Greetings, and welcome to the Acacia Research Second Quarter 2023 Financial Results Conference Call. At this time, all participants are placed on a listen-only mode, and a question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host Mr. Rob Fink of FNK IR. Sir, if you may begin.

Thank you, operator. Hosting the call today are MJ McNulty, Interim Chief Executive Officer; and Kirsten Hoover, Interim Chief Financial Officer. Before beginning, I'd like to remind you that information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations, and are based on the current estimates and projections, future results or trends. Actual results may differ materially from those projected as a result of certain risk factors and uncertainties. For a discussion of such risks, and uncertainties, please see the risk factors described in Acacia's annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC. I'd also like to remind everyone that, a press release disclosing the financial results was issued this afternoon, just after the close of market. This release may be accessed on the company's website under the Press Release section of the Investor Relations tab at acaciaresearch.com under the News and Events tasks. With all that, said I'd now like to turn the call over to MJ. MJ the call is yours.

Thanks, Rob, and thanks to everyone for joining the call today. So in mid-July and subsequent to the end of the second quarter, we completed our recapitalization transaction with our largest shareholder Starnberg value as you know. In many ways, this is milestones signaled the completion of our larger transformation of Acacia. Since, we announced this transaction in late October, along with new senior leadership and new members of our Board of Directors we significantly restructured and improved Acacia. We reorganized the team we had focusing on sourcing evaluating and executing potential transactions, putting in place a more defined methodology, while significantly reducing headcount and associated costs. Like Printronix, our IP business is now managed as a division this means, we'll consider allocating additional capital as appropriate and we're finalizing an incentive structure for our IP division management that's more aligned with their unique business. We reorganized Printronix and our new leadership reducing costs improving efficiency and setting the stage for an evolution of the business model that we believe will generate more predictable cash flows. And importantly, we put a corporate incentive plan in place for employees of our parent company to clearly align our team's incentives, with those of our shareholders. I realize that many of these achievements are behind the scenes and I recognize that many shareholders are eager for us to deploy capital into our existing businesses as well as into new businesses. So let me take a second speak to that initiative. Our pipeline of opportunities continues to grow and we're maintaining rigor in the evaluation of each of those opportunities. We have a number of late-stage targets today, and we have many other opportunities on deck. In some of these cases, we're working with people we partnered with in the past and we have…

Thank you MJ. Our GAAP book value at June 30 2023 was $335.4 million or $5.71 per basic share compared to $269.3 million or $6.19 per share at December 31, 2022. This value reflects the rights offering that was completed in the first quarter and the impact of the outstanding warrant and embedded derivative liabilities. Total liabilities for warrants and convertible preferred stock to be eliminated upon the exercise or expiration of all such warrants and convertible preferred stock was $94.9 million at June 30, 2023. As MJ said, we expect that interest income will cover Acacia's fixed parent costs. A key part of this is the elimination of approximately $6 million in annualized parent G&A costs. We expect Printronix to generate free cash flows on an annual basis. Let me now turn to the second quarter results. Total second quarter revenues were $7.9 million compared to $16.7 million in the same quarter last year. Printronix generated $7.5 million in revenue in the quarter compared to $8.7 million last year. The intellectual property business generated $400000 in licensing and other revenue during the quarter compared to $8.1 million in the same quarter last year. As MJ mentioned, given the nature of the IP business, we have expected fluctuations in revenues quarter-to-quarter. General and administrative expenses, which includes G&A at IP and Printronix were $9.4 million compared to $10.7 million in the same quarter of last year, due to the decrease in personnel and compensation costs related to the reduced headcount and a reduction in Pentronix G&A. Operating loss was $12.5 million compared to an operating loss of $5.7 million in the same quarter of last year, with the reduction due to lower revenue. Second quarter 2023 GAAP net loss attributable to Acacia Research was $18.8 million or $0.36 per diluted…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] One moment please, while we pause for questions. Thank you. Our first question is coming from Anthony Stoss with Craig-Hallum. Your line is live.

Thanks. MJ I just want to circle back to actually two questions. On the – your Wi-Fi 6 commentary I'm curious if there's more than one potential licensee that you've been engaged with? And then the second question related on the M&A side, probably more bigger picture. Are you seeing potential prices come down, are you still leaning towards doing a series of smaller deals or one larger one? I love to hear your thoughts on both subjects.

Yes. Hey, Tony. How you doing?

Good.

So on the Wi-Fi 6, so we're – all of our tenants were working with multiple parties at all the time, so there is a trial with one particular party that's upcoming. We can't really say anything about it as I'm sure you can appreciate. But there's a lot of activity on the Wi-Fi 6 portfolio. We feel really confident about it's a great portfolio standards essential. And so we have a trial that's upcoming. We are encouraged by it and we still feel really confident about the value of the rest of the portfolio. So that's the Wi-Fi 6 piece. On the M&A, so it's a great question. When we've talked in the past, we talked a lot about seeing things on the public side and we're still seeing things on the public side that are really attractive. And remember we're on the public stuff we're focused on some of the parts type opportunities and deep margin improvement-type opportunities. Where you can – we can work with the operating network that we have to really drive value in the business that should again re-rate from actually operating way that we believe we can have a work in. And we still see a lot of those we’re evaluating on those and we’re kind of engaged in service at the moment. What’s interesting is that we’re starting to see valuations become a little more attractive on the private side which is different than what I think we've talked about in the last couple of quarters, which was the private equity guys still have on realistic expectations and ask is very wide. We're starting to see that clear a little bit. And we're still in – on the private side, we're still looking at opportunities. The sum of the parts is a…

Got it. I don't have to tell you that shareholders are growing eager to see the outcome. I'm sure you are as well. Thanks, MJ.

I'm probably more eager than anybody else Tony. So I appreciate the encouragement.

Thanks, again.

Of course.

Thank you. Our next question is coming from Brett Reiss with Janney Montgomery Scott. Your line is live.

Hi MJ. Hi Kirsten. Hi Rob.

Hey Brett.

A question on the patent business, the company gets no credit for the patent side of the business and it's frustrating, because you own some good portfolios and the people who follow the industry think the Marc Booth team is top-notch. Would you consider, to help people focus and take an interest in the patent side of the business making available as the company did years ago when it was solely a patent company, a spreadsheet of pending cases with most importantly any firm trial dates so that shareholders do not have to search on their own for these public record filings?

Look, I think it's a good question. We're encouraged by -- as we look at the patent business, one we have a great team. And I appreciate you reiterating that Brett, because we do believe we have a great team. But it's always nice to hear third-party validation of that the team has a really nice set of patents in this portfolio. And the pipeline is actually pretty interesting there. The underlying economics of the individual portfolios are really attractive. And there -- as you -- a key metric there is the number of lines that we have in the longer at any given time and the progress on those lines. Look, I think we can take that into consideration. I don't know that I can give you an answer right now on that point, but I respect the question and we can take it into consideration.

Oh great, great. And one other question and it's probably for Kirsten. The June 30 cutoff date shows the cash at $355 million. So, then subsequent …

Hi Brett.

…Yeah. Hi. So subsequent to that you paid off the $60 million in notes. So the cash, I have to take $60 million off the $355 million. What's the arithmetic on that?

Brett, so in our 8-K that was just recently released, if you go to the final page of Attachment A you'll see the walk from the June 30 cash balance of $355.2 million to post recap of 343.4%

Okay. You gave ...

And that takes total effect of... Exactly. So that will walk you through each step of the recap transaction to give you the cash on a pro forma basis.

Okay. Great. Thanks for taking my question.

Sure.

Thank you everyone. As we have no further questions in queue at this time. I will hand it back to Mr. McNulty, for any closing comments.

Thanks Ali. Nothing in particular just to thank everyone for joining the call and we look forward to talking to you in a quarter with further updates.

Thank you so much.

Thanks so much.

This concludes today's conference. And you may disconnect your lines at this time. And we thank you for your participation.