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Edited Transcript of FNJN earnings conference call or presentation 8-May-19 8:30pm GMT

Q1 2019 Finjan Holdings Inc Earnings Call

BOSTON May 18, 2019 (Thomson StreetEvents) -- Edited Transcript of Finjan Holdings Inc earnings conference call or presentation Wednesday, May 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Michael D. Noonan

Finjan Holdings, Inc. - CFO, Treasurer & Secretary

* Philip Hartstein

Finjan Holdings, Inc. - President & CEO

* Vanessa Winter

Finjan Holdings, Inc. - Director of IR & Corporate Communications

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Conference Call Participants

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* Eric Benjamin Swergold

Firestorm Capital, LLC

* Michael Roy Crawford

B. Riley FBR, Inc., Research Division - Senior MD, Co-Head of The Discovery Group & Senior Analyst

* Peter Kertes

* Sam Rebotsky

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Finjan Holdings Inc. Shareholder Update Call. (Operator Instructions) Please keep in mind today's conference is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Vanessa Winter, Investor Relations. Please go ahead.

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Vanessa Winter, Finjan Holdings, Inc. - Director of IR & Corporate Communications [2]

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Thank you, Miranda. Hello, everyone, and thank you for joining us this afternoon for our shareholder update conference call. Joining me on today's call are Phil Hartstein, Finjan's President and Chief Executive Officer; and Michael Noonan, Chief Financial Officer. As a reminder, this call is being webcast, and a replay of the webcast will be available on our website.

Turning to our safe harbor. During the course of this call, we may make statements related to our overall business outlook, future financial operating results, outcomes of pending and future litigation, accounting matters and future prospects of our operating subsidiaries. These are forward-looking statements based on certain assumptions and are subject to a number of risks and uncertainties that could cause future results to differ materially from our expectations. You can learn more about these risks in our most recent filings with the SEC. These documents are available on the Investor Relations page of our website at www.finjan.com. We assume no obligation to update any forward-looking statements.

I'd also like to mention that Finjan management will be presenting at the B. Riley FBR Conference on May 22 and the LD Micro Conference on June 4, both in Los Angeles, where we hope we get the opportunity to touch base with many of you in person.

With that, I'd like to turn the call over to Phil Hartstein, Finjan's President and CEO. Phil?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [3]

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Good afternoon, and thank you for joining our call today. Given we just reported our year-end result 2 months ago, we plan to keep this update brief. And we've been encouraged with our momentum year-to-date with the recent settlement, more good news from the USPTO and PTAB and with recent orders in our various district court action.

As we confirmed this morning, we have no new licenses or settlements that closed in the first quarter, but we did recently settle our year-long litigation with Zscaler. While the terms of that deal are confidential, reaching settlements outside of court is always our preferred course of action. We appreciate when companies like Zscaler engage constructively in negotiation where parties are able to arrive at a fair value license. We're optimistic this will initiate a renewed cadence in our licensing program.

Last quarter, I referenced 3 themes which shaped the direction of our business during 2018. To review them quickly for you, the first theme was the variable of time and how managing time lines in licensing and enforcement will always be challenging in our business. Our estimations have improved over the last few years, but we still experience the occasional, unpredictable delay. Currently, in our licensing and litigation programs, we remain engaged with more than 2 dozen prospective licensees.

The second theme is driven by our success over the past year, and the fact that while we remain flexible and open to arriving at a fair value license or settlement, we are not willing to offer arbitrary discounts. As I'll discuss in more detail in a bit, we have had several recent wins at the PTAB against companies that continue to challenge the validity of Finjan's patent. Within the industry, there's a ground flow of sentiment that these types of "serial attacks" on patents need to stop but more on that later.

The final theme and the one that was really highlighted in the first quarter is that we are at a point in our program were defending our IP must be our top focus.

Let's turn to some of the recent rulings that we have had from the USPTO and PTAB and see the progress that we've made.

Since last quarter's call, we've had 3 notable wins at the PTAB, all against Juniper, which should serve us well as we continue with our serial trials for the remaining patents in our litigation dispute with them. First, in late March, Juniper's attempt to invalidate claim 1 of our '154 Patent through an IPR proceeding was denied due to a prior claim construction determination and the view that Juniper failed to establish a reasonable likelihood that our issued patent claim was invalid in light of the prior art.

Earlier this week, we announced 2 additional IPR denials also initiated by Juniper against our '633 and '926 Patent. These IPR denials offered some interesting insight as the PTAB noted, and I quote, "Notwithstanding some differences in the prior art combined with the application, we are persuaded by the patent owner that instituting trial here would be an inefficient use of Board resources and would result in substantial overlap and duplication of issues, arguments and evidence."

Here, the PTAB is referencing a previous almost identical IPR against our '633 Patent initiated by Cisco. While the PTAB did institute review on a Juniper filed IPR of Finjan's '844 Patent, they left it up to Juniper to prove invalidity by a preponderance of the evidence at trial. As a reminder, Finjan '844 Patent has been subject to numerous serial IPRs for which the validity of its issued claims have previously been confirmed by the PTAB. We are encouraged that the PTAB has increasingly been taking a hard look at petitions that allow an earlier challenge to the same patent even if different companies file them. Earlier this month, 2 U.S. senators urged the Board to do even more to limit these "serial attacks" to patents drawing an expected response from large-tech players who have long enjoyed access and persuasion based on their lobbying efforts. In fact, there was news out this morning that the PTAB has issued a precedential decision in Valve Corp., meaning it is required guidance for PTAB judges to use about what constitutes a repetitive serial attack against individual patents.

Since we are on the topic of our Juniper case, the process of the second shootout has been underway and the summary judgment motions were heard on May 2, 2019. An order has not yet been issued from that hearing. Additionally, Finjan filed a Rule 60(b) motion, which is a motion for relief from judgment, based on newly discovered evidence and Juniper has filed a Motion for Sanction. Both motions will be heard on May 9, 2019. A Bench trial on equitable defenses and 101 issues relating to the second shootout is set to be heard in July 2019.

Now I'd like to offer an update on our other litigation. When we spoke last, we had 12 active cases. Now down to 11 active cases given the settlement with Zscaler, currently, that list of active cases includes 10 patent infringement cases and 1 breach of contract case. We also talked about how, in some cases, the time lines became uncertain and elongated as several courts took scheduled dates off calendar. This included, in some cases, Markman hearing date; and in other cases, the start of trials. This led to our internal team having to reassess some of our estimated time lines. Having endured those delays, we believe all of our active cases, with 1 exception, are back on track and moving towards their trial dates.

The 1 case exception I mentioned above relates to our long-standing case against Palo Alto Networks. It remains stayed based on the '494 Patent, still before the Federal Circuit. So with the challenged claims in the '154 and the '408 Patents being found not unpatentable by the Federal Circuit, we are optimistic that the remaining issues will resolve in our favor, at which point we can move forward with this case as planned.

Turning to our case against Cisco. Judge Freeman has entered 2 serial claim construction orders in response to Cisco's request to have additional claim terms construed by the court largely adopting Finjan's interpretations of the claim. On April 15, Cisco filed a motion for reconsideration of the court's claim construction order with respect to the '633 Patent, and the court granted that request but ultimately construed the claim in a manner keeping with prior construction of the same term in another proceeding. The trial in this case is scheduled to begin June 1, 2020.

In Bitdefender, the court issued a claim construction order on the heels of Cisco's recent claim construction, also largely adopting Finjan's proposed interpretations and citing Cisco and other Northern District court findings. The case management conference took place on March 12, 2019, and the trial date is set to commence on April 6, 2020.

In ESET, we received the final order in our German Nullity in March, determining the claims to be unpatentable. We filed a Notice of Appeal with the Federal Court of Justice of Germany in April. In our southern district case, we are scheduled to begin trial on October 29, 2019. An IPR has been filed on one of the patents in that case. And while that individual IPR is pending before the PTAB, that portion of our case against ESET is stayed while the remaining patents will proceed to trial as planned.

For Trustwave. In April 2018, we filed a breach of contract case alleging unpaid royalties as a result of its acquisition by Singapore Telecom, also known as Singtel. In February of this year, after Trustwave filed a motion to dismiss Finjan's complaint, Judge William Carpenter of the Superior Court of Delaware denied the motion ruling that Finjan's breach of contract suit should proceed. Discovery is now underway in that proceeding.

I'd also like to provide some pertinent updates on several of our newer cases. For SonicWall, the Markman hearing took place in March 1, 2019, and they recently motioned the court for an additional 10 terms for be construed to which the court unilaterally denied that request in a decision out yesterday. The trial with SonicWall is scheduled to begin May 3, 2021.

In Check Point, the Markman hearing was rescheduled to August 19, 2019, and the trial start date remains set for January 25, 2021.

For Rapid7, the case is in the District Court of Delaware. Parties have agreed to mediation before a Magistrate Judge Thynge on August 13. The Markman will be on October 18, 2019, with the trial set to commence on February 22, 2021.

In Fortinet before Judge Donato and Qualys, before Judge Gonzalez Rogers, case schedules have not yet been set.

Now the case time lines are back in order, we have no reason to expect any other scheduling delays nor do we have any expectation that our history of successfully achieving value either through licenses or settlements will be any different going forward. As always, we are open to and are engaged in settlement discussions with a number of defendants as shown by our recent settlement with Zscaler. Both as part of our licensing best practices and increasingly imposed by court orders in several of our cases.

As a final reminder, Finjan hired Atlas Technology Group to engage in exploring strategic options for our business. As of now, Finjan has not consummated a transaction. If things change and Finjan were to enter into a transaction, then we will announce that promptly. And with that, I'd like to turn the call over to Michael Noonan.

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Michael D. Noonan, Finjan Holdings, Inc. - CFO, Treasurer & Secretary [4]

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Well, thank you, Phil. I'd like to begin with a brief overview of our financials followed by an update on our other businesses. Please note that all comparisons are on a year-over-year basis, unless stated otherwise.

Revenues for the fiscal first quarter of 2019 ending March 31, 2019, were $0 million compared to $65 million in the same period last year. Net loss of $6 million or $0.22 per share compared to net income of $28.3 million or $1.02 per share for the same period last year.

Turning to expenses. SG&A for the first quarter of 2019 was $7.9 million. The increased expenses can be attributed to our ongoing trials particularly ESET and Juniper Networks.

Now we carefully managed our cash position and ended the quarter with approximately $40.5 million in cash compared to $43.3 million at the end of fiscal 2018. Our cash balance was augmented by final payments from Sophos for $1.25 million and Avira for $1.3 million. Please note that $13.3 million of the cash is in short-term investments. Further details on this can be found in Note 2 of the 10-Q filed today.

Now let's turn to Finjan Mobile and InvinciBull. With our promotion engine up and running, we've reduced our advertising spend to hone in on our large installed base. We are increasing engagement within the app and encouraging free users to become loyal paid subscribers. E-mail programs and additional promotions are underway as we grow our paid subscriber base.

Last quarter, I mentioned our joining the signals of trust sponsored by the Center of Democracy & Technology (sic) [Center for Democracy & Technology]. Given that we received some questions on this recently, I would like to add that in signing the declaration, InvinciBull has joined a highly select group of leading VPN companies who have chosen to make their privacy practices transparent. InvinciBull, with its always on feature is designed for ease of use for people who use public WiFi such as business travelers, people who work remotely and others who need security on the go in airports, cafés and hotels. With respect to our investment in Jerusalem Venture Partners, the outstanding commitment is approximately $1.8 million. There are currently 11 portfolio companies in JVP who have received investment financing through the fund along with 2 exits. And with that, I'd like to turn the call over to Vanessa to help coordinate the Q&A portion of the call.

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Vanessa Winter, Finjan Holdings, Inc. - Director of IR & Corporate Communications [5]

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Thank you, Michael. Operator, we're ready to poll for the first question.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from Mike Crawford with B. Riley FBR.

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Michael Roy Crawford, B. Riley FBR, Inc., Research Division - Senior MD, Co-Head of The Discovery Group & Senior Analyst [2]

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So in the past, you've made some efforts to try to quantify potential addressable markets and how far into them you might be. Have you -- do you still think those former analyses are valid? Or do you have any updates to share with us now on any of that?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [3]

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That's a fair question. And first of all, always good to talk to you, Mike, and I think we're looking forward to see you in just about 2 weeks from now, I think.

But back to your question about where we are in terms of the available markets relative to the patents in the technology that we develop. One of the things that we're thinking about right now is that in terms of the total remaining value, there is no change. We do continue to move through our licensing and our settlement processes. One of the things that we're watching right now and it's making a little more difficult for us to give you sort of the total available representative markets in the verticals for which we're licensing the patents, is that there's some consolidation going on in the areas where Finjan Inc. has been licensing its patent portfolio. And as we begin to ramp up on licensing the Finjan blue patent portfolio, it's becoming harder and harder for us to nail down a specific number. So I guess what I would do is I would refer you back to how we've referred to the total available market. The remaining available portion of that unlicensed is still available to us, and that is what we're actively pursuing. Right, so no change there.

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Michael Roy Crawford, B. Riley FBR, Inc., Research Division - Senior MD, Co-Head of The Discovery Group & Senior Analyst [4]

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Okay. Right. Phil, I think on the last call, you talked about the -- and you've kind of referenced it again on this call, the opportunity at the end of the year to have made some license agreements that probably were not in Finjan's best interest being discounted. But do you think that the community that you're speaking with now has that message or were people still trying to play that game with you at the end of Q1 as well?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [5]

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I think the -- I think my answer is going to be a little bit off from your question, but let me explain to you what we think broke the cadence of our licensing and settlements from 2018. Typical -- it's not a typical for prospective licensees or even defendants in litigations to find an example or a reason or an excuse to not engage in a licensing or settlement discussion. What happened last year that was somewhat unique is that the court, several different courts took dates that Finjan had, sort of important events, Markman dates or trial dates. They took them off calendar. And so what that basically read to prospective licensees and defendants was, well, "wait, maybe we should disengage, hold on, see what's going on in the court system," and that has basically been what's happened over the last 3 quarters. As you've heard in the update I just gave, there's been a tremendous amount of progress in almost all of our cases, perhaps with the only exception being Palo Alto Networks, which is still stayed. We believe those case time lines are back on track. And so what we think now has restarted that sort of catalyst cycle is the Zscaler license and the fact that our cases are now and all, with the exception of Palo Alto Networks, steaming towards trial. We do see renewed engagement.

You did ask a question about value or at least part of your question was about value. I don't see any evidence of prospective licensees or defendants changing their view. I think we will always fight the question about what is the value of a license, and I'm happy to dig deeper into that if you're interested. But I don't think there's any change there. I think that the delay sort of cycle that we encountered towards the close of last year, while unfortunate, has been remediated. And we believe we're back on path now, and that that cadence will now pick up and continue this year.

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Operator [6]

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(Operator Instructions) We'll take our next question from Eric Swergold with Firestorm Capital.

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Eric Benjamin Swergold, Firestorm Capital, LLC [7]

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I don't mean this question to stir up trouble, but I'm wondering if the Board has looked at the potential for taking Finjan private? I mean given that the shares are trading for roughly 3 or 4x earnings ex cash, if you back out the public company cost, it's probably trading at 2 to 3x cash earnings. And on top of that, you've mentioned in the past the fact that various parties that you've negotiated with often try and push you around at the end of the quarter in order to try and get a better deal for themselves? And I laud you for not being pushed into taking less than you should for your settlements. But has the Board of Directors taken a good hard look at potentially having this company as a private entity versus a public entity?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [8]

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Sure. And I don't take any offense to that question. I think it's a logical question. I think one of the issues that I'm going to have is how much can I communicate, and I want to go back to a statement that I made just a few minutes ago that there is an engagement that we have with Atlas Technology Group representing Finjan. And through that engagement, we have looked at a number of opportunities that the Board has evaluated. As we indicated, we have not consummated any of those. I think the only additional pieces of information I can share is that the Board is aware of shareholder expectations and does have an appreciation for what the value of this business is, right? And so basically now...

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Eric Benjamin Swergold, Firestorm Capital, LLC [9]

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Okay. Well, my understanding was that they were looking for acquisitions for you as opposed to looking at taking you private. Is that not correct?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [10]

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There's a whole host of things that have been presented to Finjan as well as other opportunities that had been considered by the Board as well. So think about that as a very broad-based approach.

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Eric Benjamin Swergold, Firestorm Capital, LLC [11]

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So both the Board and Atlas individually and together have looked at a range of outcomes from acquiring other companies to being acquired by other companies to also being taken private?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [12]

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I'm going to see if I can dance around your question a little bit by answering -- by saying that it would be typical that an engagement with investment bankers would look at all of the examples that you just referenced as part of the consideration of publicly announcing that you're willing to consider any one of those individual opportunities.

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Operator [13]

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We'll go next to Peter Kertes with Cornerstone Capital.

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Peter Kertes, [14]

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If I remember correctly, the share count has gone down by 2.3 million shares. Is that correct?

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Michael D. Noonan, Finjan Holdings, Inc. - CFO, Treasurer & Secretary [15]

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No, I don't think so. Peter, it's Mike here. Our share count has been pretty steady. You may be thinking of some dilutive -- the dilutive number because of those warrants.

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [16]

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The number stands consistently.

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Peter Kertes, [17]

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But it would have gone up so...

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [18]

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Almost consistent with an outstanding warrant.

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Peter Kertes, [19]

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[Gone down instead of gone up.]

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Michael D. Noonan, Finjan Holdings, Inc. - CFO, Treasurer & Secretary [20]

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We did purchase about $2 million worth of stock in the last year, which equated to about under 1 million shares, but our share count stayed the same. I think you're probably looking at a dilutive amount that included, depending on where the stock price is, there would be some additional shares counted in the full dilutive number.

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Peter Kertes, [21]

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So the current share count is?

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Michael D. Noonan, Finjan Holdings, Inc. - CFO, Treasurer & Secretary [22]

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As of May 1, 27.6 million.

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Peter Kertes, [23]

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So is that something like $1.50 a share in cash, is that correct? I mean, the ballpark, right?

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Michael D. Noonan, Finjan Holdings, Inc. - CFO, Treasurer & Secretary [24]

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Sounds about right.

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Peter Kertes, [25]

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And what do you expect to happen in that meeting tomorrow morning?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [26]

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In the hearing that we have for our Juniper motions?

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Peter Kertes, [27]

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Yes. Yes...

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [28]

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Well, it's -- I would suggest that what both parties are doing is fairly typical at the end of a litigation case where, whether you win or you lose or you draw, both sides will try and represent to the court that they would like either some ruling attenuated or changed or decided as a matter of law. In some instances, that would be overruling, say, a jury by deciding that it was a legal not a factual issue. In this case, Juniper's motion is seeking sanctions against Finjan on the basis that the outcome of the original trial, meaning resulting in noninfringement, somehow, they should be awarded fees that we brought an erroneous -- basically an erroneous case in front of the court. That's a pretty high hurdle threshold, especially with today's case law and how that's perceived, but it's not uncommon to see that. Our motion is a little different. Our motion is seeking relief from judgment, meaning we're asking the court to basically vacate the jury's finding. The basis for that as we presented it to the court is that there were material documents that were withheld during discovery in the case by Juniper. And after the trial, those documents were produced, and that they represent a significant representative example that we believe interfered with the jury's ability to find infringement. In other words, the documents that were produced in our opinion are very important, and that is the motion that we have before the court tomorrow is to see that, to decide that and then to figure out what to do on the remedy side of those actions taken by Juniper.

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Peter Kertes, [29]

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Once those motions are submitted, when do you expect to issue some kind of a press release on the subject?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [30]

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Well, sometimes you are sitting in court and those things are being decided realtime. Sometimes you get zero indication from the court as those motions are being heard and argued, at which you're at the mercy of the court as to when they can get the soonest order or decision out. Our standard policy though is as soon as we know and as soon as we can summarize it, typically in less than 1 day, we will share that information with all shareholders. And even though it sounds like we're taking a day, that's really just the public market cycle. In fact, our analysis and our reporting of that to shareholders would likely be before you would read it anywhere else in the news, for example. So just short of sitting in the courtroom tomorrow, you'll have to wait until we all see the order.

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Operator [31]

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And we'll go next to Sam Rebotsky with SER Asset Management.

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Sam Rebotsky, [32]

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Your litigation seems to be pretty effective. What does, for example, in the Zscaler case, like all your cases, I think the lawyers get a percentage. Is that 20% of what you collect?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [33]

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So our fee agreements are generally sort of hard to describe, but I can do it in some components for you. We pay fees, which will be the lawyer's fees. We also pay costs and expenses, which will be things, for example, expert fees in the case. So fees and expenses are generally paid by Finjan. They're paid as we go. There is often a contingency component, so in exchange for paying less on the fee side to the lawyers, what you do is you share a portion of the proceeds from that settlement with your law firm. So not an uncommon practice to have what's called a hybrid deal when you pay some amount of money, and you also give up some percentage of the income. In this case, I don't know if we've announced it, I believe that it's probably on the order of 10% in terms of what the contingency was. So it was not at 20%. However, in some of our cases, just to be clear, this one settled before we have a Markman decision, right? So we're very early in the case. So that represents an early point, and that's the reason for the 10. But as these cases get closer to trial or if they go to trial or even to the Federal Circuit, it's not unlikely that, that fee would be 20%.

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Sam Rebotsky, [34]

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Okay. Now I know you've discussed not announcing the fees on the Zscaler. But on the 8-K that you filed on May 1, it refers to a number $7.25 million in cash within 5 business days. I assume since May 1, these 5 business days, you collected at least $7.25 million. Is that fair to say?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [35]

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Yes. It was wired, in fact, within 24 hours. So we didn't even need to wait the full 5 days.

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Sam Rebotsky, [36]

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Okay. So now -- and you will get, for example, if Zscaler made an acquisition for a number of years, you'll collect additional money. Is that -- or is the $7.25 million all you'll receive?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [37]

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That's a good question. And maybe for the other participants on the phone, the question you're asking about is a term, a protective term that we often put in our contracts that we refer to as pricing protection. The idea that Finjan grants a license to any company, Zscaler or otherwise, the value of that license is contemplated as of the date of that deal, right? And if, for example, Zscaler were to grow organically, meaning through their own engineering and development and the expansion of the market organically, then they can freely travel without needing to pay any additional follow-on income events to Finjan to extend that license. As it applies to most companies for whom we have pricing protections in our contracts with, as soon as they grow inorganically, meaning they go out and they make an acquisition or they potentially launch new products or in some cases, even if they have sales thresholds that exceed some percentage on an annual basis, say, for example, they grow more than 15% or 20% annually, then we revisit that. And that's where the pricing protections would kick in. So you mentioned sort of how that worked. It generally is a percentage royalty, based on some amount of revenue of the acquisition or the acquired company for a fixed to trailing period of time. Meaning Zscaler, for example, in this case, would have the ability to say if I were to buy company X, I can now look back to the license that I just got from Finjan and know exactly how to calculate what the expense of extending that Finjan license to my newly acquired entity would be, and that makes it much easier for them to complete a deal. So it's true. We will see follow-on income events as the industry continues to consolidate, but we also haven't precluded businesses like Zscaler and others where we have pricing protections from feeling like there's any concern of the unknown. What if Finjan doesn't grant a license or what if the next license, they tell me is going to be 10x as much. We don't have that concern based on the way that we have introduced pricing protections into our contracts.

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Sam Rebotsky, [38]

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Okay. Now the other thing, your big win from Symantec, they made several acquisitions. Do we expect any additional revenue or income out of these acquisitions and what kind of time frame do we decide that?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [39]

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Great. So you're asking -- and just for the rest of the callers on the line, you're asking about the pricing protections as they exist in our license agreement with Symantec from a year ago. The way that works is, as Symantec acquires companies over a 4-year period, they will pay 8% of -- a royalty of 8% based on the trailing 4 quarters of sales at the acquired business. So as they make small acquisitions, it's not likely that we will see revenues. If they make big acquisitions, it's likely that we will see follow-on revenues based on the extension of that license. The challenge is that within that time period, when somebody announces that they're going to make an acquisition that's different from when they actually closed the acquisition, so sometimes -- and what I would expect is there's going to be some gap from when an investor in Finjan might hear that Symantec made an acquisition before the time in which that acquisition closes for which then we can seek those sort of follow-on income events. Now there is more complicated terms to it, but that's generally the way that it works.

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Sam Rebotsky, [40]

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Okay. Did they close these acquisitions? Is there anything significant? Clearly, you didn't get any money yet. Do we -- what time is the look back? When do we look at that to make a judgment?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [41]

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And there's a number of factors here. So question #1, are there any terms that would preclude a specific acquisition from being required to need an extension of a Finjan license? So that would be #1. #2 is how big were these acquisitions and whether or not they would actually generate additional income fees to Finjan. In this case, the vast majority of the -- I think the 3 actions -- acquisitions that they've made most recently might actually trigger in the too small category. But you're right, we do follow them. I don't believe that any of those have closed. I haven't looked at it, to be honest, in probably 6 or 8 weeks. It may have happened in that interim period. But no, we have not seen income from that as of yet as it relates to the Symantec pricing protections.

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Sam Rebotsky, [42]

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Okay. I just -- and I guess that your patents are pretty good, the fact that you keep winning. And I assume the Cisco lawsuit is the largest money that you hope to get on that litigation. Is that -- what would you say the 3 largest potential money that you might receive?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [43]

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Well, that's a hard question to answer. And part of the reason is because it comes down to how deep is the infringement as you would accuse individual product lines within each company. It comes down to what damages theories are available to you to be presented to a jury? I think the only way I could do this logically would be to identify the 3 largest market players for whom we have litigations against. I would probably identify those as you so did with Cisco being one of those. I would say Palo Alto Networks would also be in the large market player category. And probably not-too-distant from there would be probably Check Point. I think those 3 companies, just from a market perspective, would be there 3 large representative defendant.

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Sam Rebotsky, [44]

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Okay. And hopefully, and I presume when do we -- we have the Zscaler revenue in the next quarter. You've received the money. And do we expect to receive any -- do we have any specific, without naming names, where we expect revenue in subsequent quarters?

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [45]

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Well, we're always working on our licenses and settlements. We are actively negotiating. And when I say actively, I don't mean the occasional phone call every 2 or 3 months. I mean there are people who are on airplanes and there are phone calls, weekly around here as we work to try and resolve some of these licensing and litigation disputes.

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Sam Rebotsky, [46]

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All right. Good luck. Hopefully, we'll see some of these wins and closures.

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Philip Hartstein, Finjan Holdings, Inc. - President & CEO [47]

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That's great. I appreciate it. Thank you very much.

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Operator [48]

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There are no further questions at this time. So I'd like to turn the floor back to Vanessa Winter.

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Vanessa Winter, Finjan Holdings, Inc. - Director of IR & Corporate Communications [49]

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Thanks, everyone. Thanks for joining us, and we hope to touch base with many of you soon. Have a good rest of your afternoon.

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Operator [50]

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This will conclude today's program. Thanks for your participation. You may now disconnect, and have a wonderful day.