues and a decrease in Industrial Operations revenues, partially offset by revenues contributed from our Energy Operations and our Manufacturing Operations. ARG revenues decreased due to a decrease in the number of license agreements executed and a decrease in average license fees, which contributed to Intellectual Property Operations revenues decreasing by $69.6 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. The decrease in Industrial Operations revenue of $4.7 million is due to lower units of printers sold. Refer to “Industrial Operations – Revenues” below for further detailed discussion. Revenues contributed from Benchmark was $49.2 million for the year ended December 31, 2024, which include post-asset acquisition revenues from Revolution compared to an approximate two month period ended December 31, 2023 revenues from Benchmark. Post-acquisition revenues contributed from Deflecto was $23.2 million for the period from October 18, 2024 to December 31, 2024. Refer to “Energy Operations - Revenues” and “Manufacturing Operations - Revenues” below for further discussion. 
 Loss before income taxes was $38.1 million for the year ended December 31, 2024, as compared to income before income taxes of $67.4 million for the year ended December 31, 2023. The net decrease was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the year ended December 31, 2024 as compared to the year ended December 31, 2023 as follows: 
 • Inventor royalties increased $706,000, from $1.0 million to $1.7 million in 2024, primarily due to a higher mix of portfolios generating revenue in 2024 with inventor royalties. Refer to “Intellectual Property Operations – Cost of Revenues” below for further discussion. 
 • Contingent legal fees decreased $8.7 million, from $11.0 million to $2.3 million in 2024, primarily due to the change in Intellectual Property Operations revenues described above. Refer to “Intellectual Property Operations – Cost of Revenues” below for further discussion. 
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 • Litigation and licensing expenses decreased $6.3 million, from $10.8 million to $4.4 million in 2024, primarily due to a net decrease in litigation support expenses associated with ongoing litigation. Refer to “Intellectual Property Operations – Cost of Revenues” below for further discussion. 
 • Amortization of patents expense from our Intellectual Property Operations increased $4.7 million, from $11.4 million to $16.1 million in 2024, due to an increase in scheduled amortization from our additional preferential future returns paid from our existing patent portfolios. Refer to Note 8 to the consolidated financial statements elsewhere herein for additional information regarding certain patent and patent rights costs related to ARG. 
 • Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased approximately $4.5 million, from $25.7 million to $21.1 million in 2024, primarily due to a decrease in revenue offset by higher margins. Refer to “Industrial Operations – Cost of Revenues ” and “Operating Expenses” below for further discussion. 
 • Benchmark’s cost of production for the year ended December 31, 2024 added a total of $35.6 million to our consolidated operating expenses. Refer to “Energy Operations – Cost of Production ” below for further discussion. 
 • Post-acquisition cost of sales, engineering and development expenses, and sales and marketing expenses from Deflecto for the period from October 18, 2024 to December 31, 2024 added operating expenses in the amount of $18.6 million. Refer to “Manufacturing Operations – Cost of Revenues ” below for further discussion. 
 • General and administrative expenses increased $10.9 million, from $44.4 million to $55.4 million in 2024, primarily due to our Energy Operations which contributed $3.4 million of general and administrative costs in 2024 and our Manufacturing Operations which contributed $4.2 million of post-acquisition general administrative costs from Deflecto for the period from October 18, 2024 through December 31, 2024. In addition, the increase is due to higher parent company and Intellectual Property Operations costs including variable performance-based compensation costs and severance costs, partially offset by a decrease in our Industrial Operations general and administrative costs. Refer to “ General and Administrative Expenses ” below for further detail and discussion. 
 • Compensation expense for share-based awards, included in general and administrative expenses above, increased $1.5 million, from $3.3 million to $4.8 million in 2024, primarily due to restricted stock and option grants issued to employees and the Board in 2024 and 2023, which includes a partial offset for forfeitures, and an increase in compensation expense related to PSUs granted in 2023 based on the probability assessment performed as of December 31, 2024. Refer to Note 17 to the consolidated financial statements elsewhere herein for additional information regarding compensation expense. 
 • Unrealized loss from the change in fair value of our equity securities was $31.4 million in 2024, as compared to an unrealized gain of $31.4 million in the prior year. The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss primarily relates to the reversal of unrealized gains previously recorded for Arix shares sold in January 2024 for realized gains. Refer to Note 4 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to “ Equity Securities Investments ” below for further discussion. 
 • Realized gain from the sale of equity securities was $28.9 million in 2024, as compared to a realized loss of $10.9 million in the prior year. The realized gains and losses were similarly derived from the sales activity from our Life Sciences Portfolio and trading securities portfolio. The 2024 period realized gains primarily relates to the Arix shares sold in January 2024. Refer to Note 4 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to “ Equity Securities Investments ” below for further discussion. 
 • Earnings on equity investment in joint venture was zero in 2024, as compared to $4.2 million in the prior year primarily due to the earnings on equity investment in joint venture from one milestone in 2023. 
 • Non-recurring legacy legal expense of $14.9 million in 2024 is related to the AIP Matter (as defined in Note 15 to the consolidated financial statements elsewhere herein) and expenses related to the settlement agreement with Slingshot (as defined in Note 15 to the consolidated financial statements elsewhere herein). Refer to Note 15 to the consolidated financial statements elsewhere herein for additional information regarding the accrual in connection with the AIP Matter and the settlement agreement with Slingshot. 
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 • Unrealized gain from the Series B Warrants and the embedded derivative fair value measurements was zero in 2024, as compared to a gain of $8.2 million in the prior year, primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company’s common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 12 and 13 to the consolidated financial statements elsewhere herein for additional information regarding the Series B Warrants and Series A Redeemable Convertible Preferred Stock and fair value measurements. 
 • Gain on derivatives was $2.0 million in 2024, as compared to $1.2 million in the prior year due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 13 for additional information regarding Benchmark’s gain on its commodity derivatives. 
 • Interest expense increased $4.4 million, from $2.1 million to $6.4 million in 2024, primarily due to the interest expense incurred in relation to the Benchmark Revolving Credit Facility and the Deflecto Term Loan. Interest expense from Benchmark Revolving Credit Facility included a full year of interest expense in 2024 compared to an approximate two month period in the prior year and post-acquisition related interest expense contributed to the increase from the Deflecto Term Loan. Refer to Note 11 to the consolidated financial statements elsewhere herein for additional information regarding the Benchmark Revolving Credit Facility and the Deflecto Term Loan. The increase is partially offset by a decrease in interest expense related to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023, pursuant to the Series B Warrants Exercise. Refer to Note 12 to the consolidated financial statements elsewhere herein for additional information regarding the Senior Secured Notes. 
 • Interest income and other, net increased $2.6 million from $14.4 million to $17.0 million in 2024, primarily due to the increase in interest income from our cash equivalents. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our cash and cash equivalents and investments in equity securities. 
 
 Intellectual Property Operations 
 Revenues 
 ARG’s revenue activity for the periods presented included the following: 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values and count totals) 
 Paid-up license revenue agreements $ 17,253 $ 87,835 $ (70,582) (80 %) 
 Recurring license revenue agreements 2,272 1,321 951 72 % 
 Total revenues $ 19,525 $ 89,156 $ (69,631) (78 %) 
 
 New license agreements executed 9 16 (7) (44 %) 
 Licensing and enforcement programs
 generating revenues 6 7 (1) (14 %) 
 
 

 For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Paid-up revenue decreased $70.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to a decrease in the number of new license agreements in 2024 and a decrease in average license fees. Recurring revenue, that provides for quarterly sales-based license fees, increased $1.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, from various on-going license arrangements. 
 Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein. 
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 Refer to “Investments in Patent Portfolios” above for information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. 
 Cost of Revenues 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Inventor royalties $ 1,731 $ 1,025 $ 706 69 % 
 Contingent legal fees 2,285 10,998 (8,713) (79 %) 
 Litigation and licensing expenses 4,438 10,771 (6,333) (59 %) 
 Amortization of patents 16,097 11,370 4,727 42 % 
 
 Total $ 24,551 $ 34,164 $ (9,613) (28 %) 

 Refer to detailed change explanations above for the years ended December 31, 2024 and 2023 regarding cost of revenues for our Intellectual Property Operations. 
 The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in certain patent portfolios without future patent partner royalty obligations. The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period. 
 Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly basis or a contingent fee basis. Litigation and licensing expenses also includes third-party patent research, development, patent prosecution and maintenance fees, re-exam and inter partes reviews, consulting and other costs incurred in connection with the licensing and enforcement of patent portfolios. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. 
 
 Industrial Operations 
 Revenues 
 Printronix's net revenues for the periods presented included the following: 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change value) 
 Printers and parts $ 10,021 $ 12,513 $ (2,492) (20 %) 
 Consumable products 17,054 19,091 (2,037) (11 %) 
 Services 3,346 3,494 (148) (4 %) 
 Total $ 30,421 $ 35,098 $ (4,677) (13 %) 

 For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services. Revenue from printers and parts and consumable products for the year ended December 31, 2024 decreased $2.5 million and $2.0 million, respectively compared to the year ended December 31, 2023, due to a decrease in the number of printer units and consumable products sold. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix’s revenue arrangements and related concentrations. Refer to “Industrial Operations Business” above for additional information related to Printronix’s operating activities. 
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 Cost of Revenues 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Cost of revenues - industrial operations $ 14,912 $ 18,009 $ (3,097) (17 %) 

 Refer to detailed change explanations above for the years ended December 31, 2024 and 2023 regarding cost of revenues for our Industrial Operations. The decrease in Printronix's cost of revenues for the year ended December 31, 2024 is due to change in revenue described above. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix’s cost of sales. 
 
 Energy Operations 
 Revenues 
 The following table provides the components of Benchmark’s revenues for the periods indicated, as well as each period’s respective average realized prices and production volumes. This table shows production on a barrel of oil equivalent basis in which natural gas is converted to oil at the ratio of 6 Mcf of natural gas to one barrel of oil. This ratio may not be reflective of the current price ratio between two products. 
 
 Year Ended December 31, 2024 November 13, 2023 to December 31, 2023 $ Change % Change 
 
 (In thousands, except per unit data and percentage change values) 
 Production: 
 Oil (Bbl) 364,464 3,389 361,075 10,654 % 
 Natural gas (Mcf) 4,678,014 144,949 4,533,065 3,127 % 
 Natural gas liquids (Bbl) 535,571 9,949 525,622 5,283 % 
 Total (boe) 1,679,704 158,287 1,521,417 961 % 
 
 Average daily production: 
 Oil (Bbl/d) 999 71 928 1,307 % 
 Natural gas (Mcf/d) 12,816 3,020 9,796 324 % 
 Natural gas liquids (Bbl/d) 1,467 207 1,260 609 % 
 Total (boe/d) 4,601 3,298 1,303 40 % 
 
 Revenues: 
 Oil sales $ 26,468 $ 256 $ 26,212 10,239 % 
 Natural gas sales 9,194 372 8,822 2,372 % 
 Natural gas liquids sales 13,014 220 12,794 5,815 % 
 Other service sales 507 — 507 n/a 
 Total $ 49,183 $ 848 $ 48,335 5,700 % 
 
 Average Price: 
 Oil (per Bbl) $ 72.62 $ 75.54 $ (2.92) (4) % 
 Natural gas (per Mcf) $ 1.97 $ 2.57 $ (0.60) (23) % 
 Natural gas liquids (per Bbl) $ 24.30 $ 22.11 $ 2.19 10 % 

 Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark’s revenue arrangements and related concentrations. 
 Cost of Production 
 Benchmark’s cost of production for the years ended December 31, 2024 and 2023 was $36.3 million and $656,000, respectively. Benchmark’s cost of production figures include the full year ended December 31, 2024 compared to an 
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 approximate two month period ended December 31, 2023 following our acquisition of Benchmark. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark’s cost of production. 
 
 Manufacturing Operations 
 Revenues 
 Deflecto’s revenues from October 18, 2024 through December 31, 2024 included the following (in thousands): 
 
 
 
 
 Air distribution $ 7,782 
 Safety products 7,977 
 Office products 7,424 
 Total $ 23,183 

 Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Deflecto’s revenue arrangements and related concentrations. 
 Cost of Revenues 
 Deflecto’s cost of revenues from October 18, 2024 through December 31, 2024 was $16.9 million. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Deflecto’s cost of revenues. 
 
 Operating Expenses 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Sales and marketing expenses - industrial operations $ 5,681 $ 6,908 $ (1,227) (18 %) 
 Sales and marketing expenses - manufacturing operations 1,536 — 1,536 n/a 
 
 General and administrative costs - intellectual property operations 8,826 7,402 1,424 19 % 
 General and administrative costs - industrial operations 8,024 9,457 (1,433) (15 %) 
 General and administrative costs - energy operations 3,427 264 3,163 1,198 % 
 General and administrative costs - manufacturing operations 4,767 — 4,767 n/a 
 Parent general and administrative expenses 30,319 27,306 3,013 11 % 
 Total general and administrative expenses 55,363 44,429 10,934 25 % 
 Total $ 62,580 $ 51,337 $ 11,243 22 % 

 The operating expenses table above includes the Company’s general and administrative expenses by operation, Printronix’s sales and marketing expenses, and Benchmark’s general and administrative costs. The periods presented above include Benchmark’s general and administrative costs for the full year ended December 31, 2024 compared to an approximate two month period ended December 31, 2023 following our acquisition of Benchmark. The table also includes Deflecto’s sales and marketing expenses and general and administrative costs for the post acquisition period from October 18, 2024 through December 31, 2024. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix’s and Deflecto’s operating expenses. 
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 General and Administrative Expenses 
 A summary of the main drivers of the increases (decreases) in general and administrative expenses is as follows: 
 
 Years Ended
December 31, 
 2024 vs. 2023 
 (In thousands) 
 Personnel costs and board fees $ (285) 
 Variable performance-based compensation costs 1,375 
 Other general and administrative costs 1,065 
 General and administrative costs - industrial operations (1,435) 
 General and administrative costs - energy operations 3,163 
 General and administrative costs - manufacturing operations 4,158 
 Amortization of industrial operations intangible assets 2 
 Amortization of manufacturing operations intangible assets 609 
 Compensation expense for share-based awards 1,498 
 Non-recurring employee severance costs 784 
 Total change in general and administrative expenses $ 10,934 

 General and administrative expenses include employee compensation and related personnel costs, including variable performance based compensation and compensation expense for share-based awards, office and facilities costs, legal and accounting professional fees, public relations, stock administration, business development, fixed asset depreciation, amortization of Industrial Operations and Manufacturing Operations’ intangible assets, state taxes based on gross receipts and other corporate costs. The periods presented above include Energy Operations’ general administrative expenses for the full year ended December 31, 2024 compared to an approximate two month period ended December 31, 2023 following our acquisition of Benchmark. The table above also includes our Manufacturing Operations general and administrative expenses for the post acquisition period from October 18, 2024 through December 31, 2024. 
 The increase in variable performance-based compensation costs was primarily due to fluctuations in performance-based compensation. The increase in other general and administrative costs, which relates to our parent company and our Intellectual Property Operations, were primarily due to increases in accounting professional fees. The increase in compensation expense for share-based awards was primarily due to compensation expense incurred related to PSUs granted in 2023 based on the probability assessment performed as of December 31, 2024. Refer to Note 17 to the consolidated financial statements elsewhere herein for additional information regarding compensation expense. The decrease in general and administrative costs of Industrial Operations is due to Printronix’s initiative to reduce costs and operate more efficiently. Non-recurring employee severance costs fluctuate based on the severance arrangements of terminated employees. In addition, our Energy Operations related general and administrative costs contributed an increase of $3.2 million and Manufacturing Operations related general and administrative costs and amortization of intangible assets contributed $4.2 million and $609,000, respectively, in each case driven by the acquisitions of Revolution and Deflecto. Refer to additional general and administrative change explanations above. 
 
 Other Income/Expense 
 Equity Securities Investments 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Change in fair value of equity securities $ (31,412) $ 31,423 $ (62,835) (200 %) 
 Gain (loss) on sale of equity securities 28,861 (10,930) 39,791 (364 %) 
 Earnings on equity investment in joint venture — 4,167 (4,167) (100 %) 
 
 
 
 Total net realized and unrealized gain $ (2,551) $ 24,660 $ (27,211) (110 %) 

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 Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date. During the first quarter of 2024, Acacia fully exited its position in Arix. Refer to periodic change explanations above. Refer to Notes 2 and 4 to the consolidated financial statements elsewhere herein for additional information regarding our investment in the Life Sciences Portfolio and other equity securities. 
 Our results included an unrealized loss from the change in fair value of our equity securities as compared to an unrealized gain in the comparable prior period, and included realized gain from the sale of our equity securities as compared to a realized loss in the prior year. These changes were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss and realized gain primarily relates to the sale of Arix shares. 
 During 2023, we recorded consolidated earnings on equity investment in joint venture, which is part of the Life Sciences Portfolio, of $4.2 million for two milestones earned during the period. There were no milestones earned during the year ended December 31, 2024. Refer to Note 4 to the consolidated financial statements elsewhere herein for additional information. 
 Non-recurring legacy legal expense 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Non-recurring legacy legal expense $ (14,857) $ — $ (14,857) n/a 

 During the year ended December 31, 2024, we recorded $12.9 million in connection with the AIP Matter in other income (expense) and $2.0 million in other income (expense) in connection with the Slingshot settlement in the consolidated statements of operations. Refer to Note 15 to the consolidated financial statements elsewhere herein for additional information. 
 
 Income Taxes 
 
 Years Ended
December 31, 
 2024 2023 $ Change % Change 
 (In thousands, except percentage change values) 
 Income tax benefit $ 3,449 $ 1,504 $ 1,945 129 % 
 Effective tax rate (9) % (2) % n/a (7) % 

 Our income tax benefit for the year ended December 31, 2024 is primarily attributable to recognizing a benefit for losses incurred year to date offset by foreign withholding taxes. Our income tax benefit for the year ended December 31, 2023 is primarily attributable to the use of tax attributes against 2023 earnings and the release of valuation allowance on the remaining federal net operating losses. 
 Our 2024 effective tax rate in each period differed from the U.S. federal statutory rate primarily due to foreign withholding taxes which we could not recognize as a foreign tax credit and non-deductible items. 
 The Company has recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2024 and 2023 on foreign tax credits and certain state net operating losses. Refer to Notes 2 and 19 to the consolidated financial statements elsewhere herein for additional income tax information. 
 
 Liquidity and Capital Resources 
 General 
 Our foreseeable material cash requirements as of December 31, 2024, are recognized as liabilities or generally are otherwise described in Note 15, “Commitments and Contingencies,” to the consolidated financial statements included elsewhere herein. In particular, our facilities lease obligations, guarantees and certain contingent obligations are further described in Note 15 to the accompanying consolidated financial statements. Historically, we have not entered into off-balance sheet financing arrangements. In addition, the obligations of our Energy Operations Business related to the 
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 Benchmark Revolving Credit Facility and the obligations of our Manufacturing Operations Business related to the Deflecto Term Loan are further described in Note 11 to the accompanying consolidated financial statements. The obligations of our Energy Operations Business related to the asset retirement obligations are further described in Note 10 to the accompanying consolidated financial statements. 
 Additional cash requirements are generally derived from our operating and investing activities including expenditures for working capital (discussed below), human capital, business development, investments in equity securities and intellectual property, and business combinations. At December 31, 2024, we had unrecognized tax benefits, as further described in Note 19 to the consolidated financial statements. 
 Certain of our operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of our operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. 
 At December 31, 2024, our primary sources of liquidity were cash and cash equivalents on hand and cash generated from our operating activities. 
 The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees for the Benchmark Transaction 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 of approximately $82.7 million and a cash contribution of approximately $15.3 million from other investors in Benchmark, including McArron Partners. Refer to Note 11 to the accompanying consolidated financial statements for additional information regarding the Benchmark Revolving Credit Facility. 
 On October 18, 2024 the Company acquired Deflecto for a purchase price of $103.7 million, which was funded with a combination of borrowings under the Deflecto Term Loan and from cash on hand. Refer to Note 11 to the accompanying consolidated financial statements for additional information regarding the Deflecto Term Loan. 
 Furthermore, we intend to grow our company by acquiring additional operating businesses and intellectual property assets. We expect to finance such acquisitions through cash on hand or by engaging in equity or debt financing. 
 Our management believes that our cash and cash equivalent balances and cash flows from operations will be sufficient to meet our cash requirements through at least twelve months from the date of this Annual Report and for the foreseeable future. We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated, including those set forth under Item 1A, “Risk Factors.” Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available to us on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption in recent years, and the volatility and impact of the disruption may continue. At times during this period, the volatility and disruption has reached unprecedented levels. In several cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers, and the commercial paper markets may not be a reliable source of short-term financing for us. If we fail to obtain additional financing when needed, we may not be able to execute our business plans and our business, conducted by our operating subsidiaries, may suffer. 
 Cash, Cash Equivalents and Investments 
 Our consolidated cash, cash equivalents and equity securities totaled $297.0 million at December 31, 2024, compared to $403.2 million at December 31, 2023. 
 The Benchmark Revolving Credit Facility and Deflecto Revolving Credit Facility include covenants potentially limiting our borrowing capacity as determined by a leverage ratio. As of December 31, 2024, we were in compliance with all financial covenants applicable to our debt agreements. Refer to Note 11 to the accompanying consolidated financial statements for additional information. 
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 Cash Flows Summary 
 The net change in cash and cash equivalents for the periods presented was comprised of the following: 
 
 Years Ended December 31, 
 2024 2023 
 (In thousands) 
 Net cash (used in) provided by: 
 Operating activities $ 50,122 $ (22,506) 
 Investing activities (212,963) 16,178 
 Financing activities 97,556 58,632 
 Effect of exchange rates on cash and cash equivalents (926) 1 
 (Decrease) increase in cash and cash equivalents $ (66,211) $ 52,305 

 Cash Flows from Operating Activities 
 Cash flows from operating activities were comprised of the following for the periods presented: 
 
 Years Ended December 31, 
 2024 2023 
 (In thousands) 
 Net (loss) income including noncontrolling interests in subsidiaries $ (34,698) $ 68,930 
 Adjustments to reconcile net loss including noncontrolling interests in 
 subsidiaries to net cash provided by (used in) operating activities: 
 Depreciation, depletion and amortization 33,574 14,728 
 
 Accretion of asset retirement obligation 986 — 
 Change in fair values Series A redeemable convertible preferred stock embedded derivatives and Series B warrants — (6,716) 
 
 Gain on exercise of Series B warrants — (1,525) 
 Compensation expense for share-based awards 4,795 3,297 
 Loss (gain) on foreign currency exchange 370 (53) 
 Change in fair value of equity securities 31,412 (31,423) 
 (Gain) loss on sale of equity securities (28,861) 10,930 
 Unrealized loss (gain) on derivatives 610 (781) 
 Earnings on equity investment in joint venture — (4,167) 
 Deferred income taxes, net of acquired net deferred tax assets (6,051) (3,657) 
 Changes in assets and liabilities: 
 Accounts receivable 69,225 (70,313) 
 Inventories 1,054 3,301 
 Prepaid expenses and other assets (9,329) (820) 
 Accounts payable and accrued expenses (8,124) (4,651) 
 Royalties and contingent legal fees payable (5,338) 751 
 Deferred revenue 497 (337) 
 Net cash provided by (used in) operating activities $ 50,122 $ (22,506) 

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 Cash receipts from ARG’s licensees totaled $91.3 million and $12.2 million for the years ended December 31, 2024 and 2023, respectively. Cash receipts from Printronix's customers totaled $31.0 million and $37.3 million for the years ended December 31, 2024 and 2023, respectively. Cash receipts from Benchmark’s customers totaled $61.7 million for the year ended December 31, 2024 and $1.8 million for the period from November 13, 2023 through December 31, 2023. Cash receipts from Deflecto’s customers totaled $24.3 million for the post acquisition period from October 18, 2024 through December 31, 2024. The fluctuations in cash receipts for the periods presented primarily reflects the corresponding fluctuations in revenues recognized during the same periods, as described above, and the related timing of payments received from licensees and customers. 
 Our reported cash provided by operations for the year ended December 31, 2024 was $50.1 million, compared to cash used in operations of $22.5 million in the prior year. The increase in cash provided by operations was primarily due to net inflows from the total changes in assets and liabilities (refer to Working Capital discussion below), decrease in accounts receivable, decrease in inventories, increase in prepaid expense and other assets, decrease in accounts payable, decrease in royalties and contingent legal fees payable and by the total change in net income (described above) and related noncash adjustments. 
 Working Capital 
 Our working capital related to cash flows from operating activities at December 31, 2024 decreased to $39.1 million, compared to $87.0 million at December 31, 2023, which was comprised of the changes in assets and liabilities presented above. The decrease is primarily due to change in accounts receivable and royalties and contingent legal fees payable, which is related to the timing of the cash receipts related to Intellectual Property Operations Business. The decrease in working capital is also due to the increase in accounts payable and accrued expenses and other current liabilities related to our Energy Operations Business and Manufacturing Operations Business. The decreases were partially offset by increases in inventory and prepaid expenses. 
 Cash Flows from Investing Activities 
 Cash flows from investing activities were comprised of the following for the periods presented: 
 
 Years Ended December 31, 
 2024 2023 
 (In thousands) 
 Acquisition, net of cash acquired (Note 3) $ (87,678) $ (9,409) 
 Cash reinvested — 9,965 
 Patent acquisition $ (14,000) $ (6,000) 
 
 Purchases of equity securities $ (20,472) $ (13,072) 
 Sales of equity securities 57,854 32,106 
 
 
 
 Distributions received from equity investment in joint venture — 2,777 
 
 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 outflows from investing activities for the year ended December 31, 2024 was $213.0 million, as compared to cash inflows of $16.2 million in the prior year, primarily due to the net effect of the acquisition of oil and gas properties in the Revolution Transaction, the acquisition of Deflecto, and net cash inflows from our trading securities portfolio equity securities transactions and sale of Arix shares. Refer to Notes 1 and 3 to the consolidated financial statements elsewhere herein for additional information regarding the Revolution Transaction and Deflecto Transaction. Refer to “Other Income/Expense – Equity Securities Investments ” above and Note 4 to the consolidated financial statements elsewhere herein for additional information related to Life Sciences Portfolio. 
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 Cash Flows from Financing Activities 
 Cash flows from financing activities included the following for the periods presented: 
 
 Years Ended December 31, 
 2024 2023 
 (In thousands) 
 Repurchase of common stock $ (20,288) $ — 
 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) 
 Taxes paid related to net share settlement of share-based awards (1,092) (614) 
 Proceeds from Rights Offering — 79,111 
 
 Proceeds from exercise of Series B warrants — 49,000 
 Proceeds from exercise of stock options 223 235 
 Net cash provided by financing activities $ 97,556 $ 58,632 

 Cash inflows from financing activities for the year ended December 31, 2024 increased to $97.6 million, as compared to cash inflows of $58.6 million in the prior year, primarily due to net cash inflows from borrowings on the Benchmark Revolving Credit Facility and Deflecto Term Loan and contributions from noncontrolling interest related to the Revolution Transaction. The increases were partially offset by decreases due to repurchases of common stock and proceeds in 2023 from a rights offering and exercise of warrants which were non-recurring. Refer to Notes 1, 3 and 11 to the consolidated financial statements elsewhere herein for additional information regarding the Revolution Transaction, Benchmark Revolving Credit Facility and Deflecto Term Loan. Refer to Note 16 to the consolidated financial statements elsewhere herein for additional information regarding the repurchase of common stock. 
 
 Critical Accounting Estimates 
 Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly. 
 We believe that of the significant accounting policies discussed in Note 2 to the consolidated financial statements included elsewhere herein, the following accounting policies require our most difficult, subjective or complex assumptions, judgments and estimates: 
 • revenue recognition; 
 • estimates of crude oil and natural gas reserves and values and standardized measure of discounted future net cash flows 
 • valuation of long-lived assets, goodwill and other intangible assets; 
 • accounting for income taxes. 
 We discuss below the critical accounting assumptions, judgements and estimates associated with these policies. Historically, our critical accounting estimates relative to our significant accounting policies have not differed materially 
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 from actual results. For further information on the related significant accounting policies, refer to Note 2 to the consolidated financial statements. 
 Revenue Recognition 
 As described below, significant management judgment must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue recognized or deferred for any period, if management made different judgments. 
 Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations. For additional information regarding Printronix’s net revenues, refer to Note 2 to the consolidated financial statements. 
 Benchmark recognizes revenue when performance obligations are satisfied at the point control of the product is transferred to the customer. Virtually all of Benchmark’s contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions. As a result, the price of the oil and natural gas fluctuate to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. For additional information regarding Benchmark’s revenues, refer to Note 2 to the consolidated financial statements. The differences between such estimates and actual amounts of oil and natural gas sales are recorded in the following month upon receipt of payment from the customer and any differences have historically been insignificant. 
 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. 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. For additional information regarding Deflecto’s net revenues, refer to Note 2 to the consolidated financial statements. 
 Estimate of Crude Oil and Natural Gas Reserves and Values and Standardized Measure of Discounted Future Net Cash Flows 
 Estimates of crude oil, natural gas and NGL reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors. Estimated crude oil, natural gas and NGL reserves affect the carrying value of oil and gas properties, depreciation, depletion and amortizations, asset retirement obligations, and evaluation of impairment of oil and natural gas properties. Changes in the estimated reserves could have a significant impact on future results of operations. Refer to the Unaudited Supplemental Information on Oil and Natural Gas Properties included elsewhere in this Annual Report for additional discussion of our net proved reserves and Standardized Measure. 
 Valuation of Long-lived Assets, Goodwill and Other Intangible Assets 
 The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of 
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 the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. For additional information regarding ARG’s patent portfolio valuation estimates, refer to Note 2 to the consolidated financial statements. The Company did not record any long-lived asset, patent or other intangible asset impairment charges for the years ended December 31, 2024 and 2023. 
 Goodwill asset impairment reviews include determining the estimated fair values of our reporting units. We evaluate Goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. The key assumptions and inputs used in such determinations may include forecasting revenues and expenses, cash flows and capital expenditures, as well as an appropriate discount rate and other inputs. Significant judgment by management is required in estimating the fair value of a reporting unit and in performing impairment reviews. Due to the inherent subjectivity and uncertainty in forecasting future cash flows and earnings over long periods of time, actual results may vary materially from the forecasts. If the carrying value of a reporting unit exceeds the estimated fair value of the reporting unit, then the excess, limited to the carrying amount of goodwill, will be charged to operations as an impairment loss. The Company’s goodwill balance relates to primarily Printronix, which was acquired on October 7, 2021, Benchmark, which was acquired on November 13, 2023, and Deflecto, which was acquired on October 18, 2024, refer to Notes 1 and 3 to the consolidated financial statements for additional information. The Company did not record any goodwill impairment charges for the years ended December 31, 2024 and 2023. 
 Accounting for Income Taxes 
 As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves the estimating of our actual current tax exposure together with assessing temporary differences resulting from recognition differences between the tax code and U.S. GAAP. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the consolidated statements of operations. 
 Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and our valuation allowance. Due to uncertainties related to our ability to utilize certain deferred tax assets in future periods, we have recorded a partial valuation allowance against our net deferred tax assets as of December 31, 2024 and 2023. These assets primarily consist of foreign tax credits and net operating loss carryforwards. Refer to Note 19 to the consolidated financial statements for additional information. 
 In assessing the need for a valuation allowance, management has considered both the positive and negative evidence available, including but not limited to, estimates of future taxable income and related probabilities, estimates surrounding the character of future income and the timing of realization, consideration of the period over which our deferred tax assets may be recoverable, our recent history of net income and prior history of losses, projected future outcomes, industry and market trends and the nature of existing deferred tax assets. In management’s estimate, any positive indicators, including forecasts of potential future profitability of our businesses, are outweighed by the uncertainties surrounding our estimates and judgments of potential future taxable income, primarily due to uncertainties surrounding the timing of realization of future taxable income and the character of such income in particular future periods (i.e. foreign or domestic). In the event that actual results differ from these estimates or we adjust these estimates should we believe we would be able to realize these deferred tax assets in the future, an adjustment to the valuation allowance would increase income in the period such determination was made. 
 Any changes in the judgments, assumptions and estimates associated with our analysis of the need for a valuation allowance in any future periods could materially impact our financial position and results of operations in the periods in which those determinations are made. 
 
 Recent Accounting Pronouncements 
 The effects of accounting standards adopted in 2024 and the potential effects of accounting standards to be adopted in the future are described in Note 2 to consolidated financial statements included elsewhere herein. 
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ACACIA RESEARCH CORP 10-K

Item 7. Management’s Discussion and Analysis
