EXHIBIT 99.1
[ACACIA LOGO]
CONTACTS: Rob Stewart
Investor Relations
FOR RELEASE Tel (949) 480-8300
- ----------- Fax (949) 480-8301
July 26, 2005
ACACIA RESEARCH REPORTS SECOND QUARTER
FINANCIAL RESULTS
Newport Beach, Calif. - (BUSINESS WIRE) - July 26, 2005 - Acacia
Research Corporation (Nasdaq: ACTG; CBMX) today reported results for the three
months ended June 30, 2005. Acacia Research Corporation comprises two operating
groups, the Acacia Technologies group and the CombiMatrix group.
"Acacia Technologies group revenues for the second quarter of 2005 were
$2,682,000, an increase of 44% from the previous quarter and over 300% from the
year ago period. We generated revenues from 6 patent licensing programs,
including revenues from 3 new programs, with initial licenses to Nokia for our
multi-dimensional bar code technology, National Instruments for our computer
simulation technology and Funai for our high capacity compact disk technology,"
commented Paul Ryan, Chairman & CEO of Acacia.
"We added Sony as a licensee for our interactive television technology,
Patriot Media for our Digital Media Transmission ("DMT(R)") technology, and Foot
Locker, Petco, Too Inc., Tuesday Morning and Sterling Jewelers for our credit
card fraud protection technology. Acacia is also pursuing 12 additional
licensing programs, including our recently acquired laptop connectivity
technology. We plan to continue acquiring new patent portfolios as we move
toward our goal of becoming the leader in technology licensing," concluded Mr.
Ryan.
"The CombiMatrix group's revenues for the second quarter of 2005 were
$1,857,000. This represents a gain of 74% over revenues from the first quarter
of 2005, and gain of 147% over revenues of the second quarter of 2004. Product
and equipment revenues related to CustomArrayTM were $565,000, which represents
an increase of 103% relative to such revenues earned in the first quarter of
2005 and over 1200% greater than such revenues for the second quarter of 2004,"
commented Dr. Amit Kumar, President and CEO of CombiMatrix Corporation.
Last quarter we achieved our first one million dollar quarter, and
during this quarter we nearly achieved our first two million dollar quarter. The
CombiMatrix group continues to execute on its plan as our products become
accepted in our industry. In addition to the aforementioned sales growth, we
made advances in all facets of our business, and began execution of our
diagnostics strategy by establishing CombiMatrix Molecular Diagnostics,"
concluded Dr. Kumar.
ACACIA RESEARCH CORPORATION CONSOLIDATED
FINANCIAL RESULTS
Consolidated revenues for the second quarter of 2005 were $4,539,000
versus $1,416,000 in the comparable 2004 period. Second quarter 2005 revenues
recognized by the CombiMatrix group were $1,857,000, comprised of $1,281,000 in
government contract revenues and $576,000 in CustomArrayTM product, equipment
and service revenues.
Second quarter 2005 revenues recognized by the Acacia Technologies
group were $2,682,000, comprised of $832,000 in recurring license fee revenues
and $1,850,000 in paid-up license fee revenues. Recurring license fee revenues
are recognized from licensees that make recurring quarterly or annual license
fee payments under their respective license agreements. Paid-up license fee
revenues are recognized from licensees that make paid-up license fee payments
for past infringement and future use of our patented technologies, in accordance
with their respective license agreements. Certain of our paid-up license
agreements provide for potential additional payments to the Acacia Technologies
group based on future activities. All of the paid-up license fee revenues
recognized in the second quarter of 2005 relate to patents acquired in the
January 2005 acquisition of Global Patent Holdings, LLC (the "GPH Acquisition").
Second quarter 2005 license fee revenues included fees from the licensing of our
Digital Media Transmission ("DMT(R)") technology, credit card fraud protection
technology, multi-dimensional bar code technology, computer simulation
technology, high capacity compact disk technology and interactive television
technology.
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The second quarter 2005 consolidated net loss was $5,417,000 versus
$4,669,000 in the comparable 2004 period. The second quarter 2005 results
include net non-cash charges totaling $1,891,000, comprised primarily of patent
amortization charges of $1,610,000 and asset depreciation charges of $266,000.
Patent amortization, non-cash stock compensation and asset depreciation charges
totaled $865,000 in the comparable 2004 period. The increase in patent
amortization charges reflects the amortization of patent related intangibles
acquired in connection with the GPH Acquisition. Patent amortization charges
will continue to be significant in future periods as the Acacia Technologies
group continues to amortize the acquired patent related costs over a weighted
average economic useful life of approximately 6 years. The second quarter 2004
results included a non-cash credit of $391,000 related to changes in the fair
value of AR-CombiMatrix common stock issuable in connection with certain
anti-dilution provisions of the September 2002 settlement agreement with
Nanogen, Inc. The anti-dilution provisions expire in September 2005.
Second quarter 2005 government contract costs totaled $1,209,000 versus
$653,000 in the comparable 2004 period. The change was due to increased costs
recognized in connection with the CombiMatrix group's commitments under its
biological threat detection cost plus fixed fee contract with the Department of
Defense, which was originally awarded in March 2004. As of June 30, 2005, the
biological threat detection contract is approximately 68% complete. Second
quarter 2005 internal research and development expenses were $1,415,000 versus
$1,409,000 in the comparable 2004 period. During the second quarter of 2005 and
2004, the CombiMatrix group continued internal research and development efforts
to improve and expand the CombiMatrix group's technology and product offerings.
Government contract costs and research and development expense were incurred
solely by the CombiMatrix group.
Marketing, general and administrative expenses for the second quarter
of 2005 increased to $4,261,000 from $3,388,000 in the comparable 2004 period,
due primarily to the addition of licensing and business development personnel
for the Acacia Technologies group, an increase in the Acacia Technologies
group's consulting expenses related to a consulting agreement executed with the
former CEO of Global Patent Holdings, LLC and an increase in marketing and sales
expenses related to commercial sales of the CombiMatrix group's CustomArray(TM)
products and services.
Second quarter 2005 patent related legal expenses, comprised solely of
costs incurred by the Acacia Technologies group, were $536,000 versus $576,000
in the comparable 2004 period. Second quarter 2005 patent related legal expenses
included $278,000 in patent related prosecution and enforcement costs incurred
by certain of the companies acquired in the GPH Acquisition transaction.
Excluding the impact of the GPH Acquisition, patent related legal expenses
decreased to $258,000 in the second quarter of 2005 due to a decrease in costs
incurred in connection with the Acacia Technologies group's ongoing DMT patent
commercialization and enforcement programs, including decreased legal costs
related to new patent claims and a decrease in patent enforcement costs related
to ongoing DMT patent related litigation. DMT related legal fees paid to outside
attorneys are incurred based on actual time and out-of-pocket expenses incurred
by external counsel and fluctuate from period to period based on patent
enforcement and prosecution activity in each period. DMT related legal expenses
will fluctuate in future periods based on actual outside patent counsel fees
incurred in connection with the Acacia Technologies group's ongoing DMT patent
commercialization and enforcement programs.
In the second quarter of 2005, the Acacia Technologies group recognized
contingent legal fee expenses totaling $592,000 and inventor royalty expenses
totaling $528,000, in connection with the recognition of related paid-up license
fee revenues.
FINANCIAL CONDITION
Total consolidated assets were $116,757,000 as of June 30, 2005
compared to $88,327,000 as of December 31, 2004. Cash and cash equivalents and
short-term investments on a consolidated basis totaled $55,331,000 as of June
30, 2005 compared to $52,358,000 as of December 31, 2004.
In June 2005, Acacia Research Corporation obtained commitments to
purchase approximately $3.2 million of its Acacia Research-CombiMatrix common
stock in a registered direct offering, which closed on July 5, 2005. Under the
terms of the transaction, 1,400,444 shares of Acacia Research-CombiMatrix common
stock were sold at $2.25 per share to a select group of institutional investors.
The net proceeds, totaling approximately $3.1 million, which are net of offering
costs, were allocated to the CombiMatrix group. All of the shares of Acacia
Research-CombiMatrix common stock were offered by Acacia Research Corporation
pursuant to an effective registration statement previously filed with the
Securities and Exchange Commission.
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ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
License fee revenues for the second quarter of 2005 were $2,682,000
versus $666,000 in the comparable 2004 period. Second quarter 2005 revenues
recognized by the Acacia Technologies group included $832,000 in recurring
license fee revenues and $1,850,000 in paid-up license fee revenues. Recurring
license fee revenues are recognized from licensees that make recurring quarterly
or annual license fee payments under their respective license agreements.
Paid-up license fee revenues are recognized from licensees that make paid-up
license fee payments for past infringement and future use of our patented
technologies, in accordance with their respective license agreements. Certain of
our paid-up license agreements provide for potential additional payments based
on future activities. All of the paid-up license fee revenues recognized in the
second quarter of 2005 relate to patents acquired in the January 2005 GPH
Acquisition. Second quarter license fee revenues included fees from the
licensing of our Digital Media Transmission ("DMT(R)") technology, credit card
fraud protection technology, multi-dimensional bar code technology, computer
simulation technology, high capacity compact disk technology and interactive
television technology.
The second quarter 2005 division net loss was $1,760,000 versus
$1,153,000 in the comparable 2004 period. Included in the second quarter 2005
divisional results are non-cash patent amortization charges totaling $1,336,000
versus $125,000 in the comparable 2004 period. Patent amortization charges
increased in the second quarter of 2005 due to the amortization of patent
related intangibles acquired in connection with the GPH Acquisition. Patent
amortization charges will continue to be significant in future periods as we
continue to amortize the acquired patent related costs over a weighted average
economic useful life of approximately 6 years.
Second quarter 2005 marketing, general and administrative expenses
increased to $1,759,000 from $1,160,000 in the comparable 2004 period, due
primarily to the addition of licensing and business development personnel for
the Acacia Technologies group and an increase in consulting expenses related to
a consulting agreement executed with the former CEO of Global Patent Holdings.
Second quarter 2005 patent related legal expenses were $536,000 versus
$576,000 in the comparable 2004 period. Second quarter 2005 patent related legal
expenses included $278,000 in patent related prosecution and enforcement costs
incurred by certain of the companies acquired in the GPH Acquisition
transaction. Excluding the impact of the GPH Acquisition, patent related legal
expenses decreased to $258,000 in the second quarter of 2005 due to a decrease
in costs incurred in connection with the Acacia Technologies group's ongoing DMT
patent commercialization and enforcement programs, including decreased legal
costs related to new patent claims and a decrease in patent enforcement costs
related to ongoing DMT patent related litigation. DMT related legal fees paid to
outside attorneys are incurred based on actual time and out-of-pocket expenses
incurred by external counsel and fluctuate from period to period based on patent
enforcement and prosecution activity in each period. DMT related legal expenses
will fluctuate in future periods based on actual outside patent counsel fees
incurred in connection with the Acacia Technologies group's ongoing DMT patent
commercialization and enforcement programs.
In the second quarter of 2005, the Acacia Technologies group recognized
contingent legal fee expenses totaling $592,000 and inventor royalty expenses
totaling $528,000, in connection with the recognition of related paid-up license
fee revenues.
It is anticipated that the majority of litigation expenses associated
with the recently acquired patent portfolios will be incurred on a contingency
basis where patent attorney fees are paid out of license fee revenues collected
based on a contractual percentage. In connection with the GPH Acquisition, we
expect that other legal expenses associated with the maintenance, licensing and
enforcement of our patented technologies, will increase in future periods as we
continue to roll out our licensing programs for our recently acquired patented
technologies.
3
FINANCIAL CONDITION
Total assets for the Acacia Technologies group were $67,658,000 as of
June 30, 2005 compared to $33,058,000 as of December 31, 2004. Cash and cash
equivalents and short-term investments totaled $39,158,000 as of June 30, 2005
compared to $28,646,000 as of December 31, 2004.
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
Revenues for the second quarter of 2005 were $1,857,000 versus $750,000
in the comparable 2004 period. Second quarter 2005 revenues were comprised of
$1,281,000 in government contract revenues and $576,000 in CustomArrayTM
product, equipment and service revenues.
Government contract revenues relate to the CombiMatrix group's
development of biological threat detection technology under its $5.9 million
Department of Defense cost plus fixed fee contract, originally awarded in March
2004.
The second quarter 2005 division net loss was $3,657,000 versus
$3,516,000 in the comparable 2004 period. The second quarter 2005 results
include non-cash patent amortization, asset depreciation and stock compensation
charges totaling $541,000 as compared to $727,000 in the comparable 2004 period.
The second quarter 2004 results also included a non-cash credit totaling
$391,000 related to changes in the fair value of AR-CombiMatrix common stock
issuable in connection with certain anti-dilution provisions of the September
2002 settlement agreement with Nanogen, Inc. The anti-dilution provisions expire
in September 2005.
Second quarter 2005 government contract costs totaled $1,209,000 versus
$653,000 in the comparable 2004 period. The change was due to increased costs
recognized in connection with the CombiMatrix group's commitments under its
biological threat detection cost plus fixed fee contract with the Department of
Defense, which was originally awarded in March 2004. As of June 30, 2005, the
biological threat detection contract is approximately 68% complete. Second
quarter 2005 internal research and development expenses were $1,415,000 versus
$1,409,000 in the comparable 2004 period. During the second quarter of 2005 and
2004, the CombiMatrix group continued internal research and development efforts
to improve and expand the CombiMatrix group's technology and product offerings.
Second quarter 2005 marketing, general and administrative expenses
increased to $2,502,000 versus $2,228,000 in the comparable 2004 period, due
primarily to an increase in marketing and sales expenses related to the
CombiMatrix group's CustomArray(TM) products and services.
FINANCIAL CONDITION
Total assets for the CombiMatrix group were $49,186,000 as of June 30,
2005 compared to $55,388,000 as of December 31, 2004. Cash and cash equivalents
and short-term investments totaled $16,173,000 as of June 30, 2005 compared to
$23,712,000 as of December 31, 2004.
In June 2005, Acacia Research Corporation obtained commitments to
purchase approximately $3.2 million of its Acacia Research-CombiMatrix common
stock in a registered direct offering, which closed on July 5, 2005. Under the
terms of the transaction, 1,400,444 shares of Acacia Research-CombiMatrix common
stock were sold at $2.25 per share to a select group of institutional investors.
The net proceeds, totaling approximately $3.1 million, which are net of offering
costs, were allocated to the CombiMatrix group. All of the shares of Acacia
Research-CombiMatrix common stock were offered by Acacia Research Corporation
pursuant to an effective registration statement previously filed with the
Securities and Exchange Commission.
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BUSINESS HIGHLIGHTS AND RECENT DEVELOPMENTS
- -------------------------------------------
Business highlights of the second quarter and recent developments include:
ACACIA TECHNOLOGIES GROUP:
o As of July 2005, the Acacia Technologies group is pursuing 18
licensing and enforcement programs which include its
audio/video enhancement and synchronization, broadcast data
retrieval, computer memory cache coherency, credit card fraud
protection, data encryption and product activation, digital
media transmission, digital video production, dynamic
manufacturing modeling, image resolution enhancement,
interactive television, interstitial Internet advertising,
high capacity compact disks, laptop connectivity,
microprocessor enhancement, multi-dimensional bar codes,
network data storage, spreadsheet automation, and resource
scheduling technologies. As of July 2005, the Acacia
Technologies group has executed license agreements and
recognized revenues from 7 of its ongoing licensing and
enforcement programs.
o In April 2005, Financial Systems Innovation LLC, a wholly
owned subsidiary that is part of the Acacia Technologies
group, entered into a non-exclusive license and settled patent
infringement litigation covering the Acacia Technologies
group's credit card fraud protection technology with Petco
Animal Supplies, Inc. The patented technology generally
relates to a computerized system for protecting retailers and
consumers engaged in credit card, check card and debit
transactions.
o In April 2005, VData, LLC, a wholly owned subsidiary that is
part of the Acacia Technologies group, entered into a license
with Nokia Corporation covering a portfolio of patents that
apply to certain multi-dimensional bar codes. The
multi-dimensional bar code technology generally relates to
encoding and reading a data matrix consisting of an array of
data cells with a border. The data matrix can contain a
variety, amount and depth of information that would not fit
on to an ordinary bar code. This patented technology can have
many applications in the manufacturing, distribution,
operations, accounting and security industries such as
tracking the movement of products, collection of data,
improved production capabilities and anti-counterfeiting.
o In April 2005, Microprocessor Enhancement Corporation, a
wholly owned subsidiary that is part of the Acacia
Technologies group, filed a patent infringement lawsuit in the
District Court for the Central District of California against
Intel Corporation and Texas Instruments Corporation. The
lawsuit alleges infringement of Microprocessor Enhancement
Corporation's microprocessor enhancement technology patents by
Intel's Itanium(R) line of microprocessors, and certain series
of digital signal processors sold by Texas Instruments. This
patented technology generally relates to an architecture
employed in advanced pipeline microprocessors. This
architecture allows for conditional execution of
microprocessor instructions, and a later determination of
whether the instructions executed should be written back to
memory. By conditionally executing instructions in this
architecture, significant improvements in microprocessor speed
can be achieved. Certain pipelined processor manufacturers are
adopting this method of processing to improve processor speed.
o In April 2005, Acacia Patent Acquisition Corporation, a wholly
owned subsidiary that is part of the Acacia Technologies
group, acquired a patent relating to a commonly used
technology to connect laptop computers to peripheral devices
via docking stations. The patented technology is used to
connect a laptop or other portable computer to multiple
external devices such as a keyboard, monitor, printer, or
mouse, through a single connector from the laptop to the
docking station.
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o In April 2005, Acacia Media Technologies Corporation added
Time Warner Cable, Cablevision Systems Corporation, Insight
Communications Company, Cebridge Connections and Bresnan
Communications to its DMT(R) patent infringement litigation.
The lawsuit against Time Warner, Insight and Bresnan
Communications was filed in the U.S. District Court for the
Southern District of New York. The lawsuit against Cablevision
Systems Corporation was filed in the Eastern District of New
York, and the lawsuit against Cebridge Connections was filed
in the Northern District of California. In accordance with the
Transfer Order issued February 24th, 2005, by the Judicial
Panel on Multidistrict Litigation, all of the cases were
transferred to the Northern District of California for
consolidation with the existing DMT(R) litigation.
o In May 2005, Computer Cache Coherency Corporation, a wholly
owned subsidiary that is part of the Acacia Technologies
group, added Intel Corporation and Advanced Micro Devices,
Inc. to the patent infringement litigation for its Computer
Memory Cache Coherency technology, which is pending in the
District Court for the Northern District of California.
Industry reports tracking 2003 sales of core logic chipsets by
all manufacturers indicate total annual sales of approximately
$4 billion, with Intel holding the largest market share. In
December 2004, the Company filed a patent infringement lawsuit
against Via Technologies, Inc., another core logic chipset
market leader. The cases will likely be consolidated for
pretrial purposes.
o In May 2005, Financial Systems Innovation LLC, a wholly owned
subsidiary that is part of the Acacia Technologies group,
entered into a non-exclusive license covering its credit card
fraud protection technology with Tuesday Morning Corporation.
o In May 2005, KY Data Systems, LLC, a wholly owned subsidiary
that is part of the Acacia Technologies Group, entered into a
non-exclusive license with Sony Corporation covering a
portfolio of patents that apply to interactive television. The
patents cover receivers such as set-top boxes and certain
televisions used in digital satellite and digital cable
systems that permit television viewers to access interactive
television features supplied by their satellite and cable
providers as part of their digital programming packages.
o In May 2005, TechSearch, LLC, a wholly owned subsidiary that
is part of the Acacia Technologies Group, entered into a
non-exclusive license with Funai Electric Co., Ltd. covering a
patent that applies to a system for recording and playing high
capacity compact disks. The patent, currently being reexamined
by the United States Patent and Trademark Office, covers
certain systems for recording and playing compact disks
containing compressed audio data utilizing certain
data-compression methods.
o In June 2005, the Acacia Technologies group entered into a
license agreement for its Digital Media Transmission
("DMT(R)") technology with Patriot Media, which provides cable
TV services throughout central and northern New Jersey. The
Acacia Technologies group's DMT(R) technology involves the
transmission and receipt of digital audio and/or audio video
content via a variety of means including the internet, cable,
satellite and local area networks. Elements of the DMT(R)
transmission process include a source material library,
identification encoding process, format conversion, sequence
encoding, compressed data storage and transmission. Elements
of the DMT(R) receiving process include a transceiver, format
conversion, storage, decompression and playback.
o In June 2005 Tech Search LLC, a wholly owned subsidiary that
is part of the Acacia Technologies group, entered into a
non-exclusive license with National Instruments covering a
portfolio of patents that apply to computer simulation
systems. The patents cover aspects of computer simulation
systems which can iteratively simulate a complex system
represented by a network of interconnected function blocks and
enable the user to graphically program their simulations.
6
o In June 2005, Financial Systems Innovation LLC, a wholly owned
subsidiary that is part of the Acacia Technologies group,
entered into non-exclusive licenses covering its credit card
fraud protection technology with Sterling Jewelers, Too Inc.
(operator of Limited Too and Justice stores) and Foot Locker,
Inc.
o In July 2005, Financial Systems Innovation LLC, a wholly owned
subsidiary that is part of the Acacia Technologies group,
entered into a non-exclusive license covering its credit card
fraud protection technology with LensCrafters, Inc., Sunglass
Hut Trading Corporation, Pearle Vision, Inc., Cole Vision
Corporation, Watch World International, Inc. and Things
Remembered, Inc.
o In July 2005, Acacia Patent Acquisition Corporation, a wholly
owned subsidiary that is part of the Acacia Technologies
group, acquired several patents covering electromagnetic
compatibility shielding ("ECS") technology commonly
incorporated into hearing aids. The patented technology
shields hearing aids from electromagnetic interference
produced by portable electronic devices such as cell phones,
cordless phones, wireless headphones and headsets, and WIFI
and Bluetooth enabled devices. The ECS technology can be
incorporated into many styles of hearing aids.
o In July 2005, Intel Corporation filed a Complaint in the
District Court for the Northern District of Illinois against
Information Technology LLC, a wholly owned subsidiary that is
part of the Acacia Technologies group, seeking a Declaratory
Judgment of non-infringement of a patent relating to
Information Technology's Dynamic Manufacturing Modeling
technology. The Dynamic Manufacturing Modeling technology
generally relates to a modeling and control process used to
decrease costs and increase production for factory operations.
Such simulation modeling can include a variety of parameters
such as products, fabrication sequences, collections of job
sets, scheduling rules and machine reliability standards. This
technology can be used for exacting manufacturing processes
such as semiconductor fabrication.
o In July 2005, Spreadsheet Automation Corporation, a wholly
owned subsidiary that is part of the Acacia Technologies
group, commenced a patent infringement lawsuit in the District
Court for the Eastern District of Texas against Microsoft
Corporation. The suit alleges the unauthorized use by certain
Microsoft products, including without limitation certain
versions of Microsoft Access and Microsoft Excel, of our
Spreadsheet Automation technology. The Spreadsheet Automation
technology generally relates to automating the production of
worksheet files for use by electronic spreadsheet programs.
Specifically, the patented technology permits the efficient
retrieval of data from external databases by allowing the user
to select specific data from a database and import the
specified data into a spreadsheet program through uniquely
streamlined spreadsheet commands. The adaptive quality of the
technology permits, among other things, the user to retrieve
updated information from an external database without creating
formatting issues in the user's spreadsheet program.
COMBIMATRIX GROUP:
o In May 2005, the CombiMatrix group entered into a
non-exclusive distribution agreement with Inter Medical to
distribute the CombiMatrix group's CustomArray(TM) products in
Japan. Inter Medical will market, sell and service the
CustomArray products in the Japanese marketplace.
o In May 2005, CombiMatrix Corporation formed a wholly owned
subsidiary, CombiMatrix Molecular Diagnostics, Inc. ("CMD"),
to take advantage of CombiMatrix's unique approach to
array-based diagnostics. Matthew C. Watson was named Chief
Executive Officer, and David A. Baunoch, Ph.D. was named
President and Chief Operating Officer of CMD. Mr. Watson and
Dr. Baunoch come to CMD from US LABS, which was recently
acquired by Laboratory Corporation of America, where they were
Vice President of Laboratory Operations and Vice President of
Research and Development, respectively. Both executives bring
to CMD more than 20 years of industry experience and a track
record of building successful companies.
7
o In June 2005, the CombiMatrix group entered into a
co-development agreement with STMicroelectronics ("ST"), a
global leader in the development and manufacturing of
semiconductor products. The co-development will combine the
CombiMatrix group's proprietary electrochemical detection
technology with STs' In-Check(TM) Lab-on-Chip platform to
investigate the feasibility of addressing the research and
point-of-care diagnostics markets. Under the terms of the
agreement, in addition to the sharing of technology and
knowledge, ST will financially support the CombiMatrix group
in this work.
o In July 2005, the CombiMatrix group entered into a
non-exclusive agreement with J.K. International Inc. to
distribute the CombiMatrix group's CustomArray(TM) products in
Japan. J.K. International's marketing and sales organizations
will market, sell and service the CustomArray products in the
Japanese marketplace.
o In July 2005, the CombiMatrix group expanded the management
team at CMD and appointed Dr. Mathew Moore as Director of
Research and Development, Robert Embree as Director of
Laboratory Operations and John Besser as Chief Financial
Officer. The three executives bring to CMD more than 40 years
of combined industry experience and a track record in building
successful diagnostic companies.
A conference call is scheduled for today. The Acacia Technologies Group
presentation and Q&A will start at 1:15 p.m. Pacific Time (4:15 p.m. Eastern).
The CombiMatrix Group presentation and Q&A session will start at 1:45 p.m.
Pacific Time (4:45 p.m. Eastern).
To listen to the presentation by phone, dial (800) 406-5345 for
domestic callers and (913) 981-5571 for international callers, both of whom will
need to provide the operator with the confirmation code 1494274. 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 1494274 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 controls 31 patent portfolios, which include over 120 U.S.
patents, and certain foreign counterparts, covering technologies used in a wide
variety of industries including audio/video enhancement & synchronization,
broadcast data retrieval, computer memory cache coherency, credit card fraud
protection, database management, data encryption & product activation, digital
media transmission (DMT(R)), digital video production, dynamic manufacturing
modeling, enhanced Internet navigation, image resolution enhancement,
interactive data sharing, interactive television, Internet access redirection,
interstitial Internet advertising, laptop connectivity, microprocessor
enhancement, multi-dimensional bar codes, network data storage, resource
scheduling, rotational video imaging and spreadsheet automation.
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's 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.
8
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.
9
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
(UNAUDITED)
CONSOLIDATED BALANCE SHEET INFORMATION
JUNE 30, DECEMBER 31,
2005 2004
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Total Assets $116,757 $ 88,327
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Total Liabilities $ 12,214 $ 11,913
======== ============
Minority Interests $ 482 $ 778
======== ============
Total Stockholders' Equity $104,061 $ 75,636
======== ============
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------------- --------------------------------
JUNE 30, 2005 JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2004
------------- ------------- ------------- -------------
Revenues:
Research and development contract .............. $ -- $ -- $ -- $ 17,302
License fees ................................... 2,682 666 4,545 1,265
Government contract ............................ 1,281 701 2,012 918
Products and services .......................... 576 49 914 146
------------- ------------- ------------- -------------
Total revenues ............................... 4,539 1,416 7,471 19,631
------------- ------------- ------------- -------------
Operating expenses:
Cost of government contract revenues ........... 1,209 653 1,900 858
Cost of product sales .......................... 190 36 353 40
Research and development expenses .............. 1,415 1,409 2,555 2,792
Non-cash stock compensation
amortization - research and development ...... -- 32 -- 101
Marketing, general and administrative expenses.. 4,261 3,388 8,150 6,672
Legal expense - patents ........................ 536 576 1,097 1,178
Contingent legal fees and inventor royalties
expense - patents ............................ 1,120 -- 1,767 --
Non-cash stock compensation amortization
- marketing, general and administrative ...... 15 143 (111) 477
Amortization of patents ........................ 1,610 399 2,800 798
Legal settlement charges (credits) ............. (16) (391) (195) 866
------------- ------------- ------------- -------------
Total operating expenses ..................... 10,340 6,245 18,316 13,782
------------- ------------- ------------- -------------
Operating income (loss) ...................... (5,801) (4,829) (10,845) 5,849
------------- ------------- ------------- -------------
Other income (expense):
Interest income ................................ 382 192 655 350
Other expense .................................. (62) -- (101) --
------------- ------------- ------------- -------------
Total other income ........................... 320 192 554 350
------------- ------------- ------------- -------------
Income (loss) from continuing operations
before income taxes and minority interests........ (5,481) (4,637) (10,291) 6,199
Benefit for income taxes ........................... 64 69 134 136
------------- ------------- ------------- -------------
Income (loss) from continuing operations
before minority interests ........................ (5,417) (4,568) (10,157) 6,335
Minority interests ................................. -- 3 -- 3
------------- ------------- ------------- -------------
Income (loss) from continuing operations ........... (5,417) (4,565) (10,157) 6,338
------------- ------------- ------------- -------------
Discontinued operations:
Estimated loss on disposal of discontinued
operations ...................................... -- (104) (210) (104)
------------- ------------- ------------- -------------
Net income (loss) .................................. $ (5,417) $ (4,669) $ (10,367) $ 6,234
============= ============= ============= =============
Earnings (loss) per common share:
Attributable to the Acacia Technologies group:
Net loss ......................................... $ (1,760) $ (1,153) $ (3,634) $ (2,142)
Basic and diluted loss per share ............... (0.06) (0.06) (0.14) (0.11)
Attributable to the CombiMatrix group:
Basic
Net income (loss) ................................ $ (3,657) $ (3,516) $ (6,733) $ 8,376
Basic earnings (loss) per share ................ (0.12) (0.12) (0.22) 0.29
Diluted
Net income (loss) ................................ $ (3,657) $ (3,516) $ (6,733) $ 8,376
Diluted earnings (loss) per share .............. (0.12) (0.12) (0.22) 0.28
Weighted average shares:
Acacia Research - Acacia Technologies stock:
Basic and diluted .............................. 27,271,416 19,787,466 25,922,412 19,769,901
============= ============= ============= =============
Acacia Research - CombiMatrix stock:
Basic ............................................ 31,200,984 30,459,576 31,200,742 28,867,101
============= ============= ============= =============
Diluted .......................................... 31,200,984 30,459,576 31,200,742 30,385,512
============= ============= ============= =============
10
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
JUNE 30, DECEMBER 31,
2005 2004
-------- ------------
Total Assets $ 67,658 $ 33,058
======== ============
Total Liabilities $ 3,254 $ 3,472
======== ============
Minority Interests $ 482 $ 778
======== ============
Total Stockholders' Equity $ 63,922 $ 28,808
======== ============
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------------- --------------------------------
JUNE 30, 2005 JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2004
------------- ------------- ------------- -------------
Revenues:
License fees ....................................... $ 2,682 $ 666 $ 4,545 $ 1,265
------------- ------------- ------------- -------------
Total revenues ................................... 2,682 666 4,545 1,265
------------- ------------- ------------- -------------
Operating expenses:
Marketing, general and administrative expenses ..... 1,759 1,160 3,369 2,166
Legal expenses - patents ........................... 536 576 1,097 1,178
Contingent legal fees and inventor royalties
expense - patents ................................ 1,120 -- 1,767 --
Amortization of patents ............................ 1,336 125 2,252 250
------------- ------------- ------------- -------------
Total operating expenses ......................... 4,751 1,861 8,485 3,594
------------- ------------- ------------- -------------
Operating loss ................................... (2,069) (1,195) (3,940) (2,329)
------------- ------------- ------------- -------------
Other income:
Interest income .................................... 278 108 449 220
Other income ....................................... 1 -- 1 --
------------- ------------- ------------- -------------
Total other income ............................... 279 108 450 220
------------- ------------- ------------- -------------
Loss from continuing operations before
income taxes and minority interests ................ (1,790) (1,087) (3,490) (2,109)
Benefit for income taxes ............................. 30 35 66 68
------------- ------------- ------------- -------------
Loss from continuing operations before
minority interests ................................. (1,760) (1,052) (3,424) (2,041)
Minority interests ................................... -- 3 -- 3
------------- ------------- ------------- -------------
Loss from continuing operations ...................... (1,760) (1,049) (3,424) (2,038)
Discontinued operations:
Estimated loss on disposal of discontinued
operations ....................................... -- (104) (210) (104)
------------- ------------- ------------- -------------
Division net loss .................................... $ (1,760) $ (1,153) $ (3,634) $ (2,142)
============= ============= ============= =============
11
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
JUNE 30, DECEMBER 31,
2005 2004
-------- ------------
Total Assets $ 49,186 $ 55,388
======== ============
Total Liabilities $ 9,047 $ 8,560
======== ============
Minority Interests $ -- $ --
======== ============
Total Stockholders' Equity $ 40,139 $ 46,828
======== ============
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------------- --------------------------------
JUNE 30, 2005 JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2004
------------- ------------- ------------- -------------
Revenues:
Research and development contract ................... $ -- $ -- $ -- $ 17,302
Government contract ................................. 1,281 701 2,012 918
Products and services ............................... 576 49 914 146
------------- ------------- ------------- -------------
Total revenues .................................... 1,857 750 2,926 18,366
------------- ------------- ------------- -------------
Operating expenses:
Cost of government contract revenues ................ 1,209 653 1,900 858
Cost of product sales ............................... 190 36 353 40
Research and development expenses ................... 1,415 1,409 2,555 2,792
Non-cash stock compensation amortization
- research and development ........................ -- 32 -- 101
Marketing, general and administrative expenses ...... 2,502 2,228 4,781 4,506
Non-cash stock compensation amortization
- marketing, general and administrative ........... 15 143 (111) 477
Amortization of patents ............................. 274 274 548 548
Legal settlement charges (credits) .................. (16) (391) (195) 866
------------- ------------- ------------- -------------
Total operating expenses .......................... 5,589 4,384 9,831 10,188
------------- ------------- ------------- -------------
Operating income (loss) ........................... (3,732) (3,634) (6,905) 8,178
------------- ------------- ------------- -------------
Other income (expense):
Interest income ..................................... 104 84 206 130
Other expense ....................................... (63) -- (102) --
------------- ------------- ------------- -------------
Total other income ................................ 41 84 104 130
------------- ------------- ------------- -------------
Income (loss) from operations before income taxes ..... (3,691) (3,550) (6,801) 8,308
Benefit for income taxes .............................. 34 34 68 68
------------- ------------- ------------- -------------
Division net income (loss) ............................ $ (3,657) $ (3,516) $ (6,733) $ 8,376
============= ============= ============= =============
12