Finjan Holdings

Last modified by Asif Farooqui on 2020/03/30 18:25

Contents

Overview
Significant Developments During 2019
Patented Technologies
Industry Trends and Outlook
Fourth Quarter 2019 Highlights:
Investor presentations
References

Overview

Finjan Holdings, Inc. (FNJN) is a pioneer in cybersecurity focused in 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 by its wholly-owned subsidiaries Finjan, Inc. (“Finjan”) and Finjan Blue, Inc. ("Finjan Blue"). The Company’s mobile security business is operated through its wholly-owned subsidiary Finjan Mobile, Inc. ("Finjan Mobile").

Finjan Holdings was incorporated in Delaware in January of 2006, with Finjan becoming a wholly owned subsidiary of Finjan Holdings in June of 2013 after a merger transaction resulting in the public trading of its common stock. The company's common stock has been trading on the NASDAQ Capital Market ("NASDAQ") since May 2014.

Founded in 1996, Finjan developed software and hardware-based web and network security technologies capable of detecting previously unknown and emerging threats on a real-time, behavior-based, basis, in contrast to signature-based methods of intercepting only known threats to computers. The older, signature-based methods were standard in the web and network security industry during the 1990s. Finjan invested heavily in research and development of its technologies as well as in protecting its innovations by securing patents covering them. As the web and endpoint security industries - known as cybersecurity - have transitioned to behavior-based detection of malicious code, the company believe that its patented technologies continue to be widely used, without license, by third parties in a number of market segments.¹

Significant Developments During 2019

Mimecast

In October 2019, The Company entered into a Confidential Patent License Agreement with Mimecast. As part of the Mimecast License Agreement, the Mimecast Parties will obtain a license to, among others, the patents of Finjan, Finjan Mobile, and Finjan Blue, and paid Finjan $5.9 million in cash. The remaining terms of the Mimecast License Agreement and the Letter Agreement are confidential.

Zscaler

In May 2019, The Company and Zscaler entered into a 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, the Zscaler Parties obtained a license to, among others, the patents of the Finjan Parties and paid Finjan $7.25 million in cash. The remaining terms of the License and Settlement Agreement and related agreements are confidential.

Appointment of Chief Financial Officer

In June, 2019 Jevan Anderson joined the Company as Chief Financial Officer, replacing Michael Noonan who departed to explore new pursuits. Mr. Anderson reports to the Company's CEO, and leads its finance and operations. Mr. Anderson has 25 years of experience in investment banking, corporate development and strategy consulting. Most recently Jevan was Senior Vice President, Corporate Advisory for Jones Lang LaSalle Incorporated ("JLL"). Prior to JLL, Jevan spent 10 years as a Managing Director and Co-Head of Technology Mergers & Acquisitions for Wells Fargo and RBC Capital Markets. Prior to his 17 year investment banking career, Jevan held roles in management consulting, strategic planning, corporate development and investor relations. Mr. Anderson holds an MBA from NYU Stern School of Business and a B.S. in Electrical Engineering from Lehigh University.

JVP

The Company completed the sale of its limited partnership interest in JVP, pursuant to a Partnership Interest Purchase Agreement (the “Purchase Agreement”) dated December 31, 2019. In connection with the sale, the Company received $3.5 million in cash, in addition to the distribution from the fund in 2015 of $1.3 million. The Company’s remaining $1.1 million capital commitment to the JVP Fund was assumed by the purchasers pursuant to the Purchase Agreement. The remaining terms of the Purchase Agreement are confidential.

Patented Technologies

Through Finjan and Finjan Blue, the company currently have 32 and 92 issued U.S. patents, respectively, Finjan has 39 international issued patents and Finjan Mobile has 6 issued U.S. patents. Finjan also has 1 U.S. patent application pending, as of the date of this report. Although the company may, from time to time, focus on monetizing certain of these patents, the company consider all of its patents to be “core” patents for its business.

Industry Trends and Outlook

Cybersecurity has been a very active sector in 2019 and the company believe this trend will continue in 2020. Cybersecurity is not just another technology but a critical business issue that intersects government, corporations and individual citizens. Finjan Holdings has recently seen a number of devastatingly successful cybersecurity breaches targeting high profile government offices and corporations. The full extent of the cost and damage associated with these attacks may not be known for some time. Nonetheless, these attacks are expected to continue, along with their associated and sometimes unprecedented costs. In many cases, it is not just the government or corporation that suffers losses or damages but their clients and customers, who can also fall victim by the breach of their personal and otherwise confidential data. These issues have forced both government and corporations to take a serious look at their vulnerabilities, which will lead to increased spending on cybersecurity infrastructure, including hardware and software, as well as cybersecurity consulting services.²

Given over 20 years of history in the cybersecurity market Finjan Holdings has had the benefit of actively participating in the progression on how technology has moved to meet the new threats and demands. The company believe this puts it in a unique position to make observations and determine the best course of action in order to make investments in new developing technologies. There is still a limited appreciation for how much personal data is being pushed out over the internet for anyone to capture and unlike desktops and laptop computers, mobile devices do not have the same kind of access to security. The company believe this represents a unique opportunity for Finjan to develop products for consumer mobile devices that were once only available to its enterprise customers. As such, Finjan Holdings is building upon its current patented technology and migrating it into the mobile platform so consumers can have greater control of their security and personal information.

The company believe that there are some proponents of patent law reform, largely made up of an individual or coalitions of technology corporations that continue to seek statutory limitations on how companies can enforce their patents. In an effort to ensure fair and balanced protections for all good faith patent owners, its executives have dedicated time and resources to actively educate its lawmakers and existing and prospective stakeholders on how certain proposed reforms could harm individual inventors, startups, small companies, the licensing industry and therefore, U.S. innovation and the economy as a whole.

Further, since the enactment of the AIA on September 16, 2011, several aspects of the patent law have been interpreted by the courts, including what constitutes patentable subject matter, inducement of infringement, and (attorney) fee-shifting to the non-prevailing party in the context of litigation, among other issues. Moreover, under AIA, patents previously granted by the USPTO may be reviewed through post-patent grant proceedings such as reexamination or IPR. It is becoming a trend, if not a practice, for accused infringers to petition for reexaminations or IPRs of asserted patents as these proceedings may give the petitioner “two bites at the apple.” The outcome of the proceedings can range from decisions favorable to the patent holder, favorable to both parties, or favorable to the petitioner. If the outcome is the latter, the value of the challenged patent can be materially reduced or extinguished. Thus, patent rights, including enforcement of such rights against unauthorized use is inherently subject to uncertainties.