Registration No. 333-39415AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
REGISTRATION NO. 333-45397
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACACIA RESEARCH CORPORATION
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-4405754
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12 SOUTH RAYMOND AVENUE
PASADENA, CALIFORNIA 91105
(626) 449-6431
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
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KATHRYN KING-VAN WIE, CHIEF OPERATING OFFICER
ACACIA RESEARCH CORPORATION
12 SOUTH RAYMOND AVENUE
PASADENA, CALIFORNIA 91105
(626) 449-6431
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES OF COMMUNICATIONS TO:
THOMAS J. LEARY, ESQ.
O'MELVENYD. STEPHEN ANTION
O'Melveny & MYERSMyers LLP
400 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIASouth Hope Street
Los Angeles, California 90071-2899
(213) 669-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time
to time after the effective date of this Registration Statement, subject to
market conditions and certain contractual restrictions on transfer.FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT,
SUBJECT TO MARKET CONDITIONS AND CERTAIN CONTRACTUAL RESTRICTIONS ON TRANSFER.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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NUMBER OF
SECURITIES PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF OF EACH CLASS TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SECURITY(2) PRICE(2) REGISTRATION FEE
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Common Stock, no par value per share 826,400 $9.625(3) $7,954,100 $2,411.00(4)
51,870 $7.6875(5) $ 398,751 $ 121.00
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- --------------------------------------------------------------------------------------------------------------------------------share........... 861,724 $8.625(3) $7,432,370(3) $2,193(5)
23,743 $8.40625(4) $199,590(4) $59
(1) Includes a number of shares of Common Stock initially issuable upon exercise
of certain warrants and options held by the Selling Securityholders and,
pursuant to Rule 416 under the Securities Act, of 1933,
as amended, an indeterminate number of
shares of Common Stock as may be issued from time to time upon exercise of
such warrants or options by reason of adjustment of the number of shares of
Common Stock to be issued upon such exercises under certain circumstances
outlined in the Prospectus.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Pursuant to Rule 457(c), the price of the Common Stock is based upon the
average of the high and low prices of the Common Stock on the Nasdaq
National Market on October 30, 1997.January 28, 1998.
(4) Previously paid.
(5) Pursuant to Rule 457(c), the price of the Common Stock is based upon the
average of the high and low prices of the Common Stock on the Nasdaq
National Market on November 24, 1997.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with SectionFebruary 11, 1998.
(5) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said SectionOF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), may determine.MAY
DETERMINE.
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PROSPECTUS
ACACIA RESEARCH CORPORATION
878,270 Shares of
Common Stock
---------------------885,467 SHARES OF
COMMON STOCK
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This Prospectus relates to the sale by the securityholders of Acacia
Research Corporation (the "Company") named herein (the "Selling
Securityholders") of up to an aggregate of 878,270885,467 shares (subject to adjustment
in certain circumstances) of common stock, no par value per share (the "Common
Stock"), of the Company. 290,200Of the shares of the Common Stock covered by this
Prospectus, 226,002 shares were issued by the Company to certain of the Selling
Securityholders in a private placement completed by the Company in JuneDecember 1997
(the "1997 Private Placement") pursuant to an exemption from registration
contained in Regulation D promulgated under Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"). An additional 290,200226,002 shares
(subject to adjustment in certain circumstances) of the Common Stock covered by
this Prospectus are issuable upon the exercise of warrants issued to certain of
the Selling Securityholders in the 1997 Private Placement. Another 403,413
shares of Common Stock covered by this Prospectus were issued by the Company to
certain Selling Securityholders in a series of independent, but related
transactions to acquire additional equity ownership in four of the Company's
affiliates--CombiMatrix Corporation, Greenwich Information Technologies LLC,
MerkWerks Corporation, and Soundview Technologies Incorporated. The remaining
297,87030,050 shares (subject to adjustment in certain circumstances) of Common Stock
covered by this Prospectus are issuable upon the exercise of options and other warrants to
purchase shares of Common Stock that have been issued by the Company to certain
of the Selling Securityholders. See "Selling Securityholders" and "Plan of
Distribution."
The shares of Common Stock offered by this Prospectus may be sold from time
to time by the Selling Securityholders in privately negotiated transactions, in
brokers' transactions, to market makers or in block placements, at market prices
prevailing at the time of sale or at prices otherwise negotiated. See "Selling
Securityholders" and "Plan of Distribution." The Selling Securityholders, and
intermediaries through whom such securities are sold, may be deemed underwriters
within the meaning of the Securities Act with respect to the securities offered,
and any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Securities Act.
The Company will not receive any of the proceeds from the sale of the shares
of Common Stock being sold by the Selling Securityholders pursuant to this
Prospectus (although the Company will receive proceeds from the exercise of certainany
warrants and options by the Selling Securityholders). See "Selling Securityholders." The
Company has agreed to bear the expenses incurred in connection with the
registration of the shares offered by this Prospectus. The Selling
Securityholders will pay or assume brokerage commissions or similar charges
incurred in the sale of the shares offered by this Prospectus.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "ACRI." The closing sale price of the Common Stock on November 24,
1997,February 11, 1998,
as reported by Nasdaq, was $7.75$8.8125 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7.8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 26, 1997., 1998.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement on Form S-3 under the Securities Act, of 1933, as amended,
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth in such Registration Statement and the exhibits
thereto. For further information with respect to the Company, reference is
hereby made to the Registration Statement and the exhibits thereto, which may be
inspected without charge at the public reference facilitiesPublic Reference Facilities maintained at the
principal office of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington D.C. 20549 and at the Commission's regional offices at 7 World Trade
Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may be obtained upon written request from the public reference sectionPublic Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Electronic registration statements made through the Electronic Data Gathering,
Analysis and Retrieval System are publicly available through the Commission's
Web site (http://www.sec.gov). Statements contained in the Prospectus as to the
contents of any contract or other document referred to herein are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed (or incorporated by reference) as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Such reports
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at the addresses shown
above. Copies of such material can be obtained from the Public Reference Section
of the Commission at the address shown above at prescribed rates or through the
Commission's Web site. Reports and other information concerning the Company may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "ACRI." Certain information, reports and proxy statements of the Company
are also available for inspection at the offices of the Nasdaq National Market
Reports Section, 1735 K Street, Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, as noted below, are incorporated by reference into this
Prospectus:(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996; (b) Amendment to Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1996; (c) Amendment No. 2 to Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1996; (d) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; (e) Amendment to Quarterly Report on Form 10-Q/A
for the quarter ended March 31, 1997; (f) Amendment No. 2 to Quarterly Report on
Form 10-Q/A for the quarter ended March 31, 1997; (g) Quarterly Report on Form
10-Q for the quarter ended SeptemberJune 30, 1997; (h) Quarterly Report on Form 10-Q for
the quarter ended JuneSeptember 30, 1997; (i) Current Report on Form 8-K, filedevent date
April 29, 1997; (j) Current Report on Form 8-K, filedevent date July 21,6, 1997; (k)
Amendment to Current Report on Form 8-K filed8-K/A, event date July 21,6, 1997; (l)
Amendment No. 2 to Current Report on Form 8-K filed8-K/A, event date July 21,6, 1997; (m)
Current Report on Form 8-K, event date January 27, 1998; (n) the description of
the Common Stock contained in the Company's Registration Statement on Form 8-A
filed with the Commission on or about May 11, 1995; and (n)(o) Amendment No. 1 to
Form 8-A on Form 8-A/A filed June 5, 1995.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
of the securities covered by this Prospectus, shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of filing such
2
such
documents. Any statement contained herein or in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus, except as so modified or superseded. The
Company hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, upon
the written or oral request of such person, a copy of any or all of the
documents referred to in "Incorporation of Certain Information by Reference"
which have been or may be incorporated in this Prospectus by reference, other
than exhibits to such documents. Requests for such copies should be directed to
the Secretary at Acacia Research Corporation, 12 South Raymond Avenue, Pasadena,
California 91105.
3
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN. INVESTORS SHOULD ALSO
CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS."
THE COMPANY
Acacia Research Corporation, a California corporation (the "Company"), is a
capital management company that provides investment advisory services, and also
provides management services to and makes direct investments in emerging
businesses. The Company's operations are comprised of two lines of business: (i)
investment advisor to domestic and offshore private investment funds; and (ii)
investing in and developing start-up business ventures. The Company is
diversified and each business segment is operated independently. See "Risk
Factors - NoFactors--No Assurance of Success."
As a registered investment advisor, the Company currently manages two
domestic private investment partnerships whose limited partners are required to
be "accredited investors," under Regulation D promulgated under the Securities
Act. The Company is also the investment advisor to two offshore investment
corporations. Client funds are invested primarily in mid-cap to large-cap U.S.
equities. The Company may manage additional private investment partnerships and
offshore investment funds in the future. See "Risk Factors - RisksFactors--Risks Associated
with the Money Management Business; Profitability Uncertain."
The Company also participates in the formation of emerging or start-up
companies in various business fields by arranging for and contributing capital
and providing management assistance. Potential ventures are evaluated based on
the ability of the business to become viable and reach a significant milestone
with the Company's initial investment. See "Risk Factors - RisksFactors--Risks Associated with
the Emerging Companies."
The Company has significant economic interests in five companies that it has
formed and takes an active role in each company's growth and advancement. The
Company holds majority interests in the following companies: (i) 51.466.7 percent of
the outstanding common stock of Soundview Technologies Incorporated, a Delaware
corporation ("Soundview Technologies"); (ii) 69.589.6 percent of the outstanding
common stock of MerkWerks Corporation, a California corporation ("MerkWerks");
and (iii) 51.352.7 percent of the outstanding common stock of CombiMatrix
Corporation, a California corporation ("CombiMatrix"). The Company holds
minority interests in the following companies: (i) a 30.0233.33 percent membership
interest in Greenwich Information Technologies LLC, a Delaware limited liability
company ("Greenwich Information Technologies"); and (ii) 18.4 percent of the
outstanding common stock of Whitewing Labs, Inc., a Delaware corporation
("Whitewing") (with voting control over 27.3 percent of the common stock in
connection with certain loans made by the Company secured by common stock of
whitewing)Whitewing). Soundview Technologies, Greenwich Information Technologies,
MerkWerks, CombiMatrix, and Whitewing are collective referred to hereinafter as
the "Affiliates." See "Risk Factors" for risks associated with each individual
Affiliate.
Soundview Technologies was formed in 1996 and owns intellectual property
related to the telecommunications field, which includes audio and video blanking
systems, also known as V-chip technology. Soundview Technologies has developed a
V-chip retrofit device, the V Chip Converter-TM-, for use in televisions already
in existence that will be "deaf" to V-chip signals. Soundview Technologies has
begun to pursue business opportunities with television manufacturers, chip
manufacturers, and television accessory companies about efficient and
cost-effective methods of commercializing its technology. Soundview Technologies
has incurred substantial losses and has not had any revenues to date.
4
Greenwich Information Technologies was formed in 1996 and is the exclusive
marketing and licensing agent for several patents relating to video-on-demand
and audio-on-demand technology. To date, Greenwich Information Technologies has
incurred substantial losses and has not had any revenues.
4
MerkWerks was formed in 1995 and is currently developing a software utility
product for use with CD-Recorder, or CD-R, computer drives. The initial version
of the product, CD WonderWriter-TM-, will be for the Macintosh platform.
MerkWerks anticipates adapting this software for Microsoft-Registered Trademark-Windows-TM-Trademark-
Windows-TM- platform. To date, MerkWerks has incurred substantial losses and has
not had any revenues.
CombiMatrix was formed in 1995 and is engaged in a highly specialized and
focused research effort to create products which would be used to streamline the
drug-discovery process. CombiMatrix is in a developmental stage, has incurred
substantial losses and has not generated any revenues to date.
Whitewing was formed in 1993 and develops and markets a line of nutritional
supplement products. Whitewing conducted an initial public offering of its
common stock in February 1996. Whitewing stock and warrants trade on the Nasdaq
Small Cap Market under the symbols "WWLI" and "WWLI-W," respectively.
Development of emerging businesses is subject to all of the problems,
expenses, delays and risks inherent in the establishment of a new business
enterprise, many of which are beyond the Company's ability to control, including
uncertain market conditions, product acceptance, cost and availability of
capital, and the absence of an operating history. Moreover, the Company expects
to encounter competition in the area of business opportunities from other
entities having similar business objectives, such as venture capital funds. Many
of these potential competitors may possess greater financial, technical, human
and other resources than the Company. Accordingly, there can be no assurance
that the Company's plan of operations will be successful or that the Company
will be able to achieve or maintain profitable operations. See "Risks
Factors - NoFactors--No Assurance of Success" and "Risks Associated with the Emerging
Companies."
The Company has never paid any cash dividends on its Common Stock and does
not anticipate that it will pay dividends in the foreseeable future. Instead,
the Company intends to apply any earnings to the development and expansion of
its business.
The Company was incorporated in the State of California on January 25, 1993,
and conducted its initial public offering on June 15, 1995. The Company's Common
Stock trades on the Nasdaq National Market System ("Nasdaq") under the symbol
"ACRI."
The Company maintains its executive offices at 12 South Raymond Avenue,
Pasadena, California 91105 and its telephone number is (626) 449-6431.
5
RECENT DEVELOPMENTS
In April 1997, the Company appointed Price Waterhouse LLP as its
independent auditors for 1997, replacing its former auditors, Finocchiaro & Co.
In May 1997, MerkWerks announced the completion of an alpha version of its
initial software product, CD-WonderWriter-TM-. On June 3, 1997, CombiMatrix elected Dr. Paul Low, former PresidentMerkWerks has not yet completed
the beta version of IBM's General Products Division and General Manager of IBM, to the Board of
Directors of CombiMatrix. During his tenure at IBM, Dr. Low was also a member
of IBM's Corporate Management Board and had worldwide line responsibility for
Technology Products. Dr. Low holds a Ph.D from Stanford University and is
currently on the board of several companies, including Applied Materials,
Solectron Corp., and VLSI Technology. Dr. Low is the third new board member to
join CombiMatrix in recent months. Earlier this year, Mark Edwards, Managing
Director of Recombinant Capital and former Manager of Business Development of
Chiron Corporation, and Rigdon Currie, former General Partner of Pacific
Ventures, were also elected to CombiMatrix's Board of Directors.
CombiMatrix also recently completed a private equity financing raising
approximately $250,000 at $2 per share. The Company owns 3,965,000 shares of
CombiMatrix and continues to maintain a majority ownership position.such product.
In June 1997, the Company sold 290,200 units at a purchase price of $5.00
per unit to 37 accredited investors (the "1997"June Private Placement"). The
Company's sale of these units was exempt from registration, as a private
placement, under Section 4(2) of the Securities Act of 1933 and Regulation D promulgated
thereunder. Each unit consisted of one Common Stock purchase warrant and one
share of the Company's Common Stock. Each Common Stock purchase warrant entitles
its holder to purchase one share of the Company's Common Stock at an exercise
price of $7.50 per share, subject to adjustment, and expires on June 8, 2000.
Finders involved in this transaction received finders fees at a rate of $0.50
per unit placed and one finder warrant per ten units placed. Each finder warrant
may be exercised prior to June 8, 2000 for one share of the Company's Common
Stock at an exercise price of $5.50 per share, subject to adjustment. The
Company has the right to redeem all of the warrants issued in the 1997 Private
Placement on 30 days prior written notice at a redemption price of $0.01 per
warrant if the closing bid price of the Company's Common Stock averages $10.00
or above for 20 consecutive trading days after the Common Stock reaches a
closing bid price of at least $10.00 on the Nasdaq national market
system.National Market. If the
Company elects to exercise its redemption right, the holder of the warrant may
either exercise the warrant, in whole or in part, or tender the warrant to the
Company for redemption, in whole or in part. Within five business days after the
end of the 30-day period, the Company will mail a check for the redemption price
to the holder of the warrant should the warrant remain outstanding, in whole or
in part, as of the end of the 30-day period, whether or not the holder has
surrendered the warrant for redemption. The warrant may not be exercised after
the end of any such 30-day period.
On July 6, 1997, the Company purchased from H. Lee Browne and David Schmidt
a total of 2,625,000 shares (the "Soundview Shares") of common stock, $.001 par
value per share, of Soundview Technologies, pursuant to the terms of a Common
Stock Purchase Agreement among the Company and each of Messrs. Browne and
Schmidt dated July 6, 1997. The Soundview Shares represent 35% of the
outstanding capital stock of Soundview.Soundview Technologies. As a result of the
transaction, the Company now ownsheld approximately 51% of the outstanding common stock
of Soundview.Soundview Technologies.
The purchase price for the Soundview Shares consisted of a total of 400,000
shares of Common Stock of the Company, $500,000 in cash and the issuance of
non-recourse promissory notes to each of Messrs. Browne and Schmidt in the
aggregate principal amount of $900,000 (the "Notes"). A portion of the proceeds
of the 1997June Private Placement was used to fund the cash component of the
transaction. The Notes are due and payable on November 1,were paid in full in December 1997 and bear
interest atusing a portion of the
rateproceeds of 6.07% per annum.
6
The Notes are secured by a pledge of 843,750 shares (in the aggregate) of
Soundview common stock pursuant to two Pledge Agreements between the Company on
the one hand, and each of Messrs. Browne and Schmidt on the other, dated as of
July 6, 1997 (the "Pledge Agreements").Private Placement.
Pursuant to the Common Stock Purchase Agreement, the Company and each of
Messrs. Browne and Schmidt entered into an Amended and Restated Stockholders'
Agreement to provide for elections of directors and other matters relating to
Soundview. In addition, as part of the transaction, Soundview entered into five
year employment agreements with each of Messrs. Browne and Schmidt.
In December 1997, the Company sold 226,002 units at a purchase price of
$7.50 per unit to 51 accredited investors (the "1997 Private Placement"). The
Company's sale of these units was exempt from registration, as a private
placement, under Section 4(2) of the Securities Act of 1933 and Regulation D
promulgated thereunder. Each unit consisted of one Common Stock Purchase Warrant
and one share of the Company's Common Stock. Each Common Stock Purchase Warrant
entitles its holder to purchase one share of the Company's Common Stock at an
exercise price of $10.00 per share, subject to adjustment, and expires on
November 30, 2000. Finders involved in this transaction received finders fees at
a rate of $0.50 per unit placed and one finder warrant per ten units placed.
Each finder warrant may be exercised prior to November 30, 2000 for one share of
the Company's Common Stock at an exercise price of $8.25 per share, subject to
adjustment. The Company has the right to redeem all of the warrants issued in
the 1997 Private
6
Placement on 30 days prior written notice at a redemption price of $0.01 per
warrant if the closing bid price of the Company's Common Stock averages $15.00
or above for 20 consecutive trading days after the Common Stock reaches a
closing bid price of at least $15.00 on the Nasdaq National Market System. If
the Company elects to exercise its redemption right, the holder of the warrant
may either exercise the warrant, in whole or in part, or tender the warrant to
the Company for redemption, in whole or in part. Within five business days after
the end of the 30-day period, the Company will mail a check for the redemption
price to the holder of the warrant should the warrant remain outstanding, in
whole or in part, as of the end of the 30-day period, whether or not the holder
has surrendered the warrant for redemption. The warrant may not be exercised
after the end of any such 30-day period.
In January 1998, the Company completed a series of independent, but related
transactions with certain Selling Securityholders, which resulted in the
acquisition of additional equity ownership in four of the Affiliates by the
Company in exchange for issuances of shares of Common Stock of the Company. A
total of 44 transactions were completed. The aggregate number of shares (or
percentage of membership interests in the case of Greenwich Information
Technologies) acquired and the number of shares of Common Stock issued by the
Company are set forth below:
NO. OF
AFFILIATE NO. OF COMPANY
SHARES ACQUIRED SHARES ISSUED
--------------- ---------------
CombiMatrix................................................. 100,000 22,085
Greenwich Information Technologies.......................... 3.31% 51,017
MerkWerks................................................... 401,359 85,975
Soundview Technologies...................................... 1,144,000 244,336
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Reference is made in particular to the description of the Company's plans
and objectives for future operations, assumptions underlying such plans and
objectives and other forward-looking statements included in this Prospectus.
Such statements may be identified by the use of forward-looking terminology such
as "may," "will," "expect," "believe," "estimate," "anticipate," "intend,"
"continue," or similar terms, variations of such terms or the negative of such
terms. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties which could cause actual
results to differ materially from those described in the forward-looking
statements. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based. Factors which could cause such results to differ materially
from those described in the forward-looking statements include those set forth
below.
7
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY IS SPECULATIVE,
INVOLVES A HIGH DEGREE OF RISK AND SHOULD ONLY BE MADE BY INVESTORS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THIS PROSPECTUS CONTAINS, IN ADDITION TO
HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY. (SEE
"FORWARD-LOOKING STATEMENTS.") FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS
THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY
REFERENCE. PROSPECTIVE PURCHASERS, PRIOR TO MAKING AN INVESTMENT, SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION
SET FORTH IN THIS PROSPECTUS, THE EXHIBITS HERETO AND THE DOCUMENTS INCORPORATED
BY REFERENCE HEREIN.
NO ASSURANCE OF SUCCESS:SUCCESS
The Company's operations are comprised of two lines of business: (i)
management of private investment funds; and (ii) investing in start-up business
ventures. The Company's business operations are subject to numerous risks
associated with managing investment funds and establishing new business
ventures. Continued implementation of the plan of operations of the Company and
each of the Company's new business ventures will be subject to all of the
problems, expenses and uncertainties inherent in the establishment of new
business enterprises, many of which are subject to outside influences over which
the Company has no control, including technological advances and product
obsolescence, uncertain market acceptance, increased levels of competition,
increases in operating costs including costs of supplies, personnel, and
equipment, the availability and cost of capital, reduced 7
margins caused by
competitive pressures and changes in general economic conditions and
governmental regulation imposed under federal, state or local laws. There can be
no assurance that the Company's new business ventures will be able to market any
product on a commercial scale, that these new business ventures will ever
achieve or maintain profitable operations or that they, or the Company, will be
able to remain in business.
SIGNIFICANT LIKELIHOOD OF LOSSES FOR FISCAL 1997
The Company has a significant likelihood of incurring a net loss for its
most recent fiscal year ended on December 31, 1997. It its last quarterly report
on Form 10-Q filed with the Commission for the nine months ending September 30,
1997, the Company reported an unaudited net loss of $2,050,553 or $0.89 per
share. Although the Company has not finalized its operating results for its most
recent fiscal year as of the date of this Prospectus, the Company believes it
will report a net loss for the fiscal year.
RISKS ASSOCIATED WITH THE MONEY MANAGEMENT BUSINESS; PROFITABILITY UNCERTAIN
Although management of the Company has had MONEY MANAGEMENT extensive experience in the
investment
BUSINESS; PROFITABILITY industry, the Company itself is a recently
UNCERTAIN: formed business entity and
has a short history of operations and only limited revenues. The Company
currently manages two domestic partnership funds and two offshore investment
funds. The Company invests a portion of its own funds in the domestic
partnership funds as a general partner. The Company does not invest Company
funds in the offshore investment funds. From its inception through JuneSeptember 30,
1997, the Company has received approximately $370,000$419,000 in aggregate performance
and management fees from managing the four investment funds. The Company is
attempting to increase the assets invested in the various funds it manages.
There can be no assurance as to the level of additional capital that the Company
will be able to raise for its investment funds.
The Company has formulated its plan of operations based on certain
assumptions regarding the potential monies that will be invested in its funds
under management and the anticipated performance of, and profits that can be
realized by, these funds. Although these assumptions are based on the best
estimates of management, there can be no assurance that these assessments will
prove to be correct. Any future success of the Company will depend upon many
factors, including factors which may be beyond the control of the Company or
which cannot be predicted at this time. These factors include the amount of
assets under management in the Company's investment funds, the performance of
those funds, the overall
8
performance of the equity markets in the United States, the success of the
Company's stock selecting strategy and other factors. The Company's income from
managing the investment funds is comprised of fixed management fees, as well as
performance fees which are based on the performance of each individual fund, as
the Company receives a percentage of the profit earned by each fund.
POTENTIAL FLUCTUATIONS IN THE FUTURE RESULTS OF OPERATION OF THE COMPANY
The Company's operating results may vary
THE FUTURE RESULTS OF significantly from quarter to
quarter due to OPERATION OF THE a variety of factors including the amount of
COMPANY: money invested in
the private investment funds managed by the Company, the performance of such
investment funds, the results of operations of the Affiliates, the nature and
timing of investments in new businesses by the Company and the timing of the
sales of securities of the Affiliates.
The Company also expects to incur significant start-up expenses in pursuing
and developing new business ventures. To date, the Company has lacked a
consistent source of recurring revenue and most of its revenues have come from
sales of securities of the Affiliates.
POTENTIAL FLUCTUATIONS IN FUTURE RESULTS OF OPERATIONS OF THE AFFILIATES
To date, Whitewing has experienced substantial operating losses and its
8
FUTURE RESULTS OF operating results have varied significantly
OPERATIONS OF THE from quarter to quarter due to a
variety of
AFFILIATES: factors. For further information regarding the nature of and the
fluctuations in Whitewing's operating results, potential investors are directed
to review Whitewing's filings under the Exchange Act, available from the
SEC.Commission.
CombiMatrix, MerkWerks, Greenwich Information Technologies and Soundview
Technologies have generated no revenues to date. The Company anticipates that
any results of operations of these Affiliates are likely to vary significantly
as a result of a number of factors, including the timing of new product
introductions by each of these Affiliates, the novelty of the technology owned
by these Affiliates, the strength of each of these Affiliates' intellectual
property rights, each Affiliates ability to exploit its technology, the volume
and timing of orders received, product line maturation, the impact of price
competition, and each Affiliate's ability to access distribution channels. Many
of these factors are beyond the control of the Affiliates. There can be no
assurance that any Affiliate will experience growth in the future or be
profitable on an operating basis in any future period.
RISKS ASSOCIATED WITH THE EMERGING COMPANIES
Involvement in emerging companies is marked by a
EMERGING COMPANIES: high degree of risk,
including difficulties in selecting ventures with viable business plans and
acceptable likelihoods of success and future profitability. There is a high
probability of loss associated with investments in start-ups. Identifying and
developing each new business opportunity also requires the Company to dedicate
significant amounts of financial resources, management attention and personnel,
with no assurance in any individual case that these expenditures will prove
fruitful.
The Company generally invests in start-up ventures with no operating
histories, unproven technologies and products and, in some cases, the need for
identification and implementation of experienced management. Because of the
uncertainties and risks associated with such start-up ventures, investors in the
Company should expect substantial losses associated with failed ventures. In
addition, markets for venture capital in the United States are increasingly
competitive. As a result, the Company faces potential losses of business
opportunities and possible deterioration of the terms of available financings
and equity investments in start-up ventures. Furthermore, the Company may lack
financial resources to fully fund additional ventures in which it could
participate and the Company as well as its Affiliates may be dependent upon
external financing to provide sufficient capital.
9
UNCERTAINTY OF EMERGING COMPANIES; LACK OF MARKET ACCEPTANCE OF PRODUCTS
COMBIMATRIX. CombiMatrix was incorporated in
COMPANIES; LACK OF October 1995 and began
operations in April 1996. MARKET ACCEPTANCE OF CombiMatrix is developing technologies involving
PRODUCTS:
combinatorial chemistry, which could represent significant improvements over
existing technologies in the speed and cost-effectiveness of drug discovery.
CombiMatrix is a development stage company without any current products or
revenues. Its current activities relate almost exclusively to research and
development.
The Company's investment in CombiMatrix is subject to the risks associated
with new technologies, including the viability of the technology, unknown market
acceptance, difficulties in obtaining
9
financing, the strength of its
intellectual property protection, increasing competition, and the ability to
convert technology into revenues. In addition, because the technologies critical
to the success of this industry are in their infancy, no assurances can be given
that CombiMatrix will be able to successfully implement its technologies. In the
event its technologies prove to be successful, CombiMatrix intends to pursue
collaborations with pharmaceutical companies, which may include the licensing of
CombiMatrix's screening libraries and possibly the licensing of internally
developed chemical compounds. No assurances can be given that CombiMatrix, even
if successful in developing its technologies, would be able to successful
implement the collaborative efforts with pharmaceutical companies.
CombiMatrix intends to vigorously protect its intellectual property rights.
There can be no assurance, however, that CombiMatrix's pending patent
applications will issue or that a third party will not violate, or attempt to
invalidate, CombiMatrix's intellectual property rights, possibly forcing
CombiMatrix to expend substantial legal fees. Successful challenges to certain
of CombiMatrix's patents, if issued, would materially adversely affect
CombiMatrix's business, operating results, financial condition and prospects.
There can be no assurance that certain aspects of CombiMatrix's technology
will not be reverse-engineered by third parties without violating CombiMatrix's
proprietary rights. CombiMatrix's existing protections also may not preclude
competitors from developing products with features and prices similar to or
better than those of CombiMatrix.
GREENWICH INFORMATION TECHNOLOGIES. Greenwich Information Technologies was
formed in June 1996 and is the exclusive marketing and licensing agent for a
number of domestic and international patents and other intellectual property
pertaining to information-on-demand systems. Although Greenwich Information
Technologies believes that it has marketing and licensing rights to enforceable
patents, no assurances can be given that other companies will not challenge the
underlying patents to these rights or develop competing technologies that do not
infringe such patents. Furthermore, whether or not competing products emerge, it
is uncertain whether and to what extent Greenwich Information Technologies will
be able to profitably market and license its rights to the information-on-demand
technology.
SOUNDVIEW TECHNOLOGIES. Soundview Technologies was formed in March 1996 to
commercialize patent rights of a method of video and audio blanking technology,
also known as V-chip technology, that screens objectionable television
programming and blocks it from the viewer. Although Soundview Technologies
believes that it owns an enforceable patent on its technology, no assurances can
be given that other companies will not challenge Soundview Technologies' patent
rights or develop competing technologies that do not infringe Soundview
Technologies' patent. Additionally, whether or not competing products emerge, it
is uncertain whether and to what extent Soundview Technologies will be able to
profitably exploit its technology.
10
MERKWERKS. MerkWerks was formed in September 1995 as a software development
company, whose first product is expected to be software for use with
CD-recordable disk drives for Macintosh platforms. MerkWerks is in the
developmental stage and, to date, has not completed the development of any
products or generated any revenues. No assurances can be given that MerkWerks
will ever be able to successfully market its products or that a market for such
products will develop.
10
The success of MerkWerks' software depends on its acceptance by original
equipment manufacturers (OEMs) that produce CD-recordable disk drives. MerkWerks
strategy is to convince these OEMs of the utility of MerkWerks' software so that
the OEMs will install such software in the CD-recordable disk drives prior to
their sale to the end-user, which will generate license fees for MerkWerks and
generate market acceptance of MerkWerks' platform. No assurances can be given
that MerkWerks' software will gain the acceptance of OEMs or ever be
incorporated into CD-recordable disk drives.
MerkWerks' initial software release is expected to be designed for use with
the Macintosh platform. In addition, MerkWerks anticipates adapting its software
to the Windows platform. However, it is uncertain whether MerkWerks will be
successful in adapting its software to the Windows platform, and, if successful,
whether a viable market will develop for this product.
UNCERTAIN REVENUES OF AFFILIATES
CombiMatrix, MerkWerks, Greenwich Information
AFFILIATES: Technologies and Soundview
Technologies have generated no revenues to date and have had substantial losses.
Although each of these companies is developing products for marketing and
commercial sale, either through direct sales or licensing, no assurances can be
given that any of these companies will ever generate meaningful revenues or will
ever be profitable.
AFFILIATES' NEED FOR ADDITIONAL CAPITAL; SUBSEQUENT FINANCINGS
To date, the Affiliates have primarily relied upon ADDITIONAL CAPITAL; the sale of equity
securities, including sales to
SUBSEQUENT FINANCINGS: the Company, to generate the funds needed to
finance the implementation of their plans of operations. The Affiliates may be
required to obtain additional financing through bank borrowings, debt or equity
financings or otherwise, or curtail such activities. No assurance can be given
that the Affiliates will continue to be able to obtain financing or will obtain
financing on favorable terms.
LACK OF MANAGEMENT; NEED FOR MARKETING AND SALES PERSONNEL
CombiMatrix, MerkWerks, Greenwich Information
NEED FOR MARKETING AND Technologies and Soundview
Technologies have
SALES PERSONNEL: generated no revenues to date. There can be no assurance these
companies will be able to meet their anticipated working capital needs for
developing their products. Failure to properly develop these products will
prevent these companies from generating meaningful product sales. Further
success in developing commercially viable products will create the need for
these companies to expand their management personnel. Some of these companies
will require the Company's assistance in identifying and implementing
experienced management teams and no assurances can be given that these companies
will be successful in assembling qualified and effective management teams.
11
Additionally, unlike Greenwich Information Technologies and Soundview
Technologies, which intend to license their respective technologies to third
parties for commercial exploitation, CombiMatrix and MerkWerks currently intend
to develop, manufacture, market and sell their respective products directly to
customers. Because CombiMatrix and MerkWerks have not completed the research and
development of their products, they have not hired marketing and sales personnel
or finalized strategic marketing plans. There can be no assurance that
CombiMatrix and MerkWerks will be able to attract and retain qualified marketing
and sales personnel or that any marketing efforts undertaken by the companies
will be successful.
DEPENDENCE ON KEY PERSONNEL; NEED TO RETAIN PERSONNEL
The Company's success will depend on its ability PERSONNEL; NEED TO RETAIN to attract, retain and
motivate the qualified
PERSONNEL: personnel that will be essential to the Company's current
plans and future development. The competition for such personnel is intense and
there can be no assurance that the Company will be successful in
11
retaining its existing key employees or in attracting and retaining the required
additional personnel. In particular, the success of the Company and each
Affiliate will also be greatly determined by the retention, motivation and
success of the individuals discussed in the following paragraphs regarding the
Company and its Affiliates:
THE COMPANY. The Company's success will depend to a significant extent upon
the continued services of Paul R. Ryan, the Company's President and Chief
Executive Officer, who also serves as a co-general partner of the two domestic
private investment partnerships and as portfolio manager for the two offshore
investment funds. The Company does not maintain key person life insurance
coverage with respect to Mr. Ryan.
COMBIMATRIX. CombiMatrix's success will depend to a significant extent upon
the continued services of, CombiMatrix's Vice President-Research and
Development. The Company maintains key person life insurance coverage with
respect to this individual in the amount of $1,000,000.
GREENWICH INFORMATION TECHNOLOGIES. Greenwich Information Technologies'
success will depend to a significant extent upon the continued services of H.
Lee Browne, Greenwich Information Technologies' President and Chief Executive
Officer. Neither Greenwich Information Technologies nor the Company maintains
key person life insurance coverage with respect to Mr. Browne.
SOUNDVIEW TECHNOLOGIES. Soundview Technologies' success will depend to a
significant extent upon the continued services of H. Lee Browne, Soundview
Technologies' President and Chief Executive Officer, and David Schmidt,
Soundview Technologies' Vice President and Director of Technology. Neither
Soundview Technologies nor the Company maintains key person life insurance
coverage with respect to Mr. Browne or Mr. Schmidt.
MERKWERKS. MerkWerks' success will depend to a significant extent upon the
continued service of James Merkle, Jr., MerkWerks' 12
President. The Company
currently maintains key person life insurance coverage with respect to Mr.
Merkle in the amount of $1,000,000.
COMPETITION FACING THE COMPANY'S MONEY MANAGEMENT BUSINESS
Competition in the investment markets and among COMPANY'S MONEY providers of investment
management services is
MANAGEMENT BUSINESS: intense. Some of these competing providers have greater
financial, marketing and other resources, as well as greater research
capabilities than the Company. The Company believes that its products and
services are differentiated from those of its competitors and well-suited for
the investment marketplace. However, there can be no assurance that the Company
will prove successful in its efforts to attract the desired amount of funds for
investment in the funds managed by the Company.
COMPETITION FACING THE AFFILIATES
WHITEWING. The markets for Whitewing's products
AFFILIATES: are intensely competitive.
The nutritional supplements market is characterized by frequent product
introductions, short product life cycles, rapid price declines and eroding
profit margins and evolving customer preferences. In each of its product lines,
Whitewing competes and is expected in the future to compete with a large number
of companies with significantly greater financial and other resources. Many of
Whitewing's current and potential competitors have significantly greater name
recognition, research capabilities and financial and technical resources than
Whitewing, and many have longstanding positions and established brand names in
their markets.
COMBIMATRIX. The pharmaceutical and biotechnology industries are subject to
intense competition and rapid and significant technological change. Many
organizations are actively attempting to identify and optimize compounds and
build libraries for potential pharmaceutical development. CombiMatrix will
compete directly with the research departments of pharmaceutical companies,
biotechnology companies, other combinatorial chemistry companies, and research
and academic institutions. Many of these competitors have greater financial and
other resources, and more experience in research and development, than
12
CombiMatrix. Historically, pharmaceutical companies have maintained close
control over their research activities, including the synthesis, screening, and
optimization of chemical compounds. Many of these companies, which represent the
greatest potential market for CombiMatrix's services and compounds, are
developing combinatorial chemistry and other methodologies to improve
productivity. In addition, these companies may already have large collections of
compounds previously synthesized or ordered from chemical supply catalogs or
other sources against which they may screen new targets. Other sources of
compounds include compounds extracted from natural products, such as plants and
microorganisms, and compounds created using rational drug design. Academic
institutions, governmental agencies and other research organizations are also
conducting research in areas in which CombiMatrix is working, either on their
own or through collaborative efforts.
CombiMatrix anticipates that it will face increased competition in the
future as new companies enter the market and advanced technologies become
available. CombiMatrix's processes may be rendered obsolete or uneconomical by
technological advances or entirely different
13
approaches developed by one or more
of CombiMatrix's competitors. The existing approaches of CombiMatrix's
competitors or new approaches or technology developed by CombiMatrix's
competitors may be more effective than those developed by CombiMatrix.
GREENWICH INFORMATION TECHNOLOGIES. Although Greenwich Information
Technologies believes that it has marketing and licensing rights to enforceable
patents and other intellectual property relating to video and audio on demand,
no assurances can be given that other companies will not develop competing
technologies that offer better or less expensive alternatives to those offered
by Greenwich Information Technologies. In the event a competing technology
emerges, Greenwich Information Technologies would expect substantial
competition. Potential competitors could have significantly greater research
capabilities and financial and technical resources than Greenwich Information
Technologies, and some could have established brand names in the market for such
products.
SOUNDVIEW TECHNOLOGIES. Soundview Technologies believes that its V-chip
technology is protected by enforceable patent rights. However, no assurances can
be given that other companies will not develop competing technologies that offer
better or less expensive alternatives to those offered by Soundview
Technologies. Many potential competitors could have significantly greater
research capabilities and financial and technical resources than Soundview
Technologies, and some could have established brand names in the market for
television products.
MERKWERKS. There are currently at least 25 CD-recordable disk drive software
packages on the market. MerkWerks' first product is not yet complete or ready
for sale. Thus, the acceptance of MerkWerks' software in the market is unproven
and speculative. The markets for software products are intensely competitive and
are characterized by rapid changes in technological standards. MerkWerks faces
competition from large companies with substantial technical, marketing and
financial resources, allowing them to aggressively develop, enhance and market
competing products. These advantages may allow competitors to dominate
distribution channels and to respond more quickly than MerkWerks to emerging
technologies or to changing customer requirements. Numerous actions by these
competitors, including price reductions and product giveaways, increased
promotion, the introduction of enhanced products and product bundling could have
a material adverse effect on MerkWerks ability to develop and market its
software products and on MerkWerks business, financial condition and operating
results.
PROPRIETARY TECHNOLOGY:TECHNOLOGY
The success of the business of CombiMatrix, Greenwich Information
Technologies, Soundview Technologies, and MerkWerks relies, to varying degrees,
on proprietary technology and the protection and exclusivity thereof.
CombiMatrix, Greenwich Information Technologies, and Soundview Technologies will
depend largely on the protection of enforceable patent rights. CombiMatrix
currently has an application on file with the United States Patent and Trademark
Office seeking a patent on its core technology, while Greenwich Information
14
Technologies and Soundview Technologies have patent or rights to patents that
13
have been issued as well as have additional patents pending. MerkWerks intends
to rely on a combination of statutory and common law, copyright, trademark and
trade secret law, and licensing agreements to protect its software product. No
assurances can be given that pending patent applications will issue, third
parties will not violate, or attempt to invalidate the Affiliates' intellectual
property rights, or certain aspects of the Affiliates' intellectual property
will not be reversed-engineered by third parties without violating the
Affiliates' proprietary rights.
In addition to the protection that may be afforded by patents and the
various laws protecting proprietary rights, the Affiliates enter into
confidentiality agreements with certain third parties and to generally limits
access to information relating to their intellectual property. Despite these
precautions, third parties may be able to gain access to and use their
intellectual property to develop similar competing technologies and/or products.
Any substantial unauthorized use of the Affiliates patent and other proprietary
rights, could materially and adversely affect the business and operational
results of the Affiliates.
NEW PRODUCTS AND TECHNOLOGICAL CHANGES AFFECTING THE AFFILIATES
The markets for each Affiliate's products are also TECHNOLOGICAL CHANGES marked by extensive
competition, rapidly changing
AFFECTING THE AFFILIATES: technology, frequent product improvements, and
evolving industry standards. The success of each Affiliate will depend on its
ability to develop and market new products or enhance existing ones to meet the
evolving needs of the market for such products. There can be no assurance that
the Affiliates' existing or future products will be successful or profitable. In
addition, there can be no assurance that products or technologies developed by
others will not render the Affiliates' products noncompetitive or obsolete.
There can be no assurance that the Companies'Company's capital requirement will not
increase or that the Company will have sufficient revenues, if any, after such
time to fund its basic operating requirements or to continue funding new
business ventures.
LIMITED OPERATING HISTORY:HISTORY
The Company commenced operations in 1993 and, accordingly, has a limited
operating history. The Company's prospects must be considered in light of the
risks, expenses, and difficulties frequently encountered by companies with such
limited operating histories. Since the Company has a limited operating history,
there can be no assurance that its operations will be profitable or that it will
generate sufficient revenues to meet its expenditures and support its
activities.
NEED FOR ADDITIONAL CAPITAL; SUBSEQUENT FINANCINGS
To date, the Company has relied upon the sale of CAPITAL; SUBSEQUENT equity securities to
generate the funds needed to
FINANCINGS: finance the implementation of its plan of
operations. The Company has in the past also relied on gains from the sale of
investment securities, including those of Whitewing, CombiMatrix, Soundview
Technologies, and MerkWerks, as well as equity interests in Greenwich
Information Technologies as additional sources of revenue. There can be no
assurance that the Company's capital requirements will not increase or that the
Company will have sufficient revenues, if any, after such time to fund its basic
operating requirements or to continue funding new business ventures. The Company
may be required to obtain additional financing through bank 15
borrowings, debt or
equity financings or otherwise. No assurance can be given that such financing
may be obtained on terms favorable to the Company.
MINORITY POSITIONS IN CERTAIN AFFILIATES
WHITEWING. The Company currently owns 532,459
CERTAIN AFFILIATES: shares of the common stock of
Whitewing, representing 18.4% of the outstanding shares and has voting control
over 789,709 shares of common stock of Whitewing, representing 27.3% of the
outstanding shares. R. Bruce Stewart, the Company's Chief Financial Officer, is
Chairman of the Board of Directors of Whitewing and Paul Ryan, the Company's
President and Chief Executive Officer, is also a member of the Board of
Directors of Whitewing,
14
representing half of Whitewing's Board of Directors. This minority position and
board representation results in the Company having influence at Whitewing, but
not the ability to control the decision-making at Whitewing.
GREENWICH INFORMATION TECHNOLOGIES. The Company currently maintains a
membership interest of 30.02%33.33% in Greenwich Information Technologies. Although a
senior member of Greenwich Information Technologies, the Company does not hold a
majority of the board of three senior members. Similarly, the Company has no
control over the day to day operations of Greenwich Information Technologies,
which are directed by the chief executive officer, H. Lee Browne. This minority
position results in the inability of the Company to control or direct the
decision-making of Greenwich Information Technologies in any meaningful way.
MANAGEMENT AND PERFORMANCE FEES
The level of management and performance fee
PERFORMANCE FEES: revenue received by the Company
will depend upon the amount of money invested in the funds managed by the
Company, which in turn will depend to a large extent upon the performance of the
funds managed by the Company. There can be no assurance that the Company will
prove successful in raising any additional capital for the investment funds
managed by the Company.
INVESTMENT IN THE PARTNERSHIP
As of JuneSeptember 30, 1997, the Company's had $504,389
PARTNERSHIP:$553,941 invested in the two
domestic private partnership funds it manages, and may invest additional amounts
to acquire or increase its interests in these or other funds. To the extent that
the Company's funds are so committed, they will be subject to all of the risks
to be encountered by all investors in such funds as a result of the investment
strategy adopted for the funds by the Company as a general partner, including
the risks associated with short sales, hedging, option trading, trading on
margin and other leverage transactions. The investment strategy adopted by the
domestic funds managed by the Company, and any other funds it subsequently
invests, could result in substantial losses, and these losses could have a
material adverse impact on the operational results of the Company. Conversely,
if any partnership funds in which Company funds are invested prove to be
profitable, the partners thereof, including the Company, will be credited with
partnership net income. The Company will thereby incur income tax liability,
even if it receives little or no cash distributions from such funds. Since the
stated intention of the funds managed by the Company is to reinvest
substantially all income and gain allocable to the partners thereof, the Company
does not 16
anticipate receiving distributions of cash from the funds to the
partners, including the Company, that could be used to pay any income tax on
partnership profits.
It is the present intention of the Company to limit its investment in
certain designated assets, including investments in domestic partnership funds,
to an amount not exceeding forty-five percent in the aggregate, of the Company's
total assets, to avoid characterization of the Company as an investment company
that would be subject to regulation under the Investment Company Act of 1940.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Securityholders pursuant to this Prospectus.
The Company will receive proceeds upon the exercise of warrants and options to purchase
shares of Common Stock held by certain of the Selling Securityholders. See
"Selling Securityholders."
1715
SELLING SECURITYHOLDERS
The shares of Common Stock offered pursuant to this Prospectus have been or
will be issued to the Selling Securityholders (or their assignees) directly by
the Company. An aggregate of 290,200226,002 of the shares of Common Stock offered
pursuant to this Prospectus were issued by the Company to certain of the Selling
Securityholders in the 1997 Private Placement. An additional 290,200226,002 of the
shares of Common Stock offered pursuant to this Prospectus (subject to
adjustment under certain circumstances) represent shares issuable to certain of
the Selling Securityholders upon exercise of the warrants issued in the 1997
Private Placement (the "1997 Warrants"). The 1997 Warrants may be redeemed by
the Company under certain circumstances. Another 403,413 shares of Common Stock
were issued by the Company to certain Selling Securityholders in a series of
independent, but related transactions to acquire additional equity ownership in
four of the Affiliates. See "Recent Developments." The remaining 297,87030,050 shares
of Common Stock offered pursuant to this Prospectus (subject to adjustment)
represent shares issuable upon the exercise of certain options and other
warrants held by certain of the Selling Securityholders. The Company will not
receive any of the proceeds from sales of the shares of Common Stock offered
pursuant to this Prospectus, although the Company will receive the exercise
prices to be paid by the Selling Securityholders upon exercise of the 1997
Warrants and the options and other warrants held by such Selling Securityholders
and referenced in the footnotes to the table below. Such funds, when received by
the Company, will be used for general corporate purposes.
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock by the Selling
Securityholders as of November 17, 1997January 30, 1998 and the number of shares which may be
offered pursuant to this Prospectus for the account of each of the Selling
Securityholders or their transferees from time to time. Except as described in
the footnotes to the table, to the best of the Company's knowledge, none of the
Selling Securityholders has had any position, office or other material
relationship with the Company or any of its affiliates.
NUMBER OF SHARES MAXIMUM NUMBER NUMBER OF SHARES
BENEFICIALLY MAXIMUM NUMBER BENEFICIALLY PERCENT OF CLASS
BENEFICIALLY
OWNED OF SHARES WHICH BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO MAY BE SOLD IN AFTER THE AFTER THE
SELLING SECURITYHOLDERS OFFERING(1) THIS OFFERING(1) OFFERING(2) OFFERING(2)
- --------------------------------------------------------------------- ----------------- ------------------ ----------------- ------------------ -------------------------------------
Thomas B. Akin 40,000 40,000 0 0
All Points Management Trust(3) 66,625(4) 58,400 8,225(4)Trust (3)....... 124,907(4) 56,282 68,625(4) 1.68%
Bruce Barber.......................... 187(5) 187(5) 0 0
Ileana C. Basil....................... 6,400 3,400 3,000 *
Dr. Brooke P. Anderson(5) 200,800(6) 2,000 198,800(6) 4.97%Douglas Benson........................ 75,654 75,654 0 0
William D. Blake...................... 10,000 10,000 0 0
Barry Booth........................... 187(6) 187(6) 0 0
Gary W. & Patricia M. Boyett 25,000Boyett.......... 40,700(7) 20,000 5,00020,700(7) *
H. Lee Browne(7) 210,000(8) 10,000(8) 200,000 5.29%
Philip J. Chelsvig 10,000 10,000Steven Bronson........................ 4,300(8) 4,300(8) 0 0
Dr.Carolyn F. & Robert S. Burgess, JT.... 14,000 14,000 0 0
Eugene A. Cafiero..................... 20,800 6,800 14,000 *
Roy & Donna V. Caponi................. 6,700 6,600 100 *
Rene Carrel........................... 2,209 2,209 0 0
James Cassel.......................... 2,619(9) 2,619(9) 0 0
Phillip J. Chelsvig................... 18,000(10) 8,000 10,000(10) *
M. Robert and& Phyllis Ching(9) 331,014(10) 80,000 251,014(10) 6.52%
Corsair Capital Partners, L.P. 40,000 40,000Ching (11)(12).... 460,838(12)(13) 129,824(12) 331,014(12)(13) 7.98%
Philip & Beverly Ching................ 10,676 10,676 0 0
Cruttenden Roth, Inc.(11) 100,000(11) 100,000Victor & Beverly Ching................ 1,068 1,068 0 0
Michael Cunniff(12) 36,000(13) 36,000Tim & Francis Lorraine Christy........ 4,000 4,000 0 0
Dennis R. Don 12,000 12,000C. Perry Chu.......................... 1,068 1,068 0 0
John D. Drake 140,000 40,000 100,000 2.64%
Stanley and Irene Farmer 28,000 10,000 18,000 *
Gerald E. Finnell and
Katherine E. Finnell Living
Trust 11,000 10,000 1,000 *
Fred F. Finocchiaro(14) 46,500(15) 46,500(15) 0Davenport Trust................. 20,000 20,000 0 First Global Securities(16) 4,000(16) 4,000(16) 0 0
Bernard Freeman Irrevocable
Trust 75,000(17) 20,000 55,000(17) 1.45%
Norio Kotani 10,000 10,000 0 0
Ronald V. Krizek 11,000 10,000 1,000 *
David M. Lackey(18) 104,270(19) 26,770(19) 77,500(19) 2.05%
Helen T. Lackey(20) 7,500 5,000 2,500 *
Dr. Calvin Layland 12,000 4,000 8,000 *
180
16
NUMBER OF SHARES MAXIMUM NUMBER NUMBER OF SHARES
BENEFICIALLY MAXIMUM NUMBER BENEFICIALLY PERCENT OF CLASS
BENEFICIALLY
OWNED OF SHARES WHICH BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO MAY BE SOLD IN AFTER THE AFTER THE
SELLING SECURITYHOLDERS OFFERING(1) THIS OFFERING(1) OFFERING(2) OFFERING(2)
- --------------------------------------------------------------------- ----------------- ------------------ ----------------- ------------------ -------------------------------------
Calvin C. Layland, D.P.M.,
Inc. Profit Sharing PlanDiamond Marketing (14)................ 870(14) 870(14) 0
John D. Drake......................... 192,360(15) 52,360 140,000(15) 3.44
John F. Eades......................... 3,400 3,400 0 0
Eric Elliot........................... 1,037(16) 1,037(16) 0 0
Gerald E. Finnell & Katherine E.
Finnell Living Trust................ 17,800(17) 6,800 11,000(17) *
Fred F. Finocchiaro (18).............. 60,500(19)(20) 14,000(20) 46,500(19) 1.14%
First Associated Securities (21)...... 2,750(21) 2,750(21) 0 0
First Global Securities (22)(23)...... 10,060(22)(23) 6,060(23) 4,000(22) *
Forbank & Co.......................... 30,626 30,626 0 0
Gary Freeman (24)..................... 97,937(24)(25) 22,937(24) 75,000(24)(25) 1.84%
Arthur R. & Judith E. Giese Revocable
Trust............................... 8,000 8,000 0 0
Global Benchmarks Arbitrage Fund,
L.P................................. 26,000 26,000 0 0
Dean Hall............................. 4,000 4,000 0 0
DonaldHarry E. Judson Living Trust.......... 2,600 2,600 0 0
Kevin Kennelly........................ 55,000 55,000 0 0
Norio D. Montgomery(21) 12,200(22) 12,000(22) 200Kotani....................... 14,000 4,000 10,000 *
Dominic Mortellaro 11,000David C. Kuplec....................... 16,800 6,800 10,000 *
David Lackey (26)(28)................. 110,895(27) 6,625(28) 104,270(27) 2.56%
Calvin Layland Pension & Profit
Plan................................ 9,338(29) 5,338 4,000(29) *
Calvin Layland........................ 20,968(30) 8,968 12,000(30) *
Laredo Trading Co..................... 990 990 0 0
Daniel & Shelly S. Lodes.............. 11,384 11,384 0 0
Scott & Joan Lovely................... 3,099 3,099 0 0
Gary A. Ludi.......................... 5,000 4,000 1,000 *
Morgan Fuller(23) 1,000(23) 1,000(23)William J. Mallory.................... 6,800 6,800 0 0
Meespierson (Isle of Man) Nominees
Ltd................................. 6,800 6,800 0 0
James A. Merkle (31).................. 17,560 10,000 7,560 *
Neil Montagino........................ 6,800 6,800 0 0
William M. Moon....................... 9,075 9,075 0 0
Dominic Mortellaro.................... 15,000(32) 4,000 11,000(32) *
David W. Moyer........................ 46,500 20,000 26,500 *
Shan A. Nathan........................ 4,400 3,400 1,000 *
Northlea Partners Ltd................. 26,000(33) 4,000 22,000(33) *
Douglas B. Odell...................... 8,300 6,800 1,500 *
Edward D. Pollock..................... 23,850(34) 6,800 17,050(34) *
Roger L. Porter....................... 7,380 3,400 3,980 *
Rhoda I. Rich......................... 4,000 4,000 0 0
Joseph P. Richardson.................. 16,000 8,000 8,000 *
Gilbert E. Rivera..................... 18,000(35) 6,000 12,000(35) *
Jose Robles........................... 24,000 20,000 4,000 *
Alan Rosen............................ 6,800 6,800 0 0
Paul R. Ryan (36)..................... 161,000(37) 3,000 158,000(37) 3.77%
Scott Salpeter........................ 85(38) 85(38) 0 0
17
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY MAXIMUM NUMBER BENEFICIALLY PERCENT OF CLASS
OWNED OF SHARES WHICH OWNED BENEFICIALLY OWNED
PRIOR TO MAY BE SOLD IN AFTER THE AFTER THE
SELLING SECURITYHOLDERS OFFERING(1) THIS OFFERING(1) OFFERING(2) OFFERING(2)
- -------------------------------------- ----------------- ------------------ ----------------- -------------------
John Saunders......................... 3,400 3,400 0 0
William D. Sears...................... 4,000 4,000 0 0
Sigler & Co........................... 14,852 14,852 0 0
Fred Jr. & Patricia Fittro Sohegian... 4,000 4,000 0 0
Barry Neville 11,500 4,000 7,500 *
Northlea Partners, Ltd. 22,000 20,000 2,000 *
Edward D. Pollock 13,650 10,000 3,650 *
John R. Queen 10,000 10,000Steiner......................... 85(39) 85(39) 0 0
Gilbert Rivera 12,000 10,000 2,000Stewart, Thomas (40)(41).............. 6,850(41) 800(42) 6,050(41) *
Paul R. Ryan(24) 133,000(25) 104,000 29,000Wendell L. Strahan.................... 41,800 6,800 35,000 *
Gary's Market Profit Sharing Plan..... 6,000 3,000 3,000 *
Gary L. & Barbara I. Thomas........... 4,500 4,000 500 *
Trendsgroup Financial (43)............ 7,570(43) 7,570(43) 0 0
Joseph and Diane Tsai (44)............ 1,282(44) 1,282(44) 0 0
Donald J. Waechter.................... 5,300 3,400 1,900 *
David Schmidt(26) 210,000(27) 10,000(27) 200,000 5.29%
Frederick L. Simmons 10,000 10,000Walters......................... 6,950 3,400 3,550 *
Michael W. Wells...................... 16,000 16,000 0 0
Southcoast Financial(28) 500(28) 500(28)James A. & Betty A. Wenker Trust...... 6,600 6,600 0 0
Jens Spitta 3,350 2,000 1,350 *
R. Bruce Stewart(29) 232,100(30) 4,000 228,100(30) 5.60%
Robert B. Stewart(31) 5,050(32) 2,050(32) 3,000 *
Thomas Stewart(33) 6,050(34) 2,050(34) 4,000 *
Wendell Strahan 35,000 10,000 25,000 *
John Tartaglione 8,000 8,000Daniel Zuckerman...................... 6,000 6,000 0 0
Bennett Tremaine 43,500 20,000 23,500 *
Henri Richard Vanyperen 10,000 10,000 0 0
Charles E. Wert 10,000 10,000 0 0
Robert E. Witt Trust 11,000 10,000 1,000 *
------------
TOTAL: 878,270-------
Total:.............................. 885,467 Shares
- ---------------------------------------------
* Less than one percent of class.
(1) Assumes exercise of all 1997 Warrants and all options and other warrants
beneficially owned by the Selling Securityholder at the exercise price and
for the maximum number of shares permitted as of the date of this
Prospectus. Share figures include shares of Common Stock issued in the 1997
Private Placement and underlying the 1997 Warrants as follows:
SHARES OF COMMON
STOCK ISSUED INShares of Common
Stock Issued in 1997 SHARES UNDERLYING
SELLING SECURITYHOLDER PRIVATE PLACEMENT 1997 WARRANTS
------------------------------------------- -----------------------Shares Underlying
Selling Securityholders Private Placement Warrants
- ---------------------------------------------------------- --------------------- -------------------
Thomas B. Akin 20,000 20,000
All Points Management Trust 29,200 29,200
Dr. Brooke P. Anderson 1,000 1,000Trust............................... 0 0
Bruce Barber.............................................. 0 0
Ileana C. Basil........................................... 1,700 1,700
Douglas Benson............................................ 0 0
William D. Blake.......................................... 5,000 5,000
Barry Booth............................................... 0 0
Gary W. & Patricia M. BoyettBoyett.............................. 10,000 10,000
H. Lee BrowneSteven Bronson............................................ 0 0
PhilipCarolyn F. & Robert S. Burgess, JT........................ 7,000 7,000
Eugene A. Cafiero......................................... 3,400 3,400
Roy & Donna V. Caponi..................................... 3,300 3,300
Rene Carrel............................................... 0 0
James Cassel.............................................. 0 0
Phillip J. Chelsvig 5,000 5,000
Dr.Chelsvig....................................... 4,000 4,000
M. Robert and& Phyllis Ching 40,000 40,000
Corsair Capital Partners, L.P. 20,000 20,000
Cruttenden Roth, Inc.Ching................................. 15,000 15,000
Philip & Beverly Ching.................................... 0 0
Michael CunniffVictor Ching.............................................. 0 0
Dennis R. Don 6,000 6,000Tim & Francis Lorraine Christy............................ 2,000 2,000
C. Perry Chu.............................................. 0 0
Irene Davenport Trust..................................... 10,000 10,000
Diamond Marketing......................................... 0 0
John D. Drake 20,000 20,000
Stanley and Irene Farmer 5,000 5,000Drake............................................. 0 0
18
Shares of Common
Stock Issued in 1997 Shares Underlying
Selling Securityholders Private Placement Warrants
- ---------------------------------------------------------- --------------------- -------------------
John F. Eades............................................. 1,700 1,700
Eric Elliot............................................... 0 0
Gerald E. Finnell and Katherine& Katherin E. Finnell Living TrustTrust...... 3,400 3,400
Fred F. Finocchiaro....................................... 6,000 6,000
First Associates Securities............................... 0 0
First Global Securities................................... 0 0
Forbank................................................... 0 0
Gary Freeman.............................................. 0 0
Arthur R. & Judith E. Giese Revocable Trust............... 4,000 4,000
Global Benchmarks Arbitrage Fund, L.P..................... 13,000 13,000
Dean Hall................................................. 2,000 2,000
Harry E. Judson Living Trust.............................. 1,300 1,300
Kevin Kennelly............................................ 27,500 27,500
Norio D. Kotani........................................... 2,000 2,000
David C. Kuplec........................................... 3,400 3,400
David Lackey.............................................. 0 0
Laredo Trading............................................ 0 0
Calvin Layland Pension & Profit Plan...................... 0 0
Calvin Layland............................................ 0 0
Daniel & Shelly S. Lodes.................................. 4,702 4,702
Scott & Joan Lovely....................................... 0 0
Gary A. Ludi.............................................. 2,000 2,000
William J. Mallory........................................ 3,400 3,400
Meespierson (Isle of Man) Nominees Ltd.................... 3,400 3,400
James A. Merkle........................................... 5,000 5,000
Neil Montagino............................................ 3,400 3,400
William M. Moon........................................... 0 0
Dominic Mortellaro........................................ 2,000 2,000
David W. Moyer............................................ 10,000 10,000
Shan A. Nathan............................................ 1,700 1,700
Northlea Partners Ltd..................................... 2,000 2,000
Douglas B. Odell.......................................... 3,400 3,400
Edward D. Pollock......................................... 3,400 3,400
Roger L. Porter........................................... 1,700 1,700
Rhoda I. Rich............................................. 2,000 2,000
Joseph P. Richardson...................................... 4,000 4,000
Gilbert E. Rivera......................................... 3,000 3,000
Jose Robles............................................... 10,000 10,000
Alan Rosen................................................ 3,400 3,400
Paul R. Ryan.............................................. 1,500 1,500
Scott Salpeter............................................ 0 0
John Saunders............................................. 1,700 1,700
William D. Sears.......................................... 2,000 2,000
Sigler & Co............................................... 0 0
Fred F. Finocchiaro 20,500 20,500Jr. & Patricia Fittro Sohegian....................... 2,000 2,000
Barry Steiner............................................. 0 0
Stewart, Thomas........................................... 0 0
Wendell L. Strahan........................................ 3,400 3,400
Gary's Market Profit Sharing Plan......................... 1,500 1,500
Gary L. & Barbara I. Thomas............................... 2,000 2,000
Trendsgroup Financial..................................... 0 0
Joseph and Diane Tsai..................................... 0 0
Dierdre Tsai.............................................. 0 0
Jared Tsai................................................ 0 0
Donald J. Waechter........................................ 1,700 1,700
David Walters............................................. 1,700 1,700
Michael W. Wells.......................................... 8,000 8,000
James A. & Betty A. Wenker Trust.......................... 3,300 3,300
19
Shares of Common
Stock Issued in 1997 Shares Underlying
Selling Securityholders Private Placement Warrants
- ---------------------------------------------------------- --------------------- -------------------
First Global Securities 0 0
Bernard Freeman Irrevocable Trust 10,000 10,000
Norio Kotani 5,000 5,000
Ronald V. Krizek 5,000 5,000
David M. Lackey 5,000 5,000
Helen T. Lackey 2,500 2,500
Dr. Calvin Layland 2,000 2,000
Calvin C. Layland, D.P.M., Inc. Profit
Sharing Plan 2,000 2,000
Donald D. Montgomery 1,000 1,000
Dominic Mortellaro 5,000 5,000
Morgan Fuller 0 0
Barry Neville 2,000 2,000
Northlea Partners, Ltd. 10,000 10,000
Edward D. Pollock 5,000 5,000
John R. Queen 5,000 5,000
Gilbert Rivera 5,000 5,000
Paul R. Ryan 2,000 2,000
David Schmidt 0 0
Frederick L. Simmons 5,000 5,000
Southcoast Financial 0 0
Jens Spitta 1,000 1,000
R. Bruce Stewart 2,000 2,000
Robert B. Stewart 0 0
Thomas Stewart 0 0
Wendell Strahan 5,000 5,000
John Tartaglione 4,000 4,000
Bennett Tremaine 10,000 10,000
Henri Richard Vanyperen 5,000 5,000
Charles E. Wert 5,000 5,000
Robert E. Witt Trust 5,000 5,000Daniel Zuckerman.......................................... 3,000 3,000
(2) Assumes thatthe each Selling Securityholder will sell all of the shares of
Common Stock offered pursuant to this Prospectus, but not any other shares
of Common Stock beneficially owned by such Securityholder.
(3) All Points Management Trust provides consulting services to the Company.
(4) Includes 2,225 shares which are subject to options exercisable at a price
of $4.40 per share, expiring August 31, 1999.
(5) Dr. Anderson is a director of the Company and also serves as its Vice
President, Research and Development. Dr. Anderson is also a director of
MerkWerks and CombiMatrix.
(6) Includes shares which are subjectwarrants to options as follows: (a) 25,000purchase 187 shares at an exercise price of $6.10 per share, expiring March 10, 2001;
(b) 20,000 shares, at an exercise price of $2.00 per share, expiring March
21, 1999; and (c) 100,000 shares, at an exercise price of $1.50 per share,
expiring July 29, 1998.
(7) Mr. Browne is a director and the President and Chief Executive Officer of
each of Greenwich Information Technologies and Soundview Technologies.
(8) Share ownership information is based on the information contained
in Mr. Browne's Schedule 13D filed with the Securities and Exchange
Commission (the "Commission") on October 27, 1997. The share figure
includes 10,000 shares which are subject to options exercisable at a price of $5.38$6.75 per share,
expiring March 21,November 28, 2001.
(6) Includes warrants to purchase 187 shares at a price of $6.75 per share,
expiring November 28, 2001.
(7) Includes warrants to purchase 10,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These options vestwarrants were issued as part of units
purchased in 2,500the June Private Placement.
(8) Includes warrants to purchase 4,300 shares at a price of $6.75 per share,
increments overexpiring November 28, 2001.
(9) Includes warrants to purchase 2,619 shares at a four year period, and become fully vested
on March 21,price of $6.75 per share,
expiring November 28, 2001.
(10) Includes warrants to purchase 5,000 shares at a price of $7.50 per share,
expiring June 8, 2000. The remaining 200,000 shares beneficially owned by
Mr. Browne areThese warrants were issued as part of units
purchased in the subject of a separate registration statement filed with
the Commission. See "Recent Developments."
(9)June Private Placement.
(11) Dr. Ching has provided consulting services to the Company.
20
(10)(12) Includes shares beneficially owned by Dr. Ching issued in the names of M.
Robert & Phyllis Ching, M. Robert & Phyllis Ching Living Trust, Phyllis
Ching, M. Robert Ching MD, Inc. Money Purchase Plan, M. Robert Ching MD
Inc. Defined Benefit Plan, Phyllis and Bradley Ching, Phyllis and Brent
Ching, and Phyllis and Brian Ching.
(13) Includes shares which are subject to options as follows: (a) 20,000 shares,
at an exercise price of $1.50 per share, expiring March 21, 1999; (b)
30,000 shares, at an exercise price of $2.50 per share, expiring August 31,
1999; (c) 5,000 shares, at an exercise price of $5.25 per share, expiring
October 13, 2000; (d) 5,000 shares at an exercise price of $5.25 per share,
expiring October 13, 2000; (e) 1,775 shares at an exercise price of $5.50
per share, expiring January 29, 2001; and (f) 3,750 shares, at an exercise
price of $7.00 per share, expiring August 8, 2001. (11) In June 1996, the Company entered into an agreement with Cruttenden Roth,
Incorporated ("CRI") under which CRI will serve, for a period of up to
two years, as a financial advisor to the Company on matters pertaining to
selected transactions including, but not limited to, mergers and
acquisitions, purchases and sales of shares of minority and
majority-owned subsidiaries, general capital markets strategies,
capital-raising activities, and other services such as the Company and
CRI may mutually see fit. As compensation for these services, CRI has
agreed to accept, in lieu of cash compensation,Also includes warrants
to purchase 100,00040,000 shares of the Company's Common Stock at an exercise price of
$6.00 per share. These warrants vest in 50,000 share increments
over two years, and expire on June 29, 2002.
(12) Mr. Cunniff from time to time provides consulting services to the Company.
(13) Includes shares which are subject to options as follows: (a) 12,000
shares, exercisable at a price of $5.00$7.50 per share, becoming fully vested on
November 1, 1997 and expiring on December 2, 1999; and (b) 24,000June 8,
2000, issued as part of units purchased in the June Private Placement.
(14) Includes warrants to purchase 870 shares
exercisable at a price of $7.00$8.25 per share,
becoming fully vested onexpiring November 1, 1998 and30, 2000. These warrants were issued as "finders
warrants" in connection with the 1997 Private Placement. See "Recent
Developments."
(15) Includes warrants to purchase 20,000 shares at a price of $7.50 per share,
expiring on July 1,June 8, 2000. (14)These warrants were issued as part of units
purchased in the June Private Placement.
(16) Includes warrants to purchase 1,037 shares at a price of $6.75 per share,
expiring November 28, 2001.
(17) Includes warrants to purchase 5,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(18) Mr. Finocchiaro is a principal in the accounting firm of Finocchiaro & Co.,
which served as independent auditors of the Company until April 1997.
(15)20
(19) Includes warrants to purchase 5,500 shares at a price of $5.50 per share,
expiring on June 8, 2000. These warrants were2000, issued as "finders warrants" in connection with
the 1997June Private Placement and warrants to purchase 20,500 shares at a
price of $7.50 per share, expiring June 8, 2000, issued as part of units
purchased in the June Private Placement.
(20) Includes warrants to purchase 2,000 shares at a price per share of $8.25
per share, expiring November 30, 2000. These warrants were issued as
"finders warrants." See "Recent Developments."
(16)(21) First Associated Securities acted as a finder in connection with the 1997
Private Placement and, in such capacity, received "finders warrants" to
purchase the 2,750 shares reflected in the table at a price of $8.25 per
share. These warrants expire on November 30, 2000. See "Recent
Developments."
(22) First Global Securities acted as a finder in connection with the June
Private Placement and, in such capacity, received "finders warrants" to
purchase the 4,000 shares at a price of $5.50 per share. These warrants
expire on June 8, 2000.
(23) First Global Securities acted as a finder in connection with the 1997
Private Placement and, in such capacity, received "finders warrants" to
purchase the 4,0006,060 shares reflected in the table at a price of $5.50$8.25 per
share. These warrants expire on June 8,November 30, 2000. See "Recent
Developments."
(17)(24) Includes shares beneficially owned by Mr. Freeman issued in the names of
Bernard Freeman Trust, Heidi Freeman, and Benjamin Freeman.
(25) Includes shares which are subject to options as follows: (a) 2,000 shares,
exercisable at a price of $2.50 per share, expiring March 29, 1999, in the
name of Benjamin Freeman; (b) 4,000 shares, exercisable at a price of $2.50
per share, expiring March 29, 1999, in the name of Gordon Freeman; (c)
2,000 shares, exercisable at a price of $2.50 per share, expiring March 29,
1999, in the name of Heidi Freeman; and (d) 4,000 shares, exercisable at a
price of $2.50 per share, expiring March 29, 1999, in the name of Marc
Freeman.
(18)(26) Mr. Lackey provides consulting services to the Company. Mr. Lackey also
acted as a finder in connection with the June Private Placement and the
1997 Private Placement. See "Recent Developments."
(19) The share figures include: (a) 12,770 shares which are subject to
"finders warrants" issued(27) Mr. Lackey acted as a finder in connection with the 1997June Private Placement
(see "Recent Developments"); and, (b)in such capacity, received "finders warrants" to purchase the 4,000
shares which are subject to
options exercisable at a price of $7.00$5.50 per share, becoming fully
vestedshare. These warrants expire on January 1, 1998 and expiring on July 1,June 8,
2000.
(20) Ms.(28) Mr. Lackey is the mother of Mr. David Lackey.
(21) Dr. Montgomery is an officer of CombiMatrix.
(22) Includes 10,000 shares which are subject to options exercisable at a price
of $6.10 per share, vesting in 2,500 share increments over four years
(becoming fully vested on March 10, 2000) and expiring on March 10, 2001.
(23) Morgan Fuller acted as a finder in connection with the 1997 Private Placement
and, in such capacity, received "finders warrants" to purchase the 1,0001,500
shares reflected in the table at a price of $5.50$8.25 per share. These warrants
expire on June 8,November 30, 2000. See "Recent Developments."
(24)(29) Includes warrants to purchase 2,000 shares at a price at $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(30) Includes warrants to purchase 2,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(31) James A. Merkle is the father of James A. Merkle, Jr., president of
MerkWerks Corporation.
(32) Includes warrants to purchase 5,000 shares at a price at $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(33) Includes warrants to purchase 10,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(34) Includes warrants to purchase 5,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
21
(35) Includes warrants to purchase 5,000 shares at a price of $7.50 per share,
expiring June 8, 2000. These warrants were issued as part of units
purchased in the June Private Placement.
(36) Mr. Ryan is a director and serves as the President and Chief Executive
Officer of the Company. Mr. Ryan is also a party to an agreement with the
Company pursuant to which the Company and Mr. Ryan have agreed to act as
the general partners of certain private investment funds and co-managers to
other investment funds. Under this agreement, the Company is entitled to
receive 75 percent, and Mr. Ryan is entitled to receive 25 percent, of the
performance and management fees earned in respect of the investment
advisory services provided to co-managed investment funds, less certain
expenses shared with other parties. Pursuant to this agreement, Mr. Ryan
earned approximately $14,000 during fiscal year 1996.
21
(25)(37) Includes 100,000 shares which are subject to warrants, exercisable at a
price of $2.00 per share, expiring January 1, 2000.2000 and warrants to purchase
2,000 shares at a price of $7.50 per share, expiring June 8, 2000, that
were issued as part of units purchased in the June Private Placement. Also
includes 25,00050,000 shares which are subject to options, exercisable at a price
of $6.10 per share, expiring March 10, 2001.
(26) Mr. Schmidt is(38) Includes warrants to purchase 85 shares at a director and servesprice of $6.75 per share,
expiring November 28, 2001.
(39) Includes warrants to purchase 85 shares at a price of $6.75 per share,
expiring November 28, 2001.
(40) Thomas Stewart acted as a Vice President of Soundview
Technologies.finder in connection with the June Private
Placement and 1997 Private Placement. See "Recent Developments." (27)Thomas
Stewart is the son of R. Bruce Stewart, Chairman and Chief Financial
Officer of the Company.
(41) Includes 10,000"finder warrants" to purchase 2,050 shares which are subject to options exercisable at a price of $5.38$5.50 per
share vestingwhich were issued in 2,500connection with the June Private Placement and
expire on June 8, 2000.
(42) Includes "finder warrants" to purchase 800 shares at a price of $8.25 per
share, increments over a four year
period, becoming fully vested on March 21, 2000 and expiring on March 21,
2001.
(28) Southcoastissued in connection with the 1997 Private Placement. See "Recent
Developments."
(43) Trendsgroup Financial acted as a finder in connection with the 1997 Private
Placement and, in such capacity, received "finders warrants" to purchase
the 5007,570 shares reflected in the table at a price of $5.50$8.25 per share.
These warrants expire on June 8,November 30, 2000. See "Recent Developments."
(29) Bruce Stewart is the Chairman of the Board of Directors and serves as the
Chief Financial Officer of the Company. Bruce Stewart has previously
served as Chief Executive Officer of the Company. He is the father of
Robert and Thomas Stewart.
(30)(44) Includes shares which are subject to options as follows: (a) 150,000
shares, exercisable at a price of $1.50 per share, expiring July 29, 1998;
(b) 40,000 shares, exercisable at a price of $2.00 per share, expiring
March 21, 1999; and (c) 25,000 shares, exercisable at a price of $6.10 per
share, expiring March 10, 2001.
(31) Robert B. Stewart has served as the Director of Marketing for the Company
since August 18, 1997, and also acted as a finder in connection with the
1997 Private Placement prior to his employment by the Company. See "Recent
Developments." Robert B. Stewart is the son of Bruce Stewart and the
brother of Thomas Stewart.
(32) Includes "finder warrants" to purchase 2,050 shares at a price of $5.50 per
share which were issued in connection with the 1997 Private Placement.
These warrants expire on June 8, 2000. See "Recent Developments."
(33) Thomas Stewart acted as a finder in connection with the 1997 Private
Placement. See "Recent Developments." Thomas Stewart is the sonnames of Bruce
Stewart and the brother of Robert Stewart.
(34) Includes "finder warrants" to purchase 2,050 shares at a price of $5.50 per
share which were issued in connection with the 1997 Private Placement.
These warrants expire on June 8, 2000. See "Recent Developments."Mr. & Mrs. Tsai's children.
22
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be sold by the Selling
Securityholders or by their respective pledgees, donees, transferees or other
successors in interest. Such sales may be made at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices. The shares may be sold
by one or more of the following: (a) one or more block trades in which a broker
or dealer so engaged will attempt to sell all or a portion of the shares held by
the Selling Securityholders as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchase by a broker
or dealer as principal and resale by such broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) privately negotiated transactions between the Selling
Securityholders and purchasers without a broker-dealer. The Selling
Securityholders may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers will receive compensation in negotiated
amounts in the form of discounts, concessions, commissions or fees from the
Selling Securityholders and/or the purchasers of the shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Such brokers or dealers or other participating brokers
or dealers and the Selling Securityholders may be deemed to be "underwriters"
within the meaning of the Securities Act, of 1933, in connection with such sales. Except
for customary selling commissions in ordinary brokerage transactions, any such
underwriter or agent will be identified, and any compensation paid to such
persons will be described, in a Prospectus Supplement. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
might be sold under Rule 144 rather than pursuant to this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock intended to be sold pursuant to
this Prospectus will be passed upon for the Company by O'Melveny & Myers LLP.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1996 have been so
included in reliance on the report of Finocchiaro & Co., independent
accountants, given on the authority of said firm as experts in auditing and
accounting. Fred F. Finocchiaro, a principal of Finocchiaro & Co., beneficially
owns 20,50026,500 shares of the Company's Common Stock and warrants to purchase an additional6,000
shares of Common Stock at $10.00 per share, 2,000 shares of Common Stock at
$8.25 per share, 20,500 shares of Common Stock at $7.50 per share, and an additional 5,500
shares of Common Stock at $5.50 per share. Certain warrants exercisable at $8.25
per share and $5.50 per share were issued as "finders warrants." The shares and
warrants beneficially owned by Mr. Finocchiaro were issued in connection with
the June Private Placement and the 1997 Private Placement. See "Recent
Developments." Mr. Finocchiaro is one of the Selling Securityholders named in
this Prospectus.
23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SECURITYHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
--------------------------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recent Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Selling Securityholders. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PAGE
----
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 4
Recent Developments....................................................... 6
Forward-Looking Statements................................................ 7
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 15
Selling Securityholders................................................... 16
Plan of Distribution...................................................... 23
Legal Matters............................................................. 23
Experts................................................................... 23
ACACIA RESEARCH
CORPORATION
878,270885,467 SHARES OF
COMMON STOCK
---------------------------------------
PROSPECTUS
------------------
November 26, 1997---------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the registration and sale of the Selling
Securityholder Securities are as follows:
SEC registration fee . . . . . . . . . . . . . . . . . $ 2,531
Printing and engraving . . . . . . . . . . . . . . . . 2,000
Accounting fees and expenses . . . . . . . . . . . . . 1,000
Legal fees and expenses. . . . . . . . . . . . . . . . 10,000
Miscellaneous expenses . . . . . . . . . . . . . . . . 5,000
------
Total. . . . . . . . . . . . . . . . . . . . . $ 20,531
------------
------------
- --------------------
* Information to be filed by amendment.
SEC registration fee............................................... $ 2,252
Printing and engraving............................................. 2,000
Accounting fees and expenses....................................... 1,000
Legal fees and expenses............................................ 10,000
Miscellaneous expenses............................................. 5,000
---------
Total.......................................................... $ 20,252
---------
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Articles of Incorporation and Bylaws of the Company, each as amended to date, requirerequires the Company to
indemnify its officers and directors to the fullest extent permitted by Section
317 of the California General
Corporation LawCorporations Code and applicable law. Section 317 of the California General
Corporation Law makes provisionprovides
for the indemnification of officers, directors and other corporate agents in
terms sufficiently broad to indemnify such persons, under certain circumstances,
for liabilities (including reimbursement of expenses incurred) arising under the
Securities Act of 1933, as amended.
II-1
Act.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Form of Common Stock Warrant Agreement issued as part of the 1997
Private Placement
4.2 Form of Specimen Certificate of Company's Common Stock(1)
5.1 Opinion of O'Melveny & Myers LLP regarding legality of securities
being registered
*23.1 Consent of Finocchiaro & Co.
23.2 Consent of O'Melveny & Myers LLP (contained in Exhibit 5.1)
*24.1 Power of Attorney
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
4.1 Form of Common Stock Warrant Agreement issued as part of the 1997 Private Placement
4.2 Form of Specimen Certificate of Company's Common Stock(1)
5.1 Opinion of Counsel regarding legality of securities being registered
10.1 Form of Common Stock Purchase Agreement(2)
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney(3)
- ------------------
* Previously filed.------------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form SB-2, File No. SB2-33-87368-L.A., and incorporated by reference.
II-2(2) Incorporated by reference from the Company's current report on Form 8-K,
event date January 27, 1998.
(3) Previously filed as an exhibit to the Company's initial Registration
Statement on Form S-3 filed with the Commission on February 2, 1998. (File
No. 333-45397).
II-1
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales arare being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;Act.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, of 1933, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(5) That, for purposes of determining any liability under the Securities
Act, of 1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-3
(6) That, for the purpose of determining any liability under the Securities
Act, of 1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 6
II-2
above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, of 1933, the registrant certifies
that it has reasonable grounds to believe that it meets all the requirements for
filing on Form S-3 and has duly caused this Amendment No. 1 to the registration statementRegistration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pasadena, State of California, on November 25, 1997.
ACACIA RESEARCH CORPORATION
By /s/ Paul R. Ryan
----------------------------------------------------
Paul R. Ryan, President and Chief Executive Officer
February 12, 1998.
ACACIA RESEARCH CORPORATION
By /s/ PAUL R. RYAN
-----------------------------------------
Paul R. Ryan
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/ Paul R. Ryan President, Chief Executive Officer November 25, 1997
- --------------------- and Director (Principal Executive
Paul R. Ryan Officer)
* Chief Financial Officer and November 25, 1997
- --------------------- Chairman of the Board (Principal
R. Bruce Stewart Financial and Accounting Officer)
* Vice President, Research and November 25, 1997
- --------------------- Development and Director
Brooke P. Anderson
* Director November 25, 1997
- ---------------------
Fred A. de Boom
* Director November 25, 1997
- ---------------------
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
President, Chief Executive
/s/ PAUL R. RYAN Officer and Director
- ------------------------------ (Principal Executive February 12, 1998
Paul R. Ryan Officer)
Chief Financial Officer
* and Chairman of the
- ------------------------------ Board (Principal February 12, 1998
R. Bruce Stewart Financial and Accounting
Officer)
*
- ------------------------------ Director February 12, 1998
Brooke P. Anderson
*
- ------------------------------ Director February 12, 1998
Fred A. de Boom
*
- ------------------------------ Director February 12, 1998
Edward W. Frykman
-
*By: /s/ PAUL R. RYAN
-------------------------
* By: /s/ Paul R. Ryan
Paul R. Ryan,
ATTORNEY-IN-FACT
II-4
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
4.1 Form of Common Stock Warrant Agreement issued as part of the 1997 Private Placement
4.2 Form of Specimen Certificate of Company's Common Stock(1)
5.1 Opinion of Counsel regarding legality of securities being registered
10.1 Form of Common Stock Purchase Agreement(2)
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney(3)
- ------------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form SB-2, File No. SB2-33-87368-L.A., and incorporated by reference.
(2) Incorporated by reference from the Company's current report on Form 8-K,
event date January 27, 1998.
(3) Previously filed as an exhibit to the Company's initial Registration
Statement on Form S-3 filed with the Commission on February 2, 1998. (File
No. 333-45397).