Core Viewpoint - Acacia Research (NASDAQ: ACTG) is a business development company focusing on acquiring, managing, and selling small to mid-sized companies across various sectors, including industrial, energy, technology, and healthcare [3][4]. Business Overview - Acacia Research is primarily owned (61%) by Starboard Value LP, an investment adviser [3]. - The company operates in three main business lines: patent licensing, industrial operations, and energy operations [3][4]. - Recent acquisition includes a 50.4% stake in Benchmark Energy II, an independent oil and gas company [4]. Financial Performance - For the most recent earnings release, revenues from the three business lines are as follows: - Intellectual property operations: $13.6 million in 2024 (up from $4.2 million in 2023) - Industrial operations: $8.8 million in 2024 (down from $10.6 million in 2023) - Energy operations: $1.9 million in 2024 (newly reported) [5]. - Patent licensing is the largest revenue source, but growth may not continue as no new patent portfolios were purchased in the recent quarter [5][6]. Cash Position - The company has $438 million in cash and cash equivalents, equating to $4.38 per share, which is approximately 79% of the current share price of $5.55 [9]. - Remaining current assets of about $114 million exceed total liabilities, indicating a strong cash position [9]. Valuation Metrics - Acacia Research has an overall A- valuation grade, with strong enterprise value metrics [11]. - Key valuation metrics include: - EV / Sales (TTM): 0.70 (A grade) - EV / EBITDA (TTM): 2.07 (A+ grade) - Price / Book (TTM): 0.98 (B grade) [12]. Investment Considerations - The company’s performance is characterized by high variability due to its business model, making future performance difficult to forecast [5][16]. - Despite the risks, the significant cash position provides a buffer against potential downturns, leading to a cautious but optimistic investment outlook [16].

Core Insights - The article highlights three stocks under $5 that present significant investment opportunities in the gold industry, healthcare technology, and specialty finance sectors [1][2]. Group 1: Acacia (ACTG) - Acacia's oil and gas subsidiary, Benchmark, has expanded its portfolio through a significant acquisition in Texas and Oklahoma, which is expected to generate approximately $50 million in asset-level cash flow in 2024 [3][4]. - Total sales for Acacia increased from $14.8 million to $24.3 million in Q1 2024, with a notable rise in licensing and other revenue from the intellectual property sector [4]. - Acacia has eliminated non-recourse debt at Benchmark and paid off senior secured notes, resulting in a debt-free parent company and a healthier financial position [4]. Group 2: CareCloud (CCLD) - CareCloud has reduced yearly expenditures by nearly $22 million since October 2023, leading to a Q1 2024 GAAP operational gain of $129,000, a significant improvement from a loss of $223,000 in Q1 2023 [5]. - The company's Q1 2024 GAAP net loss decreased to $241,000 from $401,000, and it reported an adjusted EBITDA of $3.7 million [5]. - CareCloud's free cash flow in Q1 2024 was $2.2 million, up from $2.0 million in Q1 2023, allowing for a reduction in debt commitments [6]. Group 3: New Gold (NGD) - New Gold generated substantial cash from operations amounting to $73 million in Q1 2024, despite reduced sales compared to Q1 2023, maintaining $530 million in total liquidity and $157 million in cash [7]. - The company invested over $35 million in growth capital during Q1, focusing on development initiatives to increase production capacity [7]. - New Gold's safety statistics indicate a commitment to responsible mining, with a total recordable injury frequency rate (TRIFR) of 0.92 in Q1 [8].

Financial Data and Key Metrics Changes - The GAAP book value at March 31, 2024, was $589.6 million or $5.89 per share, compared to $5.90 per share at December 31, 2023 [14][18] - Total revenues for the first quarter were $24.3 million, up from $14.8 million in the same quarter last year, reflecting a significant increase [19] - The net loss attributable to Acacia was $0.2 million or $0.00 per share, compared to a net income of $9.4 million or a loss of $0.07 per diluted share in the first quarter of last year [22] Business Line Data and Key Metrics Changes - The intellectual property business generated $13.6 million in licensing and other revenue during the quarter, compared to $4.2 million in the same quarter last year, indicating strong growth [19] - Printronix generated $8.8 million in revenues during the quarter, down from $10.6 million in the same quarter last year [20] - Benchmark, the energy operations unit, generated $1.9 million in revenue during the quarter, excluding gains on hedging contracts [20] Market Data and Key Metrics Changes - The cash, cash equivalents, and equity securities at fair value totaled $461.7 million at March 31, 2024, compared to $403.2 million at December 31, 2023 [23] - Cash per share stood at $4.39 per share as of March 31, 2024 [24] Company Strategy and Development Direction - The company is focused on two main strategies: growing cash flow and earnings from current businesses and evaluating opportunities to acquire new businesses [5] - The acquisition of Benchmark significantly expands the portfolio, adding approximately 140,000 net acres and 470 operated producing wells [9] - The company aims to deploy capital into new acquisitions across various sectors, including industrials, technology, and healthcare [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the M&A environment, noting a strong pipeline of opportunities in both public and private markets [13] - The company is not reliant on leverage for returns and is seeing traditional banks reemerging, which may allow for opportunistic leverage use [13] - Management indicated that while they are not looking to make macro-related bets, a hard landing could present good buying opportunities [40] Other Important Information - The company has approximately $400 million in capital to deploy into new acquisitions [12] - The Board of Directors nominated Michelle Felman as an independent director, bringing extensive experience in real estate, finance, and investing [15][16] Q&A Session Summary Question: Valuation of Benchmark - The investment in Benchmark is marked at cost, and the book value did not increase due to deal-related expenses [26][27] Question: Expected EBITDA from Benchmark - Benchmark is expected to generate approximately $45 million in EBITDA, with Acacia entitled to 73.5% of that amount [28][30] Question: Acquisition Strategy - The company is looking for acquisitions with a favorable risk/reward profile and is not focused on making acquisitions for the sake of it [37][38] Question: Cash on Balance Sheet - Cash and cash equivalents were reported at $439 million, with the total including equity securities at $460 million [43][44] Question: Stock Buyback Plans - The company has not yet bought back any stock, evaluating opportunities for acquisitions instead [48][50] Question: Income from Liquidity - Interest income for the quarter was reported at $4.9 million [60]

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) This Form 10-Q for **Q1 2024** identifies **Acacia Research Corporation** as a **Non-accelerated Filer** with **100 million** shares outstanding - The report is a Quarterly Report on **Form 10-Q** for the period ended **March 31, 2024**[1](index=1&type=chunk) - **Acacia Research Corporation** is classified as a **Non-accelerated Filer** and a **Smaller reporting company**[1](index=1&type=chunk) - As of **May 6, 2024**, the number of shares outstanding of the registrant's common stock was **100,021,951**[1](index=1&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=2&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights forward-looking statements, subject to risks and uncertainties, with no obligation to update them - This Quarterly Report contains forward-looking statements that involve risks and uncertainties, intended to qualify for the safe harbor from liability established by the **Private Securities Litigation Reform Act of 1995**[13](index=13&type=chunk) - Forward-looking statements are subject to **substantial risks and uncertainties**, including inability to acquire/integrate businesses, cybersecurity incidents, patent-related legal expenses, oil and gas price fluctuations, inflationary pressures, and supply chain disruptions[13](index=13&type=chunk) - The company expressly disclaims any intent or obligation to update any forward-looking statements after the date of the report, except as required by applicable law[15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion for the quarter [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements for **Q1 2024**, including balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and equity at quarter-end Total Equity Securities Fair Value | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total assets | **$631,725** | **$633,545** | | Total liabilities | **$42,121** | **$43,936** | | Total stockholders' equity | **$589,604** | **$589,609** | | Cash and cash equivalents | **$438,762** | **$340,091** | | Equity securities | **$22,918** | **$63,068** | | Accounts receivable, net | **$15,372** | **$80,555** | | Total current assets | **$553,147** | **$554,512** | | Total current liabilities | **$25,846** | **$27,636** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This statement outlines the company's revenues, expenses, and net income or loss for the three-month period Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | % Change | | :----------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :------- | | Total revenues | **$24,320** | **$14,803** | **$9,517** | **64%** | | Intellectual property operations revenue | **$13,623** | **$4,176** | **$9,447** | **226%** | | Industrial operations revenue | **$8,841** | **$10,627** | **$(1,786)** | **(17%)** | | Energy operations revenue | **$1,856** | **$0** | **$1,856** | N/A | | Total costs and expenses | **$26,407** | **$24,127** | **$2,280** | **9%** | | Operating loss | **$(2,087)** | **$(9,324)** | **$7,237** | **(78%)** | | Change in fair value of equity securities | **$(26,701)** | **$3,343** | **$(30,044)** | **(899%)** | | Gain (loss) on sale of equity securities | **$28,861** | **$(1,361)** | **$30,222** | **(2221%)** | | Legal liability fee | **$(6,243)** | **$0** | **$(6,243)** | N/A | | Net (loss) income attributable to Acacia Research Corporation | **$(186)** | **$9,447** | **$(9,633)** | **(102%)** | | Basic net income per common share | **$0** | **$0.12** | **$(0.12)** | **(100%)** | | Diluted net loss per common share | **$0** | **$(0.07)** | **$0.07** | **(100%)** | [Unaudited Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Series%20A%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity) This statement details changes in preferred stock and stockholders' equity, including net loss and share-based compensation Unaudited Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders' Equity | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----------------------------------------- | :---------------------------- | :------------------------------- | | Total Stockholders' Equity (End of Period) | **$589,604** | **$589,609** | | Net loss including noncontrolling interests | **$(189)** | N/A | | Compensation expense for share-based awards | **$858** | N/A | | Common Stock Issued (Shares) | **100,021,951** | **99,895,473** | - For the three months ended **March 31, 2023**, key activities included accretion of **Series A Redeemable Convertible Preferred Stock** to redemption value (**$1,554 thousand**) and issuance of common stock from the **Rights Offering** (**15,068,753** shares for **$79,111 thousand**)[27](index=27&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities for the period Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (in thousands) | | :----------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | **$54,839** | **$(4,349)** | **$59,188** | | Net cash provided by investing activities | **$42,040** | **$2,783** | **$39,257** | | Net cash provided by financing activities | **$1,826** | **$77,995** | **$(76,169)** | | Increase in cash and cash equivalents | **$98,671** | **$76,441** | **$22,230** | | Cash and cash equivalents, ending | **$438,762** | **$364,227** | **$74,535** | - Operating activities in **Q1 2024** were positively impacted by a **$65,156 thousand** decrease in accounts receivable, compared to a **$451 thousand** decrease in **Q1 2023**[32](index=32&type=chunk) - Investing activities in **Q1 2024** were significantly boosted by **$57,854 thousand** from sales of equity securities, compared to **$8,032 thousand** in **Q1 2023**[32](index=32&type=chunk) - Financing activities in **Q1 2023** included **$79,111 thousand** from the **Rights Offering**, which did not recur in **Q1 2024**[32](index=32&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of Business](index=10&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) This note describes **Acacia Research Corporation's** strategy of acquiring and managing companies across IP, industrial, and energy operations - **Acacia Research Corporation** focuses on acquiring and managing companies across industrial, energy, technology, and healthcare verticals, targeting complex situations and businesses valued under **$2 billion**[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The strategic relationship with **Starboard Value, LP** (controlling shareholder with ~**61.2%** ownership as of **May 6, 2024**) provides access to industry expertise and assists with sourcing and evaluating acquisition opportunities[38](index=38&type=chunk) - **Intellectual Property Operations** involves investing in, licensing, and enforcing patent portfolios, assuming operational expenses and sharing net licensing revenue with partners[39](index=39&type=chunk) - **Industrial Operations**, through **Printronix** (acquired **October 2021**), manufactures and distributes industrial impact printers and related consumables/services globally[42](index=42&type=chunk) - **Energy Operations**, through **Benchmark** (**50.4%** equity interest acquired **November 2023**), is an oil and gas company focused on acquiring, producing, and developing assets in **Texas and Oklahoma**. Post-**April 2024** acquisition, **Acacia's** interest increased to ~**73.5%**[43](index=43&type=chunk)[45](index=45&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting principles applied in preparing consolidated financial statements, including revenue recognition - The consolidated financial statements include wholly and majority-owned/controlled subsidiaries, with **Benchmark** being a **consolidated variable interest entity (VIE)**[47](index=47&type=chunk)[49](index=49&type=chunk) - Revenue from **Intellectual Property Operations** is recognized upon transfer of control of bundled IP rights, primarily from **one-time paid-up license fees** or **sales-based recurring agreements**[51](index=51&type=chunk)[54](index=54&type=chunk) Intellectual Property Operations Revenue Breakdown | Type of Revenue | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :------------------------ | :------------------------------------------- | :------------------------------------------- | | Paid-up license revenue | **$12,365** | **$3,900** | | Recurring license revenue | **$1,258** | **$276** | | **Total** | **$13,623** | **$4,176** | - Revenue from **Industrial Operations** (**Printronix**) is recognized upon transfer of goods/services, with products generally recognized upon shipment and services over time[58](index=58&type=chunk)[63](index=63&type=chunk) Industrial Operations Revenue Breakdown | Type of Revenue | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :------------------------ | :------------------------------------------- | :------------------------------------------- | | Printers, consumables, parts | **$8,078** | **$9,634** | | Services | **$763** | **$993** | | **Total** | **$8,841** | **$10,627** | - Revenue from **Energy Operations** (**Benchmark**) is recognized from sales of oil and natural gas products upon transfer of control at delivery points, with pricing tied to market indices[67](index=67&type=chunk)[68](index=68&type=chunk) Energy Operations Revenue Breakdown (3 Months Ended March 31, 2024) | Type of Revenue | Amount (in thousands) | | :------------------------ | :-------------------- | | Oil sales | **$661** | | Natural gas sales | **$730** | | Natural gas liquids sales | **$465** | | **Total** | **$1,856** | - **Benchmark's Revolving Credit Facility** had an outstanding balance of **$13.0 million** as of **March 31, 2024**, at an **11%** interest rate. A new **$150 million Revolving Credit Facility** was entered into on **April 17, 2024**, with **$82.7 million** drawn[86](index=86&type=chunk)[88](index=88&type=chunk) - The company's **effective tax rates** were **85%** for **Q1 2024** and **20%** for **Q1 2023**, with a partial valuation allowance against net deferred tax assets[99](index=99&type=chunk) - Management is evaluating the impact of recently issued **ASU 2023-07 (Improvements to Reportable Segment Disclosures)** and **ASU 2023-09 (Improvements to Income Tax Disclosures)**[102](index=102&type=chunk)[105](index=105&type=chunk) [3. Equity Securities](index=21&type=section&id=3.%20EQUITY%20SECURITIES) This note details equity investments, including fair value changes and proceeds from **Life Sciences Portfolio** monetization Total Equity Securities Fair Value | Date | Fair Value (in thousands) | | :--------------- | :------------------------ | | March 31, 2024 | **$22,918** | | December 31, 2023 | **$63,068** | - The **Life Sciences Portfolio**, acquired in **2020** for approximately **$277.5 million**, has generated **$564.1 million** in proceeds through **March 31, 2024**, with a remaining fair value of **$25.7 million**[107](index=107&type=chunk)[108](index=108&type=chunk)[235](index=235&type=chunk) - On **January 19, 2024**, the company completed the sale of its **Arix Bioscience PLC shares** for **$57.1 million**, resulting in a realized gain, and no longer owns any **Arix** shares[109](index=109&type=chunk)[235](index=235&type=chunk) Net Realized and Unrealized Gain (Life Sciences Portfolio) | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :----------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Change in fair value of equity securities | **$(28,581)** | **$577** | | Gain on sale of equity securities | **$28,581** | **$0** | | **Net realized and unrealized gain** | **$0** | **$577** | [4. Inventories](index=22&type=section&id=4.%20INVENTORIES) This note provides a breakdown of **Printronix's** inventory components and their carrying amounts Printronix Inventories | Date | Amount (in thousands) | | :--------------- | :-------------------- | | March 31, 2024 | **$9,880** | | December 31, 2023 | **$10,921** | - As of **March 31, 2024**, inventories consisted of **raw materials** (**$3,404k**), **subassemblies and work in process** (**$1,533k**), and **finished goods** (**$5,447k**)[112](index=112&type=chunk) [5. Property, Plant and Equipment, Net](index=23&type=section&id=5.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) This note presents the net carrying value of property, plant, and equipment, and associated depreciation Property, Plant and Equipment, Net | Date | Amount (in thousands) | | :--------------- | :-------------------- | | March 31, 2024 | **$2,090** | | December 31, 2023 | **$2,356** | - Total **depreciation and amortization expense** was **$280,000** for the three months ended **March 31, 2024**, a decrease from **$347,000** in the comparable prior period[116](index=116&type=chunk) [6. Oil and Natural Gas Properties, Net](index=23&type=section&id=6.%20OIL%20AND%20NATURAL%20GAS%20PROPERTIES%2C%20NET) This note details **Benchmark's** net oil and natural gas properties and related depletion expenses Benchmark's Oil and Natural Gas Properties, Net | Date | Amount (in thousands) | | :--------------- | :-------------------- | | March 31, 2024 | **$24,952** | | December 31, 2023 | **$25,117** | - Total **depletion and depreciation expense** for **Benchmark's** oil and natural gas properties was **$422,000** for the three months ended **March 31, 2024**[117](index=117&type=chunk) - No **impairment** to proved oil and natural gas properties was determined as of **March 31, 2024**[117](index=117&type=chunk) [7. Goodwill and Other Intangible Assets, Net](index=23&type=section&id=7.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS%2C%20NET) This note provides goodwill by segment and other intangible assets, including amortization schedules Goodwill Carrying Amount by Segment | Segment | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------ | :---------------------------- | :------------------------------- | | Industrial Operations | **$7,541** | **$7,541** | | Energy Operations | **$1,449** | **$1,449** | | **Total** | **$8,990** | **$8,990** | Other Intangible Assets, Net | Date | Amount (in thousands) | | :--------------- | :-------------------- | | March 31, 2024 | **$29,690** | | December 31, 2023 | **$33,556** | - Total **other intangible asset amortization expense** was **$3.9 million** for the three months ended **March 31, 2024**, compared to **$3.0 million** for the same period in **2023**[120](index=120&type=chunk) Scheduled Annual Aggregate Amortization Expense | Years Ending December 31, | Amount (in thousands) | | :------------------------ | :-------------------- | | Remainder of 2024 | **$10,964** | | 2025 | **$12,485** | | 2026 | **$3,173** | | 2027 | **$1,734** | | 2028 | **$1,334** | | **Total** | **$29,690** | [8. Accrued Expenses and Other Current Liabilities](index=25&type=section&id=8.%20ACCURRED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note details accrued expenses and other current liabilities, primarily due to patent cost payments Accrued Expenses and Other Current Liabilities | Date | Amount (in thousands) | | :--------------- | :-------------------- | | March 31, 2024 | **$3,990** | | December 31, 2023 | **$8,405** | - The decrease in accrued expenses was primarily due to the payment of **$4.0 million** in **accrued patent costs** on **January 31, 2024**[122](index=122&type=chunk)[123](index=123&type=chunk) [9. Starboard Investment](index=25&type=section&id=9.%20STARBOARD%20INVESTMENT) This note describes recapitalization, **Starboard's** ownership, and related transactions including the **Rights Offering** - The company completed a **recapitalization** in **2023** to simplify its capital structure, which included the conversion of **Series A Redeemable Convertible Preferred Stock** and the exercise/cancellation of **Series B Warrants**[126](index=126&type=chunk)[229](index=229&type=chunk) - On **July 13, 2023**, **Starboard** converted **350,000** shares of **Series A Preferred Stock** into **9,616,746 common shares**; no **Series A Preferred Stock** remains outstanding as of **March 31, 2024**[127](index=127&type=chunk)[130](index=130&type=chunk) - On **July 13, 2023**, **Starboard** exercised **Series B Warrants**, resulting in **31,506,849 common shares**, cancellation of **$60.0 million Senior Secured Notes**, and **$55.0 million** gross proceeds to the company; no **Series B Warrants** remain outstanding[127](index=127&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - As of **May 6, 2024**, **Starboard** beneficially owned **61,123,595** shares of **common stock**, representing approximately **61.2%** of the total outstanding **common stock**[38](index=38&type=chunk)[127](index=127&type=chunk)[230](index=230&type=chunk) - A **Rights Offering** in **Q1 2023** generated approximately **$361,000** from public and **$78.8 million** from a concurrent **private offering** (**Starboard**), issuing **15,068,753 common shares**[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - A **Services Agreement** with **Starboard** (**December 2023**) provides trade execution, research, and due diligence on an expense reimbursement basis; no reimbursements were made in **Q1 2024**[145](index=145&type=chunk) [10. Fair Value Measurements](index=29&type=section&id=10.%20FAIR%20VALUE%20MEASUREMENTS) This note explains the fair value hierarchy for financial assets and liabilities, including equity and commodity derivatives - The company categorizes **fair value measurements** into a **three-level hierarchy**: **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[146](index=146&type=chunk) Financial Assets Measured at Fair Value (March 31, 2024) | Instrument | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Equity securities | **$22,918** | **$0** | **$0** | **$22,918** | | Commodity derivative instruments | **$0** | **$2,094** | **$0** | **$2,094** | | **Total** | **$22,918** | **$2,094** | **$0** | **$25,012** | - As of **March 31, 2024**, there are no **Level 3** liabilities, as **Series B Warrants** and **Series A Embedded Derivatives** were exercised/converted in **2023**, resulting in zero fair value[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - **Benchmark's commodity derivative instruments** had an aggregate fair value of **$2.1 million** (asset) as of **March 31, 2024**[148](index=148&type=chunk) [11. Related Party Transactions](index=31&type=section&id=11.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses related party transactions, including a loan facility and **Starboard Services Agreement** reimbursements - The company had a **Loan Facility** with a private portfolio company with a balance of **$2.6 million** as of **March 31, 2024**, bearing **9.5%** interest per annum[154](index=154&type=chunk) - **Interest income** of **$59,000** was recorded from the **Loan Facility** for the three months ended **March 31, 2024**[154](index=154&type=chunk) - No reimbursements were made to **Starboard** under the **Services Agreement** during the three months ended **March 31, 2024**[145](index=145&type=chunk)[154](index=154&type=chunk) [12. Commitments and Contingencies](index=31&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines lease obligations, inventor royalties, and legal contingencies, including an accrued loss for the **AIP Matter** - The company leases office facilities under **operating lease arrangements** expiring through **July 2027**[155](index=155&type=chunk)[156](index=156&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) Future Minimum Lease Payments (March 31, 2024) | Years Ending December 31, | Amount (in thousands) | | :------------------------ | :-------------------- | | Remainder of 2024 | **$825** | | 2025 | **$924** | | 2026 | **$579** | | 2027 | **$243** | | **Total minimum payments**| **$2,571** | - The company is subject to **inventor royalties** and **contingent legal fees** based on future net revenues from patent licensing and enforcement[162](index=162&type=chunk)[163](index=163&type=chunk) - An **accrued loss contingency** of **$8.5 million** as of **March 31, 2024**, includes an additional accrual of **$6.2 million** in **Q1 2024** related to the **AIP Matter** (profit interests for former executives)[167](index=167&type=chunk) - The **Slingshot Technologies, LLC lawsuit**, alleging misappropriation of confidential information, was transferred to **Delaware Superior Court**, with oral arguments on summary judgment held **March 28, 2024**[165](index=165&type=chunk) [13. Stockholders' Equity](index=34&type=section&id=13.%20STOCKHOLDERS%27%20EQUITY) This note details stock repurchase programs and a charter provision designed to protect tax assets - The company has a **stock repurchase program** approved in **November 2023** for up to **$20.0 million** (capped at **5,800,000** shares); no repurchases were made under this program in **Q1 2024**[173](index=173&type=chunk) - A previous **stock repurchase program** (**March 2022**) was completed in **July 2022**, repurchasing **8,453,519** shares for **$40.0 million**[172](index=172&type=chunk) - A **Charter Provision** prohibits **common stock** transfers that could result in an **ownership change**, aiming to protect the company's ability to utilize potential tax assets like **net operating loss carryforwards**[176](index=176&type=chunk) [14. Equity-Based Incentive Plans](index=35&type=section&id=14.%20EQUITY-BASED%20INCENTIVE%20PLANS) This note describes equity-based compensation plans, including stock options, **RSAs**, and **RSUs**, and associated expenses - The company grants **stock options**, **restricted stock awards (RSAs)**, and **restricted stock units (RSUs)** under the **2016 Acacia Research Corporation Stock Incentive Plan** (the **2013 Plan** expired)[177](index=177&type=chunk)[183](index=183&type=chunk) - As of **March 31, 2024**, there were **1,457,214 shares available for grant** under the **2016 Plan**[184](index=184&type=chunk) Stock Option Activity (3 Months Ended March 31, 2024) | Metric | Options | Weighted Average Exercise Price | | :---------------------- | :-------- | :------------------------------ | | Outstanding (Dec 31, 2023) | **1,108,187** | **$4.18** | | Forfeited/Expired | **(45,000)** | **$5.40** | | Outstanding (Mar 31, 2024) | **1,063,187** | **$4.12** | | Exercisable (Mar 31, 2024) | **556,481** | **$4.16** | Nonvested Restricted Stock Activity (3 Months Ended March 31, 2024) | Metric | RSAs (Shares) | RSUs (Units) | PSUs (Units) | | :---------------------- | :------------ | :----------- | :----------- | | Nonvested (Dec 31, 2023) | **193,665** | **1,408,491** | **1,981,464** | | Vested | **(109,330)** | **(275,244)** | **0** | | Forfeited | **0** | **(30,534)** | **0** | | Nonvested (Mar 31, 2024) | **84,335** | **1,102,713** | **1,981,464** | - Total **unrecognized stock-based compensation expense** as of **March 31, 2024**, was **$4.3 million**, to be amortized over a **weighted average remaining vesting period** of **1.8 years**[189](index=189&type=chunk) Compensation Expense for Share-Based Awards | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :----- | :------------------------------------------- | :------------------------------------------- | | Options | **$128** | **$28** | | RSAs | **$106** | **$209** | | RSUs | **$624** | **$240** | | **Total** | **$858** | **$477** | [15. Income/Loss Per Share](index=38&type=section&id=15.%20INCOME%2FLOSS%20PER%20SHARE) This note presents basic and diluted net income or loss per common share and weighted average shares outstanding Net (Loss) Income Attributable to Common Stockholders | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :----- | :------------------------------------------- | :------------------------------------------- | | Basic | **$(186)** | **$5,958** | | Diluted | **$(186)** | **$(6,496)** | Weighted Average Shares Outstanding | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :----- | :---------------------------- | :---------------------------- | | Basic | **99,745,905** | **47,971,931** | | Diluted | **99,745,905** | **89,067,821** | Per Share Data | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :----- | :---------------------------- | :---------------------------- | | Basic EPS | **$0** | **$0.12** | | Diluted EPS | **$0** | **$(0.07)** | - **Anti-dilutive potential common shares** excluded from diluted EPS computation totaled **4,231,699** for the three months ended **March 31, 2024**[192](index=192&type=chunk) [16. Segment Reporting](index=38&type=section&id=16.%20SEGMENT%20REPORTING) This note provides financial information by segment: **Intellectual Property**, **Industrial**, and **Energy Operations** - The company operates in **three reportable segments**: **Intellectual Property Operations**, **Industrial Operations**, and **Energy Operations** (new in **November 2023**)[192](index=192&type=chunk)[196](index=196&type=chunk) Segment Operating Income (3 Months Ended March 31, 2024) | Segment | Operating Income (in thousands) | | :-------------------------- | :------------------------------ | | Intellectual Property Operations | **$3,282** | | Industrial Operations | **$1,212** | | Energy Operations | **$156** | | **Total Segment Operating Income** | **$4,650** | Total Revenues by Segment | Segment | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Intellectual Property Operations | **$13,623** | **$4,176** | | Industrial Operations | **$8,841** | **$10,627** | | Energy Operations | **$1,856** | **$0** | | **Total** | **$24,320** | **$14,803** | Revenues by Geographic Area (3 Months Ended March 31, 2024) | Geographic Area | Intellectual Property Operations (in thousands) | Industrial Operations (in thousands) | Energy Operations (in thousands) | Total (in thousands) | | :-------------------------- | :---------------------------------------------- | :----------------------------------- | :------------------------------- | :------------------- | | United States | **$2,064** | **$3,159** | **$1,856** | **$7,079** | | Asia-Pacific | **$11,558** | **$2,938** | **$0** | **$14,496** | | Europe, Middle East and Africa | **$0** | **$2,478** | **$0** | **$2,478** | | **Total** | **$13,623** | **$8,841** | **$1,856** | **$24,320** | [20. Subsequent Events](index=44&type=section&id=20.%20SUBSEQUENT%20EVENTS) This note discloses significant events after the balance sheet date, including **Benchmark's** upstream asset acquisition - On **April 17, 2024**, **Benchmark** completed the acquisition of certain **upstream assets** and **related facilities** in **Texas and Oklahoma** for **$145 million**, including approximately **140,000 net acres** and an interest in approximately **470 operated producing wells**[44](index=44&type=chunk)[211](index=211&type=chunk) - Following the acquisition, the company's interest in **Benchmark** increased to approximately **73.5%**[45](index=45&type=chunk)[211](index=211&type=chunk) - The acquisition was funded by **$59.9 million** from the company's **cash on hand**, **borrowings** under a **Revolving Credit Facility** (**$82.7 million** drawn), and a **cash contribution from other investors**[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, business strategy, segment operations, recent developments, and **Q1 2024** results [General Business Overview](index=45&type=section&id=General%20Business%20Overview) **Acacia Research Corporation's** investment strategy focuses on acquiring and managing companies across various verticals - **Acacia Research Corporation** focuses on acquiring and managing companies across industrial, energy, technology, and healthcare verticals, targeting complex situations where value is not fully recognized[214](index=214&type=chunk)[215](index=215&type=chunk) - The **business model is differentiated from private equity and hedge funds**, often initiating **strategic block positions** in public companies as a path to **whole company acquisitions**[215](index=215&type=chunk) - The company leverages its **disciplined focus**, willingness to invest in **off-the-run assets**, **strong relationships**, and expertise in **corporate governance** and **operational transformation**[216](index=216&type=chunk) - The strategic relationship with **Starboard Value, LP** provides access to industry expertise and assists with sourcing and evaluating acquisition opportunities[219](index=219&type=chunk) [Segment Overviews](index=46&type=section&id=Segment%20Overviews) This section overviews **Intellectual Property**, **Industrial**, and **Energy Operations** segments, highlighting core activities - **Intellectual Property Operations** invests in and licenses/enforces patent portfolios, having executed **over 1,600 license agreements** and **generated approximately $1.8 billion in gross licensing revenue** to date[220](index=220&type=chunk)[221](index=221&type=chunk) - **Industrial Operations**, through **Printronix**, is a **leading manufacturer and distributor of industrial impact printers** and related consumables and services, acquired in **October 2021**[223](index=223&type=chunk) - **Energy Operations**, through **Benchmark** (**50.4%** equity interest acquired **November 2023**), is an **independent oil and gas company** focused on **acquisition, production, and development** in **Texas and Oklahoma**. Post-**April 2024** acquisition, the company's interest is ~**73.5%**[226](index=226&type=chunk)[227](index=227&type=chunk) [Recent Business Developments and Trends](index=47&type=section&id=Recent%20Business%20Developments%20and%20Trends) This section discusses capital structure simplification, leadership changes, asset monetization, and key acquisitions - A **recapitalization** completed in **2023** simplified the capital structure, resulting in **Starboard** owning approximately **61.2%** of **common stock** and no **Series A Preferred Stock**, **Series B Warrants**, or **Senior Secured Notes** outstanding[229](index=229&type=chunk)[230](index=230&type=chunk) - **Mr. Martin D. McNulty Jr.** was appointed permanent **Chief Executive Officer** and a director in **February 2024**[234](index=234&type=chunk) - The company has received **$564.1 million** in proceeds from monetizing its **Life Sciences Portfolio** through **March 31, 2024**, including the sale of **Arix Bioscience PLC shares** for **$57.1 million** in **January 2024**[235](index=235&type=chunk) - Key acquisitions include **Printronix** (**October 2021**) and **Benchmark** (**November 2023**), with a significant follow-on asset acquisition for **Benchmark** completed in **April 2024** for **$145 million**, increasing the company's interest to ~**73.5%**[236](index=236&type=chunk)[237](index=237&type=chunk) - The business strategy involves growing through additional operating businesses, energy assets, and intellectual property assets, financed by **cash on hand** or external funding[238](index=238&type=chunk) [Inflation](index=49&type=section&id=Inflation) This section addresses inflation's impact on the consolidated enterprise, particularly **Printronix** costs and **Energy Operations** - Historically, inflation has not significantly impacted the consolidated enterprise[239](index=239&type=chunk) - In **Q1 2024**, the **Printronix** subsidiary experienced a small increase in **raw material costs**, leading to price adjustments and cost rationalization measures[239](index=239&type=chunk) - The **Energy Operations Business** may also experience inflationary pressures due to increases in oil and natural gas prices, supply chain disruptions, and labor shortages[239](index=239&type=chunk) [Patent Licensing and Enforcement](index=49&type=section&id=Patent%20Licensing%20and%20Enforcement) This section details patent licensing activities, litigation status, legal expenses, and challenges in patent acquisition - The **Patent Licensing, Enforcement and Technologies Business** has no pending patent infringement cases with scheduled trial dates in the next twelve months[240](index=240&type=chunk) - Patent-related legal expenses are expected to fluctuate based on future trial dates, international enforcement, and strategic patent portfolio activities[241](index=241&type=chunk) - The business depends on identifying and investing in new patents and IP-owning companies, with quality patent intake remaining a significant industry challenge[242](index=242&type=chunk)[244](index=244&type=chunk) - No new patent portfolios were acquired during **Q1 2024**, **2023**, or **2022**[244](index=244&type=chunk) [Industrial Operations Business](index=50&type=section&id=Industrial%20Operations%20Business) **Printronix** is a global leader in industrial impact printing solutions, serving mission-critical applications - **Printronix** is a worldwide leader in multi-technology supply-chain printing solutions, manufacturing industrial impact printers and related consumable products[246](index=246&type=chunk) - Its products are used for mission-critical applications across various industries, including manufacturing, transportation, logistics, healthcare, and banking sectors[246](index=246&type=chunk) - **Printronix** maintains manufacturing, configuration, and distribution sites in **Malaysia, the United States, Singapore, China, and the Netherlands**, supporting a global network[246](index=246&type=chunk) [Energy Operations Business](index=50&type=section&id=Energy%20Operations%20Business) **Benchmark** focuses on acquiring, producing, and developing oil and gas assets in **Texas and Oklahoma** - **Benchmark** is an **independent oil and gas company** engaged in the **acquisition, production, and development** of assets in **mature resource plays** in **Texas and Oklahoma**[247](index=247&type=chunk) - Following the acquisition of **Revolution**, **Benchmark's** assets consist of approximately **153,000 net acres** and an interest in approximately **605 wells**, with **Acacia** owning **73.5%**[247](index=247&type=chunk) - **Benchmark's** strategy focuses on enhancing asset value through **disciplined field optimization**, **robust commodity hedges**, and **low leverage**[247](index=247&type=chunk) [Operating Activities](index=50&type=section&id=Operating%20Activities) This section discusses revenue and operational variability across **Intellectual Property**, **Industrial**, and **Energy** segments - **Intellectual Property Operations revenues** historically **fluctuate significantly** due to factors such as the dollar amount and terms of license agreements, litigation outcomes, and macroeconomic factors; management does **not aim for smooth sequential growth**[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) - **Industrial Operations** (**Printronix**) focuses on **manufacturing and distributing printers** and consumable products[251](index=251&type=chunk) - **Energy Operations** (**Benchmark**) is engaged in the **acquisition, production, and development of oil and natural gas resources**[252](index=252&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) This section analyzes financial performance, including revenues, expenses, operating loss, and net income or loss Summary of Results of Operations (3 Months Ended March 31) | Metric | 2024 (in thousands) | 2023 (in thousands) | $ Change | % Change | | :----------------------------------------- | :------------------ | :------------------ | :------- | :------- | | Total revenues | **$24,320** | **$14,803** | **$9,517** | **64%** | | Total costs and expenses | **$26,407** | **$24,127** | **$2,280** | **9%** | | Operating loss | **$(2,087)** | **$(9,324)** | **$7,237** | **(78%)** | | Total other income | **$789** | **$21,254** | **$(20,465)**| **(96%)** | | (Loss) income before income taxes | **$(1,298)** | **$11,930** | **$(13,228)**| **(111%)** | | Income tax benefit (expense) | **$1,109** | **$(2,483)** | **$3,592** | **(145%)** | | Net (loss) income attributable to Acacia Research Corporation | **$(186)** | **$9,447** | **$(9,633)** | **(102%)** | - **Total revenues** increased by **64%** to **$24.3 million** in **Q1 2024**, primarily driven by a **226%** increase in **Intellectual Property Operations revenues** and **$1.9 million** from **Energy Operations**, partially offset by a **17%** decrease in **Industrial Operations revenues**[253](index=253&type=chunk) - The company reported a **net loss** of **$(186) thousand** in **Q1 2024**, a significant decline from **$9,447 thousand net income** in **Q1 2023**, mainly due to a **$(6.2) million legal liability fee** and a **$(26.7) million unrealized loss on equity securities**, despite a **$28.9 million realized gain from equity sales**[257](index=257&type=chunk)[258](index=258&type=chunk) - **General and administrative expenses** increased by **$313 thousand** (**3%**) to **$12.4 million**, primarily due to increased **Intellectual Property Operations variable performance-based compensation** and **parent compensation expense for share-based awards**, and **$385 thousand** from **Energy Operations G&A costs**[256](index=256&type=chunk)[273](index=273&type=chunk) - **Interest income and other, net**, increased to **$4.9 million** in **Q1 2024** from **$3.4 million** in **Q1 2023**, mainly due to higher **interest income from cash equivalents**[261](index=261&type=chunk) Income Tax Benefit (Expense) and Effective Tax Rate | Metric | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | % Change | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | :------- | | Income tax benefit (expense) | **$1,109** | **$(2,483)** | **(145%)** | | Effective tax rate | **(85%)** | **20%** | **(105) %** | [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses liquidity, cash flow activities, and future capital requirements for financial obligations - Primary sources of liquidity are **cash and cash equivalents on hand**, which totaled **$461.7 million** at **March 31, 2024** (up from **$403.2 million** at **Dec 31, 2023**), and **cash generated from operating activities**[281](index=281&type=chunk)[287](index=287&type=chunk) Net Cash Flow Summary (3 Months Ended March 31) | Metric | 2024 (in thousands) | 2023 (in thousands) | | :----------------------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | **$54,839** | **$(4,349)** | | Net cash provided by investing activities | **$42,040** | **$2,783** | | Net cash provided by financing activities | **$1,826** | **$77,995** | | Increase in cash and cash equivalents | **$98,671** | **$76,441** | - **Cash provided by operating activities** significantly increased to **$54.8 million** in **Q1 2024** (from **$(4.3) million** used in **Q1 2023**), primarily due to **net inflows from changes in accounts receivable and other working capital items**[293](index=293&type=chunk) - **Cash receipts from Intellectual Property Operations** totaled **$77.5 million** in **Q1 2024**, a substantial increase from **$4.4 million** in **Q1 2023**[292](index=292&type=chunk) - **Cash provided by investing activities** increased to **$42.0 million** in **Q1 2024** (from **$2.8 million** in **Q1 2023**), mainly driven by **net cash inflows from equity securities transactions** and the **sale of Arix shares**[295](index=295&type=chunk) - **Cash provided by financing activities** decreased to **$1.8 million** in **Q1 2024** (from **$78.0 million** in **Q1 2023**), primarily due to the completion of the **Rights Offering and Concurrent Private Rights Offering** in the prior period[298](index=298&type=chunk) - Management believes current **cash and cash equivalents**, along with **cash flows from operations**, will be **sufficient to meet cash requirements for at least the next twelve months**; **future acquisitions** may be financed through **cash on hand** or **equity/debt financing**[283](index=283&type=chunk) [Critical Accounting Estimates](index=60&type=section&id=Critical%20Accounting%20Estimates) This section identifies significant accounting estimates requiring management's judgment, such as revenue recognition and asset valuations - Key **critical accounting estimates** include **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**[300](index=300&type=chunk) - These **critical accounting estimates** have not materially changed from those disclosed in the **Management's Discussion and Analysis of Financial Condition and Results of Operations** included in the **2023 Annual Report**[301](index=301&type=chunk) [Recent Accounting Pronouncements](index=60&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to notes for information on recently adopted and not yet adopted accounting standards - Refer to Note **2** to the consolidated financial statements for information on recently adopted and not yet adopted accounting pronouncements[302](index=302&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate, investment, and foreign currency risks; a **10%** adverse change in public equity would decrease value by **$2.3 million** - The company's **short-term investment objective** is to **preserve principal** while **maximizing income** from **equity securities** without significantly increasing risk[304](index=304&type=chunk) - Exposure to **investment risks** related to changes in the **underlying financial condition of equity investments** and **market price volatility**[305](index=305&type=chunk) - As of **March 31, 2024**, the **carrying value of equity investments** in **public and private companies** was **$59.7 million**[305](index=305&type=chunk) - A **hypothetical 10% adverse change** in the market price of **publicly traded common stock investments** would result in a decrease of approximately **$2.3 million** as of **March 31, 2024**[306](index=306&type=chunk) - The company is exposed to **foreign currency exchange risk** related to fluctuations between the **U.S. dollar, British Pound, and Euro**, primarily affecting **foreign cash accounts**. No **foreign denominated equity securities** were held as of **March 31, 2024**[307](index=307&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of **March 31, 2024**, with no material internal control changes, acknowledging limitations - The **principal executive officer** and **principal financial officer** concluded that the company's **disclosure controls and procedures** were effective as of **March 31, 2024**[308](index=308&type=chunk) - There were no changes in **internal control over financial reporting** that materially affected, or are reasonably likely to materially affect, **internal control over financial reporting** during the three months ended **March 31, 2024**[310](index=310&type=chunk) - Management acknowledges the **inherent limitations of control systems**, stating that they can provide only **reasonable, not absolute, assurance** that objectives will be met[311](index=311&type=chunk) [PART II. OTHER INFORMATION](index=63&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal actions, including patent enforcement, not expected to materially affect financial position - The company is subject to **claims, counterclaims, and legal actions** arising in the ordinary course of business, including **patent enforcement activities**[313](index=313&type=chunk) - Management believes that the ultimate liability with respect to these **claims and legal actions** will not have a **material adverse effect** on the company's **consolidated financial position, results of operations, or cash flows**[313](index=313&type=chunk) - **Intellectual Property Operations** frequently engages in **litigation to enforce patents**, which can be **costly, consume significant resources**, and may result in **monetary sanctions or adverse outcomes**[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk) - Refer to Note **12** to the consolidated financial statements for additional information regarding certain pending litigation[313](index=313&type=chunk)[316](index=316&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) Investors should review risks in the **2023 Form 10-K** and other filings, noting no material changes - Investors should carefully review and consider the risks and uncertainties detailed in '**Item 1A. Risk Factors**' of the company's **Annual Report on Form 10-K** for the fiscal year ended **December 31, 2023**, and other public filings[317](index=317&type=chunk) - There have been no **material changes to the risk factors** previously reported in the **2023 Annual Report**[317](index=317&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report for the period - No **unregistered sales of equity securities and use of proceeds** to report for the period[318](index=318&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report for the period - No **defaults upon senior securities** to report for the period[318](index=318&type=chunk) [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) **Mine Safety Disclosures** are not applicable to the company - **Mine Safety Disclosures** are not applicable to the company[320](index=320&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a **Rule 10b5-1** trading arrangement in **Q1 2024** - During the three months ended **March 31, 2024**, no director or officer adopted, modified, or terminated a **Rule 10b5-1** or **non-Rule 10b5-1 trading arrangement**[320](index=320&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the **Form 10-Q**, including agreements, certifications, and **iXBRL financial statements** - Key exhibits include the **Amended and Restated Employment Agreement** for **Martin D. McNulty, Jr.**, the **Purchase and Sale Agreement** for **Benchmark**, the **Loan Agreement** for **BE Anadarko**, **certifications** from the **Principal Executive Officer** and **Principal Financial Officer**, and **iXBRL formatted financial statements**[319](index=319&type=chunk) [SIGNATURES](index=65&type=section&id=SIGNATURES) The Quarterly Report was signed on **May 9, 2024**, by the **CEO** and **Interim CFO** - The Quarterly Report was signed on **May 9, 2024**, by **Martin D. McNulty Jr.**, **Chief Executive Officer**, and **Kirsten Hoover**, **Interim Chief Financial Officer**[324](index=324&type=chunk)

Revenue and Financial Performance - Total revenues for Q1 2024 were $24.3 million, a significant increase from $14.8 million in Q1 2023, driven by $13.6 million from intellectual property operations[2][4] - Total revenues for Q1 2024 were $24,320 thousand, a significant increase from $14,803 thousand in Q1 2023[17] - Intellectual property operations revenue grew to $13,623 thousand in Q1 2024, compared to $4,176 thousand in Q1 2023[17] - Industrial operations revenue decreased to $8,841 thousand in Q1 2024 from $10,627 thousand in Q1 2023[17] - Energy operations generated $1,856 thousand in revenue in Q1 2024, a new segment not present in Q1 2023[17] - Benchmark Energy generated $1.9 million in revenue in Q1 2024, with no comparable revenue in Q1 2023[2][5] Net Income and Loss - GAAP net loss for Q1 2024 was $0.2 million, or $0.00 per share, compared to a net income of $9.4 million in Q1 2023[2][4] - Net loss attributable to Acacia Research Corporation was $186 thousand in Q1 2024, compared to a net income of $9,447 thousand in Q1 2023[17] - Operating loss improved to $2,087 thousand in Q1 2024 from $9,324 thousand in Q1 2023[17] Cash and Investments - Acacia holds $461.7 million in cash, cash equivalents, and equity investments as of March 31, 2024, up from $403.2 million at the end of 2023[8] - The company has $400 million in cash and marketable securities, net of cash deployed in Benchmark's recent acquisition[1] - Cash and cash equivalents increased to $438,762 thousand as of March 31, 2024, up from $340,091 thousand at the end of 2023[16] Asset and Equity Changes - Book value per share at March 31, 2024 was $5.89, or $5.95 excluding a $6.2 million accrual related to the AIP Matter[2][9] - Accounts receivable decreased to $15,372 thousand as of March 31, 2024, down from $80,555 thousand at the end of 2023[16] - Total assets slightly decreased to $631,725 thousand as of March 31, 2024, from $633,545 thousand at the end of 2023[16] - Equity securities investments showed a change in fair value of $26,701 thousand loss in Q1 2024, compared to a $3,343 thousand gain in Q1 2023[17] Acquisitions and Divestitures - The company completed the sale of Arix Bioscience Plc shares for $57.1 million, realizing a gain of $28.6 million[2] - Benchmark's recent acquisition added 140,000 net acres and 470 operated producing wells in the Western Anadarko Basin[2] Expenses - General and administrative expenses increased to $12.4 million in Q1 2024, up from $12.0 million in Q1 2023[5] Life Sciences Portfolio - Acacia's life sciences portfolio has generated $564.1 million in proceeds from sales and royalties, with remaining positions valued at $25.7 million[7]

Acacia Research Corporation (NASDAQ:ACTG) Q4 2023 Earnings Conference Call March 14, 2024 4:30 PM ET Company Participants Rob Fink - FNK, Investor Relations MJ McNulty - Chief Executive Officer Kirsten Hoover - Interim Chief Financial Officer Conference Call Participants Anthony Stoss - Craig-Hallum Brett Reiss - Janney Montgomery Scott Operator Good afternoon, everyone. And welcome to the Acacia Research Fourth Quarter and Year End 2023 Financial Results Call. At this time, all participants are in a listen ...

Part I This section outlines Acacia Research Corporation's business, strategic focus, operational structure, and key risks including legal proceedings [Business](index=5&type=section&id=Item%201.%20Business) Acacia Research Corporation focuses on acquiring and managing undervalued companies across industrial, energy, and intellectual property segments, supported by its strategic relationship with Starboard Value LP - The company focuses on acquiring and managing businesses across the industrial, energy, technology, and healthcare sectors, particularly targeting companies with market values of **$1 billion** or less[12](index=12&type=chunk)[14](index=14&type=chunk) - A strategic relationship with controlling shareholder Starboard Value, LP provides access to industry expertise, operating partners, and assistance in sourcing and evaluating acquisition opportunities[17](index=17&type=chunk) - In July 2023, a recapitalization was completed, resulting in Starboard converting its preferred stock and exercising warrants. As of March 11, 2024, Starboard beneficially owns approximately **61.2%** of the company's common stock[19](index=19&type=chunk) [Our Operations](index=8&type=section&id=Our%20Operations) The company's operations are diversified across Intellectual Property, Energy, and Industrial (Printronix) business segments - The Intellectual Property business has generated approximately **$1.8 billion** in gross licensing revenue to date, with over 1,600 license agreements executed[31](index=31&type=chunk) - In November 2023, the company invested **$10.0 million** to acquire a **50.4%** equity interest in Benchmark Energy II, LLC, establishing its Energy Operations business[32](index=32&type=chunk) - In February 2024, Benchmark agreed to acquire certain assets from Revolution Resources for **$145.0 million** in cash, a transaction expected to close in Q2 2024 and increase Acacia's interest in Benchmark to approximately **73.1%**[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The Industrial Operations business was established through the October 2021 acquisition of Printronix Holding Corp., a leading manufacturer of industrial impact printers[37](index=37&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces various risks including acquisition integration, reliance on Starboard, segment-specific challenges, and cybersecurity threats - The consummation of the Revolution Transaction is subject to conditions and its failure to close could adversely affect the company's business and stock price[50](index=50&type=chunk)[51](index=51&type=chunk) - The company's growth strategy of acquiring operating businesses involves significant risks, including integration difficulties, potential for unknown liabilities, and diversion of management attention[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Due to Starboard's majority ownership (**approx. 61.2%**), Acacia is a "controlled company" under Nasdaq rules and may rely on exemptions from certain corporate governance requirements, such as having a majority of independent directors[83](index=83&type=chunk)[84](index=84&type=chunk) - The Intellectual Property business is subject to risks from evolving patent laws, fluctuating legal expenses, and the inherent uncertainty of litigation outcomes[89](index=89&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk) - The Energy Operations business is exposed to risks from volatile oil and gas prices, inflationary pressures on costs, and potential regulatory changes related to climate change and seismic activity[106](index=106&type=chunk)[110](index=110&type=chunk)[139](index=139&type=chunk) - The Industrial Operations business (Printronix) faces risks from its reliance on a limited number of customers, potential supply chain interruptions for key components, and the need to continuously develop new products[153](index=153&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Cybersecurity](index=33&type=section&id=Item%201C.%20Cybersecurity) Acacia integrates cybersecurity risk management into its enterprise framework, overseen by the Audit Committee, with no material incidents to date - The company has integrated cybersecurity risk management into its broader risk framework, aligned with standards from CIS and NIST[175](index=175&type=chunk)[176](index=176&type=chunk) - The Audit Committee of the Board of Directors provides oversight for cybersecurity policies and risks[183](index=183&type=chunk) - To date, no cybersecurity incidents have materially affected the company's business strategy, results of operations, or financial condition[180](index=180&type=chunk) [Properties](index=34&type=section&id=Item%202.%20Properties) The company maintains leased corporate and operational offices, with segment-specific facilities including manufacturing sites and energy assets - The company's corporate headquarters are in a leased space of approximately 8,600 square feet in New York, NY[184](index=184&type=chunk) - The Energy Operations business holds over 13,000 net acres and an interest in over 125 wells, primarily in Texas and Oklahoma[188](index=188&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) Acacia is subject to various legal actions, particularly in its Intellectual Property segment, including an ongoing lawsuit with Slingshot Technologies - The company is involved in a lawsuit with Slingshot Technologies, LLC, which alleges misappropriation of information related to a patent portfolio acquisition. The case was transferred to the Delaware Superior Court in September 2023[526](index=526&type=chunk) Part II This section covers the company's common stock market, dividend policy, MD&A of financial performance, liquidity, market risk, and internal controls [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Acacia's common stock trades on Nasdaq, with no expected dividends and a recently approved $20 million share repurchase program - The company's common stock trades on The Nasdaq Global Select Market under the symbol "ACTG"[195](index=195&type=chunk) - A stock repurchase program was approved in November 2023, authorizing up to **$20 million** in share buybacks. No shares were repurchased under this program as of December 31, 2023[197](index=197&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's 2023 financial performance, highlighting a 111% revenue increase, net income turnaround, liquidity, and critical accounting estimates [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Total revenues increased 111% to $125.1 million in 2023, driven by Intellectual Property, leading to a significant shift from loss to income before taxes Summary of Results of Operations (2023 vs. 2022) | | Years Ended December 31, | | | | :--- | :--- | :--- | :--- | | (In thousands, except percentage change values) | 2023 | 2022 | $ Change | % Change | | Total revenues | $ 125,102 | $ 59,223 | $ 65,879 | 111 % | | Total costs and expenses | 104,166 | 99,315 | 4,851 | 5 % | | Operating income (loss) | 20,936 | (40,092) | 61,028 | (152 %) | | Total other income (expense) | 46,490 | (87,058) | 133,548 | (153 %) | | Income (loss) before income taxes | 67,426 | (127,150) | 194,576 | (153 %) | | Income tax benefit | 1,504 | 16,211 | (14,707) | (91 %) | | Net income (loss) attributable to Acacia Research Corporation | 67,060 | (125,065) | 192,125 | (154 %) | - Intellectual Property Operations revenues increased by **$69.6 million** (**357%**) in 2023, primarily due to a single patent portfolio generating significant license revenue in the fourth quarter[238](index=238&type=chunk)[247](index=247&type=chunk) - Industrial Operations (Printronix) revenue decreased by **$4.6 million** (**12%**) due to lower sales of printer units[238](index=238&type=chunk)[251](index=251&type=chunk) - There was a significant positive change in the valuation of equity securities, from a **$263.7 million** unrealized loss in 2022 to a **$31.4 million** unrealized gain in 2023[242](index=242&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $403.2 million in cash and equity securities, bolstered by Starboard's warrant exercise, sufficient for future needs - Consolidated cash, cash equivalents, and equity securities totaled **$403.2 million** at December 31, 2023, up from **$349.4 million** at year-end 2022[270](index=270&type=chunk) Cash Flow Summary | | Years Ended December 31, | | :--- | :--- | :--- | | (In thousands) | 2023 | 2022 | | **Net cash provided by (used in):** | | | | Operating activities | $ (22,506) | $ (37,336) | | Investing activities | 16,178 | 184,464 | | Financing activities | 58,632 | (166,137) | | **Increase (decrease) in cash and cash equivalents** | **$ 52,305** | **$ (21,575)** | - The company received approximately **$55.0 million** in gross proceeds and cancelled **$60.0 million** in Senior Secured Notes as part of the Series B Warrants exercise by Starboard in July 2023[265](index=265&type=chunk) [Critical Accounting Estimates](index=52&type=section&id=Critical%20Accounting%20Estimates) Management's critical accounting estimates involve revenue recognition, asset valuation, financial instrument fair value, oil and gas reserves, and income taxes - Key critical accounting estimates include revenue recognition, valuation of assets (long-lived, goodwill, intangibles), valuation of financial instruments (warrants, derivatives), estimation of oil and gas reserves, and accounting for income taxes[280](index=280&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk from equity investments and foreign currency fluctuations, with potential impacts on its financial position - The company's equity investments in public and private companies had a carrying value of **$99.8 million** as of December 31, 2023[298](index=298&type=chunk) - A hypothetical 10% adverse change in foreign exchange rates would have an approximate **$5.7 million** effect on the company's financial position and results of operations as of December 31, 2023[300](index=300&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were effective[303](index=303&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023[305](index=305&type=chunk) Part III This section incorporates information on corporate governance, executive compensation, security ownership, and accountant fees by reference from the 2024 proxy statement [Directors, Executive Officers, Corporate Governance, Compensation, Security Ownership, and Accountant Fees](index=58&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information on directors, executive compensation, security ownership, and accountant fees is incorporated by reference from the 2024 proxy statement - Detailed information regarding directors, executive compensation, security ownership, and related party transactions is incorporated by reference from the forthcoming 2024 proxy statement[310](index=310&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) Part IV This section contains exhibits and the complete consolidated financial statements, including the independent auditor's report and detailed notes [Exhibits and Financial Statement Schedules](index=59&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists exhibits and includes the full consolidated financial statements with Grant Thornton LLP's unqualified auditor's report [Financial Statements](index=63&type=section&id=Financial%20Statements) Audited consolidated financial statements for 2023 and 2022 are presented, showing total assets of $633.5 million and net income of $67.1 million in 2023 Key Financial Position Data (December 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | **Assets** | | | Cash and cash equivalents | $ 340,091 | | Total current assets | $ 554,512 | | Total assets | $ 633,545 | | **Liabilities & Equity** | | | Total current liabilities | $ 27,636 | | Total liabilities | $ 43,936 | | Total stockholders' equity | $ 589,609 | Key Operational & Per-Share Data (Year Ended Dec 31, 2023) | Metric | Amount (in thousands, except per share) | | :--- | :--- | | Total revenues | $ 125,102 | | Operating income | $ 20,936 | | Net income attributable to Acacia | $ 67,060 | | Basic net income per common share | $ 0.73 | | Diluted net income per common share | $ 0.58 | [Notes to Consolidated Financial Statements](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes provide detailed disclosures on accounting policies, acquisitions, equity, goodwill, Starboard recapitalization, fair value, and segment reporting - Note 10 details the comprehensive recapitalization with Starboard, which resulted in the conversion of all Series A Preferred Stock, exercise/cancellation of all warrants, and cancellation of all Senior Secured Notes, simplifying the capital structure[472](index=472&type=chunk)[473](index=473&type=chunk) - Note 19 provides a breakdown of revenues and operating results by the three segments: Intellectual Property, Industrial, and the newly formed Energy Operations[574](index=574&type=chunk)[579](index=579&type=chunk)[583](index=583&type=chunk) - Note 3 details the acquisition of a **50.4%** interest in Benchmark Energy for **$10.0 million** in November 2023, which established the Energy Operations segment[451](index=451&type=chunk)[452](index=452&type=chunk)

Exhibit 99.1 Acacia Research Reports Fourth Quarter 2023 Financial Results Intellectual Property Licensing and Settlement Agreements Drive Q4 Income; Company Continues to Advance Capital Allocation and Business Strategy, Announced Agreement to Acquire Cash Flow-Generating Oil and Gas Assets with a Goal of Driving Book Value per Share New York, NY, March 14, 2024 - Acacia Research Corporation (Nasdaq: ACTG) (“Acacia” or the “Company”) today reported financial results for the three months and full year ended ...

NEW YORK--(BUSINESS WIRE)--Acacia Research Corporation (Nasdaq: ACTG) today announced an agreement related to its intellectual property business. Atlas Global Technologies LLC (“AGT”), a subsidiary of Acacia Research Group LLC (the patent licensing business of Acacia Research Corporation), entered into licensing and settlement agreements relating to its WiFi-6 patent portfolio during the fourth quarter of 2023, with aggregate payments under such agreements totaling more than $81 million. The details of suc ...

Acacia Research Corporation (NASDAQ:ACTG) Q3 2023 Earnings Conference Call November 13, 2023 4:30 PM ET Company Participants Jeff Stanlis - FNK IR MJ McNulty - Interim Chief Executive Officer Kirsten Hoover - Interim Chief Financial Officer Conference Call Participants Anthony Stoss - Craig-Hallum Capital Group Brett Reiss - Janney Montgomery Scott John Levin - Levin Capital Strategies Operator Greetings, and welcome to the Acacia Research Third Quarter 2023 Financial Results Conference Call. [Operator Inst ...