VirnetX Holding Corp
For the period ended Mar 31, 2025. Filed May 14, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 14, 2025
VHC$9.71+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001140361-24-046446
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0001140361-25-018930
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 33 previous paragraphs and 31 current paragraphs.
19 unchanged; 9 reworded; 3 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Three Months Ended March 31, 2025
Current report
For the three months ended March 31, 2025, our research and development expenses remained steady at $1,259 compared to $1,268 for the three months ended March 31, 2024.
Current report
Our effective tax rate is 0% for income tax for thethree months ended March 31, 2025 and 2024, respectivelyand we expect our effective tax rate for the full year will be 0%. Our effective tax rate is less than the 21% statutory tax rate primarily due to our valuation allowance. Based on the weight of available evidence, includingnet cumulative losses and expected future losses, we have determined it is more likely than not thatour U.S. federal and state deferred tax assets will not be realized and therefore we have provided afull valuation allowance onthe U.S. federal and state net deferred tax assets.
Removed paragraphs (5)
Previous report
Three and Nine Months Ended September 30, 2024
Previous report
Our research and development expenses decreased by $42 to $1,176 for the three months ended September 30, 2024, and by $3,674 to $3,667 for the nine months ended September 30, 2024. The decrease was primarily due to higher engineering compensation costs in 2023.
Previous report
Dividends
Previous report
On March 30, 2023, we declared a one-time cash dividend of $20 per share of common stock, paid to shareholders of record as of the close of business on April 10, 2023. The timing and amount of future dividends, if any, will depend on market conditions, corporate business and financial considerations and regulatory requirements.
Previous report
For the three and nine months ended September 30, 2024, we recognized income tax expense of $0 and $3, an effective income tax rate of approximately 0.0% for both periods. For the three and nine months ended September 30, 2023, we recognized an income tax benefit of $1 and $79, an effective income tax rate of 0.0% and 0.4%. The effective tax rate was lower than the statutory federal income tax rate during 2023 and 2024 primarily due to the change in valuation allowance.
Reworded paragraphs (9)
Previous wording
We invested in two companies in the artificial intelligence (“AI”) sector partnering with them to augment the Company’s strategy to provide secure AI to the marketplace. The first investment was with L2 Holdings, LLC (“OmniTeq”), an AI, machine learning (“ML”) and predictive analytics-based solutions provider with a primary focus on selling into the space and defense sectors. In October 2024, OmniTeq signed a Cooperative Research and Development Agreement (CRADA) with the Air Force (AF) Research Laboratory Intelligence Systems Directorate (AFRL/RI) to facilitate collaboration on cybersecurity and Zero Trust technologies to support integrated surveillance and reconnaissance operations as well as AF and joint targeting processes. This agreement allows VirnetX to apply for security clearances for its employees. Our second investment was with OP Media, Inc, a dynamic software platform provider, addressing a critical market requirement for transforming static infrastructure processes and knowledgebases into digital processes that can be continuously optimized using AI, ML, and blockchain technologies for making informed decisions and creating streamlined workflows in real-time, without requiring coding or programming skills. Further, under the terms of our respective agreements, both OmniTeq and OP Media have agreed to integrate our VirnetX One™ family of products and services into their solutions and to resell them to their current and future customers. Both companies have committed to using VirnetX as their exclusive global cybersecurity solution provider and go-to-market partner.
Current wording
We continue to augment our product strategy to provide secure AI to the marketplace. In addition to our investments with L2 Holdings, LLC (“OmniTeq”), an artificial intelligence and machine learning (AI/ML) solutions provider and OP Media, Inc, a dynamic software platform provider, we participated in a Cooperative Research and Development Agreement (CRADA) with the Air Force (AF) Research Laboratory Intelligence Systems Directorate (AFRL/RI) to facilitate collaboration on cybersecurity and Zero Trust technologies to support integrated surveillance and reconnaissance operations as well as AF and joint targeting processes. This CRADA continues through 2030 and allows VirnetX to apply for security clearances for its employees. We are also beginning to integrate AI/ML capabilities into VirnetX Matrix™ to enhance its zero-trust security, threat detection, and network resilience by enabling autonomous threat response, adaptive access control, and self-healing network architectures.
Previous wording
We have undertaken activities to commercialize our products and intellectual property in and outside the United States including VirnetX One™, War Room™, VirnetX Matrix™ and our Secured Domain Name Registry and Technology. We believe our product portfolio to secure devices and systems are suitable in areas such as local, state, Federal and foreign governments, healthcare, finance, legal, oil and gas, medical, law enforcement, national defense and related support industries. We continue to actively pursue new sales opportunities in and outside of the United States.
Current wording
We have undertaken activities to commercialize our products and intellectual property in and outside the United States including VirnetX One™, War Room™, VirnetX Matrix™ and our Secured Domain Name Registry and Technology. We believe our product portfolio to secure devices and systems are suitable in areas such as national defense, local, state, Federal and foreign governments, critical infrastructure, law enforcement, healthcare, finance, legal, oil and gas, medical, and related support industries. We continue to actively pursue new sales opportunities in and outside of the United States.
Previous wording
Our employees include the core development team behind our inventions, technology, and software. Some members of this team have worked together for over twenty years and were on the same team that invented and developed this technology while working at Leidos, Inc., or Leidos, (f/k/a Science Applications International Corporation, or SAIC). The team has continued its research and development work to refine our unique network security technology and make it more secure and easy to deploy.
Current wording
Our employees include the core development team behind our inventions, technology, and software. Some members of this team have worked together for over twenty years and were on the same team that invented and developed this technology while working at Leidos, Inc., or Leidos. The team has continued its research and development work to refine our unique network security technology and make it more secure and easy to deploy.
Previous wording
Our portfolio of intellectual property is the foundation of our business model. We currently own U.S. and foreign patents/validations/pending applications. Our patent portfolio is primarily focused on securing real-time communications over the Internet, and related services, and is used in all our technology and products, some of which were acquired by our principal operating subsidiary, VirnetX, Inc., from Leidos in 2006.
Current wording
Our portfolio of intellectual property is the foundation of our business model. We currently own U.S. and foreign patents and pending applications. Our patent portfolio is primarily focused on securing real-time communications over the Internet, and related services, and is used in all our technology and products, some of which were acquired by our principal operating subsidiary, VirnetX, Inc., from Leidos in 2006.
Previous wording
Compared with the Three and Nine Months Ended September 30, 2023
Current wording
Compared with the Three Months Ended March 31, 2024
Previous wording
We recognized revenue of $2 and $5 in the three and nine months ended September 30, 2024 and $3 and $7 in the three and nine months ended September 30, 2023.
Current wording
We recognized revenue of $0 and $2 in the three months ended March 31, 2025 and 2024 respectively.
Previous wording
Our selling, general and administrative expenses decreased by $1,207 to $3,213 for the three months ended September 30, 2024, and by $6,267 to $10,066 for the nine months ended September 30, 2024. The decrease is primarily due to lower legal fees and compensation costs in 2024.
Current wording
Our selling, general and administrative expenses decreased by $872 to $2,788 for the three months ended March 31, 2025, from $3,660 for the three months ended March 31, 2024. The decrease is primarily due to lower legal fees and compensation costs from reduced head count in 2025.
Previous wording
As of September 30, 2024, our cash and cash equivalents totaled approximately $25,130 and our short-term investments totaled approximately $18,624, compared to cash and cash equivalents of approximately $26,289 and short-term investments of approximately $27,258 at December 31, 2023, respectively. Working capital was $36,885 at September 30, 2024, and $52,577 at December 31, 2023.
Current wording
As of March 31, 2025, our cash and cash equivalents totaled approximately $23,222 and our short-term investments totaled approximately $10,954, compared to cash and cash equivalents of approximately $23,296 and short-term investments of approximately $14,786 at December 31, 2024, respectively. Working capital was $32,624 at March 31, 2025, and $31,009 at December 31, 2024.
Previous wording
In March 2024, we renewed our facility lease in California used for marketing and promotional purposes, which extended the lease through 2035. See Note 8 – Leases in the accompanying consolidated financial statements for details.
Current wording
We have leases in Nevada, Utah and California, the last of which expires in 2035. See Note 8 – Leases in the accompanying consolidated financial statements for details.