Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Cover page. | ||
Entity Central Index Key | 0001366340 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
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(g) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | FNJN | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 27,639,888 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 16,432 | $ 32,011 |
Short term investments | 17,161 | 11,303 |
Accounts receivable | 5,900 | 2,550 |
Prepaid expenses and other current assets | 1,934 | 6,580 |
Total current assets | 41,427 | 52,444 |
Property and equipment, net | 486 | 99 |
Investments | 4,218 | 3,518 |
Intangible assets, net | 4,040 | 5,507 |
Deferred income taxes | 6,292 | 2,811 |
Right of use assets | 2,356 | |
Other assets, non-current | 214 | 214 |
Total assets | 59,033 | 64,593 |
Current liabilities: | ||
Accounts payable | 5,837 | 4,394 |
Accounts payable - related parties | 13 | 163 |
Accrued expenses | 2,213 | 394 |
Lease liability | 523 | |
Other liabilities, current | 2,000 | 1,500 |
Total current liabilities | 10,586 | 6,451 |
Lease liability, non-current | 1,914 | |
Other liabilities, non-current | 1,712 | 3,463 |
Total liabilities | 14,212 | 9,914 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock - $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2019 and December 31, 2018 | 0 | 0 |
Common stock - $0.0001 par value; 80,000,000 shares authorized 27,625,208 and 27,568,656 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 3 | 3 |
Additional paid-in capital | 29,228 | 28,534 |
Retained earnings | 15,590 | 26,142 |
Total stockholders' equity | 44,821 | 54,679 |
Total liabilities and stockholders' equity | $ 59,033 | $ 64,593 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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) | 27,625,208 | 27,568,656 |
Common stock, shares outstanding (in shares) | 27,625,208 | 27,568,656 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 5,900 | $ 0 | $ 13,150 | $ 82,300 |
Cost of revenues | 1,003 | 0 | 1,931 | 14,601 |
Gross profit | 4,897 | 0 | 11,219 | 67,699 |
Research and development expense | 484 | 789 | 1,490 | 1,773 |
Selling, general and administrative expenses | 7,486 | 7,938 | 24,074 | 22,113 |
Total operating expenses | 7,970 | 8,727 | 25,564 | 23,886 |
Income (loss) from operations | (3,073) | (8,727) | (14,345) | 43,813 |
Other income (expense) | ||||
Change in fair value of warrant liability | 0 | (1,046) | 0 | (3,445) |
Interest expense | (98) | (136) | (324) | (701) |
Interest and other income | 206 | 38 | 639 | 106 |
Income (loss) before income taxes | (2,965) | (9,871) | (14,030) | 39,773 |
Provision (benefit) for income taxes | (385) | (2,252) | (3,478) | 11,135 |
Net income (loss) | (2,580) | (7,619) | (10,552) | 28,638 |
Accretion of preferred stock | 0 | 0 | 0 | (925) |
Net income (loss) to common stockholders | $ (2,580) | $ (7,619) | $ (10,552) | $ 27,713 |
Net income (loss) per share, basic (in dollars per share) | $ (0.09) | $ (0.28) | $ (0.38) | $ 1.04 |
Net income (loss) per share, diluted (in dollars per share) | (0.09) | (0.28) | (0.38) | 1.01 |
Net income (loss) per share applicable to common stockholders, basic (in dollars per share) | (0.09) | (0.28) | (0.38) | 1.01 |
Net income (loss) per share applicable to common stockholders, diluted (in dollars share) | $ (0.09) | $ (0.28) | $ (0.38) | $ 0.98 |
Weighted-average common shares outstanding, basic (in shares) | 27,623,768 | 27,247,462 | 27,609,176 | 27,488,437 |
Weighted-average common shares outstanding, diluted (in shares) | 27,623,768 | 27,247,462 | 27,609,176 | 28,417,453 |
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, 2017 | 27,707,328 | |||
Beginning balance at Dec. 31, 2017 | $ 28,526 | $ 3 | $ 22,968 | $ 5,555 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 1,224 | 1,224 | ||
Exercise of RSUs and stock options (in shares) | 239,263 | |||
Exercise of RSUs and stock options | 230 | $ 0 | 230 | |
Net income (loss) | 28,638 | 28,638 | ||
Warrant liability adjustment | 4,541 | 4,541 | ||
Shares repurchased (in shares) | (686,492) | |||
Shares repurchased | (2,023) | $ 0 | (2,023) | |
Accretion of Series A-1 preferred stock | (925) | (925) | ||
Ending balance (in shares) at Sep. 30, 2018 | 27,260,099 | |||
Ending balance at Sep. 30, 2018 | 62,083 | $ 3 | 28,038 | 34,042 |
Beginning balance (in shares) at Jun. 30, 2018 | 27,172,924 | |||
Beginning balance at Jun. 30, 2018 | 64,669 | $ 3 | 23,005 | 41,661 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 471 | 471 | ||
Exercise of RSUs and stock options (in shares) | 87,175 | |||
Exercise of RSUs and stock options | 21 | $ 0 | 21 | |
Net income (loss) | (7,619) | (7,619) | ||
Warrant liability adjustment | 4,541 | 4,541 | ||
Ending balance (in shares) at Sep. 30, 2018 | 27,260,099 | |||
Ending balance at Sep. 30, 2018 | 62,083 | $ 3 | 28,038 | 34,042 |
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 | 694 | 694 | ||
Exercise of RSUs and stock options (in shares) | 56,552 | |||
Exercise of RSUs and stock options | $ 0 | |||
Net income (loss) | (10,552) | (10,552) | ||
Accretion of Series A-1 preferred stock | 0 | |||
Ending balance (in shares) at Sep. 30, 2019 | 27,625,208 | |||
Ending balance at Sep. 30, 2019 | 44,821 | $ 3 | 29,228 | 15,590 |
Beginning balance (in shares) at Jun. 30, 2019 | 27,610,520 | |||
Beginning balance at Jun. 30, 2019 | 47,204 | $ 3 | 29,031 | 18,170 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 197 | 197 | ||
Exercise of RSUs and stock options (in shares) | 14,688 | |||
Exercise of RSUs and stock options | $ 0 | |||
Net income (loss) | (2,580) | (2,580) | ||
Ending balance (in shares) at Sep. 30, 2019 | 27,625,208 | |||
Ending balance at Sep. 30, 2019 | $ 44,821 | $ 3 | $ 29,228 | $ 15,590 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (10,552) | $ 28,638 |
Adjustments to reconcile net income (loss) to net cash provided (used in) by operating activities: | ||
Depreciation and amortization | 1,525 | 1,300 |
Non-cash lease expense | 366 | 0 |
Change in fair value of warrant liability | 0 | 3,445 |
Deferred income taxes | (3,481) | 2,738 |
Stock-based compensation | 694 | 1,224 |
Amortization of discount and premium on investments | (230) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,350) | 1,306 |
Prepaid expenses and other assets | 4,646 | (2,267) |
Lease liability | (356) | 0 |
Accounts payable | 1,443 | (2,012) |
Accounts payable - related parties | (150) | 0 |
Accrued expenses | 1,819 | (320) |
Accrued income taxes | 0 | 0 |
Other liabilities | (1,180) | (496) |
Net cash provided by (used in) operating activities | (8,806) | 33,556 |
Cash flows from investing activities: | ||
Purchase of patents | 0 | (1,000) |
Purchase of fund investment | (700) | (900) |
Purchase of marketable securities | (19,175) | 0 |
Redemption of marketable securities | 13,547 | 0 |
Leasehold improvements | (445) | 0 |
Net cash used in investing activities | (6,773) | (1,900) |
Cash flows from financing activities: | ||
Repurchase of Finjan Holdings shares | 0 | (2,024) |
Proceeds from exercise of stock options | 0 | 231 |
Redemption of preferred shares | 0 | (19,890) |
Net cash used in financing activities | 0 | (21,683) |
Net (decrease) increase in cash and cash equivalents | (15,579) | 9,973 |
Cash and cash equivalents - beginning | 32,011 | 41,169 |
Cash and cash equivalents - ending | 16,432 | 51,142 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 0 | 10,700 |
Supplemental disclosures of cash flow information, non-cash: | ||
Accretion of series A-1 preferred stock to redemption value | 0 | 925 |
Changes in accounts receivable, adoption of ASC 606 | 3,350 | (1,306) |
Reclassification of warrant liability to equity | 0 | 4,541 |
Accounting Standards Update 2014-09 | ||
Changes in operating assets and liabilities: | ||
Accounts receivable | 0 | (2,550) |
Supplemental disclosures of cash flow information, non-cash: | ||
Changes in accounts receivable, adoption of ASC 606 | 0 | 2,550 |
Changes in deferred tax, adoption of ASC 606 | $ 0 | $ 678 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
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 and nine months ended September 30, 2019 and 2018. 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, 2018 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, 2018 which were included in the annual report on Form 10-K filed by the Company on March 13, 2019. 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, 2019 are not necessarily indicative of the operating results for the year ending December 31, 2019, 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 Effective January 1, 2018, the Company adopted Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("Topic 606” or “ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. 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 September 30, 2019 and December 31, 2018, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. 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 2019 2018 2019 2018 (In thousands, except share and per share data) Numerator: Net income (loss) to common stockholders $ (2,580) $ (7,619) $ (10,552) $ 27,713 Denominator: Weighted-average common shares, basic 27,623,768 27,247,462 27,609,176 27,488,437 Weighted-average common shares, diluted* 27,623,768 27,247,462 27,609,176 28,417,453 Net income (loss) per common share: Basic: $ (0.09) $ (0.28) $ (0.38) $ 1.01 Diluted: $ (0.09) $ (0.28) $ (0.38) $ 0.98 * For the three and nine months ended September 30, 2019 the securities would be anti-dilutive and therefore were excluded. For the three months ended September 30, 2018, the securities would be anti-dilutive and therefore were excluded. For the nine months ended September 30, 2018, the diluted earnings per common share included 209,689 unvested RSUs and the weighted average effect of 719,327 stock options that are potentially dilutive to earnings per share, since the exercise price of such securities was less than the average market price during the period. 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 income (loss) per share because their inclusion would be anti-dilutive and consist of the following: Three Months ended Nine Months ended September 30, 2019 2018 2019 2018 Stock options 2,356,198 2,574,981 2,356,198 733,025 Restricted stock units 511,853 542,476 511,853 17,778 Warrants 2,355,506 2,355,506 2,355,506 2,355,506 Total 5,223,557 5,472,963 5,223,557 3,106,309 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 SEC issued Release No. 33-10532 that amends and clarifies certain financial reporting requirements. The principal change to our financial reporting is the inclusion of the annual disclosure requirement of changes in stockholders’ equity in Rule 3-04 of Regulation S-X to interim periods. The Company adopted this guidance on January 1, 2019. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. The Company, using the modified retrospective approach with a cumulative-effect adjustment, - and recognized a right to use ("ROU") asset at the beginning of the period of adoption (January 1, 2019). Therefore, the Company recognized and measured operating leases on the condensed consolidated balance sheet without revising comparative period information or disclosure. The Company elected the package of practical expedients permitted under the transition guidance within the standard, which eliminates the reassessment of past leases, classification and initial direct costs and treats short term leases of less than a year outside of a ROU asset. The Company has no financing leases. The adoption did not materially impact the Company’s Condensed Consolidated Statements of Operations or Cash Flows. Refer to Note 3, Commitments and Contingencies, for additional disclosures required by ASC 842. The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date (except we used the practical expedients and recorded the outstanding operating lease at January 1, 2019) based on the present value of lease payments over the lease term. As the Company’s lease did not provide an implicit interest rate, the Company used the equivalent borrowing rate for a secured financing with the term of that equal to the remaining life of the lease at inception. The lease terms used to calculate the ROU asset and related lease liability did not include options to extend or termination of the lease; there are none and there is no reasonable certainty that the Company would extend the lease at expiration. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense; there were no finance leases at this time which would be recognized as depreciation expense and interest expense. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a separate lease components. Non-leasing components are not included in the ROU asset. On January 1, 2019 the Company adopted 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. The impact of this adoption was immaterial on the Company's condensed consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted 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. |
SHORT TERM INVESTMENTS, PREPAID
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 December 31, (in thousands) Government $ 1,002 $ — Asset Backed 3,354 1,786 Industrial 5,484 2,381 Financial 7,321 7,136 $ 17,161 $ 11,303 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 $ 1,425 $ 5,429 Other prepaid expenses and other current assets 509 1,151 $ 1,934 $ 6,580 In June 2019, a tax refund of $4.0 million for the prepayment made during 2018 was received from the Internal Revenue Service. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
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 two sub-leases with related parties that have lease terms that are month-to-month based on the legally enforceable terms of the agreements 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): September 30, 2019 Operating lease right of use assets $ 2,356 Operating lease liabilities Current portion included in current liabilities 523 Long Term portion included in non-current liabilities 1,914 Total Operating lease liabilities $ 2,437 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 September 30, 2019 Nine Months ended September 30, 2019 Operating lease cost $ 198 $ 594 Variable lease cost — — Short term lease income (59) (177) $ 139 $ 417 Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2019 was $0.6 million and was included in Net cash used in operating activities in the company's condensed consolidated statement of cash flows. Upon the adoption of ASC 842 on January 1, 2019, the Company increased non-cash balances of operating lease right-of-use assets and operating lease liabilities by $2.7 million and $2.8 million, respectively. As of September 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands): For the year ending December 31, 2019, remainder $ 192 2020 773 2021 801 2022 829 2023 425 Total lease payments $ 3,020 Less: Present value adjustment (583) Operating lease liabilities $ 2,437 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 September 30, 2019, the weighted average remaining lease term is 3.75 years and the weighted average discount rate used to determine the operating lease liabilities was 11%. 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 cash calls on April 1, 2019 and September 16, 2019 of $0.5 million and $0.2 million, respectively, the Company has an outstanding capital commitment of $1.1 million to the JVP Fund as of September 30, 2019. 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, 2019, the Company has a $1.0 million contractual obligation due over the next 3 quarters. 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 September 30, 2019, 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 September 30, 2019, respectively and $0.3 million and $1.5 million for the nine months ended September 30, 2019, respectively, $0.1 million and $0.5 million for the three months ended September 30, 2018, respectively and $0.7 million and $1.3 million for the nine months ended September 30, 2018, respectively. The amortization expense from the May 2018 Patent Assignment Agreement is included in the amortization expense detailed above. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued Expenses The components of accrued expenses are as presented below: September 30, December 31, (in thousands) Legal - Litigation / Licensing $ 1,725 $ — Compensation 381 336 Other 107 58 $ 2,213 $ 394 |
LICENSE, SETTLEMENT AND RELEASE
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | 9 Months Ended |
Sep. 30, 2019 | |
License Settlement And Release Agreement [Abstract] | |
LICENSE, SETTLEMENT AND RELEASE AGREEMENT | LICENSE, SETTLEMENT AND RELEASE AGREEMENT On September 30 , 2019 , each of Finjan, Finjan Mobile and Finjan Blue entered into a Confidential Patent License Agreement (collectively, the “Mimecast License Agreements”) with Mimecast Limited ("Mimecast"). In addition, to achieve global patent peace between the companies, the Company and Mimecast and Mimecast North America, Inc. have entered into mutual covenants not to sue for a certain number of years, among other terms (the “Letter Agreement”). As part of the Mimecast License Agreements, Mimecast and its licensed affiliates (the “Mimecast Parties”) will obtain a license to, among others, the patents of Finjan, Finjan Mobile, and Finjan Blue, and pay Finjan $5.9 million in cash within five (5) business days of the agreement date, which payment was received on October 3, 2019. The remaining terms of the Mimecast License Agreements and the Letter Agreement are confidential. On April 30, 2019, the Company and Zscaler, Inc. (“Zscaler”) entered into a Confidential Patent License and Settlement Agreement (the “License and Settlement Agreement”). Specifically, the parties have resolved and settled all claims between them. As part of the settlement and pursuant to the License and Settlement Agreement and related agreements, Zscaler and its licensed affiliates (the “Zscaler Parties”) obtained a license to, among others, the patents of Finjan, Finjan Mobile, Inc., and Finjan Blue, Inc. (collectively with the Company, the “Finjan Parties”) and agreed to pay Finjan $7.25 million in cash within five (5) business days of April 30, 2019, the effective date of the License and Settlement Agreement, which payment has been received by Finjan on April 30, 2019. Further, upon acquisition of Zscaler or acquisitions by Zscaler, additional one-time license fees may 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. The License and Settlement Agreement and related agreements also contained mutual covenants not to sue and mutual releases, among other terms. The remaining terms of the License and Settlement Agreement and related agreements are confidential. On February 28, 2018, the Company and 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 March 31, 2018. 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 obtained a license to our patent portfolio and agreed to 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 was received on January 28, 2019, and was included in accumulated adjustments on January 1, 2018 under ASC 606. 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019, the Company has a remaining authorization of $8.0 million for future share repurchases. Preferred Stock Series A-1 During the quarter 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. 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. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2019 | |
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 ended December 31, 2018 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 and 1,378,432 shares as of January 1, 2019 (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, 2019, the Company has 2,820,870 shares available for issuance under the 2014 Plan. During the three and nine months ended September 30, 2019, the Company expensed $0.2 million and $0.7 million, respectively and $0.5 million and $1.2 million for the three and nine months ended September 30, 2018, 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 nine months ended September 30, 2019: Number of Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2018 2,486,646 $ 1.89 7.00 $ 1,550 Options granted 50,832 2.28 9.74 — Options exercised — — — — Options forfeited (181,280) 2.23 — — Outstanding – September 30, 2019 2,356,198 $ 1.89 6.33 $ 628 Exercisable – September 30, 2019 1,688,640 $ 1.70 5.25 $ 618 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, 2019 2018 Volatility 65.01% 105% Expected term (in years) 6 6 Risk-free rate 2.37% 2.24% Expected dividend yield — — Weighted-average grant date fair value per option $ 1.76 $ 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 nine months ended September 30, 2019: Nine Months ended September 30, 2019 Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 315,292 $ 2.26 Shares vested (56,552) 2.30 Shares granted 253,113 2.28 Non-vested 511,853 $ 2.27 The aggregate intrinsic value of the unvested RSU's was $1.0 million as of September 30, 2019. As of September 30, 2019, total compensation cost not yet recognized related to restricted stock awards and unvested stock options was approximately $1.9 million, which is expected to be recognized over a weighted-average period of 2.1 years. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, the Company had balances due to this firm of approximately $13,000 and $163,000 respectively. Such amounts are included as part of accounts payable - related parties 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 Managing Director. 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 and is represented on the board. Rental income from the sublease is approximately $45,000 quarterly for an undefined term. 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. The legally enforceable terms of these sub-leases are month-to-month. As a result of the criteria outlined above, we have not included these sub-leases under ASC 842 and lessor accounting due to the legally enforceable term of less than one year and will continue to recognize amounts related to these sub-leases as income each month. |
LITIGATION, CLAIMS AND ASSESSME
LITIGATION, CLAIMS AND ASSESSMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION, CLAIMS AND ASSESSMENTS | LITIGATION, CLAIMS AND ASSESSMENTS 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. Palo Alto Networks filed its Answer and Counterclaims on December 31, 2015. 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. On May 26, 2016, the Court ordered a stay to remain in effect until the PTAB’s final determination of the instituted IPRs, and the matter remains stayed pending appeal. For particulars of the pending IPR proceedings, see Section B of this Note, “ Inter Partes Review Proceedings,” case numbers IPR 2015-01979, IPR2016-00151, and IPR2016-00159. The parties will file a joint status report within seven (7) days of final determination on the instituted IPRs, including any appeals, informing the Court of the status of the IPR decisions. 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. 3:17-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 December 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The Court’s prior Scheduling Order set a trial date of October 29, 2019. On July 30, 2019, ESET filed an Ex Parte Motion to Amend the Scheduling Order, due to ESET’s trial counsels’ move to another law firm, and on July 31, 2019, the Court granted ESET’s motion and vacated “all pending deadlines and hearing dates.” On September 24, 2019, the Court issued an Order concerning the parties’ dispositive and Daubert motions, denying some motions, providing tentative rulings on others, and requesting oral argument on the remaining, which the Court heard on September 26, 2019. The Court also set a status conference for January 10, 2020, and a tentative date for the jury trial to commence on March 9, 2020. On October 16, 2019, the Court issued its Order on Motions for Summary Judgment and Motions to Exclude or Strike. On October 28, 2019, the Court issued an Order scheduling the jury trial to commence on March 9, 2020 and setting a pretrial conference and motion in limine hearing for February 21, 2020. 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 December 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. On February 5, 2019, the Court issued an Order Construing Additional Claims in U.S. Patent Nos. 6,154,844; 6,804,780; and 7,647,633. On April 15, 2019, Cisco filed a Motion for Reconsideration of the Court’s Order Construing Additional Claims with respect to Patent No. 7,647,633, and on April 30, 2019, the Court granted Cisco’s Motion for Reconsideration. On May 7, 2019, the Court issued an Order modifying the dates for summary judgment briefing, so that currently the opening summary judgment briefs are due on October 22, 2019, oppositions due on November 12, 2019, and replies due on November 26, 2019. On October 22, 2019, Finjan filed a motion for summary judgment of validity of U.S. Patent Nos. 6,154,844, 7,647,633, and 8,677,494, and Cisco filed a partial motion for summary judgment of non-infringement of U.S. Patent Nos. 6,804,780, 7,647,633, and 8,141,154, and of no pre-suit damages. The hearing on summary judgment motions is January 9, 2020. The final pretrial conference is scheduled for April 23, 2020 and a trial is scheduled to commence on June 1, 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 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. On November 24, 2016, ESET filed a nullity action with the Federal German Patent Court (the “Court”). The infringement proceedings were stayed pending resolution in the 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. The nullity hearing was held on November 28 and 29, 2018, and on March 22, 2019, the Court issued its decision in German determining the claims at issue to be unpatentable. Finjan filed a notice of appeal of the Court’s determination with the Federal Court of Justice of Germany on April 25, 2019, and its Appeal Brief on July 25, 2019. ESET’s Reply to the Appeal Brief is due by December 2, 2019. 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 December 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. A claim construction hearing was held on March 1, 2019, and the Court issued an Order Construing Claims in U.S. Patent Nos. 6,154,844; 6,965,968; 7,058,822; 7,613,926; 7,647,633; and 8,225,408 on March 26, 2019. On April 30, 2019, SonicWall filed a motion for leave to Conduct Additional Claim Construction Proceedings, which the Court denied on May 7, 2019. The parties participated in a court-ordered mediation on September 18, 2019, without resolution. On October 3, 2019, SonicWall filed a motion for leave to Conduct Additional Claim Construction Proceedings, which Finjan opposed on October 7, 2019. On October 11, 2019, the Court granted in part SonicWall's motion for leave to conduct additional claim construction proceedings, and set a Markman hearing for January 17, 2020. 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 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 is before the Honorable Haywood S. Gilliam, Jr. Details on procedures prior to December 2018 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. A claim construction hearing was held on June 6, 2018. A Claim Construction Order issued on February 14, 2019 and a further case management conference was held on March 12, 2019. Pursuant to the Court’s April 1, 2019 Scheduling Order, dispositive motions will be filed on November 7, 2019, with oppositions on December 5, 2019, replies on December 19, 2019, and the hearing on January 9, 2020. A pretrial conference is set for March 17, 2020, with a jury trial to commence on April 6, 2020. On June 18, 2019, Bitdefender filed a Motion to Amend/Correct Counterclaims, Finjan opposed the motion on July 2, 2019, and on July 9, 2019, Bitdefender replied. The hearing is set for November 6, 2019. 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 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 2019 are disclosed in Note 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. On January 10, 2019, subsequent to the December 2018 trial and jury verdict concerning the ‘494 Patent, the parties filed and briefed Motions for Judgment as a Matter of Law (“JMOL”). On March 11, 2019, the Court denied Finjan’s motion for JMOL, a new trial, and certification for interlocutory appeal, and held Juniper’s renewed motion for JMOL in abeyance. A trial for Juniper’s equitable defenses, counterclaims, and Section 101 defense was set for July 29, 2019, but was subsequently vacated. On March 28, 2019, Juniper filed a Motion for Sanctions, and on March 29, 2019, Finjan filed a Rule 60(b) Motion for Relief from Judgment. Hearings on these motions were heard on May 9, 2019. On May 22, 2019, the Court issued an Order denying Finjan’s Rule 60(b) motion, and held in abeyance Juniper’s motion for sanctions. The second round of early summary judgment motions were briefed during February, March, and April, with a hearing on May 2, 2019. Finjan moved for summary judgment of infringement of Claim 1 of the ‘154 Patent, and Juniper moved for summary judgment of non-infringement of Claim 9 of the ‘780 Patent. On May 9, 2019 the Court denied Finjan’s motion, granted Juniper’s motion, issued an Order to Show Cause why summary judgment should not be granted regarding Claim 1 of the ‘154 Patent, and set a jury trial to commence on October 21, 2019. The parties filed responses to the Order to Show Cause, and filed respective replies to the same. On June 19, 2019, the Court entered the Fourth Amended Case Management Order setting a hearing on summary judgment motions for September 12, 2019, a hearing on Daubert motions for October 3, 2019, and a pretrial conference for October 9, 2019. A court-ordered settlement conference was held before U.S. Magistrate Judge Nathanael M. Cousins on July 9, 2019. On July 23, 2019, the Court issued an Order re the Order to Show Cause granting summary judgment of noninfringement of Claim 1 of the ‘154 Patent. On August 2, 2019, the parties filed a Joint Stipulation of Dismissal with Prejudice with respect to specific patents, claims, and counterclaims. On August 6, 2019, the Court issued an Order re Proposed Judgment, requesting the parties to jointly file a proposed judgment, and on August 8, 2019 the parties filed competing proposed judgments. On August 13, 2019, the Court entered Judgment in the case. On September 9, 2019, Finjan filed a Notice of Appeal to the Court of Appeals for the Federal Circuit (19-2405). Finjan’s Opening Brief is due December 18, 2019, Juniper’s Response on February 26, 2020, and Finjan’s Reply on March 18, 2020. 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; and 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 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 action is before the Honorable Jon S. Tigar. Zscaler filed its Answer and Counterclaims on February 12, 2018, and its Amended Answer and Counterclaims on March 19, 2018. On April 2, 2018, Finjan filed an Answer to Zscaler’s Counterclaim. On March 21, 2019, Zscaler filed a Motion to Stay the case, Finjan filed its Opposition on April 4, 2019, and Zscaler filed its Reply on April 11, 2019. The Court set a claim construction tutorial for May 14, 2019, and a claim construction hearing for May 28, 2019. A summary judgment hearing was scheduled for November 18, 2019. On May 1, 2019, 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. 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 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 is before the Honorable William C. Carpenter, Jr. 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 to Dismiss was heard on November 19, 2018. On February 11, 2019, Judge Carpenter issued an Order denying Trustwave’s Motion to Dismiss and permitting Finjan’s Breach of Contract suit to proceed. On February 19, 2019, Trustwave filed its Answer and Affirmative Defenses to Finjan’s Complaint. A schedule has not yet been set in the case. Discovery is ongoing. 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. (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. On July 16, 2018, Check Point Software Technologies Inc. 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 November 21, 2018, Check Point Software Technologies Inc. filed its Amended Answer. On December 5, 2018, Finjan filed a Motion to Strike Check Point’s Affirmative Defenses of lack of standing for the ‘154 Patent, prosecution laches, and inequitable conduct for the ‘154 and ‘494 Patents. On January 8, 2019, Check Point Software Technologies Ltd. filed its answer and affirmative defenses. On January 25, 2019, the Court granted Finjan’s Motion to Strike Check Point’s Affirmative Defenses of lack of standing and prosecution laches with leave to amend its prosecution laches defense and denied the Motion to Strike with respect to inequitable conduct. On February 12, 2019, Check Point filed a Motion for Leave to Amend its Answer and Affirmative Defenses to include inequitable conduct defenses for the ‘086, ‘633, and ‘844 Patent, and unenforceability defense based on a terminal disclaimer filed for the ‘086 Patent. Finjan’s Opposition was filed on February 26, 2019, and Check Point’s Reply was filed on March 5, 2019. On April 2, 2019, the Court issued an Order granting Check Point’s Motion for Leave to Amend its Answer and Affirmative Defenses, and on April 3, 2019, Check Point filed its Second Amended Answer and Affirmative Defenses. On June 14, 2019, the Court rescheduled the claim construction hearing to September 16, 2019, later vacated that date, and has not yet set a new date. 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, Metasploit and Komand technologies, including Rapid7 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. Pursuant to the Court’s scheduling orders, a claim construction hearing is set for January 15, 2020, and a second claim construction hearing on January 22, 2020. The deadline for dispositive and Daubert motions is August 7, 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. On December 17, 2018, the Court ordered Finjan to show cause in writing by December 27, 2018, as to why the case should not be stayed pending resolution of the other actions where overlapping patents are being actively litigated and permitted Fortinet to file a statement of its views by January 2, 2019. Fortinet’s Answer and Counterclaims were filed on December 19, 2018. On December 27, 2018, Finjan filed its Response to Order to Show Cause, opposing a stay, Fortinet filed its Response requesting a stay on January 2, 2019, and on January 3, 2019, the Court held a hearing regarding the stay. On January 7, 2019, the Court temporarily stayed the case until the next status conference, on February 21, 2019. At the February 21, 2019 status conference, and subsequently in its Minute Order dated February 25, 2019, the Court directed the parties to file by February 28, 2019, a joint statement identifying the patents and claims at issue and unique in the case. The Court has yet to decide if it will further stay the case pending resolution of other Finjan actions. On February 26, 2019, Finjan filed its answer to Fortinet’s counterclaims. On September 11, 2019, Finjan filed an updated status report, and Fortinet responded on September 13, 2019. 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. On January 23, 2019, Qualys filed its Answer and Counterclaims. On February 13, 2019, Finjan filed its Answer to Qualys’ Counterclaims. On March 6, 2019 Qualys filed its First Amended Answer and Counterclaims, and Finjan filed its Answer to Counterclaims on March 20, 2019. An initial case management conference was held on March 4, 2019. At that conference, the Court ordered Finjan to submit information identifying common asserted claims in other cases, as well as overlapping claim construction terms and definitions. Finjan filed its submission on March 15, 2019. On July 16, 2019, the Court issued an Order setting the claim construction hearing for May 1, 2020. 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 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. 8,015,182 (Assignee, Finjan, Inc.) A third-party request for Ex Parte Reexamination of claim |
INCOME TAX
INCOME TAX | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | INCOME TAXThe Company had a tax benefit of $0.4 million and $3.5 million for the three and nine months ended September 30, 2019, respectively and is comprised of a federal benefit of $0.6 million and $2.9 for the three and nine months ended September 30, 2019, respectively and a state expense of $0.2 million for the three months ended September 30, 2019 and a state benefit of $0.6 million for the nine months ended September 30, 2019. The computed effective tax rate for the three and nine months ended September 30, 2019, is approximately 28.00% and 25.00%, respectively. The Company had a tax benefit of $2.3 million for the three months ended September 30, 2018 and a tax expense of $11.1 million for the nine months ended September 30, 2018. These amounts are comprised of federal and state income tax for the activity in the period at the statutory rates. The computed effective tax rate was approximately 28.00%. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSThe Company received $5.9 million on October 3, 2019 from the Mimecast agreement. |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2018 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, 2018 which were included in the annual report on Form 10-K filed by the Company on March 13, 2019. 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, 2019 are not necessarily indicative of the operating results for the year ending December 31, 2019, 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 Effective January 1, 2018, the Company adopted Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("Topic 606” or “ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. 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. |
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 September 30, 2019 and December 31, 2018, the carrying value of the Company’s U.S. Treasury Bills approximates their fair value due to their short-term maturities. |
NET INCOME (LOSS) PER COMMON SHARE | NET INCOME (LOSS) PER COMMON SHAREBasic 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 August 2018, the SEC issued Release No. 33-10532 that amends and clarifies certain financial reporting requirements. The principal change to our financial reporting is the inclusion of the annual disclosure requirement of changes in stockholders’ equity in Rule 3-04 of Regulation S-X to interim periods. The Company adopted this guidance on January 1, 2019. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. The Company, using the modified retrospective approach with a cumulative-effect adjustment, - and recognized a right to use ("ROU") asset at the beginning of the period of adoption (January 1, 2019). Therefore, the Company recognized and measured operating leases on the condensed consolidated balance sheet without revising comparative period information or disclosure. The Company elected the package of practical expedients permitted under the transition guidance within the standard, which eliminates the reassessment of past leases, classification and initial direct costs and treats short term leases of less than a year outside of a ROU asset. The Company has no financing leases. The adoption did not materially impact the Company’s Condensed Consolidated Statements of Operations or Cash Flows. Refer to Note 3, Commitments and Contingencies, for additional disclosures required by ASC 842. The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date (except we used the practical expedients and recorded the outstanding operating lease at January 1, 2019) based on the present value of lease payments over the lease term. As the Company’s lease did not provide an implicit interest rate, the Company used the equivalent borrowing rate for a secured financing with the term of that equal to the remaining life of the lease at inception. The lease terms used to calculate the ROU asset and related lease liability did not include options to extend or termination of the lease; there are none and there is no reasonable certainty that the Company would extend the lease at expiration. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense; there were no finance leases at this time which would be recognized as depreciation expense and interest expense. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a separate lease components. Non-leasing components are not included in the ROU asset. On January 1, 2019 the Company adopted 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. The impact of this adoption was immaterial on the Company's condensed consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted 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, 2019 | |
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 Nine Months ended 2019 2018 2019 2018 (In thousands, except share and per share data) Numerator: Net income (loss) to common stockholders $ (2,580) $ (7,619) $ (10,552) $ 27,713 Denominator: Weighted-average common shares, basic 27,623,768 27,247,462 27,609,176 27,488,437 Weighted-average common shares, diluted* 27,623,768 27,247,462 27,609,176 28,417,453 Net income (loss) per common share: Basic: $ (0.09) $ (0.28) $ (0.38) $ 1.01 Diluted: $ (0.09) $ (0.28) $ (0.38) $ 0.98 * For the three and nine months ended September 30, 2019 the securities would be anti-dilutive and therefore were excluded. For the three months ended September 30, 2018, the securities would be anti-dilutive and therefore were excluded. For the nine months ended September 30, 2018, the diluted earnings per common share included 209,689 unvested RSUs and the weighted average effect of 719,327 stock options that are potentially dilutive to earnings per share, since the exercise price of such securities was less than the average market price during the period. |
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 income (loss) per share because their inclusion would be anti-dilutive and consist of the following: Three Months ended Nine Months ended September 30, 2019 2018 2019 2018 Stock options 2,356,198 2,574,981 2,356,198 733,025 Restricted stock units 511,853 542,476 511,853 17,778 Warrants 2,355,506 2,355,506 2,355,506 2,355,506 Total 5,223,557 5,472,963 5,223,557 3,106,309 |
SHORT TERM INVESTMENTS, PREPA_2
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 December 31, (in thousands) Government $ 1,002 $ — Asset Backed 3,354 1,786 Industrial 5,484 2,381 Financial 7,321 7,136 $ 17,161 $ 11,303 |
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 $ 1,425 $ 5,429 Other prepaid expenses and other current assets 509 1,151 $ 1,934 $ 6,580 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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): September 30, 2019 Operating lease right of use assets $ 2,356 Operating lease liabilities Current portion included in current liabilities 523 Long Term portion included in non-current liabilities 1,914 Total Operating lease liabilities $ 2,437 |
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 September 30, 2019 Nine Months ended September 30, 2019 Operating lease cost $ 198 $ 594 Variable lease cost — — Short term lease income (59) (177) $ 139 $ 417 |
Schedule of Future Minimum Rental Payments | As of September 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands): For the year ending December 31, 2019, remainder $ 192 2020 773 2021 801 2022 829 2023 425 Total lease payments $ 3,020 Less: Present value adjustment (583) Operating lease liabilities $ 2,437 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 $ 1,725 $ — Compensation 381 336 Other 107 58 $ 2,213 $ 394 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 and Nine Months ended September 30, 2019 2018 Volatility 65.01% 105% Expected term (in years) 6 6 Risk-free rate 2.37% 2.24% Expected dividend yield — — Weighted-average grant date fair value per option $ 1.76 $ 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 nine months ended September 30, 2019: Number of Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding 2013 & 2014 Plans – December 31, 2018 2,486,646 $ 1.89 7.00 $ 1,550 Options granted 50,832 2.28 9.74 — Options exercised — — — — Options forfeited (181,280) 2.23 — — Outstanding – September 30, 2019 2,356,198 $ 1.89 6.33 $ 628 Exercisable – September 30, 2019 1,688,640 $ 1.70 5.25 $ 618 |
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 nine months ended September 30, 2019: Nine Months ended September 30, 2019 Number of Shares Weighted Average Grant Date Fair Value Non-vested at beginning of period 315,292 $ 2.26 Shares vested (56,552) 2.30 Shares granted 253,113 2.28 Non-vested 511,853 $ 2.27 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019business_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 | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||
Net income (loss) to common stockholders | $ (2,580) | $ (7,619) | $ (10,552) | $ 27,713 |
Denominator: | ||||
Weighted-average common shares, basic (in shares) | 27,623,768 | 27,247,462 | 27,609,176 | 27,488,437 |
Weighted-average common shares, diluted (in shares) | 27,623,768 | 27,247,462 | 27,609,176 | 28,417,453 |
Net income (loss) per common share: | ||||
Basic (in dollars per share) | $ (0.09) | $ (0.28) | $ (0.38) | $ 1.01 |
Diluted (in dollars per share) | $ (0.09) | $ (0.28) | $ (0.38) | $ 0.98 |
Antidilutive securities (in shares) | 5,223,557 | 5,472,963 | 5,223,557 | 3,106,309 |
Restricted stock units | ||||
Net income (loss) per common share: | ||||
Antidilutive securities (in shares) | 209,689 | |||
Stock options | ||||
Net income (loss) per common share: | ||||
Securities that are potentially dilutive to earnings per share (in shares) | 719,327 |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Potentially Dilutive Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 5,223,557 | 5,472,963 | 5,223,557 | 3,106,309 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 2,356,198 | 2,574,981 | 2,356,198 | 733,025 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 511,853 | 542,476 | 511,853 | 17,778 |
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 |
SHORT TERM INVESTMENTS, PREPA_3
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Short Term Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | $ 17,161 | $ 11,303 |
Government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 1,002 | 0 |
Asset Backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 3,354 | 1,786 |
Industrial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | 5,484 | 2,381 |
Financial | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short term investments | $ 7,321 | $ 7,136 |
SHORT TERM INVESTMENTS, PREPA_4
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Prepaid Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Prepaid income tax | $ 1,425 | $ 5,429 |
Other prepaid expenses and other current assets | 509 | 1,151 |
Total | $ 1,934 | $ 6,580 |
SHORT TERM INVESTMENTS, PREPA_5
SHORT TERM INVESTMENTS, PREPAID EXPENSES AND OTHER CURRENT ASSETS - Narrative (Details) $ in Millions | 1 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Tax refund | $ 4 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Thousands | Sep. 09, 2019USD ($) | Aug. 24, 2018USD ($) | Aug. 24, 2017USD ($)patent | Apr. 21, 2017USD ($)installment | Nov. 21, 2013USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)leaseinstallment | Sep. 30, 2018USD ($) | Sep. 16, 2019USD ($) | Apr. 01, 2019USD ($) | Jan. 01, 2019USD ($) | Jul. 19, 2018 | Mar. 31, 2018USD ($) |
Schedule of Investments [Line Items] | ||||||||||||||
Annual rent expense | $ 700 | |||||||||||||
Percentage increase in annual rent payment | 3.50% | |||||||||||||
Number of sub-leases | lease | 2 | |||||||||||||
Operating lease payments | $ 600 | |||||||||||||
Right of use assets | $ 2,356 | 2,356 | ||||||||||||
Operating lease liabilities | $ 2,437 | $ 2,437 | ||||||||||||
Weighted average remaining lease term | 3 years 9 months | 3 years 9 months | ||||||||||||
Weighted average discount rate | 11.00% | 11.00% | ||||||||||||
Payments made | $ 0 | $ 1,000 | ||||||||||||
Avira, Inc. | ||||||||||||||
Schedule of Investments [Line Items] | ||||||||||||||
Sale of patent in license agreement | $ 3,900 | $ 1,000 | ||||||||||||
Number of quarterly installments | installment | 12 | 3 | ||||||||||||
Installment amount payable | $ 300 | |||||||||||||
Payable period of agreement | 3 years | |||||||||||||
Venture Capital Funds | ||||||||||||||
Schedule of Investments [Line Items] | ||||||||||||||
Capital commitment | $ 5,000 | $ 1,100 | $ 1,100 | |||||||||||
Percentage of limited partnership interest (less than) | 10.00% | |||||||||||||
Cash call | $ 200 | $ 500 | ||||||||||||
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 | 4,000 | |||||||||||
Useful life of intangible asset | 4 years | |||||||||||||
Patents | $ 7,000 | |||||||||||||
Adjustment, present value | $ 1,400 | |||||||||||||
Accretion expense | 100 | $ 100 | 300 | 700 | ||||||||||
Amortization of intangible assets | $ 500 | $ 500 | $ 1,500 | $ 1,300 | ||||||||||
Accounting Standards Update 2016-02 | ||||||||||||||
Schedule of Investments [Line Items] | ||||||||||||||
Right of use assets | $ 2,700 | |||||||||||||
Operating lease liabilities | $ 2,800 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Balance Sheet Information (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Operating lease right of use assets | $ 2,356 |
Operating lease liabilities | |
Current portion included in current liabilities | 523 |
Long Term portion included in non-current liabilities | 1,914 |
Total Operating lease liabilities | $ 2,437 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 198 | $ 594 |
Variable lease cost | 0 | 0 |
Short term lease income | (59) | (177) |
Total lease expense | $ 139 | $ 417 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Operating Lease | |
2019, remainder | $ 192 |
2020 | 773 |
2021 | 801 |
2022 | 829 |
2023 | 425 |
Total lease payments | 3,020 |
Less: Present value adjustment | (583) |
Operating lease liabilities | $ 2,437 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Legal - Litigation / Licensing | $ 1,725 | $ 0 |
Compensation | 381 | 336 |
Other | 107 | 58 |
Total | $ 2,213 | $ 394 |
LICENSE, SETTLEMENT AND RELEA_2
LICENSE, SETTLEMENT AND RELEASE AGREEMENT (Details) $ in Thousands | Oct. 03, 2019USD ($) | Sep. 30, 2019 | Apr. 30, 2019USD ($)installment_payment | Mar. 28, 2019USD ($) | Jan. 28, 2019USD ($) | Mar. 29, 2018USD ($) | Feb. 28, 2018USD ($) | Feb. 01, 2018USD ($) | May 31, 2017USD ($) | Apr. 21, 2017USD ($) | Mar. 31, 2017USD ($) | Mar. 30, 2017USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Jan. 31, 2019USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 5,900 | $ 0 | $ 13,150 | $ 82,300 | |||||||||||||||
Licensing Agreements | Mimecast | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Payment period | 5 days | ||||||||||||||||||
Licensing Agreements | Mimecast | Subsequent Event | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 5,900 | ||||||||||||||||||
Licensing Agreements | Zscaler | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 7,250 | ||||||||||||||||||
Payment period | 5 days | ||||||||||||||||||
Percentage of gross revenues | 8.00% | ||||||||||||||||||
Number of quarterly installments | installment_payment | 4 | ||||||||||||||||||
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 | ||||||||||||||||||
Payment period | 10 days | ||||||||||||||||||
Accounts receivable | $ 1,300 | ||||||||||||||||||
Licensing Agreements | Sophos Group | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Settlement, amount awarded from other party | $ 2,500 | ||||||||||||||||||
Cash received from license agreement | $ 15,000 | ||||||||||||||||||
Maximum | Licensing Agreements | Symantec Corp | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
Additional license fees | $ 45,000 | ||||||||||||||||||
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 | $ 1,300 | $ 2,300 | $ 2,300 | |||||||||||||||
License | Licensing Agreements | Sophos Group | |||||||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||||||
License revenue | $ 1,250 | $ 1,250 | $ 15,000 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Program (Details) - USD ($) | Sep. 30, 2019 | May 02, 2018 |
Equity [Abstract] | ||
Authorized repurchase amount | $ 10,000,000 | |
Remaining authorized repurchase amount | $ 8,000,000 |
STOCKHOLDERS' EQUITY - Series A
STOCKHOLDERS' EQUITY - Series A-1 Preferred Stock (Details) - Series A-1 preferred shares $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Class of Stock [Line Items] | |
Value of shares | $ 19.9 |
Number of shares retired (in shares) | 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 |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 19, 2017 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 19, 2018 | 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 | ||||
Common stock, shares issued (in shares) | 27,625,208 | 27,568,656 | ||||
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 | |||||
Changes in warrant liability | $ 3.3 | |||||
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 | ||||
Common stock, shares issued (in shares) | 2,000,000 | 46,370 | 309,136 | |||
Changes in warrant liability | $ 4.5 |
STOCK BASED COMPENSATION - Narr
STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Jan. 01, 2018 | Jun. 21, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock-based compensation | $ 0.2 | $ 0.5 | $ 0.7 | $ 1.2 | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | ||||
Compensation cost not yet recognized | $ 1.9 | $ 1.9 | ||||||
Compensation cost not yet recognized (in years) | 2 years 1 month 6 days | |||||||
2014 Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Increase in shares authorized (in shares) | 1,378,432 | 1,385,366 | 1,000,000 | |||||
Percentage of outstanding stock | 5.00% | |||||||
Number of shares available for issuance (in shares) | 2,820,870 | 2,820,870 | ||||||
Restricted stock units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unvested, aggregate intrinsic value | $ 1 | $ 1 |
STOCK BASED COMPENSATION - Awar
STOCK BASED COMPENSATION - Awards Outstanding (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Restricted stock units | ||
Number of Shares | ||
Beginning balance, non vested (in shares) | shares | 315,292 | |
Shares vested (in shares) | shares | (56,552) | |
Shares granted (in shares) | shares | 253,113 | |
Ending balance, non vested (in shares) | shares | 511,853 | 315,292 |
Weighted Average Grant Date Fair Value | ||
Beginning of period (in dollars per share) | $ / shares | $ 2.26 | |
Shares vested (in dollars per share) | $ / shares | 2.30 | |
Shares granted (in dollars per share) | $ / shares | 2.28 | |
End of period (in dollars per share) | $ / shares | $ 2.27 | $ 2.26 |
2013 and 2014 Plans | Stock options | ||
Number of Options Outstanding | ||
Beginning balance, outstanding (in shares) | shares | 2,486,646 | |
Options granted (in shares) | shares | 50,832 | |
Options exercised (in shares) | shares | 0 | |
Options forfeited (in shares) | shares | (181,280) | |
Ending balance, outstanding (in shares) | shares | 2,356,198 | 2,486,646 |
Exercisable (in shares) | shares | 1,688,640 | |
Weighted Average Exercise Price | ||
Beginning balance, weighted average exercise price (in dollars per share) | $ / shares | $ 1.89 | |
Options granted, weighted average exercise price (in dollars per share) | $ / shares | 2.28 | |
Options exercised, weighted average exercise price (in dollars per share) | $ / shares | 0 | |
Options forfeited, weighted average exercise price (in dollars per share) | $ / shares | 2.23 | |
Ending balance, weighted average exercise price (in dollars per share) | $ / shares | 1.89 | $ 1.89 |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 1.70 | |
Additional Disclosures | ||
Weighted Average Remaining Contractual Life | 6 years 3 months 29 days | 7 years |
Options granted, weighted average remaining contractual life | 9 years 8 months 26 days | |
Exercisable, weighted average remaining contractual life | 5 years 3 months | |
Aggregate Intrinsic Value | $ | $ 628 | $ 1,550 |
Exercisable, aggregate intrinsic value | $ | $ 618 |
STOCK BASED COMPENSATION - Fair
STOCK BASED COMPENSATION - Fair Value Assumptions (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Equity [Abstract] | ||||
Volatility | 65.01% | 105.00% | 65.01% | 105.00% |
Expected term (in years) | 6 years | 6 years | 6 years | 6 years |
Risk-free rate | 2.37% | 2.24% | 2.37% | 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) | $ 1.76 | $ 2.24 | $ 1.76 | $ 2.24 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
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 | $ 163 | |||
Benhamou Global Ventures | Director | ||||||
Related Party Transaction [Line Items] | ||||||
Rental income | $ 15 |
LITIGATION, CLAIMS AND ASSESS_2
LITIGATION, CLAIMS AND ASSESSMENTS (Details) - petition | May 26, 2016 | Nov. 05, 2015 |
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 |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ (385) | $ (2,252) | $ (3,478) | $ 11,135 |
Federal income tax benefit | 600 | 2,900 | ||
State income tax expense (benefit) | $ 200 | $ (600) | ||
Effective tax rate | 28.00% | 28.00% | 25.00% | 28.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | Oct. 03, 2019USD ($) |
Licensing Agreements | Mimecast | Subsequent Event | |
Subsequent Event [Line Items] | |
Settlement, amount awarded from other party | $ 5.9 |
Uncategorized Items - fnjn-2019
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,872,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,872,000 |