Finjan Holdings Inc (FNJN)

[Maple tree]

----VALUATION
“Current thinking on Finjan s valuation is versus the amount of the cost of a license from them for the
bigger companies. At an enterprise value of $40 million, it might be cheaper for Blue Coat to buy the
company than pay the $45 million it owes them, not including the cost of litigation to go through the
appeal and the other two trials. Cisco, who owns 7% of the company already may find that purchasing
the company is cheaper than licensing its patents. Certainly Symantec the largest possible licensor would
also find it cheaper to buy Finjan than to go to trial and lose or license its patents. It is not unheard of for
companies to do this in the past when they lost a lawsuit to another company.
On the other hand, valuing an IP company, even with a track record, is very difficult. It is even more so
with a company like Finjan that has only two court victories, five recent licensing arrangements, and no
recurring revenues. We can however look at other IP companies to see how the market values them to
make some comparisons. There seems to be two different types of companies in this space, the older
stable revenue generating companies like Rambus (RMBS), and the upstarts that trade on events and
potential. We can see from the table below, this ranges from Pendrell (PCO) with a negative $5 million
enterprise value, to Interdigital (IDCC) with an enterprise value of $2.4 billion and $382 million in sales
expected this year. On average, the companies with revenues trade at an average of 2.6X 2017
estimated calendar revenues. Using a valuation based on enterprise value to sales is easier for unprofitable companies. If Finjan were
to generate $76.3 million in sales in 2017, we could see the market putting a 2.6 times sales multiple on it
as shown in the industry average below. Using that and working back to enterprise value per share, we
see that given those revenues, Finjan should be worth $9.28 per share, assuming a settlement is
received from Blue Coat if the appeal is won”.