Company: ACTG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000934549-25-000021
Chunk: 141

Company: ACACIA RESEARCH CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 8
Chunk 141
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 the fair value of the oil and gas properties was determined based upon estimated future discounted cash flow, a Level 3 input, using estimated production which we reasonably expect, and estimated prices adjusted for differentials. Unobservable inputs include estimated future oil and natural gas production, prices, operating and development costs and a discount rate of 12%, all Level 3 inputs within the fair value hierarchy. The Company also 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. In connection with our Deflecto acquisition, nonrecurring Level 3 valuations were performed for certain intangible assets, refer to Note 3 for additional information.

14. RELATED PARTY TRANSACTIONS

In 2023, the Company entered into a Loan Facility (“Loan Facility”) with a related private portfolio company. As of March 31, 2025 and December 31, 2024, the Loan Facility balance including interest receivable was $3.9 million and $3.5 million, respectively. The Loan Facility is not impaired and no allowance for credit loss was deemed necessary as of March 31, 2025. The Loan Facility bore an interest rate of 9.5% per annum. We recorded $87,000 and $59,000 in interest income during the three months ended March 31, 2025 and 2024, respectively. The receivable is included in other non-current assets in the condensed consolidated balance sheets.Refer to Note 12 for information about the Recapitalization Agreement and Services Agreement with Starboard.

15. COMMITMENTS AND CONTINGENCIES

Inventor Royalties and Contingent Legal ExpensesIn 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