ACACIA RESEARCH CORP
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
ACTG$4.25+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000934549-24-000063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000934549-24-000068
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 119 current paragraphs.
72 unchanged; 39 reworded; 7 added; 15 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
On October 18, 2024, Deflecto Holdco LLC (“Deflcot Purchaser”), a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc. (“Deflecto”). Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the sellers in the Deflecto Transaction consisted of $103.7 million, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement (the “Deflecto Purchase Price”). The Deflecto Purchase Price was funded with a combination of borrowings of a $48.0 million secured term loan (the “Deflecto Term Loan”) and cash on hand. A portion of the Deflecto Purchase Price is being held in escrow to indemnify Purchaser against certain claims, losses and liabilities. Refer to Note 1 to the accompanying consolidated financial statements for additional information.
Current report
•Earnings on equity investment in joint venture was zero in 2024, as compared to $3.4 million in the comparable prior period primarily due to the earnings on equity investment in joint venture from the payments related to the achievement of one milestone in 2023.
Current report
•Non-recurring legacy legal expense of $2.0 million in 2024 is related to the accrual recorded in connection with the settlement agreement with Slingshot. Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information regarding the settlement agreement with Slingshot.
Current report
•Gain on derivatives was $8.0 million in 2024, as compared to zero in the comparable prior period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 11 for additional information regarding Benchmark's gain on its commodity derivatives.
Current report
•Earnings on equity investment in joint venture was zero in 2024, as compared to $3.4 million in the comparable prior period primarily due to the earnings on equity investment in joint venture from one milestone in 2023.
Current report
•Gain on derivatives was $5.5 million in 2024, as compared to zero in the comparable prior period due to the commodity derivative activities contributed from our Energy Operations. Refer to Note 11 for additional information regarding Benchmark's gain on its commodity derivatives.
Current report
The following table provides the components of Benchmark's revenues for the periods indicated, as well as each period's respective average realized prices and production volumes. This table shows production on a barrel of oil ("boe") equivalent basis in which natural gas is converted to oil at the ratio of 6 Mcf of natural gas to one barrel ("Bbl") of oil. This ratio may not be reflective of the current price ratio between two products. "Mcf" means thousand cubic feet and "/d" means per day.
Removed paragraphs (15)
Previous report
Recapitalization
Previous report
On October 30, 2022, the Company entered into a Recapitalization Agreement with Starboard, pursuant to which, among other things, the Company and Starboard agreed to enter into a series of transactions to restructure Starboard’s existing investments in the Company in order to simplify the Company’s capital structure. Subsequently, and in accordance with the terms contained in the Series A Redeemable Convertible Preferred Stock, as amended, and the Recapitalization Agreement, on July 13, 2023, Starboard completed the Preferred Stock Conversion.
Previous report
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, the cancellation of $60.0 million aggregate principal amount of the Senior Secured Notes held by Starboard and the receipt by the Company of aggregate gross proceeds of approximately $55.0 million.
Previous report
Starboard beneficially owns 61,123,595 shares of our common stock as of August 5, 2024, representing approximately 60.9% of the common stock based on 100,375,459 shares of common stock issued and outstanding as of such date and no shares of Series A Redeemable Convertible Preferred Stock, no Series B Warrants, nor any Senior Secured Notes remain outstanding.
Previous report
For a detailed description of the Series B Warrants Exercise, and the cancellations of the Senior Secured notes, the Recapitalization, the Recapitalization Agreement, and the Recapitalization Transactions, see Note 11 to the consolidated financial statements.
Previous report
Change of Chief Executive Officer and Litigation Settlement
Previous report
Since 2021, we have announced various changes to our Board and senior management. Changes in leadership and key management positions have inherent risks, and there are no assurances that any of our recent changes or future changes will not affect our operations and financial condition.
Previous report
On September 19, 2023, the Company together with ARG amicably settled with Clifford Press, former President and Chief Executive Officer of the Company, all claims, including counterclaims filed by Mr. Press, in connection with the arbitration demand previously filed by the Company against Mr. Press. As part of the settlement, and, in exchange for, among other things, a release of claims by Mr. Press in favor of the Company and agreements by Mr. Press related to non-interference and cooperation, the Company paid to Mr. Press a total of $770,000 along with reimbursement of certain counsel fees and expenses in the amount of $480,000.
Previous report
In February 2024, after over one year of service from Mr. McNulty as the Company’s Interim Chief Executive Officer, the Board appointed Mr. McNulty as Chief Executive Officer of the Company on a permanent basis. In addition, the Board expanded the size of the Board from six to seven directors and the Board appointed Mr. McNulty Jr. as a director of the Company.
Previous report
•Contingent legal fees increased $559,000, from $12,000 to $571,000 in 2024, primarily due to the decrease in ARG's revenues described above. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous report
•Realized gain or loss from the sale of our equity securities was zero in 2024, as compared to a realized loss of $8.0 million in the comparable prior period. The prior period realized loss primarily relates to sales activity from one trading securities portfolio. Refer to "Equity Securities Investments" below for further discussion.
Previous report
•Loss on foreign currency exchange was $70,000 in 2024, as compared to a gain on foreign currency exchange of $15,000 in the comparable prior period. The losses were primarily derived from our foreign cash accounts exposed to fluctuations in foreign currency exchange rates between the U.S. dollar and the Euro.
Previous report
•Interest income and other, net was $295,000 in 2024, as compared to $4.3 million in the comparable prior period, mainly due to interest expense from Benchmark's Revolving Credit Facility and Benchmark's net realized and unrealized gain or loss on its commodity derivatives, which were partially offset by an increase in interest and dividend income from our cash equivalents. Refer to Notes 2 and 12 for additional information regarding Benchmark's Revolving Credit Facility and net realized and unrealized gain or loss on its commodity derivatives, respectively. Refer to Note 2 included in our 2023 Annual Report for additional information regarding our cash and cash equivalents and investments in equity securities.
Previous report
•Interest income and other, net was $5.2 million in 2024, as compared to $7.7 million in the comparable prior period, mainly due to interest expense from Benchmark's Revolving Credit Facility and Benchmark's net realized and unrealized gain or loss on its commodity derivatives, which were partially offset by an increase in interest income from our cash equivalents. Refer to Notes 2 and 12 for additional information regarding Benchmark's Revolving Credit Facility and net realized and unrealized gain or loss on its commodity derivatives, respectively. Refer to Note 2 included in our 2023 Annual Report for additional information regarding our cash and cash equivalents and investments in equity securities.
Previous report
Benchmark's revenues included the following:
Reworded paragraphs (39)
Previous wording
We are focused on acquiring and managing companies across industries – including but not limited to the technology, energy and industrials 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.
Current wording
We are focused on acquiring and operating attractive businesses across the mature technology, energy and industrial/manufacturing sectors where we believe we can leverage our expertise, significant capital base and deep industry relationships to drive value. We focus on identifying, pursuing and acquiring businesses where we are uniquely positioned to deploy our differentiated strategy, people and processes to generate and compound shareholder value. We have a wide range of transactional and operational capabilities to realize the intrinsic value in the businesses that we acquire. Our ideal transactions include the acquisition of public or private companies, the acquisition of divisions of other companies, or structured transactions that can result in the recapitalization or restructuring of the ownership of a business to enhance value.
Previous wording
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations are masked by a diversified business mix, or where private ownership has not invested the capital and/or resources necessary to support long-term value. Through our public market activities, we aim to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. We believe this business model is differentiated from private equity funds, which do not typically own public securities prior to acquiring companies, hedge funds, which do not typically acquire entire businesses, and other acquisition vehicles such special purpose acquisition companies, which are narrowly focused on completing one singular, defining acquisition.
Current wording
We are particularly attracted to complex situations where we believe value is not fully recognized, the value of certain operations 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.
Previous wording
We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of June 30, 2024, across nearly 200 patent portfolio licensing and enforcement programs. As of June 30, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $875.6 million to our patent partners. Since January 1, 2020, we have generated gross licensing revenue of approximately $233.4 million and returned approximately $85.9 million to our patent partners.
Current wording
We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of September 30, 2024, across nearly 200 patent portfolio licensing and enforcement programs. As of September 30, 2024, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $880.9 million to our patent partners. Since January 1, 2020, we have generated gross licensing revenue of approximately $233.9 million and returned approximately $91.1 million to our patent partners.
Previous wording
On April 17, 2024, Benchmark consummated the previously announced transactions contemplated in the Purchase Agreement. Pursuant to the Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the 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 and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 2 to the accompanying consolidated financial statements for additional information regarding the Revolving Credit Facility.
Current wording
On April 17, 2024, Benchmark consummated the previously announced Revolution Transaction contemplated in the Purchase Agreement. Pursuant to the Purchase Agreement, Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells for a purchase price of $145 million in cash, subject to customary post-closing adjustments. The Company’s contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fees was $59.9 million, which was funded from cash on hand. The remainder of the Revolution Purchase Price was funded by a combination of borrowings under the Benchmark Revolving Credit Facility and a cash contribution of $15.25 million from other investors in Benchmark, including McArron Partners. Following closing, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 2 to the accompanying consolidated financial statements for additional information regarding the Revolving Credit Facility.
Previous wording
On April 17, 2024, Benchmark consummated the previously announced Transaction contemplated in the Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying consolidated financial statements). Following closing, the Company's interest in Benchmark is approximately 73.5%.
Current wording
On April 17, 2024, Benchmark consummated the previously announced Revolution Transaction contemplated in the Purchase Agreement pursuant to which Benchmark acquired certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 470 operated producing wells, for a purchase price of $145 million in cash, subject to customary post-closing adjustments (as described further in Note 1 to the accompanying consolidated financial statements). Following closing, the Company's interest in Benchmark is approximately 73.5%.
Previous wording
Historically, inflation has not had a significant impact on us or any of our subsidiaries. While insignificant to our consolidated enterprise, during the three and six months ended June 30, 2024, inflation for our Printronix subsidiary slowed down with only a small increase in cost of raw materials than in previous years related to its electronic and electrical and metal components. Printronix will continue to adjust its selling price as required in response to higher costs. Printronix have also implemented cost rationalization measures to combat the rising cost that is driven by inflation and currency pressures. Additionally, our Energy Operations Business may experience inflation. The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.
Current wording
Historically, inflation has not had a significant impact on us or any of our subsidiaries. While insignificant to our consolidated enterprise, during the three and nine months ended September 30, 2024, inflation for our Printronix subsidiary slowed down with only a small increase in cost of raw materials than in previous years related to its electronic and electrical and metal components. Printronix will continue to adjust its selling price as required in response to higher costs. Printronix have also implemented cost rationalization measures to combat the rising cost that is driven by inflation and currency pressures. Additionally, our Energy Operations Business may experience inflation. The oil and natural gas industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures.
Previous wording
During the six months ended June 30, 2024 as well as 2023 and 2022, we did not acquire any new patent portfolios. During 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents. In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, (iv) internet search, advertising and cloud computing technology and (v) GPS navigation. The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years.
Current wording
During the nine months ended September 30, 2024 as well as 2023 and 2022, we didnot acquire any new patent portfolios. During 2021, we acquired one new patent portfolio consisting of Wi-Fi 6 standard essential patents. In 2020, we acquired five new patent portfolios consisting of (i) flash memory technology, (ii) voice activation and control technology, (iii) wireless networks, (iv) internet search, advertising and cloud computing technology and (v) GPS navigation. The patents and patent rights acquired in 2021 and 2020 have estimated economic useful lives of approximately five years.
Previous wording
•the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approached a court determined trial date; and
Current wording
•the willingness of prospective licensees to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as such infringement cases approach a court determined trial date; and
Previous wording
In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations and Energy Operations segment revenues may be found in Notes 2 and 18 to the consolidated financial statements. Refer to Note 2 included in our 2023 Annual Report for additional information regarding our our Intellectual Property Operations, Industrial Operations and Energy Operations segment cost of revenues and cost of production.
Current wording
In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations and Energy Operations segment revenues may be found in Notes 2 and 17 to the consolidated financial statements. Refer to Note 2 included in our 2023 Annual Report for additional information regarding our Intellectual Property Operations, Industrial Operations and Energy Operations segment cost of revenues and cost of production.
Previous wording
Total revenues increased $17.9 million to $25.8 million for the three months ended June 30, 2024, as compared to $7.9 million for the three months ended June 30, 2023, due to an increase in our Intellectual Property Operations revenues and revenues contributed from the Energy Operations of $14.2 million partially offset by a decrease in Industrial Operations revenues. Intellectual Property Operations revenues increased $4.9 million due to higher average license fees and ARG executing more license agreements compared to the comparable prior period. Industrial Operations revenues decreased $1.2 million due to lower units of printer sold compared to the comparable prior period. Refer to "Industrial Operations –Revenues" below for further discussion.
Current wording
Total revenues increased $13.2 million to $23.3 million for the three months ended September 30, 2024, as compared to $10.1 million for the three months ended September 30, 2023, due to revenues contributed from the Energy Operations of $15.8 million partially offset by a decrease in our Intellectual Property Operations revenues and in our Industrial Operations revenues. Intellectual Property Operations revenues decreased $1.3 million due to fewer executed license agreements compared to the comparable prior period. Industrial Operations revenues decreased $1.3 million due to decrease in the number of printer units sold compared to the comparable prior period. Refer to "Industrial Operations – Revenues" below for further discussion.
Previous wording
Loss before income taxes was $15.9 million for the three months ended June 30, 2024, as compared to loss of $20.4 million in the comparable prior period. The decrease in net loss was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense as follows:
Current wording
Loss before income taxes was $6.2 million for the three months ended September 30, 2024, as compared to income of $2.6 million in the comparable prior period. The net decrease was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 as follows:
Previous wording
•Inventor royalties increased $657,000, from $145,000 to $802,000 in 2024, primarily due to license agreement activity and related revenues generated with inventor royalty obligations. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Current wording
•Inventor royalties decreased $277,000, from $497,000 to $220,000 in 2024, primarily due to license agreement activity and related revenues generated with inventor royalty obligations. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous wording
•Litigation and licensing expenses decreased $1.1 million, from $2.3 million to $1.2 million in 2024, primarily due to a net decrease in litigation support and third-party technical consulting expenses associated with ongoing litigation. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Current wording
•Litigation and licensing expenses decreased $1.2 million, from $2.0 million to $797,000 in 2024, primarily due to a net decrease in litigation support and third-party technical consulting expenses associated with ongoing litigation. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous wording
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased $1.2 million, from $6.0 million to $4.8 million in 2024, primarily due to decrease in related revenues. Refer to "Industrial Operations –Cost of Revenues" and "Operating Expenses" below for further discussion.
Current wording
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased $1.2 million, from $6.2 million to $5.0 million in 2024, primarily due to a decrease in related revenues. Refer to "Industrial Operations –Cost of Revenues" and "Operating Expenses" below for further discussion.
Previous wording
•General and administrative expenses increased $525,000, from $9.4 million to $10.0 million in 2024, primarily due to $883,000 from our Energy Operations, which were partially offset by lower parent company legal fees and lower Industrial Operations general and administrative costs for the second quarter of 2024. Refer to "General and Administrative Expenses" below for further detail and discussion.
Current wording
•General and administrative expenses decreased $481,000, from $11.6 million to $11.1 million in 2024, primarily due to lower parent company legal fees partially offset by expenses contributed from our Energy Operations of $1.0 million for the third quarter of 2024. Refer to "General and Administrative Expenses" below for further detail and discussion.
Previous wording
•Compensation expense for share-based awards, included in general and administrative expenses above, increased $17,000, from $874,000 to $891,000 in 2024, primarily due to restricted stock and option grants issued to employees and the Board of Directors in 2024 and 2023.
Current wording
•Compensation expense for share-based awards, included in general and administrative expenses above, decreased $192,000, from $973,000 to $781,000 in 2024, primarily due to restricted stock and option grants issued to employees and the Board of Directors in 2024 and 2023.
Previous wording
•Unrealized loss from the change in fair value of our equity securities was $4.7 million in 2024, as compared to an unrealized gain of $6.6 million in the comparable prior period. The unrealized loss and gain were derived from our Life Sciences Portfolio and our trading securities portfolio. Refer to "Equity Securities Investments" below for further discussion.
Current wording
•Unrealized loss from the change in fair value of our equity securities was $4.1 million in 2024, as compared to an unrealized gain of $8.8 million in the comparable prior period. The unrealized loss and gain were derived from our Life Sciences Portfolio and our trading securities portfolio. Refer to "Equity Securities Investments" below for further discussion.
Previous wording
•We recognized a gain on exercise of Series B warrants of zero in 2024, as compared to an unrealized loss of $9.9 million in the comparable prior period primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 11 and 12 to the consolidated financial statements elsewhere herein for additional information regarding the Starboard Securities and fair value measurements.
Current wording
•We recognized a gain on exercise of Series B Warrants of zero in 2024, as compared to $1.5 million in the comparable prior period primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 10 and 11 to the consolidated financial statements elsewhere herein for additional information regarding the Series B Warrants and Series A Redeemable Convertible Preferred Stock and fair value measurements.
Previous wording
•Interest expense on Senior Secured Notes decreased $900,000, from $900,000 to zero in 2024, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023 pursuant to the Series B Warrants Exercise. Refer to Note 11 to the consolidated financial statements elsewhere herein for additional information.
Current wording
•Interest expense on Senior Secured Notes decreased $130,000, from $130,000 to zero in 2024, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023 pursuant to the Series B Warrants Exercise. Refer to Note 10 to the consolidated financial statements elsewhere herein for additional information.
Previous wording
Results of Operations - six months ended June 30, 2024 compared with the six months ended June 30, 2023
Current wording
Results of Operations - nine months ended September 30, 2024 compared with the nine months ended September 30, 2023
Previous wording
Total revenues increased $27.5 million to $50.2 million for the six months ended June 30, 2024, as compared to $22.7 million for the six months ended June 30, 2023, primarily due to an increase in our Intellectual Property Operations revenues and revenues contributed from Benchmark of $16.0 million partially offset by a decrease in Industrial Operations revenues. ARG revenues increased due to an increase in the number of license agreements executed and higher average license fees, which contributed to Intellectual Property Operations revenues increasing by $14.4 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. The decrease in Industrial Operations revenue of $3.0 million is due to lower units of printers sold. Refer to “Industrial Operations –Revenues” below for further detailed discussion.
Current wording
Total revenues increased $40.7 million to $73.5 million for the nine months ended September 30, 2024, as compared to $32.8 million for the nine months ended September 30, 2023, primarily due to an increase in our Intellectual Property Operations revenues and revenues contributed from Benchmark of $31.8 million partially offset by a decrease in Industrial Operations revenues. ARG revenues increased due to an increase in the number of license agreements executed that generated higher average license fees, which contributed to Intellectual Property Operations revenues increasing by $13.1 million. Refer to “Investments in Patent Portfolios” above for additional information regarding the impact of portfolio acquisition trends on current and future licensing and enforcement related revenues. The decrease in Industrial Operations revenue of $4.3 million is due to lower units of printers sold. Refer to “Industrial Operations – Revenues” below for further detailed discussion.
Previous wording
Loss before income taxes was $17.2 million for the six months ended June 30, 2024, as compared to loss of $8.5 million in the comparable prior period. The increase was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense as follows:
Current wording
Loss before income taxes was $23.3 million for the nine months ended September 30, 2024, as compared to loss of $5.9 million in the comparable prior period. The increase was comprised of the change in total revenues described above and other changes in operating expenses and other income or expense for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as follows:
Previous wording
•Inventor royalties increased $1.0 million, from $366,000 to $1.4 million in 2024, primarily due to license agreement activity and related revenues generated in 2024. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Current wording
•Inventor royalties increased $765,000, from $863,000 to $1.6 million in 2024, primarily due to license agreement activity and related revenues generated in 2024. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous wording
•Contingent legal fees increased $1.9 million, from $544,000 to $2.4 million in 2024, primarily due to the change in Intellectual Property Operations revenues described above. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Current wording
•Contingent legal fees increased $1.5 million, from $890,000 to $2.4 million in 2024, primarily due to the change in Intellectual Property Operations revenues described above. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous wording
•Litigation and licensing expenses decreased $1.3 million, from $3.6 million to $2.3 million in 2024, primarily due to a net decrease in litigation support expenses associated with ongoing litigation. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Current wording
•Litigation and licensing expenses decreased $2.6 million, from $5.7 million to $3.1 million in 2024, primarily due to a net decrease in litigation support expenses associated with ongoing litigation. Refer to "Intellectual Property Operations –Cost of Revenues" below for further discussion.
Previous wording
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased approximately $2.8 million, from $13.3 million to $10.6 million in 2024. Refer to "Industrial Operations –Cost of Revenues" and "Operating Expenses" below for further discussion.
Current wording
•Printronix cost of sales, engineering and development expenses, and sales and marketing expenses decreased approximately $3.9 million, from $19.5 million to $15.6 million in 2024. Refer to "Industrial Operations –Cost of Revenues" and "Operating Expenses" below for further discussion.
Previous wording
•Benchmark's cost of production for the first six months of 2024 added a total of $11.4 million to our consolidated operating expenses. Refer to "Energy Operations –Cost of Production"below for further discussion.
Current wording
•Benchmark's cost of production for the first nine months of 2024 added a total of $23.1 million to our consolidated operating expenses. Refer to "Energy Operations –Cost of Production"below for further discussion.
Previous wording
•General and administrative expenses increased $838,000, from $21.5 million to $22.3 million in 2024, primarily due to an increase in Intellectual Property Operations variable performance-based compensation costs and an increase in parent compensation expense for share-based awards and $1.3 million from our Energy Operations general and administrative costs for 2024, partially offset by a decrease in our Industrial Operations general and administrative costs, other general and administrative costs and severance costs. Refer to "General and Administrative Expenses" below for further detail and discussion.
Current wording
•General and administrative expenses increased $357,000, from $33.1 million to $33.4 million in 2024, primarily due to an increase in Intellectual Property Operations general and administrative costs and $2.3 million from our Energy Operations general and administrative costs for 2024, partially offset by a decrease in our Industrial Operations general and administrative costs and other general and administrative costs. Refer to "General and Administrative Expenses" below for further detail and discussion.
Previous wording
•Compensation expense for share-based awards, included in general and administrative expenses above, increased $398,000, from $1.4 million to $1.7 million in 2024, primarily due to restricted stock and option grants issued to employees and the Board in 2024 and 2023, which includes a partial offset for forfeitures.
Current wording
•Compensation expense for share-based awards, included in general and administrative expenses above, increased $206,000, from $2.3 million to $2.5 million in 2024, primarily due to restricted stock and option grants issued to employees and the Board in 2024 and 2023, which includes a partial offset for forfeitures.
Previous wording
•Unrealized loss from the change in fair value of our equity securities was $31.4 million in 2024, as compared to an unrealized gain of $10.0 million in the comparable prior period. The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The current period unrealized loss primarily relates to the reversal of unrealized gains previously recorded for Arix shares sold in January 2024 for realized gains. Refer to Note 4 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
Current wording
•Unrealized loss from the change in fair value of our equity securities was $35.5 million in 2024, as compared to an unrealized gain of $18.8 million in the comparable prior period. The unrealized gain and loss were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss primarily relates to the reversal of unrealized gains previously recorded for Arix shares sold in January 2024 for realized gains. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
Previous wording
•Realized gain from the sale of equity securities was $28.9 million in 2024, as compared to a realized loss of $9.4 million in the comparable prior period. The realized gains and losses were similarly derived from the sales activity from our Life Sciences Portfolio and trading securities portfolio. The current period realized gains primarily relates to the Arix shares sold in January 2024. Refer to Note 4 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
Current wording
•Realized gain from the sale of equity securities was $28.9 million in 2024, as compared to a realized loss of $9.4 million in the comparable prior period. The realized gains and losses were similarly derived from the sales activity from our Life Sciences Portfolio and trading securities portfolio. The 2024 period realized gains primarily relates to the Arix shares sold in January 2024. Refer to Note 3 to the consolidated financial statements elsewhere herein for additional information regarding the sale of Arix shares and refer to "Equity Securities Investments" below for further discussion.
Previous wording
•Legal liability fee of $6.6 million in 2024 is related to the additional accruals made in connection with the AIP Matter. Refer to Note 14 to the consolidated financial statements elsewhere herein for additional information regarding the legal liability fee accrued in connection with the AIP Matter.
Current wording
•Non-recurring legacy legal expense of $14.9 million in 2024 is related to the additional accruals made in connection with the AIP Matter and expenses related to the settlement agreement with Slingshot. Refer to Note 13 to the consolidated financial statements elsewhere herein for additional information regarding the accrual in connection with the AIP Matter and the settlement agreement with Slingshot.
Previous wording
•Unrealized gain from the Series B warrants and the embedded derivative fair value measurements was zero in 2024, as compared to a gain of $6.7 million in the comparable prior period, primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 11 and 12 to the consolidated financial statements elsewhere herein for additional information regarding the Starboard Securities and fair value measurements.
Current wording
•Unrealized gain from the Series B Warrants and the embedded derivative fair value measurements was zero in 2024, as compared to a gain of $8.2 million in the comparable prior period, primarily due to the exercise of the remaining Series B Warrants and conversion of the Series A Redeemable Convertible Preferred Stock into the Company's common stock in 2023. In 2024, no shares of Series A Redeemable Convertible Preferred Stock and no Series B Warrants remained outstanding. Refer to Notes 10 and 11 to the consolidated financial statements elsewhere herein for additional information regarding the Series B Warrants and Series A Redeemable Convertible Preferred Stock and fair value measurements.
Previous wording
•Interest expense on Senior Secured Notes was zero in 2024, as compared to interest expense of $1.8 million in the comparable prior period, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023, pursuant to the Series B Warrants Exercise. Refer to Note 11 to the consolidated financial statements elsewhere herein for additional information.
Current wording
•Interest expense on Senior Secured Notes was zero in 2024, as compared to interest expense of $1.9 million in the comparable prior period, due to the cancellation of the remaining $60.0 million aggregate principal amount outstanding of the Senior Secured Notes on July 13, 2023, pursuant to the Series B Warrants Exercise. Refer to Note 10 to the consolidated financial statements elsewhere herein for additional information.
Previous wording
For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Paid-up revenue increased $4.8 million for the three months ended June 30, 2024 and increased $13.3 million for the six months ended June 30, 2024 due to an increase in the number of new license agreements that generated license revenue in 2024. Recurring revenue, that provides for quarterly sales-based license fees, increased $126,000 for the three months ended June 30, 2024 and increased $1.1 million for the six months ended June 30, 2024 from various on-going license arrangements.
Current wording
For the periods presented above, the majority of the revenue agreements executed during the relevant period provided for the payment of one-time, paid-up license fees in consideration for the grant of certain IP Rights for patented technology owned by our operating subsidiaries. These rights were primarily granted on a perpetual basis, extending until the expiration of the underlying patents. Paid-up revenue decreased $1.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as there were no new license agreements executed during the third quarter of 2024. Paid-up revenue increased $11.9 million for the nine months ended September 30, 2024 compared to the three months ended September 30, 2023 due to an increase in the number of new license agreements that generated higher license revenue in 2024. Recurring revenue, that provides for quarterly sales-based license fees, increased $136,000 for the three months ended September 30, 2024 and increased $1.2 million for the nine months ended September 30, 2024, in each case compared to the comparable prior year period, from various on-going license arrangements.
Previous wording
Refer to detailed change explanations above for the three and six months ended June 30, 2024 and 2023 regarding cost of revenues for our Intellectual Property Operations.
Current wording
Refer to detailed change explanations above for the three and nine months ended September 30, 2024 and 2023 regarding cost of revenues for our Intellectual Property Operations.
Previous wording
For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services. Revenue from printers and parts decreased $440,000 for the three months ended June 30, 2024 and decreased $1.8 million for the six months ended June 30, 2024 due to a decrease in the number of printer units sold. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix's revenue arrangements and related concentrations. Refer to “Industrial Operations Business” above for additional information related to Printronix's operating activities.
Current wording
For the periods presented above, the majority of the contract agreements executed in the relevant period include various combinations of tangible products (which include printers, consumables and parts) and services. Revenue from printers and parts decreased $485,000 for the three months ended September 30, 2024 and decreased $2.3 million for the nine months ended September 30, 2024, in each case compared to the comparable prior year period, due to a decrease in the number of printer units sold. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Printronix's revenue arrangements and related concentrations. Refer to “Industrial Operations Business” above for additional information related to Printronix's operating activities.
Previous wording
Refer to detailed change explanations above for the three and six months ended June 30, 2024 and 2023 regarding cost of revenues for our Industrial Operations. The decrease in Printronix's cost of revenues for the three and six months ended June 30, 2024 is due to change in revenue described above. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Printronix's cost of sales.
Current wording
Refer to detailed change explanations above for the three and nine months ended September 30, 2024 and 2023 regarding cost of revenues for our Industrial Operations. The decrease in Printronix's cost of revenues for the three and nine months ended September 30, 2024 is due to change in revenue described above. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Printronix's cost of sales.
Previous wording
Benchmark's cost of production for the three and six months ended June 30, 2024 was $10.0 million and $11.4 million, respectively. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Benchmark's cost of production.
Current wording
Benchmark's cost of production for the three and nine months ended September 30, 2024 was $11.7 million and $23.1 million, respectively. Refer to Note 2 included in our 2023 Annual Report for additional information regarding Benchmark's cost of production.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
•Benchmark's cost of production for the third quarter of 2024 added a total of $11.7 million to our consolidated operating expenses. Refer to "Energy Operations –Cost of Production"below for further discussion.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•Legal liability fee of $12.9 million in 2024 is related to the additional accruals made in connection with the AIP Matter. Refer to Note 14 to the consolidated financial statements elsewhere herein for additional information regarding the legal liability fee accrued in connection with the AIP Matter.