Finjan Holdings Inc (FNJN)

[Det_Robert_Thorne]

COIN Facts Plus Bonus Opinion and Analysis

My post yesterday about COIN being a company with major issues is mostly a restatement of facts about the company, along with some opinion.

The basic points covered, along with supporting data, are as follows

1) COIN received $5 for TerraSphere, which cost about $20M

My memory was a little faulty here, as I was thinking of the " ... a maximum total purchase price of $25,830,000 ..." that was stated in the filing on 7/7/10, but it turns out that because four milestones that were part of the deal were never met, only 18,174,603 shares were issued at $0.756/share, for a total of roughly $13.74M (see page 25 of this 10-K).


2) COIN's only remaining market segment is liquid fertilizer, and it's only cash flow positive two quarters of the year

From page 19 of the recent 10-Q:

Presently, within our Organic Fertilizer segment, our facility in Gonzales, CA is operational and although it was cash flow positive in the first six months of 2012 (assuming no corporate overhead) it had negative cash flow of $62,000 in the quarter ended September 30, 2012. We also expect to have negative cash flow in the quarter ended December 31, 2012 and therefore we do not expect that it will provide any cash flow to either fund corporate operating needs or expand that business segment.

3) Gildea and Allen's salaries total roughly $90K/quarter, and cash burn is several hundred thousand dollars/per quarter

The DEF-14A filed on April 30, 1012 states that Gildea's 2011 salary was $198,900, while Allen's was $156,081 (there has been nothing issued that 2012's salaries will be lower). That's a total of $354,981, or $88.7K/quarter ($90K with rounding).

Regarding the cash burn, that's an opinion, but it's based on the company's statement in the 10-Q (page 25):

If we do not receive additional funds in excess of the amount of cash on hand, whether as a result of the exercise of the warrants issued or the convertible note, or otherwise, we will not be able to continue our operations once the cash on hand is utilized, which we estimate to be December 31, 2012.

So, whatever cash they borrowed from Iroquois or got from the sale of the stock of the Intellectual Property company, they will burn through by the end of the year.

They started Q4 with about $700K in cash, and it will be gone by the end of Q4.


4) They'll do another convertible debt issue like 2012's with Iroquois, and it will be massively dilutive.

That is a prediction, based on watching what happened with the Iroquois deal, the details of which, including the ability to buy stock at 85% of the prior day's closing price (guaranteeing a 15% profit) can be found here.


5) That's a summary of the deal where they bought a stake in the Intellectual Property company, detailed in this filing


6) They state in the 10-Q that they will run out of cash at the end of Dec, 2012 (See #3, above. The comment about the convertible debt route is a forecast that's based on the 2012 deal with Iroquois.


7) Implementation of another reverse split by the end of Q1/13.

On page 24 of the 10-Q, they state:

In addition, the Investors agreed not to seek payment or to convert into shares of common stock the $600,200 of debt remaining outstanding until January 1, 2013 or until the price of our common stock is $0.05 per share.

Since Jan 1 is less than three weeks away, Iroquois will probably begin diluting again in the new year. It's likely that the stock price will dip below $0.001, adding a potential 600M shares to the number of outstanding shares, but since that would be 100M more than the 1B currently authorized, it will require another reverse split.

Depending upon how aggressively Iroquois converts, a reverse sometime in Q1 is possible.


8) This is simply an opinion, but it does seem pretty outrageous for Gildea and Allen to be making nearly $90K/quarter considering the shoddy performance.