ACACIA RESEARCH CORP

Previous wording

The following discussion should be read in conjunction with our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in Item 1A. "Risk Factors" in or Annual Report on Form 10-K for the year ended December 31 2024, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and elsewhere herein. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

Current wording

The following discussion should be read in conjunction with our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these “forward-looking statements” as a result of various factors including the risks we discuss in “Item 1A. Risk Factors" to our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere herein. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

We are 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. We acquire businesses with a view towards strong free cash flow generation and an ability to scale, and look to identify opportunities where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance. Our strategy centers around quality sourcing, execution, and improvement. We find unique situations, bring a flexible and creative approach to transacting, and rely on our relationships and expertise to drive continual improvement in operating performance. We approach transactions as business owners and operators rather than purely as financial investors, and we believe this is our core differentiator for creating long-term value for shareholders and partners. We define value through free cash flow generation, book value appreciation, and stock price growth. These are the pillars of the Acacia story.

Current wording

We are 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. We acquire businesses with a view towards strong free cash flow generation and with an ability to scale where we can tap into our deep industry relationships, significant capital base, and transaction expertise to materially improve performance. We are focused on sourcing, execution, and improvement. We find unique situations and bring a flexible and creative approach to transacting, combining relationships and expertise to drive continual improvement in operating performance. We approach transactions as business owners and operators rather than purely as financial investors. We believe this differentiates us in creating long-term value for shareholders and partners. We define value through free cash flow generation, book value appreciation, and stock price growth. These are the pillars of the Acacia story.

Previous wording

Our focus is companies with a total enterprise value of $1 billion or less. However, we may pursue larger acquisitions under the right circumstances. Broadly speaking, our potential acquisition targets are founder-owned or privately controlled businesses, entire public companies or carve-outs of specific segments, which show a path to consistent profitability, free cash flow generation and higher risk-adjusted return expectations. We buy businesses to create platforms. The Company remains focused 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. Acacia then has optionality to grow and reinvest free cash flow or look to monetize and build new platforms.

Current wording

As part of our operating philosophy, we endeavor, through our strong network of operating partners, to enhance the values of businesses we acquire, driving both the ability to generate incremental earnings and potentially enhancing a company’s valuation multiple. Our focus is companies with a total enterprise value of $1 billion or less. However, we may pursue larger acquisitions under the right circumstances. Broadly speaking, our potential acquisition targets are founder-owned or privately controlled businesses, entire public companies or carve-outs of specific segments, which show a path to consistent profitability, free cash flow generation and higher risk-adjusted return expectations. We buy businesses to create platforms. We grow them organically and through M&A, with a clear focus on free cash flow generation and defined expectations on return on invested capital. Acacia then has the optionality to grow and reinvest free cash flow or look to monetize and build new platforms. The Company remains focused 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.

Previous wording

We regularly evaluate opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth. Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon.

Current wording

We regularly evaluate potential value accretive opportunities to acquire new businesses, where our research, execution and operating partners can drive attractive earnings and book value per share growth. Our long-term focus positions our businesses to navigate economic cycles and allows sellers and other counterparties to have confidence that a transaction is not dependent on achieving the types of performance hurdles demanded by private equity sponsors. We consider opportunities based on the attractiveness of the underlying cash flows, without regard to a specific fund life or investment horizon.

Previous wording

Our strategic relationship with Starboard enhances our access to operating partners and industry experts with whom we evaluate potential acquisition opportunities, which enhances the oversight and value creation of our businesses. 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.

Current wording

Our strategic relationship with Starboard 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.

Previous wording

We have established a proven track record of licensing and enforcement success with over 1,600 license agreements executed as of September 30, 2025, across nearly 200 patent portfolio licensing and enforcement programs. As of September 30, 2025, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $898.0 million to our patent partners. Since January 1, 2021, we generated gross licensing revenue of approximately $282.3 million and returned approximately $87.2 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 March 31, 2026, across nearly 200 patent portfolio licensing and enforcement programs. As of March 31, 2026, we have generated gross licensing revenue of approximately $1.9 billion, and have returned $900.1 million to our patent partners. Since January 1, 2022, we generated gross licensing revenue of approximately $207.3 million and returned approximately $63.1 million to our patent partners.

Previous wording

In October 2021, we acquired Printronix Holding Corp. (“Printronix”). 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.

Current wording

Printronix Holding Corp. (“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.

Previous wording

We are supporting Printronix as it transitions its business mix from lower-margin printer sales to higher-margin consumable products including ink cartridges and specialty ribbons. Printronix’s dual hardware and consumables business model, combined with a streamlined operating structure, represents a steady source of cash flow for Acacia. The Printronix team is focused on topline initiatives and reducing general and administrative expenses, and we expect Printronix to continue to generate free cash flow on an annual basis.

Current wording

Printronix’s dual hardware and consumables business model, combined with a streamlined operating structure, represents a steady source of cash flow for Acacia. The Printronix team is focused on topline initiatives and reducing general and administrative expenses, and we expect Printronix to continue to generate free cash flow on an annual basis.

Previous wording

In November 2023, we acquired a 50.4% equity interest in Benchmark. Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. Prior to Benchmark’s acquisition of additional assets in April 2024, 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. Acacia made a control investment in Benchmark and intends to utilize its significant capital base 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. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information.

Current wording

Headquartered in Austin, Texas, Benchmark is an independent oil and natural gas company that acquires, produces and develops oil and natural gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team. Prior to Benchmark’s acquisition of additional assets in April 2024, 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. Acacia made a control investment in Benchmark and intends to utilize its significant capital base to acquire predictable and shallow decline, cash-flowing oil and natural 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 natural gas assets at attractive valuations. Refer to Note 1 to the consolidated financial statements elsewhere herein for additional information.

Previous wording

On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement. Pursuant to the Revolution 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 of the Revolution Transaction, the Company’s interest in Benchmark is approximately 73.5%. Refer to Note 11 to the accompanying consolidated financial statements for additional information regarding the Benchmark Revolving Credit Facility.

Current wording

On April 17, 2024, Benchmark consummated the Revolution Transaction contemplated in the Revolution Purchase Agreement. Pursuant to the Revolution 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. As of March 31, 2026, the Company’s interest in Benchmark is approximately 73.5%.

Previous wording

On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired Deflecto Acquisition, Inc. (“Deflecto”) pursuant to the Deflecto Stock Purchase Agreement. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its 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, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. Under the terms and conditions of the Deflecto Stock Purchase Agreement, the aggregate consideration paid to the Deflecto 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. Refer to Notes 3 and 11 for additional information related to the Deflecto acquisition and the Deflecto Term Loan, respectively.

Current wording

Headquartered in Indianapolis, Indiana, Deflecto isa leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. As of March 31, 2026, 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.

Previous wording

On October 18, 2024, Deflecto Purchaser, a wholly-owned subsidiary of Acacia, acquired 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 was funded with a combination of borrowings of a $48.0 million secured 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 wording

On October 18, 2024, we acquired Deflecto, a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets that is headquartered in Indianapolis, Indiana. The aggregate consideration paid to the Deflecto Sellers in the Deflecto Transaction consisted of $103.7 million in cash, subject to certain working capital, debt and other customary adjustments set forth in the Deflecto Stock Purchase Agreement, which was funded with a combination of borrowings under the $48.0 million Deflecto Term Loan and cash on hand. A portion of the Deflecto purchase price is being held in escrow to indemnify us against certain claims, losses and liabilities. Refer to “Manufacturing Operations” above and Note 1 to the consolidated financial statements elsewhere herein for additional information.

Previous wording

In June 2020 we acquired a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”). That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition. Through the end of September 30, 2025, we have received proceeds of $564.1 million as we monetized the Life Sciences portfolio. We retained an investment in the Life Sciences Portfolio consisting of public and private securities valued at $25.7 million at September 30, 2025. On January 19, 2024, we completed the sale of our 33,023,210 shares of Arix Bioscience PLC (“Arix”) to RTW Biotech Opportunities Operating Ltd, a subsidiary of RTW Biotech Opportunities Ltd, for $57.1 million in aggregate (representing £1.43 per share at an exchange rate of 1.2087 USD/GBP). Following the completion of the share sale, we no longer own any shares of Arix. Additionally, some of the businesses in which we continue to hold an interest generate income through the receipt of royalties and milestone payments. Refer to Note 4 to the consolidated financial statements elsewhere herein for more information.

Current wording

In June 2020 we acquired a portfolio of investments in 18 public and private life sciences companies (the “Life Sciences Portfolio”). That purchase was funded with a combination of available cash and capital from Starboard, for a total of approximately $282.0 million at the time of acquisition. Through the end of March 31, 2026, we have received proceeds of $564.1 million as we monetized the Life Sciences portfolio. We retained an investment in the Life Sciences Portfolio consisting of private securities valued at $25.7 million at March 31, 2026. Refer to Note 3 to the consolidated financial statements elsewhere herein for more information.

Previous wording

Historically, inflation has not had a significant impact on us or any of our subsidiaries. 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. We expect that our Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs.

Current wording

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. We expect that our Manufacturing and Industrial Operations will continue to adjust their selling prices as required in response to higher costs.

Previous wording

During the first half of 2025, the U.S. government announced additional tariffs on a broad range of imports. In an effort to mitigate any adverse impact of these tariffs and other non-tariff trade practices and policies to our Industrial and Manufacturing Operations. We have taken proactive measures to reduce our exposure to tariffs by moving certain production and working closely with our supplier and vendor base to proactively manage any impacts. These countermeasures may prove to be ineffective and the ability to predict tariff rates in different countries may be difficult as policies may change on short notice. Uncertainty about trade policy, tariff rates, and other changes in practices affecting international trade might have an adverse effect on our business and results of operation and we may face challenges in implementing the optimal responses to changing trade conditions. There can be no assurances that such factors will not impact our business in the future.

Current wording

During the first half of 2025, the U.S. government announced additional tariffs on a broad range of imports. In an effort to mitigate any adverse impact of these tariffs and other non-tariff trade practices and policies to our Industrial and Manufacturing Operations, we have taken proactive measures to reduce our exposure to tariffs by moving certain production and working closely with our supplier and vendor base to manage any impacts. These countermeasures may prove to be ineffective and the ability to predict tariff rates in different countries may be difficult as policies may change on short notice. Uncertainty about trade policy, tariff rates, and other changes in practices affecting international trade might have an adverse effect on our business and results of operation and we may face challenges in implementing the optimal responses to changing trade conditions. There can be no assurances that such factors will not impact our business in the future.

Previous wording

As of the date of this Quarterly Report, our Patent Licensing, Enforcement and Technologies Business has one pending patent infringement cases with scheduled trial dates in the next twelve months. Patent infringement trials are components of ARG’s overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities. Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates. In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for reasons that are beyond the control of our Patent Licensing, Enforcement and Technologies Business. While scheduled trial dates provide an indication of the timing of possible future revenue generating opportunities, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities.

Current wording

As of the date of this Quarterly Report, our Patent Licensing, Enforcement and Technologies Business has one pending patent infringement case with scheduled trial dates in the next twelve months. Patent infringement trials are components of ARG’s overall patent licensing process and are one of many factors that contribute to possible future revenue generating opportunities. Scheduled trial dates, as promulgated by the respective court, merely provide an indication of when, in future periods, the trials may occur according to the court’s scheduling calendar at a specific point in time. A court may change previously scheduled trial dates. In fact, courts often reschedule trial dates for various reasons that are unrelated to the underlying patent assets and typically for reasons that are beyond the control of our Patent Licensing, Enforcement and Technologies Business. While scheduled trial dates provide an indication of the timing of possible future revenue generating opportunities, the trials themselves and the immediately preceding periods represent the possible future revenue generating opportunities.

Previous wording

We acquiredone new patent portfolio during thenine months ended September 30, 2025 consisting of Wi-Fi 7 standard essential patents. 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 have estimated economic useful lives ranging from two to five years.

Current wording

We didnot acquire any new patent portfolios during thethree months ended March 31, 2026. During the year ended December 31, 2025, we acquired one new patent portfolio consisting of Wi-Fi 7 standard essential patents. 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 have estimated economic useful lives ranging from two to five years.

Previous wording

Headquartered in Austin, Texas, Benchmark is an independent oil and gas company that acquires, produces and develops oil and gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team led by Chief Executive Officer Kirk Goehring. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 155,000 net acres and an interest in approximately 600 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets 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.

Current wording

Headquartered in Austin, Texas, Benchmark is an independent oil and natural gas company that acquires, produces and develops oil and natural gas assets in Texas and Oklahoma. Benchmark is run by an experienced management team. After the acquisition of Revolution, Benchmark’s existing assets consist of approximately 155,000 net acres and an interest in approximately 600 wells, the majority of which are operated. Acacia owns approximately 73.5% of Benchmark. Benchmark intends to enhance the value of such assets 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 natural gas assets at attractive valuations.

Previous wording

In October 2024, we acquired Deflecto. Headquartered in Indianapolis, Indiana, Deflecto is a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. Its 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, sign holders and floormats used by the office market. Deflecto manufactures its products at nine manufacturing facilities across the United States, Canada, the United Kingdom and China. While we believe our Manufacturing Operations Business has been reasonably protected from tariffs from a cost standpoint, we maintain a global production footprint, and have been re-shoring certain manufacturing functions and exploring sourcing alternatives to mitigate tariff and duty impacts. However, like many of its peers, our Manufacturing Operations Business has seen tariff-specific demand headwinds. While the business environment remains challenging, our Manufacturing Operations Business continues to invest to optimize its business in order to maximize cash flow when the cycle returns.

Current wording

In October 2024, we acquired Deflecto, a leading specialty manufacturer of essential products serving the commercial transportation, HVAC and office markets that is headquartered in Indianapolis, Indiana. Under Acacia’s ownership, Deflecto is a market leader across each of its segments and end markets, supplying essential, regulatory mandated products to a blue-chip customer base via long-term relationships with more than 1,500 leading retail, wholesale and OEM customers and distribution partners globally. As of March 31, 2026, 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.

Previous wording

In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations segment revenues may be found in Notes 2 and 19 to the consolidated financial statements.

Current wording

In addition to the following results of operations discussion, more information related to our Intellectual Property Operations, Industrial Operations, Energy Operations and Manufacturing Operations segment revenues may be found in Notes 2 and 17 to the consolidated financial statements.

Previous wording

Loss before income taxes was $3.4 million for the three months ended September 30, 2025, as compared to loss of $6.2 million in the comparable prior period. The decrease comprised 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, 2025 as compared to the three months ended September 30, 2024 as follows:

Current wording

Loss before income taxes was $20.2 million for the three months ended March 31, 2026, as compared to income of $29.6 million for the three months ended March 31, 2025. The net decrease comprised the change in total revenues described above and other changes in operating expenses and other income or expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 as follows:

Previous wording

•Cost of revenues for Intellectual Property Operations increased $2.6 million, from $5.7 million to $8.3 million in 2025 primarily due to an increase in contingent legal fees, litigation and licensing expenses and patent amortization expense.

Current wording

◦Cost of revenues for Intellectual Property Operations decreased $23.1 million, from $27.9 million in 2025 to $4.8 million in 2026 primarily due to a decrease in inventor royalties, contingent legal fees, litigation and licensing expenses and patent amortization expense associated with the revenue decrease noted above. Refer to “Intellectual Property Operations –Cost of Revenues” below for further discussion.

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 $7.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to an increase in new license agreements executed. Paid-up revenue increased $59.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to an increase in average license fees per agreement. Recurring revenue, that provides for quarterly sales-based license fees, decreased $1.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to the expiration of certain 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 $69.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to a decrease in average license fees.

Previous wording

•Cost of revenues for Intellectual Property Operations increased $24.3 million, from $18.5 million to $42.8 million in 2025 primarily due to an increase in inventor royalties, contingent legal fees, litigation and licensing expenses and patent amortization expense.

Current wording

Cost of revenues for Intellectual Property Operations decreased $23.1 million, from $27.9 million to $4.8 million in 2026 primarily due to a decrease in inventor royalties, contingent legal fees and patent amortization expense.

Previous wording

◦Amortization of patents expense from our Intellectual Property Operations increased $3.8 million, from $11.4 million to $15.2 million in 2025, due to an increase in amortization from the 2025 patent portfolio acquisition.

Current wording

•Amortization of patents expense from our Intellectual Property Operations decreased $759,000, from $4.5 million to $3.8 million in 2026, due to certain patents becoming fully amortized during the period.

Previous wording

The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in certain patent portfolios without future patent partner royalty obligations. The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.

Current wording

The economic terms of patent portfolio related partnering agreements and contingent legal fee arrangements, if any, including royalty obligations, if any, royalty rates, contingent fee rates and other terms and conditions, vary across the patent portfolios owned or controlled by our operating subsidiaries. In certain instances, we have invested in patent portfolios without future patent partner royalty obligations. The costs associated with the forementioned obligations fluctuate period to period, based on the amount of revenues recognized each period, the terms and conditions of revenue agreements executed each period and the mix of specific patent portfolios, with varying economic terms and conditions, generating revenues each period.

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 consumable products decreased $1.1 million for the nine months ended September 30, 2025, compared to the comparable prior period, due primarily to a decrease in line matrix consumables 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 $519,000 for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to a decrease in 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

Cost of revenues for Industrial Operations remained flat compared to lower revenue for the nine months ended September 30, 2025 primarily due to higher input costs. Refer to Note 2 included in our 2024 Annual Report for additional information regarding Printronix’s cost of revenues.

Current wording

Cost of revenues were lower for the three months ended March 31, 2026 primarily due to lower revenues. Refer to Note 2 included in our 2025 Annual Report for additional information regarding Printronix’s cost of revenues.

Previous wording

Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark’s revenue arrangements and related concentrations.

Current wording

For the periods presented above, revenues increased $363,000 for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to increase oil production and higher oil prices and an increase in natural gas prices, partially offset by lower natural gas liquid volumes and prices. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Benchmark’s revenue arrangements and related concentrations.

Previous wording

Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Deflecto’s revenue arrangements and related concentrations.

Current wording

For the periods presented above, revenues decreased $869,000 for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to lower revenue in our air distribution end market, partially offset by growth in our transportation safety end market. Refer to Note 2 to the consolidated financial statements elsewhere herein for additional information regarding Deflecto’s revenue arrangements and related concentrations.

Previous wording

Deflecto’s cost of revenues for the three and nine months ended September 30, 2025 was $23.3 million and $66.5 million, respectively. Refer to Note 2 included in our 2024 Annual Report for additional information regarding Deflecto’s cost of sales.

Current wording

Cost of revenues increased $1.6 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher material costs. Refer to Note 2 included in our 2025 Annual Report for additional information regarding Deflecto’s cost of revenues.