Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33304 | |
Entity Registrant Name | FINJAN HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-4075963 | |
Entity Address, Address Line One | 2000 University Ave., Suite 600 | |
Entity Address, City or Town | East Palo Alto | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94303 | |
City Area Code | 650 | |
Local Phone Number | 282-3228 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | FNJN | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 27,703,002 | |
Entity Central Index Key | 0001366340 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 18,706 | $ 18,304 |
Short term investments | 13,302 | 17,779 |
Accounts receivable | 570 | 0 |
Prepaid expenses and other current assets | 3,445 | 288 |
Total current assets | 36,023 | 36,371 |
Property and equipment, net | 437 | 462 |
Intangible assets, net | 3,064 | 3,552 |
Deferred income taxes | 4,042 | 7,267 |
Right of use assets | 2,095 | 2,227 |
Other assets, non-current | 214 | 214 |
Total Assets | 45,875 | 50,093 |
Current liabilities: | ||
Accounts payable | 4,044 | 4,481 |
Accounts payable - related parties | 13 | 88 |
Accrued expenses | 522 | 260 |
Lease liability | 566 | 522 |
Other liabilities, current | 2,000 | 2,000 |
Total current liabilities | 7,145 | 7,351 |
Lease liability, non-current | 1,611 | 1,786 |
Other liabilities, non-current | 1,865 | 1,799 |
Total Liabilities | 10,621 | 10,936 |
Commitments and contingencies (Note 3) | ||
Stockholders' equity | ||
Preferred stock - $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2020 and December 31, 2019 | 0 | 0 |
Common stock - $0.0001 par value; 80,000,000 shares authorized: 27,685,554 and 27,650,926 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 3 | 3 |
Additional paid-in capital | 29,788 | 29,502 |
Retained earnings | 5,463 | 9,652 |
Total Stockholders' Equity | 35,254 | 39,157 |
Total Liabilities and Stockholders' Equity | $ 45,875 | $ 50,093 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
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) | 27,685,554 | 27,650,926 |
Common stock, shares outstanding (in shares) | 27,685,554 | 27,650,926 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 3,800 | $ 0 |
Cost of revenues | 900 | 0 |
Gross profit | 2,900 | 0 |
Research and development expense | 391 | 476 |
Selling, general and administrative expenses | 6,710 | 7,945 |
Total operating expenses | 7,101 | 8,421 |
Loss from operations | (4,201) | (8,421) |
Other income (expense) | ||
Interest and other expense | (77) | (118) |
Interest and other income | 130 | 204 |
Loss before income taxes | (4,148) | (8,335) |
Provision (benefit) for income taxes | 41 | (2,333) |
Net loss | (4,189) | (6,002) |
Net loss to common stockholder | $ (4,189) | $ (6,002) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.15) | $ (0.22) |
Net loss per share applicable to common stockholders, basic and diluted (in dollars per share) | $ (0.15) | $ (0.22) |
Weighted-average common shares outstanding, basic (in shares) | 27,677,579 | 27,594,372 |
Weighted-average common shares outstanding, diluted (in shares) | 27,677,579 | 27,594,372 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2018 | 27,568,656 | |||
Beginning balance at Dec. 31, 2018 | $ 54,679 | $ 3 | $ 28,534 | $ 26,142 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 246 | 246 | ||
Exercise of stock options and vesting of RSUs (in shares) | 27,184 | |||
Exercise of stock options and vesting of RSUs | 0 | $ 0 | ||
Net loss | (6,002) | (6,002) | ||
Ending balance (in shares) at Mar. 31, 2019 | 27,595,840 | |||
Ending balance at Mar. 31, 2019 | 48,923 | $ 3 | 28,780 | 20,140 |
Beginning balance (in shares) at Dec. 31, 2019 | 27,650,926 | |||
Beginning balance at Dec. 31, 2019 | 39,157 | $ 3 | 29,502 | 9,652 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 266 | 266 | ||
Exercise of stock options and vesting of RSUs (in shares) | 34,628 | |||
Exercise of stock options and vesting of RSUs | 20 | $ 0 | 20 | |
Net loss | (4,189) | (4,189) | ||
Ending balance (in shares) at Mar. 31, 2020 | 27,685,554 | |||
Ending balance at Mar. 31, 2020 | $ 35,254 | $ 3 | $ 29,788 | $ 5,463 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (4,189) | $ (6,002) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 513 | 497 |
Non-cash lease expense | 132 | 119 |
Stock-based compensation | 266 | 246 |
Deferred income taxes | 3,225 | (2,337) |
Amortization of discount and premium on investments | (13) | (79) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (570) | 2,550 |
Prepaid expenses and other assets | (3,157) | 767 |
Lease liability | (131) | (110) |
Accounts payable | (437) | 162 |
Accounts payable - related parties | (75) | (138) |
Accrued expenses | 262 | 1,321 |
Other liabilities | 66 | 118 |
Net cash used in operating activities | (4,108) | (2,886) |
Cash flows from investing activities: | ||
Purchase of marketable securities | (3,010) | (3,763) |
Redemptions and maturities of marketable securities | 7,500 | 1,797 |
Leasehold improvements | 0 | (31) |
Net cash provided by (used in) investing activities | 4,490 | (1,997) |
Cash flows from financing activities | ||
Proceeds from exercise of stock options | 20 | 0 |
Net cash provided by financing activities | 20 | 0 |
Net increase (decrease) in cash and cash equivalents | 402 | (4,883) |
Cash and cash equivalents - beginning | 18,304 | 32,011 |
Cash and cash equivalents - ending | $ 18,706 | $ 27,128 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
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, Inc. ("Finjan"), Finjan Blue, Inc. ("Finjan Blue") and Finjan Mobile, Inc. ("Finjan Mobile") operates a cybersecurity business focused on three business lines: intellectual property licensing and enforcement, mobile security application development and investing in cybersecurity technologies and intellectual property. Licensing and enforcement of the Company's cybersecurity patent portfolio is operated through its wholly-owned subsidiaries Finjan and Finjan Blue. Revenues and operations are concentrated in Finjan; other subsidiaries were immaterial to the condensed consolidated financial statements for the three months ended March 31, 2020 and 2019. 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, 2019 was derived from the Company's 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, 2019 which were included in the annual report on Form 10-K filed by the Company on March 4, 2020. 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 months ended March 31, 2020 are not necessarily indicative of the operating results for the year ending December 31, 2020, 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. REVENUE RECOGNITION 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. CASH AND CASH EQUIVALENTS The Company considers all highly liquid instruments with original maturities of three months or less when purchased to be cash equivalents. Included in cash and cash equivalents are demand deposits and money market accounts. SHORT TERM INVESTMENTS Investments consist of U.S. Treasury Bills, which are classified as held-to-maturity, Certificates of Deposit and other Corporate Debt Securities. The Company determines the appropriate balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. All of the Company’s investments mature within the next twelve months. Unrealized gains and losses are de minimis . As of March 31, 2020 and December 31, 2019, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. NET LOSS PER COMMON SHARE Basic net 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 2020 2019 (In thousands, except share and per share data) Numerator: Net loss to common stockholders $ (4,189) $ (6,002) Denominator: Weighted-average common shares, basic 27,677,579 27,594,372 Weighted-average common shares, diluted* 27,677,579 27,594,372 Net loss per common share: Basic: $ (0.15) $ (0.22) Diluted: $ (0.15) $ (0.22) * For the three months ended March 31, 2020 and 2019, the securities would be anti-dilutive and therefore were excluded. Potentially dilutive common shares from employee equity plans and warrants are determined by applying the treasury stock method assumed exercise of warrants and share options and were excluded from the computation of diluted net loss per share because their inclusion would be anti-dilutive and consist of the following: Three Months ended 2020 2019 Stock options 2,339,013 2,486,646 Restricted stock units 538,691 288,108 Warrants 2,355,506 2,355,506 Total 5,233,210 5,130,260 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 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. The Company adopted ASU 2018-13 on January 1, 2020, the impact on the Company's condensed consolidated financial statements of this adoption is immaterial. Recently issued accounting pronouncements not yet adopted 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. |
SHORT TERM INVESTMENTS, PREPAID
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS | SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS Short Term Investments The Company's short term investments are classified as below with maturities of twelve months or less, unrealized gains and losses were immaterial for the periods presented: Security Type Fair Value March 31, December 31, (in thousands) Government $ 1,027 $ 1,012 Asset Backed 2,895 4,854 Industrial 4,443 5,034 Financial 4,937 6,879 $ 13,302 $ 17,779 Prepaid Expenses and Other Current Assets The components of prepaid expenses and other current assets are as presented below: March 31, December 31, (in thousands) Prepaid income tax $ 3,182 $ — Other prepaid expenses and other current assets 263 288 $ 3,445 $ 288 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
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 30, 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 Company has a sub-lease with a related party that has lease terms that are month-to-month based on the legally enforceable terms of the agreement as of January 1, 2019. In accordance with ASC 842-10-55-12, leases between related parties should be classified in accordance with the lease classification criteria applicable to all other leases on the basis of the legally enforceable terms and conditions of the lease. As a result, the Company elected not to apply the recognition requirements of ASC 842 for short-term leases, however, the lease costs that pertain to the short-term leases are disclosed in the components of lease costs table below. The balance sheet classification of the Company’s right-of-use asset and lease liabilities was as follows (in thousands): March 31, 2020 December 31, 2019 Operating lease right of use assets $ 2,095 $ 2,227 Operating lease liabilities Current portion included in current liabilities 566 522 Long Term portion included in non-current liabilities 1,611 1,786 Total Operating lease liabilities $ 2,177 $ 2,308 The components of lease expenses, net which were included in total expenses in the Company’s condensed consolidated statements of operations, were as follows (in thousands): Three Months ended March 31 2020 2019 Operating lease cost $ 198 $ 198 Variable lease cost — — Short term lease income (14) (60) $ 184 $ 138 Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2020 and 2019 were $0.2 million and $0.1 million, respectively, and were included in net cash used in operating activities in the Company's condensed consolidated statement of cash flows. A non-cash lease expense of $0.1 million for three months ended March 31, 2020 and 2019 was included in net adjustments to reconcile net loss to net cash used in operating activities in the Company's condensed consolidated statement of cash flows. As of March 31, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands): For the year ending December 31, 2020, remainder $ 582 2021 801 2022 829 2023 425 Total lease payments $ 2,637 Less: present value adjustment (460) Operating lease liabilities $ 2,177 Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the date of adoption of ASC 842. As of March 31, 2020, the weighted average remaining lease term is 3.25 years and the weighted average discount rate used to determine the operating lease liabilities was 11%. 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 March 31, 2020, the Company has a $0.3 million contractual obligation due April 2020. Finjan Blue 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 and a third payment of $1.5 million on September 9, 2019. As of March 31, 2020, the Company has a remaining balance due of $4.0 million. The IBM Security Patents from the Patent Assignment Agreement 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. Accretion and amortization expense was $0.1 million and $0.5 million for the three months ended March 31, 2020, respectively and $0.1 million and $0.4 million for the three months ended March 31, 2019, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued Expenses The components of accrued expenses are as presented below: March 31, December 31, (in thousands) Legal - litigation / licensing $ 250 $ — Compensation 250 250 Other 22 10 $ 522 $ 260 |
LICENSE, SETTLEMENT AND RELEASE
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | 3 Months Ended |
Mar. 31, 2020 | |
License Settlement And Release Agreement [Abstract] | |
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | LICENSE, SETTLEMENT AND RELEASE AGREEMENTOn January 23, 2020, the Company and each of its subsidiaries entered into a Confidential Patent License and Settlement Agreement (collectively, the “2020 License Agreements”) with Bitdefender Inc., a Florida Corporation and Bitdefender S.R.L., a Romanian corporation (collectively, “Bitdefender”). As part of the 2020 License Agreements, Bitdefender will obtain a license to, among others, the patents of Finjan, Finjan Mobile, and Finjan Blue, and pay Finjan $3.8 million in cash, of which $3.2 million was received during the quarter ended March 31, 2020, the remaining $0.6 million is currently being withheld for tax purposes and will be remitted upon delivery of FORM 6166 (Tax Residency Certificate). We await receipt of FORM 6166 from the US Department of Treasury. The Company recognized $3.8 million as revenues as of January 23, 2020, in accordance with the Company’s revenue recognition policy as described in Note 1, Further, upon acquisition of Bitdefender or acquisitions by Bitdefender, additional one-time license fees may be due to Finjan. The remaining terms of the License Agreements are confidential. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2020 | |
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. As of March 31, 2020, the Company has a remaining authorization of $8.0 million for future share repurchases. Warrants During the issuance of the Series A-1 Preferred Stock in June 2017, the Company issued a fully vested common stock warrant (the “Warrant”), to initially purchase 2,000,000 shares of common stock, $0.0001 par value per share 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, expiring June 2020. As of March 31, 2020 the aggregate intrinsic value of the warrant was $0, with a weighted average contracted term of 0.2 years. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION 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, 1,378,432 shares as of January 1, 2019 and 1,382,546 shares as of January 1, 2020 (equal to 5.0% of our outstanding shares of Common Stock as of the end of our immediately preceding fiscal year). As of March 31, 2020, the Company has 4,133,416 shares available for issuance under the 2014 Plan. During the three months ended March 31, 2020 and 2019, the Company incurred $0.3 million and $0.2 million, respectively, of stock-based compensation in the condensed consolidated statements of operations. All stock-based compensation expenses were related to selling, general and administration. Stock Options The following table is a summary of stock option activity during the three months ended March 31, 2020: Number of Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2019 2,356,197 $ 1.89 5.93 $ 628 Options granted — — — — Options exercised (17,184) 1.20 6.09 — Options forfeited — — — — Outstanding – March 31, 2020 2,339,013 $ 1.89 5.68 $ — Exercisable – March 31, 2020 1,906,107 $ 1.78 5.19 $ — 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 Months ended March 31 2020 2019 Volatility NA 104.99% Expected term (in years) NA 6 Risk-free rate NA 2.24% Expected dividend yield NA — Weighted-average grant date fair value per option NA $ 2.24 The risk-free interest rate 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 Company used its common stock volatility along with the average of historic volatilities of comparative companies. The dividend yield is zero as the Company has not made any dividend payment and has no plans to pay dividends in the foreseeable future. The Company determines the expected term of its stock option awards by using the simplified method, which assumes each vesting tranche of the award has a term equal to average of the contractual term and the vesting period. Restricted Stock Units The following table is a summary of restricted stock units award activity during the three months ended March 31, 2020: Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 486,135 2.53 Shares granted 70,000 2.01 Shares vested (17,444) 1.69 Non-vested at end of period 538,691 $ 2.18 The aggregate intrinsic value of the unvested RSU's was $0.5 million as of March 31, 2020. As of March 31, 2020, total compensation cost not yet recognized related to unvested restricted stock awards and stock options was approximately $1.5 million, which is expected to be recognized over a weighted-average period of 1.9 years. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
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 in legal fees to the firm for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company had balances due to this firm of approximately $13,000 and $88,000 respectively. Such amounts are included as part of accounts payable - related parties on the accompanying condensed consolidated balance sheets. |
LITIGATION, CLAIMS AND ASSESSME
LITIGATION, CLAIMS AND ASSESSMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION, CLAIMS AND ASSESSMENTS | LITIGATION, CLAIMS AND ASSESSMENTS Finjan recognizes that the dynamic nature of the COVID-19 Pandemic requires flexibility in its normal business activities particularly with respect to ongoing litigation. Most courts have postponed long-set trials and hearings, or are conducting them via virtual meeting platforms. We report below those cases and activities that have been directly impacted by the Pandemic, while noting that other normal business activities are ongoing remotely. A. United States District Court Actions 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 of 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. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. There are no new developments to report since January 1, 2020. 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 (Case No. 3:16-cv-03731-JD (N.D. Cal.)) on July 1, 2016, asserting that ESET infringes 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 judgment that ESET has infringed and is infringing the Asserted Patents, a preliminary and permanent injunction from the infringement of the same 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. The case was transferred to the Southern District of California on January 31, 2017. This action is before the Honorable Cathy Ann Bencivengo. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. A Mandatory Settlement Conference was held on February 10, 2020 in person before the Honorable Magistrate Judge Bernard G. Skomal and did not result in any resolution between the parties. A pretrial conference and motion in limine hearing was held on February 21, 2020, the Pretrial Order was entered on February 25, 2020, and the jury trial commenced on March 9, 2020. On March 16, 2020, Judge Bencivengo deemed a mistrial based upon the current state of extraordinary circumstances due to the Coronavirus/COVID-19 Pandemic, suspending all proceedings until further notice. 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. This action is before the Honorable Beth Labson Freeman. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. A hearing on summary judgment motions occurred on January 9, 2020. On February 3, 2020, the Court denied Finjan’s Motion for Summary Judgment of validity, and March 30, 2020, the Court granted in part and denied in part Cisco's motion for summary judgment of non-infringement. The Court heard oral arguments on Daubert motions on March 26, 2020, and issued an Order on Daubert Motions on April 17, 2020. The final pretrial conference was held on April 30, 2020 and a jury trial is scheduled to commence on June 22, 2020. 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 (German Litigations) 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 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 products including 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 has sought cease and desist orders against both defendants for offering or delivering the challenged products, under penalty of a fine for each violation of such orders, for orders providing Finjan with profit information regarding the challenged products, and for damages which Finjan has suffered or shall suffer as a result of ESET offering or delivering the challenged products since November 1, 2008. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. There are no new developments to report since January 1, 2020. There can be no assurance that Finjan will be successful in settling or litigating these claims. 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 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 action is before the Honorable Beth Labson Freeman. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. A summary judgment hearing is scheduled for January 14, 2021, a final pretrial conference 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 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 action was before the Honorable Haywood S. Gilliam, Jr. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. On January 23, 2020, the parties filed a Joint Stipulation of Dismissal with Prejudice pursuant to a confidential settlement agreement between the parties, which the Court granted on the same day. 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 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 action was before the Honorable William H. Alsup. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This case is now pending before the Court of Appeals for the Federal Circuit. Finjan’s Opening Brief was filed on December 18, 2019, Juniper’s Response was filed on March 27, 2020, and the projected date for Finjan’s Reply is May 18, 2020. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Trustwave Holdings, Inc. & Singapore Telecommunications Ltd., Case No. 1:20-cv-00371-LPS (D. Del.) Finjan filed a patent infringement lawsuit against Trustwave Holdings, Inc. (“Trustwave”) and its parent Singapore Telecommunications Ltd. (“SingTel”) in the United States District Court for the District of Delaware on March 26, 2020, asserting that Trustwave and SingTel are directly and indirectly infringing certain claims of Finjan’s U.S. Patent No. 8,141,154 (the “Asserted Patent”) through the manufacture, use, sale, importation, and/or offer for sale of their products and services, including, but not limited to, Trustwave’s Secure Web Gateway and Secure Email Gateway products. Finjan seeks entry of judgment that Trustwave and SingTel have infringed, are infringing, have induced infringement and are inducing infringement of the Asserted Patent, a preliminary and permanent injunction from infringing, or inducing the infringement of the Asserted Patent, 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 Leonard P. Stark. Finjan, Inc. v. Trustwave Holdings, Inc., Case No. 1:20-cv-00372-LPS (D. Del.) Finjan filed a breach of contract lawsuit against Trustwave Holdings, Inc. (“Trustwave”) in the Superior Court of Delaware on April 4, 2018 (Case No. N18C-04-006 WCC-CCLD), 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 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 action was before the Honorable William C. Carpenter, Jr. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. On March 16, 2020 Finjan filed a Notice of Removal of this case to the U.S. District Court of Delaware. The case is now pending before the Honorable Leonard P. Stark. On April 14, 2020 Trustwave filed a motion to remand the case to Superior Court. 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. (collectively “Check Point”) in the United States District Court for the Northern District of California on May 3, 2018, asserting that Check Point is directly and indirectly infringing 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, Check Point’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 Check Point 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 of 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 William H. Orrick. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The Court issued an order on January 17, 2020 granting in part Check Point’s motion to strike Finjan’s second amended infringement contentions. Finjan filed a motion to certify the order for interlocutory appeal, which the Court denied on April 20, 2020. The Court also issued a notice of intent to appoint a special master to address the remainder of the dispute, and on February 14, 2020 appointed Magistrate Elizabeth Laporte as the special master. 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-MN (D. Del) Finjan filed a patent infringement lawsuit against Rapid7, Inc. (“Rapid7”) in the United States District Court for the District of Delaware on October 1, 2018, asserting that Rapid7 is directly and indirectly infringing certain claims of Finjan’s U.S. Patent Nos. 7,757,289; 7,613,918; 7,975,305; 8,079,086; 8,141,154; 8,225,408; 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, Rapid7’s InsightIDR, InsightVM (Nexpose), InsightAppSec, AppSpider, and Metasploit technologies, including Rapid7's Insight Platform products. Finjan seeks entry of judgment that Rapid7 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 of 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 Maryellen Noreika. The Court held claim construction hearings on January 15 and January 22, 2020 and issued a claim construction order on February 5, 2020. The deadline for dispositive and Daubert motions is September 25, 2020, a pretrial conference is set for February 8, 2021, and trial for February 22, 2021. 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-JD (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 (the “Asserted Patents”) through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including, but not limited to, Fortinet’s FortiGate, FortiManager, FortiAnalyzer, FortiSiem, FortiSandbox, FortiMail, FortiWeb, FortiCache, and FortiClient technologies, including Fortinet Security Fabric products. Finjan seeks entry of judgment that Fortinet 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 of 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 James Donato. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. There are no new developments to report since January 1, 2020. There can be no assurance that Finjan will be successful in settling or litigating these claims. Finjan, Inc. v. Qualys Inc., Case No. 4:18-cv-07229-YGR (N.D. Cal.) Finjan filed a patent infringement lawsuit against Qualys Inc. (“Qualys”) in the United States District Court for the Northern District of California on November 29, 2018, asserting that Qualys infringes certain claims of Finjan’s U.S. Patent Nos. 6,154,844; 8,677,494; 7,975,305; 8,225,408; 6,965,968; 7,418,731; and 8,141,154 (the “Asserted Patents”) through the manufacture, use, sale, importation, and/or offer for sale of its products and services, including, but not limited to, Qualys’ products and services that utilize Vulnerability Management, Threat Protection, Continuous Monitoring, Indicators of Compromise, Container Security, Web App Firewall, Web App Scanning, and Compliance Monitoring, including Qualys Cloud Platform products. Finjan seeks entry of judgment that Qualys 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 of 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 Yvonne Gonzalez Rogers. Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. On February 28, 2020 Qualys filed a motion for leave to amend its answer and affirmative defenses, which Finjan opposed, and on April 13, 2020 the Court issued an order granting the leave to amend. On April 14, 2020, Qualys filed its Second Amended Answer to Complaint and Counterclaims, to which Finjan filed its answer on April 28, 2020. A claim construction hearing has been scheduled for May 27, 2020, via Zoom meeting platform due to the COVID-19 Pandemic. B. Proceedings before the United States Patent & Trademark Office (USPTO) Ex Parte Reexamination Proceedings As defined by the USPTO, an Ex Parte Reexamination is a “proceeding in which any person may request reexamination of a U.S. Patent based on one or more prior patents or printed publications. A requester who is not the patent owner has limited participation rights in the proceedings.” U.S. Patent No. 7,975,305 (Assignee, Finjan, Inc.) A third-party request for Ex Parte Reexamination of claims 6, 9, 11, 12, 17, and 25 of U.S. Patent No. 7,975,305 was filed on March 19, 2020 by Rapid7, Inc. and SonicWall, Inc., and assigned Reexamination Control Number 90/014,477. Reexamination was ordered on May 7, 2020. An optional Patent Owner Statement is due July 7, 2020. Inter Partes Review Proceedings As defined by the USPTO, Inter Partes Review (“IPR”) is a trial proceeding conducted at the Patent Trial and Appeal Board (PTAB or Board) to review the patentability of one or more claims in a patent only on a ground that could be raised under 35 U.S.C. §§ 102 or 103, and only on the basis of prior art consisting of patents or printed publications. For first-inventor-to-file patents, the IPR process begins with a third party (a person who is not the owner of the patent) filing a petition after the later of either: (1) nine months after the grant of the patent or issuance of a reissue patent; or (2) if a post grant review is instituted, the termination of the post grant review. These deadlines do not apply to first-to-invent patents. The patent owner may file a preliminary response to the petition ("POPR"). An IPR may be instituted upon a showing that there is a reasonable likelihood that the petitioner would prevail with respect to at least one claim challenged. If the proceeding is instituted and not dismissed, a final determination by the Board will be issued within one year (extendable for good cause by six months). The procedure for conducting IPR took effect on September 16, 2012, and applies to any patent issued before, on, or after September 16, 2012. U.S. Patent No. 8,141,154 (Assignee, Finjan, Inc.) Details on procedures prior to January 2020 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. On July 17, 2019, Palo Alto Networks filed a Notice of Appeal for IPR2016-00151 to the United States Court of Appeals for the Federal Circuit (Case No. 19-2151). Palo Alto Networks’ filed its Opening Brief on November 27, 2019, and the Director of the USPTO intervened in the appeal on January 6, 2020. Intervenor filed its Response Brief on March 4, 2020, Finjan’s filed its Response Brief on March 20, 2020, and Palo Alto Networks’ filed its Reply on April 10, 2020. No date for oral argument has been set. U.S Patent No. 7,975,305 (Assignee, Finjan, Inc.) On July 4, 2017, ESET, LLC and ESET SPOL S.R.O. (collectively “ESET”) filed a Petition for IPR of U.S. Patent No. 7,975,305 (IPR2017-01738). On January 24, 2019, the PTAB issued a Final Written Decision maintaining the validity of all instituted claims. On March 25, 2019, ESET filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (Case No. 19-1716). ESET filed its Opening Brief on September 6, 2019. On October 18, 2019 the United States Patent and Trademark Office (“USPTO”) filed a Notice of Intervention. Finjan filed its Response Brief and the USPTO filed its Intervenor Brief on November 15, 2019, and ESET filed its Reply on December 20, 2019. On April 9, 2020, due to COVID-19, an order issued canceling the previously scheduled oral argument set for May 6, 2020, and the appeal was submitted on the briefs without oral argument on that date. On May 11, 2020, the Federal Circuit issued a Judgment affirming the PTAB’s Final Written Decision. U.S. Patent No. 7,647,633 (Assignee, Finjan, Inc.) On December 22, 2017, Cisco Systems, Inc. filed a Petition for IPR of U.S. Patent No. 7,647,633 (IPR2018-00391). On May 23, 2019, the PTAB issued its Final Written Decision maintaining the validity of claim 14 and invalidating claims 1-4, 8, and 11-13. Finjan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit on June 27, 2019, and Cisco filed a Notice of Cross Appeal on July 1, 2019 (Case No. 19-2074). Finjan’s Opening Brief was filed on November 22, 2019 and Cisco’s Opening Brief on January 16, 2020. Finjan’s Reply Brief was filed on March 26, 2020 and Cisco's Reply Brief on April 16, 2020. No date for oral argument has been set. U.S. Patent No. 6,154,844 (Assignee, Finjan, Inc.) On October 2, 2018, Juniper Networks, Inc. filed a Petition for IPR of U.S. Patent No. 6,154,844 (IPR2019-00026). Finjan’s POPR was filed on January 11, 2019. On April 9, 2019, the PTAB instituted IPR on claims 1, 15, and 41. Finjan’s Patent Owner Response was filed on July 2, 2019, Petitioner’s Reply was filed on September 24, 2019, and Finjan’s Sur-Reply was filed on November 5, 2019. Oral argument was held on January 10, 2020. On April 7, 2020, the PTAB issued its Final Written Decision maintaining the validity of claims 1, 15, and 41. U.S. Patent No. 7,418,731 (Assignee, Finjan, Inc.) On July 26, 2019, Juniper Networks, Inc. filed a Petition for IPR of U.S. Patent No. 7,418,731 (IPR2019-01403). Finjan’s POPR was filed on November 22, 2019. On December 18, 2019, the PTAB denied institution of IPR. On January 14, 2020, Juniper filed a Request for Rehearing, and on February 27, 2020 the PTAB denied the request. U.S. Patent No. 8,079,086 (Assignee, Finjan, Inc.) On September 18, 2019, Unified Patents, Inc. filed a Petition for IPR of U.S. Patent No. 8,079,086 (IPR2019-01611). Finjan’s POPR was filed on January 23, 2020, and Unified’s Reply to POPR was filed on February 11, 2020. On April 13, 2020, the PTAB denied institution of IPR. Except for the foregoing disclosures, Finjan is not presently aware of any other material pending legal proceedings, to which Finjan or any of its subsidiaries are a party or of which any of its property is the subject. Litigation, including patent litigation, is inherently subject to uncertainties, especially in the midst of the COVID-19 pandemic . As such, there can be no assurance that Finjan will be successful in litigating and/or settling any of these claims. |
INCOME TAX
INCOME TAX | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | INCOME TAXOn March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), an economic stimulus package in response to the COVID-19 global pandemic. The CARES Act contains several corporate income tax provisions, including making remaining AMT credits immediately refundable; providing a 5-year carryback of net operating losses ("NOL") generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOL if carried back to prior tax years or utilized in tax years beginning before 2021, among others. The Company intends to avail itself of these new provisions and are reflected in the results as of March 31, 2020.The Company had a tax expense of $41,000 for the three months ended March 31, 2020 and is comprised of federal and state tax benefits on current period losses, along with a net federal tax expense for the impact of the CARES Act, resulting in an effective tax rate on a YTD basis of approximately -1.0%. The Company had a tax benefit of $2.3 million for the three months ended March 31, 2019, comprising of a federal tax benefit and a state tax benefit of $1.7 million and $0.6 million, respectively. The computed effective tax rate for the three months ended March 31, 2019, is approximately 28.00%. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2019 was derived from the Company's 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, 2019 which were included in the annual report on Form 10-K filed by the Company on March 4, 2020. 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 months ended March 31, 2020 are not necessarily indicative of the operating results for the year ending December 31, 2020, 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. |
REVENUE RECOGNITION | REVENUE RECOGNITION 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 |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers all highly liquid instruments with original maturities of three months or less when purchased to be cash equivalents. Included in cash and cash equivalents are demand deposits and money market accounts. |
SHORT TERM INVESTMENTS | SHORT TERM INVESTMENTS Investments consist of U.S. Treasury Bills, which are classified as held-to-maturity, Certificates of Deposit and other Corporate Debt Securities. The Company determines the appropriate balance sheet classification of its investments at the time of purchase and evaluates the classification at each balance sheet date. All of the Company’s investments mature within the next twelve months. Unrealized gains and losses are de minimis . As of March 31, 2020 and December 31, 2019, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. |
NET LOSS PER COMMON SHARE | NET LOSS PER COMMON SHAREBasic net 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 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. The Company adopted ASU 2018-13 on January 1, 2020, the impact on the Company's condensed consolidated financial statements of this adoption is immaterial. Recently issued accounting pronouncements not yet adopted 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) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
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 2020 2019 (In thousands, except share and per share data) Numerator: Net loss to common stockholders $ (4,189) $ (6,002) Denominator: Weighted-average common shares, basic 27,677,579 27,594,372 Weighted-average common shares, diluted* 27,677,579 27,594,372 Net loss per common share: Basic: $ (0.15) $ (0.22) Diluted: $ (0.15) $ (0.22) * For the three months ended March 31, 2020 and 2019, the securities would be anti-dilutive and therefore were excluded. |
Summary of Components Excluded from Computation of Diluted Net Loss Per Share | Potentially dilutive common shares from employee equity plans and warrants are determined by applying the treasury stock method assumed exercise of warrants and share options and were excluded from the computation of diluted net loss per share because their inclusion would be anti-dilutive and consist of the following: Three Months ended 2020 2019 Stock options 2,339,013 2,486,646 Restricted stock units 538,691 288,108 Warrants 2,355,506 2,355,506 Total 5,233,210 5,130,260 |
SHORT TERM INVESTMENTS, PREPA_2
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Short Term Investments | The Company's short term investments are classified as below with maturities of twelve months or less, unrealized gains and losses were immaterial for the periods presented: Security Type Fair Value March 31, December 31, (in thousands) Government $ 1,027 $ 1,012 Asset Backed 2,895 4,854 Industrial 4,443 5,034 Financial 4,937 6,879 $ 13,302 $ 17,779 |
Schedule of Prepaid Expenses | The components of prepaid expenses and other current assets are as presented below: March 31, December 31, (in thousands) Prepaid income tax $ 3,182 $ — Other prepaid expenses and other current assets 263 288 $ 3,445 $ 288 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Balance Sheet Information | The balance sheet classification of the Company’s right-of-use asset and lease liabilities was as follows (in thousands): March 31, 2020 December 31, 2019 Operating lease right of use assets $ 2,095 $ 2,227 Operating lease liabilities Current portion included in current liabilities 566 522 Long Term portion included in non-current liabilities 1,611 1,786 Total Operating lease liabilities $ 2,177 $ 2,308 |
Components of Lease Expense | The components of lease expenses, net which were included in total expenses in the Company’s condensed consolidated statements of operations, were as follows (in thousands): Three Months ended March 31 2020 2019 Operating lease cost $ 198 $ 198 Variable lease cost — — Short term lease income (14) (60) $ 184 $ 138 |
Schedule of Future Minimum Rental Payments | As of March 31, 2020, the maturities of the Company’s operating lease liabilities were as follows (in thousands): For the year ending December 31, 2020, remainder $ 582 2021 801 2022 829 2023 425 Total lease payments $ 2,637 Less: present value adjustment (460) Operating lease liabilities $ 2,177 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | The components of accrued expenses are as presented below: March 31, December 31, (in thousands) Legal - litigation / licensing $ 250 $ — Compensation 250 250 Other 22 10 $ 522 $ 260 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
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 Months ended March 31 2020 2019 Volatility NA 104.99% Expected term (in years) NA 6 Risk-free rate NA 2.24% Expected dividend yield NA — Weighted-average grant date fair value per option NA $ 2.24 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-Based Compensation Activity | The following table is a summary of stock option activity during the three months ended March 31, 2020: Number of Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2019 2,356,197 $ 1.89 5.93 $ 628 Options granted — — — — Options exercised (17,184) 1.20 6.09 — Options forfeited — — — — Outstanding – March 31, 2020 2,339,013 $ 1.89 5.68 $ — Exercisable – March 31, 2020 1,906,107 $ 1.78 5.19 $ — |
Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-Based Compensation Activity | The following table is a summary of restricted stock units award activity during the three months ended March 31, 2020: Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 486,135 2.53 Shares granted 70,000 2.01 Shares vested (17,444) 1.69 Non-vested at end of period 538,691 $ 2.18 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020business_line | |
Accounting Policies [Abstract] | |
Number of business lines | 3 |
NATURE OF OPERATIONS AND SUMM_5
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 | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss to common stockholders | $ (4,189) | $ (6,002) |
Denominator: | ||
Weighted-average common shares, basic (in shares) | 27,677,579 | 27,594,372 |
Weighted-average common shares, diluted (in shares) | 27,677,579 | 27,594,372 |
Net loss per common share: | ||
Basic (in dollars per share) | $ (0.15) | $ (0.22) |
Diluted (in dollars per share) | $ (0.15) | $ (0.22) |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Potentially Dilutive Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 5,233,210 | 5,130,260 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 2,339,013 | 2,486,646 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 538,691 | 288,108 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 2,355,506 | 2,355,506 |
SHORT TERM INVESTMENTS, PREPA_3
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Short Term Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | $ 13,302 | $ 17,779 |
Government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 1,027 | 1,012 |
Asset Backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 2,895 | 4,854 |
Industrial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 4,443 | 5,034 |
Financial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | $ 4,937 | $ 6,879 |
SHORT TERM INVESTMENTS, PREPA_4
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Prepaid Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Prepaid income tax | $ 3,182 | $ 0 |
Other prepaid expenses and other current assets | 263 | 288 |
Total | $ 3,445 | $ 288 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Thousands | Sep. 09, 2019USD ($) | Aug. 24, 2018USD ($) | Aug. 24, 2017USD ($)patent | Apr. 21, 2017USD ($)installment | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jul. 19, 2018 | Mar. 31, 2018USD ($) |
Schedule of Investments [Line Items] | ||||||||
Annual rent expense | $ 700 | |||||||
Percentage increase in annual rent payment | 3.50% | |||||||
Operating lease payments | 200 | $ 100 | ||||||
Non-cash lease expense | $ 132 | 119 | ||||||
Weighted average remaining lease term | 3 years 3 months | |||||||
Weighted average discount rate | 11.00% | |||||||
Avira, Inc. | ||||||||
Schedule of Investments [Line Items] | ||||||||
Sale of patent in license agreement | $ 3,900 | $ 300 | ||||||
Number of quarterly installments | installment | 12 | |||||||
Installment amount payable | $ 300 | |||||||
Payable period of agreement | 3 years | |||||||
Patents | Finjan Blue | ||||||||
Schedule of Investments [Line Items] | ||||||||
Number of assets transferred | patent | 41 | |||||||
Patents acquired | $ 8,500 | |||||||
Payments made | $ 1,500 | $ 1,000 | 2,000 | |||||
Cash payable over subsequent four years | $ 6,500 | 4,000 | ||||||
Useful life of intangible asset | 4 years | |||||||
Patents | $ 7,000 | |||||||
Adjustment, present value | $ 1,400 | |||||||
Accretion expense | 100 | 100 | ||||||
Amortization of intangible assets | $ 500 | $ 400 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease right of use assets | $ 2,095 | $ 2,227 |
Operating lease liabilities | ||
Current portion included in current liabilities | 566 | 522 |
Long Term portion included in non-current liabilities | 1,611 | 1,786 |
Total Operating lease liabilities | $ 2,177 | $ 2,308 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 198 | $ 198 |
Variable lease cost | 0 | 0 |
Short term lease income | (14) | (60) |
Total lease expense | $ 184 | $ 138 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Operating Lease | ||
2020, remainder | $ 582 | |
2021 | 801 | |
2022 | 829 | |
2023 | 425 | |
Total lease payments | 2,637 | |
Less: present value adjustment | (460) | |
Operating lease liabilities | $ 2,177 | $ 2,308 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Legal - litigation / licensing | $ 250 | $ 0 |
Compensation | 250 | 250 |
Other | 22 | 10 |
Total | $ 522 | $ 260 |
LICENSE, SETTLEMENT AND RELEA_2
LICENSE, SETTLEMENT AND RELEASE AGREEMENT (Details) - Licensing Agreements - Bitdefender - USD ($) $ in Millions | Jan. 23, 2020 | Mar. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Settlement, amount awarded from other party | $ 3.8 | |
Revenue | $ 3.8 | $ 3.2 |
Accounts receivable | $ 0.6 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Program (Details) - USD ($) | Mar. 31, 2020 | May 02, 2018 |
Equity [Abstract] | ||
Authorized repurchase amount | $ 10,000,000 | |
Remaining authorized repurchase amount | $ 8,000,000 |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2020 | Dec. 31, 2019 | |
Class of Warrant or Right [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common Stock Warrant | |||
Class of Warrant or Right [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | ||
Exercise price (in dollars per share) | $ 3.18 | ||
Term of warrant | 3 years | ||
Aggregate intrinsic value | $ 0 | ||
Weighted average contracted term | 2 months 12 days | ||
Common Stock | Common Stock Warrant | |||
Class of Warrant or Right [Line Items] | |||
Common stock warrant purchased (in shares) | 2,000,000 | 2,355,506 |
STOCK BASED COMPENSATION - Narr
STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Jan. 01, 2019 | Jan. 01, 2018 | Jun. 21, 2017 | Mar. 31, 2020 | Mar. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation | $ 0.3 | $ 0.2 | ||||
Expected dividend yield | 0.00% | 0.00% | ||||
Compensation cost not yet recognized | $ 1.5 | |||||
Compensation cost not yet recognized (in years) | 1 year 10 months 24 days | |||||
2014 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Increase in shares authorized (in shares) | 1,382,546 | 1,378,432 | 1,385,366 | 1,000,000 | ||
Percentage of outstanding stock | 5.00% | |||||
Number of shares available for issuance (in shares) | 4,133,416 | |||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unvested, aggregate intrinsic value | $ 0.5 |
STOCK BASED COMPENSATION - Awar
STOCK BASED COMPENSATION - Awards Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Restricted stock units | ||
Number of Shares | ||
Beginning balance, non vested (in shares) | 486,135 | |
Shares granted (in shares) | 70,000 | |
Shares vested (in shares) | (17,444) | |
Ending balance, non vested (in shares) | 538,691 | 486,135 |
Weighted Average Grant Date Fair Value | ||
Beginning of period (in dollars per share) | $ 2.53 | |
Shares granted (in dollars per share) | 2.01 | |
Shares vested (in dollars per share) | 1.69 | |
End of period (in dollars per share) | $ 2.18 | $ 2.53 |
2013 and 2014 Plans | Stock options | ||
Number of Options Outstanding | ||
Beginning balance, outstanding (in shares) | 2,356,197 | |
Options granted (in shares) | 0 | |
Options exercised (in shares) | (17,184) | |
Options forfeited (in shares) | 0 | |
Ending balance, outstanding (in shares) | 2,339,013 | 2,356,197 |
Exercisable (in shares) | 1,906,107 | |
Weighted Average Exercise Price | ||
Beginning balance, weighted average exercise price (in dollars per share) | $ 1.89 | |
Options granted, weighted average exercise price (in dollars per share) | 0 | |
Options exercised, weighted average exercise price (in dollars per share) | 1.20 | |
Options forfeited, weighted average exercise price (in dollars per share) | 0 | |
Ending balance, weighted average exercise price (in dollars per share) | 1.89 | $ 1.89 |
Exercisable, weighted average exercise price (in dollars per share) | $ 1.78 | |
Additional Disclosures | ||
Weighted Average Remaining Contractual Life | 5 years 8 months 4 days | 5 years 11 months 4 days |
Options granted, weighted average remaining contractual life | 6 years 1 month 2 days | |
Exercisable, weighted average remaining contractual life | 5 years 2 months 8 days | |
Aggregate Intrinsic Value | $ 0 | $ 628 |
Exercisable, aggregate intrinsic value | $ 0 |
STOCK BASED COMPENSATION - Fair
STOCK BASED COMPENSATION - Fair Value Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Equity [Abstract] | ||
Volatility | 104.99% | |
Expected term (in years) | 6 years | |
Risk-free rate | 2.24% | |
Expected dividend yield | 0.00% | 0.00% |
Weighted-average grant date fair value per option (in dollars per share) | $ 2.24 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Legal services | Chairman | ||||
Related Party Transaction [Line Items] | ||||
Legal fees | $ 38 | $ 38 | ||
Amount due to firm | $ 13 | $ 88 | ||
Benhamou Global Ventures | Director | ||||
Related Party Transaction [Line Items] | ||||
Rent income | $ 15 |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision (benefit) for income taxes | $ 41 | $ (2,333) |
Effective tax rate | (1.00%) | 28.00% |
Federal income tax benefit | $ 1,700 | |
State income tax benefit | $ 600 |