ACACIA RESEARCH CORP

Acacia Research Corporation is a disciplined value-oriented acquirer and operator of businesses across public and private markets and industries including but not limited to the industrial, energy and technology sectors. The Company focuses on sourcing, execution, and improvement, targeting businesses with a total enterprise value of $1 billion or less, though it may pursue larger acquisitions under the right circumstances. The Company's strategic relationship with Starboard Value LP, its controlling shareholder, provides access to industry expertise and operating partners to evaluate potential acquisition opportunities and enhance oversight and value creation of acquired businesses.

The Company faces intense competition in identifying, evaluating and executing strategic acquisitions from other entities with similar business objectives, including private equity groups and operating businesses seeking strategic acquisitions, as well as financial firms, corporate buyers and others looking to invest in strategic opportunities. The Company's Intellectual Property Operations faces intense competition in identifying, evaluating and executing strategic acquisitions from other entities with similar business objectives, including financial firms, corporate buyers and others investing in strategic opportunities and acquiring IP, as well as universities and other technology sources. The Energy Operations Business faces intense competition in identifying, evaluating, and executing attractive oil and natural gas asset acquisitions from other entities with similar business objectives, including major and independent oil and natural gas companies and private equity groups. The Manufacturing Operations Business is subject to intense competition, competing with numerous other manufacturers and distributors of consumer and commercial products, many of which are large and well-established.

Acacia generates revenue through the acquisition and operation of businesses, with a focus on strong free cash flow generation and an ability to scale. The Company's core business model involves identifying, pursuing, and acquiring businesses where it is uniquely positioned to deploy its differentiated strategy, people and processes to generate and compound shareholder value. The Company's revenue streams include licensing and enforcement of patented technologies through its Intellectual Property Operations, manufacturing and distribution of industrial impact printers and related consumables and services through its Industrial Operations, production and development of oil and natural gas assets through its Energy Operations, and specialty manufacturing of essential products serving the commercial transportation, HVAC, and office markets through its Manufacturing Operations.

The Intellectual Property Operations segment invests in intellectual property and engages in the licensing and enforcement of patented technologies through its wholly-owned subsidiary Acacia Research Group LLC. As of December 31, 2025, the Company has generated gross licensing revenue of approximately $1.9 billion ¹, and has returned $898.2 million ² to its patent partners. During the past five calendar years ending on December 31, 2025, the Company generated gross licensing revenue of approximately $282.6 million ³ and returned approximately $87.3 million ⁴ to its patent partners. The Company acquired one new patent portfolio during the year ended December 31, 2025 consisting of Wi-Fi 7 standard essential patents. The Company's current active patent portfolios include Atlas Technologies (Wi-Fi 6 standard essential patents), Avalon Technologies (Wi-Fi 7 standard essential patents), Unification Technologies (flash memory technology), Monarch Networking Technologies (IP networking technology), Stingray IP Solutions (wireless networking), and R2 Solutions (internet search, advertising and cloud computing technology). The Company has established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of December 31, 2025 ⁵, across nearly 200 patent portfolio licensing and enforcement programs ⁶.

The Industrial Operations segment consists of Printronix, a leading manufacturer and distributor of industrial impact printers, also known as line matrix printers, and related consumables and services. Printronix's line matrix printers are used for mission critical applications within industries including auto manufacturing, transportation and logistics, retail distribution, food and beverage distribution, and pharmaceutical distribution. Printronix has manufacturing, configuration and/or distribution sites located in Malaysia, the United States, Singapore, China and the Netherlands. The Energy Operations segment consists of the Company's approximately 73.5% ⁷ interest in Benchmark Energy II, LLC, an independent oil and natural gas company that acquires, produces and develops oil and natural gas assets in Texas and Oklahoma. As of December 31, 2025, Benchmark's operated assets consisted of 554 gross (474 net) operated wells ⁸, and its non-operated assets consisted of an average working interest of 10% in 82 gross (8 net) productive wells ⁹. Production from Benchmark's operated and non-operated wells during the year ended December 31, 2025 totaled 2,081 Mboe ¹⁰, or an average of 5.7 Mboe per day ¹¹. The Manufacturing Operations segment consists of Deflecto, a leading specialty manufacturer of essential products serving the commercial transportation, HVAC, and office markets. As of December 31, 2025, Deflecto's products include emergency warning triangles and vehicle mud flaps used by the transportation industry, various airducts and air registers used by the HVAC market and literature and sign holders used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China.

On April 17, 2024, Benchmark consummated the Revolution Transaction, acquiring certain upstream assets and related facilities in Texas and Oklahoma, including approximately 140,000 net acres and an interest in approximately 528 gross (423 net) operated and non-operated wells ¹² for a purchase price of $145 million ¹³ in cash. The Company's contribution to Benchmark to fund its portion of the Revolution Purchase Price and related fee was $59.9 million ¹⁴, 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 ¹⁵ from other investors in Benchmark. On October 18, 2024, the Company acquired Deflecto for aggregate consideration of $103.7 million ¹⁶ in cash, which was funded with a combination of borrowings under a $48.0 million ¹⁷ secured term loan and cash on hand. In December 2025, Benchmark spud its first horizontal development well which is expected to be completed and producing in the first quarter of 2026. During the year ended December 31, 2025, the Company recognized income of $15.8 million ¹⁸ in connection with a settlement with a service provider that was previously engaged by its Intellectual Property Business. The Company repurchased 4,358,361 ¹⁹ shares of common stock for $20.3 million ²⁰ during the year ended December 31, 2024.

Total revenues increased $162.9 million ²¹ to $285.2 million ²² for the year ended December 31, 2025, as compared to $122.3 million ²³ for the year ended December 31, 2024, primarily due to an increase in Intellectual Property Operations revenues and increases in Energy Operations and Manufacturing Operations revenues from acquisitions in the prior year. Net income attributable to Acacia Research Corporation was $21.7 million ²⁴ for the year ended December 31, 2025, compared to a net loss of $36.1 million ²⁵ for the year ended December 31, 2024. Diluted net income per common share was $0.22 ²⁶ for the year ended December 31, 2025, compared to a diluted net loss per common share of $0.36 ²⁷ for the year ended December 31, 2024. Operating income was $6.4 million ²⁸ for the year ended December 31, 2025, compared to an operating loss of $32.9 million ²⁹ for the year ended December 31, 2024.

The Company intends to grow by acquiring additional operating businesses, energy assets and intellectual property assets. The Company's focus is companies with a total enterprise value of $1 billion or less, however, it may pursue larger acquisitions under the right circumstances. The Company's growth strategy includes identifying opportunities where it can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price. The Company also aims to initiate strategic block positions in public companies as a path to complete whole company acquisitions or strategic transactions that unlock value. The Company's Energy Operations Business intends to evaluate future growth and acquisitions of oil and natural gas assets at attractive valuations. Benchmark intends to continue its development activities in 2026 and has adopted a plan for future development thereafter.

The Company's Manufacturing Operations Business continues to invest to optimize its business in order to maximize cash flow when the cycle returns. The Company expects that its Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs. The Company's Industrial Operations Business is supporting Printronix as it transitions its business mix from lower-margin printer sales to higher-margin consumable products including ink cartridges and specialty ribbons, along with its initiative to reduce costs and operate more efficiently to generate growth. Printronix expects approximately 56.0% ³⁰ of its revenue for its fiscal year ending March 31, 2026 will be derived from the sale of supplies.

The Company has taken proactive measures to reduce its exposure to tariffs by moving certain production and working closely with its supplier and vendor base to manage any impacts. The Company's Manufacturing Operations Business has been re-shoring certain manufacturing functions and exploring sourcing alternatives to mitigate tariff and duty impacts. The Company's Manufacturing Operations Business has seen tariff-specific demand headwinds. The Company expects patent-related legal expenses to continue to fluctuate from period to period based on factors including future trial dates, international enforcement, strategic patent portfolio prosecution and current and future patent portfolio investment, prosecution, licensing and enforcement activities.

The Company's capital allocation strategy includes acquiring businesses at a 'good multiple' and targeting similar returns without requiring an exit event. The Company may issue shares of common stock or other equity securities in connection with future acquisitions of businesses and technologies. The Company does not anticipate paying any cash dividends to holders of its common stock in the foreseeable future. The Company's current policy of its board of directors is to retain earnings, if any, to provide for its growth. The Company's stock repurchase program was previously authorized, with no repurchases during the quarter ended December 31, 2025.

The Company faces structural headwinds including the potential for oil and natural gas prices to decline or for the differential between benchmark prices of oil and the wellhead price to increase, which could cause production from some of Benchmark's assets to become uneconomic and cause write downs of the value of its properties. The Company's Energy Operations Business is concentrated in the Anadarko Basin, making it vulnerable to risks associated with operating in a limited number of geographic areas. The Company's Manufacturing Operations Business has seen tariff-specific demand headwinds. The Company's Intellectual Property Business is reliant on the strength of its patent portfolios and is subject to evolving legislation, regulations, and rules associated with patent law. The Company faces challenges in quality patent intake due to the challenges and complexity associated with the current patent environment.

The Company's success is dependent on its ability to attract and retain the employees and management teams of its operating businesses, the loss of whom could materially adversely affect its financial condition, business and results of operations. The Company's growth strategy depends on acquiring additional operating businesses, energy assets and intellectual property assets, which may not occur, and any acquisitions that are completed could be costly, negatively affect results of operations, dilute stockholders' ownership, or cause significant expense, and the Company may not realize expected benefits due to difficulties related to integration. The Company's Intellectual Property Business is reliant on the strength of its patent portfolios and is subject to evolving legislation, regulations, and rules associated with patent law, and patent litigation is inherently risky because courts may find patents invalid, not infringed, or unenforceable. If oil and natural gas prices decline from current levels, production from some of Benchmark's assets may become uneconomic and cause write downs of the value of its properties, which may adversely affect its ability to borrow, its financial condition and its ability to make distributions. The Company's Manufacturing Operations Business's operating results can be adversely affected by inflation, changes in the cost or availability of raw materials, labor, energy, transportation and other necessary supplies and services, as well as the impact of tariffs and changes in a country's or region's political or economic conditions.

Management's message emphasizes the Company's disciplined value-oriented approach as an acquirer and operator of businesses, focusing on sourcing, execution, and improvement. Management highlights the Company's differentiated business model from private equity funds, hedge funds, and special purpose acquisition companies, noting that the Company approaches transactions as business owners and operators rather than purely as financial investors. Management defines value through free cash flow generation, book value appreciation, and stock price growth. The strategic priorities emphasized for the period ahead include continuing to focus on creating transactions where the Company is able to acquire operating businesses and strategic assets that are believed to be undervalued, utilizing capabilities across Research, Transactions and Execution, and Operations and Management to drive discovery, investment, acquisition and integration of target opportunities. Management also emphasizes the Company's focus on acquiring and building businesses that have stable cash flow generation with an ability to scale, while retaining the flexibility to make opportunistic acquisitions with high risk-adjusted return characteristics.