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FNJN: Transforming to Cybersecurity Startup: Finjan Establishes a New Consulting Business

By Lisa Thompson


Until this week, Finjan Holdings (FNJN)- has been a pure play in cyber security IP. Its sole source of revenues has been license agreements with other producers of cybersecurity products that use its behavior based threat detection technologies and infringe on it patents. However, it has already had considerable success with investing as a VC with Jerusalem Venture Partners Cybersecurity Fund VII and just received a cash pay out from its portion of an investment in CyActive, which was bought by PayPal for approximately $60 million. Finjan received a distribution from its JVP investment. This investment will yield a Gain on investment of approximately $826,000 in this June quarter and will appear on the income statement under other income.

To continue this diversification away from just licensing, this week Finjan announced the establishment of a new international consulting operation, “CybeRisk” by hiring two world-class executives based in Tel Aviv. It is in effect acting as a VC by starting up a new business. Heading up the group is Yoram Golandsky, who was General Manager of Cisco's Cyber Security Center of Excellence for the past year. Before that he was the founder and CEO of Security Art Ltd., a leader in providing worldwide cybersecurity and information risk management services for five years. He also was the Head of Information Security at RSA (the Security Division of EMC), and Chief Security Officer at PriceWaterhouseCoopers Israel. COO Eyal Harari, also from Cisco’s Cyber Security Center of Excellence, joins him. He also worked for Security Art and consulting firm that performed red team exercises for clients.

The two started with Finjan on Monday June 15, 2015 and there are plans to add perhaps four or more people by year-end. We expect the company to begin adding revenues to the company in Q4 and operate on a cash flow neutral basis for the year.

The company also announced that its non-compete and confidentiality agreement with its former licensee and acquirer of its hardware business, M86 (who subsequently merged with Trustwave, and more recently into SingTel) has expired. It had restricted Finjan from making cybersecurity products. The company now plans to develop and release new products and is moving into direct to consumer applications. Development will be done entirely by Yeti, a San Francisco-based app developer. This company will create the products Finjan brings to them. The first release is mobile browser for IOS and Android (called “Finjan Mobile Secure Browser”) that will scan a website for security and rate it safe, suspicious or avoid before a user actually lands on a page. This browser can be downloaded for free from the Apple App store and the Google Play Store.

Next Events

The next major event is the start of the trial with Blue Coat on June 20, 2015. A Markman hearing with Proofpoint, on June 24, 2015, and then a Markman hearing with Symantec on June 29, 2015 will follow this. We expect the Blue Coat trial to take about two weeks and then the results of that trial to be issued another two weeks later. This trial should be an important indicator of future prospects for litigation.

The company’s has a market cap of $29 million and approximately $15 million in cash but could be worth considerably more if it is successful in its licensing pursuits. Estimating revenues of $23 million in 2015 and an industry multiple of 3.7 times sales, the company could be worth $115 million by next year if it succeeds in reaching successful licensing arrangements.

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