[CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights forward-looking statements, their inherent risks, and the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 - This Quarterly Report contains forward-looking statements that involve risks and uncertainties, intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995[14](index=14&type=chunk) - Forward-looking statements cover business, operating, development, investment and finance strategies, relationship with Starboard Value LP, acquisition activities, financial results, intellectual property licensing, capital expenditures, earnings, litigation, regulatory matters, markets, liquidity, and accounting[14](index=14&type=chunk) - Key risks include inability to acquire or integrate businesses, employee retention, cybersecurity incidents, fluctuations in legal expenses, patent invalidity, supply chain disruptions, and external events like political unrest or pandemics[14](index=14&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Acacia Research Corporation for the three and six months ended June 30, 2023, and 2022, including balance sheets, statements of operations, statements of equity, and cash flows, along with comprehensive notes detailing accounting policies, investments, liabilities, and segment information [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030,%202023%20(Unaudited)%20and%20December%2031,%202022) | Metric | June 30, 2023 (Unaudited) (in thousands) | December 31, 2022 (in thousands) | | :--------------------------------- | :--------------------------------------- | :------------------------------------ | | **ASSETS** | | | | Total current assets | $485,792 | $427,985 | | Total assets | $534,708 | $482,928 | | **LIABILITIES & EQUITY** | | | | Total current liabilities | $77,806 | $87,209 | | Total liabilities | $176,121 | $193,682 | | Total stockholders' equity | $335,433 | $269,322 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202023%20and%202022) | Metric (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $7,904 | $16,717 | $22,707 | $30,224 | | Operating loss | $(12,529) | $(5,670) | $(21,853) | $(14,178) | | Loss before income taxes | $(20,424) | $(47,690) | $(8,494) | $(135,834) | | Net loss attributable to Acacia Research Corporation | $(18,779) | $(61,503) | $(9,332) | $(134,769) | | Basic net loss per common share | $(0.36) | $(1.44) | $(0.26) | $(3.06) | | Diluted net loss per common share | $(0.36) | $(1.44) | $(0.26) | $(3.06) | - Total revenues decreased by **53%** for the three months ended June 30, 2023, and by **25%** for the six months ended June 30, 2023, primarily due to decreases in both Intellectual Property Operations and Industrial Operations revenues[27](index=27&type=chunk)[237](index=237&type=chunk)[246](index=246&type=chunk) - Net loss attributable to Acacia Research Corporation significantly decreased by **69%** for the three months and **93%** for the six months ended June 30, 2023, compared to the prior year, largely driven by changes in fair value of equity securities and warrants[27](index=27&type=chunk)[237](index=237&type=chunk)[246](index=246&type=chunk) [Unaudited Condensed Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Series%20A%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202023%20and%202022) | Metric (in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------- | :------------ | :---------------- | | Series A Redeemable Convertible Preferred Stock | $23,154 | $19,924 | | Common Stock | $58 | $43 | | Treasury Stock | $(98,258) | $(98,258) | | Additional Paid-in Capital | $738,712 | $663,284 | | Accumulated Deficit | $(316,121) | $(306,789) | | Total Stockholders' Equity | $335,433 | $269,322 | - Total stockholders' equity increased from **$269.3 million** at December 31, 2022, to **$335.4 million** at June 30, 2023, primarily due to an increase in additional paid-in capital from the Rights Offering and stock option exercises[22](index=22&type=chunk)[34](index=34&type=chunk) - The accumulated deficit increased from **$(306.8) million** to **$(316.1) million** during the six months ended June 30, 2023, reflecting the net loss for the period[22](index=22&type=chunk)[34](index=34&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030,%202023%20and%202022) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(19,122) | $(17,553) | | Net cash provided by investing activities | $9,218 | $78,547 | | Net cash provided by (used in) financing activities | $77,322 | $(106,410) | | Increase (decrease) in cash and cash equivalents | $67,402 | $(45,416) | | Cash and cash equivalents, ending | $355,188 | $263,945 | - Cash flows from financing activities significantly increased to **$77.3 million** provided in H1 2023, compared to **$106.4 million** used in H1 2022, primarily due to proceeds from the Rights Offering[38](index=38&type=chunk)[286](index=286&type=chunk) - Net cash provided by investing activities decreased from **$78.5 million** in H1 2022 to **$9.2 million** in H1 2023, mainly due to lower net cash inflows from equity securities transactions[38](index=38&type=chunk)[284](index=284&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's significant accounting policies, financial statement components, and related party transactions [1. DESCRIPTION OF BUSINESS](index=11&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) This note describes the company's opportunistic capital platform strategy, its relationship with Starboard Value, LP, and its two primary business segments - Acacia Research Corporation operates as an opportunistic capital platform, acquiring businesses based on public/private market valuation differentials, focusing on companies with market values under **$2 billion**, particularly **$1 billion** or less[41](index=41&type=chunk) - The company maintains a strategic relationship with Starboard Value, LP, which provides access to industry expertise and assistance in sourcing and evaluating acquisition opportunities[43](index=43&type=chunk) - The company's business segments include Intellectual Property Operations (

Acacia Research Corporation (NASDAQ:ACTG) Q1 2023 Results Conference Call May 11, 2023 4:30 PM ET Company Participants Rob Fink - Managing Partner MJ McNulty - Interim CEO Kirsten Hoover - Interim CFO Conference Call Participants Brett Reiss - Janney Montgomery Scott Adam Eagleston - Formidable AM Operator Good day, and welcome to the Acacia Research First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements prepared remarks there will be questio ...

SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-37721 Acacia Research Corporation (Name of registrant as specified in its charter) Delaware 95-4405754 (State or other jurisdi ...

Acquisition Strategy - Acacia Research Corporation focuses on acquiring businesses with market values in the sub-$2 billion range, particularly those valued at $1 billion or less[13]. - The company aims to continue focusing on undervalued operating businesses and strategic assets for future acquisitions[20]. - Acacia's strategic relationship with Starboard Value, LP enhances access to industry expertise and acquisition opportunities[18]. - The company plans to grow by acquiring additional operating businesses and intellectual property assets, but there are risks associated with identifying and integrating these acquisitions[41]. - The company has acquired five noteworthy new patent portfolios for an aggregate consideration of approximately $46.9 million from 2019 to 2022[28]. - Successful acquisitions depend on the ability to combine operations without disrupting existing relationships and achieving operational synergies[42]. - The company may issue shares of common stock for future acquisitions, potentially leading to dilution for existing shareholders[46]. - The company faces risks in acquiring privately held companies due to limited information and potential economic vulnerabilities[55]. Financial Performance - The company has generated gross licensing revenue of approximately $1.7 billion and returned $849.2 million to patent partners as of December 31, 2022[29]. - Total revenues decreased by $28.8 million to $59.2 million for the year ended December 31, 2022, compared to $88.0 million for the year ended December 31, 2021, primarily due to a decrease in Intellectual Property Operations revenues[186]. - Operating loss for the year ended December 31, 2022, was $40.1 million, compared to an operating income of $14.5 million in the prior year, representing a change of $54.6 million[186]. - Loss before income taxes was $127.2 million for the year ended December 31, 2022, compared to income of $174.7 million in the prior year, a decrease of $301.9 million[189]. - Unrealized loss from the change in fair value of equity securities was $263.7 million in 2022, compared to an unrealized gain of $87.5 million in the prior year[193]. - Total revenues decreased by $56.5 million, from $76.0 million to $19.5 million in 2022, representing a 74% decline[198]. Operational Challenges - Integration challenges may include higher-than-expected costs, management distraction, and failure to maintain key customer relationships[42]. - The company faces limitations on utilizing net operating losses due to potential ownership changes, which could restrict future tax benefits[68]. - The company outsources various services, including cloud computing for data storage, which may lead to operational disruptions and reduced control over service quality[66]. - Cybersecurity incidents, such as data breaches, could materially affect the company's business and financial condition, potentially leading to significant legal liabilities and reputational harm[70]. - The company faces risks related to reliance on outsourced providers and suppliers, which could impair its ability to manage operations and generate revenues[116]. Management and Governance - Recent management changes, including the resignation of the CEO and CFO, may disrupt business operations and affect stock performance[60][64]. - The company entered into a Recapitalization Agreement with Starboard, ensuring at least two independent directors on the Board until May 12, 2026[140]. - Following the Recapitalization Agreement, Starboard may own up to 61.3% of the company's common stock, significantly influencing shareholder decisions and governance[81]. - The concentration of voting power with Starboard could delay or prevent changes in control or mergers that other shareholders may favor, potentially affecting stock price[85]. Intellectual Property and Legal Risks - The company's intellectual property business is heavily reliant on the strength of its patent portfolios, which are subject to evolving legislation and regulations[90]. - Patent acquisition and enforcement are costly and time-consuming, with significant uncertainty regarding the outcomes of litigation and the value of patents[91]. - Recent changes in patent law and regulations may weaken the rights of patent owners, affecting the ability to obtain and enforce patents[92]. - The America Invents Act has introduced new avenues for challenging the validity of issued patents, increasing uncertainty for the company's patent portfolio[92]. - The company expects patent-related legal expenses to continue to fluctuate based on various factors, including trial dates and enforcement activities[168]. Employee and Workforce - As of December 31, 2022, Acacia had 263 full-time employees and six contractors, indicating a stable workforce[36]. - The company must attract and retain qualified personnel to execute business plans effectively, with competition for talent being intense[49]. Printronix Operations - Acacia's Industrial Operations Business includes the acquisition of Printronix, a leading manufacturer of industrial impact printers, which supports mission-critical applications[30]. - Printronix's financial performance may be adversely affected by unexpected fluctuations in customer demand or reseller inventory levels[118]. - Printronix expects approximately 48.0% of its revenue for the fiscal year ending March 31, 2023, to be derived from the sale of supplies[121]. - Revenue from international sales is anticipated to comprise approximately 53.3% of Printronix's revenue for the fiscal year ending March 31, 2023[122]. - Printronix's cost of sales for 2022 was $19.4 million, compared to $7.4 million in 2021, reflecting a full year of operations post-acquisition[208].

Acacia Research Corporation (NASDAQ:ACTG) Q4 2022 Earnings Call Transcript March 16, 2023 11:00 AM ET Company Participants Robert Fink - Investor Relations Martin McNulty - Interim Chief Executive Officer Kirsten Hoover - Interim Chief Financial Officer Conference Call Participants Operator Greetings. Welcome to the Acacia Research Fourth Quarter 2022 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Inst ...

Financial Data and Key Metrics Changes - Acacia's GAAP book value as of September 30 was $282.5 million, or $7.33 per basic share, compared to $268.2 million, or $6.60 per share as of June 30, and $430.5 million, or $8.80 per share at December 31, 2021 [21][22][24] - Pro forma book value will be $520.1 million or $5.22 per share after the completion of the Starboard transactions [19][23] - Cash and equity securities at fair value totaled $323.2 million at September 30, down from $670.7 million at December 31, 2021 [27] Business Line Data and Key Metrics Changes - Revenues for Q3 2022 were $15.9 million, compared to $1.6 million a year ago, with Printronix contributing $9.6 million and the intellectual property business generating $6.3 million [24][25] - General and administrative expenses were $15 million, up from $10.3 million in the same quarter last year [25] - Operating loss was $11.4 million, slightly improved from an operating loss of $12.7 million a year ago [25] Market Data and Key Metrics Changes - The current market conditions have shifted the acquisition pipeline more towards public targets due to elevated valuations in private markets [11] - Acacia expects to have more than $320 million in cash on the balance sheet by the end of the first quarter of 2023 following the initial steps of the Starboard transaction [23] Company Strategy and Development Direction - Acacia aims to establish a hybrid acquisition platform that combines elements of hedge fund activism and private equity [9][13] - The company is focused on acquiring businesses in industrials, healthcare, and mature technology sectors, while remaining open to other opportunities [42][56] - The partnership with Starboard is seen as crucial for accessing capital and enhancing acquisition capabilities [5][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acquisition pipeline, which is described as the most robust seen to date [11][12] - The company is committed to a disciplined approach to acquisitions, emphasizing the importance of valuation and strategic fit [41][52] - Management highlighted the importance of demonstrating value to shareholders to encourage participation in the upcoming rights offering [50] Other Important Information - The agreement with Starboard will streamline Acacia's capital structure, eliminating complex derivatives and preferred shares [15][20] - Acacia has a strong internal team and a network of advisors to enhance acquisition processes and operational improvements post-acquisition [10][11] Q&A Session Summary Question: How does Acacia plan to monetize its investment in Viamet? - Acacia owns approximately 26% of Viamet and anticipates receiving milestone and royalty payments, with a larger payment expected before year-end [34] Question: What is the expected go-forward rate for operating expenses? - Operating expenses are expected to vary based on business activity, but $17.3 million is a reasonable starting point [35][36] Question: What is the status of the Wi-Fi IP portfolio? - The Wi-Fi IP portfolio has exceeded initial capital expectations and generated significant discussions with potential licensees [38][39] Question: What is the focus of Acacia's acquisition strategy? - Acacia is focused on acquiring businesses that can be improved in partnership with experienced executives, with a current emphasis on industrials, healthcare, and mature technology [41][42][56] Question: Are there conditions that need to be met before making the first acquisition? - There are no specific conditions such as shareholder approval that need to be met before pursuing acquisitions [47] Question: How important is the additional capital from the rights offering? - The rights offering is important for demonstrating value to shareholders, but the company will not rush into acquisitions solely to drive participation [50][52] Question: What criteria does Acacia use for acquisitions? - Acacia has a checklist of criteria for evaluating potential acquisitions, focusing on businesses that can be improved and are aligned with their strategic goals [53][56]

Acacia Research Corporation (NASDAQ:ACTG) Q2 2022 Earnings Conference Call August 11, 2022 11:00 AM ET Company Participants Rob Fink - FNK, IR Clifford Press - CEO Richard Rosenstein - CFO Conference Call Participants Anthony Stoss - Craig-Hallum Jeff Henriksen - Thorpe Abbotts Capital Brett Reiss - Janney David Hoff - Kubhera Enterprises Operator Good day, ladies and gentlemen, and welcome to the Acacia Research Second Quarter 2022 Financial Results Call. [Operator Instructions] It is now my pleasure to tu ...

Financial Position - As of June 30, 2022, total assets decreased to $561.7 million from $798.9 million as of December 31, 2021, representing a decline of approximately 29.7%[12] - Cash and cash equivalents were reported at $263.9 million, down from $308.9 million, indicating a decrease of about 14.5%[12] - Total stockholders' equity fell to $268.2 million from $430.5 million, a reduction of approximately 37.7%[13] - The accumulated deficit increased to $316.5 million from $181.7 million, reflecting a rise of about 74.1%[13] - Current assets totaled $500.2 million, down from $730.7 million, marking a decrease of approximately 31.5%[12] Revenue and Earnings - Total revenues for the three months ended June 30, 2022, were $8,655 million, a decrease of 50.2% compared to $17,400 million for the same period in 2021[16] - The net loss attributable to Acacia Research Corporation for the six months ended June 30, 2022, was $134,769 million, compared to a net income of $19,660 million for the same period in 2021[16] - Basic net loss per common share for the three months ended June 30, 2022, was $(1.44), a decline from a profit of $0.31 for the same period in 2021[16] - Total revenues for the six months ended June 30, 2022, amounted to $10.68 million, compared to $23.20 million for the same period in 2021[52] Expenses and Losses - Total costs and expenses for the three months ended June 30, 2022, were $22,387 million, an increase of 42% from $15,756 million in the same period of 2021[16] - The company reported a significant loss in equity securities investments, with a change in fair value of $(57,647) million for the three months ended June 30, 2022, compared to a gain of $11,158 million in the same period of 2021[16] - General and administrative expenses increased to $10,722 million for the three months ended June 30, 2022, from $6,503 million in the same period of 2021, reflecting a rise of 64%[16] - The company reported a total other expense of $(42,020) million for the three months ended June 30, 2022, compared to an income of $18,532 million in the same period of 2021[16] Cash Flow and Investments - Cash and cash equivalents at the end of June 30, 2022, were $263,945, compared to $222,062 at the end of June 30, 2021, reflecting an 18.9% increase[27] - The company incurred a compensation expense for share-based awards of $2,257 for the six months ended June 30, 2022, compared to $979 for the same period in 2021, which is a 130% increase[27] - The company repurchased common stock amounting to $39,508 during the six months ended June 30, 2022[27] Acquisitions and Business Strategy - The company has focused on acquiring businesses valued at $1 billion or less, with a strategy to pursue larger acquisitions under favorable circumstances[29] - As of June 30, 2022, the company has monetized a portion of its Life Sciences Portfolio while retaining interests in several operating businesses[30] - The acquisition of Printronix was completed on October 7, 2021, for approximately $37.0 million, including an initial cash payment of $33.0 million and a $4.0 million working capital adjustment[36] Tax and Legal Matters - The effective tax rates for the three months ended June 30, 2022, and 2021 were zero and 3%, respectively, while for the six months ended June 30, 2022, and 2021, they were 11% and zero, respectively[112] - The Company had total unrecognized tax benefits of approximately $887,000 as of June 30, 2022, with $110,000 recorded in other long-term liabilities[113] - Acacia's Tax Benefits Preservation Plan aims to protect potential tax assets by discouraging ownership changes exceeding 4.9%[202] Stock and Shareholder Information - Acacia's Board of Directors approved a stock repurchase program for up to $40.0 million of shares of common stock effective March 31, 2022, with no time limit[198] - During July 2022, the company completed the March 2022 stock repurchase program with total purchases of 8,453,519 shares for $40.0 million at an average price of $4.73 per share[200] - The total number of shares repurchased from December 1, 2021, to June 30, 2022, was 9,467,338 shares for an aggregate amount of $55.0 million, averaging $4.80 per share[199] Operational and Market Conditions - The management anticipates potential impacts from public health threats, including COVID-19, on future operations and financial results[7] - The company has implemented robust disaster recovery and business continuity policies in response to the COVID-19 pandemic, ensuring operations can continue remotely[37] - The company is subject to claims and legal actions in the ordinary course of business, but management believes these will not materially affect its financial position[188]

Financial Data and Key Metrics Changes - Revenue for Q1 2022 was $13.5 million, up from $5.8 million in the same quarter last year, with Printronix contributing $10.9 million [20] - GAAP net loss for the quarter was $73.3 million or $1.61 per diluted share, compared to a net loss of $164.5 million or $2.81 per diluted share in Q1 2021 [23] - GAAP book value at March 31, 2022, was $345.5 million or $7.42 per basic share, down from $430.5 million or $8.80 per basic share at December 31, 2021 [19] Business Line Data and Key Metrics Changes - Printronix contributed $10.9 million in revenue, while the Intellectual Property business generated $2.6 million, down from $5.8 million in the previous year [20] - Operating loss was $8.5 million, with Printronix contributing positive $1.6 million in operating income, offset by a $3.6 million operating loss in the Intellectual Property business [21] Market Data and Key Metrics Changes - Realized and unrealized loss on securities totaled $105.3 million, primarily due to a 43% decline in the share price of Oxford Nanopore [22] - Cash and equity securities at fair value totaled $535.9 million at March 31, 2022, down from $670.7 million at December 31, 2021 [24] Company Strategy and Development Direction - The company is focusing on acquisitions of operating assets and has established a strategic partnership with Starboard Value LP to identify opportunities [9][13] - The strategy includes a flexible approach to acquiring public or private companies and participating in larger transactions through consortia [9][15] Management's Comments on Operating Environment and Future Outlook - Management noted that market volatility is creating attractive opportunities for acquisitions, with a strong capital base and an experienced team in place [7][25] - The company aims to leverage its infrastructure to identify and close appropriate transactions, with 2022 potentially being a transformative year [25] Other Important Information - The company realized an additional $59.5 million in gains from monetization of its life sciences portfolio during the quarter, totaling $394 million realized from this portfolio to date [9] - A milestone payment of $26 million is expected from Mycovia due to FDA approval of a novel compound, with future royalties anticipated [10][28] Q&A Session Summary Question: Additional milestone payments and royalties from Mycovia - Management confirmed a significant milestone payment of $26 million triggered by FDA approval, with smaller payments expected from other geographies, and future royalties based on sales [28] Question: Areas of expertise in the acquisition team - The team focuses on industrials, mature technology, healthcare, and consumer sectors, with flexibility in deal sizing based on value and contribution to the company [31] Question: Debt repayment strategy - The company plans to continue paying down debt as it has resources from selling securities, while still maintaining significant capital for potential acquisitions [33] Question: Participation in AMO Pharma's recent investment - Management clarified that they did not participate in the recent investment round for AMO Pharma, which was part of a previously negotiated equity investment [35] Question: Valuation changes for Mycovia - Management indicated that the accounting for Viamet is through a joint venture, and future clarity on valuation will come as royalties are generated [36][38] Question: Institutional buying of stock - Management acknowledged the complexity of attracting institutional investors, noting that scale and capital structure are factors being addressed [45]