该截至2024年9月30日的第10-Q季度报告（下称“本季度报告”）包含根据联邦证券法的含义属于前瞻性声明。在本季度报告中的陈述如果不是历史事实的重述，则构成前瞻性声明，据定义，这些声明涉及可能导致实际结果与此类声明所陈述或暗示的结果有重大不同的风险和不确定性。这些前瞻性声明旨在符合1995年《私人证券诉讼改革法》建立的免责港湾的条件。在整个本季度报告中，我们尝试通过使用“预期”，“相信”，“持续”，“可能”，“估计”，“期望”，“预测”，“目标”，“打算”，“可能”，“计划”，“潜力”，“预测”，“项目”，“寻求”，“应该”，“将会”或其他形式的这些词语或类似词语或表达方式，或其否定形式来识别前瞻性声明，虽然并非所有前瞻性声明均包含这些条件。前瞻性声明包括关于我们业务、运营、发展、投资和融资策略，我们与Starboard Value LP的关系，收购和开发活动，我们运营业务的财务结果，其他相关业务活动，资本支出、收益、诉讼，监管事宜，我们服务的市场，流动性和资本资源以及会计事项等的声明。前瞻性声明面临重大风险和不确定性，这可能导致我们未来业务、财务状况、经营业绩与历史结果或本季度报告中所包含的任何前瞻性声明表述或暗示的结果有重大不同。我们所有的前瞻性声明均包含作为或与此类声明相关的基础的假设，并受到许多因素的影响，这些因素带来相当大的风险和不确定性，包括但不限于：
我们与Starboard Value、LP（以及与之关联或由Starboard Value LP管理的某些基金和账户，以下简称为「Starboard」）建立的战略关系提供了产业专业知识、营运伙伴和产业专家，用于评估潜在的收购机会，并在完成收购后增强对这些企业的监察和增值。Starboard已提供，我们期望将继续提供，以方便我们接触其庞大的产业高层网络，作为我们关系的一部分，Starboard已协助，我们预计将继续协助，寻找和评估适当的收购机会。我们还与Starboard签订了服务协议（定义如下），其中Starboard同意根据费用返还的基础提供某些交易执行、研究、尽职调查和其他服务。Starboard有益拥有公司于2024年9月30日股份，根据该日期发行和流通的普通股份计算，占普通股的约61.8％。另见附注10以获取更多信息。 61,123,595 截至2024年9月30日，Starboard作为公司控股股东持有普通股，根据当时发行和流通的普通股计算，其持股比例约为61.8％。详见附注10以获取更多信息。 98,838,337 作为2024年9月30日现有并流通的普通股，参考附注10以获取更多信息。
知识产权业务运营 – 专利许可、执行和技术业务
本公司透过其专利许可、执行和技术业务投资于知识产权和相关绝对回报资产，并从事专利技术的许可和执行。我们透过我们的专利许可、执行和技术业务，在我们全资拥有的子公司Acacia Research Group, LLC（简称"ARG"）的指导下运作，及其全资拥有的子公司，我们在专利组合的授权和执行中扮演主要角色，我们的运营子公司获得专利组合的权利或直接购买专利组合。虽然我们不时与发明人和专利拥有者合作，无论是小实体还是大公司，我们承担所有推进运营支出的责任，同时推进专利许可和执行计划，并在适用时，在预先安排和谈判的基础上，与我们的专利伙伴分享净许可收入，随著该计划成熟。我们也可能向专利拥有者提供资本预付款，作为未来许可收入的预付款。
在2023年11月13日，我们投资了$10.0百万以收购Benchmark Energy II, LLC（以下简称“Benchmark”） 50.4％的股权。总部位于德克萨斯州奥斯汀市的Benchmark是一家从事在德克萨斯州和奥克拉荷马州成熟资源区进行石油和天然气资产收购、生产和开发的独立石油和燃料币公司。Benchmark由一支经验丰富的管理团队运作，由首席执行官柯克·葛林（Kirk Goehring）率领，他曾分别担任Benchmark和Jones Energy, Inc.的首席运营官。交易（如下所定义）之前，Benchmark的资产主要包括位于德克萨斯州罗伯茨县和亨菲尔德县的超过13,000英亩，以及对超过125口井的持有权，其中大部分是由其运营。Benchmark旨在收购可预测且衰退缓慢、现金流稳定的石油和天然气资产，透过谨慎、场站优化的策略增加价值，通过强大的商品套期保值和低杠杆化管控风险。通过对Benchmark的投资，公司将与Benchmark管理团队一起评估以有吸引力的估值收购未来的石油和天然气资产和成长。公司的合并基本报表将包括自2023年11月13日至2024年9月30日Benchmark的合并营运。
2024年4月17日，Benchmark完成了根据购买和出售协议（“革命购买协议”），该协议于2024年2月16日与Benchmark、Revolution Resources II, LLC、Revolution II NPI Holding Company, LLC、Jones Energy, LLC、Nosley Assets, LLC、Nosley Acquisition, LLC和Nosley Midstream, LLC（以下统称为“革命”）订定，预先宣布的交易。
在2020年，与Link Fund Solutions Limited的交易有关（详情见附注3），公司收购了Malin J1 Limited（“MalinJ1”）的股权证券。由于公司透过其在MalinJ1的股权证券的利益，有能力控制MalinJ1的运营和活动，因此MalinJ1被纳入公司的综合基本报表中。Viamet HoldCo LLC是一家特拉华州的有限责任公司，为Acacia的全资子公司，并且是MalinJ1的主要股东。
本公司持有Benchmark的变量利益，因为公司有义务承担损失，并且在收购日期后有权从Benchmark获取利益，因此Benchmark被视为变量利益实体（"VIE"）。我们确定我们有权指导对Benchmark经济表现影响最大的活动，我们 (i) 有义务承担可能对Benchmark造成重大影响的损失，或 (ii) 持有从Benchmark获取可能对其具有重大意义的利益的权利。
重组协议还规定，自重组交易的结束及所有高级担保票据不再流通之日中较晚者生效，(i) 证券购买协议及 (ii) 于2019年11月18日签定，并于2020年1月7日修订及重述的特定治理协议（以下称「治理协议」）将自动终止，并不再具有效力，无需任何当事方进一步采取行动。因此，随著重组交易的完成，证券购买协议和治理协议已被终止，并不再具有效力。
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 September 30, 2024 and December 31, 2023:
租约为月份，从开始日期起，每年租金上涨，并未提供我们提前终止或延长租约期限的权利。 60 租约于2024年7月31日到期，并未获得续租或延长。在2024年4月29日，Acacia与加州有限合伙企业Metro Pointe 13580 Lot Two签订了一份建筑租约协议。根据租约，我们已在加州哥斯达默萨租下了 平方英尺的办公空间。 1,820 租约始于2024年7月1日，为期月，从开始日期起，每年租金上涨，并未提供我们提前终止或延长租约期限的权利。
On January 7, 2020, Acacia entered into a building lease agreement with Sage Realty Corporation. Pursuant to the lease, as amended, we have leased approximately 8,600 square feet of office space for our corporate headquarters in New York, New York. The lease commenced on February 1, 2020. The term of the initial lease was 24 months from the commencement date, 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 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.
Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through February 2028. Printronix has leased 73,649 square feet of facilities space, of which the significant leases are as follows:
•On November 10, 2020, Printronix entered into a building lease agreement with PPC Irvine Center Investment, LLC for 8,662 square feet of office space in Irvine, California. The lease commenced on April 1, 2021. The term of the lease is 65 months from the commencement date, provides for annual rent increases and provides the right to early terminate the lease under certain circumstances, as well as extend the lease term.
•On September 30, 2019, Printronix entered into a building lease agreement with Dynamics Sing Sdn. Bhd for 52,000 square feet of warehouse/manufacturing space in Johor, Malaysia. The lease commenced on December 29, 2019. The initial term of the lease was 48 months from the commencement date, has no annual rent increases and provides the right to early terminate or extend our lease term. The Malaysia factory lease has two renewal options for an additional four years and one additional renewal option for two years. On July 26, 2023, Printronix entered into a lease agreement to renew the lease for another 24 months commencing on December 29, 2023.
•On June 2, 2022, Printronix entered into a building lease agreement with HSBC Institutional Trust Services (Singapore) Limited for 4,560 square feet of office space in Singapore. The lease commenced on June 13, 2022. The term of the lease is 36 months from the commencement date, has no annual rent increases and does not provide the right to early terminate or extend the lease term.
•On November 28, 2019, Printronix entered into a building lease agreement with PF Grand Paris for 3,045 square feet of office space in Paris, France. The lease commenced on March 1, 2019. The term of the lease is 109 months from the commencement date, has no annual rent increases and provides the right to early terminate the lease under certain circumstances, however it does not provide for an extension of the lease term.
•On November 1, 2020, Printronix entered into a building lease agreement with Shanghai SongYun Enterprise Management Center for 2,422 square feet of office space in Shanghai, China. The lease commenced on November 1, 2020. The term of the lease is 48 months from the commencement date, has no annual rent increases and provides the right to early terminate or extend the lease term.
The Company's operating lease costs were $212,000 and $293,000 for the three months ended September 30, 2024 and 2023, respectively, and $801,000 and $881,000 for the nine months ended September 30, 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 September 30, 2024 (in thousands):
Years Ending December 31,
Remainder of 2024
$
302
2025
1,133
2026
665
2027
266
Total minimum payments
2,366
Less: short-term lease liabilities
(1,115)
Long-term lease liabilities
$
1,251
Inventor Royalties and Contingent Legal Expenses
In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios.
ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained.
Patent Enforcement and Legal Proceedings
The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights. In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material.
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.
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 nine months ended September 30, 2024. Accordingly, for the nine months ended September 30, 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 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 September 30, 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 September 30, 2024 and December 31, 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 three and nine months ended September 30, 2024.
14. 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 Securities Exchange Act of 1934, as amended (the "Exchange Act").
Stock repurchases during the nine months ended September 30, 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
Between October 1, 2024 and November 7, 2024, we repurchased a total of 1,470,172 shares at an average price per share of $4.63. Under the Repurchase Program as of November 7, 2024, we have repurchased a total of 3,007,294 shares at an average price per share of $4.67, and $6.0 million may yet be purchased under the Repurchase Program, subject to the aggregate cap for the Repurchase Program of 5,800,000 shares of common stock.
In determining whether or not to repurchase any shares of Acacia’s common stock, management considers such factors, among others, as market conditions, legal requirements, stock price, the impact of the repurchase on Acacia’s cash position, as well as Acacia’s capital needs and whether there is a better alternative use of Acacia’s capital. Acacia has no obligation to repurchase any amount of its common stock under its stock repurchase programs. The authorization to repurchase shares provides an opportunity to reduce the outstanding share count and enhance stockholder value.
Tax Benefits Preservation Charter Provision
The Company has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. The purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income.
15. EQUITY-BASED INCENTIVE PLANS
Stock-Based Incentive Plans
The 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 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 September 30, 2024, after annual RSU grants were made to non-employee directors, there were 12,451,122 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 September 30, 2024, there are 16,281,634 shares of common stock reserved for issuance under the Plans.
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 September 30, 2024
1,001,520
$
4.16
$
704
7.6 years
Exercisable at September 30, 2024
551,064
$
4.39
$
347
7.4 years
Vested and expected to vest at September 30, 2024
1,001,520
$
4.16
$
704
7.6 years
Unrecognized stock-based compensation expense at September 30, 2024 (in thousands)
$
405
Weighted average remaining vesting period at September 30, 2024
1.3 years
During the three and nine months ended September 30, 2024, there were no stock options granted. The aggregate fair value of options vested during the nine months ended September 30, 2024 was $521,000.
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
13,865
$
5.68
143,978
$
5.21
—
$
—
Vested
(123,195)
$
4.25
(643,182)
$
4.38
—
$
—
Forfeited
(16,667)
$
3.60
(61,759)
$
4.10
—
$
—
Nonvested at September 30, 2024
67,668
$
3.63
847,528
$
4.43
1,981,464
$
4.61
Unrecognized stock-based compensation expense at September 30, 2024 (in thousands)
$
107
$
2,731
$
—
Weighted average remaining vesting period at September 30, 2024
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 nine months ended September 30, 2024was $523,000. The aggregate fair value of RSUs vested during the nine months ended September 30, 2024 was $2.8 million. During the nine months ended September 30, 2024, RSAs and RSUs totaling 766,377 shares were vested and 222,061 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the 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 not recorded any expense related to the PSUs based on the probability assessment performed as of September 30, 2024.
Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(In thousands)
Options
$
114
$
126
$
366
$
275
RSAs
62
112
304
507
RSUs
605
735
1,860
1,542
Total compensation expense for share-based awards
$
781
$
973
$
2,530
$
2,324
Total unrecognized stock-based compensation expense as of September 30, 2024 was $3.2 million, which will be amortized over a weighted average remaining vesting period of 1.3 years.
The following table presents the calculation of basic and diluted income/loss per share of common stock:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
(In thousands, except share and per share data)
Numerator:
Net (loss) income attributable to Acacia Research Corporation
$
(13,996)
$
1,636
$
(22,628)
$
(7,696)
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)
—
(3,377)
Net loss attributable to common stockholders - Basic
(13,996)
(1,741)
(22,628)
(15,703)
Less: Gain on exercise of Series B warrants
—
(1,525)
—
—
Add: Interest expense associated with Starboard Notes, net of tax
—
102
—
—
Net loss attributable to common stockholders - Diluted
$
(13,996)
$
(3,164)
$
(22,628)
$
(15,703)
Denominator:
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Basic
99,854,723
94,328,452
99,893,336
67,072,835
Potentially dilutive common shares:
Series B Warrants
—
4,794,521
—
—
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Diluted
99,854,723
99,122,973
99,893,336
67,072,835
Basic net loss per common share
$
(0.14)
$
(0.02)
$
(0.23)
$
(0.23)
Diluted net loss per common share
$
(0.14)
$
(0.03)
$
(0.23)
$
(0.23)
Anti-dilutive potential common shares excluded from the computation of diluted net income/loss per share:
Equity-based incentive awards
3,898,180
3,894,709
3,898,180
4,706,140
Series B warrants
—
—
—
31,506,849
Total
3,898,180
3,894,709
3,898,180
36,212,989
17. SEGMENT REPORTING
As of September 30, 2024, the Company operates and reports its results in three reportable segments: Intellectual Property Operations, Industrial Operations and Energy Operations.
The Company reports segment information based on the management approach and organizes its businesses based on products and services. The management approach designates the internal reporting used by the chief operating decision maker for decision making and performance assessment as the basis for determining the Company’s reportable segments. The performance measure of the Company’s reportable segments is primarily income or (loss) from operations. Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment. Other than the Company's equity securities investments, specific asset information is not included in managements review at this time.
The Company’s Intellectual Property Operations segment invests in IP and related absolute return assets, and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program. When applicable, we share net licensing
revenue with our patent partners as that program matures, on a prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own.
The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users.
The Company's Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in 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. As of and for the three and nine months ended September 30, 2023, the consolidated results represented the results of the Company's two reporting segments: Intellectual Property Operations and Industrial Operations.
Equity securities without readily determinable fair value
5,816
5,816
Equity method investments
30,934
30,934
Total parent equity securities investments
50,850
99,818
Other parent assets
176,739
218,909
Segment total assets:
Intellectual property operations
220,914
234,254
Industrial operations
47,816
47,854
Energy operations
211,253
32,710
Total assets
$
707,572
$
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 subsidiary, has identified three global regions for marketing its products and services: Americas, Europe, Middle East and Africa, and Asia-Pacific. Assets are summarized based on the location of held assets. Benchmark's sales are only attributed to the United States of America.
On October 18, 2024, the Company consummated the Deflecto Transaction. Refer to Note 1 to the accompanying consolidated financial statements and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report"). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in "Item 1A. Risk Factors" to our Annual Report on Form 10-K for the year ended December 31, 2023 and elsewhere herein. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”
See the consolidated financial statements included elsewhere in the Quarterly Report for the definitions of certain capitalized terms used throughout the remainder of this Quarterly Report.
General
We are focused on acquiring and operating attractive businesses across the mature technology, energy and industrial/manufacturing sectors where we believe we can leverage our expertise, significant capital base and deep industry relationships to drive value. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.
Our focus is companies with market values in the sub-$2 billion range and particularly on businesses valued at $1billion or less. We are, however, opportunistic, and may pursue acquisitions that are larger under the right circumstance.
We believe the Company has the potential to develop advantaged opportunities due to its:
•disciplined focus on identifying opportunities where the Company can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price;
•willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity discount;
•relationships and partnership abilities across functions and sectors; and
•strong expertise in corporate governance and operational transformation.
Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon.
People, Process and Performance
Our Company is built on the principles of People, Process and Performance. We have built a management team with demonstrated expertise in Research, Transactions and Execution, and Operations and Management of our targeted
acquisitions. We believe our priorities and skills underpin a compelling value proposition for operating businesses, partners and future acquisition targets, including:
•the flexibility to consummate transactions using financing structures suited to the opportunity and involving third-party transaction structuring as needed;
•the ability to deliver ongoing financial and strategic support; and
•the financial capacity to maintain a long-term outlook and remain committed to a multi-year business plan.
Relationship with Starboard Value, LP
Our strategic relationship with Starboard 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.
Intellectual Property Operations
The Company through its Patent Licensing, Enforcement and Technologies Business invests in IP and related absolute return assets and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue.
Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. 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.
We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of September 30, 2024, across nearly 200 patent portfolio licensing and enforcement programs. As of September 30, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $880.9 million to our patent partners. Since January 1, 2020, we have generated gross licensing revenue of approximately $233.9 million and returned approximately $91.1 million to our patent partners.
For more information related to our Intellectual Property Operations, refer to additional detailed patent business discussion below.
Industrial Operations
In October 2021, we consummated our first operating company acquisition of Printronix. Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.
For more information related to our Industrial Operations, refer to the section entitled “Industrial Operations Business” below.
Energy Operations
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. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. Prior to Benchmark's acquisition of additional assets in April 2024, Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Acacia made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company’s consolidated financial statements include Benchmark’s consolidated operations from November 13, 2023 through September 30, 2024. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information.
On April 17, 2024, Benchmark consummated the previously announced Revolution Transaction contemplated in the Purchase Agreement. Pursuant to the Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 2to the accompanying consolidated financial statements for additional information regarding the Revolving Credit Facility.
For more information, refer to the section entitled “Energy Operations” below.
Recent Business Developments and Trends
Business Strategy
We intend to grow our Company by acquiring additional operating businesses, energy assets and intellectual property assets. However, we may not complete any acquisitions, and any acquisitions that we complete will be costly and could negatively affect our results of operations, and dilute our stockholders' ownership, or cause us to incur significant expense, and we may not realize the expected benefits of acquisitions.
Recent Acquisitions
In November 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma.
On April 17, 2024, Benchmark consummated the previously announced Revolution Transaction contemplated in the Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying consolidated financial statements). Following closing, the Company's interest in Benchmark is approximately 73.5%.
On October 18, 2024, Deflecto Holdco LLC (“Deflcot Purchaser”), a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc. (“Deflecto”). Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the sellers in the Deflecto Transaction consisted of $103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement (the “Deflecto Purchase Price”). 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 Purchaser against certain claims, losses and liabilities. Refer to Note 1 to the accompanying consolidated financial statements for additional information.
Life Sciences Portfolio
In June 2020 we acquired a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”). That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition. Through the end of September 30, 2024, we have received proceeds of $564.1 million as we monetized the Life Sciences portfolio. We retained an investment in the Life Sciences Portfolio consisting of public and private securities valued at $25.7 million at September 30, 2024. On January 19, 2024, we completed the sale of our 33,023,210 shares of Arix Bioscience PLC (“Arix”) to RTW Biotech Opportunities Operating Ltd, a subsidiary of RTW Biotech Opportunities Ltd, for $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, we no longer own any shares of Arix. Additionally, some of the businesses in which we continue to hold an interest generate income through the receipt of royalties and milestone payments. Refer to Note 3to the consolidated financial statements elsewhere herein for more information.
Inflation
Historically, inflation has not had a significant impact on us or any of our subsidiaries. While insignificant to our consolidated enterprise, during the three and nine months ended September 30, 2024, inflation for our Printronix subsidiary slowed down with only a small increase in cost of raw materials than in previous years related to its electronic and electrical and metal components. Printronix will continue to adjust its selling price as required in response to higher costs. Printronix have also implemented cost rationalization measures to combat the rising cost that is driven by inflation and currency pressures. Additionally, our Energy Operations Business may experience inflation. The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.
Patent Licensing and Enforcement
Patent Litigation Trial Dates and Related Trials
As of the date of this Quarterly Report, our Patent Licensing, Enforcement and Technologies Business has one pending patent infringement case with scheduled trial dates in the next twelve months. Patent infringement trials are components of its overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities. Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates. In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for reasons that are beyond the control of our Patent Licensing, Enforcement and Technologies Business. While scheduled trial dates provide an indication of the timing of possible future revenue generating opportunities, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities.
Litigation and Licensing Expense
We expect patent-related legal expenses to continue to fluctuate from period to period based on the factors summarized herein, in connection with future trial dates, international enforcement, strategic patent portfolio prosecution and our current and future patent portfolio investment, prosecution, licensing and enforcement activities.
With respect to our licensing, enforcement and overall business, neither we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and investment in patents, inventions and companies that own IP through our relationships with inventors, universities, research institutions, technology companies and others. If our operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then we may not be able to identify new technology-based patent opportunities for sustainable revenue and /or revenue growth.
Our current or future relationships may not provide the volume or quality of technologies necessary to sustain our licensing, enforcement and overall business. In some cases, universities and other technology sources compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These and other strategies employed by potential partners may reduce the number of technology sources and potential clients to whom we can market our solutions. If we are unable to maintain current relationships and sources of technology or to secure new relationships and sources of technology, such inability may have a material adverse effect on our revenues, operating results, financial condition and ability to maintain our licensing and enforcement business.
Patent Portfolio Intake
One of the significant challenges in the intellectual property industry continues to be quality patent intake due to the challenges and complexity associated with the current patent environment.
During the nine months ended September 30, 2024 as well as 2023 and 2022, we did not acquire any new patent portfolios. During 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents. In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, (iv) internet search, advertising and cloud computing technology and (v) GPS navigation. The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years.
Industrial Operations Business
Our Printronix subsidiary is a worldwide leader in multi‐technology supply‐chain printing solutions for a variety of industries, including auto manufacturing, transportation and logistics, retail distribution, food and beverage distribution, and pharmaceutical distribution. Printronix’s line matrix printers are used for mission critical applications within these industries, including labeling and inventory management, build sheets, invoicing, manifests and bills of lading, and reporting. In China, India and other developing countries in Asia and Africa, our printers are also prevalent in the banking and government sectors. Printronix has manufacturing, configuration and/or distribution sites located in Malaysia, the United States, Singapore, China and the Netherlands, along with sales and support locations around the world to support its global network of users, channel partners, and strategic alliances. Printronix designs and manufactures printers and related consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements, which are serviced by outside contractors. Consumable products include inked ribbons which are used within Printronix's printers. Printronix’s products are primarily sold through Printronix’s global network of channel partners, such as dealers and distributors, to end‐users.
Energy OperationsBusiness
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, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 153,000 net acres and an interest in approximately 605 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.
Our Intellectual Property Operations revenues historically have fluctuated quarterly, and can vary significantly period to period, based on a number of factors including the following:
•the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee;
•the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments;
•fluctuations in the total number of agreements executed each period;
•the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs;
•the relative maturity of licensing programs during the applicable periods;
•other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors;
•the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approach a court determined trial date; and
•fluctuations in overall patent portfolio related enforcement activities which are impacted by the portfolio intake challenges discussed above.
Our management does not attempt to manage for smooth sequential periodic growth in revenues from period to period, and therefore, periodic results can be uneven. Unlike most operating businesses and industries, licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or both continue into subsequent periods, and depending on a number of other factors, such potential revenues may be pushed into subsequent annual periods.
Industrial Operations
Refer to "Industrial Operations Business" above for information related to Printronix's operating activities.
Energy Operations
Refer to "Energy Operations Business" above for information related to Benchmark's operating activities.
In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations and Energy Operations segment revenues may be found in Notes 2 and 17 to the consolidated financial statements. Refer to Note 2 included in our 2023 Annual Report for additional information regarding our Intellectual Property Operations, Industrial Operations and Energy Operations segment cost of revenues and cost of production.
Net (loss) income attributable to Acacia Research Corporation
(13,996)
1,636
(15,632)
(956
%)
(22,628)
(7,696)
(14,932)
194
%
Results of Operations - three months ended September 30, 2024 compared with the three months ended September 30, 2023
Total revenues increased $13.2 million to $23.3 million for the three months ended September 30, 2024, as compared to $10.1 million for the three months ended September 30, 2023, due to revenues contributed from the Energy Operations of $15.8 million partially offset by a decrease in our Intellectual Property Operations revenues and in our Industrial Operations revenues. Intellectual Property Operations revenues decreased $1.3 million due to fewer executed license agreements compared to the comparable prior period. Industrial Operations revenues decreased $1.3 million due to decrease in the number of printer units sold compared to the comparable prior period. Refer to "Industrial Operations – Revenues" below for further discussion.
Loss before income taxes was $6.2 million for the three months ended September 30, 2024, as compared to income of $2.6 million in the comparable prior period. The net decrease was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023as follows:
•Inventor royalties decreased $277,000, from $497,000 to $220,000 in 2024, primarily due to license agreement activity and related revenues generated with inventor royalty obligations. Refer to "Intellectual Property Operations – Cost of Revenues" below for further discussion.
•Litigation and licensing expenses decreased $1.2 million, from $2.0 million to $797,000 in 2024, primarily due to a net decrease in litigation support and third-party technical consulting expenses associated with ongoing litigation. Refer to "Intellectual Property Operations – Cost of Revenues" below for further discussion.
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased $1.2 million, from $6.2 million to $5.0 million in 2024, primarily due to a decrease in related revenues. Refer to "Industrial Operations – Cost of Revenues" and "Operating Expenses" below for further discussion.
•Benchmark's cost of production for the third quarter of 2024 added a total of $11.7 million to our consolidated operating expenses. Refer to "Energy Operations – Cost ofProduction" below for further discussion.
•General and administrative expenses decreased $481,000, from $11.6 million to $11.1 million in 2024, primarily due to lower parent company legal fees partially offset by expenses contributed from our Energy Operations of $1.0 million for the third quarter of 2024. Refer to "General and Administrative Expenses" below for further detail and discussion.
•Compensation expense for share-based awards, included in general and administrative expenses above, decreased $192,000, from $973,000 to $781,000 in 2024, primarily due to restricted stock and option grants issued to employees and the Board of Directors in 2024 and 2023.
•Unrealized loss from the change in fair value of our equity securities was $4.1 million in 2024, as compared to an unrealized gain of $8.8 million in the comparable prior period. The unrealized loss and gain were derived from our Life Sciences Portfolio and our trading securities portfolio. Refer to "Equity Securities Investments" below for further discussion.
•Earnings on equity investment in joint venture was zero in 2024, as compared to $3.4 million in the comparable prior period primarily due to the earnings on equity investment in joint venture from the payments related to the achievement of one milestone in 2023.
•Non-recurring legacy legal expense of $2.0 million in 2024 is related to the accrual recorded in connection with the settlement agreement with Slingshot. Refer to Note 13to the consolidated financial statements elsewhere herein for additional information regarding the settlement agreement with Slingshot.
•We recognized a gain on exercise of Series B Warrants of zero in 2024, as compared to $1.5 million in the comparable prior period primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 10 and 11to the consolidated financial statements elsewhere herein for additional information regarding the Series B Warrants and Series A Redeemable Convertible Preferred Stock and fair value measurements.
•Gain on derivatives was $8.0 million in 2024, as compared to zero in the comparable prior period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 11 for additional information regarding Benchmark's gain on its commodity derivatives.
•Interest expense on Senior Secured Notes decreased $130,000, from $130,000 to zero in 2024, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023 pursuant to the Series B Warrants Exercise. Refer to Note 10 to the consolidated financial statements elsewhere herein for additional information.
Results of Operations - nine months ended September 30, 2024 compared with the nine months ended September 30, 2023
Total revenues increased $40.7 million to $73.5 million for the nine months ended September 30, 2024, as compared to $32.8 million for the nine months ended September 30, 2023, primarily due to an increase in our Intellectual Property Operations revenues and revenues contributed from Benchmark of $31.8 million partially offset by a decrease in Industrial Operations revenues. ARG revenues increased due to an increase in the number of license agreements executed that generated higher average license fees, which contributed to Intellectual Property Operations revenues increasing by $13.1 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. The decrease in Industrial Operations revenue of $4.3 million is due to lower units of printers sold. Refer to “Industrial Operations – Revenues” below for further detailed discussion.
Loss before income taxes was $23.3 million for the nine months ended September 30, 2024, as compared to loss of $5.9 million in the comparable prior period. The increase was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as follows:
•Inventor royalties increased $765,000, from $863,000 to $1.6 million in 2024, primarily due to license agreement activity and related revenues generated in 2024. Refer to "Intellectual Property Operations – Cost of Revenues" below for further discussion.
•Contingent legal fees increased $1.5 million, from $890,000 to $2.4 million in 2024, primarily due to the change in Intellectual Property Operations revenues described above. Refer to "Intellectual Property Operations – Cost of Revenues" below for further discussion.
•Litigation and licensing expenses decreased $2.6 million, from $5.7 million to $3.1 million in 2024, primarily due to a net decrease in litigation support expenses associated with ongoing litigation. Refer to "Intellectual Property Operations – Cost of Revenues" below for further discussion.
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased approximately $3.9 million, from $19.5 million to $15.6 million in 2024. Refer to "Industrial Operations – Cost of Revenues" and "Operating Expenses" below for further discussion.
•Benchmark's cost of production for the first nine months of 2024 added a total of $23.1 million to our consolidated operating expenses. Refer to "Energy Operations – Cost ofProduction" below for further discussion.
•General and administrative expenses increased $357,000, from $33.1 million to $33.4 million in 2024, primarily due to an increase in Intellectual Property Operations general and administrative costs and $2.3 million from our Energy Operations general and administrative costs for 2024, partially offset by a decrease in our Industrial Operations general and administrative costs and other general and administrative costs. Refer to "General and Administrative Expenses" below for further detail and discussion.
•Compensation expense for share-based awards, included in general and administrative expenses above, increased $206,000, from $2.3 million to $2.5 million in 2024, primarily due to restricted stock and option grants issued to employees and the Board in 2024 and 2023, which includes a partial offset for forfeitures.
•Unrealized loss from the change in fair value of our equity securities was $35.5 million in 2024, as compared to an unrealized gain of $18.8 million in the comparable prior period. The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss primarily relates to the reversal of unrealized gains previously recorded for Arix shares sold in January 2024 for realized gains. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
•Realized gain from the sale of equity securities was $28.9 million in 2024, as compared to a realized loss of $9.4 million in the comparable prior period. The realized gains and losses were similarly derived from the sales activity from our Life Sciences Portfolio and trading securities portfolio. The 2024 period realized gains primarily relates to the Arix shares sold in January 2024. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
•Earnings on equity investment in joint venture was zero in 2024, as compared to $3.4 million in the comparable prior period primarily due to the earnings on equity investment in joint venture from one milestone in 2023.
•Non-recurring legacy legal expense of $14.9 million in 2024 is related to the additional accruals made in connection with the AIP Matter and expenses related to the settlement agreement with Slingshot. Refer to Note 13to the consolidated financial statements elsewhere herein for additional information regarding the accrual in connection with the AIP Matter and the settlement agreement with Slingshot.
•Unrealized gain from the Series B Warrants and the embedded derivative fair value measurements was zero in 2024, as compared to a gain of $8.2 million in the comparable prior period, primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 10 and 11to the consolidated financial statements elsewhere herein for additional information regarding the Series B Warrants and Series A Redeemable Convertible Preferred Stock and fair value measurements.
•Gain on derivatives was $5.5 million in 2024, as compared to zero in the comparable prior period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 11 for additional information regarding Benchmark's gain on its commodity derivatives.
•Interest expense on Senior Secured Notes was zero in 2024, as compared to interest expense of $1.9 million in the comparable prior period, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023, pursuant to the Series B Warrants Exercise. Refer to Note 10 to the consolidated financial statements elsewhere herein for additional information.
Intellectual Property Operations
Revenues
ARG's revenue activity for the periods presented included the following:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change values and count totals)
Paid-up license revenue agreements
$
—
$
1,410
$
(1,410)
(100
%)
$
17,253
$
5,385
$
11,868
220
%
Recurring license revenue agreements
486
350
136
39
%
2,189
945
1,244
132
%
Total revenues
$
486
$
1,760
$
(1,274)
(72
%)
$
19,442
$
6,330
$
13,112
207
%
New license agreements executed
—
5
(5)
(100
%)
9
10
(1)
(10
%)
Licensing and enforcement programs generating revenues
3
5
(2)
(40
%)
6
6
—
—
%
For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Paid-up revenue decreased $1.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023as there were no new license agreements executed during the third quarter of 2024. Paid-up revenue increased $11.9 million for the nine months ended September 30, 2024 compared to the three months ended September 30, 2023 due to an increase in the number of new license agreements that generated higher license revenue in 2024. Recurring revenue, that provides for quarterly sales-based license fees, increased $136,000 for the three months ended September 30, 2024 and increased $1.2 million for the nine months ended September 30, 2024, in each case compared to the comparable prior year period, from various on-going license arrangements.
Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein.
Refer to “Investments in Patent Portfolios” above for information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
Cost of Revenues
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change values)
Inventor royalties
$
220
$
497
$
(277)
(56
%)
$
1,628
$
863
$
765
89
%
Contingent legal fees
(22)
346
(368)
(106
%)
2,373
890
1,483
167
%
Litigation and licensing expenses
797
2,026
(1,229)
(61
%)
3,087
5,663
(2,576)
(45
%)
Amortization of patents
4,712
2,601
2,111
81
%
11,385
7,802
3,583
46
%
Total
$
5,707
$
5,470
$
237
4
%
$
18,473
$
15,218
$
3,255
21
%
Refer to detailed change explanations above for the three and nine months ended September 30, 2024 and 2023 regarding cost of revenues for our Intellectual Property Operations.
The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in certain patent portfolios without future patent partner royalty obligations. The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue
agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.
Litigation and licensing expenses include patent-related litigation, enforcement and prosecution costs incurred by law firms and external patent attorneys engaged on either an hourly basis or a contingent fee basis. Litigation and licensing expenses also includes third-party patent research, development, patent prosecution and maintenance fees, re-exam and inter partes reviews, consulting and other costs incurred in connection with the licensing and enforcement of patent portfolios. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues.
Industrial Operations
Revenues
Printronix's net revenues for the periods presented included the following:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change value)
Printers and parts
$
2,367
$
2,852
$
(485)
(17
%)
$
7,316
$
9,640
$
(2,324)
(24
%)
Consumable products
3,782
4,576
(794)
(17
%)
12,362
14,074
(1,712)
(12
%)
Services
858
896
(38)
(4
%)
2,505
2,747
(242)
(9
%)
Total
$
7,007
$
8,324
$
(1,317)
(16
%)
$
22,183
$
26,461
$
(4,278)
(16
%)
For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services. Revenue from printers and parts decreased $485,000 for the three months ended September 30, 2024 and decreased $2.3 million for the nine months ended September 30, 2024, in each case compared to the comparable prior year period, due to a decrease in the number of printer units sold. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix's revenue arrangements and related concentrations. Refer to “Industrial Operations Business” above for additional information related to Printronix's operating activities.
Cost of Revenues
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change values)
Cost of revenues - industrial operations
$
3,523
$
4,377
$
(854)
(20
%)
$
10,849
$
13,530
$
(2,681)
(20
%)
Refer to detailed change explanations above for the three and nine months ended September 30, 2024 and 2023 regarding cost of revenues for our Industrial Operations. The decrease in Printronix's cost of revenues for the three and nine months ended September 30, 2024 is due to change in revenue described above. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Printronix's cost of sales.
The following table provides the components of Benchmark's revenues for the periods indicated, as well as each period's respective average realized prices and production volumes. This table shows production on a barrel of oil ("boe") equivalent basis in which natural gas is converted to oil at the ratio of 6 Mcf of natural gas to one barrel ("Bbl") of oil. This ratio may not be reflective of the current price ratio between two products. "Mcf" means thousand cubic feet and "/d" means per day.
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2024
(In thousands, except per unit data )
Production:
Oil (Bbl)
121,251
235,867
Natural gas (Mcf)
1,482,555
3,100,391
Natural gas liquids (Bbl)
172,164
357,738
Total (boe)
540,508
1,110,336
Average daily production:
Oil (Bbl/d)
1,318
861
Natural gas (Mcf/d)
16,115
11,315
Natural gas liquids (Bbl/d)
1,871
1,306
Total (boe/d)
5,875
4,052
Revenues:
Oil sales
$
8,997
$
17,740
Natural gas sales
2,829
5,550
Natural gas liquids sales
3,837
8,390
Other service sales
154
163
Total
$
15,817
$
31,843
Average Price:
Oil (per Bbl)
$
74.20
$
75.21
Natural gas (per Mcf)
$
1.91
$
1.79
Natural gas liquids (per Bbl)
$
22.29
$
23.45
Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark's revenue arrangements and related concentrations.
Cost of Production
Benchmark's cost of production for the three and nine months ended September 30, 2024 was $11.7 million and $23.1 million, respectively. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Benchmark's cost of production.
Engineering and development expenses - industrial operations
$
108
$
172
$
(64)
(37
%)
$
420
$
593
$
(173)
(29
%)
Sales and marketing expenses - industrial operations
1,391
1,613
(222)
(14
%)
4,333
5,385
(1,052)
(20
%)
General and administrative costs - intellectual property operations
1,917
1,818
99
5
%
7,078
5,317
1,761
33
%
General and administrative costs - industrial operations
2,086
1,999
87
4
%
5,704
6,743
(1,039)
(15
%)
General and administrative costs - energy operations
1,024
—
1,024
n/a
2,292
—
2,292
n/a
Parent general and administrative expenses
6,097
7,788
(1,691)
(22
%)
18,354
21,011
(2,657)
(13
%)
Total general and administrative expenses
11,124
11,605
(481)
(4
%)
33,428
33,071
357
1
%
Total
$
12,623
$
13,390
$
(767)
(6
%)
$
38,181
$
39,049
$
(868)
(2
%)
The operating expenses table above includes the Company's general and administrative expenses by operation, Printronix's engineering and development expenses and sales and marketing expenses, and Benchmark's general and administrative costs. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix's operating expenses.
General and Administrative Expenses
A summary of the main drivers of the change in general and administrative expenses is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2024 vs. 2023
2024 vs. 2023
(In thousands)
Personnel costs and board fees
$
(86)
$
(155)
Variable performance-based compensation costs
192
2,251
Other general and administrative costs
(2,546)
(3,976)
General and administrative costs - industrial operations
86
(1,039)
General and administrative costs - energy operations
1,024
2,292
Amortization of industrial operations intangible assets
1
—
Compensation expense for share-based awards
(192)
206
Non-recurring employee severance costs
1,040
778
Total change in general and administrative expenses
$
(481)
$
357
General and administrative expenses include employee compensation and related personnel costs, including variable performance based compensation and compensation expense for share-based awards, office and facilities costs, legal and accounting professional fees, public relations, stock administration, business development, fixed asset depreciation, amortization of Industrial Operations intangible assets, state taxes based on gross receipts and other corporate costs.
The increase in variable performance-based compensation costs was primarily due to fluctuations in performance-based compensation. Compensation expense for share-based awards increased primarily due to restricted stock and option grants issued to employees and the Board of Directors in 2024 and 2023 partially offset by forfeitures. The decrease in other general and administrative costs, which relates to our parent company and Intellectual Property Operations business, were primarily due to lower legal fees. The decrease in general and administrative costs of Industrial Operations is due to Printronix's initiative to reduce costs and operate more efficiently. Non-recurring employee severance costs fluctuate based on the severance arrangements of terminated employees. In addition, our Energy Operations related general and administrative costs contributed $2.3 million of the increased expenses. Refer to additional general and administrative change explanations above.
Other Income/Expense
Equity Securities Investments
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change values)
Change in fair value of equity securities
$
(4,074)
$
8,823
$
(12,897)
(146
%)
$
(35,519)
$
18,783
$
(54,302)
(289
%)
Gain (loss) on sale of equity securities
—
—
—
n/a
28,861
(9,360)
38,221
(408
%)
Earnings on equity investment in joint venture
—
3,375
(3,375)
(100
%)
—
3,375
(3,375)
(100
%)
Total net realized and unrealized gain
$
(4,074)
$
12,198
$
(16,272)
(133
%)
$
(6,658)
$
12,798
$
(19,456)
(152
%)
Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date. During the first quarter of 2024, Acacia fully exited its position in Arix. Refer to periodic change explanations above. Refer to Notes 2 and 3 to the consolidated financial statements elsewhere herein for additional information regarding our investment in the Life Sciences Portfolio and other equity securities.
Our results included an unrealized loss from the change in fair value of our equity securities as compared to an unrealized gain in the comparable prior period, and included realized gain from the sale of our equity securities as compared to a realized loss in the prior year. These changes were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss and realized gain primarily relates to the sale of Arix shares.
During the third quarter of 2023, we recorded consolidated earnings on equity investment of $3.4 million for one milestone earned during the period. There were no other milestones earned during the nine months ended September 30, 2024. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information.
Non-recurring legacy legal expense
Three Months Ended March 31,
Nine Months Ended September 30,
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
(In thousands, except percentage change values)
Non-recurring legacy legal expense
$
(2,000)
$
—
$
(2,000)
n/a
$
(14,857)
$
—
$
(14,857)
n/a
During the nine months ended September 30, 2024, we recorded an additional accrual of $12.9 million in connection with the AIP Matter in other income (expense) and an accrual of $2.0 million in connection with Slingshot settlement in the consolidated statements of operations. Refer to Note 13to the consolidated financial statements elsewhere herein for additional information.
Our income tax expense for the three months ended September 30, 2024 is primarily attributable to changes to the forecasted benefit of losses estimated for 2024. Our income tax benefit for the nine months ended September 30, 2024 is primarily attributable to recognizing a benefit for losses incurred year to date offset by foreign withholding taxes. Our income tax benefit for the three months ended September 30, 2023 is primarily attributable to recognizing an income tax benefit on losses incurred in jurisdictions for which a valuation allowance is not needed. Our income tax expense for the nine months ended September 30, 2023 is primarily attributable to foreign taxes withheld and state income taxes.
Our 2024 effective tax rate in each period differed from the U.S. federal statutory rate primarily due to foreign withholding taxes which we could not recognize as a foreign tax credit and non-deductible items. Our 2023 effective tax rate in each period was lower than the U.S. federal statutory rate primarily due to expiration of foreign tax credits changes in valuation allowance, as well as non-deductible items. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets.
The Company has recorded a partial valuation allowance against our net deferred tax assets as of September 30, 2024 and December 31, 2023 on foreign tax credits and certain state net operating losses. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional income tax information.
Liquidity and Capital Resources
General
Our foreseeable material cash requirements as of September 30, 2024, are recognized as liabilities or generally are otherwise described in Note 13, "Commitments and Contingencies," to the consolidated financial statements included elsewhere herein. Our facilities lease obligations, guarantees and certain contingent obligations are further described in Note 13 to the accompanying consolidated financial statements. Historically, we have not entered into off-balance sheet financing arrangements. In addition, the obligations of Energy Operations Business related to the Benchmark Revolving Credit Facility are further described in Note 2 to the accompanying consolidated financial statements. The obligations of our Energy Operations Business related to the asset retirement obligations are further described in Note 9 to the accompanying consolidated financial statements.
Additional cash requirements are generally derived from our operating and investing activities including expenditures for working capital (discussed below), human capital, business development, investments in equity securities and intellectual property, and business combinations. At September 30, 2024, we had unrecognized tax benefits, as further described in Note 2 to the consolidated financial statements.
Certain of our operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of our operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material.
At September 30, 2024, our primary sources of liquidity were cash and cash equivalents on hand and cash generated from our operating activities.
The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees for the Benchmark Transaction was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility of approximately $82.7 million and a cash contribution of approximately $15.3 million from other investors in Benchmark, including McArron Partners. Refer to Note 2to the accompanying consolidated financial statements for additional information regarding the Revolving Credit Facility.
On October 18, 2024 the Company acquired Deflecto for a purchase price of $103.7 million, which was funded with a combination of borrowings under the Deflecto Term Loan and from cash on hand. Refer to Note 1 to the accompanying consolidated financial statements for additional information.
Furthermore, we intend to grow our company by acquiring additional operating businesses and intellectual property assets. We expect to finance such acquisitions through cash on hand or by engaging in equity or debt financing.
Our management believes that our cash and cash equivalent balances and cash flows from operations will be sufficient to meet our cash requirements through at least twelve months from the date of this Quarterly Report and for the foreseeable future. We may, however, encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated, including those set forth under “Item 1A, Risk Factors” of our 2023 Annual Report. Any efforts to seek additional funding could be made through issuances of equity or debt, or other external financing. However, additional funding may not be available to us on favorable terms, or at all. The capital and credit markets have experienced extreme volatility and disruption in recent years, and the volatility and impact of the disruption may continue. At times during this period, the volatility and disruption has reached unprecedented levels. In several cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers, and the commercial paper markets may not be a reliable source of short-term financing for us. If we fail to obtain additional financing when needed, we may not be able to execute our business plans and our business, conducted by our operating subsidiaries, may suffer.
Cash, Cash Equivalents and Investments
Our consolidated cash, cash equivalents and equity securities totaled $374.2 million at September 30, 2024, compared to $403.2 million at December 31, 2023.
Cash Flows Summary
The net change in cash and cash equivalents for the periods presented was comprised of the following:
Nine Months Ended September 30,
2024
2023
(In thousands)
Net cash provided (used) by:
Operating activities
$
70,384
$
(17,962)
Investing activities
(117,067)
8,617
Financing activities
66,577
66,351
Effect of exchange rates on cash and cash equivalents
Cash flows from operating activities were comprised of the following for the periods presented:
Nine Months Ended September 30,
2024
2023
(In thousands)
Net loss including noncontrolling interests in subsidiaries
$
(20,675)
$
(6,570)
Adjustments to reconcile net loss including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization
21,735
10,152
Accretion of asset retirement obligation
620
—
Change in fair values Series A redeemable convertible preferred stock embedded derivatives and Series B warrants
—
(6,716)
Gain on exercise of Series B warrants
—
(1,525)
Compensation expense for share-based awards
2,530
2,324
Loss (gain) on foreign currency exchange
72
(25)
Change in fair value of equity securities
35,519
(18,783)
(Gain) loss on sale of equity securities
(28,861)
9,360
Unrealized gain on derivatives
(3,918)
—
Earnings on equity investment in joint venture
—
(3,375)
Deferred income taxes
(5,509)
(1,063)
Changes in assets and liabilities:
Accounts receivable
69,710
2,982
Inventories
(1,297)
1,847
Prepaid expenses and other assets
(3,373)
(1,395)
Accounts payable and accrued expenses
8,129
(5,623)
Royalties and contingent legal fees payable
(4,593)
597
Deferred revenue
295
(149)
Net cash provided by (used in) operating activities
$
70,384
$
(17,962)
Cash receipts from ARG's licensees totaled $90.9 million and $6.3 million for the nine months ended September 30, 2024 and 2023, respectively. Cash receipts from Printronix's customers totaled $23.8 million and $28.8 million for the nine months ended September 30, 2024 and 2023, respectively. Cash receipts from Benchmark's customers totaled $37.4 million for the nine months ended September 30, 2024. The fluctuations in cash receipts for the periods presented primarily reflects the corresponding fluctuations in revenues recognized during the same periods, as described above, and the related timing of payments received from licensees and customers.
Our reported cash provided by operations for the nine months ended September 30, 2024 was $70.4 million, compared to cash used in operations of $18.0 million in the comparable prior period. The increase in cash provided by operations was primarily due to net inflows from the total changes in assets and liabilities (refer to Working Capital discussion below), decrease in accounts receivable, increase in inventories, increase in prepaid expense and other assets, increase in accounts payable, decrease in royalties and contingent legal fees payable and by the total change in net income (described above) and related noncash adjustments.
Working Capital
Our working capital related to cash flows from operating activities at September 30, 2024 decreased to $18.8 million, compared to $87.0 million at December 31, 2023, which was comprised of the changes in assets and liabilities presented above. The decrease is primarily due to change in accounts receivable and royalties and contingent legal fees payable, which is related to the timing of the cash receipts related to Intellectual Property Operations Business, partially offset by the increase in accrued expenses and other current liabilities related to our Energy Operations Business.
Cash flows from investing activities were comprised of the following for the periods presented:
Nine Months Ended September 30,
2024
2023
(In thousands)
Patent acquisition
$
(14,000)
$
—
Purchases of equity securities
(15,544)
(8,678)
Sales of equity securities
57,854
15,198
Distributions received from equity investment in joint venture
—
2,249
Net purchases of property and equipment and additions to oil and gas properties
(145,377)
(152)
Net cash (used in) provided by investing activities
$
(117,067)
$
8,617
Cash outflows from investing activities for the nine months ended September 30, 2024 was $117.1 million, as compared to cash inflow of $8.6 million in the comparable prior period, primarily due to the acquisition of oil and gas properties in the Transaction and net cash inflows from our trading securities portfolio equity securities transactions and sale of Arix shares. Refer to Note 1to the consolidated financial statements elsewhere herein for additional information regarding the Transaction. Refer to “Other Income/Expense – Equity Securities Investments” above and Note 3 to the consolidated financial statements elsewhere herein for additional information related to Life Sciences Portfolio.
Cash Flows from Financing Activities
Cash flows from financing activities included the following for the periods presented:
Nine Months Ended September 30,
2024
2023
(In thousands)
Repurchase of common stock
$
(7,303)
$
—
Paydown of Senior Secured Notes
—
(60,000)
Contributions from noncontrolling interest
15,250
—
Borrowings on the Revolving credit facility
71,475
—
Paydown of Revolving Credit Facility
(12,000)
—
Dividend on Series A Redeemable Convertible Preferred Stock
—
(1,400)
Taxes paid related to net share settlement of share-based awards
(1,068)
(595)
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
$
66,577
$
66,351
Cash flows from financing activities for the nine months ended September 30, 2024 increased to $66.6 million, as compared to cash flow of $66.4 million in the comparable prior period, primarily due to contributions from noncontrolling interest related to the Revolution Transaction and net cash inflows from borrowings on the Benchmark Revolving Credit Facility partially offset by the repurchase of common stock. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information regarding the Revolution Transaction. Refer to Note 14 to the consolidated financial statements elsewhere herein for additional information regarding the repurchase of common stock.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing these financial statements, we make assumptions, judgments and estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our assumptions, judgments and estimates on historical experience and
various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.
We believe that of the significant accounting policies discussed in Note 2 included in our 2023 Annual Report, the following accounting policies require our most difficult, subjective or complex assumptions, judgments and estimates:
•revenue recognition;
•estimates of crude oil and natural gas reserves;
•valuation of long-lived assets, goodwill and other intangible assets; and
•accounting for income taxes.
Our critical accounting estimates have not changed materially from those disclosed in the Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Annual Report. For further information on the significant accounting policies related to the revenue recognition, estimates of crude oil and natural gas reserves, valuation of long-lived assets, goodwill and other intangible assets and income taxes, refer to Note 2 to the consolidated financial statements and other related significant account policies included in our 2023 Annual Report.
Recent Accounting Pronouncements
Refer to Note 2 to consolidated financial statements included elsewhere herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our short-term investment activities is to preserve principal while concurrently maximizing the income we receive from our equity securities without significantly increasing risk. Some of the securities that we invest in may be subject to interest rate risk and/or market risk. This means that a change in prevailing interest rates, with respect to interest rate risk, or a change in the value of the United States equity markets, with respect to market risk, may cause the principal amount or market value of the equity securities to fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the current value of the principal amount of our investment may decline. To minimize these risks in the future, we intend to maintain our portfolio of cash equivalents and equity securities in a variety of securities. 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. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate. Accordingly, a 100 basis point increase in interest rates or a 10% decline in the value of the United States equity markets would not be expected to have a material impact on the value of such money market funds. Declines in interest rates over time will, however, reduce our interest income.
Investment Risk
We are exposed to investment risks related to changes in the underlying financial condition of certain of our equity investments in technology companies. The fair value of these investments can be significantly impacted by the risk of adverse changes in securities markets generally, as well as risks related to the performance of the companies whose securities we have invested in, risks associated with specific industries, and other factors. These investments are subject to significant fluctuations in fair value due to the volatility of the securities markets and of the underlying businesses.
As of September 30, 2024 and December 31, 2023, the carrying value of our equity investments in public and private companies was $50.9 million and $99.8 million, respectively.
We record our equity investments in publicly traded companies at fair value, which are subject to market price volatility. As of September 30, 2024, a hypothetical 10% adverse change in the market price of our investments in publicly traded common stock would have resulted in a decrease of approximately $1.4 million in such equity investments. We evaluate our equity investments in private companies for impairment when events and circumstances indicate that the decline in fair value of such assets below the carrying value is other-than temporary.
Foreign Currency Exchange Risk
Although we historically have not had material foreign operations, we are also exposed to market risks related 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. As of September 30, 2024, we did not have any foreign denominated equity securities.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods prescribed by the SEC.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
In the ordinary course of business, we or our various businesses and operations are the subject of, or party to, various pending or threatened legal actions, including various counterclaims in connection with patent enforcement activities. We believe that any liability arising from these actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. See Note 13to the consolidated financial statements elsewhere herein for additional information.
Intellectual Property Operations
Our Intellectual Property Operations Business is often required to engage in litigation to enforce its patents and patent rights. Certain of its operating subsidiaries are parties to ongoing patent enforcement related litigation, alleging infringement by third-parties of certain of the patented technologies owned or controlled by its operating subsidiaries.
In connection with any of its patent enforcement actions, it is possible that a defendant may claim and/or a court may rule that our Intellectual Property Operations Business 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 it or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material, and if required to be paid by it or its operating subsidiaries, could materially harm its operating results and its financial position.
Our Intellectual Property Operations Business spends a significant amount of its financial and management resources to pursue its current litigation matters. These litigation matters and others that it may in the future determine to pursue could continue for years and continue to consume significant financial and management resources. The counterparties to its litigation matters are sometimes large, well-financed companies with substantially greater resources. We cannot assure you that any of our Intellectual Property Operations Business current or future litigation matters will result in a favorable outcome for it. In addition, in part due to the appeals process and other legal processes, even if our Intellectual Property Operations Business obtains favorable interim rulings or verdicts in particular litigation matters, they may not be predictive of the ultimate resolution of the dispute. Also, we cannot assure you that our Intellectual Property Operations Business will not be exposed to claims or sanctions against it which may be costly or impossible for it to defend. Unfavorable or adverse outcomes may result in losses, exhaustion of financial resources or other adverse effects which could encumber our Intellectual Property Operations Business’s ability to effectively and efficiently monetize its assets. Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information related to legal proceedings.
ITEM 1A. RISK FACTORS
An investment in our common stock involves risks. Before making an investment decision, you should carefully consider all of the information in this Quarterly Report on Form 10-Q, including in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our consolidated financial statements and the accompanying notes thereto. In addition, you should carefully consider the risks and uncertainties in “Item 1A. Risk Factors” in our 2023 Annual Report, as well as in our other public filings with the SEC. If any of the identified risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that case, the trading price of our common stock may decline, and you could lose all or part of your investment. In addition, other risks of which we are currently unaware, or which we do not currently view as material, could have a material adverse effect on our business, financial condition, operating results and prospects. There have been no material changes to the risk factors previously reported in our 2023 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities (1)
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased under the Program
(In thousands)
July 1, 2024 - July 31, 2024
—
$
—
—
$
—
August 1, 2024 - August 31, 2024
676,775
$
4.68
676,775
$
16,833
September 1, 2024 - September 30, 2024
860,347
$
4.72
860,347
$
12,769
Total
1,537,122
$
4.70
1,537,122
(1) 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. Between October 1, 2024 and November 7, 2024, we repurchased a total of 1,470,172 shares at an average price per share of $4.61. Under the Repurchase Program as of November 7, 2024, we have repurchased a total of 3,007,294 shares at an average price per share of $4.65, and $6.0 million may yet be purchased under the Repurchase Program, subject to the aggregate cap for the Repurchase Program of 5,800,000 shares of common stock. Refer to Note 14 to the consolidated financial statements elsewhere herein for additional information.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of Acacia Research Corporation adopted, modified 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.
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024 and 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed 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)
_________________________
# Filed herewith.
*The referenced exhibit is a management contract, compensatory plan or arrangement.
† The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the Registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.
^ 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACACIA RESEARCH CORPORATION
Date: November 12, 2024
/s/ Martin D. McNulty Jr.
By:Martin D. McNulty Jr.
Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)
Date: November 12, 2024
/s/ Kirsten Hoover
By: Kirsten Hoover
Interim Chief Financial Officer (Principal Financial Officer and Accounting Officer)