ACACIA RESEARCH CORP

Previous wording

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.”

Current wording

The following discussion should be read in conjunction with our condensed 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" in or Annual Report on Form 10-K for the year ended December 31 2024 and elsewhere herein. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

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.

Current wording

Acacia creates value by building relationships and providing transaction expertise to create acquisition opportunities where we can meaningfully improve performance. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value of the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.

Previous wording

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.

Current wording

We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations is masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.

Previous wording

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.

Current wording

We regularly evaluate opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth. Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon.

Previous wording

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.

Current wording

Our strategic relationship with Starboard enhances our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities.

Previous wording

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.

Current wording

The Company through its Patent Licensing, Enforcement and Technologies Business invests in IP and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively,“ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. On a consolidated basis, we currently own or control the rights to multiple patent portfolios, including U.S. patents and certain foreign counterparts, which cover technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own. While we partner from time to time with inventors and patent owners, ranging in size and including large corporations, we control and assume all responsibility in pursuing patent licensing and enforcement programs, and for the related operating expenses. When applicable, share licensing revenue, net of costs, with our patent partners after we have achieved our agreed upon minimum return threshold. We may also provide upfront capital to patent owners as an advance against future licensing revenue.

Previous wording

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.

Current wording

We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of March 31, 2025, across nearly 200 patent portfolio licensing and enforcement programs. As of March 31, 2025, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $897.5 million to our patent partners. During the past five calendar years ending on December 31, we generated gross licensing revenue of approximately $234.0 million and returned approximately $91.2 million to our patent partners.

Previous wording

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.

Current wording

In October 2021, we acquired Printronix Holding Corp. (“Printronix”). Printronix is a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. The Printronix business serves a diverse group of customers that operate across healthcare, food and beverage, manufacturing and logistics, and other sectors. This mature technology is known for its ability to operate in hazardous environments. Printronix has a manufacturing site located in Malaysia and third-party configuration sites located in the United States, Singapore and Holland, along with sales and support locations around the world to support its global network of users, channel partners and strategic alliances. This acquisition was made at what we believe to be an attractive purchase price, and we are now supporting existing management in its initiative to reduce costs and operate more efficiently and in its execution of strategic partnerships to generate growth.

Previous wording

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.

Current wording

In November 2023, we acquired a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. Prior to Benchmark’s acquisition of additional assets in April 2024, Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Acacia made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. Refer to Note 1 to the condensed consolidated financial statements elsewhere herein for additional information.

Previous wording

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 2 to the accompanying consolidated financial statements for additional information regarding the Revolving Credit Facility.

Current wording

On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement. Pursuant to the Revolution Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing of the Revolution Transaction, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 11 to the accompanying condensed consolidated financial statements for additional information regarding the Benchmark Revolving Credit Facility.

Previous wording

For more information, refer to the section entitled“Energy Operations” below.

Current wording

For more information, refer to the section entitled “Energy Operations Business” below.

Previous wording

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%.

Current wording

On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying condensed consolidated financial statements). Following closing, the Company’s interest in Benchmark is approximately 73.5%.

Previous wording

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.

Current wording

On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the sellers in the Deflecto Transaction consisted of $103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement. The Deflecto Purchase Price was funded with a combination of borrowings of a $48.0 million secured term loan and cash on hand. A portion of the Deflecto Purchase Price is being held in escrow to indemnify Purchaser against certain claims, losses and liabilities. Refer to Note 1 to the accompanying condensed consolidated financial statements for additional information.

Previous wording

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 3 to the consolidated financial statements elsewhere herein for more information.

Current wording

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 March 31, 2025, 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 March 31, 2025. On January 19, 2024, we completed the sale of our 33,023,210 shares of Arix Bioscience PLC (“Arix”) to RTW Biotech Opportunities Operating Ltd, a subsidiary of RTW Biotech Opportunities Ltd, for $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, we no longer own any shares of Arix. Additionally, some of the businesses in which we continue to hold an interest generate income through the receipt of royalties and milestone payments. Refer to Note 4 to the condensed consolidated financial statements elsewhere herein for more information.

Previous wording

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.

Current wording

Historically, inflation has not had a significant impact on us or any of our subsidiaries. We expect that our Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs and may also implement cost rationalization measures, as applicable. Additionally, our Energy Operations Business may experience inflation. The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.

Previous wording

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.

Current wording

As of the date of this Quarterly Report, our Patent Licensing, Enforcement and Technologies Business has two pending patent infringement cases 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.

Previous wording

During the nine months ended September 30, 2024 as well as 2023 and 2022, we didnot 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.

Current wording

We acquiredone new patent portfolio during the three months ended March 31, 2025 consisting of Wi-Fi 7 standard essential patents. 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 have estimated economic useful lives ranging from two to five years.

Previous wording

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.

Current wording

Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 156,000 net acres and an interest in approximately 615 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations.

Previous wording

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:

Current wording

Our Intellectual Property Operations revenues historically have fluctuated quarterly, and can vary significantly period to period, based on several factors including the following:

Previous wording

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.

Current wording

Our management does not attempt to manage for smooth sequential periodic growth in revenues from period to period, and therefore, periodic results can be uneven. Unlike most operating businesses and industries, licensing revenues not generated in a current period are not necessarily foregone but, depending on whether negotiations, litigation or both continue into subsequent periods, and depending on several other factors, such potential revenues may be pushed into subsequent annual periods.

Previous wording

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.

Current wording

In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations segment revenues may be found in Notes 2 and 19 to the condensed consolidated financial statements.

Previous wording

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.

Current wording

Total revenues increased $100.1 million to $124.4 million for the three months ended March 31, 2025, as compared to $24.3 million for the three months ended March 31, 2024, due to an increase in our Intellectual Property Operations revenues and our Manufacturing Operations revenue and Energy Operations revenue including the revenue from the recent acquisitions (refer to Note 3). Intellectual Property Operations revenues increased $56.3 million due to an increase in average license fees per agreement for the three months ended March 31, 2025. Industrial Operations revenues decreased $1.2 million due to decrease in the number of printer units and consumables products sold compared to the comparable prior period.

Previous wording

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, 2023 as follows:

Current wording

Income before income taxes was $29.6 million for the three months ended March 31, 2025, as compared to loss of $1.3 million in the comparable prior period. The net increase 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 March 31, 2025 as compared to the three months ended March 31, 2024 as follows:

Previous wording

•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.

Current wording

•Inventor royalties increased $15.9 million, from $606,000 to $16.5 million in the first quarter of 2025, primarily due to license agreement activity and related revenues generated with inventor royalty obligations.

Previous wording

•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.

Current wording

•Litigation and licensing expenses increased $0.9 million, from $1.1 million to $2.1 million in the first quarter of 2025, primarily due to a net increase in litigation support and third-party technical consulting expenses associated with ongoing litigation.

Previous wording

•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.

Current wording

•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses remained relatively flat at $5.7 million in the first quarter of 2025 and the comparable prior period.

Previous wording

•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 of Production"below for further discussion.

Current wording

•Benchmark’s cost of production for the first quarter of 2025 added an additional $11.4 million to our consolidated operating expenses.

Previous wording

•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.

Current wording

•Unrealized loss from the change in fair value of our equity securities was $4.8 million in the first quarter of 2025, as compared to an unrealized gain of $26.7 million in the comparable prior year period. The unrealized loss and gain were derived from our Life Sciences Portfolio and our trading securities portfolio.

Previous wording

•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.

Current wording

•Loss on derivatives was $5.0 million in the first quarter of 2025, as compared to a $171,000 in the comparable prior year period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 13 for additional information regarding Benchmark’s commodity derivatives.

Previous wording

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, 2023 as 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.

Current wording

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 increased $57.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to an increase in average license fees per agreement. Recurring revenue, that provides for quarterly sales-based license fees, decreased $0.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, from various on-going license arrangements.

Previous wording

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.

Current wording

Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding our revenue arrangements and related concentrations for the periods presented herein.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services. Revenue from printers and parts and consumable products for the three months ended decreased $0.2 million and $1.0 million, respectively compared to the three months ended March 31, 2024, due to a decrease in the number of printer units and consumable products sold. Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Printronix’s revenue arrangements and related concentrations.

Previous wording

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.

Current wording

The following table provides the components of Benchmark’s revenues for the periods indicated, as well as each period’s respective average realized prices and production volumes. This table shows production on a barrel of oil equivalent basis in which natural gas is converted to oil at the ratio of 6 thousand cubic feet (“Mcf”) of natural gas to one barrel of oil. This ratio may not be reflective of the current price ratio between two products.

Previous wording

Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark's revenue arrangements and related concentrations.

Current wording

Refer to Note 2 to the condensed consolidated financial statements elsewhere herein for additional information regarding Benchmark’s revenue arrangements and related concentrations.