(State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Large accelerated Filer | ☐ | Accelerated Filer | ☐ | ||||||||
x | Smaller reporting company | ||||||||||
Emerging Growth Company |
Page | ||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Equity securities | |||||||||||
Equity securities without readily determinable fair value | |||||||||||
Equity method investments | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Oil and natural gas properties, net | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Operating lease, right-of-use assets | |||||||||||
Deferred income tax assets, net | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Accrued compensation | |||||||||||
Royalties and contingent legal fees payable | |||||||||||
Deferred revenue | |||||||||||
Accrued loss contingency | |||||||||||
Total current liabilities | |||||||||||
Deferred revenue, net of current portion | |||||||||||
Long-term lease liabilities | |||||||||||
Revolving credit facility | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock, par value $ | |||||||||||
Common stock, par value $ | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total Acacia Research Corporation stockholders' equity | |||||||||||
Noncontrolling interests | |||||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Revenues: | |||||||||||
Intellectual property operations | $ | $ | |||||||||
Industrial operations | |||||||||||
Energy operations | |||||||||||
Total revenues | |||||||||||
Costs and expenses: | |||||||||||
Cost of revenues - intellectual property operations | |||||||||||
Cost of revenues - industrial operations | |||||||||||
Cost of production - energy operations | |||||||||||
Engineering and development expenses - industrial operations | |||||||||||
Sales and marketing expenses - industrial operations | |||||||||||
General and administrative expenses | |||||||||||
Total costs and expenses | |||||||||||
Operating loss | ( | ( | |||||||||
Other income (expense): | |||||||||||
Equity securities investments: | |||||||||||
Change in fair value of equity securities | ( | ||||||||||
Gain (loss) on sale of equity securities | ( | ||||||||||
Net realized and unrealized gain | |||||||||||
Legal liability fee | ( | ||||||||||
Change in fair value of the Series B warrants and embedded derivatives | |||||||||||
(Loss) gain on foreign currency exchange | ( | ||||||||||
Interest expense on Senior Secured Notes | ( | ||||||||||
Interest income and other, net | |||||||||||
Total other income | |||||||||||
(Loss) income before income taxes | ( | ||||||||||
Income tax benefit (expense) | ( | ||||||||||
Net (loss) income including noncontrolling interests in subsidiaries | ( | ||||||||||
Net loss attributable to noncontrolling interests in subsidiaries | |||||||||||
Net (loss) income attributable to Acacia Research Corporation | $ | ( | $ | ||||||||
(Loss) income per share: | |||||||||||
Net (loss) income attributable to common stockholders - Basic | $ | ( | $ | ||||||||
Weighted average number of shares outstanding - Basic | |||||||||||
Basic net income per common share | $ | $ | |||||||||
Net loss attributable to common stockholders - Diluted | $ | ( | $ | ( | |||||||
Weighted average number of shares outstanding - Diluted | |||||||||||
Diluted net loss per common share | $ | $ | ( |
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A Redeemable Convertible Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interests in Operating Subsidiaries | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss including noncontrolling interests in subsidiaries | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of share-based awards | — | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense for share-based awards | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | $ |
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A Redeemable Convertible Preferred Stock | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Noncontrolling Interests in Operating Subsidiaries | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Net income including noncontrolling interests in subsidiaries | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of Series A Redeemable Convertible Preferred Stock to redemption value | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividend on Series A Redeemable Convertible Preferred Stock | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from the Rights Offering | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for unvested restricted stock awards, net of forfeitures | — | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of share-based awards | — | — | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense for share-based awards | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) income including noncontrolling interests in subsidiaries | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) income including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: | |||||||||||
Depreciation, depletion and amortization | |||||||||||
Change in fair value of Series A redeemable convertible preferred stock embedded derivatives | ( | ||||||||||
Change in fair value of Series B warrants | ( | ||||||||||
Compensation expense for share-based awards | |||||||||||
Loss (gain) on foreign currency exchange | ( | ||||||||||
Change in fair value of equity securities | ( | ||||||||||
(Gain) loss on sale of equity securities | ( | ||||||||||
Unrealized loss on derivatives | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Accounts payable and accrued expenses | |||||||||||
Royalties and contingent legal fees payable | ( | ||||||||||
Deferred revenue | ( | ||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of equity securities | ( | ( | |||||||||
Sales of equity securities | |||||||||||
Net purchases of property and equipment and additions to oil and gas properties | ( | ( | |||||||||
Net cash provided by investing activities | |||||||||||
Cash flows from financing activities: | |||||||||||
Borrowings on the Revolving Credit Facility | |||||||||||
Dividend on Series A Redeemable Convertible Preferred Stock | ( | ||||||||||
Taxes paid related to net share settlement of share-based awards | ( | ( | |||||||||
Proceeds from Rights Offering | |||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rates on cash and cash equivalents | ( | ||||||||||
Increase in cash and cash equivalents | |||||||||||
Cash and cash equivalents, beginning | |||||||||||
Cash and cash equivalents, ending | $ | $ | |||||||||
Supplemental schedule of cash flow information: | |||||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid | |||||||||||
Noncash investing and financing activities: | |||||||||||
Accrued patent costs | ( | ||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Paid-up license revenue agreements | $ | $ | |||||||||
Recurring License Revenue Agreements | |||||||||||
Total | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Printers, consumables and parts | $ | $ | |||||||||
Services | |||||||||||
Total | $ | $ |
Three Months Ended March 31, | |||||
2024 | |||||
(In thousands) | |||||
Oil sales | $ | ||||
Natural gas sales | |||||
Natural gas liquids sales | |||||
Total | $ |
Security Type | Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | |||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
March 31, 2024: | |||||||||||||||||||||||
Equity securities - other common stock | $ | $ | $ | ( | $ | ||||||||||||||||||
Total | $ | $ | $ | ( | $ | ||||||||||||||||||
December 31, 2023: | |||||||||||||||||||||||
Equity securities - Life Sciences Portfolio | $ | $ | $ | ( | $ | ||||||||||||||||||
Equity securities - other common stock | ( | ||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Change in fair value of equity securities of public companies | $ | ( | $ | ||||||||
Gain on sale of equity securities of public companies | |||||||||||
Net realized and unrealized gain | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Raw materials | $ | $ | |||||||||
Subassemblies and work in process | |||||||||||
Finished goods | |||||||||||
Inventory reserves | ( | ( | |||||||||
Total inventories | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Machinery and equipment | $ | $ | |||||||||
Furniture and fixtures | |||||||||||
Computer hardware and software | |||||||||||
Leasehold improvements | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Property, plant and equipment, net | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Total proved properties costs | $ | $ | |||||||||
Accumulated depletion and depreciation | ( | ( | |||||||||
Oil and natural gas properties, net | $ | $ |
March 31, 2024 | |||||||||||||||||
Industrial Operations | Energy Operations | Total | |||||||||||||||
(In thousands) | |||||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Acquisition of business | |||||||||||||||||
Impairment losses | |||||||||||||||||
Ending balance | $ | $ | $ |
December 31, 2023 | |||||||||||||||||
Industrial Operations | Energy Operations | Total | |||||||||||||||
(In thousands) | |||||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Acquisition of business | |||||||||||||||||
Impairment losses | |||||||||||||||||
Ending balance | $ | $ | $ |
March 31, 2024 | |||||||||||||||||||||||
Weighted Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Patents: | |||||||||||||||||||||||
Intellectual property operations | $ | $ | ( | $ | |||||||||||||||||||
Industrial operations | ( | ||||||||||||||||||||||
Total patents | ( | ||||||||||||||||||||||
Customer relationships - industrial operations | ( | ||||||||||||||||||||||
Trade name and trademarks - industrial operations | ( | ||||||||||||||||||||||
Total | $ | $ | ( | $ |
December 31, 2023 | |||||||||||||||||||||||
Weighted Average Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Patents: | |||||||||||||||||||||||
Intellectual property operations | $ | $ | ( | $ | |||||||||||||||||||
Industrial operations | ( | ||||||||||||||||||||||
Total patents | ( | ||||||||||||||||||||||
Customer relationships - industrial operations | ( | ||||||||||||||||||||||
Trade name and trademarks - industrial operations | ( | ||||||||||||||||||||||
Total | $ | $ | ( | $ |
Years Ending December 31, | |||||
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Total | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Accrued consulting and other professional fees | $ | $ | |||||||||
Income taxes payable | |||||||||||
Product warranty liability, current | |||||||||||
Service contract costs, current | |||||||||||
Accrued patent cost (see Note 7) | |||||||||||
Other accrued liabilities | |||||||||||
Total | $ | $ |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
March 31, 2024: | |||||||||||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||||||||||
Commodity derivative instruments | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2023: | |||||||||||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||||||||||
Commodity derivative instruments | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Series A Embedded Derivative Liabilities | Series B Warrant Liabilities | Total | |||||||||||||||
(In thousands) | |||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ||||||||||||||
Remeasurement to fair value | ( | ( | ( | ||||||||||||||
Balance at March 31, 2023 | |||||||||||||||||
Years Ending December 31, | |||||
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
Total minimum payments | |||||
Less: short-term lease liabilities | ( | ||||
Long-term lease liabilities | $ |
Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Outstanding at December 31, 2023 | $ | $ | |||||||||||||||||||||
Granted | $ | $ | — | ||||||||||||||||||||
Exercised | $ | $ | |||||||||||||||||||||
Forfeited/Expired | ( | $ | $ | ||||||||||||||||||||
Outstanding at March 31, 2024 | $ | $ | |||||||||||||||||||||
Exercisable at March 31, 2024 | $ | $ | |||||||||||||||||||||
Vested and expected to vest at March 31, 2024 | $ | $ | |||||||||||||||||||||
Unrecognized stock-based compensation expense at March 31, 2024 (in thousands) | $ | ||||||||||||||||||||||
Weighted average remaining vesting period at March 31, 2024 |
RSAs | RSUs | PSUs | |||||||||||||||||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Units | Weighted Average Grant Date Fair Value | Units | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Nonvested at December 31, 2023 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted | $ | $ | $ | ||||||||||||||||||||||||||||||||
Vested | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
Forfeited | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
Nonvested at March 31, 2024 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Unrecognized stock-based compensation expense at March 31, 2024 (in thousands) | $ | $ | $ | ||||||||||||||||||||||||||||||||
Weighted average remaining vesting period at March 31, 2024 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Options | $ | $ | |||||||||
RSAs | |||||||||||
RSUs | |||||||||||
Total compensation expense for share-based awards | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands, except share and per share data) | |||||||||||
Numerator: | |||||||||||
Net (loss) income attributable to Acacia Research Corporation | $ | ( | $ | ||||||||
Dividend on Series A redeemable convertible preferred stock | ( | ||||||||||
Accretion of Series A redeemable convertible preferred stock | ( | ||||||||||
Undistributed earnings allocated to participating securities | ( | ||||||||||
Net (loss) income attributable to common stockholders - Basic | ( | ||||||||||
Add: Dividend on Series A redeemable convertible preferred stock | |||||||||||
Add: Accretion of Series A redeemable convertible preferred stock | |||||||||||
Less: Change in fair value of Series A redeemable convertible preferred stock embedded derivative | ( | ||||||||||
Less: Change in fair value of dilutive Series B warrants | ( | ||||||||||
Add: Interest expense associated with Starboard Notes, net of tax | |||||||||||
Add: Undistributed earnings allocated to participating securities | |||||||||||
Net loss attributable to common stockholders - Diluted | $ | ( | $ | ( | |||||||
Denominator: | |||||||||||
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Basic | |||||||||||
Potentially dilutive common shares: | |||||||||||
Series A Redeemable Convertible Preferred Stock | |||||||||||
Series B Warrants | |||||||||||
Weighted average shares used in computing net income (loss) per share attributable to common stockholders - Diluted | |||||||||||
Basic net income per common share | $ | $ | |||||||||
Diluted net loss per common share | $ | $ | ( | ||||||||
Anti-dilutive potential common shares excluded from the computation of diluted net income/loss per share: | |||||||||||
Equity-based incentive awards | |||||||||||
Total |
Three Months Ended March 31, 2024 | |||||||||||||||||||||||
Intellectual Property Operations | Industrial Operations | Energy Operations | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
License fees | $ | $ | $ | $ | |||||||||||||||||||
Printers and parts | |||||||||||||||||||||||
Consumable products | |||||||||||||||||||||||
Services | |||||||||||||||||||||||
Oil sales | |||||||||||||||||||||||
Natural gas sales | |||||||||||||||||||||||
Natural gas liquids sales | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||
Inventor royalties | |||||||||||||||||||||||
Contingent legal fees | |||||||||||||||||||||||
Litigation and licensing expenses | |||||||||||||||||||||||
Amortization of patents | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Cost of production | |||||||||||||||||||||||
Total cost of revenues | |||||||||||||||||||||||
Segment gross profit | |||||||||||||||||||||||
Other operating expenses: | |||||||||||||||||||||||
Engineering and development expenses | |||||||||||||||||||||||
Sales and marketing expenses | |||||||||||||||||||||||
Amortization of intangible assets | |||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Total other operating expenses | |||||||||||||||||||||||
Segment operating income | $ | $ | $ | ||||||||||||||||||||
Parent general and administrative expenses | |||||||||||||||||||||||
Operating loss | ( | ||||||||||||||||||||||
Total other income | |||||||||||||||||||||||
Loss before income taxes | $ | ( |
Three Months Ended March 31, 2023 | |||||||||||||||||
Intellectual Property Operations | Industrial Operations | Total | |||||||||||||||
(In thousands) | |||||||||||||||||
Revenues: | |||||||||||||||||
License fees | $ | $ | $ | ||||||||||||||
Printers and parts | |||||||||||||||||
Consumable products | |||||||||||||||||
Services | |||||||||||||||||
Total revenues | |||||||||||||||||
Cost of revenues: | |||||||||||||||||
Inventor royalties | |||||||||||||||||
Contingent legal fees | |||||||||||||||||
Litigation and licensing expenses | |||||||||||||||||
Amortization of patents | |||||||||||||||||
Cost of sales | |||||||||||||||||
Total cost of revenues | |||||||||||||||||
Segment gross profit | ( | ||||||||||||||||
Other operating expenses: | |||||||||||||||||
Engineering and development expenses | |||||||||||||||||
Sales and marketing expenses | |||||||||||||||||
Amortization of intangible assets | |||||||||||||||||
General and administrative expenses | |||||||||||||||||
Total other operating expenses | |||||||||||||||||
Segment operating (loss) income | $ | ( | $ | ( | |||||||||||||
Parent general and administrative expenses | |||||||||||||||||
Operating income loss | ( | ||||||||||||||||
Total other income | |||||||||||||||||
Income before income taxes | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Equity securities investments: | |||||||||||
Equity securities | $ | $ | |||||||||
Equity securities without readily determinable fair value | |||||||||||
Equity method investments | |||||||||||
Total parent equity securities investments | |||||||||||
Other parent assets | |||||||||||
Segment total assets: | |||||||||||
Intellectual property operations | |||||||||||
Industrial operations | |||||||||||
Energy operations | |||||||||||
Total assets | $ | $ |
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||
Intellectual Property Operations | Industrial Operations | Energy Operations | Total | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Revenues by geographic area: | ||||||||||||||||||||||||||
United States | $ | $ | $ | $ | ||||||||||||||||||||||
Canada and Latin America | ||||||||||||||||||||||||||
Total Americas | ||||||||||||||||||||||||||
Europe, Middle East and Africa | ||||||||||||||||||||||||||
China | ||||||||||||||||||||||||||
India | ||||||||||||||||||||||||||
Asia-Pacific, excluding China and India | ||||||||||||||||||||||||||
Total Asia-Pacific | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
Three Months Ended March 31, 2023 | |||||||||||||||||
Intellectual Property Operations | Industrial Operations | Total | |||||||||||||||
(In thousands) | |||||||||||||||||
Revenues by geographic area: | |||||||||||||||||
United States | $ | $ | $ | ||||||||||||||
Canada and Latin America | |||||||||||||||||
Total Americas | |||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||
China | |||||||||||||||||
India | |||||||||||||||||
Asia-Pacific, excluding China and India | |||||||||||||||||
Total Asia-Pacific | |||||||||||||||||
Total revenues | $ | $ | $ |
March 31, 2024 | |||||||||||||||||||||||
Intellectual Property Operations | Industrial Operations | Energy Operations | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Long-lived tangible assets by geographic area: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Malaysia | |||||||||||||||||||||||
Other foreign countries | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2023 | |||||||||||||||||||||||
Intellectual Property Operations | Industrial Operations | Energy Operations | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Long-lived tangible assets by geographic area: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Malaysia | |||||||||||||||||||||||
Other foreign countries | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
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 | %) |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values and count totals) | |||||||||||||||||||||||
Paid-up license revenue agreements | $ | 12,365 | $ | 3,900 | $ | 8,465 | 217 | % | |||||||||||||||
Recurring license revenue agreements | 1,258 | 276 | 982 | 356 | % | ||||||||||||||||||
Total revenues | $ | 13,623 | $ | 4,176 | $ | 9,447 | 226 | % | |||||||||||||||
New license agreements executed | 6 | 4 | 2 | 50 | % | ||||||||||||||||||
Licensing and enforcement programs generating revenues | 6 | 6 | — | — | % | ||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
Inventor royalties | $ | 606 | $ | 221 | $ | 385 | 174 | % | |||||||||||||||
Contingent legal fees | 1,824 | 532 | 1,292 | 243 | % | ||||||||||||||||||
Litigation and licensing expenses | 1,138 | 1,384 | (246) | (18 | %) | ||||||||||||||||||
Amortization of patents | 3,433 | 2,601 | 832 | 32 | % | ||||||||||||||||||
Total | $ | 7,001 | $ | 4,738 | $ | 2,263 | 48 | % |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change value) | |||||||||||||||||||||||
Printers and parts | $ | 3,065 | $ | 4,464 | $ | (1,399) | (31 | %) | |||||||||||||||
Consumable products | 5,013 | 5,170 | (157) | (3 | %) | ||||||||||||||||||
Services | 763 | 993 | (230) | (23 | %) | ||||||||||||||||||
Total | $ | 8,841 | $ | 10,627 | $ | (1,786) | (17 | %) |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
Cost of revenues - industrial operations | $ | 4,049 | $ | 5,220 | $ | (1,171) | (22 | %) |
Oil sales | $ | 661 | |||
Natural gas sales | 730 | ||||
Natural gas liquids sales | 465 | ||||
Total | $ | 1,856 |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
Engineering and development expenses - industrial operations | $ | 134 | $ | 216 | $ | (82) | (38 | %) | |||||||||||||||
Sales and marketing expenses - industrial operations | 1,555 | 1,913 | (358) | (19 | %) | ||||||||||||||||||
General and administrative costs - intellectual property operations | 3,340 | 1,897 | 1,443 | 76 | % | ||||||||||||||||||
General and administrative costs - industrial operations | 1,891 | 2,718 | (827) | (30 | %) | ||||||||||||||||||
General and administrative costs - energy operations | 385 | — | 385 | n/a | |||||||||||||||||||
Parent general and administrative expenses | 6,737 | 7,425 | (688) | (9 | %) | ||||||||||||||||||
Total general and administrative expenses | 12,353 | 12,040 | 313 | 3 | % | ||||||||||||||||||
Total | $ | 14,042 | $ | 14,169 | $ | (127) | (1 | %) |
Three Months Ended March 31, | |||||
2024 vs. 2023 | |||||
(In thousands) | |||||
Personnel costs and board fees | $ | 156 | |||
Variable performance-based compensation costs | 1,582 | ||||
Other general and administrative costs | (1,031) | ||||
General and administrative costs - industrial operations | (827) | ||||
General and administrative costs - energy operations | 385 | ||||
Compensation expense for share-based awards | 381 | ||||
Non-recurring employee severance costs | (333) | ||||
Total change in general and administrative expenses | $ | 313 |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
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 | (2,221 | %) | ||||||||||||||||||
Total net realized and unrealized gain | $ | 2,160 | $ | 1,982 | $ | 178 | 9 | % |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
Legal liability fee | $ | (6,243) | $ | — | $ | (6,243) | n/a |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||||||||||||
(In thousands, except percentage change values) | |||||||||||||||||||||||
Income tax benefit (expense) | $ | 1,109 | $ | (2,483) | $ | 3,592 | (145 | %) | |||||||||||||||
Effective tax rate | (85) | % | 20 | % | n/a | (105) | % |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Net cash provided by: | |||||||||||
Operating activities | $ | 54,839 | $ | (4,349) | |||||||
Investing activities | 42,040 | 2,783 | |||||||||
Financing activities | 1,826 | 77,995 | |||||||||
Effect of exchange rates on cash and cash equivalents | (34) | 12 | |||||||||
Increase in cash and cash equivalents | $ | 98,671 | $ | 76,441 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Net (loss) income including noncontrolling interests in subsidiaries | $ | (189) | $ | 9,447 | |||||||
Adjustments to reconcile net (loss) income including noncontrolling interests in subsidiaries to net cash provided by (used in) operating activities: | |||||||||||
Depreciation, depletion and amortization | 4,568 | 3,381 | |||||||||
Change in fair values Series A redeemable convertible preferred stock embedded derivatives and Series B warrants | — | (16,651) | |||||||||
Compensation expense for share-based awards | 858 | 477 | |||||||||
Loss (gain) on foreign currency exchange | 18 | (80) | |||||||||
Change in fair value of equity securities | 26,701 | (3,343) | |||||||||
(Gain) loss on sale of equity securities | (28,861) | 1,361 | |||||||||
Unrealized loss on derivatives | 629 | — | |||||||||
Deferred income taxes | (3,652) | (240) | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | 65,156 | (451) | |||||||||
Inventories | 1,041 | (503) | |||||||||
Prepaid expenses and other assets | (10,752) | (391) | |||||||||
Accounts payable and accrued expenses | 7,108 | 2,355 | |||||||||
Royalties and contingent legal fees payable | (7,811) | 360 | |||||||||
Deferred revenue | 25 | (71) | |||||||||
Net cash provided by (used in) operating activities | $ | 54,839 | $ | (4,349) |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Purchases of equity securities | $ | (15,544) | $ | (5,166) | |||||||
Sales of equity securities | 57,854 | 8,032 | |||||||||
Net purchases of property and equipment and additions to oil and gas properties | (270) | (83) | |||||||||
Net cash provided by investing activities | $ | 42,040 | $ | 2,783 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Borrowings on the Revolving Credit Facility | $ | 2,500 | $ | — | |||||||
Dividend on Series A Redeemable Convertible Preferred Stock | — | (700) | |||||||||
Taxes paid related to net share settlement of share-based awards | (674) | (416) | |||||||||
Proceeds from Rights Offering | — | 79,111 | |||||||||
Net cash provided by financing activities | $ | 1,826 | $ | 77,995 |
EXHIBIT NUMBER | EXHIBIT | ||||||||||
10.1* | |||||||||||
10.2^ | |||||||||||
10.3^ | |||||||||||
31.1# | |||||||||||
31.2# | |||||||||||
32.1† | |||||||||||
32.2† | |||||||||||
101# | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2024 and 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | ||||||||||
104# | Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101) |
ACACIA RESEARCH CORPORATION | |||||
Date: May 9, 2024 | /s/ Martin D. McNulty Jr. | ||||
By: Martin D. McNulty Jr. | |||||
Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory) | |||||
Date: May 9, 2024 | /s/ Kirsten Hoover | ||||
By: Kirsten Hoover | |||||
Interim Chief Financial Officer (Principal Financial Officer and Accounting Officer) |
Date: May 9, 2024 | /s/ Martin D. McNulty Jr. | ||||
Martin D. McNulty Jr. | |||||
Chief Executive Officer |
Date: May 9, 2024 | /s/ Kirsten Hoover | ||||
Kirsten Hoover | |||||
Interim Chief Financial Officer |
Date: May 9, 2024 | By: | /s/ Martin D. McNulty Jr. | ||||||
Martin D. McNulty Jr. | ||||||||
Chief Executive Officer |
Date: May 9, 2024 | By: | /s/ Kirsten Hoover | ||||||
Kirsten Hoover | ||||||||
Interim Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par or stated value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par or stated value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares, outstanding | 100,021,951 | 99,895,473 |
Common stock, shares, issued | 100,021,951 | 99,895,473 |
Treasury stock, common, shares | 16,183,703 | 16,183,703 |
DESCRIPTION OF BUSINESS |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is focused on acquiring and managing companies across industries including but not limited to the industrial, energy, technology, and healthcare verticals. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value. We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as Special Purpose Acquisition Companies, which are narrowly focused on completing one singular, defining acquisition. Our focus is companies with market values in the sub-$2 billion range and particularly on businesses valued at $1 billion or less. We are, however, opportunistic, and may pursue acquisitions that are larger under the right circumstance. Relationship with Starboard Value, LP Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company's controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. Starboard beneficially owned 61,123,595 shares of common stock as of May 6, 2024, representing approximately 61.2% of the common stock based on 100,021,951 shares of common stock issued and outstanding as of such date. Refer to Note 9 for additional information. Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and related absolute return assets and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own. Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others. If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth. During the three months ended March 31, 2024 and the year ended December 31, 2023, ARG did not obtain control of any new patent portfolios. Industrial Operations On October 7, 2021, we consummated our first operating company acquisition of Printronix Holding Corporation and subsidiaries (“Printronix”). We acquired all of the outstanding stock of Printronix, for a cash purchase price of approximately $37.0 million, which included an initial $33.0 million cash payment and a $4.0 million working capital adjustment. 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. Energy Operations Acquisition In November 13, 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC ("Benchmark"). Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. Prior to the Transaction (as defined below), Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company's consolidated financial statements include Benchmark's consolidated operations from November 13, 2023 through March 31, 2024. On April 17, 2024, Benchmark consummated the previously announced transactions contemplated in the Purchase and Sale Agreement (the "Purchase Agreement"), dated February 16, 2024, by and among Benchmark and Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”). Pursuant to the Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells (such purchase and sale, together with the other transactions contemplated by the Purchase Agreement, the “Transaction”) for a purchase price of $145 million in cash (the “Purchase Price”), subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Purchase Price was funded by a combination of borrowings under the Revolving Credit Facility (as defined below) and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 2 for additional information regarding the Revolving Credit Facility.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for noncontrolling interests activity. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 3, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. The Company holds a variable interest in Benchmark as the Company is obligated to absorb the loss and has the right to receive the benefit from Benchmark after the acquisition date and therefore, Benchmark is considered a variable interest entity ("VIE"). We determined that we have the power to direct the activities that most significantly impact Benchmark's economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023, as reported by Acacia in its 2023 Annual Report, as well as in our other public filings with the SEC. The condensed consolidated interim financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia's consolidated financial position as of March 31, 2024, and results of operations and its cash flows for the interim periods presented. The consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year. Revenue Recognition Intellectual Property Operations ARG's revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled IP Rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by ARG primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by ARG. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring License Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were generally perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to grant combined items to which the promised IP Rights are inputs and (ii) the Company's promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant IP Rights in the contract. Since the promised IP Rights are not individually distinct, ARG combined each individual IP Right in the contract into a bundle of IP Rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. ARG’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. ARG’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 15-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring License Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties from Recurring License Revenue Agreements, ARG includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they are granted to the licensee. In determining the transaction price, ARG adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, ARG does not adjust the promised amount of consideration for the effects of a significant financing component if ARG expects, at contract inception, that the period between when the entity grants promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. License revenues were comprised of the following for the periods presented:
Industrial Operations Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations. Printronix enters into contract arrangements that may include various combinations of tangible products (which include printers, consumables and parts) and services, which are generally capable of being distinct and accounted for as separate performance obligations. Printronix evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (i.e. capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e. distinct within the context of the contract). For contract arrangements that include multiple performance obligations, Printronix allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and standard software while standalone selling prices for repair and maintenance services are developed with an expected cost-plus margin or residual approach. Regional pricing, marketing strategies and business practices are evaluated to derive the estimated standalone selling price using a cost-plus margin methodology. Printronix recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes consideration of the following: (i) the customer simultaneously receives and consumes the benefits provided as Printronix performs its promises, (ii) the performance creates or enhances an asset that is under control of the customer, (iii) the performance does not create an asset with an alternative use to Printronix, and (iv) Printronix has an enforceable right to payment for its performance completed to date. Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. Service revenue commissions are tied to the revenue recognized during the current year of the related sale. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue. Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer. These agreements commence upon expiration of the standard warranty period. Printronix provides the point-of-customer-contact, dispatches calls and sells the parts used for printer repairs to service providers. Printronix contracts third parties to perform the on-site repair services at the time of sale which covers the period of service at a set amount. The maintenance service agreements are separately priced at a stand-alone value. For those transactions in which maintenance service agreements are purchased concurrently with the purchase of printers, the revenue is deferred based on the selling price, which approximates the stand-alone value for separately sold maintenance services agreements. Revenue from maintenance service contracts are recognized on a straight-line basis over the period of each individual contract, which is consistent with the pattern in which the benefit is consumed by the customer. Printronix's net revenues were comprised of the following for the periods presented:
Refer to Note 16 for additional information regarding net sales to customers by geographic region. Deferred revenue in the consolidated balance sheets represents a contract liability under Accounting Standards Codification (“ASC”) 606 and consists of payments and billings in advance of the performance. Printronix recognized approximately $578,000 and $542,000 in revenue that was previously included in the beginning balance of deferred revenue during the three months ended March 31, 2024 and 2023, respectively. Printronix's payment terms vary by the type and location of its customers and the products, solutions or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, Printronix has determined that its contracts do not include a significant financing component. Printronix's remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $470,000 and $567,000 as of March 31, 2024 and December 31, 2023, respectively. Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. On average, remaining performance obligations as of March 31, 2024 are expected to be recognized over a period of approximately two years. Energy Operations Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer. Benchmark's contracts' pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions. As a result, the price of the oil and natural gas fluctuates to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant. Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations. Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed delivery point, at which time the customer takes custody, title, and risk of loss of the product. Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials. Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive. Benchmark's natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point. The midstream entity gathers, processes, and remits proceeds to Benchmark for the resulting sale of natural gas and natural gas liquids, and generally includes a reduction for contractual fees and for percent of proceeds. For the contracts where Benchmark maintains control through the outlet of the midstream processing facility, Benchmark recognizes revenue on a gross basis, with gathering, transportation, and processing fees presented as an expense on the consolidated statements of operations. Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues based on the net amount of the proceeds received from the midstream processing entity as customer. Benchmark's proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark's proportionate share of sales proceeds, which is net of costs incurred by the operator, if any. Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive. Proceeds are generally received by Benchmark within two to three months after the month in which production occurs. Benchmark's revenue were comprised of the following:
Impairment of Investments Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and a new cost basis in the investment is established. Accounts Receivable and Allowance for Credit Losses Intellectual Property Operations ARG performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for credit losses established as of March 31, 2024 and December 31, 2023. Industrial Operations Printronix's accounts receivable are recorded at the invoiced amount and do not bear interest. Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs. Receivable losses are charged against the allowance when management believes the account has become uncollectible. Subsequent recoveries, if any, are credited to the allowance. As of March 31, 2024 and December 31, 2023, Printronix's combined allowance for credit losses and allowance for sales returns was $66,000 and $56,000, respectively. Energy Operations Benchmark's oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers. Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs. Benchmark's accounts receivable are recorded at the invoiced amount and do not bear interest. An allowance for credit losses may be established to reflect management's best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined by evaluating individual customer receivables based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2024 and December 31, 2023, Benchmark's allowance for credit losses was $100,000 and zero, respectively. Oil and Natural Gas Properties Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities. Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves. If Benchmark determines that the wells do not find proved reserves, the costs are charged to expense. At March 31, 2024, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized. On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained. Capitalized costs of proved oil and natural gas properties are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized costs of wells and related equipment and facilities are depreciated based on the unit-of-production method over the estimated proved developed reserves. Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. Refer to Note 6 for additional information. Goodwill Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. We evaluate goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the excess is charged to earnings as an impairment loss. Refer to Note 7 for additional information. Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. The Company’s leases primarily consist of facility leases which are classified as operating leases. Lease expense is recognized on a straight-line basis over the lease term. As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Refer to Note 12 for additional information. Impairment of Long-lived Assets ARG's patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations. ARG's patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from to five years. Refer to Note 7 for additional information. Printronix's intangible assets consist of trade names and trademarks, patents and customer and distributor relationships. These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization. Printronix currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives of seven years. Refer to Note 7 for additional information. The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over their estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. Refer to Note 7 for additional information. Revolving Credit Facility Credit Agreement On September 16, 2022, Benchmark entered into a credit agreement (the "Credit Agreement") for a revolving credit facility (the "Revolver") and a term loan with a bank. The Revolver had an initial borrowing base of $25 million and $75 million maximum borrowing capacity. The Revolver matures on September 16, 2025. The availability under the Credit Agreement is subject to the borrowing base, which is redetermined on April 1 and October 1 of each year. During 2023, the borrowing base was reduced to $17.5 million and payment was made, which further reduced the borrowing base to $10.5 million. During the three months ended March 31, 2024, the borrowing base increased by $2.5 million. As of March 31, 2024 and December 31, 2023 the outstanding balance on the Revolver was $13.0 million and $10.5 million, respectively. Additionally, Benchmark initially borrowed $3.5 million under the related term loan, which was paid in full during 2023. Benchmark’s outstanding balance on the term loan was zero as of March 31, 2024 and December 31, 2023. In general, the borrowings under the Revolver bear interest at either the Alternate Base Rate or Secured Overnight Financing Rate (each as defined in the Credit Agreement). Either rate is adjusted upward by an applicable margin based on Benchmark's percentage of utilization of the Revolver. As of March 31, 2024, the interest rate associated with the outstanding borrowings was 11% for the Revolver. The Revolver contains customary financial and non-financial covenants, the most restrictive of which are (i) current assets to current liabilities of not less than 1.0 to 1.0 and (ii) total debt to EBITDAX (as defined in the Credit Agreement) of not greater than 3.5 to 1.0 for the rolling periods as defined in the Credit Agreement. As of March 31, 2024, Benchmark was in compliance with these financial covenants related to the Revolver. Loan Agreement On April 17, 2024 (the "Closing Date"), in connection with the Transaction, BE Anadarko II, LLC, a subsidiary of Benchmark, entered into a Loan Agreement (the "Loan Agreement") with lenders from time to time party thereto (the "Lenders"), governing a new revolving credit facility (the "Revolving Credit Facility"), with a maximum aggregate credit amount of $150 million, of which approximately $85 million was available at the Closing Date, that Benchmark may draw upon from time to time subject to the terms and conditions set forth in the Loan Agreement. The Revolving Credit Facility will mature three years from the Closing Date and includes a letter of credit subfacility. On the Closing Date, $82.7 million, including $660,000 related to letters of credit, was drawn under the Revolving Credit Facility. Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the Loan Agreement. Borrowings under the Revolving Credit Facility will bear interest at a rate per annum equal to the “Adjusted Term SOFR Margin Rate” (as defined in the Loan Agreement) plus a margin of 3.00% to 4.00%. The applicable margin will be determined based on a monthly utilization percentage, and the availability will be determined by reference to a borrowing base calculation. Unused commitments under the Revolving Credit Facility are subject to a commitment fee 0.5 percent payable on a quarterly basis. The Loan Agreement contains customary covenants with respect to BE Anadarko and its subsidiaries, including, among others, limitations on indebtedness, liens, mergers, issuances of disqualified capital stock, dispositions, payment of dividends, investments and new businesses, amendments of organizational documents and other material contracts, hedging contracts, sale and lease back transactions and transactions with affiliates. In addition, the Loan Agreement contains covenants that require BE Anadarko to maintain certain financial ratios related to its consolidated current assets and leverage. The Loan Agreement also contains certain events of default, including, among others, nonpayment, inaccuracy of representations and warranties, violation of covenants, cross-default to other indebtedness, bankruptcy, material judgments, or a change of control. Upon the occurrence of an event of default, the Lenders may terminate the commitments under the Loan Agreement and declare all loans due and payable. Treasury Stock Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets. Refer to Note 13 for additional information. Engineering and Development Engineering and development costs are expensed as incurred and consist of labor, supplies, consulting and other costs related to developing and improving Printronix's products. Stock-Based Compensation The compensation cost for all time-based stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is currently to four years. Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards (“PSUs”) are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Forfeitures are accounted for as they occur. Refer to Note 14 for additional information. Foreign Currency Gains and Losses In connection with our Printronix business, the U.S. dollar is the functional currency for all of the foreign subsidiaries. Transactions that are recorded in currencies other than the U.S. dollar may result in transaction gains or losses at the end of the reporting period and when trade receipts and payments occur. For these subsidiaries, the assets and liabilities have been re-measured at the end of the period for changes in exchange rates, except inventories and property, plant and equipment, which have been remeasured at historical average rates. The consolidated statements of operations have been reevaluated at average rates of exchange for the reporting period, except cost of sales and depreciation, which have been reevaluated at historical rates. Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts, a note receivable and certain equity security investments. All foreign currency exchange activity is recorded in the consolidated statements of operations. Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Under U.S. GAAP, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. The provision for income taxes for interim periods is determined using an estimate of Acacia's annual effective rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. Our income tax benefit for the three months ended March 31, 2024 is primarily attributable to recognizing a benefit for losses incurred year-to-date offset by foreign withholding taxes. Our income tax expense for the three months ended March 31, 2023 is primarily attributable to foreign taxes withheld and foreign and state income taxes. The Company's effective tax rates were 85% and 20% for the three months ended March 31, 2024 and 2023, respectively. Our 2024 effective tax rate in the period was higher than the U.S. federal statutory rate primarily due to dividends received deduction offset by foreign withholding taxes which we could not recognize as a foreign tax credit. Our 2023 effective tax rate in the period was lower than the U.S. federal statutory rate primarily due to expiration of foreign tax credits, changes in valuation allowance, as well as non-deductible items. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. The Company has recorded a partial valuation allowance against our net deferred tax assets as of March 31, 2024 and December 31, 2023. These assets primarily consist of foreign tax credits and state net operating loss carryforwards. At March 31, 2024 and December 31, 2023, the Company had total unrecognized tax benefits of approximately $757,000. At March 31, 2024 and December 31, 2023, $757,000 of unrecognized tax benefits were recorded in other long-term liabilities. No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. At March 31, 2024, if recognized, $757,000 of tax benefits would impact the Company’s effective tax rate subject to valuation allowance. The Company does not expect that the liability for unrecognized benefits will change significantly within the next 12 months. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months. Recent Accounting Pronouncements Recently Adopted There have been no recent accounting pronouncements adopted by the Company which would have a material impact on the Company's financial statements. Not Yet Adopted In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures”, which requires disclosures of significant expenses by segment and interim disclosure of items that were previously required on an annual basis. ASU 2023-07 is to be applied on a retrospective basis and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Management is currently evaluating the impact that the amendments in this update may have on the Company's consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures," which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires that entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company's consolidated financial statements.
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY SECURITIES PORTFOLIO INVESTMENT | EQUITY SECURITIES Equity securities for the periods presented were comprised of the following:
Equity Securities Portfolio Investment On April 3, 2020, the Company entered into an Option Agreement with LF Equity Income Fund, which included general terms through which the Company was provided the option to purchase a portfolio of investments in 18 public and private life sciences companies (the "Life Sciences Portfolio") for an aggregate purchase price of £223.9 million, approximately $277.5 million at the exchange rate on April 3, 2020. For accounting purposes, the total purchase price of the Life Sciences Portfolio was allocated to the individual equity securities based on their individual fair values as of April 3, 2020, in order to establish an appropriate cost basis for each of the acquired securities. The fair values of the public company securities were based on their quoted market price. The fair values of the private company securities were estimated based on recent financing transactions and secondary market transactions and factoring in a discount for the illiquidity of these securities. Included in our consolidated balance sheets as of March 31, 2024 and December 31, 2023, the total fair value of the remaining Life Sciences Portfolio investment was $25.7 million and $82.8 million, respectively. As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired an equity interest in Arix Bioscience PLC (“Arix”), a public company listed on the London Stock Exchange. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into an agreement (the “Arix Shares Purchase Agreement”) with RTW Biotech Opportunities Ltd. (“RTW Bio”) to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). On January 19, 2024, the Company completed such sale for $57.1 million. Following the completion of the share sale, the Company no longer owns any shares of Arix. The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:
As part of the Company’s acquisition of equity securities in the Life Sciences Portfolio, the Company acquired a majority interest in the equity securities of MalinJ1 (63.9%), which were transferred to the Company on December 3, 2020. The acquisition of the MalinJ1 securities was accounted for as an asset acquisition as there was a change of control of MalinJ1 and substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset, an investment in Viamet Pharmaceuticals Holdings, LLC (“Viamet”). As such, the cost basis of the MalinJ1 securities was used to allocate to the Viamet investment, the single identifiable asset, and no goodwill was recognized. The Company through its consolidation of MalinJ1 accounts for the Viamet investment under the equity method as MalinJ1 owns 41.0% of outstanding shares of Viamet. As of March 31, 2024 and 2023, this investment did not meet the significance thresholds for additional summarized income statement disclosures, as defined by the SEC. During the three months ended March 31, 2024 and 2023, our consolidated earnings on equity investment was zero. No distributions were received during the three months ended March 31, 2024 and 2023.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES, NET | INVENTORIES Printronix's inventories consisted of the following:
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PROPERTY, PLANT AND EQUIPMENT, NET |
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PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following:
Total depreciation and amortization expense in the consolidated statements of operations was $280,000 and $347,000 for the three months ended March 31, 2024 and 2023, respectively. Our Intellectual Property Operations and parent company include depreciation and amortization in general and administrative expenses. For the three months ended March 31, 2024 and 2023, our Industrial Operations allocated depreciation and amortization, totaling $252,000 and $313,000 to all applicable operating expense categories, including cost of sales of $106,000 and $111,000, respectively.
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OIL AND NATURAL GAS PROPERTIES, NET |
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Extractive Industries [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OIL AND NATURAL GAS PROPERTIES, NET | OIL AND NATURAL GAS PROPERTIES, NET Benchmark's oil and natural gas properties consisted of the following:
Total depletion and depreciation expense in the consolidated statements of operations was $422,000 for the three months ended March 31, 2024 and includes depletion and depreciation in cost of production. Benchmark determined no impairment to proved oil and natural gas properties was necessary as of March 31, 2024.
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Changes in the carrying amount of goodwill consisted of the following:
The ending balance of goodwill includes no accumulated impairment losses to date. Refer to Note 1 for additional information related to the Printronix and Benchmark acquisitions. Other intangible assets, net consisted of the following:
Total other intangible asset amortization expense in the consolidated statements of operations was $3.9 million and $3.0 million for the three months ended March 31, 2024 and 2023, respectively. The Company did not record charges related to impairment of other intangible assets for the three months ended March 31, 2024 and 2023. There was no accelerated amortization of other intangible assets for the three months ended March 31, 2024 and 2023. Intellectual Property Operations amortization of patents is expensed in cost of revenues and Industrial Operations amortization is expensed in general and administrative expenses. The following table presents the scheduled annual aggregate amortization expense (in thousands):
During the year ended December 31, 2022, ARG entered into an agreement granting ARG the exclusive option to acquire all rights to license and enforce a patent portfolio and all future patents and patent applications, and incurred $15.0 million of certain patent and patent rights costs, of which was fully paid in 2023. The patent costs are included in prepaid expenses and other current assets in the consolidated balance sheet as of March 31, 2024. As of December 31, 2023, ARG accrued $4.0 million of certain patent and patent rights acquisition costs, which was paid on January 31, 2024. As of March 31, 2024 and December 31, 2023, zero and $4.0 million of certain patent and patent rights acquisition costs was accrued, respectively, and included in accrued expenses and other current liabilities (see Note 8).
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following:
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STARBOARD INVESTMENT |
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Mar. 31, 2024 | |
Starboard Investment [Abstract] | |
STARBOARD INVESTMENT | STARBOARD INVESTMENT In order to establish a strategic and ongoing relationship between the Company and Starboard, on November 18, 2019, the Company and Starboard entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which Starboard acquired (i) 350,000 shares of Series A Redeemable Convertible Preferred Stock with a stated value of $100 per share, (ii) Series A Warrants to purchase up to 5,000,000 shares of the Company's common stock (the “Series A Warrants”) and (iii) Series B Warrants to purchase up to 100,000,000 shares of the Company's common stock. On November 12, 2021, the Board of Directors of the Company (the "Board") formed a Special Committee comprised of directors not affiliated or associated with Starboard in order to explore the possibility of simplifying the Company’s capital structure. Management of the Company believed that the Company’s capital structure, with multiple different series of securities, made it difficult for investors to understand and value the Company and created an impediment to new public investment. As a result, on October 30, 2022, and following the unanimous recommendation of the Special Committee of the Board, the Company entered into the Recapitalization Agreement with Starboard in order to simplify the Company’s capital structure, pursuant to which, among other things, (1) effective as of November 1, 2022, Starboard exercised the Series A Warrants in full and received 5,000,000 shares of the Company’s common stock, (2) Starboard purchased 15,000,000 shares of the Company’s common stock pursuant to the Concurrent Private Rights Offering (as defined below) and the Unadjusted Series B Warrants (as defined below) were cancelled, and (3) on July 13, 2023, (a) Starboard converted 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of the Company’s common stock, and (b) Starboard exercised 31,506,849 of the Series B Warrants through a combination of a “Note Cancellation” and a “Limited Cash Exercise” (each as defined in the Series B Warrants), resulting in the receipt by Starboard of 31,506,849 shares of common stock, the cancellation of $60.0 million aggregate principal amount of the Company’s senior secured notes held by Starboard (the “Senior Secured Notes”) and the receipt by the Company of aggregate gross proceeds of approximately $55.0 million. As a result, Starboard beneficially owned 61,123,595 shares of common stock as of July 13, 2023, representing approximately 61.2% of the common stock based on 99,886,322 shares of common stock issued and outstanding as of such date. Accordingly, no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding. As applicable, the following discussion of Starboard’s investments in the Company reflect the transactions effected pursuant to the Recapitalization Agreement. Series A Redeemable Convertible Preferred Stock Per its terms, the Series A Redeemable Convertible Preferred Stock could be converted into a number of shares of common stock equal to (i) the stated value thereof plus accrued and unpaid dividends, divided by (ii) the conversion price of $3.65 (subject to certain anti-dilution adjustments) and holders of the Series A Redeemable Convertible Preferred Stock could elect to convert the Series A Redeemable Convertible Preferred Stock into common stock at any time. Further, the Series A Redeemable Convertible Preferred Stock accrued cumulative dividends quarterly at annual rate of 3.0% on the stated value. Upon consummation of the Printronix acquisition in October 2021, the dividend rate increased to 8.0% on the stated value. There were no accrued and unpaid dividends as of March 31, 2024 and December 31, 2023. Under the Recapitalization Agreement, the Company and Starboard agreed to take certain actions related to the Series A Preferred Stock in connection with the Recapitalization, including submitting a proposal for stockholder approval to remove the “4.89% blocker” provision contained in the Company's Amended and Restated Certificate of Designations (the "Amendment to the Amended and Restated Certificate of Designations"). The Company’s stockholders approved the Amendment to the Amended and Restated Certificate of Designations at the Company’s annual meeting of stockholders held on May 16, 2023 which became effective on June 30, 2023. Subsequently, and in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, on July 13, 2023, Starboard converted an aggregate amount of 350,000 shares of Series A Redeemable Convertible Preferred Stock into 9,616,746 shares of common stock, which included 27,704 shares of common stock issued in respect of accrued and unpaid dividends. Following Starboard’s conversion of its 350,000 shares of Series A Redeemable Convertible Preferred Stock, the Company no longer had any shares of Series A Redeemable Convertible Preferred Stock outstanding, which resulted in a fair value of zero. The Company classified the Series A Redeemable Convertible Preferred Stock as mezzanine equity as the instrument would become redeemable at the option of the holder in various scenarios or otherwise on November 15, 2027. As it was probable that the Series A Redeemable Convertible Preferred Stock would become redeemable, the Company accreted the instrument to its redemption value using the effective interest method and recognized any changes against additional paid in capital in the absence of retained earnings. The Company determined that upon entering into the Recapitalization Agreement, the Series A Redeemable Convertible Preferred Stock was not modified related to the redemption, as such action was subject to the receipt of stockholder approval at the Company’s next annual meeting of stockholders. Accordingly, the Series A Redeemable Convertible Preferred Stock continued to be classified as temporary equity and continued to be accreted to its redemption value to the earliest redemption date of November 15, 2024. Accretion for the three months ended March 31, 2024 and 2023 was zero and $1.6 million, respectively. Series B Warrants On February 25, 2020, pursuant to the terms of the Securities Purchase Agreement with Starboard, the Company issued Series B Warrants to purchase up to 100,000,000 shares of the Company’s common stock at an exercise price (subject to certain price-based anti-dilution adjustments) of either (i) $5.25 per share, if exercising by cash payment, within 30 months from the issuance date (i.e., August 25, 2022); or (ii) $3.65 per share, if exercising by cancellation of a portion of the Senior Secured Notes. The Company issued the Series B Warrants for an aggregate purchase price of $4.6 million. The Series B Warrants had an expiration date of November 15, 2027. In connection with the issuance of the Senior Secured Notes on June 4, 2020, the terms of certain of the Series B Warrants were amended to permit the payment of the lower exercise price of $3.65 through the payment of cash, rather than only through the cancellation of Senior Secured Notes outstanding, at any time until the expiration date of November 15, 2027. 31,506,849 of the Series B Warrants were subject to this adjustment with the remaining balance of 68,493,151 Series B Warrants continuing under their original terms (the Series B Warrants not subject to such adjustment, the “Unadjusted Series B Warrants”). During the third quarter of 2022, the cash exercise feature of the Unadjusted Series B Warrants expiration date of August 25, 2022 was extended to October 28, 2022. On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for the related 68,493,151 warrants. In March 2023, the Unadjusted Series B Warrants were cancelled immediately following the completion of the Rights Offering (as described below). In 2023, the remaining 31,506,849 Series B Warrants were exercised. Further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, on July 13, 2023, Starboard completed the Series B Warrants Exercise. Pursuant to the Series B Warrants Exercise, the Company effectively cancelled $60.0 million aggregate principal amount of Senior Secured Notes held by Starboard and received aggregate gross proceeds of approximately $55.0 million. At the closing of the Series B Warrants Exercise, the Company paid to Starboard an aggregate amount of $66.0 million (the “Recapitalization Payment”) representing a negotiated settlement of the foregone time value of the Series B Warrants and the Series A Redeemable Convertible Preferred Stock (which amount was paid through a reduction in the exercise price of the Series B Warrants). The Recapitalization Payment effectively modified the exercise price of the Series B Warrants. Upon the Series B Warrants Exercise, Starboard exercised the Series B Warrants at a reduced price and the Company issued an aggregate of 31,506,849 shares of the Company’s common stock to Starboard in consideration of the cash payment and cancellation of any outstanding Senior Secured Notes. The Series B Warrants were classified as a liability in accordance with ASC 480, "Distinguishing Liabilities from Equity", as the agreement provided for net cash settlement upon a change in control, which was outside the control of the Company. In connection with the Recapitalization Agreement and related warrant modification, the Company recognized the incremental fair value as a component of the change in fair value of the Series B Warrants in other expense as of December 31, 2022. The Series B Warrants were recognized at fair value at each reporting period until exercised, which resulted in a fair value of zero, with changes in fair value recognized in other income or (expense) in the consolidated statements of operations. As of March 31, 2024, no Series B warrants were issued or outstanding. Rights Offering and Concurrent Private Rights Offering On February 14, 2023, pursuant to the requirements of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the Company commenced a rights offering (the “Rights Offering”). Under the terms of the Rights Offering, the Company distributed non-transferable subscription rights to record holders (“Eligible Securityholders”) of the Company’s common stock held as of 5 p.m. Eastern time on February 13, 2023, the record date for the Rights Offering. The subscription period for the Rights Offering terminated at 5 p.m. Eastern time on March 1, 2023 (the “Expiration Time”). Pursuant to the Rights Offering, Eligible Securityholders received one non-transferable subscription right (a “Subscription Right”) for every four shares of common stock owned by such Eligible Securityholders. Each Subscription Right entitled an Eligible Securityholder to purchase, at such Eligible Securityholder’s election, one share of common stock at a price of $5.25 per share (the “Subscription Price”). Starboard received private subscription rights to purchase up to 28,647,259 shares of common stock at the Subscription Price pursuant to a concurrent private rights offering (the “Concurrent Private Rights Offering”) in connection with their ownership of common stock and, on an as-converted basis, the Company’s Series B Warrants and shares of the Company’s Series A Redeemable Convertible Preferred Stock. The private subscription rights provided to Starboard pursuant to the Concurrent Private Rights Offering were on substantially the same terms as the Subscription Rights, and were distributed substantially concurrently with the distribution of the Subscription Rights and expired at the Expiration Time. In connection with the Rights Offering, Starboard purchased 15,000,000 shares of common stock. The Company determined that upon entering into the Recapitalization Agreement on October 30, 2022, the Rights Offering and Concurrent Private Rights Offering and related commitment required no recognition in the Company's financial statements. The Company recognized the proceeds received from the sale of the shares in equity when the sale occurred. The Company received aggregate gross proceeds of approximately $361,000 from the Rights Offering and aggregate gross proceeds of approximately $78.8 million from the Concurrent Private Rights Offering and issued an aggregate of 15,068,753 shares of common stock. The Rights Offering was made pursuant to a prospectus supplement to the Company’s shelf registration statement on Form S-3 (No. 333-249984), filed with the SEC on February 14, 2023. Governance Under the Recapitalization Agreement, the parties agreed that for a period from the date of the Recapitalization Agreement until May 12, 2026 (the “Applicable Period”), the Board of the Company will include at least two (2) directors that are independent of, and not affiliates (as defined in Rule 144 of the Securities Exchange Act of 1934, as amended) of, Starboard, with current Board members Maureen O’Connell and Isaac T. Kohlberg satisfying this initial condition under the Recapitalization Agreement. The parties also agreed that Katharine Wolanyk would continue to serve as a director of the Company until at least May 12, 2024 (or such earlier date if Ms. Wolanyk is unwilling or unable to serve as a director for any reason or resigns as a director). Additionally, the Company appointed Gavin Molinelli as a member and as Chair of the Board. The Company and Starboard also agreed that, following the closing of the Series B Warrants Exercise until the end of the Applicable Period, the number of directors serving on the Board will not exceed 10 members. Other Provisions of the Recapitalization Agreement On February 14, 2023, the Company entered into an amended and restated Registration Rights Agreement with Starboard as contemplated by the Recapitalization Agreement. Pursuant to the amended Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale of the shares of common stock, issuable or issued to Starboard pursuant to or in accordance with Section 1.1 of the Recapitalization Agreement, including the shares issued to Starboard in the Concurrent Private Rights Offering, within 90 days after a written request made prior to the first anniversary of the Closing Date (as defined in the Registration Rights Agreement). The Registration Rights Agreement also provides Starboard with additional rights to require that the Company file a registration statement in other circumstances. The Registration Rights Agreement includes other customary terms. The Recapitalization Agreement includes a “fair price” provision requiring, in addition to any other stockholder vote required by the Company’s Certificate of Incorporation or Delaware law, the affirmative vote of the holders of a majority of the outstanding voting stock held by stockholders of the Company other than Starboard and its affiliates, by or with whom or on whose behalf, directly or indirectly, a business combination is proposed, in order to approve such a business combination; provided, that the additional majority voting requirement would not be applicable if either (x) the business combination is approved by the Board by the affirmative vote of at least a majority of the directors who are unaffiliated with Starboard or (y) (i) the consideration to be received by stockholders other than Starboard and its affiliates meets certain minimum price conditions, and (ii) the consideration to be received by stockholders other than Starboard and its affiliates is of the same form and kind as the consideration paid by Starboard and its affiliates. The Recapitalization Agreement also provided that, effective as of the later of the closing of the Recapitalization Transactions and the date on which no Senior Secured Notes remain outstanding, (i) the Securities Purchase Agreement and (ii) that certain Governance Agreement, dated as of November 18, 2019, as amended and restated on January 7, 2020 (the "Governance Agreement"), would be automatically terminated and of no further force and effect without any further action by any party thereto. As a result of the closing of the Recapitalization Transactions, the Securities Purchase Agreement and the Governance Agreement have been terminated and are of no further force and effect. Services Agreement On December 12, 2023, the Company entered into a Services Agreement with Starboard (the “Services Agreement”), pursuant to which, upon the Company’s request, Starboard will provide to the Company certain trade execution, research, due diligence and other services. Starboard has agreed to provide the services on an expense reimbursement basis and no separate fee will be charged by Starboard for the services. During the three months ended March 31, 2024 the Company did not make any reimbursements to Starboard under the Services Agreement.
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FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS U.S. GAAP defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: (i)Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; (ii)Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and (iii)Level 3 - Unobservable Inputs: Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs, including the entity’s own assumptions in determining the fair value of derivatives and certain investments. Whenever possible, the Company is required to use observable market inputs (Level 1) when measuring fair value. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. In certain cases, inputs used to measure fair value may fall into different levels of the fair value hierarchy. The Company held the following types of financial instruments at fair value on a recurring basis as of March 31, 2024 and December 31, 2023: Equity Securities. Equity securities includes investments in public company common stock and are recorded at fair value based on the quoted market price of each share on the valuation date. The fair value of these securities are within Level 1 of the valuation hierarchy. Equity investments that do not have regular market pricing, but for which fair value can be determined based on other data values or market prices, are recorded at fair value within Level 2 of the valuation hierarchy. The Company has elected to apply the fair value method to one equity securities investment that would otherwise be accounted for under the equity method of accounting. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into the Arix Shares Purchase Agreement with RTW Bio to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). On January 19, 2024, the Company completed such sale for $57.1 million. As a result, as of March 31, 2024, the aggregate carrying amount of this investment was zero, and was included in equity securities, in the consolidated balance sheet (refer to Note 3 for additional information). Commodity Derivative Instruments: Commodity derivative instruments are recorded at fair value using industry standard models using assumptions and inputs which are substantially observable in active markets throughout the full term of the instruments. These include market price curves, quoted market prices in active markets, credit risk adjustments, implied market volatility and discount factors. The fair value of these instruments are within Level 2 of the valuation hierarchy. During 2024, Benchmark executed derivative contracts with a single counterparty and also executed an International Swap Dealers Association Master Agreement ("ISDA") with its counterparty, the terms of which provide Benchmark and its counterparty with rights of offset. There are no derivative assets that were subjected to offset for the three months ended March 31, 2024. As of March 31, 2024, the aggregate fair value of the open commodity derivatives was $2.1 million and is included in and other non-current assets, in the consolidated balance sheet (refer to Note 2 to the consolidated financial statements included in our 2023 Annual Report). Series B Warrants. Series B Warrants are recorded at fair value, using a Black-Scholes option-pricing model (Level 3). On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for such warrants (refer to Note 9 for additional information). The fair value of the remaining Series B Warrants as of July 13, 2023 was estimated based on the following significant assumptions: volatility of 120 percent, risk-free rate of 5.24 percent, term of 0.04 years and a dividend yield of 0 percent. On July 13, 2023, further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the remaining Series B Warrants were exercised, which also resulted in a fair value of zero as of December 31, 2023 (refer to Note 9 for additional information). As of March 31, 2024, no Series B warrants were issued or outstanding. Refer to the "Embedded derivative liabilities" discussion below for additional information on assumptions. Embedded derivative liabilities. Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the host instrument. During the quarter ended December 31, 2022 in connection with the Recapitalization Agreement, the Company changed its methodology from a binomial lattice framework to an as-converted value (Level 3), based on an expected Series A Redeemable Convertible Preferred Stock conversion date on or prior to July 14, 2023 (refer to Note 9 for additional information). The volatility of the Company’s common stock is estimated by analyzing the Company’s historical volatility, implied volatility of publicly traded stock options, and the Company’s current asset composition and financial leverage. Prior to December 31, 2022, the selected volatility, as described herein, represented a haircut from the Company’s actual realized historical volatility. A volatility haircut is a concept used to describe a commonly observed occurrence in which the volatility implied by market prices involving options, warrants and convertible debt is lower than historical actual realized volatility. The risk-free interest rate was based on the yield on the U.S. Treasury with a remaining term equal to the expected term of the conversion and early redemption options. The fair value of the embedded derivative as of July 13, 2023 was estimated based on the following significant assumptions: coupon rate of 8.00 percent, conversion ratio of 27.40, conversion date of July 14, 2023 and a discount rate of 14.80 percent. On July 13, 2023, in accordance with the terms of the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, Starboard converted the Series A Redeemable Convertible Preferred Stock into common stock, which resulted in a fair value of zero as of December 31, 2023 (refer to Note 9 for additional information). As of March 31, 2024, the Company no longer had any shares of Series A Redeemable Convertible Preferred Stock outstanding. Financial assets and liabilities measured at fair value on a recurring basis were as follows:
Benchmark's realized derivative gain of $800,000 and unrealized derivative loss of $629,000 for the three months ended March 31, 2024 and are included in other income or (expense) in the consolidated statements of operations. No amounts are netted under the terms of the ISDA. The following table sets forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which were measured at fair value on a recurring basis. There are no Level 3 liabilities as of March 31, 2024. The changes in the estimated fair value of the Company's Level 3 liabilities as of March 31, 2023 were as follows:
In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of equity securities without readily determinable fair value, equity method investments and patents on a quarterly basis for indications of impairment, and other long-lived assets at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.
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RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company reimbursed an aggregate amount of zero and $20,000 during the three months ended March 31, 2024 and 2023, respectively, to former executive officers in connection with legal fees incurred following such officers’ respective departures from the Company. In 2023, the Company entered into a Loan Facility ("Loan Facility") with a private portfolio company. As of March 31, 2024 and December 31, 2023, the Loan Facility balance was $2.6 million and $2.2 million, respectively. The Loan Facility bore an interest rate of 9.5% per annum. We recorded $59,000 in interest income during the three months ended March 31, 2024. The receivable is included in other non-current assets in the consolidated balance sheets. Refer to Note 9 for information about the Recapitalization Agreement and Services Agreement with Starboard.
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Facility Leases Acacia primarily leases office facilities under operating lease arrangements that will end in various years through July 2027. On June 7, 2019, Acacia entered into a building lease agreement with Jamboree Center 4 LLC. Pursuant to the lease, we have leased 8,293 square feet of office space in Irvine, California. The lease commenced on August 1, 2019. The term of the lease is 60 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. On January 7, 2020, Acacia entered into a building lease agreement with Sage Realty Corporation. Pursuant to the lease, as amended, we have leased approximately 8,600 square feet of office space for our corporate headquarters in New York, New York. The lease commenced on February 1, 2020. The term of the initial lease was 24 months from the commencement date, provides for annual rent increases, and does not provide us the right to early terminate or extend our lease terms. During August 2021, we entered into a first amendment of the New York office lease, to commence for a period of three years upon landlord's substantial completion of adequate substitution space. On January 25, 2022, the substitution space was substantially completed and the new expiration date is February 28, 2025. During July 2022, we entered into a second amendment of the New York office lease, to add space to the existing premises and increase the annual fixed rent through the existing expiration date. The new fixed rent commenced upon landlord's substantial completion of the additional space, which occurred on September 19, 2022. On June 23, 2023, the Company notified the landlord of its election to early terminate the lease effective as of March 31, 2024, pursuant to the terms set forth in the lease. In connection with such early termination election, the Company paid the landlord a termination payment as set forth in the lease. During September 2023, we entered into a fourth amendment of the New York office lease, which provides for (among other things): (a) the surrender a portion of the premises (Unit 602) effective as of March 31, 2024; (b) the rescission of the early termination election as it relates to the remaining portion of the premises (Unit 601); (c) an extension of the lease term with respect to Unit 601 for 40 months commencing on April 1, 2024 and expiring on July 31, 2027; and (d) annual rent increases, with no right to early terminate or extend the lease. Printronix conducts its foreign and domestic operations using leased facilities under non-cancelable operating leases that expire at various dates through February 2028. Printronix has leased 73,649 square feet of facilities space, of which the significant leases are as follows: •On November 10, 2020, Printronix entered into a building lease agreement with PPC Irvine Center Investment, LLC for 8,662 square feet of office space in Irvine, California. The lease commenced on April 1, 2021. The term of the lease is 65 months from the commencement date, provides for annual rent increases and provides the right to early terminate the lease under certain circumstances, as well as extend the lease term. •On September 30, 2019, Printronix entered into a building lease agreement with Dynamics Sing Sdn. Bhd for 52,000 square feet of warehouse/manufacturing space in Johor, Malaysia. The lease commenced on December 29, 2019. The term of the lease is 48 months from the commencement date, has no annual rent increases and provides the right to early terminate or extend our lease term. The Malaysia factory lease has two renewal options for an additional four years and one additional renewal option for two years. On July 26, 2023, Printronix entered into a lease agreement to renew the lease for another 24 months commencing on December 29, 2023. •On June 2, 2022, Printronix entered into a building lease agreement with HSBC Institutional Trust Services (Singapore) Limited for 4,560 square feet of office space in Singapore. The lease commenced on June 13, 2022. The term of the lease is 36 months from the commencement date, has no annual rent increases and does not provide the right to early terminate or extend the lease term. •On November 28, 2019, Printronix entered into a building lease agreement with PF Grand Paris for 3,045 square feet of office space in Paris, France. The lease commenced on March 1, 2019. The term of the lease is 109 months from the commencement date, has no annual rent increases and provides the right to early terminate the lease under certain circumstances, however it does not provide for an extension of the lease term. •On November 1, 2020, Printronix entered into a building lease agreement with Shanghai SongYun Enterprise Management Center for 2,422 square feet of office space in Shanghai, China. The lease commenced on November 1, 2020. The term of the lease is 48 months from the commencement date, has no annual rent increases and provides the right to early terminate or extend the lease term. The Company's operating lease costs were $336,000 and $388,000 for the three months ended March 31, 2024 and 2023, respectively. The table below presents aggregate future minimum lease payments due under the Company's leases discussed above, reconciled to long-term lease liabilities and short-term lease liabilities (included in accrued expenses and other current liabilities) included in the consolidated balance sheet as of March 31, 2024 (in thousands):
Inventor Royalties and Contingent Legal Expenses In connection with the investment in certain patents and patent rights, ARG and its subsidiaries executed related agreements which grant to the former owners of the respective patents or patent rights, the right to receive inventor royalties based on future net revenues (as defined in the respective agreements) generated as a result of licensing and otherwise enforcing the respective patents or patent portfolios. ARG or its subsidiaries may retain the services of law firms that specialize in patent licensing and enforcement and patent law in connection with their licensing and enforcement activities. These law firms may be retained on a contingent fee basis whereby such law firms are paid on a scaled percentage of any negotiated fees, settlements or judgments awarded based on how and when the fees, settlements or judgments are obtained. Patent Enforcement and Legal Proceedings The Company is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows. Subsidiaries of ARG are often required to engage in litigation to enforce their patents and patent rights. In connection with any such patent enforcement actions, it is possible that a defendant may request and/or a court may rule that a subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against ARG or its subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. On September 6, 2019, Slingshot Technologies, LLC (“Slingshot”), filed a lawsuit in Delaware Chancery Court against the Company and ARG (collectively, the “Acacia Entities”), Monarch Networking Solutions LLC (“Monarch”), Acacia board member Katharine Wolanyk, and Transpacific IP Group, Ltd. (“Transpacific”). Slingshot alleges that the Acacia Entities and Monarch misappropriated its confidential and proprietary information, purportedly furnished to the Acacia Entities and Monarch by Ms. Wolanyk, in acquiring a patent portfolio from Transpacific after Slingshot’s exclusive option to purchase the same patent portfolio from Transpacific had already expired. Slingshot seeks monetary damages, as well as equitable and injunctive relief related to its alleged right to own the portfolio. On March 15, 2021, the Court issued orders granting Monarch’s motion to dismiss for lack of personal jurisdiction and Ms. Wolanyk’s motion to dismiss for lack of subject matter jurisdiction. The remaining parties served written discovery requests and responses, exchanged their respective document productions, and completed depositions as of October 27, 2022. On November 18, 2022, the Acacia Entities and Transpacific filed motions for summary judgment on Slingshot’s claims. Slingshot filed its opposition to the summary judgment motions on December 23, 2022, and the Acacia Entities and Transpacific filed their replies on January 10, 2023. The Chancery Court took off calendar the two-day trial on liability that had been scheduled for April 18–19, 2023, and instead set the hearing on the summary judgment motions for April 19, 2023. On April 19, 2023, the Chancery Court heard oral argument and took the summary judgment motions under advisement. On July 26, 2023, the Court held a telephonic hearing during which it delivered its ruling on the motions for summary judgment. The Court granted Transpacific’s motion and deferred ruling on the Acacia Entities’ motion pending further briefing as to whether the Court has subject matter jurisdiction. On September 14, 2023, the Acacia Entities and Slingshot filed a joint submission with the Chancery Court agreeing to proceed in Delaware Superior Court based on the Chancery Court’s apparent lack of subject matter jurisdiction over the remaining claims, and on September 21, 2023, the Chancery Court issued an order transferring the case to Delaware Superior Court. The case was subsequently assigned to Judge Eric M. Davis in the Complex Commercial Litigation Division of the Superior Court. On January 8, 2024, Judge Davis held an initial status conference, during which he instructed the Acacia Entities and Slingshot to refile their respective summary judgment briefs in Superior Court for the Court's consideration. The oral arguments on the Acacia Entities' motion for summary judgment took place on March 28, 2024. In the event that the Court denies the motion, it will set the case for trial. In February 2017, AIP Operation LLC, or AIP, an indirect subsidiary of the Company, adopted a Profits Interests Plan that granted a profit interest in Veritone 10% Warrants held by AIP to certain members of management and the Board of Directors of the Company as compensation for services rendered. Those members of management and the Board separated from Acacia in 2018 and 2019 and the Veritone 10% Warrants were exercised in 2020 and 2021. In the first quarter of 2024, we accrued for a potential legal liability in connection with an ongoing matter involving those former executives' separation from Acacia and their related profit interests in AIP (the "AIP Matter"). The accrued amount is an estimate based on best available information to the Company. For the three months ended March 31, 2024, other income (expense) includes an additional accrual of $6.2 million for amounts in connection with the AIP Matter, which is incremental to the $2.3 million that was expensed in prior periods. As of March 31, 2024, the related accrued loss contingency was $8.5 million, which is inclusive of the incremental accrual of $6.2 million. Guarantees and Indemnifications Acacia and certain of Acacia’s operating subsidiaries have made guarantees and indemnities under which they may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, Acacia and certain of its operating subsidiaries have indemnified lessors for certain claims arising from the facilities or the leases. Acacia indemnifies its directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, Acacia has a directors and officers insurance policy that may reduce its exposure in certain circumstances and may enable it to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments that Acacia could be obligated to make. To date, Acacia has made no material payments related to these guarantees and indemnities. Acacia estimates the fair value of its indemnification obligations to be immaterial based on this history and therefore, have not recorded any material liability for these guarantees and indemnities in the consolidated balance sheets. Additionally, no events or transactions have occurred that would result in a material liability as of March 31, 2024. Printronix posted collateral in the form of a surety bond or other similar instruments, which are issued by independent insurance carriers (the “Surety”), to cover the risk of loss related to certain customs and employment activities. If any of the entities that hold such bonds should require payment from the Surety, Printronix would be obligated to indemnify and reimburse the Surety for all costs incurred. As of March 31, 2024 and December 31, 2023, Printronix had approximately $100,000 of these bonds outstanding. Environmental Cleanup Energy Operations Benchmark is engaged in oil and natural gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup of well production and also may become subject to certain liabilities as they relate to environmental cleanup of well sites or other environmental restoration procedures as they relate to oil and natural gas wells and the operation thereof. In connection with Benchmark's acquisition of existing or previously drilled well bores, Benchmark may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated. Should it be determined that a liability exists with respect to any environmental cleanup or restoration, Benchmark would be responsible for curing such a violation. No claim has been made, nor is management aware of any liability that exists, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto for the three months ended March 31, 2024.
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STOCKHOLDERS’ EQUITY |
3 Months Ended |
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Mar. 31, 2024 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Repurchases of Common Stock On March 31, 2022, the Board approved a stock repurchase program for up to $40.0 million of shares of common stock. The repurchase authorization had no time limit and did not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act. During July 2022, we completed the March 2022 program with total common stock purchases of 8,453,519 shares for the aggregate amount of $40.0 million. On November 9, 2023, the Board approved a stock repurchase program for up to $20.0 million, subject to a cap of 5,800,000 shares of common stock. The repurchase authorization has no time limit and does not require the repurchase of a minimum number of shares. The common stock may be repurchased on the open market, in block trades, or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Exchange Act. There have been no stock repurchases under this repurchase program for the three months ended March 31, 2024. In determining whether or not to repurchase any shares of Acacia’s common stock, management considers such factors, among others, as market conditions, legal requirements, stock price, the impact of the repurchase on Acacia’s cash position, as well as Acacia’s capital needs and whether there is a better alternative use of Acacia’s capital. Acacia has no obligation to repurchase any amount of its common stock under its stock repurchase programs. The authorization to repurchase shares provides an opportunity to reduce the outstanding share count and enhance stockholder value. Tax Benefits Preservation Charter Provision The Company has a provision in its Amended and Restated Certificate of Incorporation, as amended (the “Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. The purpose of the Charter Provision is to protect the Company’s ability to utilize potential tax assets, such as net operating loss carryforwards and tax credits to offset potential future taxable income.
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EQUITY-BASED INCENTIVE PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY-BASED INCENTIVE PLANS | EQUITY-BASED INCENTIVE PLANS Stock-Based Incentive Plans The 2013 Acacia Research Corporation Stock Incentive Plan (“2013 Plan”) and the 2016 Acacia Research Corporation Stock Incentive Plan (“2016 Plan”) (collectively, the “Plans”) were approved by the stockholders of Acacia in May 2013 and June 2016, respectively. The Plans allow grants of stock options, stock awards and restricted stock units with respect to Acacia common stock to eligible individuals, which generally includes directors, officers, employees and consultants. The 2013 Plan expired in May 2023, therefore, Acacia exclusively grants awards under the 2016 Plan. Except as noted below, the terms and provisions of the Plans are identical in all material respects. Acacia’s compensation committee administers the Plans. The compensation committee determines which eligible individuals are to receive option grants, stock issuances or restricted stock units under the Plans, the time or times when the grants or issuances are to be made, the number of shares subject to each grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option grant, stock issuance or restricted stock units and the maximum term for which any granted option is to remain outstanding. The exercise price of options is equal to the fair market value of Acacia’s common stock on the date of grant. Options generally begin to be exercisable one year after grant and expire ten years after grant. Stock options with time-based vesting generally vest over three years and restricted shares and restricted stock units with time-based vesting generally vest in full after to three years (generally representing the requisite service period). The Plans terminate no later than the tenth anniversary of the approval of the incentive plans by Acacia’s stockholders. The Plans provide for the following separate programs: Stock Issuance Program. Under the stock issuance program, eligible individuals may be issued shares of common stock directly, upon the attainment of performance milestones or the completion of a specified period of service or as a bonus for past services. Under this program, the purchase price for the shares shall not be less than 100% of the fair market value of the shares on the date of issuance, and payment may be in the form of cash or past services rendered. The eligible individuals receiving RSAs under the 2016 Plan shall have full stockholder rights with respect to any shares of common stock issued to them under the Stock Issuance Program once those shares are vested, and under the 2013 Plan, had full stockholder rights with respect to any shares of common stock issued to them under the Stock Issuance Program, whether or not their interest in those shares was vested. Accordingly, once full stockholder rights are obtained, the eligible individuals shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. Discretionary Option Grant Program. Under the discretionary option grant program, Acacia’s compensation committee may grant (1) non-statutory options to purchase shares of common stock to eligible individuals in the employ or service of Acacia or its subsidiaries (including employees, non-employee board members and consultants) at an exercise price not less than 100% of the fair market value of those shares on the grant date, and (2) incentive stock options to purchase shares of common stock to eligible employees at an exercise price not less than 100% of the fair market value of those shares on the grant date (not less than 110% of fair market value if such employee actually or constructively owns more than 10% of Acacia’s voting stock or the voting stock of any of its subsidiaries). Discretionary Restricted Stock Unit Grant Program. Under the discretionary restricted stock unit program, Acacia's compensation committee may grant restricted stock units to eligible individuals, which vest upon the attainment of performance milestones or the completion of a specified period of service. During June 2023, Acacia's compensation committee adopted a long-term incentive program to incentivize and reward employees, including members of the Company's executive leadership team, for driving Acacia's performance over the longer-term and to align employees and shareholders. Under the long-term incentive program, Acacia's compensation committee granted RSUs subject to time-based vesting requirements and PSUs subject to performance-based vesting requirements to employees of the parent company, including the Company's Chief Executive Officer, interim Chief Financial Officer, Chief Administrative Officer and General Counsel. The grants are generally intended to cover two years of annual grants (fiscal years 2023 and 2024). The number of shares of common stock initially reserved for issuance under the 2013 Plan was 4,750,000 shares. The 2013 Plan has expired, and while awards remain outstanding under the 2013 Plan, no new awards may be granted under the 2013 Plan. The stock issued, or issuable pursuant to still-outstanding awards, under the 2013 Plan shall be shares of authorized but unissued or reacquired common stock, including shares repurchased by the Company on the open market. In June 2016, 625,390 shares of common stock available for issuance under the 2013 Plan were transferred into the 2016 Plan. The number of shares of common stock initially reserved for issuance under the 2016 Plan was 4,500,000 shares plus 625,390 shares of common stock available for issuance under the 2013 Plan, which were transferred into the 2016 Plan as of the effective date of the 2016 Plan. In May 2022, security holders approved an increase of 5,500,000 shares of common stock authorized to be issued pursuant to the 2016 Plan. At March 31, 2024, there were 1,457,214 shares available for grant under the 2016 Plan. Upon the exercise of stock options, the granting of RSAs, or the delivery of shares pursuant to vested RSUs, it is Acacia’s policy to issue new shares of common stock. The Board may amend or modify the 2016 Plan at any time, subject to any required stockholder approval. As of March 31, 2024, there are 5,604,578 shares of common stock reserved for issuance under the 2016 Plan. The following table summarizes stock option activity for the Plans:
During the three months ended March 31, 2024, there were no stock options granted. The aggregate fair value of options vested during the three months ended March 31, 2024 was $420,000. The following table summarizes nonvested restricted stock activity for the Plans:
During the three months ended March 31, 2024, there were no RSUs granted. The aggregate fair value of RSAs vested during the three months ended March 31, 2024 was $444,000. The aggregate fair value of RSUs vested during the three months ended March 31, 2024 was $1.1 million. During the three months ended March 31, 2024, RSAs and RSUs totaling 384,574 shares were vested and 148,766 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the vesting date. PSUs granted in 2023 can be earned based upon the level of achievement of the Company's compound annual growth rate of its adjusted book value per share, measured over a three-year performance period beginning on January 1, 2023 and ending on December 31, 2025. The number of PSUs granted in 2023 that can be earned ranges from 0% to 200% of the target number of PSUs granted (up to a maximum of 750,000 shares of Acacia's common stock per recipient). Such number of PSUs that are ultimately earned and eligible to vest will generally become vested on the third anniversary of the grant date subject to continued employment through such date. The Company has not recorded any expense related to the PSUs based on the probability assessment performed as of March 31, 2024. Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:
Total unrecognized stock-based compensation expense as of March 31, 2024 was $4.3 million, which will be amortized over a weighted average remaining vesting period of 1.8 years.
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INCOME/LOSS PER SHARE |
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INCOME/LOSS PER SHARE | INCOME/LOSS PER SHARE The following table presents the calculation of basic and diluted income/loss per share of common stock:
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING As of March 31, 2024, the Company operates and reports its results in three reportable segments: Intellectual Property Operations, Industrial Operations and Energy Operations. The Company reports segment information based on the management approach and organizes its businesses based on products and services. The management approach designates the internal reporting used by the chief operating decision maker for decision making and performance assessment as the basis for determining the Company’s reportable segments. The performance measure of the Company’s reportable segments is primarily income or (loss) from operations. Income or (loss) from operations for each segment includes all revenues, cost of revenues, gross profit and other operating expenses directly attributable to the segment. Other than the Company's equity securities investments, specific asset information is not included in managements review at this time. The Company’s Intellectual Property Operations segment invests in IP and related absolute return assets, and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program. When applicable, we share net licensing revenue with our patent partners as that program matures, on a prearranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. We generate revenues and related cash flows from the granting of IP rights for the use of patented technologies that our operating subsidiaries control or own. The Company’s Industrial Operations segment generates operating income by designing and manufacturing printers and consumable products for various industrial printing applications. Printers consist of hardware and embedded software and may be sold with maintenance service agreements. Consumable products include inked ribbons which are used in Printronix’s printers. Printronix’s products are primarily sold through channel partners, such as dealers and distributors, to end-users. The Company's Energy Operations segment generates operating income from its wells and engages in the acquisition, exploration, development, and production of oil and natural gas resources located in Roberts and Hemphill Counties in Texas. Benchmark seeks to acquire predictable and shallow decline, cash flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. The Energy Operations reporting segment did not exist prior to the acquisition of Benchmark in November 2023. As of and for the three months ended March 31, 2023, the consolidated results represented the results of the Company's two reporting segments: Intellectual Property Operations and Industrial Operations. The Company's segment information is as follows:
The Company's revenues and long-lived tangible assets by geographic area are presented below. Intellectual Property Operations revenues are attributed to licensees domiciled in foreign jurisdictions. Printronix's net sales to external customers are attributed to geographic areas based upon the final destination of products shipped. The Company, primarily through its Printronix subsidiary, has identified three global regions for marketing its products and services: Americas, Europe, Middle East and Africa, and Asia-Pacific. Assets are summarized based on the location of held assets. Benchmark's sales are only attributed to the United States of America.
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Description of Business | DESCRIPTION OF BUSINESS Acacia Research Corporation (the “Company,” “Acacia,” “we,” “us,” or “our”) is focused on acquiring and managing companies across industries including but not limited to the industrial, energy, technology, and healthcare verticals. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value. We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such as Special Purpose Acquisition Companies, which are narrowly focused on completing one singular, defining acquisition. Our focus is companies with market values in the sub-$2 billion range and particularly on businesses valued at $1 billion or less. We are, however, opportunistic, and may pursue acquisitions that are larger under the right circumstance. Relationship with Starboard Value, LP Our strategic relationship with Starboard Value, LP (together with certain funds and accounts affiliated with, or managed by, Starboard Value LP, “Starboard”), the Company's controlling shareholder, provides us access to industry expertise, and operating partners and industry experts to evaluate potential acquisition opportunities and enhance the oversight and value creation of such businesses once acquired. Starboard has provided, and we expect will continue to provide, ready access to its extensive network of industry executives and, as part of our relationship, Starboard has assisted, and we expect will continue to assist, with sourcing and evaluating appropriate acquisition opportunities. Starboard beneficially owned 61,123,595 shares of common stock as of May 6, 2024, representing approximately 61.2% of the common stock based on 100,021,951 shares of common stock issued and outstanding as of such date. Refer to Note 9 for additional information. Intellectual Property Operations – Patent Licensing, Enforcement and Technologies Business The Company through its Patent Licensing, Enforcement and Technologies Business invests in intellectual property and related absolute return assets and engages in the licensing and enforcement of patented technologies. Through our Patent Licensing, Enforcement and Technologies Business, operated under our wholly owned subsidiary, Acacia Research Group, LLC, and its wholly-owned subsidiaries (collectively, “ARG”), we are a principal in the licensing and enforcement of patent portfolios, with our operating subsidiaries obtaining the rights in the patent portfolio or purchasing the patent portfolio outright. While we, from time to time, partner with inventors and patent owners, from small entities to large corporations, we assume all responsibility for advancing operational expenses while pursuing a patent licensing and enforcement program, and when applicable, share net licensing revenue with our patent partners as that program matures, on a pre-arranged and negotiated basis. We may also provide upfront capital to patent owners as an advance against future licensing revenue. Currently, on a consolidated basis, our operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a variety of industries. ARG generates revenues and related cash flows from the granting of IP rights for the use of patented technologies that its operating subsidiaries control or own. Our Patent Licensing, Enforcement and Technologies Business depends upon the identification and investment in new patents, inventions and companies that own IP through relationships with inventors, universities, research institutions, technology companies and others. If ARG’s operating subsidiaries are unable to maintain those relationships and identify and grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and/or revenue growth. During the three months ended March 31, 2024 and the year ended December 31, 2023, ARG did not obtain control of any new patent portfolios. Industrial Operations On October 7, 2021, we consummated our first operating company acquisition of Printronix Holding Corporation and subsidiaries (“Printronix”). We acquired all of the outstanding stock of Printronix, for a cash purchase price of approximately $37.0 million, which included an initial $33.0 million cash payment and a $4.0 million working capital adjustment. 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. Energy Operations Acquisition In November 13, 2023, we invested $10.0 million to acquire a 50.4% equity interest in Benchmark Energy II, LLC ("Benchmark"). Headquartered in Austin, Texas, Benchmark is an independent oil and gas company engaged in the acquisition, production and development of oil and gas assets in mature resource plays in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring, who previously served as Chief Operating Officer of both Benchmark and Jones Energy, Inc. Prior to the Transaction (as defined below), Benchmark’s assets consisted of over 13,000 net acres primarily located in Roberts and Hemphill Counties in Texas, and an interest in over 125 wells, the majority of which are operated. Benchmark seeks to acquire predictable and shallow decline, cash-flowing oil and gas properties whose value can be enhanced via a disciplined, field optimization strategy, with risk managed through robust commodity hedges and low leverage. Through its investment in Benchmark, the Company, along with the Benchmark management team, will evaluate future growth and acquisitions of oil and gas assets at attractive valuations. The Company's consolidated financial statements include Benchmark's consolidated operations from November 13, 2023 through March 31, 2024. On April 17, 2024, Benchmark consummated the previously announced transactions contemplated in the Purchase and Sale Agreement (the "Purchase Agreement"), dated February 16, 2024, by and among Benchmark and Revolution Resources II, LLC, Revolution II NPI Holding Company, LLC, Jones Energy, LLC, Nosley Assets, LLC, Nosley Acquisition, LLC, and Nosley Midstream, LLC (collectively, “Revolution”). Pursuant to the Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells (such purchase and sale, together with the other transactions contemplated by the Purchase Agreement, the “Transaction”) for a purchase price of $145 million in cash (the “Purchase Price”), subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Purchase Price was funded by a combination of borrowings under the Revolving Credit Facility (as defined below) and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 2 for additional information regarding the Revolving Credit Facility.
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Accounting Principles | Accounting Principles The consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
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Principles of Consolidation and Basis of Presentation | Principles of Consolidation The consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity. Consolidated net income or (loss) is adjusted to include the net (income) or loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders’ Equity for noncontrolling interests activity. In 2020, in connection with the transaction with Link Fund Solutions Limited, which is more fully described in Note 3, the Company acquired equity securities of Malin J1 Limited (“MalinJ1”). MalinJ1 is included in the Company’s consolidated financial statements because the Company, through its interest in the equity securities of MalinJ1, has the ability to control the operations and activities of MalinJ1. Viamet HoldCo LLC, a Delaware limited liability company and wholly-owned subsidiary of Acacia, is the majority shareholder of MalinJ1. The Company holds a variable interest in Benchmark as the Company is obligated to absorb the loss and has the right to receive the benefit from Benchmark after the acquisition date and therefore, Benchmark is considered a variable interest entity ("VIE"). We determined that we have the power to direct the activities that most significantly impact Benchmark's economic performance and we (i) are obligated to absorb the losses that could be significant to Benchmark or (ii) hold the right to receive benefits from Benchmark that could potentially be significant to it. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures required by U.S. GAAP in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023, as reported by Acacia in its 2023 Annual Report, as well as in our other public filings with the SEC. The condensed consolidated interim financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia's consolidated financial position as of March 31, 2024, and results of operations and its cash flows for the interim periods presented. The consolidated results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year.
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Revenue Recognition | Revenue Recognition Intellectual Property Operations ARG's revenue is recognized upon transfer of control (i.e., by the granting) of promised bundled IP Rights and other contractual performance obligations to licensees in an amount that reflects the consideration we expect to receive in exchange for those IP Rights. Revenue contracts that provide promises to grant the right to use IP Rights as they exist at the point in time at which the IP Rights are granted, are accounted for as performance obligations satisfied at a point in time and revenue is recognized at the point in time that the applicable performance obligations are satisfied and all other revenue recognition criteria have been met. For the periods presented, revenue contracts executed by ARG primarily provided for the payment of contractually determined, one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technologies owned or controlled by ARG. Revenues also included license fees from sales-based revenue contracts, the majority of which were originally executed in prior periods, which provide for the payment of quarterly license fees based on quarterly sales of applicable product units by licensees (“Recurring License Revenue Agreements”). Revenues may also include court ordered settlements or awards related to our patent portfolio or sales of our patent portfolio. IP Rights granted included the following, as applicable: (i) the grant of a non-exclusive, future license to manufacture and/or sell products covered by patented technologies, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The IP Rights granted were generally perpetual in nature, extending until the legal expiration date of the related patents. The individual IP Rights are not accounted for as separate performance obligations, as (i) the nature of the promise, within the context of the contract, is to grant combined items to which the promised IP Rights are inputs and (ii) the Company's promise to grant each individual IP right described above to the customer is not separately identifiable from other promises to grant IP Rights in the contract. Since the promised IP Rights are not individually distinct, ARG combined each individual IP Right in the contract into a bundle of IP Rights that is distinct, and accounted for all of the IP Rights promised in the contract as a single performance obligation. The IP Rights granted were “functional IP rights” that have significant standalone functionality. ARG’s subsequent activities do not substantively change that functionality and do not significantly affect the utility of the IP to which the licensee has rights. ARG’s operating subsidiaries have no further obligation with respect to the grant of IP Rights, including no express or implied obligation to maintain or upgrade the technology, or provide future support or services. The contracts provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the contract. Licensees legally obtain control of the IP Rights upon execution of the contract. As such, the earnings process is complete and revenue is recognized upon the execution of the contract, when collectability is probable and all other revenue recognition criteria have been met. Revenue contracts generally provide for payment of contractual amounts within 15-90 days of execution of the contract, or the end of the quarter in which the sale or usage occurs for Recurring License Revenue Agreements. Contractual payments made by licensees are generally non-refundable. For sales-based royalties from Recurring License Revenue Agreements, ARG includes in the transaction price some or all of an amount of estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Notwithstanding, revenue is recognized for a sales-based royalty promised in exchange for a license of IP Rights when the later of (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based royalty has been allocated has been satisfied. Estimates are generally based on historical levels of activity, if available. Revenues from contracts with significant financing components (either explicit or implicit) are recognized at an amount that reflects the price that a licensee would have paid if the licensee had paid cash for the IP Rights when they are granted to the licensee. In determining the transaction price, ARG adjusts the promised amount of consideration for the effects of the time value of money. As a practical expedient, ARG does not adjust the promised amount of consideration for the effects of a significant financing component if ARG expects, at contract inception, that the period between when the entity grants promised IP Rights to a customer and when the customer pays for the IP Rights will be one year or less. In general, ARG is required to make certain judgments and estimates in connection with the accounting for revenue contracts with customers. Such areas may include identifying performance obligations in the contract, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct from other promised goods or services, evaluating whether a license transfers to a customer at a point in time or over time, allocating the transaction price to separate performance obligations, determining whether contracts contain a significant financing component, and estimating revenues recognized at a point in time for sales-based royalties. License revenues were comprised of the following for the periods presented:
Industrial Operations Printronix recognizes revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods or services. To determine the transaction price, Printronix estimates the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to a customer. Elements of variable consideration are estimated at the time of sale which primarily include product rights of return, rebates, price protection and other incentives that occur under established sales programs. These estimates are developed using the expected value or the most likely amount method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal recognized will not occur in future periods. The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters, and adjusted to reflect management’s future expectations. Printronix enters into contract arrangements that may include various combinations of tangible products (which include printers, consumables and parts) and services, which are generally capable of being distinct and accounted for as separate performance obligations. Printronix evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgement, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. Printronix deems performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (i.e. capable of being distinct) and if the transfer of products or services is separately identifiable from other promises in the contract (i.e. distinct within the context of the contract). For contract arrangements that include multiple performance obligations, Printronix allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and standard software while standalone selling prices for repair and maintenance services are developed with an expected cost-plus margin or residual approach. Regional pricing, marketing strategies and business practices are evaluated to derive the estimated standalone selling price using a cost-plus margin methodology. Printronix recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes consideration of the following: (i) the customer simultaneously receives and consumes the benefits provided as Printronix performs its promises, (ii) the performance creates or enhances an asset that is under control of the customer, (iii) the performance does not create an asset with an alternative use to Printronix, and (iv) Printronix has an enforceable right to payment for its performance completed to date. Revenues for products are generally recognized upon shipment, whereas revenues for services are generally recognized over time, assuming all other criteria for revenue recognition have been met. As a practical expedient, incremental costs of obtaining a contract are expensed as incurred when the expected amortization period is one year or less. Service revenue commissions are tied to the revenue recognized during the current year of the related sale. All taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue. Printronix offers printer-maintenance services through service agreements that customers may purchase separately from the printer. These agreements commence upon expiration of the standard warranty period. Printronix provides the point-of-customer-contact, dispatches calls and sells the parts used for printer repairs to service providers. Printronix contracts third parties to perform the on-site repair services at the time of sale which covers the period of service at a set amount. The maintenance service agreements are separately priced at a stand-alone value. For those transactions in which maintenance service agreements are purchased concurrently with the purchase of printers, the revenue is deferred based on the selling price, which approximates the stand-alone value for separately sold maintenance services agreements. Revenue from maintenance service contracts are recognized on a straight-line basis over the period of each individual contract, which is consistent with the pattern in which the benefit is consumed by the customer. Printronix's net revenues were comprised of the following for the periods presented:
Refer to Note 16 for additional information regarding net sales to customers by geographic region. Deferred revenue in the consolidated balance sheets represents a contract liability under Accounting Standards Codification (“ASC”) 606 and consists of payments and billings in advance of the performance. Printronix recognized approximately $578,000 and $542,000 in revenue that was previously included in the beginning balance of deferred revenue during the three months ended March 31, 2024 and 2023, respectively. Printronix's payment terms vary by the type and location of its customers and the products, solutions or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, Printronix has determined that its contracts do not include a significant financing component. Printronix's remaining performance obligations, following the transfer of products to customers, primarily relate to repair and support services. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year included in deferred revenue was $470,000 and $567,000 as of March 31, 2024 and December 31, 2023, respectively. Printronix adopted the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. On average, remaining performance obligations as of March 31, 2024 are expected to be recognized over a period of approximately two years. Energy Operations Benchmark recognizes revenues from sales of oil and natural gas products upon transfer of control of the product to the customer. Benchmark's contracts' pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality of the oil and natural gas products and prevailing supply and demand conditions. As a result, the price of the oil and natural gas fluctuates to remain competitive with other available oil and natural gas supplies. To the extent actual volumes and prices of oil and natural gas products are unavailable at the time of reporting, Benchmark will estimate the amounts. Benchmark records the differences between such estimates and actual amounts of oil and natural gas sales in the following month upon receipt of payment from the customer and any differences have historically been insignificant. Benchmark sells oil production to customers at the wellhead or other contractually agreed upon delivery locations. Revenue is recognized when control transfers to the customer upon delivery to the contractually agreed delivery point, at which time the customer takes custody, title, and risk of loss of the product. Revenue is recorded based on contract pricing terms which reflect prevailing market prices, net of pricing differentials. Oil revenue is recognized during the month in which control transfers to the customer, and it is probable Benchmark will collect the consideration it is entitled to receive. Benchmark's natural gas and natural gas liquids are sold to midstream customers at the lease location, inlet of the midstream entity’s gathering system, the tailgate of a natural gas processing plant, or other contractual delivery point. The midstream entity gathers, processes, and remits proceeds to Benchmark for the resulting sale of natural gas and natural gas liquids, and generally includes a reduction for contractual fees and for percent of proceeds. For the contracts where Benchmark maintains control through the outlet of the midstream processing facility, Benchmark recognizes revenue on a gross basis, with gathering, transportation, and processing fees presented as an expense on the consolidated statements of operations. Alternatively, where Benchmark relinquishes control at the inlet of the midstream processing facility, Benchmark recognizes natural gas and natural gas liquids revenues based on the net amount of the proceeds received from the midstream processing entity as customer. Benchmark's proportionate share of production from non-operated properties is generally marketed at the discretion of the operators with Benchmark receiving a net payment from the operator representing Benchmark's proportionate share of sales proceeds, which is net of costs incurred by the operator, if any. Such non-operated revenues are recognized at the net amount of proceeds to be received by Benchmark during the month in which production occurs, and it is probable Benchmark will collect the consideration it is entitled to receive. Proceeds are generally received by Benchmark within two to three months after the month in which production occurs. Benchmark's revenue were comprised of the following:
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Impairment of Investments | Impairment of Investments Acacia reviews its investments quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. In making this judgment, Acacia considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, Acacia evaluates, among other factors, general market conditions and the duration and extent to which the fair value is less than cost. Acacia also considers specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the consolidated statements of operations and a new cost basis in the investment is established.
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Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Intellectual Property Operations ARG performs credit evaluations of its licensees with significant receivable balances, if any, and has not experienced any significant credit losses. Accounts receivable are recorded at the executed contract amount and generally do not bear interest. Collateral is not required. An allowance for credit losses may be established to reflect the Company’s best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined based on known troubled accounts, historical experience, and other currently available evidence. There was no allowance for credit losses established as of March 31, 2024 and December 31, 2023. Industrial Operations Printronix's accounts receivable are recorded at the invoiced amount and do not bear interest. Printronix performs initial and periodic credit evaluations on customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness. The allowance for credit losses is determined by evaluating individual customer receivables, based on contractual terms, reviewing the financial condition of customers, and from the historical experience of write-offs. Receivable losses are charged against the allowance when management believes the account has become uncollectible. Subsequent recoveries, if any, are credited to the allowance. As of March 31, 2024 and December 31, 2023, Printronix's combined allowance for credit losses and allowance for sales returns was $66,000 and $56,000, respectively. Energy Operations Benchmark's oil and gas accounts receivable consist of crude oil, natural gas and natural gas liquids sales proceeds receivable from purchasers. Accounts receivable – joint interest owners consist of amounts due from joint interest partners for operating costs. Benchmark's accounts receivable are recorded at the invoiced amount and do not bear interest. An allowance for credit losses may be established to reflect management's best estimate of probable losses inherent in the accounts receivable balance, and is reflected as a contra-asset account on the balance sheets and a charge to general and administrative expenses in the consolidated statements of operations for the applicable period. The allowance is determined by evaluating individual customer receivables based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2024 and December 31, 2023, Benchmark's allowance for credit losses was $100,000 and zero, respectively.
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Oil and Natural Gas Properties | Oil and Natural Gas Properties Benchmark follows the successful efforts method of accounting for oil and natural gas producing activities. Costs to acquire oil and gas product leaseholds, to drill and equip exploratory wells that find proved reserves, to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have found proved reserves. If Benchmark determines that the wells do not find proved reserves, the costs are charged to expense. At March 31, 2024, Benchmark had no capitalized exploratory costs that were pending determination of economic reserves. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties, are charged to expense as incurred. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depletion and depreciation are eliminated from the property accounts, and the resulting gain or loss is recognized. On the sale of a partial unit of proved property, the amount received is treated as a reduction of the cost of the interest retained. Capitalized costs of proved oil and natural gas properties are depleted based on the unit-of-production method over total estimated proved reserves, and capitalized costs of wells and related equipment and facilities are depreciated based on the unit-of-production method over the estimated proved developed reserves. Capitalized costs related to proved oil, natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then an impairment charge is recognized in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. Refer to Note 6 for additional information.
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Goodwill | Goodwill Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. We evaluate goodwill for impairment annually in the fourth quarter and on an interim basis if the facts and circumstances lead us to believe that more-likely-than-not there has been an impairment. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the excess is charged to earnings as an impairment loss. Refer to Note 7 for additional information.
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Leases | Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. The Company’s leases primarily consist of facility leases which are classified as operating leases. Lease expense is recognized on a straight-line basis over the lease term. As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The Company evaluates renewal options at lease inception and on an ongoing basis, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Refer to Note 12 for additional information.
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Impairment of Long-lived Assets | Impairment of Long-lived Assets ARG's patents include the cost of patents or patent rights acquired from third-parties or obtained in connection with business combinations. ARG's patent costs are amortized utilizing the straight-line method over their estimated useful lives, ranging from to five years. Refer to Note 7 for additional information. Printronix's intangible assets consist of trade names and trademarks, patents and customer and distributor relationships. These definite-lived intangible assets, at the time of acquisition, are recorded at fair value and are stated net of accumulated amortization. Printronix currently amortizes the definite-lived intangible assets on a straight-line basis over their estimated useful lives of seven years. Refer to Note 7 for additional information. The Company reviews long-lived assets, patents and other intangible assets for potential impairment annually and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss is recorded in an amount equal to the excess of the asset’s carrying value over its fair value. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. In the event that management decides to no longer allocate resources to a patent portfolio, an impairment loss equal to the remaining carrying value of the asset is recorded. Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over their estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows.
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Revolving Credit Facility | Revolving Credit Facility Credit Agreement On September 16, 2022, Benchmark entered into a credit agreement (the "Credit Agreement") for a revolving credit facility (the "Revolver") and a term loan with a bank. The Revolver had an initial borrowing base of $25 million and $75 million maximum borrowing capacity. The Revolver matures on September 16, 2025. The availability under the Credit Agreement is subject to the borrowing base, which is redetermined on April 1 and October 1 of each year. During 2023, the borrowing base was reduced to $17.5 million and payment was made, which further reduced the borrowing base to $10.5 million. During the three months ended March 31, 2024, the borrowing base increased by $2.5 million. As of March 31, 2024 and December 31, 2023 the outstanding balance on the Revolver was $13.0 million and $10.5 million, respectively. Additionally, Benchmark initially borrowed $3.5 million under the related term loan, which was paid in full during 2023. Benchmark’s outstanding balance on the term loan was zero as of March 31, 2024 and December 31, 2023. In general, the borrowings under the Revolver bear interest at either the Alternate Base Rate or Secured Overnight Financing Rate (each as defined in the Credit Agreement). Either rate is adjusted upward by an applicable margin based on Benchmark's percentage of utilization of the Revolver. As of March 31, 2024, the interest rate associated with the outstanding borrowings was 11% for the Revolver. The Revolver contains customary financial and non-financial covenants, the most restrictive of which are (i) current assets to current liabilities of not less than 1.0 to 1.0 and (ii) total debt to EBITDAX (as defined in the Credit Agreement) of not greater than 3.5 to 1.0 for the rolling periods as defined in the Credit Agreement. As of March 31, 2024, Benchmark was in compliance with these financial covenants related to the Revolver. Loan Agreement On April 17, 2024 (the "Closing Date"), in connection with the Transaction, BE Anadarko II, LLC, a subsidiary of Benchmark, entered into a Loan Agreement (the "Loan Agreement") with lenders from time to time party thereto (the "Lenders"), governing a new revolving credit facility (the "Revolving Credit Facility"), with a maximum aggregate credit amount of $150 million, of which approximately $85 million was available at the Closing Date, that Benchmark may draw upon from time to time subject to the terms and conditions set forth in the Loan Agreement. The Revolving Credit Facility will mature three years from the Closing Date and includes a letter of credit subfacility. On the Closing Date, $82.7 million, including $660,000 related to letters of credit, was drawn under the Revolving Credit Facility. Benchmark pledged substantially all of its oil and gas properties and other assets as collateral to secure amounts outstanding under the Loan Agreement. Borrowings under the Revolving Credit Facility will bear interest at a rate per annum equal to the “Adjusted Term SOFR Margin Rate” (as defined in the Loan Agreement) plus a margin of 3.00% to 4.00%. The applicable margin will be determined based on a monthly utilization percentage, and the availability will be determined by reference to a borrowing base calculation. Unused commitments under the Revolving Credit Facility are subject to a commitment fee 0.5 percent payable on a quarterly basis. The Loan Agreement contains customary covenants with respect to BE Anadarko and its subsidiaries, including, among others, limitations on indebtedness, liens, mergers, issuances of disqualified capital stock, dispositions, payment of dividends, investments and new businesses, amendments of organizational documents and other material contracts, hedging contracts, sale and lease back transactions and transactions with affiliates. In addition, the Loan Agreement contains covenants that require BE Anadarko to maintain certain financial ratios related to its consolidated current assets and leverage. The Loan Agreement also contains certain events of default, including, among others, nonpayment, inaccuracy of representations and warranties, violation of covenants, cross-default to other indebtedness, bankruptcy, material judgments, or a change of control. Upon the occurrence of an event of default, the Lenders may terminate the commitments under the Loan Agreement and declare all loans due and payable.
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Treasury Stock | Treasury Stock Repurchases of the Company’s outstanding common stock are accounted for using the cost method. The applicable par value is deducted from the appropriate capital stock account on the formal or constructive retirement of treasury stock. Any excess of the cost of treasury stock over its par value is charged to additional paid-in capital and reflected as treasury stock in the consolidated balance sheets.
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Engineering and Development | Engineering and Development Engineering and development costs are expensed as incurred and consist of labor, supplies, consulting and other costs related to developing and improving Printronix's products.
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Stock-Based Compensation | Stock-Based Compensation The compensation cost for all time-based stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period (generally the vesting period of the equity award) which is currently to four years. Compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. The fair value of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance based stock awards (“PSUs”) are determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model. Forfeitures are accounted for as they occur.
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Foreign Currency Gains and Losses | Foreign Currency Gains and Losses In connection with our Printronix business, the U.S. dollar is the functional currency for all of the foreign subsidiaries. Transactions that are recorded in currencies other than the U.S. dollar may result in transaction gains or losses at the end of the reporting period and when trade receipts and payments occur. For these subsidiaries, the assets and liabilities have been re-measured at the end of the period for changes in exchange rates, except inventories and property, plant and equipment, which have been remeasured at historical average rates. The consolidated statements of operations have been reevaluated at average rates of exchange for the reporting period, except cost of sales and depreciation, which have been reevaluated at historical rates. Although Acacia historically has not had material foreign operations, Acacia is exposed to fluctuations in foreign currency exchange rates between the U.S. dollar, and the British Pound and Euro currency exchange rates, primarily related to foreign cash accounts, a note receivable and certain equity security investments. All foreign currency exchange activity is recorded in the consolidated statements of operations.
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Income Taxes | Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated income tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized, or if it is determined that there is uncertainty regarding future realization of such assets. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Under U.S. GAAP, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. The provision for income taxes for interim periods is determined using an estimate of Acacia's annual effective rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is recorded. Our income tax benefit for the three months ended March 31, 2024 is primarily attributable to recognizing a benefit for losses incurred year-to-date offset by foreign withholding taxes. Our income tax expense for the three months ended March 31, 2023 is primarily attributable to foreign taxes withheld and foreign and state income taxes. The Company's effective tax rates were 85% and 20% for the three months ended March 31, 2024 and 2023, respectively. Our 2024 effective tax rate in the period was higher than the U.S. federal statutory rate primarily due to dividends received deduction offset by foreign withholding taxes which we could not recognize as a foreign tax credit. Our 2023 effective tax rate in the period was lower than the U.S. federal statutory rate primarily due to expiration of foreign tax credits, changes in valuation allowance, as well as non-deductible items. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. The Company has recorded a partial valuation allowance against our net deferred tax assets as of March 31, 2024 and December 31, 2023. These assets primarily consist of foreign tax credits and state net operating loss carryforwards. At March 31, 2024 and December 31, 2023, the Company had total unrecognized tax benefits of approximately $757,000. At March 31, 2024 and December 31, 2023, $757,000 of unrecognized tax benefits were recorded in other long-term liabilities. No interest and penalties have been recorded for the unrecognized tax benefits for the periods presented. At March 31, 2024, if recognized, $757,000 of tax benefits would impact the Company’s effective tax rate subject to valuation allowance. The Company does not expect that the liability for unrecognized benefits will change significantly within the next 12 months. Acacia recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense (benefit). Acacia has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted There have been no recent accounting pronouncements adopted by the Company which would have a material impact on the Company's financial statements. Not Yet Adopted In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures”, which requires disclosures of significant expenses by segment and interim disclosure of items that were previously required on an annual basis. ASU 2023-07 is to be applied on a retrospective basis and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Management is currently evaluating the impact that the amendments in this update may have on the Company's consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures," which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires that entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. Management is currently evaluating the impact that the amendments in this update may have on the Company's consolidated financial statements.
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Fair Value Measurement | Equity Securities. Equity securities includes investments in public company common stock and are recorded at fair value based on the quoted market price of each share on the valuation date. The fair value of these securities are within Level 1 of the valuation hierarchy. Equity investments that do not have regular market pricing, but for which fair value can be determined based on other data values or market prices, are recorded at fair value within Level 2 of the valuation hierarchy. The Company has elected to apply the fair value method to one equity securities investment that would otherwise be accounted for under the equity method of accounting. On November 1, 2023, the Company, through a wholly owned subsidiary, entered into the Arix Shares Purchase Agreement with RTW Bio to sell its shares of Arix to RTW Bio for a purchase price of $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). On January 19, 2024, the Company completed such sale for $57.1 million. As a result, as of March 31, 2024, the aggregate carrying amount of this investment was zero, and was included in equity securities, in the consolidated balance sheet (refer to Note 3 for additional information). Series B Warrants. Series B Warrants are recorded at fair value, using a Black-Scholes option-pricing model (Level 3). On October 28, 2022, the cash exercise feature of the Unadjusted Series B Warrants expired, which resulted in a fair value of zero for such warrants (refer to Note 9 for additional information). The fair value of the remaining Series B Warrants as of July 13, 2023 was estimated based on the following significant assumptions: volatility of 120 percent, risk-free rate of 5.24 percent, term of 0.04 years and a dividend yield of 0 percent. On July 13, 2023, further to the terms of the Recapitalization Agreement and in accordance with the terms of the Series B Warrants, the remaining Series B Warrants were exercised, which also resulted in a fair value of zero as of December 31, 2023 (refer to Note 9 for additional information). As of March 31, 2024, no Series B warrants were issued or outstanding. Refer to the "Embedded derivative liabilities" discussion below for additional information on assumptions. Embedded derivative liabilities. Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the host instrument. During the quarter ended December 31, 2022 in connection with the Recapitalization Agreement, the Company changed its methodology from a binomial lattice framework to an as-converted value (Level 3), based on an expected Series A Redeemable Convertible Preferred Stock conversion date on or prior to July 14, 2023 (refer to Note 9 for additional information).
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | License revenues were comprised of the following for the periods presented:
Printronix's net revenues were comprised of the following for the periods presented:
Benchmark's revenue were comprised of the following:
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EQUITY SECURITIES PORTFOLIO INVESTMENT (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain (Loss) on Investments | Equity securities for the periods presented were comprised of the following:
The following unrealized and realized gains or losses from our investment in the Life Sciences Portfolio are recorded in the change in fair value of equity securities and gain or loss on sale of equity securities, respectively, in the consolidated statements of operations:
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INVENTORIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Printronix's inventories consisted of the following:
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PROPERTY, PLANT AND EQUIPMENT, NET (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment, net consisted of the following:
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OIL AND NATURAL GAS PROPERTIES, NET (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Extractive Industries [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Oil and Natural Gas Properties, Net | Benchmark's oil and natural gas properties consisted of the following:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill consisted of the following:
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Schedule of Finite-Lived Intangible Assets | Other intangible assets, net consisted of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table presents the scheduled annual aggregate amortization expense (in thousands):
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued expenses and other current liabilities consisted of the following:
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis were as follows:
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table sets forth a summary of the changes in the estimated fair value of the Company’s Level 3 liabilities, which were measured at fair value on a recurring basis. There are no Level 3 liabilities as of March 31, 2024. The changes in the estimated fair value of the Company's Level 3 liabilities as of March 31, 2023 were as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Liability, Maturity | The table below presents aggregate future minimum lease payments due under the Company's leases discussed above, reconciled to long-term lease liabilities and short-term lease liabilities (included in accrued expenses and other current liabilities) included in the consolidated balance sheet as of March 31, 2024 (in thousands):
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EQUITY-BASED INCENTIVE PLANS (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Option, Activity | The following table summarizes stock option activity for the Plans:
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Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes nonvested restricted stock activity for the Plans:
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Share-based Payment Arrangement, Cost by Plan | Compensation expense for share-based awards recognized in general and administrative expenses was comprised of the following:
|
INCOME/LOSS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted income/loss per share of common stock:
|
SEGMENT REPORTING (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The Company's segment information is as follows:
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Schedule of Segment Reporting Information, by Segment |
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Revenue from External Customers by Geographic Areas |
|
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Long-lived Assets by Geographic Areas |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 24,320 | $ 14,803 |
Intellectual property operations | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 13,623 | 4,176 |
Paid-up license revenue agreements | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 12,365 | 3,900 |
Recurring License Revenue Agreements | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,258 | 276 |
Industrial operations | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 8,841 | 10,627 |
Printers, consumables and parts | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 8,078 | 9,634 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 763 | $ 993 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Remaining Performance Obligation (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Printronix | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract with customer, liability, revenue recognized | $ 578 | $ (542) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Remaining performance obligation | $ 567 | ||
Remaining performance obligation period | 2 years | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Remaining performance obligation | $ 470 | ||
Remaining performance obligation period | 2 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Benchmark's Revenue (Details) - Benchmark $ in Thousands |
2 Months Ended |
---|---|
Dec. 31, 2023
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 1,856 |
Oil sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | 661 |
Natural gas sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | 730 |
Natural gas liquids sales | |
Disaggregation of Revenue [Line Items] | |
Revenue | $ 465 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Receivables (Details) - Printronix - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Industrial operations | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Allowance for doubtful accounts and sales returns | $ 66 | $ 56 |
Energy operations | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Allowance for doubtful accounts and sales returns | $ 100 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) |
Mar. 31, 2024 |
---|---|
Printronix | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Finite-lived intangible asset, useful life | 7 years |
Minimum | Patents | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Finite-lived intangible asset, useful life | 2 years |
Maximum | Patents | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Finite-lived intangible asset, useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 1 year |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 1 year |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 4 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effective income tax rate reconciliation, percent | (85.00%) | 20.00% |
Total | $ 757 | |
Other Noncurrent Liabilities | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Unrecognized tax benefits | $ 757 |
EQUITY SECURITIES PORTFOLIO INVESTMENT - Summary of Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Debt and Equity Securities, FV-NI [Line Items] | |||
Cost | $ 19,971 | $ 33,423 | |
Gross Unrealized Gain | 2,966 | $ 29,680 | |
Gross Unrealized Loss | (19) | (35) | |
Fair Value | 22,918 | 63,068 | |
Equity securities - Life Sciences Portfolio | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Cost | 28,498 | ||
Gross Unrealized Gain | 28,600 | ||
Gross Unrealized Loss | (20) | ||
Fair Value | 57,078 | ||
Equity securities - other common stock | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Cost | 19,971 | 4,925 | |
Gross Unrealized Gain | 2,966 | 1,080 | |
Gross Unrealized Loss | (19) | $ (15) | |
Fair Value | $ 22,918 | $ 5,990 |
EQUITY SECURITIES PORTFOLIO INVESTMENT - Narrative (Details) $ in Thousands, £ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Apr. 03, 2020
USD ($)
|
Apr. 03, 2020
GBP (£)
|
Mar. 31, 2024
USD ($)
|
Mar. 31, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
Dec. 03, 2020 |
|
Offsetting Liabilities [Line Items] | ||||||
Fair value of investment | $ 22,918 | $ 63,068 | ||||
Net loss including noncontrolling interests in subsidiaries | (186) | $ 9,447 | ||||
Net income attributable to noncontrolling interests in subsidiaries | (3) | $ 0 | ||||
Life Sciences Portfolio | ||||||
Offsetting Liabilities [Line Items] | ||||||
Investment at fair value | 25,700 | $ 82,800 | ||||
Arix | ||||||
Offsetting Liabilities [Line Items] | ||||||
Fair value of investment | 0 | |||||
MalinJ1 | ||||||
Offsetting Liabilities [Line Items] | ||||||
Ownership percentage | 63.90% | |||||
Earnings on equity investment in joint venture | $ 0 | |||||
MalinJ1 | MalinJ1 | ||||||
Offsetting Liabilities [Line Items] | ||||||
Equity method investment ownership | 41.00% | |||||
Option Agreement | Portfolio Companies | ||||||
Offsetting Liabilities [Line Items] | ||||||
Payments to acquire investments | $ 277,500 | £ 223.9 |
EQUITY SECURITIES PORTFOLIO INVESTMENT - Unrealized and Realized Gains or Losses on Investment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Debt and Equity Securities, FV-NI [Line Items] | ||
Change in fair value of investment | $ (26,701) | $ 3,343 |
Trading Securites - LF Fund Public Securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Change in fair value of investment | (28,581) | 577 |
Realized investment gains (losses) | 28,581 | 0 |
Trading Securites Lf Fund Securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Net realized and unrealized gain (loss) on investments | $ 0 | $ 577 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,404 | $ 3,961 |
Subassemblies and work in process | 1,533 | 1,882 |
Finished goods | 5,447 | 5,578 |
Inventory, gross | 10,384 | 11,421 |
Inventory reserves | (504) | (500) |
Inventories | $ 9,880 | $ 10,921 |
OIL AND NATURAL GAS PROPERTIES, NET - Summary of Oil and Natural Gas Properties, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Extractive Industries [Abstract] | ||
Capitalized Costs, Proved Properties | $ 25,533 | $ 25,276 |
Capitalized Costs, Accumulated Depreciation, Depletion, Amortization and Valuation Allowance Relating to Oil and Gas Producing Activities | (581) | (159) |
Oil and natural gas properties, net | $ 24,952 | $ 25,117 |
OIL AND NATURAL GAS PROPERTIES, NET - Narrative (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Extractive Industries [Abstract] | |
Depletion and depreciation expense | $ 422 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 8,990 | $ 7,541 |
Acquisition of business | 0 | 1,449 |
Impairment losses | 0 | 0 |
Ending balance | 8,990 | 8,990 |
Industrial operations | ||
Goodwill [Roll Forward] | ||
Beginning balance | 7,541 | 7,541 |
Acquisition of business | 0 | 0 |
Impairment losses | 0 | 0 |
Ending balance | 7,541 | 7,541 |
Energy operations | ||
Goodwill [Roll Forward] | ||
Beginning balance | 1,449 | 0 |
Acquisition of business | 0 | 1,449 |
Impairment losses | 0 | 0 |
Ending balance | $ 1,449 | $ 1,449 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment losses | $ 0 | $ 0 | |
Amortization of intangible assets | 3,900,000 | $ 3,000,000 | |
Impairment of intangible assets, finite-lived | 0 | 0 | |
Accelerated amortization of patents | 0 | $ 0 | |
Accrued Patent Investment Costs | $ 15,000,000 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Annual Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2024 | $ 10,964 | |
2025 | 12,485 | |
2026 | 3,173 | |
2027 | 1,734 | |
2028 | 1,334 | |
Net Book Value | $ 29,690 | $ 33,556 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued consulting and other professional fees | $ 832 | $ 1,595 |
Income taxes payable | 1,313 | 619 |
Product warranty liability, current | 27 | 30 |
Service contract costs, current | $ 168 | $ 169 |
Operating lease, liability, current, statement of financial position | Total | Total |
Short-term lease liability | $ 1,094 | $ 1,248 |
Accrued patent costs | 0 | 4,000 |
Other accrued liabilities | 556 | 744 |
Total | $ 3,990 | $ 8,405 |
STARBOARD INVESTMENT - Senior Secured Notes (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jul. 14, 2023 |
Feb. 14, 2023 |
---|---|---|---|---|
Series B warrants | ||||
Debt Instrument, Redemption [Line Items] | ||||
Class of warrant or right, exercise price of warrants or rights | $ 5.25 | |||
Common Stock | ||||
Debt Instrument, Redemption [Line Items] | ||||
Convertible preferred stock, shares issued upon conversion | 9,616,746 | |||
Series A Redeemable Convertible Preferred Stock | ||||
Debt Instrument, Redemption [Line Items] | ||||
Dividends payable, current | $ 0 | $ 0 | ||
Senior Secured Notes | Securities Purchase Agreement | New Notes | Merton | ||||
Debt Instrument, Redemption [Line Items] | ||||
Principal amount outstanding | $ 60,000,000 | $ 60,000,000 |
STARBOARD INVESTMENT - Modifications to Stock and Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands |
Feb. 14, 2023 |
Feb. 25, 2022 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jul. 31, 2023 |
Jul. 13, 2023 |
Jun. 04, 2020 |
---|---|---|---|---|---|---|---|
Offsetting Assets [Line Items] | |||||||
Common stock, shares, issued | 100,021,951 | 99,895,473 | 61,123,595 | ||||
Common stock, shares, outstanding | 100,021,951 | 99,895,473 | 99,886,322 | ||||
Series B warrants | |||||||
Offsetting Assets [Line Items] | |||||||
Warrants and rights outstanding | $ 0 | ||||||
Series B warrants | Starboard | |||||||
Offsetting Assets [Line Items] | |||||||
Conversion price | $ 3.65 | ||||||
Class of warrant or right, warrants subject to adjustments | 31,506,849 | ||||||
Class of warrant or right, outstanding (in shares) | 68,493,151 | ||||||
Proceeds from issuance of preferred stock and preference stock | $ 4,600 | ||||||
Rights Offering | |||||||
Offsetting Assets [Line Items] | |||||||
Proceeds from issuance of redeemable preferred stock | $ 361 | ||||||
Concurrent Private Rights Offering | |||||||
Offsetting Assets [Line Items] | |||||||
Proceeds from issuance of redeemable preferred stock | $ 78,800 |
STARBOARD INVESTMENT - Rights and Offering (Details) - USD ($) $ / shares in Units, $ in Thousands |
Feb. 14, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jul. 31, 2023 |
Jul. 13, 2023 |
---|---|---|---|---|---|
Class of Warrant or Right [Line Items] | |||||
Common stock, shares, issued | 100,021,951 | 99,895,473 | 61,123,595 | ||
Common stock, shares, outstanding | 100,021,951 | 99,895,473 | 99,886,322 | ||
Rights Offering | |||||
Class of Warrant or Right [Line Items] | |||||
Proceeds from issuance of redeemable preferred stock | $ 361 | ||||
Concurrent Private Rights Offering | |||||
Class of Warrant or Right [Line Items] | |||||
Proceeds from issuance of redeemable preferred stock | $ 78,800 | ||||
Sale of Stock, Number of Shares Issued in Transaction | 15,068,753 | ||||
Series B warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, exercise price of warrants or rights | $ 5.25 |
FAIR VALUE MEASUREMENTS - Changes to Fair Value Measurement Level 3 (Details) - Liabilities - Level 3 - Fair Value, Recurring $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Derivative liability, beginning balance | $ 101,615 |
Remeasurement to fair value | (16,651) |
Derivative liability, ending balance | 84,964 |
Series A Embedded Derivative Liabilities | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Derivative liability, beginning balance | 16,835 |
Remeasurement to fair value | (5,023) |
Derivative liability, ending balance | 11,812 |
Series B Warrant Liabilities | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Derivative liability, beginning balance | 84,780 |
Remeasurement to fair value | (11,628) |
Derivative liability, ending balance | $ 73,152 |
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Related Party Transaction [Line Items] | |||
Legal fees | $ 0 | $ 20 | |
Loan Facility With Private Portfolio Company | Related Party | |||
Related Party Transaction [Line Items] | |||
Loan receivable | $ 2,600 | $ 2,200 | |
Interest rate | 9.50% | ||
Interest income and other, net | $ 59 |
COMMITMENTS AND CONTINGENCIES - Future Minimum Payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2024 | $ 825 | |
2025 | 924 | |
2026 | 579 | |
2027 | 243 | |
Total minimum payments | 2,571 | |
Less: short-term lease liabilities | (1,094) | $ (1,248) |
Long-term lease liabilities | $ 1,477 | $ 1,736 |
STOCKHOLDERS’ EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | |||
---|---|---|---|---|
Nov. 09, 2023 |
Jul. 31, 2022 |
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Class of Stock [Line Items] | ||||
Treasury stock, value, acquired, cost method | $ 40.0 | |||
Preferred stock, par or stated value (in usd per share) | $ 0.001 | $ 0.001 | ||
Stock repurchase program | ||||
Class of Stock [Line Items] | ||||
Treasury stock, shares, acquired | 5,800,000 | 8,453,519 | ||
Stock repurchase program, authorized amount | $ 20.0 | $ 40.0 |
EQUITY-BASED INCENTIVE PLANS - Share-based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 858 | $ 477 |
Time Based Service | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 858 | 477 |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 128 | 28 |
RSAs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 106 | 209 |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 624 | $ 240 |
SEGMENT REPORTING - Narrative (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024
USD ($)
segment
|
Mar. 31, 2023
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 3 | |
General and administrative expenses | $ 12,353 | $ 12,040 |
Parent Company | ||
Segment Reporting Information [Line Items] | ||
General and administrative expenses | $ 6,737 | $ 7,425 |
SEGMENT REPORTING - Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Fair Value | $ 22,918 | $ 63,068 |
Equity securities without readily determinable fair value | 5,816 | 5,816 |
Equity method investments | 30,934 | 30,934 |
Cost | 59,668 | 99,818 |
Other parent assets | 261,185 | 218,909 |
Total assets | 631,725 | 633,545 |
Intellectual property operations | ||
Segment Reporting Information [Line Items] | ||
Total assets | 227,050 | 234,254 |
Industrial operations | ||
Segment Reporting Information [Line Items] | ||
Total assets | 48,863 | 47,854 |
Energy operations | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 34,959 | $ 32,710 |
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