EXHIBIT 99.1
ACACIA
RESEARCH
CORPORATION
CONTACTS: Rob Stewart
Investor Relations
FOR RELEASE Tel (949) 480-8300
- ----------- Fax (949)480-8301
October 21, 2004
ACACIA RESEARCH REPORTS THIRD QUARTER RESULTS
Newport Beach, Calif. - (BUSINESS WIRE) - October 21, 2004 - Acacia
Research Corporation (Nasdaq: ACTG; CBMX) today reported results for the three
months ended September 30, 2004. Acacia Research Corporation comprises two
operating groups, the Acacia Technologies group and the CombiMatrix group.
"The Acacia Technologies group revenues for the third quarter of 2004
were $2,240,000, consisting of the recognition of $1,500,000 in deferred
revenues from the licensing program for the television V-chip and $740,000 in
licensing revenues from our Digital Media Transmission (DMT(R)) technology
licensing program. We entered into 41 new licensing agreements for our DMT(R)
technology in the third quarter, including our first 6 cable TV licenses. We
signed an additional 7 cable TV licenses since the end of the third quarter and
have entered into 188 DMT(R) technology licenses to date. New licensees also
included online news, movie and entertainment companies such as Bloomberg, iFilm
and World Wrestling Entertainment and a significant number of agreements with
major corporations, such as Sonoco and Wachovia, covering the use of our DMT(R)
Technology on corporate websites. We also recently commenced the licensing
program for our Internet Access Redirection ("IAR") technology which is used at
wireless hotspots," commented Chairman and CEO, Paul Ryan.
"The CombiMatrix group reported revenues of $753,000 during the third
quarter of 2004, which were comprised of $685,000 of government contract
revenues recognized under its biowarfare detection contract and $68,000 of
microarray product sales and service revenue. $62,000 of the government contract
revenue related to the sale of microarrays, resulting in total microarray sales
for the third quarter of $130,000," said Dr. Amit Kumar, CEO and President of
CombiMatrix Corporation.
"The CombiMatrix group has recently entered into a number of new
collaborative agreements, including a strategic alliance with Furuno Electric
Corporation, which made a $1,000,000 upfront payment during the third quarter,
and agreements with Intel Corporation, Strand Genomics and a three-year research
and development agreement with the irsiCaixa Foundation for siRNA research. We
also launched a series of catalog arrays in the areas of human metabolism,
toxicology and cancer. In addition, Congress allocated an additional $2.3
million in a defense appropriation spending bill to continue our biowarfare
detection program with the Department of Defense. In October 2004, we entered
into an agreement to acquire up to a one-third ownership interest in Leuchemix
Corporation, a developer of drugs for oncology indications," concluded Dr.
Kumar.
ACACIA RESEARCH CORPORATION CONSOLIDATED
FINANCIAL RESULTS
Consolidated revenues for the third quarter of 2004 were $2,993,000
versus $367,000 in the comparable 2003 period. Third quarter 2004 revenues were
comprised of $685,000 in government contract revenue and $68,000 in microarray
product sales and other contract service revenues, all of which were recognized
by the CombiMatrix group, and Digital Media Transmission ("DMT(R)") license fee
revenues totaling $740,000 and V-chip license fee revenues of $1,500,000
recognized by the Acacia Technologies group.
In August 2004, the U.S. Court of Appeals for the Federal Circuit
affirmed the September 2002 U.S. District Court for the District of Connecticut
ruling that television manufacturers named in the Acacia Technologies group's
V-chip patent infringement lawsuit do not infringe the Acacia Technologies
group's V-chip patent. As a result of the ruling, the Acacia Technologies group
recorded an impairment charge of $1,616,000 associated with the write-off of
goodwill related to the V-chip. In addition, as a result of the conclusion of
the V-chip patent litigation, the Acacia Technologies group recognized
$1,500,000 of V-chip related deferred license fee revenues and $668,000 of
V-chip related deferred legal costs in the third quarter of 2004. The ruling has
no impact on the revenues that we have recognized to date from licensees of our
patented V-chip technology.
The third quarter 2004 consolidated net loss was $5,390,000 versus
$5,832,000 in the comparable 2003 period. The third quarter 2004 results include
non-cash patent amortization, asset depreciation and stock compensation charges
totaling $824,000 versus $1,417,000 in the comparable 2003 period.
Consolidated research and development expenses in the third quarter of
2004, comprised solely of costs incurred by the CombiMatrix group, were
$1,787,000 (including government contract costs) versus $1,726,000 in the
comparable 2003 period. Third quarter 2004 research and development activities
included increased costs incurred in connection with the CombiMatrix group's
commitments under its biowarfare detection contract with the Department of
Defense and costs related to other internal research and development efforts in
the areas of genomics, drug discovery and development and material sciences.
Research and development expenses in the comparable 2003 period related
primarily to the CombiMatrix group's research and development agreements with
Roche Diagnostics, GmbH ("Roche"), which were completed in the first quarter of
2004.
Marketing, general and administrative expenses in the third quarter of
2004 increased to $4,771,000 from $3,675,000 in the comparable 2003 period, due
primarily to the addition of licensing and business development personnel for
the Acacia Technologies group, an increase in marketing and sales costs related
to the launch of the CombiMatrix group's CustomArray(TM) DNA microarray platform
in March 2004, an increase in corporate professional fees related to ongoing
Sarbanes-Oxley compliance projects at both operating groups and an increase in
the Acacia Technologies group's general and administrative overhead costs
related to ongoing operations. The increase also reflects V-chip related
deferred legal expenses totaling $668,000 recognized during the third quarter of
2004 as described above.
FINANCIAL CONDITION
Total consolidated assets were $93,546,000 as of September 30, 2004
compared to $90,040,000 as of December 31, 2003. Cash and cash equivalents and
short-term investments on a consolidated basis totaled $57,043,000 as of
September 30, 2004 compared to $50,500,000 as of December 31, 2003.
During the third quarter of 2004, the CombiMatrix group received an
upfront payment of $1,000,000 from Furuno Electric Corporation ("Furuno")
pursuant to its multi-year collaborative strategic alliance to design, engineer
and build CombiMatrix Corporation's Bench-Top DNA Microarray Synthesizer for
CustomArray(TM) formatted microarrays. The payment received from Furuno was
included in deferred revenues as of the end of the third quarter.
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
DMT(R) license fee revenues for the third quarter of 2004 were $740,000
versus $186,000 in the comparable 2003 period. To date the Acacia Technologies
group has entered into 188 license agreements for its DMT(R) technology. All of
the Acacia Technologies group's material DMT(R) license agreements provide for
license fee payments to be made by the respective licensees over the term of the
licenses.
In August 2004, the U.S. Court of Appeals for the Federal Circuit
affirmed the September 2002 U.S. District Court for the District of Connecticut
ruling that television manufacturers named in the Acacia Technologies group's
V-chip patent infringement lawsuit do not infringe the Acacia Technologies
group's V-chip patent. As a result of the ruling, the Acacia Technologies group
recorded an impairment charge of $1,616,000 associated with the write-off of
goodwill related to the V-chip. In addition, as a result of the conclusion of
the V-chip patent litigation, the Acacia Technologies group recognized
$1,500,000 of V-chip related deferred license fee revenues and $668,000 of
V-chip related deferred legal costs in the third quarter of 2004. The ruling has
no impact on the revenues that we have recognized to date from licensees of our
patented V-chip technology.
The third quarter 2004 division net loss was $1,842,000 versus
$1,296,000 in the comparable 2003 period. Included in the third quarter 2004
divisional results are non-cash patent amortization and depreciation charges
totaling $138,000 versus $153,000 in the comparable 2003 period.
Marketing, general and administrative expenses in the third quarter of
2004 increased to $1,323,000 from $955,000 in the comparable 2003 period, due
primarily to the addition of licensing and business development personnel, an
increase in corporate professional fees related to ongoing Sarbanes-Oxley
compliance projects and an increase in general and administrative overhead costs
in connection with ongoing operations. Third quarter 2004 patent related legal
expenses, excluding V-chip related legal expenses recognized as discussed above,
decreased to $506,000 from $598,000 in the comparable 2003 period and will
continue to fluctuate based on actual outside patent counsel fees incurred in
connection with the Acacia Technologies group's ongoing DMT(R) patent
commercialization and enforcement programs.
FINANCIAL CONDITION
Total assets for the Acacia Technologies group were $34,926,000 as of
September 30, 2004 compared to $39,978,000 as of December 31, 2003. Cash and
cash equivalents and short-term investments totaled $30,364,000 as of September
30, 2004 compared to $33,201,000 as of December 31, 2003.
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
Revenues for the third quarter of 2004 were $753,000 versus $181,000 in
the comparable 2003 period. Third quarter 2004 revenues were comprised of
$685,000 in government contract revenues and $68,000 in microarray product sales
and other contract service revenues.
The third quarter 2004 division net loss was $3,548,000 versus a
division net loss of $4,536,000 in the comparable 2003 period. The third quarter
2004 divisional results include non-cash patent amortization, asset depreciation
and stock compensation charges totaling $686,000 versus $1,264,000 in the
comparable 2003 period.
Third quarter 2004 research and development expenses were $1,787,000
(including government contract costs) versus $1,726,000 in the comparable 2003
period. Third quarter 2004 research and development activities included
increased government contract costs incurred in connection with the CombiMatrix
group's commitments under its biowarfare detection contract with the Department
of Defense and other internal research and development efforts in the areas of
genomics, drug discovery and development and material sciences. Research and
development expenses in the comparable 2003 period related primarily to the
CombiMatrix group's research and development agreements with Roche, which were
completed in the first quarter of 2004.
Marketing, general and administrative expenses in the third quarter of
2004 increased to $2,274,000 from $2,122,000 in the comparable 2003 period, due
primarily to an increase in marketing and sales costs related to the launch of
the CombiMatrix group's CustomArray(TM) DNA microarray platform in March 2004
and an increase in corporate professional fees related to ongoing Sarbanes-Oxley
compliance projects.
FINANCIAL CONDITION
Total assets for the CombiMatrix group were $58,735,000 as of September
30, 2004 compared to $50,161,000 as of December 31, 2003. Cash and cash
equivalents and short-term investments totaled $26,679,000 as of September 30,
2004 compared to $17,299,000 as of December 31, 2003.
During the third quarter of 2004, the CombiMatrix group received an
upfront payment of $1,000,000 from Furuno pursuant to its multi-year
collaborative strategic alliance to design, engineer and build CombiMatrix
Corporation's Bench-Top DNA Microarray Synthesizer for CustomArray(TM) formatted
microarrays. The payment received from Furuno was included in deferred revenues
as of the end of the third quarter.
BUSINESS HIGHLIGHTS AND RECENT DEVELOPMENTS
- -------------------------------------------
Business highlights of the third quarter and recent developments include:
ACACIA TECHNOLOGIES GROUP:
o As of October 2004, the Acacia Technologies group has entered into 188
DMT(R) technology licensing agreements, including agreements with
companies in the cable television, hotel on-demand TV services, online
music, movie, adult entertainment, e-learning, corporate and sports,
news and information industries. We have executed license agreements
with companies including Bloomberg L.P., Capella Education Company,
Callaway Golf Company, B&C Cablevision, Central Valley Cable TV, LLC,
CinemaNow, Inc., Disney Enterprises, Inc., General Dynamics Interactive
Corporation, Grupo Pegaso, LodgeNet Entertainment Corporation, NXTV,
Inc., On Command Corporation, Oral Roberts University, Seren
Innovations, Sonoco Products Company, T. Rowe Price Associates, Inc.,
24/7 University, Inc., Virgin Radio, Wachovia Corporation, and World
Wrestling Entertainment, Inc.
o On July 12, 2004, the United States District Court for the Central
District of California issued a Markman Order giving the Court's
construction of some of the disputed patent terms and phrases contained
in two of the five U.S. DMT(R) patents.
o In July 2004, the Acacia Technologies group acquired U.S. Patent No.
6,226,677 from LodgeNet Entertainment Corporation. The newly acquired
patent has several potential licensing opportunities, including DSL
registrations, wireless "hotspots," and hotel high-speed Internet
access ("HSIA"). The patent covers technology and methods for
redirecting users to a login page when accessing the Internet.
o In September 2004, Acacia Media Technologies Corporation added Mediacom
LLC to its complaint filed in the District Court for the Northern
District of California alleging infringement of Acacia Media
Technologies Corporation's DMT(R) patents against certain cable and
satellite companies, increasing the number of defendants in the
complaint to ten. As of October 2004, Acacia Media Technologies has
executed license and settlement agreements with three of nine cable and
satellite companies originally named in the complaint.
o In September 2004, Acacia Media Technologies Corporation filed
complaints in the U.S. District Court for the District of Arizona, U.S.
District Court for the District of Minnesota and the U.S. District
Court for the Northern District of Ohio - Eastern Division, alleging
infringement of Acacia Media Technologies Corporation's DMT(R) patents
against certain cable and satellite companies located in Arizona,
Minnesota, and Ohio. Companies named in the lawsuits include Armstrong
Group, Arvig Communication Systems, Block Communications, Inc., Cable
America Corporation, Cable One, Inc., Cable System Services, Inc.,
Cannon Valley Communications, Inc., East Cleveland Cable TV and
Communications, LLC, Loretel Cablevision, Massillon Cable TV, Inc.,
Mid-Continent Media, Inc., Nelsonville TV Cable, Inc., NPG Cable, Inc.,
Precis Communications, Inc. San Carlos Cablevision, LLC, Savage
Communications, Inc., Sjoberg's Cablevision, Inc., US Cable, and Wide
Open West, LLC.
COMBIMATRIX GROUP:
During the third quarter of 2004, the CombiMatrix group entered into
the following collaborations:
o In July 2004, the CombiMatrix group entered into a
co-marketing agreement with Strand Genomics to market Strand
Genomics' product "avadis," a data analysis software tool for
microarray gene expression that combines scalable analytical
algorithms with interactive visualization to derive valuable
insights from gene expression data.
o In July 2004, the CombiMatrix group and collaborator irsiCaixa
Foundation entered into a three-year research, development,
and licensing agreement and selected two siRNA candidates for
downstream pre-clinical development against HIV.
o In August 2004, the CombiMatrix group entered into a
multi-year collaborative strategic alliance with Furuno to
design, engineer and build CombiMatrix Corporation's Bench-Top
DNA Microarray Synthesizer for CustomArray(TM) formatted
microarrays. Under the terms of the agreement, Furuno paid
CombiMatrix Corporation an upfront fee of $1,000,000 and will
make additional development and milestone payments in the
future, in accordance with the agreement.
o In September 2004, the CombiMatrix group and Intel Corporation
entered into an agreement to work together on the feasibility
of various projects utilizing the CombiMatrix group's core
technology. The terms and conditions of the agreement are
confidential.
o In October 2004, the CombiMatrix group entered into an
agreement to acquire up to a one-third ownership interest in
Leuchemix, Inc. ("Leuchemix"), a private drug development
firm, which is developing several compounds for the treatment
of leukemia and other cancers. In consideration for the equity
ownership interest, the CombiMatrix group will provide
Leuchemix a total of $4,000,000 to be paid quarterly over the
next two years. Dr. Amit Kumar, CombiMatrix Corporation's CEO,
was named a director of Leuchemix.
Other highlights and recent events:
o In July 2004, the CombiMatrix group made available to
researchers a new CustomArray(TM) Human Drug Metabolism Array.
This array enables researchers to screen a panel of genes and
"splice variants" known to be critical for the pharmokinetics
and metabolism for both established and new drugs.
o In July 2004, the CombiMatrix group made available to
researchers its new CustomArray(TM) Human Toxicology Array.
This array provides researchers a powerful tool for detecting
changes in gene expression indicative of a toxic or
stress-related response.
o In July 2004, the CombiMatrix group announced that it will
receive $2.3 million from a Department of Defense spending
bill passed by Congress, which will be used to further its
biowarfare detector system currently under development under
its existing $5.9 million contract with the Department of
Defense.
o In July 2004, the CombiMatrix group launched a new
CustomArray(TM) Core 67 Cancer Array. This array enables
researchers to screen and monitor the 67 genes that were
recently identified as markers of multiple types of cancer.
o In August 2004, the CombiMatrix group's strategic partner,
Nanomaterials Discovery Corporation ("NDC"), was awarded $2.5
million from the Department of Defense for the development of
its fuel cell technology. NDC will utilize the CombiMatrix
group's NanoArrays(TM) for the further discovery and
optimization of a new class of fuel cells powered by
high-energy materials such as propellants and explosives.
A conference call is scheduled for today. The Acacia Technologies Group
presentation and Q&A will start at 1:30 p.m. Pacific Time (4:30 p.m. Eastern).
The CombiMatrix Group presentation and Q&A session will start at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern).
To listen to the presentation by phone, dial (800) 238-9007 for
domestic callers and (719) 457-2622 for international callers, both of whom will
need to provide the operator with the confirmation code 988192. A replay of the
audio presentation will be available for 30 days at (888) 203-1112 for domestic
callers and (719) 457-0820 for international callers, both of whom will need to
enter the code 988192 when prompted.
The call is being webcast by CCBN and can be accessed at Acacia's
website at www.acaciaresearch.com.
ABOUT ACACIA RESEARCH CORPORATION
Acacia Research Corporation comprises two operating groups, Acacia Technologies
group and CombiMatrix group.
The Acacia Technologies Group develops, acquires, and licenses patented
technologies. Acacia's DMT(R) technology, which is supported by 5 U.S. and 31
foreign patents, relates to audio and audio/video transmission and receiving
systems commonly known as audio-on-demand, video-on-demand, and audio/video
streaming, and is used for distributing digital content via several means
including Internet, cable, satellite and wireless systems. Acacia's Internet
Access Redirection ("IAR") technology covers redirected Internet registrations
commonly used at wireless hotspots.
The CombiMatrix group is developing a platform technology to rapidly produce
customizable arrays, which are semiconductor-based tools for use in identifying
and determining the roles of genes, gene mutations and proteins. The CombiMatrix
group's technology has a wide range of potential applications in the areas of
genomics, proteomics, biosensors, drug discovery, drug development, diagnostics,
combinatorial chemistry, material sciences and nanotechnology.
Acacia Research-Acacia Technologies (Nasdaq: ACTG) and Acacia
Research-CombiMatrix (Nasdaq:CBMX) are both classes of common stock issued by
Acacia Research Corporation and are intended to reflect the performance of the
respective operating groups and are not issued by the operating groups.
Information about the Acacia Technologies group and the CombiMatrix group is
available at www.acaciaresearch.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS ARE BASED UPON OUR CURRENT EXPECTATIONS AND SPEAK ONLY AS
OF THE DATE HEREOF. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY AND ADVERSELY FROM
THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS
AND UNCERTAINTIES, INCLUDING THE RECENT ECONOMIC SLOWDOWN AFFECTING TECHNOLOGY
COMPANIES, OUR ABILITY TO SUCCESSFULLY DEVELOP PRODUCTS, RAPID TECHNOLOGICAL
CHANGE IN OUR MARKETS, CHANGES IN DEMAND FOR OUR FUTURE PRODUCTS, LEGISLATIVE,
REGULATORY AND COMPETITIVE DEVELOPMENTS AND GENERAL ECONOMIC CONDITIONS. OUR
ANNUAL REPORT ON FORM 10-K, RECENT AND FORTHCOMING QUARTERLY REPORTS ON FORM
10-Q, RECENT CURRENT REPORTS ON FORMS 8-K AND 8-K/A, AND OTHER SEC FILINGS
DISCUSS SOME OF THE IMPORTANT RISK FACTORS THAT MAY AFFECT OUR BUSINESS, RESULTS
OF OPERATIONS AND FINANCIAL CONDITION. WE UNDERTAKE NO OBLIGATION TO REVISE OR
UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON.
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
(UNAUDITED)
CONSOLIDATED BALANCE SHEET INFORMATION
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------ ------------
Total Assets $ 93,546 $ 90,040
============ ============
Total Liabilities $ 11,872 $ 28,513
============ ============
Minority Interests $ 780 $ 1,127
============ ============
Total Stockholders' Equity $ 80,894 $ 60,400
============ ============
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:
Research and development contract .......................... $ -- $ -- $ 17,302 $ --
License fees ............................................... 2,240 186 3,505 211
Government contract ........................................ 685 -- 1,603 --
Service contracts .......................................... 16 10 102 23
Products ................................................... 52 171 112 380
------------- ------------- ------------- -------------
Total revenues .......................................... 2,993 367 22,624 614
------------- ------------- ------------- -------------
Operating expenses:
Cost of government contract revenues ....................... 647 -- 1,505 --
Cost of product sales ...................................... 41 17 81 94
Research and development expenses .......................... 1,140 1,726 3,932 6,219
Non-cash stock compensation amortization -
research and development ................................ (10) 243 91 525
Marketing, general and administrative expenses ............. 4,771 3,675 12,621 11,482
Non-cash stock compensation amortization - marketing,
general and administrative .............................. 157 421 634 1,055
Amortization of patents .................................... 399 399 1,197 1,198
Legal settlement charges (credits) ......................... (90) -- 776 --
------------- ------------- ------------- -------------
Total operating expenses ................................ 7,055 6,481 20,837 20,573
------------- ------------- ------------- -------------
Operating income (loss) ................................. (4,062) (6,114) 1,787 (19,959)
------------- ------------- ------------- -------------
Total other income (expense) ................................... (1,398) 212 (1,048) 460
------------- ------------- ------------- -------------
Income (loss) from continuing operations before income
taxes and minority interests ................................ (5,460) (5,902) 739 (19,499)
Benefit for income taxes ....................................... 70 70 206 196
------------- ------------- ------------- -------------
Income (loss) from continuing operations before
minority interests .......................................... (5,390) (5,832) 945 (19,303)
Minority interests ............................................. -- -- 3 30
------------- ------------- ------------- -------------
Income (loss) from continuing operations ....................... (5,390) (5,832) 948 (19,273)
Discontinued operations:
Estimated loss on disposal of discontinued operations ...... -- -- (104) --
------------- ------------- ------------- -------------
Net income (loss) .............................................. $ (5,390) $ (5,832) $ 844 $ (19,273)
============= ============= ============= =============
Earnings (loss) per common share:
Attributable to the Acacia Technologies group:
Net loss ................................................... $ (1,842) $ (1,296) $ (3,984) $ (4,368)
Basic and diluted loss per share ........................... (0.09) (0.07) (0.20) (0.22)
Attributable to the CombiMatrix group:
Basic
Net income (loss) .......................................... $ (3,548) $ (4,536) $ 4,828 $ (14,905)
Basic earnings (loss) per share ............................ (0.11) (0.18) 0.16 (0.64)
Diluted
Net income (loss) .......................................... $ (3,548) $ (4,536) $ 4,828 $ (14,905)
Diluted earnings (loss) per share .......................... (0.11) (0.18) 0.16 (0.64)
Weighted average shares:
Acacia Research - Acacia Technologies stock:
Basic and diluted .......................................... 19,793,487 19,645,949 19,777,820 19,642,541
============= ============= ============= =============
Acacia Research - CombiMatrix stock:
Basic ...................................................... 30,962,190 25,890,408 29,570,562 23,129,476
============= ============= ============= =============
Diluted .................................................... 30,962,190 25,890,408 30,789,229 23,129,476
============= ============= ============= =============
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------ ------------
Total Assets $ 34,926 $ 39,978
============ ============
Total Liabilities $ 3,707 $ 4,188
============ ============
Minority Interests $ 780 $ 1,127
============ ============
Total Stockholders' Equity $ 30,439 $ 34,663
============ ============
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:
License fees ...................................... $ 2,240 $ 186 $ 3,505 $ 211
------------ ------------ ------------ ------------
Total revenues .................................. 2,240 186 3,505 211
------------ ------------ ------------ ------------
Operating expenses:
Marketing, general and administrative expenses..... 1,323 955 3,489 3,157
Legal expenses - patents .......................... 1,174 598 2,352 1,435
Amortization of patents ........................... 125 125 375 377
------------ ------------ ------------ ------------
Total operating expenses ........................ 2,622 1,678 6,216 4,969
------------ ------------ ------------ ------------
Operating loss .................................. (382) (1,492) (2,711) (4,758)
------------ ------------ ------------ ------------
Other income:
Impairment charges .............................. (1,616) -- (1,616) (207)
Interest income ................................. 120 128 340 408
Realized gains on short-term investments ........ -- 32 -- 94
Other income .................................... -- -- -- 1
------------ ------------ ------------ ------------
Total other income (expense) .................... (1,496) 160 (1,276) 296
------------ ------------ ------------ ------------
Loss from continuing operations before
income taxes and minority interests ............... (1,878) (1,332) (3,987) (4,462)
Benefit for income taxes ............................ 36 36 104 94
------------ ------------ ------------ ------------
Loss from continuing operations before
minority interests ................................ (1,842) (1,296) (3,883) (4,368)
Minority interests .................................. -- -- 3 --
------------ ------------ ------------ ------------
Loss from continuing operations ..................... (1,842) (1,296) (3,880) (4,368)
Discontinued operations:
Estimated loss on disposal of discontinued
operations ...................................... -- -- (104) --
------------ ------------ ------------ ------------
Division net loss ................................... $ (1,842) $ (1,296) $ (3,984) $ (4,368)
============ ============ ============ ============
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------ ------------
Total Assets $ 58,735 $ 50,161
============ ============
Total Liabilities $ 8,280 $ 24,424
============ ============
Minority Interests $ -- $ --
============ ============
Total Stockholders' Equity $ 50,455 $ 25,737
============ ============
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
------------------------------ -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:
Research and development contract ........................ $ -- $ -- $ 17,302 $ --
Government contract ...................................... 685 -- 1,603 --
Service contracts ........................................ 16 10 102 23
Products ................................................. 52 171 112 380
------------ ------------ ------------ ------------
Total revenues ......................................... 753 181 19,119 403
------------ ------------ ------------ ------------
Operating expenses:
Cost of government contract revenues ..................... 647 -- 1,505 --
Cost of product sales .................................... 41 17 81 94
Research and development expenses ........................ 1,140 1,726 3,932 6,219
Non-cash stock compensation amortization -
research and development .............................. (10) 243 91 525
Marketing, general and administrative expenses ........... 2,274 2,122 6,780 6,890
Non-cash stock compensation amortization -
marketing, general and administrative ................. 157 421 634 1,055
Amortization of patents .................................... 274 274 822 821
Legal settlement charges (credits) ......................... (90) -- 776 --
------------ ------------ ------------ ------------
Total operating expenses ............................... 4,433 4,803 14,621 15,604
------------ ------------ ------------ ------------
Operating income (loss) ................................ (3,680) (4,622) 4,498 (15,201)
------------ ------------ ------------ ------------
Other income:
Interest income ......................................... 98 52 228 164
------------ ------------ ------------ ------------
Total other income ..................................... 98 52 228 164
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Income (loss) from operations before income taxes
and minority interests .................................. (3,582) (4,570) 4,726 (15,037)
Benefit for income taxes ................................... 34 34 102 102
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Income (loss) from operations before minority interests (3,548) (4,536) 4,828 (14,935)
Minority interests ......................................... -- -- -- 30
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Division net income (loss) ................................. $ (3,548) $ (4,536) $ 4,828 $ (14,905)
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