PROSPECTUS SUPPLEMENT
(To Prospectus dated March 17, 2004)
ACACIA RESEARCH CORPORATION
3,500,000 SHARES
ACACIA RESEARCH-ACACIA TECHNOLOGIES COMMON STOCK
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Acacia Research Corporation is offering 3,500,000 shares of our Acacia
Research-Acacia Technologies common stock. The Acacia Research-Acacia
Technologies common stock is intended to reflect the performance of Acacia
Research Corporation's Acacia Technologies group. Holders of Acacia
Research-Acacia Technologies common stock, however, are common stockholders of
Acacia Research Corporation and are subject to all of the risks of an equity
investment in Acacia Research Corporation and all of our businesses, assets and
liabilities.
Our Acacia Research-Acacia Technologies common stock is traded on the Nasdaq
National Market under the ticker symbol "ACTG." The last reported sales price of
our Acacia Research-Acacia Technologies common stock on February 8, 2005, was
$5.68 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE S-1.
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PER SHARE TOTAL
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Offering Price $5.60 $19,600,000
We estimate the total expenses of this offering will be approximately $25,000.
We expect that delivery of the shares of Acacia Research-Acacia Technologies
common stock being offered under this prospectus supplement will be made to
investors on or about February 10, 2005.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus supplement is February 9, 2005
TABLE OF CONTENTS
Risk Factors.................................................. S-1
Special Note Regarding Forward-Looking Statements............. S-1
Market Price and Dividends On Our Stock....................... S-2
Capitalization................................................ S-3
The Offering.................................................. S-4
Use of Proceeds............................................... S-4
Dilution...................................................... S-5
Plan of Distribution.......................................... S-6
Legal Matters................................................. S-6
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This prospectus supplement describes the specific terms of this offering
and other matters relating to us and our financial condition.
The accompanying prospectus gives more general information about securities
we may offer from time to time, some of which may not apply to the Acacia
Research-Acacia Technologies common stock offered by this prospectus supplement.
To the extent there is a conflict between the information contained in this
prospectus supplement, on the one hand, and the information contained in the
accompanying prospectus or any document incorporated by reference therein, on
the other hand, the information in this prospectus supplement shall control.
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this prospectus supplement and the accompanying
prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus supplement or the
accompanying prospectus. This prospectus supplement and the accompanying
prospectus do not constitute an offer to sell or the solicitation of an offer to
buy common stock, nor do this prospectus supplement and the accompanying
prospectus constitute an offer to sell or the solicitation of an offer to buy
common stock in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. You should not assume that the
information contained in this prospectus supplement and the accompanying
prospectus is accurate on any date subsequent to the date set forth on the front
of the document or that any information we have incorporated by reference is
correct on any date subsequent to the date of the document incorporated by
reference, even though this prospectus supplement and any accompanying
prospectus is delivered or common stock is sold on a later date.
Information that we file with the SEC subsequent to the date on the cover
will automatically update and supersede the information contained in this
prospectus supplement and the accompanying prospectus. We incorporate by
reference the documents listed in the accompanying prospectus and any filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, from the date of the accompanying prospectus
until we issue all of the common stock offered pursuant to this prospectus
supplement and the accompanying prospectus.
- i -
RISK FACTORS
AN INVESTMENT IN OUR ACACIA RESEARCH-ACACIA TECHNOLOGIES COMMON STOCK
INVOLVES VARIOUS RISKS. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED
ON PAGES 2 TO 20 OF THE PROSPECTUS ACCOMPANYING THIS PROSPECTUS SUPPLEMENT,
TOGETHER WITH THE OTHER INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, BEFORE PURCHASING
OUR COMMON STOCK. IF ANY OF THE RISKS DISCUSSED IN THE ACCOMPANYING PROSPECTUS
ACTUALLY OCCUR, OUR BUSINESS, OPERATING RESULTS, PROSPECTS OR FINANCIAL
CONDITION COULD BE HARMED. THIS COULD CAUSE THE MARKET PRICE OF OUR ACACIA
RESEARCH-ACACIA TECHNOLOGIES COMMON STOCK TO DECLINE AND COULD CAUSE YOU TO LOSE
ALL OR PART OF YOUR INVESTMENT.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements are
statements that predict or describe future events or trends and that do not
relate solely to historical matters. You can generally identify forward-looking
statements as statements containing the words "may," "will," "expect,"
"believe," "estimate," "anticipate," "intend," "continue," and other similar
expressions or the negative of these terms. You should be aware that the matters
described in our forward-looking statements are subject to known and unknown
risks, uncertainties and other unpredictable factors, many of which are beyond
our control. Statements regarding the following subjects are forward-looking by
their nature:
o our business strategies;
o market trends and risks;
o assumptions regarding economic conditions;
o circumstances affecting anticipated revenues and costs; and
o legislative, regulatory and competitive developments.
These forward-looking statements are subject to various risks and
uncertainties, including those related to:
o the recent slowdown affecting technology companies;
o our ability to successfully develop products;
o rapid technological change in our markets;
o anticipated sources of future revenues;
o changes in demand for our future products;
o our ability to raise capital in the future; and
o the adequacy of our capital resources to fund our operations.
Other risks, uncertainties and factors, including those discussed under
"Risk Factors" in the prospectus accompanying this prospectus supplement or
described in reports that we file from time to time with the Securities and
Exchange Commission, such as our quarterly and annual reports, could cause our
actual results to differ materially from those projected in any forward-looking
statements we make. We are not obligated to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
S-1
MARKET PRICE AND DIVIDENDS ON OUR STOCK
RECENT MARKET PRICES
Acacia Research Corporation's two classes of common stock, Acacia
Research-CombiMatrix common stock and Acacia Research-Acacia Technologies common
stock, commenced trading on the Nasdaq Stock Market on December 16, 2002. The
two classes of common stock were created as a result of Acacia Research
Corporation's recapitalization that was approved by Acacia Research
Corporation's stockholders on December 11, 2002. The two classes of stock
replaced Acacia Research Corporation's common stock formerly traded on the
Nasdaq stock market under the symbol ACRI. Acacia Research-CombiMatrix common
stock and Acacia Research-Acacia Technologies common stock are now listed on the
Nasdaq National Market System. Acacia Research-CombiMatrix common stock is
intended to reflect the performance of Acacia Research Corporation's CombiMatrix
group, and Acacia Research-Acacia Technologies common stock is intended to
reflect the performance of Acacia Research Corporation's Acacia Technologies
group.
The high and low bid prices for our Acacia Research-Acacia Technologies
common stock as reported by NASDAQ for the periods indicated are as follows.
Such prices are inter-dealer prices without retail markups, markdowns or
commissions and may not necessarily represent actual transactions.
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HIGH LOW
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YEAR ENDED DECEMBER 31, 2003:
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Fourth Quarter $8.58 $4.71
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Third Quarter $6.73 $1.25
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Second Quarter $1.75 $0.99
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First Quarter $2.40 $0.96
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YEAR ENDED DECEMBER 31, 2004:
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Fourth Quarter $5.60 $3.91
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Third Quarter $7.14 $2.77
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Second Quarter $7.25 $4.84
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First Quarter $7.50 $5.15
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On February 8, 2005, there were approximately 334 owners of record of
Acacia Research-Acacia Technologies stock and Acacia Research-CombiMatrix stock.
The majority of the outstanding shares of Acacia Research-Acacia Technologies
stock are held by a nominee holder on behalf of an indeterminable number of
ultimate beneficial owners.
DIVIDEND POLICY
To date, we have not declared or paid any cash dividends with respect to
our capital stock, and the current policy of the board of directors is to retain
earnings, if any, to provide for the growth of Acacia Research Corporation.
Consequently, we do not expect to pay any cash dividends in the foreseeable
future. Further, there can be no assurance that our proposed operations will
generate revenues and cash flow needed to declare a cash dividend or that we
will have legally available funds to pay dividends.
S-2
CAPITALIZATION
The following table sets forth our actual capitalization as of September
30, 2004, and our capitalization as adjusted to give effect to the issuance of
3,500,000 shares of our Acacia Research-Acacia Technologies common stock in this
offering at an assumed offering price of $5.60 per share.
The information set forth in the following table should be read in
conjunction with, and is qualified in its entirety by, the financial statements
and the notes thereto included in our Annual Report on Form 10-K for the year
ended December 31, 2003, and in our Quarterly Report on Form 10-Q for the
quarter ended September 20, 2004, which are incorporated by reference into the
accompanying prospectus.
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AS OF SEPTEMBER 30, 2004
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HISTORICAL AS ADJUSTED(1)
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(dollars in thousands)
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STOCKHOLDERS' EQUITY:
Preferred stock $ - $ -
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Acacia Research Corporation, par value $0.001 per
share; 10,000,000 shares authorized; no shares
outstanding - -
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Common stock
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Acacia Research-Acacia Technologies common stock,
par value $0.001 per share, 50,000,000 authorized;
19,739,984 shares issued and outstanding; 23,239,984
shares issued and outstanding, as adjusted 20 23
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Acacia Research-CombiMatrix common stock, par value
$0.001 per share, 50,000,000 authorized; 26,328,122
shares issued and outstanding; 26,328,122 shares issued
and outstanding, as adjusted 31 31
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Additional paid-in capital 263,462 283,034
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Deferred stock compensation 1 1
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Accumulated comprehensive loss (59) (59)
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Accumulated deficit (182,561) (182,561)
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Total stockholders' equity $ 80,894 $ 100,469
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S-3
THE OFFERING
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Acacia Research-Acacia Technologies common stock
offered....................................................... 3,500,000 shares
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Acacia Research-Acacia Technologies common stock
to be outstanding after this offering......................... 27,252,440 shares
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Acacia Research-CombiMatrix common stock offered.............. 0 shares
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Acacia Research-CombiMatrix common stock to be
outstanding after this offering............................... 31,200,496 shares
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Use of Proceeds............................................... We intend to use the net proceeds from the
sale of the securities offered by this
prospectus and the related accompanying
prospectus supplement to provide working
capital for our Acacia Technologies group,
including the Acacia Technologies group's
subsidiaries.
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Nasdaq National Market trading symbols........................ ACTG; CBMX
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To the extent that any outstanding options are exercised, new options are
issued under our stock incentive plans or we issue additional shares of common
stock in the future, there will be further dilution to new investors.
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Our address is 500 Newport Center Drive, 7th Floor, Newport Beach,
California 92660, and our telephone number is (949) 480-8300. Our website is
located at www.acaciaresearch.com. Information contained on our website is not
incorporated by reference into this prospectus supplement and you should not
consider information on our website a part of the prospectus.
USE OF PROCEEDS
We estimate that the net proceeds we will receive from this offering will
be approximately $19,575,000, after deducting the estimated offering expenses.
We will retain broad discretion over the use of the net proceeds from the sale
of our Acacia Research-Acacia Technologies common stock offered hereby. We
currently anticipate using the net proceeds from the sale of our Acacia
Research-Acacia Technologies common stock hereby primarily for working capital
for our Acacia Technologies group, including the Acacia Technologies group's
subsidiaries.
The amounts and timing of the Acacia Technologies group's expenditures may
vary significantly depending on numerous factors, such as the progress of our
licensing programs and intellectual property enforcement and development
efforts, technological advances and the competitive environment for our
businesses. We may use a portion of the net proceeds to acquire additional
intellectual property or acquire or invest in businesses complementary to the
Acacia Technologies group's business and related technologies. Although we have
no specific arrangements with respect to acquisitions, we evaluate acquisition
opportunities and engage in related discussions from time to time.
S-4
DILUTION
Our net tangible book value on September 30, 2004 was as follows:
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SHARES OF NET TANGIBLE
NET TANGIBLE COMMON STOCK BOOK VALUE
BOOK VALUE OUTSTANDING PURCHASE
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CombiMatrix group 23,881,000 31,005,585 0.77
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Acacia Technologies group 28,797,000 19,795,525 1.45
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Acacia Research Corporation Consolidated 52,678,000 N/A N/A
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Without taking into account any other changes in the net tangible book
value for the Acacia Technologies group after September 30, 2004, other than to
give effect to our receipt of the estimated net proceeds from the sale of the
maximum number of shares issuable in this offering (3,500,000 shares) at an
offering price of $5.60 per share, less our estimated offering expenses, the net
tangible book value of the Acacia Technologies group as of September 30, 2004,
after giving effect to the items above, would have been approximately
$48,372,000, or $2.07 per share. This represents an immediate increase in the
net tangible book value of $0.62 per share to existing holders of Acacia
Research-Acacia Technologies common stock and an immediate dilution of $3.53 per
share to new investors. The following table illustrates this per share dilution:
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Offering price per share of Acacia Research-
Acacia Technologies common stock....................... $ 5.60
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Net tangible book value per share as of
September 30, 2004(1).................................. $ 1.45
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Increase in net tangible book value per share
attributable to the offering(1) ....................... $ 0.62
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Pro forma net tangible book value per share
as of September 30, 2004, after giving effect
to the offering(1)..................................... $ 2.07
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Dilution per share to new investors in the
Offering............................................... $ 3.53
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(1) Per share amounts calculated using the net tangible book value of
Acacia Research Corporation's Acacia Technologies group.
The tables above are based on 19,795,525 shares of Acacia Research-Acacia
Technologies common stock and 31,005,585 shares of Acacia Research-CombiMatrix
common stock outstanding as of September 30, 2004 and exclude the shares of
Acacia Research-Acacia Technologies common stock and Acacia Research-CombiMatrix
common stock that may be issued upon the exercise of outstanding options granted
and shares reserved for issuance under our 2002 Acacia Technologies Stock
Incentive Plan and our 2002 CombiMatrix Stock Incentive Plan, as of September
30, 2004.
To the extent that any outstanding Acacia Research-Acacia Technologies
common stock options are exercised, new Acacia Research-Acacia Technologies
common stock options are issued under our stock incentive plans or we issue
additional shares of Acacia Research-Acacia Technologies common stock in the
future, there will be further dilution to new investors.
S-5
PLAN OF DISTRIBUTION
We are offering the shares of our Acacia Research-Acacia Technologies
common stock through direct sales to purchasers without the use of placement
agents.
The shares of Acacia Research-Acacia Technologies common stock sold in this
offering will be listed on the Nasdaq National Market under the trading symbol
"ACTG." We expect that the shares of Acacia Research-Acacia Technologies common
stock will be delivered only in book-entry form through The Depository Trust
Company, New York, New York on or about February 10, 2005.
It is possible that not all of the shares of our Acacia Research-Acacia
Technologies common stock offered pursuant to this prospectus supplement will be
sold at the closing, in which case our net proceeds would be reduced.
The estimated offering expenses payable by us are approximately $25,000,
which includes legal, accounting and printing costs and various other fees
associated with registering and listing the shares of Acacia Research-Acacia
Technologies common stock. After deducting our estimated offering expenses, we
expect the net proceeds from this offering to be up to approximately 19,575,000.
We have agreed with certain purchasers of our Acacia Research-Acacia
Technologies common stock sold in this offering to register upon demand, at our
sole cost and expense, the resale of such common stock if such purchasers
collectively own more than ten percent of our total outstanding common stock.
The transfer agent for our common stock is U.S. Stock Transfer Corporation,
Glendale, California.
LEGAL MATTERS
Certain legal matters relating to this prospectus supplement will be passed
upon for us by Greenberg Traurig, LLP, Costa Mesa, California.
S-6