Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 06, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | FINJAN HOLDINGS, INC. | |
Entity Central Index Key | 1,366,340 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Trading Symbol | FNJN | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,542,283 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 51,142 | $ 41,169 |
Accounts receivable | 3,850 | 2,606 |
Prepaid expenses and other current assets | 3,032 | 765 |
Total current assets | 58,024 | 44,540 |
Property and equipment, net | 110 | 140 |
Investment | 3,518 | 2,618 |
Intangible assets, net | 5,995 | 7,748 |
Other long-term assets | 2,785 | 6,201 |
Total assets | 70,432 | 61,247 |
Current liabilities: | ||
Accounts payable | 2,634 | 4,646 |
Accrued expenses | 983 | 1,303 |
Warrant liability | 0 | 1,096 |
Other liabilities | 1,013 | 1,211 |
Total current liabilities | 4,630 | 8,256 |
Other liabilities, non-current - patent purchase | 3,719 | 5,500 |
Total liabilities | 8,349 | 13,756 |
Commitments and contingencies (Note 3) | ||
Stockholders' equity | ||
Preferred stock - $0.0001 par value; 10,000,000 shares authorized; 153,000 shares designated Series A-1 Redeemable Preferred Stock at December 31, 2017 | 0 | 0 |
Common stock - $0.0001 par value; 80,000,000 shares authorized; 27,260,099 and 27,707,328 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 3 | 3 |
Additional paid-in capital | 28,038 | 22,968 |
Retained earnings | 34,042 | 5,555 |
Total stockholders' equity | 62,083 | 28,526 |
Total liabilities and stockholders' equity | 70,432 | 61,247 |
Series A-1 Preferred stock - $0.0001 par value, no shares and 153,000 issued and outstanding at September 30, 2018 and December 31, 2017, respectively (Liquidation preference of $19,890 at December 31, 2017) | ||
Redeemable Preferred Stock | ||
Series A-1 Preferred stock - $0.0001 par value, no shares and 153,000 issued and outstanding at September 30, 2018 and December 31, 2017, respectively (Liquidation preference of $19,890 at December 31, 2017) | $ 0 | $ 18,965 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 80,000,000 | 80,000,000 |
Common stock, shares issued (in shares) | 27,260,099 | 27,707,328 |
Common stock, shares outstanding (in shares) | 27,260,099 | 27,707,328 |
Series A-1 preferred shares | ||
Redeemable preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Redeemable preferred stock, shares issued (in shares) | 0 | 153,000 |
Redeemable preferred stock, shares outstanding (in shares) | 0 | 153,000 |
Redeemable preferred stock, liquidation preference | $ 19,890 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 0 | $ 0 | $ 82,300 | $ 27,056 |
Cost of revenues | 0 | 0 | 14,601 | 4,008 |
Gross profit | 0 | 0 | 67,699 | 23,048 |
Research and development expense | 789 | 655 | 1,773 | 1,142 |
Selling, general and administrative expenses | 7,938 | 5,112 | 22,113 | 14,284 |
Total operating expenses | 8,727 | 5,767 | 23,886 | 15,426 |
Income (loss) from operations | (8,727) | (5,767) | 43,813 | 7,622 |
Other income (expense) | ||||
Change in fair value of warrant liability | (1,046) | 1,530 | (3,445) | 1,530 |
Interest expense | (136) | 0 | (701) | 0 |
Interest and other income | 38 | 0 | 106 | 0 |
Income (loss) before income taxes | (9,871) | (4,237) | 39,773 | 9,152 |
Provision (benefit) for income taxes | (2,252) | 0 | 11,135 | 269 |
Net income (loss) | (7,619) | (4,237) | 28,638 | 8,883 |
Accretion of preferred stock | 0 | 0 | (925) | (3,925) |
Net income (loss) to common stockholders | $ (7,619) | $ (4,237) | $ 27,713 | $ 4,958 |
Income (loss) from operations per share, basic (in dollars per share) | $ (0.32) | $ (0.21) | $ 1.59 | $ 0.31 |
Income (loss) from operations per share, diluted (in dollars per share) | (0.32) | (0.21) | 1.54 | 0.29 |
Net income (loss) per share, basic (in dollars per share) | (0.28) | (0.16) | 1.04 | 0.36 |
Net income (loss) per share, diluted (in dollars per share) | (0.28) | (0.16) | 1.01 | 0.34 |
Net income (loss) per share applicable to common stockholders, basic (in dollars per share) | (0.28) | (0.16) | 1.01 | 0.20 |
Net income (loss) per share applicable to common stockholders, diluted (in dollars share) | $ (0.28) | $ (0.16) | $ 0.98 | $ 0.19 |
Weighted-average common shares outstanding, basic (in shares) | 27,247,462 | 27,327,936 | 27,488,437 | 24,588,296 |
Weighted-average common shares outstanding, diluted (in shares) | 27,247,462 | 27,327,936 | 28,417,453 | 26,138,201 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 28,638 | $ 8,883 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,300 | 257 |
Change in fair value of warrant liability | 3,445 | (1,530) |
Stock-based compensation | 1,224 | 641 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,306 | 1,066 |
Prepaid expenses and other current assets | (2,267) | (252) |
Other assets | 2,738 | 0 |
Accounts payable | (2,012) | 973 |
Accrued expenses | (320) | (1,328) |
Other liabilities | (496) | 102 |
Net cash provided by operating activities | 33,556 | 8,812 |
Cash flows from investing activities: | ||
Purchase of patents | (1,000) | (2,000) |
Purchase of fund investment | (900) | 0 |
Proceeds from fund investment | 0 | 127 |
Net cash used in investing activities | (1,900) | (1,873) |
Cash flows from financing activities: | ||
Repurchase of Finjan Holdings shares | (2,024) | 0 |
Proceeds from common share offering, net of issuance costs | 0 | 11,951 |
Proceeds from sale of series A-1 preferred shares, net of issuance costs | 0 | 14,375 |
Redemption of preferred shares | (19,890) | (13,777) |
Proceeds from exercise of stock options | 231 | 229 |
Net cash provided by (used in) financing activities | (21,683) | 12,778 |
Net increase in cash and cash equivalents | 9,973 | 19,717 |
Cash and cash equivalents - beginning | 41,169 | 13,678 |
Cash and cash equivalents - ending | 51,142 | 33,395 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 10,700 | 0 |
Supplemental disclosures of cash flow information, non cash: | ||
Series A-1 warrant liability | 0 | 3,313 |
Patent purchase in exchange for payable | 0 | 6,500 |
Changes in accounts receivable, adoption of ASC-606 (see NOTE 1) | (1,306) | (1,066) |
Reclassification of warrant liability to equity | 4,541 | 0 |
Series A preferred shares | ||
Supplemental disclosures of cash flow information, non cash: | ||
Accretion of series A preferred stock to redemption value | 0 | 291 |
Series A-1 preferred shares | ||
Supplemental disclosures of cash flow information, non cash: | ||
Accretion of series A preferred stock to redemption value | 925 | 3,634 |
Accounting Standards Update 2014-09 | ||
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,550) | 0 |
Supplemental disclosures of cash flow information, non cash: | ||
Changes in accounts receivable, adoption of ASC-606 (see NOTE 1) | 2,550 | 0 |
Changes in deferred tax, adoption of ASC-606 (see NOTE 1) | $ 678 | $ 0 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Finjan Holdings, Inc. (the “Company” or “Finjan Holdings”), a Delaware corporation, and its wholly owned subsidiaries, Finjan, Finjan Blue, Finjan Mobile and CybeRisk operates a cybersecurity business focused in four business lines: intellectual property licensing and enforcement, mobile security application development, advisory services and investing in cybersecurity technologies and intellectual property. Revenues and operations from the Company’s Finjan Mobile security business and the Company’s CybeRisk advisory services were immaterial to the condensed consolidated financial statements for the three and nine months ended September 30, 2018 and 2017. Licensing and enforcement of the Company's cybersecurity patent portfolio is operated, through its wholly-owned subsidiary Finjan, Inc. The Company’s common stock has been trading on the NASDAQ Capital Market ("NASDAQ") since May 2014. BASIS OF PRESENTATION These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of the Company for the year ended December 31, 2017 which were included in the annual report on Form 10-K filed by the Company on March 14, 2018. In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the operating results for the year ending December 31, 2018, or any other interim or future periods. USE OF ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to stock-based compensation, investments, the determination of the economic useful life of property and equipment, income taxes and valuation allowances against net deferred tax assets. Management bases its estimates on historical experience or on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements include the accounts of Finjan Holdings and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. RECLASSIFICATIONS Certain amounts within the balance sheet and cash flows for the prior periods presented have been reclassified to conform to the current period presentation reflected in these condensed consolidated financial statements. There was no impact to the previously reported net income (loss). REVENUE RECOGNITION Under Accounting Standards Codification ("ASC") 605, revenue was recognized when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, all obligations have been performed pursuant to the terms of the agreement, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue from the Company’s cybersecurity business results from grants of licenses to its patented cybersecurity technology and settlements reached from legal enforcement of the Company’s patent rights. Revenue is recognized when the arrangement with the licensee has been signed and the license has been delivered and made effective, provided the license fees are fixed or determinable and collectability is reasonably assured. The total amount of the consideration received upon any settlement or judgment is allocated to each element based on the fair value of each element. Elements provided in either settlement agreements or judgments include, the value of a license, legal release and interest. Fair value of licensing agreements and royalty revenues, are recognized as revenues in the condensed consolidated statement of operations. Elements not related to license agreements and royalty revenue in nature will be reflected in other income (expense), net in the condensed consolidated statements of operations. Legal release as part of a settlement agreement is recognized as a separate line item in the condensed consolidated statements of operations when value can be allocated to the legal release. When the Company reaches a settlement with a defendant, no value is allocated to the legal release since the existence of a settlement removes legal standing to bring a claim of infringement, and without a legal claim, the legal release has no economic value. The element that is applicable to interest income will be recorded in other income (expense), net. When settlements or judgments are achieved at discounts to the fair value of a license, the Company allocates the full settlement or judgment, excluding specifically named elements as mentioned above, to the value of the license agreement or royalty revenue under the residual method relative to full license fair value prior to the discount. The Company adopted guidance ASC-606 effective January 1, 2018. For further details, see "Recently adopted accounting pronouncements" below. CONCENTRATIONS OF CREDIT RISK The Company maintains substantially all of its cash and cash equivalents in financial institutions located in the United States. At times, the Company’s cash and cash equivalent balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts. As of September 30, 2018 , and December 31, 2017 , substantially all of the Company’s cash and cash equivalents are uninsured. ACCOUNTING FOR WARRANTS The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). DERIVATIVE LIABILITIES In connection with the issuance of Series A-1 Preferred Stock, the Company issued a warrant with variable consideration from June 2017 through September 2018. The Company determined that this instrument is an embedded derivative pursuant to ASC 815, “Derivatives and Hedging” and recorded a warrant liability that was reclassified to equity during this period (see Note 6). The accounting treatment of derivative financial instruments requires that the Company record the warrant, at its fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The Monte Carlo Valuation model is used to estimate the fair value of the warrant. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the instrument granted. The risk-free interest rate used is the United States Treasury rate for the day of the grant having a term equal to the life of the equity instrument. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate. The dividend yield is zero percent as the Company has not made any dividend payment. The Company determines the expected term of its warrant awards by using the contractual term. The principal assumptions used in applying the model were as follows: Assumptions: For Three and Nine Months Ended September 30, 2018 Risk-free interest rate 2.3% - 2.5% Expected life 1.8 - 2.2 Years Expected volatility 65% - 70% Dividends 0.0% NET INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share is based upon the weighted-average number of common shares outstanding. Diluted net income (loss) per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands, except share and per share data) Numerator: Net income (loss) to common stockholders $ (7,619 ) $ (4,237 ) $ 27,713 $ 4,958 Denominator: Weighted-average common shares, basic 27,247,462 27,327,936 27,488,437 24,588,296 Weighted-average common shares, diluted* 27,247,462 27,327,936 28,417,453 26,138,201 Net income (loss) per common share: Basic: $ (0.28 ) $ (0.16 ) $ 1.01 $ 0.20 Diluted: $ (0.28 ) $ (0.16 ) $ 0.98 $ 0.19 * The diluted earnings per common share included the weighted average effect of 209,689 unvested RSU's and 719,327 stock options that are potentially dilutive to earnings per share for the nine months ended September 30, 2018; 462,046 unvested RSU's and 1,087,859 stock options for the nine months ended September 30, 2017. For the three months ended September 30, 2018 and 2017, the securities would be anti-dilutive and were excluded. The following potential common shares were excluded from the calculation of net income (loss) per common share, diluted as their effect would have been anti-dilutive for the periods presented: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 Stock options 2,574,981 1,620,507 733,025 1,087,859 Restricted stock units 542,476 462,046 17,778 — Warrants 2,355,506 2,355,506 2,355,506 2,355,506 Total 5,472,963 4,438,059 3,106,309 3,443,365 INCOME TAXES The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which contains certain practical expedients in response to identified implementation issues. The Company elected to adopt ASC-606 under Modified Retrospective approach. Under the Modified Retrospective approach, only contracts with customers for which there were remaining unsatisfied performance obligations (open contracts) at the beginning of initial year of adoption must be restated to apply retrospectively the guidance under ASC-606. Any resulting impact for such contracts prior to the beginning of the initial year of adoption are made as an adjustment to opening retained earnings for such year. On January 1, 2018, the Company adopted ASC-606 using the modified retrospective method. This method required retrospective application of the new accounting standard to those contracts which were not completed as of January 1, 2018. Results for the reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The change to the current revenue policy is the timing of revenue recognition. Under the guidance ASC 605, the Company recognized revenue upon receipt of funds related to an executed agreement or funds which were received within 90 days of receipt. Under the guidance ASC 606, all revenue is recognized upon execution of the agreement, including any future dated payments, which often spread over several quarters or years. The Company recorded $2.6 million to opening retained earnings of $5.6 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to existing contracts that had 2019 payment dates. The cumulative effect of the changes made to the condensed consolidated balance sheet as of January 1, 2018 under current assets for the adoption ASU 2014-09, Revenue - Revenue from Contracts with Customers were as follows (in thousands): Balance Sheet Balance at December 31, 2017 Adjustments due to ASU 2014-09 Balance at January 1, 2018 Current Assets Accounts receivable $ 2,606 $ 2,550 $ 5,156 Liabilities and Stockholders' Equity Retained earnings $ 5,555 $ 2,550 $ 8,105 In accordance with the new revenue recognition standards, the impact of adoption of ASC-606 to the condensed consolidated statement of operations and balance sheet for the period ended September 30, 2018 was as follows (in thousands): Income Statement Three Months ended September 30, 2018 Nine Months ended September 30, 2018 As reported Balance without adoption - ASC-606 Effect of change As reported Balance without adoption - ASC-606 Effect of change Revenue $ — $ 1,300 $ (1,300 ) $ 82,300 $ 81,000 $ 1,300 Provision for income taxes $ (2,252 ) $ (1,888 ) $ (364 ) $ 11,135 $ 10,771 $ 364 Net income (loss) $ 2,252 $ 3,188 $ (936 ) $ 71,165 $ 70,229 $ 936 September 30, 2018 Balance Sheet As reported Balance without ASC-606 Effect of change Current Assets Accounts receivable $ 3,850 $ — $ (3,850 ) Other long-term assets (1) $ 678 $ — $ (678 ) Prepaid income tax $ 2,331 $ 2,695 $ 364 Liabilities and Stockholders' Equity Retained earnings $ 34,042 $ 29,878 $ 4,164 (1) Deferred tax assets related to the adoption of ASC-606 The Company also adopted the following standards during the nine months ended September 30, 2018, none of which had a material impact on the Company's condensed consolidated financial statements: Standard Description Effective date 2016-09 Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting January 1, 2018 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments January 1, 2018 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting June 1, 2018 Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued ASU No. 2016-02, " Leases" (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. In July 2018, the FASB issued ASU 2018-10, to provide certain areas for improvement in ASU 2016-02. The New Leasing Standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those annual periods, early adoption is permitted. Management is evaluating the impact of adopting ASU 2016-02 and ASU 2018-10 on our condensed consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception". Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect of the standard on its condensed consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. Adoption of this guidance is required for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating this guidance and the impact of this update on its condensed consolidated financial statements. Other recent accounting standards that have been issued or proposed by FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's condensed consolidated financial statements upon adoption. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS Prepaid Expenses and Other Current Assets The components of prepaid expenses and other current assets are as presented below: September 30, December 31, (in thousands) Prepaid income tax (see Note 10) $ 2,331 $ — Other prepaid expenses and other current assets 701 765 $ 3,032 $ 765 Intangible Assets The Company and Finjan Blue entered into a Patent Assignment and Support Agreement (the “Patent Assignment Agreement”) with IBM effective as of August 24, 2017 (see "Note 3 - Commitments and Contingencies", "Finjan Blue"). In accordance with ASC 350-30-35-2 through 35-4, Intangibles-Goodwill and Other, the Company determined that the useful life of the patents acquired under the Patent Assignment and Support Agreement should be amortized over the four -year term of the agreement. On May 15, 2018, Finjan Blue, entered into a second Patent Assignment and Support Agreement (the “May 2018 Patent Assignment Agreement”) with IBM. Pursuant to the May 2018 Patent Assignment Agreement, Finjan Blue acquired 56 select issued and pending IBM patents in the security sector. The terms of the May 2018 Patent Assignment Agreement are confidential. In accordance with ASC 350-30-35-2 through 35-4, Intangibles-Goodwill and Other, the Company determined that the useful life of the patents acquired under the May 2018 Patent Assignment Agreement should be amortized over five years as the covenants between the parties are effective for that period. The components of these intangible assets are as follows: September 30, December 31, (in thousands) Patents $ 26,070 $ 26,552 Less accumulated amortization (20,075 ) (18,804 ) $ 5,995 $ 7,748 Amortization expense for the three and nine months ended September 30, 2018 was $0.5 million and $1.3 million , respectively, and $0.2 million for the three and nine months ended September 30, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases On July 19, 2018, the Company entered into an office lease agreement for its headquarters through June 2023. The annual rent is approximately $0.7 million , payable in equal monthly installments, unless earlier terminated by either party in accordance with the lease. The annual rent is subject to an approximate 3.5% increase at each anniversary of the commencement date during the term of the agreement. The following table sets forth the Company's future minimum lease payments under its operating lease commitments as of September 30, 2018 (in thousands): For the year ending December 31, 2018 (remainder) $ 124 2019 747 2020 773 2021 801 2022 829 2023 425 $ 3,699 The Company accounts for its leases under the straight-line method of accounting. Deferred rent payable was $0 and $36,000 as of September 30, 2018 and December 31, 2017, respectively, and is included in non current liabilities on the condensed consolidated balance sheets. Rent expense was $146,000 and $432,000 for the three months and nine months ended September 30, 2018, respectively, and $198,000 and $573,000 for the three and nine months ended September 30, 2017, respectively. Rental income was $102,000 and $186,000 for the three and nine months ended September 30, 2018, respectively, and $90,000 and $267,000 for the three and nine months ended September 30, 2017, respectively. Capital Commitments On November 21, 2013, the Company made a $5.0 million commitment to invest in JVP VII Cyber Strategic Partners, L.P. (the “JVP Fund”), an Israel-based limited partnership venture capital fund seeking to invest in early-stage cyber technology companies. If and when the Company funds the entire amount of the investment, it will be less than a 10% limited partnership interest in which the Company will not be able to exercise control over the fund. Accordingly, the Company has accounted for this investment under the cost method of accounting. Following a cash call on February 23, 2018 for $0.5 million and September 4, 2018 for $0.4 million , the Company had an outstanding capital commitment to the JVP Fund of $1.8 million as of September 30, 2018. The remaining commitment can be called at any time. Contractual Commitments Finjan Mobile On April 21, 2017, the Company and Finjan Mobile, a wholly-owned subsidiary of the Company, entered into a Confidential Avira VPN Platform Distribution Agreement (the “Distribution Agreement”) with Avira, Inc., a Delaware corporation (“Avira”). Pursuant to the Distribution Agreement, Avira will provide its Virtual Private Network (“VPN”) platform and technical support (“VPN Platform”) to Finjan Mobile, and Finjan Mobile will utilize the VPN Platform as part of its VitalSecurity™ suite of product offerings. Avira also granted Finjan Mobile related license rights in connection with the Distribution Agreement and starting July 1, 2017, Finjan Mobile began paying Avira $3.9 million in fees under the Distribution Agreement, payable in 12 quarterly installments of $0.3 million over the subsequent 3 years. The Company has analyzed the terms of the agreement and has accounted for the transaction as a service agreement, to be expensed over the period of service. As of September 30, 2018, the Company has a $2.3 million contractual obligation due over the next 7 quarters. Finjan Blue As described in Note 2, the Company and Finjan Blue entered into a Patent Assignment Agreement with IBM effective as of August 24, 2017. Pursuant to the Patent Assignment Agreement, Finjan Blue acquired 41 select issued and pending IBM Security Patents in exchange for $8.5 million cash, payable as follows: (i) $2.0 million upon execution of the Patent Assignment Agreement and (ii) $6.5 million over the subsequent four years . The Company made its second payment of $1.0 million on August 24, 2018. As of September 30, 2018, the Company has a remaining balance due of $5.5 million . The IBM Security Patents have been recorded at their present value of $7.0 million in the first quarter of 2018, recognizing a present value adjustment of $1.4 million . Accretion related to the present value and amortization expense is recognized over the expected useful life. During the three months ended September 30, 2018 accretion and amortization expense was $0.1 and $0.5 million , respectively, and for the nine months ended September 30, 2018, accretion and amortization expense was $0.7 million and $1.3 million , respectively. IBM will support Finjan Blue in its development and licensing of the IBM Security Patents and provide assistance for such efforts as needed for the term of the Agreement and Finjan Blue will reimburse IBM for reasonable time and out of pocket costs for such assistance, however IBM will no t receive further proceeds from such efforts. IBM does have reservation of rights with respect to the IBM Security Patents for its current licensees and open source initiatives. |
ACCRUED EXPENSES & WARRANT LIAB
ACCRUED EXPENSES & WARRANT LIABILITY | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES & WARRANT LIABILITY | ACCRUED EXPENSES & WARRANT LIABILTY Accrued Expenses The components of accrued expenses are as presented below: September 30, December 31, (in thousands) Legal - Litigation / Licensing $ 760 $ — Compensation 218 1,233 Other 5 70 $ 983 $ 1,303 Warrant Liability A summary of the Company's Level 3 derivative liabilities for the nine months ended September 30, 2018 is as follows (in thousands): Balance, December 31, 2017 $ 1,096 Fair value change of derivative liabilities 3,445 Reclassification to additional paid-in capital (4,541 ) Balance, September 30, 2018 $ — The change in fair value of the warrant liability resulted in a loss of $1.0 million and $3.4 million for the three and nine months ended September 30, 2018, respectively, and a gain of $1.5 million for the three and nine months ended September 30, 2017. |
LICENSE, SETTLEMENT AND RELEASE
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | 9 Months Ended |
Sep. 30, 2018 | |
License Settlement And Release Agreement [Abstract] | |
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | LICENSE, SETTLEMENT AND RELEASE AGREEMENT On June 29, 2018, the Company including its wholly-owned subsidiaries, entered into a Confidential Patent License Agreement (the “June License Agreement”) with Trend Micro Incorporated (K.K.), a Japanese corporation (“Trend Micro Japan”) and Trend Micro, Inc., a California corporation (“Trend Micro U.S. and collectively with Trend Micro Japan, the “Trend Micro Parties”). The June License Agreement provides that the Trend Micro Parties will obtain a license to, among others, the Finjan patents and pay the Finjan parties $13.4 million in cash which Finjan received June 29, 2018. Further, upon acquisition by the Trend Micro Parties of certain entities, the Trend Micro Parties will pay additional license fees to Finjan, unless otherwise mutually agreed to by the Company and the Trend Micro Parties. Further, the June License Agreement has additional provisions relating to certain unlicensed products of any company that acquires a Trend Micro Party, in which case additional license fees may apply. The parties also entered into related agreements with respect to their respective patents, including the transfer of 18 select issued security-related patent assets from the Trend Micro Parties to the Finjan Parties. In accordance with ASC-845-10-30, the Company determined that the acquired assets are non-monetary with no defined future benefit, resulting in the conclusion that they are not assets. The remaining terms of the June License Agreement are confidential. On April 6, 2018, the Company and its wholly-owned subsidiary Finjan, entered into a Confidential Patent License and Settlement Agreement (the “Finjan License”) with Carbon Black, Inc., a Delaware corporation (“Carbon Black”), whereby the companies have resolved all pending litigation matters (Case No. 5:18-cv-01760-NC). In addition, Finjan Mobile, a wholly-owned subsidiary of the Company and Carbon Black have entered into a separate Confidential Patent Cross License Agreement (the “Cross License”), which serves to ensure the parties’ freedom to operate under the other’s patent portfolio. The terms of each agreement are confidential. Under the terms of the Finjan License, Carbon Black agreed to pay Finjan $3.9 million in license fees, as follows: (i) $1.3 million within five ( 5 ) business days of the Effective Date of the Finjan License, which was received on April 9, 2018, (ii) $1.3 million on or before September 30, 2018, which was received on September 26, 2018, and (iii) $1.3 million on or before December 31, 2018. The Company recognized $3.9 million as revenues as of September 30, 2018, in accordance with the Company’s revenue recognition policy as described in Note 1. Further, upon acquisition of Carbon Black or acquisitions by Carbon Black, additional one-time license fees will be due to Finjan equal to eight percent ( 8% ) of the gross revenues of certain qualifying products and services for the four ( 4 ) concluded quarters immediately preceding the acquisition. On February 28, 2018, Finjan Holdings, Inc. and its subsidiaries, including its wholly-owned subsidiary, Finjan (collectively, the “Finjan Parties”), entered into a Confidential Patent License and Settlement Agreement (the “Symantec License and Settlement Agreement”) with Symantec and its subsidiary, Blue Coat Systems, LLC (collectively, the “Symantec Parties”). Pursuant to the Symantec License and Settlement Agreement, the parties resolved and settled all claims between them. As part of the settlement, the Symantec Parties obtained a license to, among others, the Finjan patents and agreed to pay the Finjan Parties $65.0 million in cash within twenty ( 20 ) days of the Effective Date of the Symantec License and Settlement Agreement, which Finjan received on March 19, 2018. The Company recognized $65.0 million as revenues as of September 30, 2018, in accordance with the Company’s revenue recognition policy as described in Note 1. Further, if Symantec acquires certain entities within four years from the Effective Date, the Symantec Parties will pay additional license fees of up to $45.0 million to the Finjan Parties, unless otherwise mutually agreed to by the Company and Symantec. The remaining terms of the Symantec License and Settlement Agreement are confidential. On April 21, 2017, the Company entered into a Confidential Patent License Agreement (the “April 2017 Agreement”) with a European corporation (“EU Licensee”). Pursuant to the April 2017 Agreement, EU Licensee will obtain a license to our patent portfolio and will pay Finjan $4.9 million cash, in license fees, paid as follows: (i) $2.3 million to be paid within 10 days after the effective date of the April 2017 Agreement, which was received in May, 2017, (ii) $1.3 million on or before January 31, 2018, which was paid on February 1, 2018 and (iii) $1.3 million on or before January 31, 2019. The Company collected and recognized $2.3 million of the $4.9 million license as revenues as of June 30, 2017. The second installment of $1.3 million was received on February 1, 2018 and recognized as revenues as of December 31, 2017. The final payment of $1.3 million is due on or before January 31, 2019 and is included in accumulated adjustments on January 1, 2018, as further described in Note 1, recently adopted accounting pronouncements. Such license does not grant EU Licensee any right to transfer, sublicense or grant any rights under the April 2017 Agreement to a third party except as specifically provided under the April 2017 Agreement. Such license also has certain provisions relating to certain unlicensed products of any company that acquires EU Licensee, or is acquired by EU Licensee or its affiliates, in which case additional license fees may apply. The specific terms of the April 2017 Agreement are confidential. On March 30, 2017, Finjan entered into a Confidential Master Agreement (the “Sophos Agreement”) with Sophos Group plc, a public limited company organized and existing under the laws of England and Wales, Sophos Limited, a corporation organized and existing under the laws of England and Wales (“Sophos Limited”), and Sophos Inc. (“Sophos Inc.”), a Massachusetts corporation (collectively, “Sophos”). Pursuant to the Sophos Agreement, Finjan and Sophos Inc. agreed to dismiss the suit Finjan, Inc. v. Sophos, Inc. before the United States District Court of the Northern District of California (case no. 3:14cv1197-WHO) with prejudice. The Sophos Agreement also provides for full releases by the parties and covenants not to sue. Under the terms of the Sophos Agreement, on March 30, 2017, Sophos obtained a fully paid up license to the Finjan patent portfolio and pay a license fee of $15.0 million in cash, which Finjan received on March 31, 2017. The Company recognized $15.0 million as revenues as of March 31, 2017. Finally, in connection with the Sophos Agreement, on March 30, 2017, Finjan Mobile entered into a Confidential Patent Cross License Agreement (the “Finjan Mobile Cross License Agreement”) with Sophos Limited. Pursuant to the terms of the Finjan Mobile Cross License Agreement, the parties granted patent cross licenses in the Field of Use and Sophos Limited will pay Finjan Mobile $2.5 million cash, of which $1.25 million was received on March 29, 2018. The final payment of $1.25 million is due on or before March 31, 2019 and is included in accumulated adjustments on January 1, 2018, as further described in Note 1, recently adopted accounting pronouncements. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Stock Repurchase Program On May 2, 2018, the Company’s board of directors authorized the repurchase of issued and outstanding shares of the Company’s common stock having an aggregate value of up to $10.0 million pursuant to a share repurchase program. The authorization did not specify an expiration date. The repurchases under the share repurchase program were made in the open market or in privately negotiated transactions and were funded from the Company’s working capital. All shares of common stock repurchased under the Company’s share repurchase program were retired and restored to authorized but unissued shares of common stock at September 30, 2018. During the nine months ended September 30, 2018, the Company repurchased 686,492 shares of its common stock under the share repurchase program, for an aggregate purchase price of approximately $2.0 million , or a weighted average cost of $2.93 per share. In accordance with ASC 505-30-30-8, we charged the excess over the par value entirely to retained earnings in recognition of the fact that a corporation can capitalize or allocate retained earnings for such purposes. As of September 30, 2018, the Company had a remaining authorization of $8.0 million for future share repurchases. Preferred Stock Series A-1 During the quarter ended ended March 31, 2018, the Company retired all shares of the Series A-1 Preferred stock, $19.9 million or 153,000 shares; $15.3 million reduced the original recorded value of the Series A-1 Preferred stock and $4.6 million reduced the accreted value. During the issuance of the Series A-1 Preferred stock, the Company incurred issuance costs of $1.0 million which were recorded as an offset to the preferred stock. Such costs have been recognized as a deemed dividend upon the redemption and retirement of the Preferred stock, which occurred during the quarter ended March 31, 2018. The Company accretes changes in redemption value over the period from the date of issuance to the earliest redemption dates of the security. The increase in the redemption value is a deemed dividend that increases the carrying value of the Series A-1 Preferred Stock to equal the redemption value at the end of each reporting period with an offsetting decrease to additional paid-in-capital. The Company recorded a deemed dividend of $4.6 million during the second half of 2017, representing an increase to the Series A-1 Preferred Stock's redemption (liquidation) value. On issuance of the Series A-1 Preferred stock, the Company agreed to issue to Soryn HLDR Vehicle II LLC, a Delaware limited liability company, a fully vested common stock warrant (the “Warrant”), to initially purchase 2,000,000 shares of common stock, $0.0001 par value per share of the Company at an exercise price of $3.18 per share, which increased to 2,355,506 shares in accordance with its terms. The Warrant has a term of three years . Upon the closing of the sale and issuance of the Series A-1 Preferred Stock on June 19, 2017, the Warrant was issuable for 2,000,000 shares, increased by an additional 309,136 shares on June 30, 2017 and an additional 46,370 shares on July 25, 2017. The holder of the Warrant has the right to acquire a variable amount of common stock at a fixed price for the first 15 months . Under ASC 815-40-15-8A, the Warrant is not considered indexed to the Company’s stock, and thus it had a derivative feature and was classified as a liability for the first 15 months. The Company valued the Warrant at inception using a Monte Carlo valuation model, recording a $3.3 million warrant liability at inception, which was then marked-to-market at each reporting period with the change in fair value recorded in the condensed consolidated statements of operations. The change in fair value of the warrant liability for the three and nine months ended September 30, 2018 was a loss of $1.0 million and $3.4 million , respectively, and a gain of $1.5 million for both periods in 2017. On September 19, 2018, upon expiration of the 15 month period, the Warrant was marked-to-market and its value increased to $4.5 million and reclassified such amounts to equity. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION Stock-based compensation to employees and non-employees is recognized as expense in the condensed consolidated statement of operations. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using Black-Scholes option pricing model for stock options and fair value for Restricted Stocks Units ("RSUs"), and is recognized as an expense over the requisite service period (generally the vesting of the equity awards). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including future employee stock option exercise behavior and requisite service periods. The Company adopted ASU 2016-09 and 2018-07 during the year and recognizes forfeitures as they occur. There were none since the adoption of these pronouncements. On June 21, 2017, at the annual meeting of stockholders, the Company's shareholders approved (i) an increase of 1,000,000 shares to the Finjan Holdings, Inc. 2014 Plan and (ii) the addition of an “evergreen” feature which provides for the annual replenishment of shares to the Restated 2014 Plan share reserve without stockholder approval, which represented an additional 1,385,366 shares as of January 1, 2018 (equal to 5.0% of our outstanding shares of Common Stock as of the end of our immediately preceding fiscal year). As of September 30, 2018, the Company has 1,558,142 shares available for issuance under the 2014 Plan. During the three and nine months ended September 30, 2018 , the Company expensed $471,000 and $1,224,000 , respectively, and $222,000 and $641,000 for the three and nine months ended September 30, 2017, of stock-based compensation in the condensed consolidated statements of operations. All stock-based compensation expenses were related to selling, general and administration. During the nine months ended September 30, 2018, 143,026 stock options were exercised for cash proceeds of $0.2 million . Stock Options The following table is a summary of stock option activity during the nine months ended September 30, 2018: Number of Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2017 2,341,340 $ 1.77 5.78 $ 1,087 Options granted 376,667 $ 2.41 9.41 $ 716 Options exercised (143,026 ) $ 1.61 — — Options forfeited — — — — Options expired — — — — Outstanding – September 30, 2018 2,574,981 $ 1.88 7.21 $ 6,268 Exercisable – September 30, 2018 1,352,795 $ 1.59 5.53 $ 3,673 As of September 30, 2018, total compensation cost not yet recognized related to restricted stock awards and unvested stock options was approximately $2.6 million , which is expected to be recognized over a weighted-average period of 2.5 years . The Company estimates the fair values of stock options using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model and the weighted-average grant date fair value of the option awards for the periods presented were as follows: Three and Nine Months Ended September 30, 2018 Three and Nine Months Ended September 30, 2017 Volatility 105% 132% - 141% Expected term (in years) 6 6 Risk-free rate 2.24% 1.82% - 2.19% Expected dividend yield — — Weighted-average grant date fair value per option $ 2.24 $ 1.45 - 3.32 The risk-free interest rate is based on the U.S. Treasury rates with maturities similar to the expected term of the option. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate and was based on historical volatility of comparative companies that are similar to the Company. During the nine months ended September 30, 2018, the Company updated its volatility assumptions to reflect the increased trading history in the Company’s stock. The expected term was estimated using the simplified method. The simplified method calculates the expected term as the average vesting of the option. The dividend yield is 0% as the Company has never declared or paid any cash dividends and does not anticipate paying dividends in the future. Restricted Stock Units The following table is a summary of restricted stock units award activity during the nine months ended September 30, 2018: Nine Months Ended September 30, 2018 Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 438,712 $ 2.28 Shares granted 200,000 $ 3.16 Shares vested (96,236 ) $ 2.33 Shares forfeited — — Non-vested 542,476 $ 2.60 The aggregate intrinsic value of the unvested RSU's was $2.3 million as of September 30, 2018. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In the course of business, the Company obtains legal services from a firm in which the Company’s Chairman is a partner. The Company incurred approximately $38,000 and $114,000 in legal fees to the firm for the three and nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018 and December 31, 2017, the Company had balances due to this firm of $13,000 and $113,000 respectively. Such amounts are included as part of other liabilities on the accompanying condensed consolidated balance sheets. The Company entered into a sublease agreement at its headquarters, effective July 1, 2018 with Benhamou Global Ventures, a company in which one of the Company's Directors serves as Chairman and CEO. Rental income from the sublease is approximately $15,000 quarterly for an undefined term. The Company entered into a second sublease agreement at its headquarters, effective July 1, 2018 with a portfolio company in which one of the Company's Directors is an investor. Rental income from the sublease is approximately $45,000 quarterly for an undefined term. |
LITIGATION, CLAIMS AND ASSESSME
LITIGATION, CLAIMS AND ASSESSMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION, CLAIMS AND ASSESSMENTS | LITIGATION, CLAIMS AND ASSESSMENTS A. United States District Court Actions Finjan, Inc. v. FireEye, Inc., Case No. 4:13-cv-03133-SBA, (N.D. Cal) Finjan filed a patent infringement lawsuit against FireEye, Inc. (“FireEye”) in the United States District Court for the Northern District of California on July 8, 2013, asserting that FireEye, Inc. was directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,804,780, 7,058,822, 7,647,633, 7,975,305, 8,079,086, 8,225,408, and 6,154,844, through the manufacture, use, importation, sale, and/or offer for sale of its products and services, including but not limited to FireEye’s Threat Protection Platform, including the FireEye Malware Protection System, the FireEye Dynamic Threat Intelligence, and the FireEye Central Management System. On January 12, 2018, the parties stipulated that all claims in the case be dismissed with prejudice pursuant to a confidential patent license and settlement agreement executed December 29, 2017. Finjan, Inc. v. Blue Coat Systems, Inc., Case No. 5:13-cv-03999-BLF (N.D. Cal.) ("Blue Coat I") Finjan filed a patent infringement lawsuit against Blue Coat Systems, Inc., (“Blue Coat I”) in the United States District Court for the Northern District of California on August 28, 2013, asserting that Blue Coat was directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,804,780, 6,965,968, 7,058,822, 7,418,731 and 7,647,633. This action was before the Honorable Judge Beth Labson Freeman. Trial commenced July 20, 2015. On August 4, 2015, the jury returned a unanimous verdict that each of the Finjan asserted patents are valid and enforceable. Further, the jury returned a unanimous verdict that Finjan’s U.S. Patent Nos. 6,154,844, 6,804,780, 6,965,968, and 7,418,731 were literally infringed by Blue Coat, and that U.S. Patent No. 7,647,633 was infringed by Blue Coat under the Doctrine of Equivalents. The jury also awarded Finjan approximately $39.5 million in damages as reasonable royalties for Blue Coat's infringement, and such finding was appealed by Blue Coat to the Court of Appeals for the Federal Circuit ("Federal Circuit"). On March 5, 2018, the Court ordered, pursuant to stipulation between the parties following entry into a confidential patent license and settlement agreement, that all claims in the case be dismissed with prejudice. Finjan, Inc. v. Blue Coat Systems LLC, Case No. 5:15-cv-03295-BLF (N.D. Cal.) Finjan filed a second patent infringement lawsuit against Blue Coat Systems LLC (“Blue Coat II”) in the United States District Court for the Northern District of California on July 15, 2015, asserting that Blue Coat was directly infringing certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,965,968, 7,418,731, 8,079,086, 8,225,408, 8,677,494, 8,566,580, 9,141,786, 9,189,621, and 9,219,755 through the manufacture, use, importation, sale, and/or offer for sale of its products and services. A trial was held on October 31, 2017, that resulted in a partial verdict, followed by a retrial on certain issues on January 8, 2018. The Court declared a mistrial following the Federal Circuit’s January 10, 2018 issuance of its decision related to Blue Coat I. The Court ordered, among other things, a second retrial for February 12, 2018, which it later vacated on February 9, 2018. On March 5, 2018, the Court ordered pursuant to stipulation between the parties following entry into a confidential patent license and settlement agreement, dismissal of all claims with prejudice. Finjan, Inc. v. Symantec Corporation, Case No. 4:14-cv-02998-HSG (N.D. Cal.) Finjan filed a patent infringement lawsuit against Symantec Corporation (“Symantec”) in the United States District Court for the Northern District of California on June 30, 2014, asserting that Symantec was directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 7,756,996, 7,757,289, 7,930,299, 8,015,182, 8,141,154, 6,154,844, 7,613,926 and 8,677,494 through the manufacture, use, importation, sale, and/or offer for sale of certain products and services. On March 5, 2018, the Court ordered, pursuant to stipulation between the parties following entry into a confidential patent license and settlement agreement dated February 28, 2018, that all claims in the case be dismissed with prejudice. Finjan, Inc. v. Palo Alto Networks, Inc., Case No. 4:14-cv-04908-PJH (N.D. Cal.) Finjan filed a patent infringement lawsuit against Palo Alto Networks, Inc. (“Palo Alto Networks”) in the United States District Court for the Northern District of California on November 4, 2014, asserting that Palo Alto Networks is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,804,780, 6,965,968, 7,058,822, 7,418,731, 7,613,918, 7,613,926, 7,647,633, 8,141,154, 8,225,408, and 8,677,494 (the "Asserted Patents") through the manufacture, use, importation, sale, and/or offer for sale of its products and services, including but not limited to Next-Generation Security Platform, Next-Generation Firewall, Virtualized Firewall, WildFire Subscription, WildFire Platform, URL Filtering Subscription, Threat Prevention Subscription, and Advanced EndPoint Protection. Finjan seeks entry of judgment that Palo Alto Networks has infringed, is infringing, has induced infringement and is inducing infringement of the Asserted Patents, a preliminary and permanent injunction from infringing, or inducing the infringement the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. §285. This action is before the Honorable Phyllis J. Hamilton in the Oakland division of the District Court for the Northern District of California. Palo Alto Networks filed several petitions for IPR's before the PTAB. The PTAB instituted review of certain patents and denied institution on other challenged patents. In particular, the PTAB instituted and subsequently determined that the challenged claims of U.S. Patent Nos. 8,141,154 and 8,225,408 were not unpatentable; upon which Palo Alto Networks appealed to the Federal Circuit. Oral argument before the Federal Circuit regarding the ‘154 and ‘408 Patents was heard June 6, 2018. On September 19, 2018, the Federal Circuit upheld the PTAB’s decision. In addition, the PTAB instituted and subsequently determined that claims 3-5 and 10-15 of U.S. Patent No. 8,677,494 were not unpatentable, and that claims 1, 2, and 6 of the ‘494 Patent were shown to be unpatentable. Finjan appealed this latter determination to the Federal Circuit, which is pending. On May 26, 2016, the Court ordered the stay to remain in effect until the PTAB’s final determination of the instituted IPRs and the matter remains stayed pending appeal. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. ESET, LLC et al., Case No. 3:16-cv-03731-JD (N.D. Cal.) Finjan filed a patent infringement lawsuit against ESET, LLC and ESET SPOL S.R.O. (collectively "ESET") in the United States District Court for the Northern District of California on July 1, 2016, asserting that ESET infringes certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,804,780, 7,975,305, 8,079,086, 9,189,621, and 9,219,755 (the "Asserted Patents") through the manufacture, use, importation, sale, and/or offer for sale of its products and services, including but not limited to, ESET ThreatSense, ESET Advanced Heuristic, ESET DNA Signature, Host-based Intrusion Prevention System (HIPS), and ESET LiveGrid technologies including ESET’S Home Protection, Small Office, and Business product lines and ESET Services. Finjan seeks entry of a judgment that ESET has infringed and is infringing the Asserted Patents, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This case was transferred to the Southern District of California on January 30, 2017 and was assigned to the Honorable Cathy Ann Bencivengo on February 8, 2017, Case No. 3-17-cv-00183 (S.D. Cal.). There can be no assurance that Finjan will be successful in settling or litigating these claims. ESET, LLC v. Finjan, Inc., Case No. 3:16-cv-01704-CAB (S.D. Cal.) ESET, LLC (“ESET”) filed a Complaint for Declaratory Judgment against Finjan in the United States District Court for the Southern District of California on July 1, 2016, asserting that there is an actual controversy between the parties to declare that ESET does not infringe any claim of U.S. Patent No. 7,975,305 (“the ‘305 Patent”). ESET sought an entry of judgment that it has not infringed any claim of the ‘305 Patent, an injunction against Finjan from asserting any of the claims in the ‘305 Patent against ESET or any of its customers or suppliers, and a finding that the case is exceptional and an award of fees and costs under 35 U.S.C. § 285. On July 11, 2016, ESET filed an Amended Complaint for Declaratory Judgment, seeking entry of judgment that it does not infringe any claim of the U.S. Patent Nos. 6,154,844, 6,804,780, 7,975,305, 8,079,086, 9,189,621, and 9,219,755. ESET seeks an injunction against Finjan from asserting infringement of these patents against ESET or any of its customers or suppliers, and a finding that the case is exceptional and an award of fees and costs under 35 U.S.C. § 285. On July 26, 2016, Finjan filed a motion to dismiss the action pursuant to the first-to-file rule, asserting that Finjan was first to file an action in the Northern District of California with respect to five of the six patents at issue between the parties ( Finjan, Inc. v ESET, LLC et al., Case 3:16-cv-03731-JD (N.D. Cal.). On September 26, 2016, the Court granted Finjan’s motion and dismissed this action without prejudice. ESET has appealed the dismissal to the Court of Appeals for the Federal Circuit. The Federal Circuit dismissed this Appeal on February 2, 2017 after the Court in Finjan, Inc. v. ESET, LLC et al., Case 3:16-cv-03731-JD, transferred that case to the Southern District of California. Finjan, Inc. v. ESET, LLC et al., Case No. 3:17-cv-00183-CAB (S.D. Cal.) Finjan filed a patent infringement lawsuit against ESET, LLC and ESET SPOL S.R.O. (collectively, “ESET”) in the United States District Court for the Northern District of California on July 1, 2016 (Case No. 3:16-cv-03731-JD (N.D. Cal.)), which was transferred to the Southern District of California on January 30, 2017. This action is currently before the Honorable Cathy Ann Bencivengo. Details on procedures prior to February 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. On February 20, 2018, ESET filed a motion to stay pending inter partes review, which Finjan opposed. On May 7, 2018, the Court granted ESET’s motion to stay with regard to the ‘305 Patent only. On October 4, 2018, the Court amended the scheduling order such that opening summary judgment briefs are due February 8, 2019, with oppositions due on February 22, 2019, replies due on March 1, 2019, a hearing for summary judgment motions will be held on March 15, 2019, a final pretrial conference on April 19, 2019, and a jury trial will commence on May 6, 2019. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Cisco Systems, Inc., Case No. 5:17-cv-00072-BLF (N.D. Cal.) Finjan filed a patent infringement lawsuit against Cisco Systems, Inc. (“Cisco”) in the United States District Court for the Northern District of California on January 6, 2017, asserting that Cisco infringes certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,804,780, 7,647,633, 8,141,154 and 8,677,494 (the "Asserted Patents") through the manufacture, use, importation, sale, and/or offer for sale of its products and services, including but not limited to, Cisco’s Advanced Malware Protection, Cisco Collective Security Intelligence, Cisco Outbreak Filters, Talos Security Intelligence and Research Group, and AMP Threat Grid technologies, including Cisco AMP for Endpoints, Cisco AMP for Networks (also referred to by Cisco as “NGIPS”), Cisco AMP for ASA with FirePOWER Services, Cisco AMP Private Cloud Virtual Appliance, Cisco AMP for CWS, ESA, or WSA, Cisco AMP for Meraki MX, Cisco AMP Threat Grid. Finjan seeks entry of judgment that Cisco has infringed and is infringing the asserted patents, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. Details on procedures prior to March 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. On August 16, 2017, the Court issued a scheduling order that set opening summary judgment briefs for September 12, 2019, with oppositions due on October 3, 2019, replies due on October 17, 2019, and a hearing for the motions for summary judgment on October 31, 2019, a final pretrial conference for April 23, 2020, and trial to commence on June 1, 2020. On April 2, 2018, Finjan filed a motion to strike Cisco’s affirmative defenses of prosecution laches, ensnarement doctrine, and inequitable conduct, to which a hearing was held on August 30, 2018. On June 7, 2018, the Court held a claim construction tutorial, and on June 15, 2018, the Court held a claim construction hearing. A claim construction order was issued on July 23, 2018. The Court held a case management conference on August 30, 2018 and confirmed the jury trial to commence on June 1, 2020. On September 13, 2018, the Court granted Finjan’s motion to strike Cisco’s affirmative defenses of prosecution laches and ensnarement doctrine, and a portion of Cisco’s inequitable conduct defense, with leave to amend. On October 4, 2018, Cisco filed its second amended answer. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. ESET SPOL S.R.O. et al., Docket Nos. 2 Ni 53/16 (EP). 4c O 33/16 (Düsseldorf District Court and Munich Court) Finjan filed a patent infringement lawsuit against ESET SPOL. S.R.O., a Slovak Republic Corporation, and ESET Deutschland GmbH (collectively “ESET”) in the Düsseldorf District Court of Germany on July 1, 2016, asserting that ESET infringes Finjan’s European Patent No. 0 965 094 B1 (“the ‘094 Patent”), through the offering and/or delivering to customers in the Federal Republic of Germany software covered by the ‘094 Patent, including but not limited to ESET’s ThreatSense, ESET Advanced Heuristic, ESET DNA Signature, ESET LiveGrid technologies, including ESET’s Home Users, Small Office, and Business product lines and ESET services. Finjan seeks a judgment sentencing ESET to a fine for each violation of patent infringement or, alternatively imprisonment of ESET directors, cease and desist orders for offering or delivering infringing software, providing Finjan with profit information for offering or delivering infringing software, and damages, which Finjan has suffered or shall suffer as a result of ESET offering or delivering infringing software since November 1, 2008. The infringement hearing was held on October 5, 2017. No decision has been entered to date. On November 24, 2016, ESET filed a nullity action. Finjan responded to the nullity action contesting the nullity action completely and requesting the Court to reject the action and impose the cost of the proceedings to the claimant. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Blue Coat Systems, Inc., and Blue Coat Systems GmbH., Docket Nos. 2 Ni 22/17 (EP), 4c O 57/16 (Dusseldorf District Court and Munich Court) Finjan filed a third patent infringement lawsuit against Blue Coat Systems, Inc., which was its first patent infringement suit against Blue Coat’s subsidiary Blue Coat Systems GmbH, located in Munich Germany in the Dusseldorf District Court of Germany on October 14, 2016. Finjan asserted that Blue Coat infringed Finjan’s European Patent No. 0 965 094 B1 (“the ‘094 Patent”) through the offering and/or delivering to customers in the Federal Republic of Germany software covered by the ‘094 Patent. Blue Coat filed a nullity (invalidity) action in Munich, Germany. On March 2, 2018, the parties entered into a confidential settlement agreement. On March 6, 2018, Blue Coat withdrew their nullity action in Germany. Finjan, Inc. v. SonicWall, Inc., Case No. 5:17-cv-04467-BLF (N.D. Cal.) Finjan filed a patent infringement lawsuit against SonicWall, Inc. (“SonicWall”) in the United States District Court for the Northern District of California on August 4, 2017, asserting that SonicWall is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 7,058,822, 6,804,780, 7,613,926, 7,647,633, 8,141,154, 8,677,494, 7,975,305, 8,225,408 and 6,965,968 (the "Asserted Patents") through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including but not limited to, Appliance Products utilizing Capture ATP and/or Gateway Security Services and Email Security Products utilizing Capture ATP and/or Gateway Security Services. Finjan seeks entry of a judgment that SonicWall has infringed and is infringing the Asserted Patents, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This matter is assigned to the Honorable Beth Labson Freeman, United States District Judge. On October 13, 2017, SonicWall filed a Motion to Dismiss Finjan’s Complaint for Failure to State a Claim for Willful Infringement. On May 16, 2018, the Court denied Sonicwall’s Motion to Dismiss. On May 30, 2018, SonicWall filed its answer. On June 20, 2018, Finjan filed a motion to strike SonicWall’s affirmative defense of inequitable conduct. Defendant’s opposition was filed on July 5, 2018, and Finjan’s reply was filed on July 12, 2018. Finjan’s motion to strike is scheduled to be heard on December 6, 2018. On September 11, 2018, the Court amended its scheduling order pursuant to the parties’ stipulation such that the claim construction hearing will be held on March 1, 2019. Pursuant to the Court’s December 14, 2017 Case Management Order, a final pretrial conference is set for March 18, 2021, and a jury trial to commence on May 3, 2021. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Bitdefender Inc., et al., Case No. 4:17-cv-04790-HSG (N.D. Cal.) Finjan filed a patent infringement lawsuit against Bitdefender Inc. and Bitdefender S.R.L. (“Bitdefender”) in the United States District Court for the Northern District of California on August 16, 2017, asserting that Bitdefender is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,804,780, 7,930,299, 8,141,154, and 8,677,494 (the "Asserted Patents") through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including but not limited to, Total Security, Family Pack, Internet Security, Antivirus Plus, Security for XP and Vista, Antivirus for Mac, Mobile Security, GravityZone Enterprise Security, GravityZone Elite Security, GravityZone Advanced Business Security, GravityZone Business Security, Hypervisor Introspection, Security for AWS, Cloud Security for MSP, GravityZone for xSP, and BOX. Finjan seeks entry of a judgment that Bitdefender has infringed and is infringing the Asserted Patents, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This matter is assigned to the Honorable Haywood S. Gilliam, Jr., United States District Judge. On December 13, 2017, Finjan filed a Motion to Strike Bitdefender’s Answer, Counterclaims, and Affirmative Defenses, for which a hearing was held on March 8, 2018. On December 21, 2017, Bitdefender filed a motion to dismiss, or in the alternative, to quash the return of summons, and Finjan filed its opposition on January 4, 2018. On January 11, 2018, the parties submitted a proposed order stipulating to Bitdefender withdrawing its motion to dismiss as moot, which the Court entered into on January 12, 2018. On April 17, 2018, the Court granted in part and denied in part Finjan’s motion to strike affirmative defenses. Specifically, the Court granted Finjan’s motion to strike defenses of prosecution laches, waiver, estoppel, unclean hands, and denied the motion to strike the affirmative defenses of inequitable conduct and prosecution history estoppel. On February 5, 2018, Bitdefender filed a Motion to Stay, which it withdrew by stipulation with Finjan on May 8, 2018. On April 5, 2018, the parties filed a Joint Claim Construction statement. Bitdefender filed an amended answer and counterclaims on May 8, 2018, and Finjan filed its answer on May 22, 2018. A claim construction hearing was held on June 6, 2018. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Juniper Networks, Inc., Case No. 3:17-cv-05659-WHA (N.D. Cal.) Finjan filed a patent infringement lawsuit against Juniper Networks, Inc. (“Juniper”) in the United States District Court for the Northern District of California on September 29, 2017, asserting that Juniper is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,804,780, 7,647,633, 7,613,926, 8,141,154, 8,677,494, 7,975,305, and 8,225,408 (the "Asserted Patents") through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including but not limited to, SRX Gateways, SRX Gateways using Sky ATP, and Contrail. Finjan seeks entry of a judgment that Juniper has infringed and is infringing the asserted patents, has and is inducing infringement, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This matter is assigned to the Honorable William H. Alsup, United States District Judge. On February 23, 2018, the Court set the following dates: (1) on June 7, 2018, the parties are to file early motions for summary judgment for the one asserted claim each have selected as its compelling case for noninfringement or invalidity, with oppositions due by June 28, 2018, and replies due by July 12, 2018, and a hearing for the summary judgment motions were held on July 26, 2018; (2) the last day for dispositive motions (other than the early motions for summary judgment) is April 11, 2019; (3) a pretrial conference on June 5, 2019; and (4) jury trial on July 8, 2019. On February 28, 2018, Juniper filed its answer and counterclaims against Finjan. On March 21, 2018, Finjan filed its answer to Juniper’s counterclaim. On May 31, 2018, Finjan filed a motion for leave to file a second amended complaint to assert U.S. Patent No. 7,418,731 (the “‘731 Patent”), after considering the parties' briefs and oral argument, the Court granted Finjan's motion to file a second amended complaint on July 19, 2018. The parties filed their respective opening summary judgment briefs for one asserted claim on June 7, 2018, their oppositions on June 28, 2018, and replies on July 12, 2018. Finjan moved for summary judgment of infringement on the ‘494 Patent, and Juniper moved on summary judgment of invalidity, non-infringement, and limited damages of the ‘780 Patent. A hearing on the parties’ summary judgment was held on July 26, 2018. Finjan also moved to dismiss Juniper’s counterclaims and strike its affirmative defenses on June 15, 2018. On July 27, 2018, Finjan filed its second amended complaint to assert the ‘731 Patent. On August 9, 2018, the Court granted Juniper’s motion for summary judgment of non-infringement of the ‘780 Patent. On August 21, 2018, the parties filed a response to the Court’s August 20, 2018, order requesting supplemental briefing for summary judgment of the ‘494 Patent. On August 24, 2018, the Court granted in part Finjan’s motion for summary judgment of the ‘494 Patent. On August 31, 2018, the Court converted Finjan’s motion to dismiss to a judgment on the pleadings and dismissed Juniper’s claims of prosecution laches, inequitable conduct for the ‘154 and ‘494 Patents, and ensnarement doctrine, and ordered that Juniper may seek leave to amend, and denied Finjan’s motion to dismiss unclean hands. On September 21, 2018, Juniper filed a motion for leave to file an amended answer. Finjan filed its opposition on October 5, 2018, and Juniper’s reply was filed on October 12, 2018. A hearing for Juniper’s motion for leave to amend is set for November 1, 2018. A final pretrial conference for trial on the ‘494 Patent will be held on December 4, 2018, with a jury trial to commence on December 10, 2018. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. ZScaler, Inc., Case No. 3:17-cv-06946-JST (N.D. Cal.) Finjan filed a patent infringement lawsuit against ZScaler, Inc. (“ZScaler”) in the United States District Court for the Northern District of California on December 5, 2017, asserting that ZScaler is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 6,804,780, 7,647,633, 8,677,494 , 7,975,305 (the "Asserted Patents") through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including, but not limited to, ZScaler’s Internet Access Bundles (including Professional, Business, and Transformation), Private Access Bundle (including Professional Business, and Enterprise), ZScaler Enforcement Node (“ZEN”), Secure Web Gateway, Cloud Firewall, Cloud Sandbox, and Cloud Architecture products and services. Finjan seeks entry of a judgment that ZScaler has and continues to infringe the asserted patents, has and continues to induce infringement, a preliminary and permanent injunction from infringing the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty, enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This matter is assigned to the Honorable Jon S. Tigar, United States District Judge. On March 5, 2018, Finjan moved to strike ZScaler’s affirmative defense. ZScaler filed an amended answer and counterclaims on March 29, 2018, and Finjan’s motion to strike was terminated as moot. Finjan filed its answer to ZScaler’s counterclaims on April 2, 2018. On April 2, 2018, Finjan filed an answer to ZScaler’s counterclaim, the Court set a claim construction tutorial for March 12, 2019, and a claim construction hearing for March 25, 2019. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Trustwave Holdings, Inc., C.A. No. N18C-04-006 WCC-CCLD (Del. Super. Ct.) Finjan filed a breach of contract lawsuit against Trustwave Holdings, Inc. (“Trustwave”) in the Superior Court of Delaware on April 4, 2018, asserting that Trustwave breached a patent licensing agreement with Finjan by failing to pay owed royalties, failing to comply with audit procedures as provided by that licensing agreement, and for failing to pay for that audit. Finjan seeks entry of a judgment that Trustwave be ordered to pay damages due to the breach of the agreement and the cost of the audit, including interest, and that Finjan be awarded attorneys’ fees. This matter is assigned to the Honorable William C. Carpenter, Jr., Judge in the Superior Court of Delaware. Trustwave moved to dismiss the complaint on June 8, 2018, and filed its opening brief on June 29, 2018. Finjan opposed the motion to dismiss on July 30, 2018, and Trustwave filed its reply on August 13, 2018. A hearing on the motion is scheduled to be heard on November 19, 2018. A schedule has not yet been set in the case. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Check Point et al., Case No. 3:18-cv-02621-WHO (N.D. Cal.) Finjan filed a patent infringement lawsuit against Check Point Software Technologies Inc. and Check Point Software Technologies Ltd. (“CheckPoint”) in the United States District Court for the Northern District of California on May 3, 2018, asserting that CheckPoint infringes certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,965,968, 7,418,731, 7,647,633, 8,079,086, 8,141,154, and 8,677,494 (the “Asserted Patents”) through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including, but not limited to, CheckPoint’s Next Generation Firewall and Security Gateway products, Blade products, CloudGuard products, Endpoint Protection products, Advanced Threat Prevention products, Mobile Security products, ZoneAlarm products, Threat Intelligence products, Security Management and Policy Management products, ThreatCloud Managed Security Service products, Smart-1 Appliance products, products using SandBlast technology, and products utilizing the Gaia Operating System. Finjan seeks entry of judgment that CheckPoint has infringed, is infringing, has induced infringement and is inducing infringement of the Asserted Patents, a preliminary and permanent injunction from infringing, or inducing the infringement the Asserted Patents, an accounting of all infringing sales and revenues, damages of no less than a reasonable royalty consistent with proof, and enhanced damages for willful infringement, costs, interest, and reasonable attorneys’ fees under 35 U.S.C. § 285. This matter is assigned to the Honorable William H. Orrick, United States District Judge. On July 16, 2018, CheckPoint filed its answer. A Case Management Conference was held on August 14, 2018. On August 15, 2018, the Court issued its Civil Pretrial Order setting a hearing for summary judgment motions on September 30, 2020, a pretrial conference on December 14, 2020, and a jury trial to commence on January 25, 2021. On September 10, 2018, the Court scheduled a claim construction tutorial for April 26, 2019 and a claim construction hearing on May 3, 2019. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Rapid7, Inc. et al. , Case No. 1:18-cv-01519-LPS (D. Del) Finjan filed a patent infringement lawsuit against Rapid7, Inc. (“Rapid7”) in the United States District Court of Delaware on October 1, 2018. Finjan asserts that Rapid7 infringes U.S. Patent Nos. 7,975,305, 8,225,408, 7,757,289, 7,613,918, 8,079,086, 8,141,154, and 8,677,494. This matter is assigned to the Honorable Leonard P. Stark, United States District Court Judge. Rapid7’s answer is to be filed on November 21, 2018. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Fortinet, Inc. , Case No. 3:18-cv-06555-KAW (N.D. Cal.) Finjan filed a patent infringement lawsuit against Fortinet, Inc. (“Fortinet”) in the United States District Court for the Northern District of California on October 26, 2018, asserting that Fortinet infringes certain claims of Finjan’s U.S. Patent Nos. 6,154,844, 6,965,968, 7,058,822, 7,418,731, 7,647,633, 7,975,305, 8,079,086, 8,225,408, and 8,677,494. This matter is currently assigned to the Honorable Kandis A. Westmore, United States Magistrate Judge. Fortinet’s answer is to be filed on November 19, 2018. There can be no assurance that Finjan will be successful in settling or litigating these claims. B. Proceedings before the United States Patent & Trademark Office (USPTO) Ex Parte Reexamination P |
INCOME TAX
INCOME TAX | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | INCOME TAX The Company had a tax benefit of $2.3 million and a tax expense of $11.1 million , for the three and nine months ended September 30, 2018, respectively. These amounts are comprised of federal and state income tax for the activity in the period at the statutory rates. The current tax payable differs from the year-to-date tax expense due to carry over attributes, including utilization of its remaining net operating losses of approximately $12.7 million . The computed effective tax rate for the nine months ended September 30, 2018, of approximately 28.00% reflects the recently enacted tax reform which reduced the federal tax rate to 21%. In addition, the Company no longer has a valuation allowance against its domestic net deferred tax assets as it was released during 2017. During the three and nine months ended September 30, 2018, the Company made income tax payments to applicable federal and state agencies of $5.0 million and $10.7 million , respectively. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”), for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto of the Company for the year ended December 31, 2017 which were included in the annual report on Form 10-K filed by the Company on March 14, 2018. In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the operating results for the year ending December 31, 2018, or any other interim or future periods. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to stock-based compensation, investments, the determination of the economic useful life of property and equipment, income taxes and valuation allowances against net deferred tax assets. Management bases its estimates on historical experience or on various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements include the accounts of Finjan Holdings and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
RECLASSIFICATIONS | RECLASSIFICATIONS Certain amounts within the balance sheet and cash flows for the prior periods presented have been reclassified to conform to the current period presentation reflected in these condensed consolidated financial statements. There was no impact to the previously reported net income (loss). |
REVENUE RECOGNITION | REVENUE RECOGNITION Under Accounting Standards Codification ("ASC") 605, revenue was recognized when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, all obligations have been performed pursuant to the terms of the agreement, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue from the Company’s cybersecurity business results from grants of licenses to its patented cybersecurity technology and settlements reached from legal enforcement of the Company’s patent rights. Revenue is recognized when the arrangement with the licensee has been signed and the license has been delivered and made effective, provided the license fees are fixed or determinable and collectability is reasonably assured. The total amount of the consideration received upon any settlement or judgment is allocated to each element based on the fair value of each element. Elements provided in either settlement agreements or judgments include, the value of a license, legal release and interest. Fair value of licensing agreements and royalty revenues, are recognized as revenues in the condensed consolidated statement of operations. Elements not related to license agreements and royalty revenue in nature will be reflected in other income (expense), net in the condensed consolidated statements of operations. Legal release as part of a settlement agreement is recognized as a separate line item in the condensed consolidated statements of operations when value can be allocated to the legal release. When the Company reaches a settlement with a defendant, no value is allocated to the legal release since the existence of a settlement removes legal standing to bring a claim of infringement, and without a legal claim, the legal release has no economic value. The element that is applicable to interest income will be recorded in other income (expense), net. When settlements or judgments are achieved at discounts to the fair value of a license, the Company allocates the full settlement or judgment, excluding specifically named elements as mentioned above, to the value of the license agreement or royalty revenue under the residual method relative to full license fair value prior to the discount. The Company adopted guidance ASC-606 effective January 1, 2018. For further details, see "Recently adopted accounting pronouncements" below. |
CONCENTRATIONS OF CREDIT RISK | CONCENTRATIONS OF CREDIT RISK The Company maintains substantially all of its cash and cash equivalents in financial institutions located in the United States. At times, the Company’s cash and cash equivalent balances may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts. |
ACCOUNTING FOR WARRANTS | ACCOUNTING FOR WARRANTS The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). |
DERIVATIVE LIABILITIES | DERIVATIVE LIABILITIES In connection with the issuance of Series A-1 Preferred Stock, the Company issued a warrant with variable consideration from June 2017 through September 2018. The Company determined that this instrument is an embedded derivative pursuant to ASC 815, “Derivatives and Hedging” and recorded a warrant liability that was reclassified to equity during this period (see Note 6). The accounting treatment of derivative financial instruments requires that the Company record the warrant, at its fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The Monte Carlo Valuation model is used to estimate the fair value of the warrant. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the instrument granted. The risk-free interest rate used is the United States Treasury rate for the day of the grant having a term equal to the life of the equity instrument. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate. The dividend yield is zero percent as the Company has not made any dividend payment. The Company determines the expected term of its warrant awards by using the contractual term. The principal assumptions used in applying the model were as follows: Assumptions: For Three and Nine Months Ended September 30, 2018 Risk-free interest rate 2.3% - 2.5% Expected life 1.8 - 2.2 Years Expected volatility 65% - 70% Dividends 0.0% |
NET INCOME (LOSS) PER COMMON SHARE | NET INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share is based upon the weighted-average number of common shares outstanding. |
INCOME TAXES | INCOME TAXES The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which contains certain practical expedients in response to identified implementation issues. The Company elected to adopt ASC-606 under Modified Retrospective approach. Under the Modified Retrospective approach, only contracts with customers for which there were remaining unsatisfied performance obligations (open contracts) at the beginning of initial year of adoption must be restated to apply retrospectively the guidance under ASC-606. Any resulting impact for such contracts prior to the beginning of the initial year of adoption are made as an adjustment to opening retained earnings for such year. On January 1, 2018, the Company adopted ASC-606 using the modified retrospective method. This method required retrospective application of the new accounting standard to those contracts which were not completed as of January 1, 2018. Results for the reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The change to the current revenue policy is the timing of revenue recognition. Under the guidance ASC 605, the Company recognized revenue upon receipt of funds related to an executed agreement or funds which were received within 90 days of receipt. Under the guidance ASC 606, all revenue is recognized upon execution of the agreement, including any future dated payments, which often spread over several quarters or years. The Company recorded $2.6 million to opening retained earnings of $5.6 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to existing contracts that had 2019 payment dates. The cumulative effect of the changes made to the condensed consolidated balance sheet as of January 1, 2018 under current assets for the adoption ASU 2014-09, Revenue - Revenue from Contracts with Customers were as follows (in thousands): Balance Sheet Balance at December 31, 2017 Adjustments due to ASU 2014-09 Balance at January 1, 2018 Current Assets Accounts receivable $ 2,606 $ 2,550 $ 5,156 Liabilities and Stockholders' Equity Retained earnings $ 5,555 $ 2,550 $ 8,105 In accordance with the new revenue recognition standards, the impact of adoption of ASC-606 to the condensed consolidated statement of operations and balance sheet for the period ended September 30, 2018 was as follows (in thousands): Income Statement Three Months ended September 30, 2018 Nine Months ended September 30, 2018 As reported Balance without adoption - ASC-606 Effect of change As reported Balance without adoption - ASC-606 Effect of change Revenue $ — $ 1,300 $ (1,300 ) $ 82,300 $ 81,000 $ 1,300 Provision for income taxes $ (2,252 ) $ (1,888 ) $ (364 ) $ 11,135 $ 10,771 $ 364 Net income (loss) $ 2,252 $ 3,188 $ (936 ) $ 71,165 $ 70,229 $ 936 September 30, 2018 Balance Sheet As reported Balance without ASC-606 Effect of change Current Assets Accounts receivable $ 3,850 $ — $ (3,850 ) Other long-term assets (1) $ 678 $ — $ (678 ) Prepaid income tax $ 2,331 $ 2,695 $ 364 Liabilities and Stockholders' Equity Retained earnings $ 34,042 $ 29,878 $ 4,164 (1) Deferred tax assets related to the adoption of ASC-606 The Company also adopted the following standards during the nine months ended September 30, 2018, none of which had a material impact on the Company's condensed consolidated financial statements: Standard Description Effective date 2016-09 Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting January 1, 2018 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments January 1, 2018 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting June 1, 2018 Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued ASU No. 2016-02, " Leases" (Topic 842) (“ASU 2016-02”). This statement requires entities to recognize on its balance sheet assets and liabilities associated with the rights and obligations created by leases with terms greater than twelve months. In July 2018, the FASB issued ASU 2018-10, to provide certain areas for improvement in ASU 2016-02. The New Leasing Standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those annual periods, early adoption is permitted. Management is evaluating the impact of adopting ASU 2016-02 and ASU 2018-10 on our condensed consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception". Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect of the standard on its condensed consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. Adoption of this guidance is required for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating this guidance and the impact of this update on its condensed consolidated financial statements. Other recent accounting standards that have been issued or proposed by FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's condensed consolidated financial statements upon adoption. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Fair Value Assumptions | The principal assumptions used in applying the model were as follows: Assumptions: For Three and Nine Months Ended September 30, 2018 Risk-free interest rate 2.3% - 2.5% Expected life 1.8 - 2.2 Years Expected volatility 65% - 70% Dividends 0.0% |
Schedule of Earnings Per Share, Basic and Diluted | Diluted net income (loss) per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands, except share and per share data) Numerator: Net income (loss) to common stockholders $ (7,619 ) $ (4,237 ) $ 27,713 $ 4,958 Denominator: Weighted-average common shares, basic 27,247,462 27,327,936 27,488,437 24,588,296 Weighted-average common shares, diluted* 27,247,462 27,327,936 28,417,453 26,138,201 Net income (loss) per common share: Basic: $ (0.28 ) $ (0.16 ) $ 1.01 $ 0.20 Diluted: $ (0.28 ) $ (0.16 ) $ 0.98 $ 0.19 * The diluted earnings per common share included the weighted average effect of 209,689 unvested RSU's and 719,327 stock options that are potentially dilutive to earnings per share for the nine months ended September 30, 2018; 462,046 unvested RSU's and 1,087,859 stock options for the nine months ended September 30, 2017. For the three months ended September 30, 2018 and 2017, the securities would be anti-dilutive and were excluded. |
Summary of Components Excluded from Computation of Diluted Net Loss Per Share | The following potential common shares were excluded from the calculation of net income (loss) per common share, diluted as their effect would have been anti-dilutive for the periods presented: Three Months Ended Nine Months Ended September 30, 2018 2017 2018 2017 Stock options 2,574,981 1,620,507 733,025 1,087,859 Restricted stock units 542,476 462,046 17,778 — Warrants 2,355,506 2,355,506 2,355,506 2,355,506 Total 5,472,963 4,438,059 3,106,309 3,443,365 |
Schedule of Cumulative Effect of ASU 2014-09 | The Company also adopted the following standards during the nine months ended September 30, 2018, none of which had a material impact on the Company's condensed consolidated financial statements: Standard Description Effective date 2016-09 Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting January 1, 2018 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments January 1, 2018 2018-07 Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting June 1, 2018 The cumulative effect of the changes made to the condensed consolidated balance sheet as of January 1, 2018 under current assets for the adoption ASU 2014-09, Revenue - Revenue from Contracts with Customers were as follows (in thousands): Balance Sheet Balance at December 31, 2017 Adjustments due to ASU 2014-09 Balance at January 1, 2018 Current Assets Accounts receivable $ 2,606 $ 2,550 $ 5,156 Liabilities and Stockholders' Equity Retained earnings $ 5,555 $ 2,550 $ 8,105 In accordance with the new revenue recognition standards, the impact of adoption of ASC-606 to the condensed consolidated statement of operations and balance sheet for the period ended September 30, 2018 was as follows (in thousands): Income Statement Three Months ended September 30, 2018 Nine Months ended September 30, 2018 As reported Balance without adoption - ASC-606 Effect of change As reported Balance without adoption - ASC-606 Effect of change Revenue $ — $ 1,300 $ (1,300 ) $ 82,300 $ 81,000 $ 1,300 Provision for income taxes $ (2,252 ) $ (1,888 ) $ (364 ) $ 11,135 $ 10,771 $ 364 Net income (loss) $ 2,252 $ 3,188 $ (936 ) $ 71,165 $ 70,229 $ 936 September 30, 2018 Balance Sheet As reported Balance without ASC-606 Effect of change Current Assets Accounts receivable $ 3,850 $ — $ (3,850 ) Other long-term assets (1) $ 678 $ — $ (678 ) Prepaid income tax $ 2,331 $ 2,695 $ 364 Liabilities and Stockholders' Equity Retained earnings $ 34,042 $ 29,878 $ 4,164 (1) Deferred tax assets related to the adoption of ASC-606 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses | The components of prepaid expenses and other current assets are as presented below: September 30, December 31, (in thousands) Prepaid income tax (see Note 10) $ 2,331 $ — Other prepaid expenses and other current assets 701 765 $ 3,032 $ 765 |
Schedule of Intangible Assets | The components of these intangible assets are as follows: September 30, December 31, (in thousands) Patents $ 26,070 $ 26,552 Less accumulated amortization (20,075 ) (18,804 ) $ 5,995 $ 7,748 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments | The following table sets forth the Company's future minimum lease payments under its operating lease commitments as of September 30, 2018 (in thousands): For the year ending December 31, 2018 (remainder) $ 124 2019 747 2020 773 2021 801 2022 829 2023 425 $ 3,699 |
ACCRUED EXPENSES & WARRANT LI_2
ACCRUED EXPENSES & WARRANT LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | The components of accrued expenses are as presented below: September 30, December 31, (in thousands) Legal - Litigation / Licensing $ 760 $ — Compensation 218 1,233 Other 5 70 $ 983 $ 1,303 |
Schedule of Warrant Liability | A summary of the Company's Level 3 derivative liabilities for the nine months ended September 30, 2018 is as follows (in thousands): Balance, December 31, 2017 $ 1,096 Fair value change of derivative liabilities 3,445 Reclassification to additional paid-in capital (4,541 ) Balance, September 30, 2018 $ — |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Share-Based Compensation Activity | Nine Months Ended September 30, 2018 Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 438,712 $ 2.28 Shares granted 200,000 $ 3.16 Shares vested (96,236 ) $ 2.33 Shares forfeited — — Non-vested 542,476 $ 2.60 The following table is a summary of stock option activity during the nine months ended September 30, 2018: Number of Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2017 2,341,340 $ 1.77 5.78 $ 1,087 Options granted 376,667 $ 2.41 9.41 $ 716 Options exercised (143,026 ) $ 1.61 — — Options forfeited — — — — Options expired — — — — Outstanding – September 30, 2018 2,574,981 $ 1.88 7.21 $ 6,268 Exercisable – September 30, 2018 1,352,795 $ 1.59 5.53 $ 3,673 |
Schedule of Weighted-Average Black-Scholes Option Pricing Model Assumptions | The assumptions used in the Black-Scholes option-pricing model and the weighted-average grant date fair value of the option awards for the periods presented were as follows: Three and Nine Months Ended September 30, 2018 Three and Nine Months Ended September 30, 2017 Volatility 105% 132% - 141% Expected term (in years) 6 6 Risk-free rate 2.24% 1.82% - 2.19% Expected dividend yield — — Weighted-average grant date fair value per option $ 2.24 $ 1.45 - 3.32 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018USD ($)business_line | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of business lines | business_line | 4 | ||
Retained earnings | $ 34,042 | $ 5,555 | |
Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 8,105 | ||
Adjustments due to ASU 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 4,164 | ||
Adjustments due to ASU 2014-09 | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect on retained earnings | 2,600 | ||
Retained earnings | $ 2,550 |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Fair Value Assumptions (Details) - Warrants | Sep. 30, 2018 |
Dividends | |
Assumptions: | |
Measurement input | 0 |
Minimum | Risk-free interest rate | |
Assumptions: | |
Measurement input | 0.023 |
Minimum | Expected life | |
Assumptions: | |
Expected life | 1 year 9 months 18 days |
Minimum | Expected volatility | |
Assumptions: | |
Measurement input | 0.65 |
Maximum | Risk-free interest rate | |
Assumptions: | |
Measurement input | 0.025 |
Maximum | Expected life | |
Assumptions: | |
Expected life | 2 years 2 months 12 days |
Maximum | Expected volatility | |
Assumptions: | |
Measurement input | 0.70 |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income (loss) to common stockholders | $ (7,619) | $ (4,237) | $ 27,713 | $ 4,958 |
Denominator: | ||||
Weighted-average common shares, basic (in shares) | 27,247,462 | 27,327,936 | 27,488,437 | 24,588,296 |
Weighted-average common shares, diluted (in shares) | 27,247,462 | 27,327,936 | 28,417,453 | 26,138,201 |
Net income (loss) per common share: | ||||
Basic (in dollars per share) | $ (0.28) | $ (0.16) | $ 1.01 | $ 0.20 |
Diluted (in dollars per share) | $ (0.28) | $ (0.16) | $ 0.98 | $ 0.19 |
Antidilutive securities (in shares) | 5,472,963 | 4,438,059 | 3,106,309 | 3,443,365 |
Restricted stock units | ||||
Net income (loss) per common share: | ||||
Antidilutive securities (in shares) | 209,689 | 426,046 | ||
Stock options | ||||
Net income (loss) per common share: | ||||
Securities that are potentially dilutive to earnings per share (in shares) | 719,327 | 1,087,859 |
NATURE OF OPERATIONS AND SUMM_7
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Potentially Dilutive Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 5,472,963 | 4,438,059 | 3,106,309 | 3,443,365 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 2,574,981 | 1,620,507 | 733,025 | 1,087,859 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 542,476 | 462,046 | 17,778 | 0 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 2,355,506 | 2,355,506 | 2,355,506 | 2,355,506 |
NATURE OF OPERATIONS AND SUMM_8
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cumulative Effect of ASU 2014-09 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Assets | ||||||
Accounts receivable | $ (3,850) | $ (3,850) | $ (2,606) | |||
Other long-term assets | (678) | (678) | ||||
Prepaid income tax (see Note 10) | 2,331 | 2,331 | 0 | |||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | 34,042 | 34,042 | 5,555 | |||
Income Statement | ||||||
Provision (benefit) for income taxes | (2,252) | $ 0 | 11,135 | $ 269 | ||
Net income (loss) | (7,619) | $ (4,237) | 28,638 | $ 8,883 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Assets | ||||||
Accounts receivable | 0 | 0 | ||||
Other long-term assets | 0 | 0 | ||||
Prepaid income tax (see Note 10) | 2,695 | 2,695 | ||||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | 29,878 | 29,878 | ||||
Adjustments due to ASU 2014-09 | ||||||
Assets | ||||||
Accounts receivable | (3,850) | (3,850) | ||||
Other long-term assets | (678) | (678) | ||||
Prepaid income tax (see Note 10) | 364 | 364 | ||||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | 4,164 | 4,164 | ||||
Accounting Standards Update 2014-09 | ||||||
Assets | ||||||
Accounts receivable | $ (5,156) | |||||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | 8,105 | |||||
Income Statement | ||||||
Revenues | 0 | 82,300 | ||||
Provision (benefit) for income taxes | (2,252) | 11,135 | ||||
Net income (loss) | 2,252 | 71,165 | ||||
Accounting Standards Update 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||
Assets | ||||||
Accounts receivable | (2,606) | |||||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | $ 5,555 | |||||
Income Statement | ||||||
Revenues | 1,300 | 81,000 | ||||
Provision (benefit) for income taxes | (1,888) | 10,771 | ||||
Net income (loss) | 3,188 | 70,229 | ||||
Accounting Standards Update 2014-09 | Adjustments due to ASU 2014-09 | ||||||
Assets | ||||||
Accounts receivable | (2,550) | |||||
Liabilities and Stockholders' Equity | ||||||
Retained earnings | $ 2,550 | |||||
Income Statement | ||||||
Revenues | (1,300) | 1,300 | ||||
Provision (benefit) for income taxes | (364) | 364 | ||||
Net income (loss) | $ (936) | $ 936 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS - Schedule of Prepaid Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Prepaid income tax (see Note 10) | $ 2,331 | $ 0 |
Other prepaid expenses and other current assets | 701 | 765 |
Total | $ 3,032 | $ 765 |
PREPAID EXPENSES AND OTHER CU_4
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS - Narrative (Details) $ in Millions | May 15, 2018patent | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization of intangible assets | $ | $ 0.5 | $ 0.2 | $ 1.3 | $ 0.2 | |
Patent Assignment Agreement | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents, useful life | 4 years | ||||
Second Patent Assignment Agreement | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents, useful life | 5 years | ||||
Number of assets transferred | patent | 56 |
PREPAID EXPENSES AND OTHER CU_5
PREPAID EXPENSES AND OTHER CURRENT ASSETS & INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 26,070 | $ 26,552 |
Less accumulated amortization | (20,075) | (18,804) |
Intangible assets, net | $ 5,995 | $ 7,748 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | Aug. 24, 2018USD ($) | Aug. 24, 2017USD ($)patent | Apr. 21, 2017USD ($)installment | Nov. 21, 2013USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)installment | Sep. 30, 2017USD ($) | Sep. 04, 2018USD ($) | Jul. 19, 2018 | Mar. 31, 2018USD ($) | Feb. 23, 2018USD ($) | Dec. 31, 2017USD ($) |
Schedule of Investments [Line Items] | |||||||||||||
Annual rent expense | $ 700 | ||||||||||||
Percentage increase in annual rent payment | 3.50% | ||||||||||||
Deferred rent payable | $ 0 | 0 | $ 36 | ||||||||||
Rent expense | 146 | $ 198 | 432 | $ 573 | |||||||||
Rental income | 102 | 90 | 186 | 267 | |||||||||
Payments made | 1,000 | 2,000 | |||||||||||
Patents | 26,070 | 26,070 | $ 26,552 | ||||||||||
Amortization of intangible assets | 500 | $ 200 | 1,300 | $ 200 | |||||||||
Avira, Inc. | |||||||||||||
Schedule of Investments [Line Items] | |||||||||||||
Sale of patent in license agreement | $ 3,900 | $ 2,300 | |||||||||||
Number of quarterly installments | installment | 12 | 7 | |||||||||||
Installment amount payable | $ 300 | ||||||||||||
Payable period of agreement | 3 years | ||||||||||||
Venture Capital Funds | |||||||||||||
Schedule of Investments [Line Items] | |||||||||||||
Capital commitment | $ 5,000 | 1,800 | $ 1,800 | ||||||||||
Percentage of limited partnership interest (less than) | 10.00% | ||||||||||||
Cash call | $ 400 | $ 500 | |||||||||||
Patents | Finjan Blue | |||||||||||||
Schedule of Investments [Line Items] | |||||||||||||
Number of assets transferred | patent | 41 | ||||||||||||
Patents acquired | $ 8,500 | ||||||||||||
Payments made | $ 1,000 | 2,000 | |||||||||||
Cash payable over subsequent four years | $ 6,500 | 5,500 | 5,500 | ||||||||||
Useful life of intangible asset | 4 years | ||||||||||||
Patents | $ 7,000 | ||||||||||||
Adjustment, present value | $ 1,400 | ||||||||||||
Accretion expense | 100 | 700 | |||||||||||
Amortization of intangible assets | $ 500 | $ 1,300 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2018 (remainder) | $ 124 |
2,019 | 747 |
2,020 | 773 |
2,021 | 801 |
2,022 | 829 |
2,023 | 425 |
Total | $ 3,699 |
ACCRUED EXPENSES & WARRANT LI_3
ACCRUED EXPENSES & WARRANT LIABILITY - Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Legal - Litigation / Licensing | $ 760 | $ 0 |
Compensation | 218 | 1,233 |
Other | 5 | 70 |
Total | $ 983 | $ 1,303 |
ACCRUED EXPENSES & WARRANT LI_4
ACCRUED EXPENSES & WARRANT LIABILITY - Warrant Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance, December 31, 2017 | $ 1,096 | |||
Fair value change of derivative liabilities | $ 1,046 | $ (1,530) | 3,445 | $ (1,530) |
Reclassification to additional paid-in capital | (4,541) | |||
Balance, September 30, 2018 | 0 | 0 | ||
Change in fair value of warrant liability | $ (1,046) | $ 1,530 | $ (3,445) | $ 1,530 |
LICENSE, SETTLEMENT AND RELEA_2
LICENSE, SETTLEMENT AND RELEASE AGREEMENT (Details) $ in Thousands | Jun. 29, 2018USD ($)asset | Apr. 09, 2018USD ($) | Apr. 06, 2018installment_payment | Mar. 29, 2018USD ($) | Mar. 19, 2018USD ($) | Feb. 28, 2018USD ($) | Feb. 01, 2018USD ($) | Apr. 21, 2017USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Mar. 31, 2019USD ($) | Jan. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 26, 2018USD ($) | May 31, 2017USD ($) | Mar. 30, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 0 | $ 0 | $ 82,300 | $ 27,056 | |||||||||||||||
Licensing Agreements | Trend Micro Parties | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 13,400 | ||||||||||||||||||
Number of assets transferred | asset | 18 | ||||||||||||||||||
Licensing Agreements | Carbon Black, Inc | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Cash received from license agreement | $ 1,300 | 3,900 | |||||||||||||||||
Payment period | 5 days | ||||||||||||||||||
Receivable related to license agreement | $ 1,300 | ||||||||||||||||||
Percentage of gross revenue | 8.00% | ||||||||||||||||||
Number of quarterly installments | installment_payment | 4 | ||||||||||||||||||
Licensing Agreements | Carbon Black, Inc | Forecast | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Receivable related to license agreement | $ 1,300 | ||||||||||||||||||
Licensing Agreements | Symantec Corp | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 65,000 | ||||||||||||||||||
Payment period | 20 days | ||||||||||||||||||
Payable period of agreement | 4 years | ||||||||||||||||||
Licensing Agreements | EU Licensee | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 4,900 | ||||||||||||||||||
Cash received from license agreement | 2,300 | ||||||||||||||||||
Payment period | 10 days | ||||||||||||||||||
Receivable related to license agreement | $ 1,300 | $ 2,300 | |||||||||||||||||
Licensing Agreements | EU Licensee | Forecast | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Receivable related to license agreement | $ 1,300 | ||||||||||||||||||
Licensing Agreements | Sophos Group | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 1,250 | ||||||||||||||||||
Cash received from license agreement | $ 15,000 | ||||||||||||||||||
Receivable related to license agreement | $ 2,500 | ||||||||||||||||||
Licensing Agreements | Sophos Group | Forecast | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Receivable related to license agreement | $ 1,250 | ||||||||||||||||||
Maximum | Licensing Agreements | Symantec Corp | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Additional license fees | $ 45,000 | ||||||||||||||||||
License | Licensing Agreements | Carbon Black, Inc | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | 3,900 | ||||||||||||||||||
License | Licensing Agreements | Symantec Corp | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 65,000 | ||||||||||||||||||
License | Licensing Agreements | EU Licensee | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 1,300 | ||||||||||||||||||
License | Licensing Agreements | Sophos Group | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 15,000 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Program (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | May 02, 2018 | |
Equity [Abstract] | ||
Authorized repurchase amount | $ 10,000,000 | |
Repurchased shares (in shares) | 686,492 | |
Repurchased shares, value | $ 2,000,000 | |
Repurchased price per share (in dollars per share) | $ 2.93 | |
Remaining authorized repurchase amount | $ 8,000,000 |
STOCKHOLDERS' EQUITY - Series A
STOCKHOLDERS' EQUITY - Series A-1 Preferred Stock (Details) - Series A-1 preferred shares - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | ||
Value of shares | $ 19.9 | |
Number of shares retired (in shares) | 153,000 | |
Reduction in the value of the preferred stock | $ 15.3 | |
Reduction in the accretive value of the preferred stock | 4.6 | |
Issuance costs | $ 1 | |
Deemed dividend | $ 4.6 |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 19, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 19, 2018 | Dec. 31, 2017 | Jul. 25, 2017 | Jun. 30, 2017 |
Class of Warrant or Right [Line Items] | |||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Common stock, shares issued (in shares) | 27,260,099 | 27,260,099 | 27,707,328 | ||||||
Series A-1 warrant liability | $ 0 | $ 3,313 | $ 0 | $ 3,313 | |||||
Change in fair value of warrant liability | $ (1,046) | 1,530 | $ (3,445) | 1,530 | |||||
Common Stock Warrant | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | ||||||||
Right to acquire variable amount of common stock, term | 15 months | ||||||||
Common Stock Warrant | Soryn HLDR | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Exercise price (in dollars per share) | $ 3.18 | ||||||||
Term of warrant | 3 years | ||||||||
Series A-1 warrant liability | $ 3,300 | ||||||||
Common stock | Common Stock Warrant | Soryn HLDR | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Common stock warrant purchased (in shares) | 2,000,000 | 2,355,506 | 2,355,506 | ||||||
Common stock, shares issued (in shares) | 2,000,000 | 46,370 | 309,136 | ||||||
Series A-1 warrant liability | $ 4,500 | ||||||||
Change in fair value of warrant liability | $ (1,000) | $ 1,500 | $ (3,400) | $ 1,500 |
STOCK BASED COMPENSATION - Narr
STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Jun. 21, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation | $ 471 | $ 222 | $ 1,224 | $ 641 | ||
Options exercised (in shares) | 143,026 | |||||
Proceeds from exercise of stock options | $ 231 | $ 229 | ||||
Compensation cost not yet recognized | $ 2,600 | $ 2,600 | ||||
Compensation cost not yet recognized (in years) | 2 years 6 months | |||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | ||
2014 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Increase in shares authorized (in shares) | 1,385,366 | 1,000,000 | ||||
Percentage of outstanding stock | 5.00% | |||||
Number of shares available for issuance (in shares) | 1,558,142 | 1,558,142 | ||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unvested, aggregate intrinsic value | $ 2,300 | $ 2,300 |
STOCK BASED COMPENSATION - Awar
STOCK BASED COMPENSATION - Awards Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Number of Options Outstanding | |||
Options exercised (in shares) | (143,026) | ||
Restricted stock units | |||
Number of Shares | |||
Beginning balance, non vested (in shares) | 438,712,000 | ||
Shares granted (in shares) | 200,000,000 | 200,000 | |
Shares vested (in shares) | (96,236,000) | ||
Shares forfeited (in shares) | 0 | ||
Ending balance, non vested (in shares) | 542,476,000 | 438,712,000 | |
Weighted Average Grant Date Fair Value | |||
Beginning of period (in dollars per share) | $ 2.28 | ||
Shares granted (in dollars per share) | 3.16 | ||
Shares vested (in dollars per share) | 2.33 | ||
Shares forfeited (in dollars per share) | 0 | ||
End of period (in dollars per share) | $ 2.60 | $ 2.28 | |
2013 and 2014 Plans | Stock options | |||
Number of Options Outstanding | |||
Beginning balance, outstanding (in shares) | 2,341,340 | ||
Options granted (in shares) | 376,667 | ||
Options exercised (in shares) | (143,026) | ||
Options forfeited (in shares) | 0 | ||
Options expired (in shares) | 0 | ||
Ending balance, outstanding (in shares) | 2,574,981 | 2,341,340 | |
Exercisable (in shares) | 1,352,795 | ||
Weighted Average Exercise Price | |||
Weighted average exercise price (in dollars per share) | $ 1.88 | $ 1.77 | |
Options granted, weighted average exercise price (in dollars per share) | 2.41 | ||
Options exercised, weighted average exercise price (in dollars per share) | 1.61 | ||
Options forfeited, weighted average exercise price (in dollars per share) | 0 | ||
Options expired, weighted average exercise price (in dollars per share) | 0 | ||
Exercisable, weighted average exercise price (in dollars per share) | $ 1.59 | ||
Additional Disclosures | |||
Weighted Average Remaining Contractual Life | 7 years 2 months 14 days | 5 years 9 months 11 days | |
Options granted, weighted average remaining contractual life | 9 years 4 months 28 days | ||
Exercisable, weighted average remaining contractual life | 5 years 6 months 10 days | ||
Aggregate Intrinsic Value | $ 6,268 | $ 1,087 | |
Options granted, aggregate intrinsic value | 716 | ||
Exercisable, aggregate intrinsic value | $ 3,673 |
STOCK BASED COMPENSATION - Fai
STOCK BASED COMPENSATION - Fair Value Assumptions (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Volatility | 105.00% | 105.00% | ||
Expected term (in years) | 6 years | 6 years | 6 years | 6 years |
Risk-free rate | 2.24% | 2.24% | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Weighted-average grant date fair value per option (in dollars per share) | $ 2.24 | $ 2.24 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Volatility | 132.00% | 132.00% | ||
Risk-free rate | 1.82% | 1.82% | ||
Weighted-average grant date fair value per option (in dollars per share) | $ 1.45 | $ 1.45 | ||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Volatility | 141.00% | 141.00% | ||
Risk-free rate | 2.19% | 2.19% | ||
Weighted-average grant date fair value per option (in dollars per share) | $ 3.32 | $ 3.32 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Director | ||||||
Related Party Transaction [Line Items] | ||||||
Rental income | $ 45 | |||||
Legal services | Chairman | ||||||
Related Party Transaction [Line Items] | ||||||
Legal fees | $ 38 | $ 38 | $ 114 | $ 114 | ||
Amount due to firm | $ 13 | $ 13 | $ 113 | |||
Benhamou Global Ventures | Director | ||||||
Related Party Transaction [Line Items] | ||||||
Rental income | $ 15 |
LITIGATION, CLAIMS AND ASSESS_2
LITIGATION, CLAIMS AND ASSESSMENTS (Details) $ in Millions | Jul. 26, 2016patent | Mar. 29, 2016inter_parts_review | Aug. 04, 2015USD ($) | Jun. 10, 2016petition | May 26, 2016petition | Apr. 27, 2016petition | Nov. 06, 2015petition | Nov. 05, 2015petition |
Finjan, Inc. v. Blue Coat Systems, Inc. | ||||||||
Loss Contingencies [Line Items] | ||||||||
Damages awarded | $ | $ 39.5 | |||||||
ESET, LLC v. Finjan, Inc. | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of patents first-to-file | patent | 5 | |||||||
Number of patents asserted | patent | 6 | |||||||
Symantec Corp | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of petitions filed for IPR | 3 | |||||||
Palo Alto Networks, Inc | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of petitions filed for IPR | 2 | 2 | ||||||
Number of IPRs | inter_parts_review | 2 | |||||||
Blue Coat Systems, Inc. | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of petitions filed for IPR | 2 | 2 |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ (2,252) | $ 0 | $ 11,135 | $ 269 |
Net operating loss carryforwards | 12,700 | $ 12,700 | ||
Effective tax rate | 28.00% | |||
Income taxes paid | $ 5,000 | $ 10,700 | $ 0 |