ACACIA RESEARCH CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods 77 Table of Contents 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, 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 Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Rule 13a-15(f) under the Exchange Act. I nternal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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, 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. 78 Table of Contents 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; and • 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. 79 Table of Contents 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. 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 or procedures may deteriorate. /s/ GRANT THORNTON LLP Houston, Texas March 17, 2025 ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Acacia Research Group adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 80 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Except as provided below, in accordance with General Instruction G(3) to Form 10-K, certain information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2025 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. Code of Conduct We have adopted a Code of Conduct that applies to all employees, including our principal executive officer and principal financial officer and any persons performing similar functions. Our Code of Conduct is provided on our internet website at www.acaciaresearch.com . ITEM 11. EXECUTIVE COMPENSATION In accordance with General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2025 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS In accordance with General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2025 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE In accordance with General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2025 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES In accordance with General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to our definitive proxy statement for our 2025 annual meeting of stockholders to be filed with the SEC within 120 days after the close of our fiscal year. 81 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this report. (1) Financial Statements. Page Acacia Research Corporation Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) F- 1 Consolidated Balance Sheets as of December 31, 2024 and 2023 F- 3 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 F- 4 Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F- 5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F- 6 Notes to Consolidated Financial Statements F- 7 Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited) F- 57 (2) Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or the Notes thereto. (3) Exhibits. Refer to Item 15(b) below. (b) Exhibits. The following exhibits are either filed herewith or incorporated herein by reference: Exhibit Number Description 2.1^ 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) 2.2^ 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) 3.2 Fifth Amended and Restated Bylaws of Acacia Research Corporation (incorporated by reference to Exhibit 3.1 to Amendment No.1 to the Company’s Current Report on Form 8-K filed on August 2, 2023) 3.3 Certificate of Retirement of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Current Report on Form 8-K filed on August 2, 2023) 4.1# Description of Acacia Research Corporation Capital Stock 10.1* Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020) 10.2* Acacia Research Corporation Amended and Restated Executive Severance Policy (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 26, 2009) 10.3* 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Annex A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 24, 2013) 10.4* Form of Stock Issuance Agreement under the 2013 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K on May 22, 2013) 82 Table of Contents 10.5* 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2016, filed on August 9, 2016) 10.6* Form of Stock Option Agreement under the 2016 Acacia Research Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 10, 2017) 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* 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) 10.9* 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) 10.11* 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. McNulty, Jr. (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) 10.21^ 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 ) 10.23^ 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 21.1# List of Subsidiaries 23.1# 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). 31.1# Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 31.2# Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 32.1† Certification of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 32.2† Certification of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 97.1 Acacia Research Corporation Compensation Recovery Policy (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 83 Table of Contents 99.2# Report of Cawley, Gillespie & Associates, Inc. as of December 31, 2023 101# 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: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders' Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. 104# Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101). ____________________ * The referenced exhibit is a management contract, compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(a)(3) of Form 10-K. ^ This filing excludes certain schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request; provided, however, that the registrant may request confidential treatment for any schedules or exhibits so furnished. # Filed herewith. † The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Acacia Research Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language contained in any filing. (c) Other financial statement schedules. Not applicable. ITEM 16. FORM 10-K SUMMARY Not applicable. 84 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACACIA RESEARCH CORPORATION Dated: March 17, 2025 By: /s/ Martin D. McNulty Jr. Martin D. McNulty Jr. Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory) POWER OF ATTORNEY We, the undersigned directors and officers of Acacia Research Corporation, do hereby constitute and appoint Martin D. McNulty Jr. and Kirsten Hoover, and each of them, as our true and lawful attorneys-in-fact and agents with power of substitution, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorney-in-fact and agent may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments hereto; and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and the capacities and on the dates indicated. Signature Title Date /s/ Martin D. McNulty Jr. Chief Executive Officer and Director March 17, 2025 Martin D. McNulty Jr. (Principal Executive Officer) /s/ Kirsten Hoover Interim Chief Financial Officer March 17, 2025 Kirsten Hoover (Principal Financial and Accounting Officer) /s/ Gavin Molinelli Director March 17, 2025 Gavin Molinelli /s/ Isaac Kohlberg Director March 17, 2025 Isaac Kohlberg /s/ Maureen O’Connell Director March 17, 2025 Maureen O’Connell /s/ Geoffrey Ribar Director March 17, 2025 Geoffrey Ribar /s/ Ajay Sundar Director March 17, 2025 Ajay Sundar /s/ Michelle Felman Director March 17, 2025 Michelle Felman 85 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Acacia Research Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Acacia Research Corporation (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 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 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. F-1 Table of Contents 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. Houston, Texas March 17, 2025 F-2 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 273,880 $ 340,091 Equity securities 23,135 63,068 Equity securities without readily determinable fair value 5,816 5,816 Equity method investments 30,934 30,934 Accounts receivable, net 26,909 80,555 Inventories 27,485 10,921 Prepaid expenses and other current assets 31,987 23,127 Total current assets 420,146 554,512 Property, plant and equipment, net 23,865 2,356 Oil and natural gas properties, net 191,680 25,117 Goodwill 29,339 8,990 Other intangible assets, net 55,429 33,556 Operating lease, right-of-use assets 9,287 1,872 Deferred income tax assets, net 20,233 2,915 Other non-current assets 6,415 4,227 Total assets $ 756,394 $ 633,545 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,074 $ 3,261 Accrued expenses and other current liabilities 20,575 8,405 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 Total current liabilities 47,239 27,636 Asset retirement obligation 31,070 294 Long-term lease liabilities 6,778 1,736 Deferred income tax liabilities, net 2,609 — 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 (Note 15) Stockholders' equity: Preferred stock, par value $ 0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock, par value $ 0.001 per share; 300,000,000 shares authorized; 96,048,999 and 99,895,473 shares issued and outstanding as of December 31, 2024 and 2023, respectively 96 100 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 Accumulated deficit ( 275,786 ) ( 239,729 ) Total Acacia Research Corporation stockholders' equity 514,825 568,266 Noncontrolling interests 37,794 21,343 Total stockholders' equity 552,619 589,609 Total liabilities and stockholders' equity $ 756,394 $ 633,545 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except share and per share data) Years Ended December 31, 2024 2023 Revenues: Intellectual property operations $ 19,525 $ 89,156 Industrial operations 30,421 35,098 Energy operations 49,183 848 Manufacturing operations 23,183 — Total revenues 122,312 125,102 Costs and expenses: Cost of revenues - intellectual property operations 24,551 34,164 Cost of revenues - industrial operations 14,912 18,009 Cost of production - energy operations 36,291 656 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 (loss) income ( 32,926 ) 20,936 Other (expense) income: Equity securities investments: Change in fair value of equity securities ( 31,412 ) 31,423 Gain (loss) on sale of equity securities 28,861 ( 10,930 ) Earnings on equity investment in joint venture — 4,167 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 (expense) income ( 5,221 ) 46,490 (Loss) income before income taxes ( 38,147 ) 67,426 Income tax benefit 3,449 1,504 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 (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 (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 (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. F-4 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (In thousands, except share data) Year Ended December 31, 2024 Series A Redeemable Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Noncontrolling Interests in Operating Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2023 — $ — 99,895,473 $ 100 $ ( 98,258 ) $ 906,153 $ ( 239,729 ) $ — $ 21,343 $ 589,609 Net (loss) income including noncontrolling interests in subsidiaries — — — — — — ( 36,057 ) — 1,359 ( 34,698 ) Other comprehensive loss — — — — — — — ( 1,180 ) — ( 1,180 ) Contributions from noncontrolling interests in subsidiaries — — — — — — — — 15,250 15,250 Change in ownership percentage in subsidiary — — — — — 158 — — ( 158 ) — Stock options exercised — — 61,667 — — 223 — — — 223 Issuance of common stock for vesting of restricted stock units — — 657,515 — — — — — — — Issuance of common stock for unvested restricted stock awards, net of forfeitures — — 20,081 — — — — — — — Shares withheld related to net share settlement of share-based awards — — ( 227,376 ) — — ( 1,092 ) — — — ( 1,092 ) Compensation expense for share-based awards — — — — — 4,795 — — — 4,795 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 Year Ended December 31, 2023 Series A Redeemable Convertible Preferred Stock Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Noncontrolling Interests in Operating Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2022 350,000 $ 19,924 43,484,867 $ 43 $ ( 98,258 ) $ 663,284 $ ( 306,789 ) $ 11,042 $ 269,322 Net income including noncontrolling interests in subsidiaries — — — — — — 67,060 1,870 68,930 Distributions to noncontrolling interests in subsidiaries — — — — — — — ( 1,390 ) ( 1,390 ) Accretion of Series A Redeemable Convertible Preferred Stock to redemption value — 3,230 — — — ( 3,230 ) — — ( 3,230 ) Dividend on Series A Redeemable Convertible Preferred Stock — — — — — ( 1,400 ) — — ( 1,400 ) Conversion of Series A Redeemable Convertible Preferred Stock to common stock ( 350,000 ) ( 23,154 ) 9,616,746 10 — 36,023 — — 36,033 Exercise of Series B warrants — — 31,506,849 32 — 129,462 — — 129,494 Stock options exercised — — 67,500 — — 235 — — 235 Issuance of common stock from the Rights Offering — — 15,068,753 15 — 79,096 — — 79,111 Issuance of common stock for vesting of restricted stock units — — 327,684 — — — — — — Issuance of common stock for unvested restricted stock awards, net of forfeitures — — ( 34,167 ) — — — — — — Shares withheld related to net share settlement of share-based awards — — ( 142,759 ) — — ( 614 ) — — ( 614 ) Compensation expense for share-based awards — — — — — 3,297 — — 3,297 Acquisition of Benchmark — — — — — — — 9,821 9,821 Balance at December 31, 2023 — $ — 99,895,473 $ 100 $ ( 98,258 ) $ 906,153 $ ( 239,729 ) $ 21,343 $ 589,609 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents ACACIA RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities: 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 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 B warrants — ( 2,762 ) 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 Earnings on equity investment in joint venture — ( 4,167 ) 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: 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 ) Cash flows from investing activities: 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 flows from financing activities: 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 Effect of exchange rates on cash and cash equivalents ( 926 ) 1 (Decrease) increase in cash and cash equivalents ( 66,211 ) 52,305 Cash and cash equivalents, beginning 340,091 287,786 Cash and cash equivalents, ending $ 273,880 $ 340,091 Supplemental schedule of cash flow information: Interest paid $ 5,058 $ 2,513 Income taxes paid 1,048 831 Noncash investing and financing activities: Accrued patent costs — 4,000 Distribution to noncontrolling interests in subsidiaries — 1,390 The accompanying notes are an integral part of these consolidated financial statements F-6 Table of Contents ACACIA RESEARCH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is 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 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. 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 Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company’s controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. 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 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 F-7 Table of Contents subsidiaries (collectively, “ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own. Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others. If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth. During the years ended December 31, 2024 and 2023, ARG did not obtain control of any new patent portfolios. 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. 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. 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 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, 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 F-8 Table of Contents 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). 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 The consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations and comprehensive income (loss). Refer to the Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for noncontrolling interests activity. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 4, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. 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 F-9 Table of Contents 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 21 for additional information regarding our four reportable business segments: Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, estimates of variable consideration for revenue, including sales returns, the valuation of equity securities without readily determinable fair value, the determination of excess and obsolete inventories, allowance for credit losses and 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 Intellectual Property Operations ARG’s revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled IP Rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by ARG primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by ARG. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring License Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were generally perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to grant combined items to which the promised IP Rights are inputs and (ii) the Company’s promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant IP Rights in the contract. Since the promised IP Rights are not individually distinct, ARG combined each individual IP Right in the contract into a bundle of IP Rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. ARG’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. ARG’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when F-10 Table of Contents collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 15-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring License Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties from Recurring License Revenue Agreements, ARG includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they are granted to the licensee. In determining the transaction price, ARG adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, ARG does not adjust the promised amount of consideration for the effects of a significant financing component if ARG expects, at contract inception, that the period between when the entity grants promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. License revenues were comprised of the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Paid-up license revenue agreements $ 17,253 $ 87,835 Recurring License Revenue Agreements 2,272 1,321 Total $ 19,525 $ 89,156 Industrial Operations Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations. Printronix enters into contract arrangements that may include various combinations of tangible products (which include printers, consumables and parts) and services, which are generally capable of being distinct and accounted for as separate performance obligations. Printronix evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together F-11 Table of Contents with readily available resources (i.e. capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e. distinct within the context of the contract). For contract arrangements that include multiple performance obligations, Printronix allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and standard software while standalone selling prices for repair and maintenance services are developed with an expected cost-plus margin or residual approach. Regional pricing, marketing strategies and business practices are evaluated to derive the estimated standalone selling price using a cost-plus margin methodology. Printronix recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes consideration of the following: (i) the customer simultaneously receives and consumes the benefits provided as Printronix performs its promises, (ii) the performance creates or enhances an asset that is under control of the customer, (iii) the performance does not create an asset with an alternative use to Printronix, and (iv) Printronix has an enforceable right to payment for its performance completed to date. Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. Service revenue commissions are tied to the revenue recognized during the current year of the related sale. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue. Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer. These agreements commence upon expiration of the standard warranty period. Printronix provides the point-of-customer-contact, dispatches calls and sells the parts used for printer repairs to service providers. Printronix contracts third parties to perform the on-site repair services at the time of sale which covers the period of service at a set amount. The maintenance service agreements are separately priced at a stand-alone value. For those transactions in which maintenance service agreements are purchased concurrently with the purchase of printers, the revenue is deferred based on the selling price, which approximates the stand-alone value for separately sold maintenance services agreements. Revenue from maintenance service contracts are recognized on a straight-line basis over the period of each individual contract, which is consistent with the pattern in which the benefit is consumed by the customer. Printronix’s net revenues were comprised of the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Printers, consumables and parts $ 27,075 $ 31,604 Services 3,346 3,494 Total $ 30,421 $ 35,098 Refer to Note 21 for additional information regarding net sales to customers by geographic region. Deferred revenue in the consolidated balance sheets represents a contract liability under Accounting Standards Codification (“ASC”) 606 and consists of payments and billings in advance of the performance. Printronix recognized approximately $ 1.6 million and $ 1.4 million in revenue that was previously included in the beginning balance of deferred revenue during the years ended December 31, 2024 and 2023, respectively. Printronix’s payment terms vary by the type and location of its customers and the products, solutions or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, Printronix has determined that its contracts do not include a significant financing component. F-12 Table of Contents Printronix’s remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $ 627,000 and $ 567,000 as of December 31, 2024 and 2023, respectively. Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. On average, remaining performance obligations as of December 31, 2024 are expected to be recognized over a period of approximately two years . Energy Operations Benchmark recognizes revenues from sales of oil and natural gas products. 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. As a result, the price of the oil and natural gas fluctuate to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant. Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations. Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed 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 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 and comprehensive income (loss). 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. Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive. Proceeds are generally received by Benchmark within two to three months after the month in which production occurs. Benchmark’s 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. F-13 Table of Contents 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 Natural gas sales 9,194 372 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 F-14 Table of Contents Cost of Revenues and Cost of Production Intellectual Property Operations Cost of revenues include the costs and expenses incurred in connection with ARG’s patent licensing and enforcement activities, including inventor royalties paid to patent owners, patent maintenance and prosecution costs, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third-parties and the amortization of patent-related investment costs. Cost of revenues were comprised of the following for the periods presented: Years Ended December 31, 2024 2023 (In thousands) Inventor royalties $ 1,731 $ 1,025 Contingent legal fees 2,285 10,998 Litigation and licensing expenses 4,438 10,771 Amortization of patents 16,097 11,370 Total $ 24,551 $ 34,164 Inventor Royalties and Contingent Legal Expenses Inventor royalties are expensed in the consolidated statements of operations and comprehensive income (loss) 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 and comprehensive income (loss). 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; however, ARG’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Inventor royalty and contingent legal agreements generally provide for payment by ARG of contractual amounts 30 days subsequent to the quarter end during which related license fee payments are received from licensees by ARG. Litigation and Licensing Expenses Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly basis or a contingent fee basis. Litigation and licensing expenses also includes third-party patent research, development, patent prosecution and maintenance fees, re-exam and inter partes reviews, consulting and other costs incurred in connection with the licensing and enforcement of patent portfolios. Industrial Operations Included in cost of revenues are inventory costs (refer to “Inventories” below), indirect labor, overhead and warranty costs. Printronix offers both assurance-type and service-type product warranties with varying terms depending on the product, region and customer contracts. Warranty periods range from three months to two years . The provision for warranty costs is determined by applying the historical claims experience and estimated repair costs to the outstanding units under warranty. F-15 Table of Contents The following is a summary of the accrued warranty liabilities, which are included in accrued expenses and other current liabilities, and other long-term liabilities in the consolidated balance sheets: Years Ended December 31, 2024 2023 (In thousands) Beginning balance $ 96 $ 131 Estimated future warranty expense 231 65 Warranty claims settled ( 218 ) ( 100 ) Ending balance $ 109 $ 96 Energy Operations 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 Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable. The Company places its cash equivalents primarily in highly rated money market funds, investments in U.S. treasury securities and investment grade marketable securities. Cash and cash equivalents are also invested in deposits and other high quality money market instruments with certain financial institutions and majority of the bank accounts exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents. Intellectual Property Operations 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, 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. Two licensees individually represented approximately 56 % and 44 % of accounts receivable at December 31, 2024. Two licensees individually represented approximately 72 % and 26 % of accounts receivable at December 31, 2023. Industrial Operations No single Printronix customer accounted for more than 10% of revenue for the years ended December 31, 2024 and 2023. Printronix has significant foreign operations, refer to Note 21 for additional information regarding net sales to customers by geographic region. 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. F-16 Table of Contents 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 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. Benchmark’s financial condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and supply and demand for, crude oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond Benchmark’s control. These factors include the level of global and regional supply and demand for the petroleum products, the establishment of and compliance with production quotas by oil exporting countries, weather conditions, the price and availability of alternative fuels, and overall economic conditions, both foreign and domestic. Benchmark cannot predict future oil and natural gas prices with any degree of certainty. Sustained weakness in oil and natural gas prices may adversely affect the financial condition and results of operations and may also reduce the amount of net oil and natural gas reserves Benchmark can produce economically. Similarly, any improvement in oil and natural gas prices can have a favorable impact on the Benchmark’s financial condition, results of operations, and capital resources. 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 The Company considers all highly liquid securities with original maturities of three months or less when purchased to be cash equivalents. For the periods presented, Acacia’s cash equivalents are comprised of investments in U.S. treasury securities and AAA rated money market funds that invest in first-tier only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its agencies. Equity Securities Investments in equity securities are reported at fair value on a recurring basis, with related realized and unrealized gains and losses in the value of such securities recorded in other income or (expense) in the consolidated statements of operations and comprehensive income (loss). Dividend income is included in other income or (expense). Refer to Note 4 for additional information. Equity Securities Without Readily Determinable Fair Value For equity securities that do not have a readily determinable fair value, the Company elected to report them under the measurement alternative. They are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions F-17 Table of Contents 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. Refer to Note 4 for additional information. Equity Method Investments Equity investments in common stock and in-substance common stock without readily determinable fair values in companies over which the Company has the ability to exercise significant influence, are accounted for using the equity method of accounting. Acacia includes its proportionate share of earnings and/or losses of its equity method investees in earnings on equity investment in joint venture in the consolidated statements of operations 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. Investments in preferred stock with substantive liquidation preferences are accounted for at cost, (subject to impairment considerations, as described below, if any), as adjusted for the impact of changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. In-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity’s common stock. An investment in preferred stock with substantive liquidation preferences over common stock, is not substantially similar to common stock, and therefore is not considered in-substance common stock. A liquidation preference is substantive if the investment has a stated liquidation preference that is significant, from a fair value perspective, in relation to the purchase price of the investment. A liquidation preference in an investee that has sufficient subordinated equity from a fair value perspective is substantive because, in the event of liquidation, the investment will not participate in substantially all of the investee’s losses, if any. The initial determination of whether an investment is substantially similar to common stock is made on the initial date of investment if the Company has the ability to exercise significant influence over the operating and financial policies of the investee. That determination is reconsidered if (i) contractual terms of the investment are changed, (ii) there is a significant change in the capital structure of the investee, including the investee’s receipt of additional subordinated financing, or (iii) the Company obtains an additional interest in an investment, resulting in the method of accounting for the cumulative interest being based on the characteristics of the investment at the date at which the Company obtains the additional interest. Investment at Fair Value On an individual investment basis, Acacia may elect to account for investments in companies where the Company has the ability to exercise significant influence over operating and financial policies of the investee, at fair value. If the fair value method is applied to an investment that would otherwise be accounted for under the equity method of accounting, it is applied to all of the financial interests in the same entity that are eligible items (i.e., common stock and warrants). As part of the Company’s equity securities in the Life Sciences Portfolio, the Company has elected to apply the fair value method to one investment, refer to Note 4 for additional information. Impairment of Investments Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and comprehensive income (loss) and a new cost basis in the investment is established. F-18 Table of Contents Accounts Receivable and Allowance for Credit Losses Intellectual Property Operations ARG performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations and comprehensive income (loss) for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. Allowance for credit losses was immaterial as of December 31, 2024 and 2023. Industrial Operations Printronix’s accounts receivable are recorded at the invoiced amount and do not bear interest. Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs. Receivable losses are charged against the allowance when management believes the account has become uncollectible. Subsequent recoveries, if any, are credited to the allowance. As of December 31, 2024 and 2023, Printronix’s combined allowance for credit losses and allowance for sales returns was $ 425,000 and $ 56,000 , respectively. Energy Operations Benchmark’s oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers. Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs. Benchmark’s accounts receivable are recorded at the invoiced amount and do not bear interest. An allowance for credit losses may be established to reflect management’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations 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. 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. F-19 Table of Contents Inventories Industrial Operations Printronix’s inventories, which include material, labor and overhead costs, are valued at the lower of cost or net realizable value. Cost is determined at standard cost adjusted on a first-in, first-out basis for variances. Cost includes shipping and handling fees and other costs, including freight insurance and customs duties for international shipments, which are subsequently expensed to cost of sales. Printronix evaluates and records a provision to reduce the carrying value of inventory for estimated excess and obsolete stocks based upon forecasted demand, planned obsolescence and market conditions. Refer to Note 5 for additional information related to Printronix’s inventories. 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 Benchmark records open derivative instruments at fair value as either commodity derivative assets or liabilities. Benchmark has not designated any derivative instruments as cash-flow hedges, but uses these instruments to reduce exposure to fluctuations in commodity prices related to production. Unrealized gains and losses, at fair value, are included in the consolidated balance sheets as prepaid expenses and other current assets or other non-current assets or liabilities based on the anticipated timing of cash settlements under the related contracts. Realized and unrealized changes in the fair value of our commodity derivative contracts are included in other income or (expense) in the consolidated statements of operations and comprehensive income (loss) for the period as they occur. Refer to Note 13 for additional information. Property, Plant and Equipment Property and equipment are recorded at cost. Major additions and improvements that materially extend useful lives of property and equipment are capitalized. Maintenance and repairs are charged against the results of operations as incurred. When these assets are sold or otherwise disposed of, the asset and related depreciation are relieved, and any gain or loss is included in the consolidated statements of operations and comprehensive income (loss) for the period of sale or disposal. Refer to Note 6 for additional information. Depreciation and amortization is computed on a straight-line basis over the following estimated useful lives of the assets: Machinery and equipment 2 to 10 years Vehicles 3 to 5 years Furniture and fixtures 3 to 7 years Computer hardware and software 3 to 5 years Building and leasehold improvements 2 to 40 years (Lesser of lease term or useful life of improvement) Oil and Natural Gas Properties Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities. Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves. If Benchmark determines that the wells do not find proved F-20 Table of Contents 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. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized. On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained. Capitalized costs of proved oil and natural gas properties are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized 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. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. Refer to Note 7 for additional information. Goodwill Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. We evaluate goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the excess is charged to earnings as an impairment loss. Refer to Note 8 for additional information. Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. The Company’s leases primarily consist of facility leases which are classified as operating leases. Lease expense is recognized on a straight-line basis over the lease term. As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. 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. Impairment of Long-lived Assets ARG’s patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations. ARG’s patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from two to five years . Refer to Note 8 for additional information. Printronix’s intangible assets consist of trade names and trademarks, patents and customer and distributor relationships. These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization. Printronix currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives of seven years . Refer to Note 8 for additional information. F-21 Table of Contents 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. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over their estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Refer to Note 8 for additional information. 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 The Company, from time to time, is involved in certain legal proceedings. Based upon consultation with outside counsel handling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arising from such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its consolidated financial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptions and judgments, reflects the most likely outcome, is recorded as a contingent liability in the consolidated financial statements. In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these types of contingencies are recognized in the period in which the litigation services were provided. Refer to Note 15 for additional information. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivables, current liabilities and revolving credit facility and term loan approximates their fair values due to their short-term maturities or the fact that the interest rate of the revolving credit facility is based upon current market rates. Refer to Note 13 for additional information. F-22 Table of Contents Fair Value Measurements U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. Refer to Note 13 for additional information. Treasury Stock Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any 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. Advertising Printronix expenses advertising costs, including promotional literature, brochures and trade shows, as incurred. 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 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. Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards (“PSUs”) are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Forfeitures are accounted for as they occur. Refer to Note 17 for additional information. Foreign Currency In connection with our Printronix business, the U.S. dollar is the functional currency for all of Printronix’s foreign subsidiaries. Transactions that are recorded in currencies other than the U.S. dollar may result in transaction gains or losses at the end of the reporting period and when trade receipts and payments occur. For these subsidiaries, the assets and liabilities have been re-measured at the end of the period for changes in exchange rates, except inventories and property, plant and equipment, which have been remeasured at historical average rates. The consolidated statements of operations 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). F-23 Table of Contents 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 and comprehensive income (loss). Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Under U.S. GAAP, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Refer to Note 19 for additional information. Income/Loss Per Share For periods in which the Company generates net income, the Company computes basic net income per share attributable to common stockholders using the two-class method required for capital structures that include participating securities. Under the two-class method, securities that participate in non-forfeitable dividends, such as the Company’s outstanding unvested restricted stock and Series A Redeemable Convertible Preferred Stock, are considered participating securities and are allocated a portion of the Company’s earnings. For periods in which the Company generates a net loss, net losses are not allocated to holders of the Company’s participating securities as the security holders are not contractually obligated to share in the Company’s losses. Basic net income/loss per share of common stock is computed by dividing net income/loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income/loss per share of common stock is computed by dividing net income/loss attributable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding for the period using the treasury stock method or the as-converted method, or the two-class method for participating securities, whichever is more dilutive. Potentially dilutive common stock equivalents consist of stock options, restricted stock units, unvested restricted stock, Series A Redeemable Convertible Preferred Stock and Series B Warrants. Refer to Note 20 for additional information. Recent Accounting Pronouncements Recently Adopted 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 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 F-24 Table of Contents 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. 3. ACQUISITION Benchmark 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. Deflecto 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. F-25 Table of Contents The following unaudited pro forma summary presents consolidated information, as if the business combination had occurred on January 1, 2023: Years Ended December 31, 2024 2023 (Unaudited, in thousands) Pro forma: Revenues $ 246,644 $ 313,839 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 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, 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 15,290 Adjustment and indemnity escrow amount 2,415 Total consideration $ 98,994 Identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 11,316 Accounts receivables 15,705 Inventories 17,617 Prepaid expenses and other current assets 4,498 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 Goodwill $ 20,628 F-26 Table of Contents Intangible Assets and Liabilities As of December 31, 2024, management has preliminary assessed the valuations of all acquired assets and liabilities assumed in the acquisition. 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 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. 4. EQUITY SECURITIES Equity securities for the periods presented were comprised of the following: Security Type Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value (In thousands) December 31, 2024: Equity securities - other common stock $ 24,898 $ 118 $ ( 1,881 ) $ 23,135 Total $ 24,898 $ 118 $ ( 1,881 ) $ 23,135 December 31, 2023: Equity securities - Life Sciences Portfolio $ 28,498 $ 28,600 $ ( 20 ) $ 57,078 Equity securities - other common stock 4,925 1,080 ( 15 ) 5,990 Total $ 33,423 $ 29,680 $ ( 35 ) $ 63,068 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 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. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our consolidated balance sheets as of December 31, 2024 and 2023, the total fair value of the remaining Life Sciences Portfolio investment was $ 25.7 million and $ 82.8 million, respectively. As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange. On November 1, 2023, F-27 Table of Contents 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 and comprehensive income (loss): Years Ended December 31, 2024 2023 (In thousands) Change in fair value of equity securities of public companies $ ( 28,581 ) $ 14,383 Gain on sale of equity securities of public companies 28,581 — 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. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0 % of outstanding shares of Viamet. As of December 31, 2024 and 2023, this investment did not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. 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. 5. INVENTORIES Inventories consisted of the following: December 31, 2024 2023 (In thousands) Raw materials $ 8,575 $ 3,591 Subassemblies and work in process 1,481 1,882 Finished goods 17,429 5,448 Total inventories $ 27,485 $ 10,921 F-28 Table of Contents 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: December 31, 2024 2023 (In thousands) Machinery and equipment $ 14,687 $ 3,035 Vehicles 404 — Furniture and fixtures 528 395 Computer hardware and software 1,218 312 Land 2,876 — Building and leasehold improvements 9,078 1,018 28,791 4,760 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 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. 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. 7. OIL AND NATURAL GAS PROPERTIES, NET Benchmark’s oil and natural gas properties consisted of the following: December 31, 2024 2023 (In thousands) 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 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. F-29 Table of Contents 8. GOODWILL AND OTHER INTANGIBLE ASSETS, NET Changes in the carrying amount of goodwill consisted of the following: December 31, 2024 Industrial Operations Energy Operations Manufacturing Operations Total (In thousands) Beginning balance $ 7,541 $ 1,449 $ — $ 8,990 Acquisition of business — — 20,628 20,628 Effect of foreign currency translation — — ( 279 ) ( 279 ) Impairment losses — — — — Ending balance $ 7,541 $ 1,449 $ 20,349 $ 29,339 December 31, 2023 Industrial Operations Energy Operations Total (In thousands) Beginning balance $ 7,541 $ — $ 7,541 Acquisition of business — 1,449 1,449 Impairment losses — — — Ending balance $ 7,541 $ 1,449 $ 8,990 The ending balance of goodwill includes no accumulated impairment losses to date. 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: December 31, 2024 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Patents: Intellectual property operations 6 years $ 351,403 $ ( 332,211 ) $ 19,192 Industrial operations 7 years 3,400 ( 1,568 ) 1,832 Total patents 354,803 ( 333,779 ) 21,024 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 F-30 Table of Contents December 31, 2023 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Patents: Intellectual property operations 6 years $ 341,403 $ ( 316,114 ) $ 25,289 Industrial operations 7 years 3,400 ( 1,083 ) 2,317 Total patents 344,803 ( 317,197 ) 27,606 Customer relationships - industrial operations 7 years 5,300 ( 1,689 ) 3,611 Trade name and trademarks - industrial operations 7 years 3,430 ( 1,091 ) 2,339 Total $ 353,533 $ ( 319,977 ) $ 33,556 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 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 2026 5,796 2027 3,356 2028 2,957 2029 1,623 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, which was fully 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 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). F-31 Table of Contents 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: December 31, 2024 2023 (In thousands) Accrued consulting and other professional fees $ 2,602 $ 1,595 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 Service contract costs, current 277 169 Short-term lease liability 3,563 1,248 Accrued patent cost (see Note 7) — 4,000 Other accrued liabilities 2,216 638 Total $ 20,575 $ 8,405 10. 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 Less: Current portion ( 1,546 ) — Asset retirement obligation, long-term $ 31,070 $ 294 11. 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 F-32 Table of Contents 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 F-33 Table of Contents 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. 12. 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 (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 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. As applicable, the following discussion of Starboard’s investments in the Company reflect the transactions effected pursuant to the Recapitalization Agreement. Series A Redeemable Convertible Preferred Stock Per its terms, the Series A Redeemable Convertible Preferred Stock could be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $ 3.65 F-34 Table of Contents (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. There were no accrued and unpaid dividends as of December 31, 2024 and 2023. Under the Recapitalization Agreement, the Company and Starboard agreed to take certain actions related to the Series A Preferred Stock in connection with the Recapitalization, including submitting a proposal for stockholder approval to remove the “4.89% blocker” provision contained in the Company’s Amended and Restated Certificate of Designations (the “Amendment to the Amended and Restated Certificate of Designations”). The Company’s stockholders approved the Amendment to the Amended and Restated Certificate of Designations at the Company’s annual meeting of stockholders held on May 16, 2023 which became effective on June 30, 2023. Subsequently, and in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, on July 13, 2023, Starboard converted an aggregate amount of 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of common stock, which included 27,704 shares of common stock issued in respect of accrued and unpaid dividends. 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. 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, 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, 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 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. On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for the related 68,493,151 warrants. In March 2023, the Unadjusted Series B Warrants were cancelled immediately following the completion of the Rights Offering (as described below). 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 F-35 Table of Contents 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, 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, 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. Rights Offering and Concurrent Private Rights Offering On February 14, 2023, pursuant to the requirements of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the Company commenced a rights offering (the “Rights Offering”). Under the terms of the Rights Offering, the Company distributed non-transferable subscription rights to record holders (“Eligible Securityholders”) of the Company’s common stock held as of 5 p.m. Eastern time on February 13, 2023, the record date for the Rights Offering. The subscription period for the Rights Offering terminated at 5 p.m. Eastern time on March 1, 2023 (the “Expiration Time”). Pursuant to the Rights Offering, Eligible Securityholders received one non-transferable subscription right (a “Subscription Right”) for every four shares of common stock owned by such Eligible Securityholders. Each Subscription 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. The Company recognized the proceeds received from the sale of the shares in equity when the sale occurred. The Company received aggregate gross proceeds of approximately $ 361,000 from the Rights Offering and aggregate gross proceeds of approximately $ 78.8 million from the Concurrent Private Rights Offering and issued an aggregate of 15,068,753 shares of common stock. The Rights Offering was made pursuant to a prospectus supplement to the Company’s shelf registration statement on Form S-3 (No. 333-249984), filed with the SEC on February 14, 2023. Governance Under the Recapitalization Agreement, the parties agreed that, 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. Additionally, the Company appointed Gavin Molinelli as a member and as Chair of the Board. The Company and Starboard also agreed that until May 12, 2026, the number of directors serving on the Board will not exceed 10 members. F-36 Table of Contents Other Provisions of the Recapitalization Agreement On February 14, 2023, the Company entered into an amended and restated Registration Rights Agreement with Starboard as contemplated by the Recapitalization Agreement. Pursuant to the amended Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale of the shares of common stock, issuable or issued to Starboard pursuant to or in accordance with Section 1.1 of the Recapitalization Agreement, including the shares issued to Starboard in the Concurrent Private Rights Offering, within 90 days after a written request made prior to the first anniversary of the Closing Date (as defined in the Registration Rights Agreement). The Registration Rights Agreement also provides Starboard with additional rights to require that the Company file a registration statement in other circumstances. The Registration Rights Agreement includes other customary terms. The Recapitalization Agreement includes a “fair price” provision requiring, in addition to any other stockholder vote required by the Company’s Certificate of Incorporation or Delaware law, the affirmative vote of the holders of a majority of the outstanding voting stock held by stockholders of the Company other than Starboard and its affiliates, by or with whom or on whose behalf, directly or indirectly, a business combination is proposed, in order to approve such a business combination; provided, that the additional majority voting requirement would not be applicable if either (x) the business combination is approved by the Board by the affirmative vote of at least a majority of the directors who are unaffiliated with Starboard or (y) (i) the consideration to be received by stockholders other than Starboard and its affiliates meets certain minimum price conditions, and (ii) the consideration to be received by stockholders other than Starboard and its affiliates is of the same form and kind as the consideration paid by Starboard and its affiliates. The Recapitalization Agreement also provided that, effective as of the later of the closing of the Recapitalization Transactions and the date on which no Senior Secured Notes remain outstanding, (i) the Securities Purchase Agreement and (ii) that certain Governance Agreement, dated as of November 18, 2019, as amended and restated on January 7, 2020 (the “Governance Agreement”), would be automatically terminated and of no further force and effect without any further action by any party thereto. As a result of the closing of the Recapitalization Transactions, the Securities Purchase Agreement and the Governance Agreement have been terminated and are of no further force and effect. Services Agreement On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services. Starboard has agreed to provide the services on an expense reimbursement basis and no separate fee will be charged by Starboard for the services. During the years ended December 31, 2024 and 2023 the Company reimbursed Starboard $ 476,000 and $ 216,000 , respectively, under the Services Agreement. 13. FAIR VALUE MEASUREMENTS U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i) Level 1 - Observable Inputs : Quoted prices in active markets for identical investments; (ii) Level 2 - Pricing Models with Significant Observable Inputs : Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and (iii) Level 3 - Unobservable Inputs : Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs, including the entity’s own assumptions in determining the fair value of derivatives and certain investments. F-37 Table of Contents Whenever possible, the Company is required to use observable market inputs (Level 1) when measuring fair value. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. The Company held the following types of financial instruments at fair value on a recurring basis as of December 31, 2024 and 2023: Equity Securities. Equity securities includes investments in public company common stock and are recorded at fair value based on the quoted market price of each share on the valuation date. The fair value of these securities are within Level 1 of the valuation hierarchy. Equity investments that do not have regular market pricing, but for which fair value can be determined based on other data values or market prices, are recorded at fair value within Level 2 of the valuation hierarchy. T he Company has elected to apply the fair value method to one equity securities investment that would otherwise be accounted for under the equity method of accounting. 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 : Commodity derivative instruments are recorded at fair value using industry standard models using assumptions and inputs which are substantially observable in active markets throughout the full term of the instruments. These include market price curves, quoted market prices in active markets, credit risk adjustments, implied market volatility and discount factors. The fair value of these instruments are within Level 2 of the valuation hierarchy. During 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 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). The fair value of the remaining Series B Warrants as of July 13, 2023 was estimated based on the following significant assumptions: volatility of 120 percent, risk-free rate of 5.24 percent, term of 0.04 years and a dividend yield of 0 percent. On July 13, 2023, further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the remaining Series B Warrants were exercised, which also resulted in a fair value of zero as of December 31, 2023 (refer to Note 12 for additional information). 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. Embedded derivative liabilities. Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the host instrument. During the quarter ended December 31, 2022 in connection with the Recapitalization Agreement, the Company changed its methodology from a binomial lattice framework to an as-converted value (Level 3), based on an expected Series A Redeemable Convertible Preferred Stock conversion date on or prior to July 14, 2023 (refer to Note 12 for additional information). The volatility of the Company’s common stock is estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage. Prior to December 31, 2022, the selected volatility, as described herein, represented a haircut from the Company’s actual realized historical volatility. A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants and convertible debt is lower than historical actual realized volatility. The risk-free interest rate was based on the yield on the U.S. Treasury with a remaining term equal to the expected term of the conversion and early redemption options. The fair value of the embedded derivative as of July 13, 2023 was estimated based on the following significant assumptions: coupon rate of 8.00 percent, conversion ratio of 27.40 , conversion date of July 14, 2023 and a discount rate of 14.80 percent. On July 13, 2023, in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, Starboard F-38 Table of Contents 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: Level 1 Level 2 Level 3 Total (In thousands) Assets December 31, 2024: Equity securities $ 23,135 $ — $ — $ 23,135 Commodity derivative instruments — 2,114 — 2,114 Total $ 23,135 $ 2,114 $ — $ 25,249 December 31, 2023: Equity securities $ 63,068 $ — $ — $ 63,068 Commodity derivative instruments — 2,723 — 2,723 Total $ 63,068 $ 2,723 $ — $ 65,791 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 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) Balance at December 31, 2022 $ 16,835 $ 84,780 $ 101,615 Exercise of warrants — ( 82,018 ) ( 82,018 ) Conversion of redeemable convertible preferred stock ( 12,881 ) — ( 12,881 ) Remeasurement to fair value ( 3,954 ) ( 2,762 ) ( 6,716 ) Balance at December 31, 2023 — — — In accordance with U.S. GAAP, from time to time, the Company measures certain assets 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 F-39 Table of Contents 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. 14. RELATED PARTY TRANSACTIONS 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 $ 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. Refer to Note 12 for information about the Recapitalization Agreement and Services Agreement with Starboard. 15. COMMITMENTS AND CONTINGENCIES Facility Leases 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 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. On January 7, 2020, Acacia entered into a building lease agreement with Sage Realty Corporation. Pursuant to the lease, as amended, we have leased approximately 4,600 square feet of office space for our corporate headquarters in New York, New York. The lease commenced on February 1, 2020. The term of the initial lease was 24 months from the commencement date, 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 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 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. In connection with such early termination election, the Company paid the landlord a termination payment as set forth in the lease. During September 2023, we entered into a fourth amendment of the New York office lease, which provides for (among other things): (a) the surrender a portion of the premises (Unit 602) effective as of March 31, 2024; (b) the rescission of the early termination election as it relates to the remaining portion of the premises (Unit 601); (c) an extension of the lease term with respect to Unit 601 for 40 months commencing on April 1, 2024 and expiring on July 31, 2027; and (d) annual rent increases, with no right to early terminate or extend the lease. 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. The term F-40 Table of Contents 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. The table below presents aggregate future minimum lease payments due under the Company’s leases discussed above, reconciled to long-term lease liabilities and short-term lease liabilities (included in accrued expenses and other current liabilities) included in the consolidated balance sheet as of December 31, 2024 (in thousands): Years Ending December 31, 2025 $ 4,120 2026 3,490 2027 1,703 2028 632 2029 598 Thereafter 1,196 Total minimum payments 11,739 Less: short-term lease liabilities ( 3,563 ) Less: present value discount ( 1,398 ) Long-term lease liabilities $ 6,778 Inventor Royalties and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. F-41 Table of Contents Patent Enforcement and Legal Proceedings The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows. Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights. In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. 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”). Slingshot alleges that the Acacia Entities and Monarch misappropriated its confidential and proprietary information, purportedly furnished to the Acacia Entities and Monarch by Ms. Wolanyk, in acquiring a patent portfolio from Transpacific after Slingshot’s exclusive option to purchase the same patent portfolio from Transpacific had already expired. Slingshot seeks monetary damages, as well as equitable and injunctive relief related to its alleged right to own the portfolio. On March 15, 2021, the Court issued orders granting Monarch’s motion to dismiss for lack of personal jurisdiction and Ms. Wolanyk’s motion to dismiss for lack of subject matter jurisdiction. The remaining parties served written discovery requests and responses, exchanged their respective document productions, and completed depositions as of October 27, 2022. On November 18, 2022, the Acacia Entities and Transpacific filed motions for summary judgment on Slingshot’s claims. Slingshot filed its opposition to the summary judgment motions on December 23, 2022, and the Acacia Entities and Transpacific filed their replies on January 10, 2023. The Chancery Court 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. On July 26, 2023, the Court held a telephonic hearing during which it delivered its ruling on the motions for summary judgment. The Court granted Transpacific’s motion and deferred ruling on the Acacia Entities’ motion pending further briefing as to whether the Court has subject matter jurisdiction. On September 14, 2023, the Acacia Entities and Slingshot filed a joint submission with the Chancery Court agreeing to proceed in Delaware Superior Court based on the Chancery Court’s apparent lack of subject matter jurisdiction over the remaining claims, and on September 21, 2023, the Chancery Court issued an order transferring the case to Delaware Superior Court. The case was subsequently assigned to Judge Eric M. Davis in the Complex Commercial Litigation Division of the Superior Court. On January 8, 2024, Judge Davis held an initial status conference, during which he instructed the Acacia Entities and Slingshot to refile their respective summary judgment briefs in Superior Court for the Court’s consideration. The 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 Acacia and certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases. Acacia indemnifies its F-42 Table of Contents directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, Acacia has a directors and officers insurance policy that may reduce its exposure in certain circumstances and may enable it to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make. To date, Acacia has made no material payments related to these guarantees and indemnities. Acacia estimates the fair value of its indemnification obligations to be immaterial based on this history and therefore, have not recorded any material liability for these guarantees and indemnities in the consolidated balance sheets. Additionally, no events or transactions have occurred that would result in a material liability as of December 31, 2024. Printronix posted collateral in the form of a surety bond or other similar instruments, which are issued by independent insurance carriers (the “Surety”), to cover the risk of loss related to certain customs and employment activities. If any of the entities that hold such bonds should require payment from the Surety, Printronix would be obligated to indemnify and reimburse the Surety for all costs incurred. As of December 31, 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 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. 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. 16. STOCKHOLDERS’ EQUITY Repurchases of Common Stock 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. 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 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. F-43 Table of Contents Stock repurchases during the year ended December 31, 2024, all of which were purchased pursuant to the Repurchase Program, were as follows: Total Number of Shares Purchased Average Price paid per 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 The Company has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. The purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income. 17. EQUITY-BASED INCENTIVE PLANS Stock-Based Incentive Plans 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 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, 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 F-44 Table of Contents 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 (a 10% shareholder)). 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 . Under the discretionary restricted stock unit program, Acacia’s compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service. During June 2023, Acacia’s compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company’s executive leadership team, for driving Acacia’s performance over the longer-term and to align employees and shareholders. Under the long-term incentive program, Acacia’s compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company’s Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel. The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024). The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan. The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. 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. 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 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. F-45 Table of Contents The following table summarizes stock option activity for the Plans: Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (In thousands) Outstanding at December 31, 2023 1,108,187 $ 4.18 $ 187 7.9 years Granted — $ — $ — Exercised ( 61,667 ) $ 3.59 $ 115 Forfeited/Expired ( 45,000 ) $ 5.40 $ — Outstanding at December 31, 2024 1,001,520 $ 4.16 $ 437 7.3 years Exercisable at December 31, 2024 551,064 $ 4.39 $ 225 7.2 years Vested and expected to vest at December 31, 2024 1,001,520 $ 4.16 $ 437 7.3 years Unrecognized stock-based compensation expense at December 31, 2024 (in thousands) $ 290 Weighted average remaining vesting period at December 31, 2024 1.1 years 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: RSAs RSUs PSUs Shares Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Nonvested at December 31, 2023 193,665 $ 3.87 1,408,491 $ 4.31 1,981,464 $ 4.61 Granted 36,748 $ 4.86 143,978 $ 5.21 — $ — Vested ( 146,078 ) $ 4.27 ( 657,515 ) $ 4.40 — $ — Forfeited ( 16,667 ) $ 3.60 ( 61,759 ) $ 4.10 — $ — Nonvested at December 31, 2024 67,668 $ 3.63 833,195 $ 4.42 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 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. 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 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 expensed $ 1.4 million related to the PSUs based on the probability assessment performed as of December 31, 2024. F-46 Table of Contents Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following: Years Ended December 31, 2024 2023 (In thousands) Options $ 481 $ 401 RSAs 466 618 RSUs 2,457 2,278 PSUs 1,391 — Total compensation expense for share-based awards $ 4,795 $ 3,297 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. 18. RETIREMENT SAVINGS PLANS AND SEVERANCE Retirement Savings Plans Acacia has an employee savings and retirement plan under Section 401(k) of the Internal Revenue Code. The plan is a defined contribution plan in which eligible employees may elect to have a percentage of their compensation contributed to the plan, subject to certain guidelines issued by the Internal Revenue Service. During the years ended December 31, 2024 and 2023, Acacia’s total contribution to the plan was $ 170,000 and $ 155,000 , respectively. In the United States of America, Printronix has a 401(k) Savings and Investment Plan, for all eligible U.S. employees, which is designed to be tax deferred in accordance with the provisions of Section 401(k). Printronix matches employee contributions dollar-for-dollar up to the first 1 percent of compensation, and then an additional $ 0.50 to-the-dollar on the next 1 percent of employee compensation. Printronix’s contributions have graded-vesting annually and become fully vested to the employee after four full years of employment. During the years ended December 31, 2024 and 2023, Printronix’s total contribution to the plan was $ 51,000 and $ 61,000 , respectively. Printronix has statutory obligations to contribute to overseas employee retirement funds or the local social security pension funds in China, Malaysia, Singapore, France, Netherlands and the United Kingdom. During the years ended December 31, 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 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. F-47 Table of Contents 19. INCOME TAXES The components of (loss) income before income taxes were as follows: Years Ended December 31, 2024 2023 (In thousands) Domestic $ ( 40,372 ) $ 70,912 Foreign 2,225 ( 3,486 ) Total $ ( 38,147 ) $ 67,426 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, 2024 2023 Statutory federal tax rate 21 % 21 % Foreign rate differential ( 5 ) % 3 % Noncontrolling interests in operating subsidiaries 1 % ( 1 ) % Nondeductible permanent items ( 1 ) % ( 1 ) % Expired tax attributes ( 15 ) % 6 % Foreign tax credits — % ( 3 ) % Derivative fair value adjustment — % ( 3 ) % Transaction Costs ( 2 ) % — % Valuation allowance 13 % ( 27 ) % Other ( 3 ) % 1 % Effective income tax rate 9 % ( 2 ) % Acacia’s income tax benefit (expense) for the periods presented consisted of the following: Years Ended December 31, 2024 2023 (In thousands) Current: Federal $ ( 191 ) $ ( 215 ) State ( 111 ) 37 Foreign ( 2,812 ) ( 1,975 ) Total current ( 3,114 ) ( 2,153 ) Deferred: Federal 1,239 ( 14,041 ) State 107 ( 925 ) Foreign 376 593 Total deferred 1,722 ( 14,373 ) Change in valuation allowance 4,841 18,030 Income tax benefit $ 3,449 $ 1,504 F-48 Table of Contents The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following: December 31, 2024 2023 (In thousands) Deferred tax assets: Net operating loss and capital loss carryforwards and credits $ 50,453 $ 34,595 Unrealized loss on investments held at fair value 1,025 146 Compensation expense for share-based awards 693 1,095 Accrued expenses 3,677 1,453 Lease liability 2,010 689 State taxes 17 37 Total deferred tax assets 57,875 38,015 Valuation allowance ( 26,250 ) ( 30,219 ) Total deferred tax assets, net of valuation allowance 31,625 7,796 Deferred tax liabilities: ROU Asset ( 1,956 ) ( 680 ) Fixed assets and intangibles ( 8,062 ) ( 1,841 ) Basis of investment in affiliates ( 3,983 ) ( 2,360 ) Other — — Total deferred tax liabilities ( 14,001 ) ( 4,881 ) 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. This evaluation utilizes the framework contained in ASC 740, “Income Taxes,” wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of the Company’s deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more-likely-than-not that the asset will not be realized. In assessing the realization of the Company’s deferred tax assets, management considers all available evidence, both positive and negative. Based upon available evidence, it was concluded on a more-likely-than-not basis that as of December 31, 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, 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. federal, foreign and state income tax net operating loss carryforwards (“NOLs”) totaling approximately $ 104.0 million, $ 4.9 million and $ 56.8 million, respectively. Pursuant to the Tax Cuts and Jobs Act (“TCJA”) enacted by the U.S. federal government in December 2017, for federal income tax purposes, NOL carryovers generated for our tax years beginning January 1, 2018 can be carried forward indefinitely but will be subject to a taxable income limitation. $ 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 F-49 Table of Contents 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 U.S. corporate income tax returns, or as a credit against U.S. income tax liabilities, subject to certain limitations. The following changes occurred in the amount of unrecognized tax benefits: Years Ended December 31, 2024 2023 (In thousands) Beginning balance $ 757 $ 760 Additions for current year tax positions — — Additions included in purchase accounting for prior year positions 178 — Reductions for prior year tax positions — ( 3 ) Ending Balance (excluding interest and penalties) 935 757 Interest and penalties — — Total $ 935 $ 757 At December 31, 2024 and 2023, the Company had total unrecognized tax benefits of approximately $ 935,000 and $ 757,000 , respectively. At December 31, 2024 and 2023, $ 935,000 and $ 757,000 , respectively, of unrecognized tax benefits are recorded in other long-term liabilities. At December 31, 2024, if recognized, $ 935,000 of tax benefits would impact the Company’s effective tax rate. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months. Acacia is subject to taxation in the U.S. and in various state/foreign jurisdictions and incurs foreign tax withholdings on revenue agreements with licensees in certain foreign jurisdictions. The Company’s 2020 through 2024 tax years generally remain subject to examination by federal, state and foreign tax authorities. 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. The FASB Staff Q&A, Topic 740 No. 5. Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. F-50 Table of Contents 20. INCOME/LOSS PER SHARE The following table presents the calculation of basic and diluted income/loss per share of common stock: Years Ended December 31, 2024 2023 (In thousands, except share and per share data) Numerator: Net (loss) income attributable to Acacia Research Corporation $ ( 36,057 ) $ 67,060 Dividend on Series A redeemable convertible preferred stock — ( 1,400 ) Accretion of Series A redeemable convertible preferred stock — ( 3,230 ) Return on settlement of Series A redeemable convertible preferred stock — ( 3,377 ) Undistributed earnings allocated to participating securities — ( 3,913 ) Net (loss) income attributable to common stockholders - Basic ( 36,057 ) 55,140 Less: Change in fair value and gain on exercise of dilutive Series B warrants — ( 4,287 ) Add: Interest expense associated with Starboard Notes, net of tax — 1,518 Add: Undistributed earnings allocated to participating securities — 3,913 Reallocation of undistributed earnings to participating securities — ( 3,076 ) Net (loss) income attributable to common stockholders - Diluted $ ( 36,057 ) $ 53,208 Denominator: Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Basic 99,213,835 75,296,025 Potentially dilutive common shares: Employee stock options and restricted stock units — 163,738 Series B Warrants — 16,952,055 Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Diluted 99,213,835 92,411,818 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 computation of diluted net income/loss per share: Equity-based incentive awards 3,883,847 2,098,747 Series B warrants — — Total 3,883,847 2,098,747 21. SEGMENT REPORTING 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 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. Specific asset information is not included in management’s review at this time. F-51 Table of Contents 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. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program. When applicable, we share net licensing revenue with our patent partners as that program matures, on a prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own. The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users. The Company’s Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in 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 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. F-52 Table of Contents 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 Manufacturing Operations Total (In thousands) Revenues: License fees $ 19,525 $ — $ — $ — $ 19,525 Revenues - industrial operations — 30,421 — — 30,421 Oil sales — — 26,468 — 26,468 Natural gas sales — — 9,194 — 9,194 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: 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 (loss) profit ( 5,026 ) 15,509 12,892 6,279 29,654 Other operating expenses: 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 (loss) income $ ( 13,852 ) $ 1,804 $ 9,465 $ ( 24 ) ( 2,607 ) Parent general and administrative expenses 30,319 Operating loss ( 32,926 ) Total other expense ( 5,221 ) Loss before income taxes $ ( 38,147 ) F-53 Table of Contents 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 Energy Operations Total (In thousands) Revenues: License fees $ 89,156 $ — $ — $ 89,156 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: 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 Segment gross profit 54,992 17,089 192 72,273 Other operating expenses: General and administrative expenses 7,402 16,365 264 24,031 Total other operating expenses 7,402 16,365 264 24,031 Segment operating income (loss) $ 47,590 $ 724 $ ( 72 ) 48,242 Parent general and administrative expenses 27,306 Operating income 20,936 Total other income 46,490 Income before income taxes $ 67,426 The Company’s reportable asset segment information is as follows: December 31, 2024 2023 (In thousands) Total parent assets 150,033 318,727 Segment total assets: Intellectual property operations 213,854 234,254 Industrial operations 48,438 47,854 Energy operations 209,355 32,710 Manufacturing operations 134,714 — Total assets $ 756,394 $ 633,545 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 and Deflecto subsidiary, has identified three global regions for marketing its products and services: F-54 Table of Contents Americas, Europe, Middle East and Africa, and Asia-Pacific. Assets are summarized based on the location of held assets. Benchmark’s sales are only attributed to the United States of America. Year Ended December 31, 2024 Intellectual Property Operations Industrial Operations Energy Operations Manufacturing Operations Total (In thousands) Revenues by geographic area: United States $ 7,957 $ 12,855 $ 49,183 $ 13,400 $ 83,395 Canada and Latin America 6 857 — 3,569 4,432 Total Americas 7,963 13,712 49,183 16,969 87,827 Europe, Middle East and Africa — 7,974 — 1,575 9,549 China 4,650 1,482 — 3,923 10,055 India — 2,700 — 26 2,726 Asia-Pacific, excluding China and India 6,912 4,553 — 690 12,155 Total Asia-Pacific 11,562 8,735 — 4,639 24,936 Total revenues $ 19,525 $ 30,421 $ 49,183 $ 23,183 $ 122,312 Year Ended December 31, 2023 Intellectual Property Operations Industrial Operations Energy Operations Total (In thousands) Revenues by geographic area: United States $ 80,407 $ 14,128 $ 848 $ 95,383 Canada and Latin America 514 1,100 — 1,614 Total Americas 80,921 15,228 848 96,997 Europe, Middle East and Africa — 8,935 — 8,935 China 8,200 3,512 — 11,712 India — 2,849 — 2,849 Asia-Pacific, excluding China and India 35 4,574 — 4,609 Total Asia-Pacific 8,235 10,935 — 19,170 Total revenues $ 89,156 $ 35,098 $ 848 $ 125,102 December 31, 2024 Intellectual Property Operations Industrial Operations Energy Operations Manufacturing Operations Total (In thousands) Long-lived tangible assets by geographic area: United States $ 126 $ 220 $ 192,435 $ 7,685 $ 200,466 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 F-55 Table of Contents December 31, 2023 Intellectual Property Operations Industrial Operations Energy Operations Total (In thousands) Long-lived tangible assets by geographic area: United States $ 201 $ 92 $ 25,117 $ 25,410 Asia-Pacific — 2,063 — 2,063 Total $ 201 $ 2,155 $ 25,117 $ 27,473 22. SUBSEQUENT EVENTS 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. F-56 Table of Contents 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. F-57 Table of Contents 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) $ 4,848 Properties being amortized (1) 206,094 Total capitalized costs $ 210,942 Less accumulated depletion, amortization and impairment (15,466) Net capitalized costs $ 195,476 _________________________ (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 F-58 Table of Contents Proved Reserves The following table presents Benchmark’s estimated proved reserves by product. Crude Oil (MBbl) Natural Gas (MMcf) NGLs (MBbl) Total (MBoe) 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) : 2023 — — — — 2024 — — — — _________________________ (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. F-59 Table of Contents 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 F-60