Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 21, 2014 | Jun. 28, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Entity Registrant Name | 'VirnetX Holding Corp | ' | ' |
Entity Central Index Key | '0001082324 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $1,023,550,789 |
Entity Common Stock, Shares Outstanding | ' | 51,236,141 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $19,173 | $19,661 |
Investments available for sale | 19,815 | 26,493 |
Prepaid taxes | 0 | 14,963 |
Prepaid expense and other current assets | 357 | 114 |
Total current assets | 39,345 | 61,231 |
Property and equipment, net | 53 | 70 |
Intangible and other assets | 0 | 12 |
Total assets | 39,398 | 61,313 |
Current liabilities: | ' | ' |
Accounts payable and accrued liabilities | 1,748 | 3,197 |
Income tax liability | 395 | 0 |
Deferred Revenue | 667 | 0 |
Derivative liability | 2,564 | 4,172 |
Total current liabilities | 5,374 | 7,369 |
Commitments and Contingencies | 0 | 0 |
Stockholders' equity: | ' | ' |
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at December 31, 2013 and 2012, Issued and outstanding: 0 shares at December 31, 2013 and 2012 | 0 | 0 |
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at December 31, 2013 and 2012, Issued and outstanding: 51,236,141 shares and 51,150,242 shares, at December 31, 2013 and 2012, respectively | 5 | 5 |
Additional paid-in capital | 124,589 | 116,856 |
Accumulated deficit | -90,533 | -62,925 |
Accumulated other comprehensive income (loss) | -37 | 8 |
Total stockholders' equity | 34,024 | 53,944 |
Total liabilities and stockholders' equity | $39,398 | $61,313 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' equity: | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 51,236,141 | 51,150,242 |
Common stock, outstanding (in shares) | 51,236,141 | 51,150,242 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ' | ' | ' |
Revenue | $2,197 | $412 | $20 |
Operating expense: | ' | ' | ' |
Research and development | 1,782 | 1,555 | 1,464 |
General, selling and administrative | 29,002 | 37,718 | 15,932 |
Total operating expense | 30,784 | 39,273 | 17,396 |
Loss from operations | -28,587 | -38,861 | -17,376 |
Gain (loss) on change in value of embedded derivative and warrants | 1,608 | -927 | -5,595 |
Interest income, net | 122 | 329 | 228 |
Loss before taxes | -26,857 | -39,459 | -22,743 |
Income tax (expense) benefit | -751 | 12,535 | 5,480 |
Net loss | ($27,608) | ($26,924) | ($17,263) |
Basic and diluted loss per share: (in dollars per share) | ($0.54) | ($0.53) | ($0.35) |
Weighted average shares outstanding basic and diluted (in shares) | 51,188,006 | 50,934,266 | 50,028,413 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ' | ' | ' |
Net income (loss) | ($27,608) | ($26,924) | ($17,263) |
Other comprehensive income (loss), net of tax: | ' | ' | ' |
Change in equity adjustment from foreign currency translation, net of tax | -12 | 0 | 0 |
Change in unrealized gain (loss) on investments, net of tax | -33 | 12 | -3 |
Total other comprehensive income(loss), net of tax | -45 | 12 | -3 |
Comprehensive loss | ($27,653) | ($26,912) | ($17,266) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Income (Expense) [Member] | Total | Issued at $3.93-3.59 per share [Member] |
In Thousands, except Share data, unless otherwise specified | USD ($) | Issued at $3.93-3.59 per share [Member] | USD ($) | Issued at $3.93-3.59 per share [Member] | USD ($) | USD ($) | USD ($) | USD ($) |
USD ($) | ||||||||
Balance at Dec. 31, 2010 | $5 | ' | $78,187 | ' | ($17,755) | ($984) | $59,453 | ' |
Balance (in shares) at Dec. 31, 2010 | 49,341,028 | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued for cash exercise of warrants, net | ' | ' | ' | 3,063 | ' | ' | ' | 3,063 |
Stock issued for cash exercise of warrants (in shares) | ' | 855,536 | ' | ' | ' | ' | ' | ' |
Stock-based compensation | ' | ' | 4,368 | ' | ' | ' | 4,368 | ' |
Deferred tax benefit related to stock based compensation | ' | ' | 2,331 | ' | ' | ' | 2,331 | ' |
Derivative liability | ' | ' | 15,260 | ' | ' | ' | 15,260 | ' |
Cashless exercise of underwriter warrants | ' | ' | ' | ' | ' | ' | 0 | ' |
Cashless exercise of underwriter warrants (in shares) | 24,178 | ' | ' | ' | ' | ' | ' | ' |
Exercise of options | ' | ' | 1,068 | ' | ' | ' | 1,068 | ' |
Exercise of options (in shares) | 398,394 | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income: | ' | ' | ' | ' | ' | ' | ' | ' |
Reclassification adjustment for net loss included in net income | ' | ' | ' | ' | -983 | 983 | 0 | ' |
Net loss | ' | ' | ' | ' | -17,263 | ' | -17,263 | ' |
Other comprehensive income net of tax | ' | ' | ' | ' | ' | -3 | -3 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | -17,266 | ' |
Balance at Dec. 31, 2011 | 5 | ' | 104,277 | ' | -36,001 | -4 | 68,277 | ' |
Balance (in shares) at Dec. 31, 2011 | 50,619,136 | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued for cash exercise of warrants, net | ' | ' | ' | 161 | ' | ' | ' | 161 |
Stock issued for cash exercise of warrants (in shares) | ' | 44,941 | ' | ' | ' | ' | ' | ' |
Stock-based compensation | ' | ' | 6,162 | ' | ' | ' | 6,162 | ' |
Deferred tax benefit related to stock based compensation | ' | ' | 3,111 | ' | ' | ' | 3,111 | ' |
Derivative liability | ' | ' | 1,454 | ' | ' | ' | 1,454 | ' |
Exercise of options | ' | ' | 1,691 | ' | ' | ' | 1,691 | ' |
Exercise of options (in shares) | 486,165 | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income: | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -26,924 | ' | -26,924 | ' |
Other comprehensive income net of tax | ' | ' | ' | ' | ' | 12 | 12 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | -26,912 | ' |
Balance at Dec. 31, 2012 | 5 | ' | 116,856 | ' | -62,925 | 8 | 53,944 | ' |
Balance (in shares) at Dec. 31, 2012 | 51,150,242 | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation | ' | ' | 7,563 | ' | ' | ' | 7,563 | ' |
Exercise of options | ' | ' | 170 | ' | ' | ' | 170 | ' |
Exercise of options (in shares) | 39,833 | ' | ' | ' | ' | ' | ' | ' |
Vested RSU's (in shares) | 46,066 | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income: | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -27,608 | ' | -27,608 | ' |
Other comprehensive income net of tax | ' | ' | ' | ' | ' | -45 | -45 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | -27,653 | ' |
Balance at Dec. 31, 2013 | $5 | ' | $124,589 | ' | ($90,533) | ($37) | $34,024 | ' |
Balance (in shares) at Dec. 31, 2013 | 51,236,141 | ' | ' | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Cashless exercise of underwriter warrants (in dollars per share) | ' | $4.80 |
Issued at $3.93-3.59 per share [Member] | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Stock issued for cash exercise of warrants at per share, net - minimum (in dollars per share) | $3.59 | $3.59 |
Stock issued for cash exercise of warrants at per share, net - maximum (in dollars per share) | $3.93 | $3.93 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities: | ' | ' | ' |
Net (loss) | ($27,608) | ($26,924) | ($17,263) |
Adjustments to reconcile net (loss) to net cash used in operating activities: | ' | ' | ' |
Depreciation and amortization | 36 | 71 | 68 |
Stock-based compensation | 7,563 | 6,162 | 4,367 |
Net change in deferred taxes | 0 | 3,158 | 5,663 |
Change in value of derivative liability | -1,608 | 927 | 5,595 |
Changes in assets and liabilities: | ' | ' | ' |
Prepaid expenses and other current assets | -243 | -23 | -3 |
Prepaid taxes | 14,963 | -4,934 | -10,459 |
Deferred revenue | 667 | 0 | 0 |
Accounts payable and accrued liabilities | -1,449 | 1,970 | 708 |
Income tax liability | 395 | 0 | -6,928 |
Net cash used in operating activities | -7,284 | -19,593 | -18,252 |
Cash flows from investing activities: | ' | ' | ' |
Purchase of property and equipment | -7 | -37 | -51 |
Purchase of investments | -92,729 | -59,342 | -34,082 |
Proceeds from sale or maturity of investments | 99,362 | 47,299 | 63,101 |
Net cash provided by (used in) investing activities | 6,626 | -12,080 | 28,968 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from exercise of options | 170 | 1,691 | 1,068 |
Proceeds from exercise of warrants | 0 | 161 | 3,063 |
Net cash provided by financing activities | 170 | 1,852 | 4,131 |
Net increase (decrease) in cash and cash equivalents | -488 | -29,821 | 14,847 |
Cash and cash equivalents, beginning of year | 19,661 | 49,482 | 34,635 |
Cash and cash equivalents, end of year | 19,173 | 19,661 | 49,482 |
Supplemental disclosure of cash flow information: | ' | ' | ' |
Cash paid during the year for taxes | 0 | 0 | 9,600 |
Cash paid during the year for interest | $0 | $0 | $0 |
Formation_and_Business_of_the_
Formation and Business of the Company | 12 Months Ended |
Dec. 31, 2013 | |
Formation and Business of the Company [Abstract] | ' |
Formation and Business of the Company | ' |
Note 1 - Formation and Business of the Company | |
VirnetX Holding Corporation, which we refer to as” we”, “us”, “our”, “the Company” or “VirnetX”, is engaged in the business of commercializing a portfolio of patents. We seek to license our technology, including GABRIEL Connection Technology™, to various original equipment manufacturers, or OEMs, that use our technologies in the development and manufacturing of their own products within the IP-telephony, mobility, fixed-mobile convergence and unified communications markets. Prior to 2012 our revenue was limited to an insignificant amount of software royalties pursuant to the terms of a single license agreement. During 2013 and 2012 we had revenues from settlements of patent infringement disputes whereby we received consideration for past sales of licensees that utilized our technology, where there was no prior patent license agreement (see “Revenue Recognition”). |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary of Significant Accounting Policies [Abstract] | ' | ||
Summary of Significant Accounting Policies | ' | ||
Note 2 - Summary of Significant Accounting Policies | |||
Basis of Presentation | |||
The consolidated financial statements include the accounts of VirnetX Holding Corporation and all wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to current year presentations. | |||
Use of Estimates | |||
We have made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) as delineated by the Financial Accounting Standards Board (FASB) in its Accounting Standards Codification (ASC). Generally, assets and liabilities that are subject to estimation and judgment include the fair value of stock-based compensation, the fair value of our warrant liability and deferred income taxes. While actual results could differ, we believe such estimates to be reasonable. | |||
Revenue Recognition | |||
We derive our revenue from patent licensing. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements can be complex and may or may not include multiple elements. These agreements may include, without limitation, elements related to the settlement of past patent infringement liabilities, up-front and non-refundable license fees for the use of patents, patent licensing royalties on covered products sold by licensees, and the compensation structure and ownership of intellectual property rights associated with contractual technology development arrangements. Licensing agreements are accounted for under the FASB revenue recognition guidance, "Revenue Arrangements with Multiple Deliverables." This guidance requires consideration to be allocated to each element of an agreement that has stand-alone value using the relative fair value method. In other circumstances, such as those agreements involving consideration for past and expected future patent royalty obligations, after consideration of the particular facts and circumstances, the appropriate recording of revenue between periods may require the use of judgment. In all cases, revenue is only recognized after all of the following criteria are met: (1) written agreements have been executed; (2) delivery of technology or intellectual property rights has occurred or services have been rendered; (3) fees are fixed or determinable; and (4) collectability of fees is reasonably assured. | |||
Patent License Agreements: Upon signing a patent license agreement, including licenses entered into settlement of litigation, we provide the licensee permission to use our patented technology in specific applications. We account for patent license agreements in accordance with the guidance for revenue recognition for arrangements with multiple deliverables, with amounts allocated to each element based on their fair values. We have elected to utilize the leased-based model for revenue recognition with revenue being recognized over the expected period of benefit to the licensee. Under our patent license agreements, we typically receive one or a combination of the following forms of payment as consideration for permitting our licensees to use our patented inventions in specific applications and products: | |||
· | Consideration for Past Sales: Consideration related to a licensee’s product sales from prior periods may result from a negotiated agreement with a licensee that utilized our patented technology prior to signing a patent license agreement with us or from the resolution of a litigation, disagreement or arbitration with a licensee over the specific terms of an existing license agreement. We may also receive royalty for past sales in connection with the settlement of patent litigation where there was no prior patent license agreement. These amounts are negotiated, typically based upon application of a royalty rate to historical sales prior to the execution of the license agreement. In each of these cases, since delivery has occurred, we record the consideration as revenue when we have obtained a signed agreement, identified a fixed or determinable price, and determined that collectability is reasonably assured. | ||
· | Current Royalty Payments: We may also receive ongoing royalty payments covering a licensee’s obligations to us related to its sales of covered products in the current contractual reporting period. Licensees that owe these current royalty payments are obligated to provide us with quarterly or semi-annual royalty reports that summarize their sales of covered products and their related royalty obligations to us. We expect to receive these royalty reports subsequent to the period in which our licensees’ underlying sales occurred. As a result, it is impractical for us to recognize revenue in the period in which the underlying sales occur, and, in most cases, we will recognize revenue in the period in which the royalty report is received and other revenue recognition criteria are met due to the fact that without royalty reports from our licensees, our visibility into our licensees’ sales is limited. | ||
· | Non-Refundable Prepaid Fees and Minimum Fee Contracts: For contracts which contain non-refundable prepayment or fixed minimum payments over the remaining term of the license, where we have no future obligations or performance requirements, revenue will generally be deferred and recognized over the license term, depending on how and when the revenue recognition process is complete. Revenue for contracts longer than one year may not be recognized in advance of collections as the fee may be considered to be not fixed and determinable. | ||
· | Non-Royalty Elements: Elements that are not related to royalty revenue in nature, such as settlement fees, expense reimbursement, and damages, if any, are recorded as gain from settlement which is reflected as a separate line item within the operating expenses section in the consolidated statements of operations. | ||
Cash and Cash Equivalents | |||
We consider all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments. | |||
Investments | |||
Investments are classified as available-for-sale and are recorded at fair market value. Unrealized gain and losses are reported as other comprehensive income. Realized gains and losses are recorded in income in the period they are realized. We invest our excess cash primarily in highly liquid debt instruments including municipal and federal agency securities. By policy, we limit the amount of credit exposure to any one issuer. | |||
Property and Equipment | |||
Property and equipment are stated at historical cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the accelerated and straight line methods over the estimated useful lives of the assets, which range from five to seven years. Repair and maintenance costs are charged to expense as incurred. | |||
Concentration of Credit Risk and Other Risks and Uncertainties | |||
Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. During the year ended December 31, 2013 and 2012, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. | |||
Fair Value | |||
The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. | |||
Intangible Assets | |||
We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. | |||
Impairment of Long-Lived Assets | |||
We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. | |||
Research and Development | |||
Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. | |||
Income Taxes | |||
We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing if we will realize our deferred tax assets, we consider whether it is more likely than not that some portion of the deferred tax assets will not be realized. | |||
A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. Consistent with our policy, and because of our history of operating losses, we do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards, that may be used to offset future taxable income. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. | |||
We account for our uncertain tax positions in accordance with U.S. GAAP. The purpose of this method is to clarify accounting for uncertain tax positions recognized. The U.S. GAAP method of accounting for uncertain tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. | |||
Derivative Instruments | |||
Our Series I Warrants are accounted for as derivative instruments as a result of an anti-dilution provision which, in accordance with U.S. GAAP, prevents them from being considered indexed to our stock and qualified for an exception to derivative accounting. | |||
We recognize derivative instruments as either assets or liabilities on the accompanying Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying Consolidated Statements of Operations. | |||
Stock-Based Compensation | |||
We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs net of the applicable forfeiture rate and recognize the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term of 4 years. We estimate the forfeiture rate based on our historical experience if any. See Note 6 - Stock-Based Compensation for additional information concerning our share-based compensation awards. | |||
In addition, as required we record stock and options granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued as they vest over the performance period. | |||
Earnings per Share | |||
Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. During 2013, 2012 and 2011 we incurred losses; therefore the effect of any common stock equivalent would be anti-dilutive during these periods. | |||
New Accounting Pronouncements | |||
In February 2013, the FASB issued final guidance on the presentation of reclassifications out of other comprehensive income. The guidance requires an entity to provide information about the amounts reclassified out of other comprehensive income by component. In addition, an entity is required to present, either on the face of the income statement or in a footnote, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, only if the amount reclassified is required by GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide detail about those amounts. This guidance was effective for interim and fiscal years beginning after December 15, 2012. The guidance did not impact our financial position or results of operations. | |||
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists." The guidance is a new accounting standard on the financial statement presentation of unrecognized tax benefits. The standard provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carry forward, a similar tax loss or a tax credit carry forward if such settlement is required or expected in the event the uncertain tax position is disallowed. The standard became effective for us on January 1, 2014 and had no material effect on our financial position or statement of operations. | |||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property and Equipment [Abstract] | ' | ||||||||||||
Property and Equipment | ' | ||||||||||||
Note 3 - Property and Equipment | |||||||||||||
Our major classes of property and equipment were as follows: | |||||||||||||
31-Dec | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Office furniture | $ | 70 | $ | 70 | $ | 57 | |||||||
Computer equipment | 121 | 115 | 91 | ||||||||||
Total | 191 | 185 | 148 | ||||||||||
Less accumulated depreciation | (138 | ) | (115 | ) | (92 | ) | |||||||
$ | 53 | $ | 70 | $ | 56 | ||||||||
Depreciation expense for the years ended December 31, 2013, 2012 and 2011 was $24, $23 and $20 respectively. |
Commitments
Commitments | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Commitments [Abstract] | ' | ||||||||||||||||
Commitments | ' | ||||||||||||||||
Note 4 - Commitments | |||||||||||||||||
We lease our offices under an operating lease with a third party expiring in October 2015. We recognize rent expense on a straight-line basis over the term of the lease. Rent expense was $56, $56 and $59 for the years ended December 31, 2013, 2012 and 2011, respectively. | |||||||||||||||||
We entered into a non-cancelable agreement for corporate promotional and marketing purposes for a period of ten years at a cost of $4,000. Initial payments of $250 have been prepaid and are included in prepaid expenses and other current assets on our Consolidated Balance Sheet. The remaining balance is due on March 1 of the year the facility will become available for use, which the lessor anticipates will be in 2014, at which time we will begin amortizing the agreement over the contract period. The lease terms include certain refunds and deductions in the event construction is delayed or not completed within specified time-frames. | |||||||||||||||||
The following table summarizes our contractual obligations, including interest expense, and commitments as of December 31, 2013: | |||||||||||||||||
Total | 2014 | 2015 | Thereafter | ||||||||||||||
Contractual obligations | $ | 3,750 | $ | 3,750 | $ | — | — | ||||||||||
Leases | 102 | 56 | 46 | — | |||||||||||||
Total | $ | 3,852 | $ | 3,806 | $ | 46 | — | ||||||||||
Stock_Plan
Stock Plan | 12 Months Ended |
Dec. 31, 2013 | |
Stock Plan [Abstract] | ' |
Stock Plan | ' |
Note 5 - Stock Plan | |
In 2005, VirnetX, Inc. adopted the 2005 Stock Plan (the "2005 Plan"), which was assumed by us upon the closing of the transaction between VirnetX Holding Corporation and VirnetX, Inc. on July 5, 2007. Our Board of Directors renamed the 2005 Plan the VirnetX Holding Corporation 2007 Stock Plan and our stockholders approved the 2007 Plan at our 2008 annual stockholders' meeting. The 2007 Plan provided for the issuance of up to 11,624,469 shares of our common stock. The 2007 Plan provided for the granting of stock options and restricted stock purchase rights (RSU) to our employees and consultants. | |
On May 22, 2013, our stockholders approved the VirnetX Holding Corporation 2013 Equity Incentive Plan (the "2013 Plan") at our 2013 annual stockholders' meeting. The 2013 Plan provides for the issuance of up to 2,500,000 shares of our common stock. To the extent that any award should expire, become un-exercisable or is otherwise forfeited, the shares subject to such award will again become available for issuance under the 2013 Plan. The 2013 Plan provides for the granting of stock options and restricted stock purchase rights (“RSU”) to our employees and consultants. Stock options granted under the 2013 Plan may be incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may only be granted to our employees (including officers and directors). Nonqualified stock options ("NSO") and stock purchase rights may be granted to our employees and consultants. | |
The 2013 Plan will expire in 2023. Options may be granted under the 2013 Plan with an exercise price determined by our Board of Directors, or a duly appointed committee thereof, provided, however, that the exercise price of an option granted to any employee shall be not less than 100% of the fair market value at the date of grant in the case of ISO or 85% of the fair market value at the date of grant in the case of an NSO. The exercise price of an ISO or NSO granted to one of our Named Executive Officers shall not be less than 100% fair market value of the shares at the date of grant and the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the fair market value of the shares on the date of grant. Stock options granted under the 2013 Plan typically vest over four years and have a 10 year term. All RSUs are considered to be granted at the fair value of our stock on the date of grant because they have no exercise price. RSUs typically vest over four years. At December 31, 2013 there were 2,227,882 shares available for grant under the 2013 Plan. | |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | ' | |||||||||||||||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||||||||||||||||
Note 6 - Stock-Based Compensation | ||||||||||||||||||||||||||||||
The following tables summarize information about stock-options and RSU's outstanding at December 31, 2013: | ||||||||||||||||||||||||||||||
Options Outstanding | Options Vested and Exercisable | |||||||||||||||||||||||||||||
Date of | Range of | Number | Weighted | Weighted Average | Number | Weighted | Weighted | |||||||||||||||||||||||
Option Issue | Exercise Prices | Outstanding | Average | Exercise Price | Exercisable | Average | Average | |||||||||||||||||||||||
Remaining | Remaining | Exercise | ||||||||||||||||||||||||||||
Contractual Life (Years) | Contractual Life (Years) | Price | ||||||||||||||||||||||||||||
2006 | $ | 0.24 | 690,612 | 2.22 | $ | 0.24 | 690,612 | 2.22 | $ | 0.24 | ||||||||||||||||||||
2007 | $ | 4.2 | 1,277,574 | 3.56 | 4.2 | 1,277,574 | 3.56 | 4.2 | ||||||||||||||||||||||
2007 | $ | 5.88-6.47 | 563,931 | 3.99 | 5.88 | 563,931 | 3.99 | 5.88 | ||||||||||||||||||||||
2008 | $ | 1.74-6.20 | 169,500 | 4.37 | 5.13 | 169,500 | 4.37 | 5.13 | ||||||||||||||||||||||
2009 | $ | 1.15- 1.58 | 933,211 | 5.26 | 1.16 | 933,211 | 5.26 | 1.16 | ||||||||||||||||||||||
2010 | $ | 5.48-6.03 | 279,896 | 6.17 | 5.49 | 268,440 | 6.17 | 5.49 | ||||||||||||||||||||||
2011 | $ | 19.85-23.62 | 425,000 | 7.37 | 23.62 | 290,416 | 7.37 | 23.62 | ||||||||||||||||||||||
2012 | $ | 23.84 – 35.25 | 362,500 | 8.39 | 27 | 164,166 | 8.35 | 27.16 | ||||||||||||||||||||||
2013 | $ | 23.72 – 35.05 | 274,625 | 9.37 | 25.37 | 52,561 | 9.36 | 25.7 | ||||||||||||||||||||||
4,976,849 | 4.91 | $ | 7.86 | 4,410,411 | 4.45 | $ | 5.66 | |||||||||||||||||||||||
RSU's Outstanding | ||||||||||||||||||||||||||||||
Grant Date | Range of | Number | Weighted Average | |||||||||||||||||||||||||||
Grant Prices | Outstanding | Grant Price | ||||||||||||||||||||||||||||
2012 | $ | 24.75 – 29.90 | 92,500 | $ | 24.75 | |||||||||||||||||||||||||
2013 | $ | 23.72 | 156,415 | 23.72 | ||||||||||||||||||||||||||
248,915 | $ | 24.1 | ||||||||||||||||||||||||||||
The following tables summarize activity under the Plan for the indicated periods: | ||||||||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||||
Number of | Weighted Average | Weighted Average | Aggregate Intrinsic | |||||||||||||||||||||||||||
Shares | Exercise Price | Remaining Contractual | Value | |||||||||||||||||||||||||||
Life (Years) | ||||||||||||||||||||||||||||||
Outstanding at December 31, 2010 | 4,830,391 | $ | 3.14 | — | — | |||||||||||||||||||||||||
Options granted | 475,000 | 23.8 | — | — | ||||||||||||||||||||||||||
Options exercised | (398,393 | ) | 2.68 | — | — | |||||||||||||||||||||||||
Options cancelled | — | — | — | — | ||||||||||||||||||||||||||
Outstanding at December 31, 2011 | 4,906,998 | 5.12 | — | — | ||||||||||||||||||||||||||
Options granted | 367,500 | 26.97 | — | — | ||||||||||||||||||||||||||
Options exercised | (486,165 | ) | 3.48 | — | — | |||||||||||||||||||||||||
Options cancelled | (12,109 | ) | 17.34 | — | — | |||||||||||||||||||||||||
Outstanding at December 31, 2012 | 4,776,224 | 6.94 | — | — | ||||||||||||||||||||||||||
Options granted | 274,625 | 25.37 | — | — | ||||||||||||||||||||||||||
Options exercised | (39,833 | ) | 4.27 | — | — | |||||||||||||||||||||||||
Options cancelled | (34,167 | ) | 20.57 | — | — | |||||||||||||||||||||||||
Outstanding at December 31, 2013 | 4,976,849 | $ | 7.86 | 4.91 | $ | 63,649 | ||||||||||||||||||||||||
RSU's | ||||||||||||||||||||||||||||||
Number of | Weighted Average | Aggregate Intrinsic | ||||||||||||||||||||||||||||
RSU's | Grant Date | Value | ||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||
Outstanding at December 31, 2011 | — | — | — | |||||||||||||||||||||||||||
RSU's granted | 151,665 | 25.6 | — | |||||||||||||||||||||||||||
Outstanding at December 31, 2012 | 151,665 | $ | 25.6 | $ | — | |||||||||||||||||||||||||
RSU's granted | 156,415 | 23.72 | — | |||||||||||||||||||||||||||
RSU's vested | (55,832 | ) | 27.06 | — | ||||||||||||||||||||||||||
RSU's cancelled | (3,333 | ) | 24.75 | — | ||||||||||||||||||||||||||
Outstanding at December 31, 2013 | 248,915 | $ | 24.1 | $ | — | |||||||||||||||||||||||||
Intrinsic value is calculated as the difference between, the per share market price of our common stock on the last trading day of 2013, which was $19.41, and the exercise price of the options. For options exercised, the intrinsic value is the difference between market price and the exercise price on the date of exercise. We received cash proceeds of $170, $1,691 and $1,068 from stock options exercised in 2013, 2012 and 2011 respectively. The total intrinsic value of options exercised was $676, $11,509 and $8,050 during the years ended December 31, 2013, 2012 and 2011, respectively. The aggregate intrinsic value of options exercisable at December 31, 2013 was $63,490. For RSU’s vested, the intrinsic value is the difference between market price and the vested price on the date of vest. The total intrinsic value of the RSU’s vested was zero during the year ended December 31, 2013. | ||||||||||||||||||||||||||||||
Stock-based compensation expense is included in general and administrative expense for each period as follows: | ||||||||||||||||||||||||||||||
Stock-Based Compensation by Type of Award | Year Ended | Year Ended | Year Ended | |||||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | 31-Dec-11 | ||||||||||||||||||||||||||||
Employee stock options | $ | 6,488 | $ | 5,171 | $ | 4,367 | ||||||||||||||||||||||||
RSU’s | 1,075 | 991 | — | |||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 7,563 | $ | 6,162 | $ | 4,367 | ||||||||||||||||||||||||
As of December 31, 2013, there was $11,752 of unrecognized stock-based compensation expense expected to be recognized related to unvested employee stock options and 4,773 of unrecognized stock-based compensation expense to be recognized related to unvested RSU’s. These costs are expected to be recognized over a weighted-average period of 2.39 and 2.70 years, respectively. | ||||||||||||||||||||||||||||||
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: | ||||||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
Expected stock price volatility | 93 | % | 111 | % | 123 | % | ||||||||||||||||||||||||
Risk-free interest rate | 2.04 | % | 1.9 | % | 3.05 | % | ||||||||||||||||||||||||
Expected life term (in years) | 6.10 years | 6.8 years | 6.6 years | |||||||||||||||||||||||||||
Expected dividends | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||||||
Based on the Black-Scholes option pricing model, the weighted average estimated fair value of employee stock options granted was $19.24, $23.17 and $21.43 per share during the years ended December 31, 2013, 2012 and 2011, respectively. | ||||||||||||||||||||||||||||||
The expected life was determined using the simplified method outlined in ASC 718, taking the average of the vesting term and the contractual term of the option. Expected volatility of the stock options was based upon historical data and other relevant factors, such as the volatility of comparable publicly-traded companies at a similar stage of life cycle. We have not provided an estimate for forfeitures because we have had nominal forfeited options and believe that all outstanding options at December 31, 2013, will vest. In the future, we may change this estimate based on actual and expected future forfeiture rates. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Earnings Per Share | ' | ||||||||||||
Note 7 - Earnings Per Share | |||||||||||||
Basic earnings per share are based on the weighted average number of shares outstanding for a period. Diluted earnings per share are based upon the weighted average number of shares and potentially dilutive common shares outstanding. Potential common shares outstanding principally include stock options, under our stock plan and warrants. During 2013, 2012 and 2011 we incurred losses; therefore the effect of any common stock equivalent would be anti-dilutive during those periods. | |||||||||||||
The table below sets forth the basic loss per share calculations: | |||||||||||||
Period Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net loss | $ | (27,608 | ) | $ | (26,924 | ) | $ | (17,263 | ) | ||||
Basic weighted average number of shares outstanding | 51,188 | 50,934 | 50,028 | ||||||||||
Diluted weighted average number of shares outstanding | 51,188 | 50,934 | 50,028 | ||||||||||
Basic and diluted loss per share | $ | (0.54 | ) | $ | (0.53 | ) | $ | (0.35 | ) |
Common_Stock
Common Stock | 12 Months Ended |
Dec. 31, 2013 | |
Common Stock [Abstract] | ' |
Common Stock | ' |
Note 8 - Common Stock | |
Each share of common stock has the right to one vote. The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. Our restated articles of incorporation authorize us to issue up to 100,000,000 shares of $.0001 par value common stock. | |
Warrants
Warrants | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Warrants [Abstract] | ' | ||||||||||||||||||||||||||||
Warrants | ' | ||||||||||||||||||||||||||||
Note 9 - Warrants | |||||||||||||||||||||||||||||
Information about warrants outstanding during the twelve months ended December 31, 2013 follows: | |||||||||||||||||||||||||||||
Original | Exercise | Exercisable at | Became | Exercised | Terminated / | Exercisable at | Expiration | ||||||||||||||||||||||
Number of | Price per | December 31, | Exercisable | Cancelled / | December 31, | Date | |||||||||||||||||||||||
Warrants | Common | 2012 | Expired | 2013 | |||||||||||||||||||||||||
Issued | Share | ||||||||||||||||||||||||||||
2,619,036 | -1 | $ | 3.59 | 159,967 | — | — | — | 159,967 | Mar-15 | ||||||||||||||||||||
Total | 159,967 | — | — | — | 159,967 | ||||||||||||||||||||||||
-1 | Referred to as our Series I Warrants. |
Employee_Benefit_Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2013 | |
Employee Benefit Plan [Abstract] | ' |
Employee Benefit Plan | ' |
Note 10 - Employee Benefit Plan | |
We sponsor a defined contribution, 401k plan, covering substantially all our employees. Our matching contribution to the plan was approximately, $47 in 2013, $41 in 2012 and $36 in 2011. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||
Income Taxes | ' | ||||||||||||
Note 11 - Income Taxes | |||||||||||||
The benefit (provision) for income taxes is comprised of the following: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Current: | |||||||||||||
Federal | $ | (354 | ) | $ | 12,154 | $ | 8,036 | ||||||
State | (397 | ) | 428 | 767 | |||||||||
Foreign | - | - | 9 | ||||||||||
(751 | ) | 12,582 | 8,812 | ||||||||||
Deferred: | |||||||||||||
Federal | - | (40 | ) | (3,331 | ) | ||||||||
State | - | (7 | ) | (1 | ) | ||||||||
- | (47 | ) | (3,332 | ) | |||||||||
Total benefit (provision) for income taxes | $ | (751 | ) | $ | 12,535 | $ | 5,480 | ||||||
A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
United States federal statutory rate | 35 | % | 35 | % | 35 | % | |||||||
State taxes, net of federal benefit | (1.48 | )% | 1.07 | % | 2.19 | % | |||||||
Valuation allowance | (37.11 | )% | (4.41 | )% | (4.39 | )% | |||||||
Stock options | (0.17 | )% | 0.14 | % | (1.92 | )% | |||||||
Prior year true-up | (1.32 | )% | 1.03 | % | - | ||||||||
Warrants | 2.1 | % | (0.82 | )% | (8.60 | )% | |||||||
Other | 0.18 | % | (0.32 | )% | 1.79 | % | |||||||
Balance at the end of the year | (2.80 | )% | 31.69 | % | 24.07 | % | |||||||
Deferred tax assets (liabilities) consist of the following: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Deferred tax assets: | |||||||||||||
Reserves and accruals | $ | 58 | $ | 50 | $ | 46 | |||||||
State tax | 1 | 1 | 1 | ||||||||||
Research and development credits and other credits | 907 | - | - | ||||||||||
Net operating loss carry forward | 8,249 | 2,254 | 2,822 | ||||||||||
Stock based compensation | 6,600 | 4,506 | 3,155 | ||||||||||
Other | 154 | 177 | 211 | ||||||||||
Total deferred tax assets | 15,969 | 6,988 | 6,235 | ||||||||||
Valuation allowance | (15,955 | ) | (6,969 | ) | (6,168 | ) | |||||||
Deferred tax assets after valuation allowance | 14 | 19 | 67 | ||||||||||
Deferred tax liability: | |||||||||||||
Depreciation and amortization | (14 | ) | (19 | ) | (20 | ) | |||||||
Total deferred tax liability | (14 | ) | (19 | ) | (20 | ) | |||||||
Net deferred tax assets | $ | - | $ | - | $ | 47 | |||||||
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. | |||||||||||||
Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets at December 31, 2013 will not be fully realizable. Accordingly, management has maintained a full valuation allowance against its net deferred tax assets at December 31, 2013. The net change in the total valuation allowance for the 12 months ended December 31, 2013 was an increase of $8,986. At December 31, 2013, we had federal and state net operating loss carry-forwards of approximately $23,468 and $37,993, respectively, expiring beginning in 2027 and 2016, respectively. At December 31, 2013, we had federal research and development credit carry-forwards of approximately $907 expiring beginning in 2031. | |||||||||||||
Internal Revenue Code Section 382 places a limitation (the "Section 382 Limitation") on the amount of taxable income can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. California has similar rules. Our capitalization described herein may have resulted in such a change. Generally, after a control change, a loss corporation cannot deduct net operating loss carry forwards generated in years prior to the deemed change of control under IRC Section 382 in excess of the Section 382 Limitation. | |||||||||||||
We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. As a result, we have provided contingent reserve under ASC 740-10 of $316, $128 and $128 at December 31, 2013, December 31, 2012 and December 31, 2011, respectively. Our tax returns are subject to review by various tax authorities. The returns are subject to review those from 2008 forward. | |||||||||||||
Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We have accrued interest or penalties during the 12 month period ended December 31, 2013 in the amount of $79. | |||||||||||||
A reconciliation of beginning and ending amounts of unrecognized tax benefits follows: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance at the beginning of the year | $ | 128 | $ | 128 | $ | 128 | |||||||
Additions based on tax positions related to the current year | - | - | - | ||||||||||
Additions for tax positions of prior years | 188 | - | - | ||||||||||
Settlements | - | - | - | ||||||||||
Lapse of applicable statute of limitations | - | - | - | ||||||||||
Balance at the end of the year | $ | 316 | $ | 128 | $ | 128 | |||||||
Fair_Value_Measurement
Fair Value Measurement | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Fair Value Measurement [Abstract] | ' | ||||||||||||||||||||||||
Fair Value Measurement | ' | ||||||||||||||||||||||||
Note 12 - Fair Value Measurement | |||||||||||||||||||||||||
We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: | |||||||||||||||||||||||||
Level 1 – Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||||||||
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||||||||||
Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. | |||||||||||||||||||||||||
The carrying amounts for cash and cash equivalents, investments in certificates of deposit, accounts payable and accrued expenses approximate their fair values due to the short period of time until maturity. | |||||||||||||||||||||||||
Certificate of deposits: Fair value measured at face value plus accrued interest. | |||||||||||||||||||||||||
Mutual Funds: Valued at the quoted net asset value (NAV) of shares held. | |||||||||||||||||||||||||
Corporate, Municipal and U.S. Agency securities: Fair value measured at the closing price reported on the active market on which the individual securities are traded. | |||||||||||||||||||||||||
Series I Warrants: Fair value measured by using a Binomial valuation model. As of December 31, 2013, the assumptions used to measure fair value of the liability embedded in our outstanding Series I Warrants included a warrant exercise price of $3.59 per share, a common share price of $19.41, a discount rate of 1.75%, and a volatility of 91.55%. As of December 31, 2012, the assumptions used to measure fair value of the liability embedded in our outstanding Series I Warrants included a warrant exercise price of $3.59 per share, a common share price of $29.28, a discount rate of 0.72%, and a volatility of 94.15%. | |||||||||||||||||||||||||
The following table shows our cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents of investments available for sale as of December 31, 2013 and 2012 respectively (in thousands): | |||||||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Cash | Investments | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | and Cash | Available | ||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | for Sale | ||||||||||||||||||||
Cash | $ | 11,699 | $ | - | $ | - | $ | 11,699 | $ | 11,699 | $ | - | |||||||||||||
Level 1: | |||||||||||||||||||||||||
Mutual funds | 73 | - | - | 73 | 73 | - | |||||||||||||||||||
Corporate securities | 10,782 | - | - | 10,782 | 2,325 | 8,457 | |||||||||||||||||||
Municipal securities | 2,173 | - | - | 2,173 | 665 | 1,508 | |||||||||||||||||||
U.S agency securities | 14,287 | - | (25 | ) | 14,262 | 4,411 | 9,851 | ||||||||||||||||||
27,315 | - | (25 | ) | 27,289 | 7,474 | 19,815 | |||||||||||||||||||
Total | $ | 39,014 | $ | - | $ | (25 | ) | $ | 38,988 | $ | 19,173 | $ | 19,815 | ||||||||||||
31-Dec-12 | |||||||||||||||||||||||||
Cash | Investments | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | and Cash | Available | ||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | for Sale | ||||||||||||||||||||
Cash | $ | 19,661 | $ | - | $ | - | $ | 19,661 | $ | 19,661 | $ | - | |||||||||||||
Level 1: | |||||||||||||||||||||||||
Certificates of deposit | 17,836 | - | - | 17,836 | - | 17,836 | |||||||||||||||||||
Corporate securities | 8,649 | 8 | - | 8,657 | - | 8,657 | |||||||||||||||||||
26,485 | 8 | - | 26,493 | - | 26,493 | ||||||||||||||||||||
Total | $ | 46,146 | $ | 8 | $ | - | $ | 46,154 | $ | 19,661 | $ | 26,493 | |||||||||||||
The maturities of the Company's marketable securities generally range from within one to two years. Actual maturities could differ from contractual maturities due to call or prepayment provisions. | |||||||||||||||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2013 (in thousands): | |||||||||||||||||||||||||
Quoted | Significant | Significant | |||||||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||||||
Markets for | Inputs | ||||||||||||||||||||||||
Identical | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||
Series l Warrants | $ | — | $ | — | $ | 2,564 | $ | 2,564 | |||||||||||||||||
Total | $ | — | $ | — | $ | 2,564 | $ | 2,564 | |||||||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2012 (in thousands): | |||||||||||||||||||||||||
Quoted | Significant | Significant | |||||||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||||||
Markets for | Inputs | ||||||||||||||||||||||||
Identical | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||
Series l Warrants | $ | — | $ | — | $ | 4,172 | $ | 4,172 | |||||||||||||||||
Total | $ | — | $ | — | $ | 4,172 | $ | 4,172 | |||||||||||||||||
The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2013, 2012 and 2011 (in thousands): | |||||||||||||||||||||||||
Fair Value Measurements Using Significant | |||||||||||||||||||||||||
Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
Year ended | Year ended | Year ended | |||||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||
Beginning Balance | $ | 4,172 | $ | 4,699 | $ | 14,364 | |||||||||||||||||||
(Gain) losses included in losses | (1,608 | ) | 927 | 5,595 | |||||||||||||||||||||
Settlements | — | (1,454 | ) | (15,260 | ) | ||||||||||||||||||||
Ending Balance | $ | 2,564 | $ | 4,172 | $ | 4,699 | |||||||||||||||||||
Patent_Portfolio
Patent Portfolio | 12 Months Ended |
Dec. 31, 2013 | |
Patent Portfolio [Abstract] | ' |
Patent Portfolio | ' |
Note 13 - Patent Portfolio | |
As of December 31, 2013, we have over 80 U.S. and international patents with over 100 pending applications. Our issued U.S. and foreign patents expire at various times during the period from 2019 to 2024. Some of our issued patents and pending patent applications were acquired by our principal operating subsidiary, VirnetX, Inc., from Leidos, Inc. in 2006 and we are required to make payments to Leidos, Inc. based on cash or certain other values generated from those patents. The amount of such payments depends upon the type of value generated, and certain categories are subject to maximums and other limitations. As of June 30, 2010, we met our maximum royalty payment requirement; however, Leidos, Inc. is also entitled under certain circumstances to receive a portion of the proceeds paid to us for certain acquisitions of VirnetX or from the settlement of certain patent infringement claims of ours. | |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2013 | |
Litigation [Abstract] | ' |
Litigation | ' |
Note 14 - Litigation | |
We have four intellectual property infringement lawsuits pending against multiple parties in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we allege that these parties infringe on certain of our patents. We seek damages and injunctive relief in all the complaints. | |
VirnetX Inc. et al., v. Microsoft Corporation | |
On April 22, 2013, we initiated a lawsuit by filing a complaint against Microsoft Corporation in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we allege that Microsoft has infringed U.S. Patent Nos. 6,502,135, 7,188,180, 7,418,504, 7,490,151, 7,921,211, and 7,987,274. We seek damages and injunctive relief. The Markman hearing in this case is scheduled for September 4, 2014 and the jury trial is scheduled for July 13, 2015. | |
VirnetX Inc. v. Cisco Systems, Inc. et al and VirnetX Inc. v. Apple Inc. (Severed Case) | |
On August 11, 2010, we initiated a lawsuit by filing a complaint against Aastra, Apple, Cisco, and NEC in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we allege that these parties infringe on certain of our patents. We seek damages and injunctive relief. On February 4, 2011, we amended our original complaint, filed on August 11, 2010, against Aastra, Apple, Cisco and NEC in the United States District Court for the Eastern District of Texas, Tyler Division, to assert U.S. Patent No. 7,418,504 against Apple and Aastra. On April 5, 2011, we again amended our complaint against Aastra, Apple, Cisco and NEC in the United States District Court for the Eastern District of Texas, Tyler Division, to include Apple’s iPad 2 in the list of Apple products that are accused of infringing our patents. We also asserted our newly-issued patent, U.S. Patent No. 7,921,211 against all of the defendants in that lawsuit. A claim construction hearing was held on January 5, 2012 and the court issued a Markman ruling on April 25, 2012. Aastra and NEC have signed license agreements with us and we have agreed to drop all the accusations of infringement against them. At the pre-trial hearing, the judge decided to postpone the trial against Cisco to March 4, 2013 and just try the case against Apple. On November 6, 2012, a Jury in the United States Court for the Eastern District of Texas, Tyler Division, awarded us over $368 million in a verdict against Apple Corporation for infringing four of our patents. A post-trial hearing in the case against Apple was held on December 20, 2012. On February 26, 2013, the United States District Court for the Eastern District of Texas, Tyler Division issued its Memorandum Opinion and Order regarding post-trial motions resulting from the prior jury verdict. The Court denied Apple’s motion to reduce the damages awarded by the jury for past infringement. The Court further denied Apple’s request for a new trial on the liability and damages portions of the verdict. Additionally, the Court granted our motions for pre-judgment interest, post-judgment interest, and post-verdict damages to date. Specifically, the Court ordered that Apple pay $34 in daily interest up to final judgment and $330 in daily damages for infringement up to final judgment for certain Apple devices included in the verdict. The Court denied our request for a permanent injunction. In doing so, the Court ordered the parties to mediate over a license in the following 45 days for Apple’s future infringing use not covered by the Court’s Order, and ordered us to file an appropriate motion with the court if the parties fail to agree to a license. On March 28, 2013, Apple filed a motion to alter or amend the judgment entered by the Court. The mediation was held on April 9, 2013 and the parties did not come to an agreement on an ongoing royalty rate for infringing Apple products. We filed our opposition to this motion on April 10, 2013. As ordered by the Court, we filed a sealed motion with the Court on April 16, 2013, requesting the Court’s assistance in deciding an appropriate royalty rate for all infringing products shipped by Apple that are “not more than colorably different” with regards to the accused functionality. However, the judgment may be appealed and no assurances can be given as to when or if we will receive any proceeds in connection with these matters, and accordingly there has been no recognition of the jury awards or royalties in our accompanying financial statements. Under our agreements with Leidos, Inc. we would pay to Leidos, Inc. 25% of the proceeds obtained by us in this lawsuit against Apple after reduction for attorneys’ fees and costs incurred in litigating those claims. We are awaiting the Court’s decision in this matter. On July 1, 2013, the Court entered an Order setting a hearing on our motion for an ongoing royalty for August 15, 2013. On July 3, 2013, Apple filed an appeal of the judgment dated February 27, 2013 and order dated June 4, 2013 denying Apple’s motion to alter or amend the judgment to the United States Court of Appeals for the Federal Circuit. On October 16, 2013 Apple filed its opening appeal brief to the United States Court of Appeals for the Federal Circuit. Our response to the opening brief was filed on December 02, 2013, and on December 19, 2013, Apple filed its final response to complete the briefing of the court. The case is scheduled for hearing on March 03, 2014 at 10:00 a.m. at the United States Court of Appeals for the Federal Circuit (Howard T. Markey National Courts Building, 717 Madison Place, N.W. Washington, DC 20439), Courtroom 402. | |
The jury trial against Cisco was held on March 4, 2013. At the end of the trial, the jury came back with a verdict of non-infringement in the trial. The same jury determined that all our patents-in-suit patents are not invalid. On April 3, 2013, we filed a request for a new trial regarding Cisco’s infringement of four of our patents based primarily on our allegations of Cisco’s inappropriate conduct and arguments during the jury trial that concluded on March 14, 2013. In addition to the request for a new trial, we filed a motion for a judgment as a matter of law on Cisco’s infringement of the ‘759 patent. On April 11, 2013, in response to our motion, Cisco filed its renewed motion to dismiss as moot its invalidity counterclaims against the claims in our patents that were not asserted in the lawsuit as well as a conditional motion for a new trial on certain limited claims and defenses. We are awaiting the Court’s decision in this matter. A hearing on our motion for new trial and Cisco’s renewed motion to dismiss as moot its invalidity counterclaims and conditional motion for a new trial was held on June 17, 2013. We are awaiting the Court’s ruling on these motions. | |
VirnetX Inc. v. Apple, Inc. | |
On November 1, 2011, we initiated a lawsuit against Apple in the United States District Court, Tyler Division, pursuant to which we allege that Apple infringes one or more claims of our U.S. Patent No. 8,051,181. We seek damages and injunctive relief. On June 17, 2013 the Court granted our unopposed motion to lift the stay ordered by the Court on December 15, 2011. On June 18, 2013 the Court granted the parties unopposed motion to consolidate this case with Civil Action No. 6:12-cv-00855-LED. | |
VirnetX Inc. v. Apple, Inc. | |
On November 6, 2012, we filed a new complaint against Apple Inc., in the United States District Court for the Eastern District of Texas, Tyler Division for willfully infringing four of our patents, U.S. Patent Nos. 6,502,135, 7,418,504, 7,921,211 and 7,490,151, and seeking both damages and injunctive relief. The accused products include the iPhone 5, iPod Touch 5th Generation, iPad 4th Generation, iPad mini, and the latest Macintosh computers. Due to their release dates, these products were not included in the previous lawsuit that concluded with a Jury verdict on November 6, 2012 that was subsequently upheld by the United States District Court for the Eastern District of Texas, Tyler Division, on February 26, 2013. On July 1, 2013, we filed a consolidated and amended complaint to include U.S. Patent No. 8,051,181 and consolidate Civil Action No. 6:11-cv-00563-LED. On August 27, 2013, we filed an amended complaint including allegations of willful infringement related to U.S. Patent No. 8,504,697 seeking both damages and injunctive relief. The Markman hearing in this case is scheduled for May 8, 2014 and the jury trial is scheduled for October 13, 2015. | |
One or more potential intellectual property infringement claims may also be available to us against certain other companies who have the resources to defend against any such claims. Although we believe these potential claims are worth pursuing, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we will prevail on such potential claims. In addition, bringing a lawsuit may lead to potential counterclaims which may preclude our ability to commercialize our initial products, which are currently in development. Currently, we are not a party to any other pending legal proceedings, and are not aware of any proceeding threatened or contemplated against us by any governmental authority or other party. | |
Quarterly_Financial_Informatio
Quarterly Financial Information (unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information (unaudited) [Abstract] | ' | ||||||||||||||||
Quarterly Financial Information (unaudited) | ' | ||||||||||||||||
Note 15 - Quarterly Financial Information (unaudited) | |||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
(in thousands except per share) | |||||||||||||||||
2013 | |||||||||||||||||
Revenue | $ | 293 | $ | 6 | $ | 1,612 | $ | 286 | |||||||||
Loss from operations | (9,529 | ) | (6,578 | ) | (5,133 | ) | (7,347 | ) | |||||||||
Net loss | (7,891 | ) | (7,029 | ) | (5,134 | ) | (7,554 | ) | |||||||||
Basic and diluted loss per common share | $ | (0.15 | ) | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.15 | ) | |||||
First | Second | Third | Fourth | ||||||||||||||
(in thousands except per share) | |||||||||||||||||
2012 | |||||||||||||||||
Revenue | $ | - | $ | 36 | $ | 368 | $ | 8 | |||||||||
Loss from operations | (7,223 | ) | (11,734 | ) | (9,371 | ) | (10,533 | ) | |||||||||
Net loss | (4,707 | ) | (10,264 | ) | (4,719 | ) | (7,234 | ) | |||||||||
Basic and diluted loss per common share | $ | (0.09 | ) | $ | (0.20 | ) | $ | (0.09 | ) | $ | (0.14 | ) |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary of Significant Accounting Policies [Abstract] | ' | ||
Basis of Presentation | ' | ||
Basis of Presentation | |||
The consolidated financial statements include the accounts of VirnetX Holding Corporation and all wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to current year presentations. | |||
Use of Estimates | ' | ||
Use of Estimates | |||
We have made a number of estimates and assumptions related to the reporting of assets, liabilities, revenues and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) as delineated by the Financial Accounting Standards Board (FASB) in its Accounting Standards Codification (ASC). Generally, assets and liabilities that are subject to estimation and judgment include the fair value of stock-based compensation, the fair value of our warrant liability and deferred income taxes. While actual results could differ, we believe such estimates to be reasonable. | |||
Revenue Recognition | ' | ||
Revenue Recognition | |||
We derive our revenue from patent licensing. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements can be complex and may or may not include multiple elements. These agreements may include, without limitation, elements related to the settlement of past patent infringement liabilities, up-front and non-refundable license fees for the use of patents, patent licensing royalties on covered products sold by licensees, and the compensation structure and ownership of intellectual property rights associated with contractual technology development arrangements. Licensing agreements are accounted for under the FASB revenue recognition guidance, "Revenue Arrangements with Multiple Deliverables." This guidance requires consideration to be allocated to each element of an agreement that has stand-alone value using the relative fair value method. In other circumstances, such as those agreements involving consideration for past and expected future patent royalty obligations, after consideration of the particular facts and circumstances, the appropriate recording of revenue between periods may require the use of judgment. In all cases, revenue is only recognized after all of the following criteria are met: (1) written agreements have been executed; (2) delivery of technology or intellectual property rights has occurred or services have been rendered; (3) fees are fixed or determinable; and (4) collectability of fees is reasonably assured. | |||
Patent License Agreements: Upon signing a patent license agreement, including licenses entered into settlement of litigation, we provide the licensee permission to use our patented technology in specific applications. We account for patent license agreements in accordance with the guidance for revenue recognition for arrangements with multiple deliverables, with amounts allocated to each element based on their fair values. We have elected to utilize the leased-based model for revenue recognition with revenue being recognized over the expected period of benefit to the licensee. Under our patent license agreements, we typically receive one or a combination of the following forms of payment as consideration for permitting our licensees to use our patented inventions in specific applications and products: | |||
· | Consideration for Past Sales: Consideration related to a licensee’s product sales from prior periods may result from a negotiated agreement with a licensee that utilized our patented technology prior to signing a patent license agreement with us or from the resolution of a litigation, disagreement or arbitration with a licensee over the specific terms of an existing license agreement. We may also receive royalty for past sales in connection with the settlement of patent litigation where there was no prior patent license agreement. These amounts are negotiated, typically based upon application of a royalty rate to historical sales prior to the execution of the license agreement. In each of these cases, since delivery has occurred, we record the consideration as revenue when we have obtained a signed agreement, identified a fixed or determinable price, and determined that collectability is reasonably assured. | ||
· | Current Royalty Payments: We may also receive ongoing royalty payments covering a licensee’s obligations to us related to its sales of covered products in the current contractual reporting period. Licensees that owe these current royalty payments are obligated to provide us with quarterly or semi-annual royalty reports that summarize their sales of covered products and their related royalty obligations to us. We expect to receive these royalty reports subsequent to the period in which our licensees’ underlying sales occurred. As a result, it is impractical for us to recognize revenue in the period in which the underlying sales occur, and, in most cases, we will recognize revenue in the period in which the royalty report is received and other revenue recognition criteria are met due to the fact that without royalty reports from our licensees, our visibility into our licensees’ sales is limited. | ||
· | Non-Refundable Prepaid Fees and Minimum Fee Contracts: For contracts which contain non-refundable prepayment or fixed minimum payments over the remaining term of the license, where we have no future obligations or performance requirements, revenue will generally be deferred and recognized over the license term, depending on how and when the revenue recognition process is complete. Revenue for contracts longer than one year may not be recognized in advance of collections as the fee may be considered to be not fixed and determinable. | ||
· | Non-Royalty Elements: Elements that are not related to royalty revenue in nature, such as settlement fees, expense reimbursement, and damages, if any, are recorded as gain from settlement which is reflected as a separate line item within the operating expenses section in the consolidated statements of operations. | ||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
We consider all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments. | |||
Investments | ' | ||
Investments | |||
Investments are classified as available-for-sale and are recorded at fair market value. Unrealized gain and losses are reported as other comprehensive income. Realized gains and losses are recorded in income in the period they are realized. We invest our excess cash primarily in highly liquid debt instruments including municipal and federal agency securities. By policy, we limit the amount of credit exposure to any one issuer. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment are stated at historical cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the accelerated and straight line methods over the estimated useful lives of the assets, which range from five to seven years. Repair and maintenance costs are charged to expense as incurred. | |||
Concentration of Credit Risk and Other Risks and Uncertainties | ' | ||
Concentration of Credit Risk and Other Risks and Uncertainties | |||
Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. During the year ended December 31, 2013 and 2012, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. | |||
Fair Value | ' | ||
Fair Value | |||
The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. | |||
Intangible Assets | ' | ||
Intangible Assets | |||
We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. | |||
Impairment of Long-Lived Assets | ' | ||
Impairment of Long-Lived Assets | |||
We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. | |||
Research and Development | ' | ||
Research and Development | |||
Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. | |||
Income Taxes | ' | ||
Income Taxes | |||
We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing if we will realize our deferred tax assets, we consider whether it is more likely than not that some portion of the deferred tax assets will not be realized. | |||
A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. Consistent with our policy, and because of our history of operating losses, we do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards, that may be used to offset future taxable income. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. | |||
We account for our uncertain tax positions in accordance with U.S. GAAP. The purpose of this method is to clarify accounting for uncertain tax positions recognized. The U.S. GAAP method of accounting for uncertain tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. | |||
Derivative Instruments | ' | ||
Derivative Instruments | |||
Our Series I Warrants are accounted for as derivative instruments as a result of an anti-dilution provision which, in accordance with U.S. GAAP, prevents them from being considered indexed to our stock and qualified for an exception to derivative accounting. | |||
We recognize derivative instruments as either assets or liabilities on the accompanying Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying Consolidated Statements of Operations. | |||
Stock-Based Compensation | ' | ||
Stock-Based Compensation | |||
We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs net of the applicable forfeiture rate and recognize the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term of 4 years. We estimate the forfeiture rate based on our historical experience if any. See Note 6 - Stock-Based Compensation for additional information concerning our share-based compensation awards. | |||
In addition, as required we record stock and options granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued as they vest over the performance period. | |||
Earnings Per Share | ' | ||
Earnings per Share | |||
Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. During 2013, 2012 and 2011 we incurred losses; therefore the effect of any common stock equivalent would be anti-dilutive during these periods. | |||
New Accounting Pronouncements | ' | ||
New Accounting Pronouncements | |||
In February 2013, the FASB issued final guidance on the presentation of reclassifications out of other comprehensive income. The guidance requires an entity to provide information about the amounts reclassified out of other comprehensive income by component. In addition, an entity is required to present, either on the face of the income statement or in a footnote, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, only if the amount reclassified is required by GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide detail about those amounts. This guidance was effective for interim and fiscal years beginning after December 15, 2012. The guidance did not impact our financial position or results of operations. | |||
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists." The guidance is a new accounting standard on the financial statement presentation of unrecognized tax benefits. The standard provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carry forward, a similar tax loss or a tax credit carry forward if such settlement is required or expected in the event the uncertain tax position is disallowed. The standard became effective for us on January 1, 2014 and had no material effect on our financial position or statement of operations. | |||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property and Equipment [Abstract] | ' | ||||||||||||
Classes of Property and Equipment | ' | ||||||||||||
Our major classes of property and equipment were as follows: | |||||||||||||
31-Dec | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Office furniture | $ | 70 | $ | 70 | $ | 57 | |||||||
Computer equipment | 121 | 115 | 91 | ||||||||||
Total | 191 | 185 | 148 | ||||||||||
Less accumulated depreciation | (138 | ) | (115 | ) | (92 | ) | |||||||
$ | 53 | $ | 70 | $ | 56 |
Commitments_Tables
Commitments (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Commitments [Abstract] | ' | ||||||||||||||||
Future Minimum Required Lease Payments | ' | ||||||||||||||||
The following table summarizes our contractual obligations, including interest expense, and commitments as of December 31, 2013: | |||||||||||||||||
Total | 2014 | 2015 | Thereafter | ||||||||||||||
Contractual obligations | $ | 3,750 | $ | 3,750 | $ | — | — | ||||||||||
Leases | 102 | 56 | 46 | — | |||||||||||||
Total | $ | 3,852 | $ | 3,806 | $ | 46 | — | ||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | ' | |||||||||||||||||||||||||||||
Information about Stock Options | ' | |||||||||||||||||||||||||||||
The following tables summarize information about stock-options and RSU's outstanding at December 31, 2013: | ||||||||||||||||||||||||||||||
Options Outstanding | Options Vested and Exercisable | |||||||||||||||||||||||||||||
Date of | Range of | Number | Weighted | Weighted Average | Number | Weighted | Weighted | |||||||||||||||||||||||
Option Issue | Exercise Prices | Outstanding | Average | Exercise Price | Exercisable | Average | Average | |||||||||||||||||||||||
Remaining | Remaining | Exercise | ||||||||||||||||||||||||||||
Contractual Life (Years) | Contractual Life (Years) | Price | ||||||||||||||||||||||||||||
2006 | $ | 0.24 | 690,612 | 2.22 | $ | 0.24 | 690,612 | 2.22 | $ | 0.24 | ||||||||||||||||||||
2007 | $ | 4.2 | 1,277,574 | 3.56 | 4.2 | 1,277,574 | 3.56 | 4.2 | ||||||||||||||||||||||
2007 | $ | 5.88-6.47 | 563,931 | 3.99 | 5.88 | 563,931 | 3.99 | 5.88 | ||||||||||||||||||||||
2008 | $ | 1.74-6.20 | 169,500 | 4.37 | 5.13 | 169,500 | 4.37 | 5.13 | ||||||||||||||||||||||
2009 | $ | 1.15- 1.58 | 933,211 | 5.26 | 1.16 | 933,211 | 5.26 | 1.16 | ||||||||||||||||||||||
2010 | $ | 5.48-6.03 | 279,896 | 6.17 | 5.49 | 268,440 | 6.17 | 5.49 | ||||||||||||||||||||||
2011 | $ | 19.85-23.62 | 425,000 | 7.37 | 23.62 | 290,416 | 7.37 | 23.62 | ||||||||||||||||||||||
2012 | $ | 23.84 – 35.25 | 362,500 | 8.39 | 27 | 164,166 | 8.35 | 27.16 | ||||||||||||||||||||||
2013 | $ | 23.72 – 35.05 | 274,625 | 9.37 | 25.37 | 52,561 | 9.36 | 25.7 | ||||||||||||||||||||||
4,976,849 | 4.91 | $ | 7.86 | 4,410,411 | 4.45 | $ | 5.66 | |||||||||||||||||||||||
RSU's Outstanding | ||||||||||||||||||||||||||||||
Grant Date | Range of | Number | Weighted Average | |||||||||||||||||||||||||||
Grant Prices | Outstanding | Grant Price | ||||||||||||||||||||||||||||
2012 | $ | 24.75 – 29.90 | 92,500 | $ | 24.75 | |||||||||||||||||||||||||
2013 | $ | 23.72 | 156,415 | 23.72 | ||||||||||||||||||||||||||
248,915 | $ | 24.1 | ||||||||||||||||||||||||||||
Stock Option Activity | ' | |||||||||||||||||||||||||||||
The following tables summarize activity under the Plan for the indicated periods: | ||||||||||||||||||||||||||||||
Options | ||||||||||||||||||||||||||||||
Number of | Weighted Average | Weighted Average | Aggregate Intrinsic | |||||||||||||||||||||||||||
Shares | Exercise Price | Remaining Contractual | Value | |||||||||||||||||||||||||||
Life (Years) | ||||||||||||||||||||||||||||||
Outstanding at December 31, 2010 | 4,830,391 | $ | 3.14 | — | — | |||||||||||||||||||||||||
Options granted | 475,000 | 23.8 | — | — | ||||||||||||||||||||||||||
Options exercised | (398,393 | ) | 2.68 | — | — | |||||||||||||||||||||||||
Options cancelled | — | — | — | — | ||||||||||||||||||||||||||
Outstanding at December 31, 2011 | 4,906,998 | 5.12 | — | — | ||||||||||||||||||||||||||
Options granted | 367,500 | 26.97 | — | — | ||||||||||||||||||||||||||
Options exercised | (486,165 | ) | 3.48 | — | — | |||||||||||||||||||||||||
Options cancelled | (12,109 | ) | 17.34 | — | — | |||||||||||||||||||||||||
Outstanding at December 31, 2012 | 4,776,224 | 6.94 | — | — | ||||||||||||||||||||||||||
Options granted | 274,625 | 25.37 | — | — | ||||||||||||||||||||||||||
Options exercised | (39,833 | ) | 4.27 | — | — | |||||||||||||||||||||||||
Options cancelled | (34,167 | ) | 20.57 | — | — | |||||||||||||||||||||||||
Outstanding at December 31, 2013 | 4,976,849 | $ | 7.86 | 4.91 | $ | 63,649 | ||||||||||||||||||||||||
RSU's | ||||||||||||||||||||||||||||||
Number of | Weighted Average | Aggregate Intrinsic | ||||||||||||||||||||||||||||
RSU's | Grant Date | Value | ||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||
Outstanding at December 31, 2011 | — | — | — | |||||||||||||||||||||||||||
RSU's granted | 151,665 | 25.6 | — | |||||||||||||||||||||||||||
Outstanding at December 31, 2012 | 151,665 | $ | 25.6 | $ | — | |||||||||||||||||||||||||
RSU's granted | 156,415 | 23.72 | — | |||||||||||||||||||||||||||
RSU's vested | (55,832 | ) | 27.06 | — | ||||||||||||||||||||||||||
RSU's cancelled | (3,333 | ) | 24.75 | — | ||||||||||||||||||||||||||
Outstanding at December 31, 2013 | 248,915 | $ | 24.1 | $ | — | |||||||||||||||||||||||||
Share-Based Compensation by Type of Award | ' | |||||||||||||||||||||||||||||
Stock-based compensation expense is included in general and administrative expense for each period as follows: | ||||||||||||||||||||||||||||||
Stock-Based Compensation by Type of Award | Year Ended | Year Ended | Year Ended | |||||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | 31-Dec-11 | ||||||||||||||||||||||||||||
Employee stock options | $ | 6,488 | $ | 5,171 | $ | 4,367 | ||||||||||||||||||||||||
RSU’s | 1,075 | 991 | — | |||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 7,563 | $ | 6,162 | $ | 4,367 | ||||||||||||||||||||||||
Fair Value Assumptions | ' | |||||||||||||||||||||||||||||
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: | ||||||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
Expected stock price volatility | 93 | % | 111 | % | 123 | % | ||||||||||||||||||||||||
Risk-free interest rate | 2.04 | % | 1.9 | % | 3.05 | % | ||||||||||||||||||||||||
Expected life term (in years) | 6.10 years | 6.8 years | 6.6 years | |||||||||||||||||||||||||||
Expected dividends | 0 | % | 0 | % | 0 | % |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Calculation of Earnings (Loss) Per Share | ' | ||||||||||||
The table below sets forth the basic loss per share calculations: | |||||||||||||
Period Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net loss | $ | (27,608 | ) | $ | (26,924 | ) | $ | (17,263 | ) | ||||
Basic weighted average number of shares outstanding | 51,188 | 50,934 | 50,028 | ||||||||||
Diluted weighted average number of shares outstanding | 51,188 | 50,934 | 50,028 | ||||||||||
Basic and diluted loss per share | $ | (0.54 | ) | $ | (0.53 | ) | $ | (0.35 | ) |
Warrants_Tables
Warrants (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Warrants [Abstract] | ' | ||||||||||||||||||||||||||||
Information about Warrants Outstanding | ' | ||||||||||||||||||||||||||||
Information about warrants outstanding during the twelve months ended December 31, 2013 follows: | |||||||||||||||||||||||||||||
Original | Exercise | Exercisable at | Became | Exercised | Terminated / | Exercisable at | Expiration | ||||||||||||||||||||||
Number of | Price per | December 31, | Exercisable | Cancelled / | December 31, | Date | |||||||||||||||||||||||
Warrants | Common | 2012 | Expired | 2013 | |||||||||||||||||||||||||
Issued | Share | ||||||||||||||||||||||||||||
2,619,036 | -1 | $ | 3.59 | 159,967 | — | — | — | 159,967 | Mar-15 | ||||||||||||||||||||
Total | 159,967 | — | — | — | 159,967 | ||||||||||||||||||||||||
-1 | Referred to as our Series I Warrants. |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Taxes [Abstract] | ' | ||||||||||||
Components of Income Tax Expense (Benefit) | ' | ||||||||||||
The benefit (provision) for income taxes is comprised of the following: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Current: | |||||||||||||
Federal | $ | (354 | ) | $ | 12,154 | $ | 8,036 | ||||||
State | (397 | ) | 428 | 767 | |||||||||
Foreign | - | - | 9 | ||||||||||
(751 | ) | 12,582 | 8,812 | ||||||||||
Deferred: | |||||||||||||
Federal | - | (40 | ) | (3,331 | ) | ||||||||
State | - | (7 | ) | (1 | ) | ||||||||
- | (47 | ) | (3,332 | ) | |||||||||
Total benefit (provision) for income taxes | $ | (751 | ) | $ | 12,535 | $ | 5,480 | ||||||
Effective Income Tax Rate Reconciliation | ' | ||||||||||||
A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
United States federal statutory rate | 35 | % | 35 | % | 35 | % | |||||||
State taxes, net of federal benefit | (1.48 | )% | 1.07 | % | 2.19 | % | |||||||
Valuation allowance | (37.11 | )% | (4.41 | )% | (4.39 | )% | |||||||
Stock options | (0.17 | )% | 0.14 | % | (1.92 | )% | |||||||
Prior year true-up | (1.32 | )% | 1.03 | % | - | ||||||||
Warrants | 2.1 | % | (0.82 | )% | (8.60 | )% | |||||||
Other | 0.18 | % | (0.32 | )% | 1.79 | % | |||||||
Balance at the end of the year | (2.80 | )% | 31.69 | % | 24.07 | % | |||||||
Deferred Tax Assets and Liabilities | ' | ||||||||||||
Deferred tax assets (liabilities) consist of the following: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Deferred tax assets: | |||||||||||||
Reserves and accruals | $ | 58 | $ | 50 | $ | 46 | |||||||
State tax | 1 | 1 | 1 | ||||||||||
Research and development credits and other credits | 907 | - | - | ||||||||||
Net operating loss carry forward | 8,249 | 2,254 | 2,822 | ||||||||||
Stock based compensation | 6,600 | 4,506 | 3,155 | ||||||||||
Other | 154 | 177 | 211 | ||||||||||
Total deferred tax assets | 15,969 | 6,988 | 6,235 | ||||||||||
Valuation allowance | (15,955 | ) | (6,969 | ) | (6,168 | ) | |||||||
Deferred tax assets after valuation allowance | 14 | 19 | 67 | ||||||||||
Deferred tax liability: | |||||||||||||
Depreciation and amortization | (14 | ) | (19 | ) | (20 | ) | |||||||
Total deferred tax liability | (14 | ) | (19 | ) | (20 | ) | |||||||
Net deferred tax assets | $ | - | $ | - | $ | 47 | |||||||
Unrecognized Tax Benefits Reconciliation | ' | ||||||||||||
A reconciliation of beginning and ending amounts of unrecognized tax benefits follows: | |||||||||||||
Year Ended | Year Ended | Year Ended | |||||||||||
December 31, | December 31, | December 31, | |||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance at the beginning of the year | $ | 128 | $ | 128 | $ | 128 | |||||||
Additions based on tax positions related to the current year | - | - | - | ||||||||||
Additions for tax positions of prior years | 188 | - | - | ||||||||||
Settlements | - | - | - | ||||||||||
Lapse of applicable statute of limitations | - | - | - | ||||||||||
Balance at the end of the year | $ | 316 | $ | 128 | $ | 128 | |||||||
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Fair Value Measurement [Abstract] | ' | ||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | ' | ||||||||||||||||||||||||
The following table shows our cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents of investments available for sale as of December 31, 2013 and 2012 respectively (in thousands): | |||||||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Cash | Investments | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | and Cash | Available | ||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | for Sale | ||||||||||||||||||||
Cash | $ | 11,699 | $ | - | $ | - | $ | 11,699 | $ | 11,699 | $ | - | |||||||||||||
Level 1: | |||||||||||||||||||||||||
Mutual funds | 73 | - | - | 73 | 73 | - | |||||||||||||||||||
Corporate securities | 10,782 | - | - | 10,782 | 2,325 | 8,457 | |||||||||||||||||||
Municipal securities | 2,173 | - | - | 2,173 | 665 | 1,508 | |||||||||||||||||||
U.S agency securities | 14,287 | - | (25 | ) | 14,262 | 4,411 | 9,851 | ||||||||||||||||||
27,315 | - | (25 | ) | 27,289 | 7,474 | 19,815 | |||||||||||||||||||
Total | $ | 39,014 | $ | - | $ | (25 | ) | $ | 38,988 | $ | 19,173 | $ | 19,815 | ||||||||||||
31-Dec-12 | |||||||||||||||||||||||||
Cash | Investments | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | and Cash | Available | ||||||||||||||||||||
Cost | Gains | Losses | Value | Equivalents | for Sale | ||||||||||||||||||||
Cash | $ | 19,661 | $ | - | $ | - | $ | 19,661 | $ | 19,661 | $ | - | |||||||||||||
Level 1: | |||||||||||||||||||||||||
Certificates of deposit | 17,836 | - | - | 17,836 | - | 17,836 | |||||||||||||||||||
Corporate securities | 8,649 | 8 | - | 8,657 | - | 8,657 | |||||||||||||||||||
26,485 | 8 | - | 26,493 | - | 26,493 | ||||||||||||||||||||
Total | $ | 46,146 | $ | 8 | $ | - | $ | 46,154 | $ | 19,661 | $ | 26,493 | |||||||||||||
Fair Value, Liabilities Measured on Recurring Basis | ' | ||||||||||||||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2013 (in thousands): | |||||||||||||||||||||||||
Quoted | Significant | Significant | |||||||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||||||
Markets for | Inputs | ||||||||||||||||||||||||
Identical | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||
Series l Warrants | $ | — | $ | — | $ | 2,564 | $ | 2,564 | |||||||||||||||||
Total | $ | — | $ | — | $ | 2,564 | $ | 2,564 | |||||||||||||||||
The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2012 (in thousands): | |||||||||||||||||||||||||
Quoted | Significant | Significant | |||||||||||||||||||||||
Prices in | Other | Unobservable | |||||||||||||||||||||||
Active | Observable | Inputs | |||||||||||||||||||||||
Markets for | Inputs | ||||||||||||||||||||||||
Identical | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||
Series l Warrants | $ | — | $ | — | $ | 4,172 | $ | 4,172 | |||||||||||||||||
Total | $ | — | $ | — | $ | 4,172 | $ | 4,172 | |||||||||||||||||
Summary of Changes in Fair Value of Level 3 Liabilities | ' | ||||||||||||||||||||||||
The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2013, 2012 and 2011 (in thousands): | |||||||||||||||||||||||||
Fair Value Measurements Using Significant | |||||||||||||||||||||||||
Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
Year ended | Year ended | Year ended | |||||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||
Beginning Balance | $ | 4,172 | $ | 4,699 | $ | 14,364 | |||||||||||||||||||
(Gain) losses included in losses | (1,608 | ) | 927 | 5,595 | |||||||||||||||||||||
Settlements | — | (1,454 | ) | (15,260 | ) | ||||||||||||||||||||
Ending Balance | $ | 2,564 | $ | 4,172 | $ | 4,699 | |||||||||||||||||||
Quarterly_Financial_Informatio1
Quarterly Financial Information (unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information (unaudited) [Abstract] | ' | ||||||||||||||||
Quarterly Financial Information | ' | ||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
(in thousands except per share) | |||||||||||||||||
2013 | |||||||||||||||||
Revenue | $ | 293 | $ | 6 | $ | 1,612 | $ | 286 | |||||||||
Loss from operations | (9,529 | ) | (6,578 | ) | (5,133 | ) | (7,347 | ) | |||||||||
Net loss | (7,891 | ) | (7,029 | ) | (5,134 | ) | (7,554 | ) | |||||||||
Basic and diluted loss per common share | $ | (0.15 | ) | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.15 | ) | |||||
First | Second | Third | Fourth | ||||||||||||||
(in thousands except per share) | |||||||||||||||||
2012 | |||||||||||||||||
Revenue | $ | - | $ | 36 | $ | 368 | $ | 8 | |||||||||
Loss from operations | (7,223 | ) | (11,734 | ) | (9,371 | ) | (10,533 | ) | |||||||||
Net loss | (4,707 | ) | (10,264 | ) | (4,719 | ) | (7,234 | ) | |||||||||
Basic and diluted loss per common share | $ | (0.09 | ) | $ | (0.20 | ) | $ | (0.09 | ) | $ | (0.14 | ) | |||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Institution | |
Concentration of Credit Risk and Others Risks and Uncertainties [Abstract] | ' |
Number of financial institutions holding company's cash | 2 |
Award vesting period | '4 years |
Minimum [Member] | ' |
Property and Equipment [Abstract] | ' |
Useful lives (in years) | '5 years |
Intangible Assets Disclosure [Abstract] | ' |
Estimated useful lives (in years) | '3 years |
Maximum [Member] | ' |
Property and Equipment [Abstract] | ' |
Useful lives (in years) | '7 years |
Intangible Assets Disclosure [Abstract] | ' |
Estimated useful lives (in years) | '15 years |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Property and Equipment [Line Items] | ' | ' | ' |
Property and equipment, gross | $191 | $185 | $148 |
Less accumulated depreciation | -138 | -115 | -92 |
Property and equipment, net | 53 | 70 | 56 |
Depreciation expense | 24 | 23 | 20 |
Office Furniture [Member] | ' | ' | ' |
Property and Equipment [Line Items] | ' | ' | ' |
Property and equipment, gross | 70 | 70 | 57 |
Computer Equipment [Member] | ' | ' | ' |
Property and Equipment [Line Items] | ' | ' | ' |
Property and equipment, gross | $121 | $115 | $91 |
Commitments_Details
Commitments (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Commitments [Abstract] | ' | ' | ' |
Operating lease expiring date | 31-Oct-15 | ' | ' |
Rent expense | $56 | $56 | $59 |
Period of corporate promotion and marketing | '10 years | ' | ' |
Lease commitments, promotional and marketing | 4,000 | ' | ' |
Prepayments of promotional and marketing commitments | 250 | ' | ' |
Contractual Obligation, Fiscal Year Maturity [Abstract] | ' | ' | ' |
Contractual Obligation, Total | 3,750 | ' | ' |
Contractual obligations, 2014 | 3,750 | ' | ' |
Contractual obligations, 2015 | 0 | ' | ' |
Contractual obligations, There After | 0 | ' | ' |
Leases, Fiscal Year Maturity [Abstract] | ' | ' | ' |
Leases, Total | 102 | ' | ' |
Leases, 2014 | 56 | ' | ' |
Leases, 2015 | 46 | ' | ' |
Leases, There After | 0 | ' | ' |
Contractual obligations, including interest expense, and commitments, Fiscal Year Maturity [Abstract] | ' | ' | ' |
Contractual obligations, including interest expense, and commitments, Total | 3,852 | ' | ' |
Contractual obligations, including interest expense, and commitments, 2014 | 3,806 | ' | ' |
Contractual obligations, including interest expense, and commitments, 2015 | 46 | ' | ' |
Contractual obligations, including interest expense, and commitments, There After | $0 | ' | ' |
Stock_Plan_Details
Stock Plan (Details) | 12 Months Ended |
Dec. 31, 2013 | |
VirnetX Holding Corporation 2007 Stock Plan [Line Items] | ' |
Number of shares authorized (in shares) | 11,624,469 |
Vesting period | '4 years |
2013 Plan [Member] | ' |
VirnetX Holding Corporation 2007 Stock Plan [Line Items] | ' |
Number of shares authorized (in shares) | 2,500,000 |
Terms of Plan | 'To the extent that any award should expire, become un-exercisable or is otherwise forfeited, the shares subject to such award will again become available for issuance under the Plan. The Plan provides for the granting of stock options and restricted stock purchase rights (RSU) to our employees and consultants. Stock options granted under the Plan may be incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may only be granted to our employees (including officers and directors). Nonqualified stock options ("NSO") and stock purchase rights may be granted to our employees and consultants. The Plan will expire 10 years after it was approved by our Board of Directors. Options may be granted under the Plan with an exercise price determined by our Board of Directors, or a duly appointed committee thereof, provided, however, that the exercise price of an option granted to any employee shall be not less than 100% of the fair market value at the date of grant in the case of ISO or 85% of the case of an NSO, the exercise price of an ISO or NSO granted to one of our Named Executive Officers shall not be less than 100% fair market value of the shares at the date of grant and the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the fair market value of the shares on the date of grant. Stock options granted under the Plan typically vest over four years and have a 10 year term. All RSUs are considered to be granted at the fair value of our stock on the date of grant because they have no exercise price. RSUs typically vest over four years. |
Term of Plan | '10 years |
Minimum exercise price of ISO granted (in hundredths) | 100.00% |
Minimum exercise price of NSO granted (in hundredths) | 85.00% |
Minimum exercise price of options granted to named executive officers (in hundredths) | 100.00% |
Minimum exercise price of options granted to 10% shareholders (in hundredths) | 110.00% |
Shares available for grant (in shares) | 2,227,882 |
2013 Plan [Member] | Restricted Stock [Member] | ' |
VirnetX Holding Corporation 2007 Stock Plan [Line Items] | ' |
Vesting period of restricted share units | '4 years |
2013 Plan [Member] | Stock Options [Member] | ' |
VirnetX Holding Corporation 2007 Stock Plan [Line Items] | ' |
Vesting period | '4 years |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Intrinsic value (in dollars per share) | $19.41 | ' | ' |
Proceeds from exercise of options | $170,000 | $1,691,000 | $1,068,000 |
Total intrinsic value of options exercised | 676,000 | 11,509,000 | 8,050,000 |
Fair value assumptions [Abstract] | ' | ' | ' |
Weighted average grant date fair value - grants (in dollars per share) | $19.24 | $23.17 | $21.43 |
General and Administrative Expense [Member] | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Allocated Share-based Compensation Expense | 7,563,000 | 6,162,000 | 4,367,000 |
Restricted Stock [Member] | ' | ' | ' |
Options activity [Roll Forward] | ' | ' | ' |
Outstanding at beginning of period (in shares) | 151,665 | 0 | ' |
Options granted (in shares) | 156,415 | 151,665 | ' |
Options vested (in shares) | -55,832 | ' | ' |
Options cancelled (in shares) | -3,333 | ' | ' |
Outstanding at end of period (in shares) | 248,915 | 151,665 | ' |
Options, Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Outstanding, weighted average exercise price, at beginning of period (in dollars per share) | $25.60 | $0 | ' |
Options granted, weighted average exercise price - options granted (in dollars per share) | $23.72 | $26 | ' |
Options vested, weighted average exercise price (in dollars per share) | $27.06 | ' | ' |
Options, weighted average exercise price, options cancelled (in dollars per share) | $24.75 | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $24.10 | $25.60 | ' |
Options outstanding, aggregate intrinsic value | 0 | 0 | ' |
Stock Options [Member] | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Aggregate intrinsic value of options exercisable | 63,490,000 | ' | ' |
Total compensation cost not yet recognized, Total | 11,752,000 | ' | ' |
Total compensation cost not yet recognized, period for recognition | '2 years 4 months 20 days | ' | ' |
Fair value assumptions [Abstract] | ' | ' | ' |
Expected stock price volatility (in hundredths) | 93.00% | 111.00% | 123.00% |
Risk free interest rate (in hundredths) | 2.04% | 1.90% | 3.05% |
Expected life term (in years) | '6 years 1 month 6 days | '6 years 9 months 18 days | '6 years 7 months 6 days |
Expected dividend | 0 | 0 | 0 |
Options activity [Roll Forward] | ' | ' | ' |
Outstanding at beginning of period (in shares) | 4,776,224 | 4,906,998 | 4,830,391 |
Options granted (in shares) | 274,625 | 367,500 | 475,000 |
Options exercised (in shares) | -39,833 | -486,165 | -398,393 |
Options cancelled (in shares) | -34,167 | -12,109 | 0 |
Outstanding at end of period (in shares) | 4,976,849 | 4,776,224 | 4,906,998 |
Options, Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Outstanding, weighted average exercise price, at beginning of period (in dollars per share) | $6.94 | $5.12 | $3.14 |
Options granted, weighted average exercise price - options granted (in dollars per share) | $25.37 | $26.97 | $23.80 |
Options exercised, weighted average exercise price (in dollars per share) | $4.27 | $3.48 | $2.68 |
Options, weighted average exercise price, options cancelled (in dollars per share) | $20.57 | $17.34 | $0 |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $7.86 | $6.94 | $5.12 |
Options outstanding, weighted average remaining contractual term, at end of period | '4 years 10 months 28 days | ' | ' |
Options outstanding, aggregate intrinsic value | 63,649 | ' | ' |
Stock Options [Member] | General and Administrative Expense [Member] | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Allocated Share-based Compensation Expense | 6,488,000 | 5,171,000 | 4,367,000 |
Restricted Stock Units (RSUs) [Member] | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Aggregate intrinsic value of options exercisable | 0 | ' | ' |
Total compensation cost not yet recognized, Total | 4,773,000 | ' | ' |
Total compensation cost not yet recognized, period for recognition | '2 years 8 months 12 days | ' | ' |
Options activity [Roll Forward] | ' | ' | ' |
Outstanding at end of period (in shares) | 248,915 | ' | ' |
Options, Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $24.10 | ' | ' |
Restricted Stock Units (RSUs) [Member] | General and Administrative Expense [Member] | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' |
Allocated Share-based Compensation Expense | $1,075,000 | $991,000 | $0 |
StockBased_Compensation_Shares
Stock-Based Compensation, Shares authorized under Stock Option Plans, by Exercise Price Range (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Restricted Stock [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Number of options outstanding (in shares) | 248,915 | 151,665 | 0 | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $24.10 | $25.60 | $0 | ' |
Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Number of options outstanding (in shares) | 4,976,849 | 4,776,224 | 4,906,998 | 4,830,391 |
Options outstanding, weighted average remaining contractual term, at end of period | '4 years 10 months 28 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $7.86 | $6.94 | $5.12 | $3.14 |
Number of options exercisable (in shares) | 4,410,411 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '4 years 5 months 12 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $5.66 | ' | ' | ' |
Restricted Stock Units (RSUs) [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Number of options outstanding (in shares) | 248,915 | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $24.10 | ' | ' | ' |
Exercise Price $0.24 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2006 | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $0.24 | ' | ' | ' |
Number of options outstanding (in shares) | 690,612 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '2 years 2 months 19 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $0.24 | ' | ' | ' |
Number of options exercisable (in shares) | 690,612 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '2 years 2 months 19 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $0.24 | ' | ' | ' |
Exercise Price $4.20 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2007 | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $4.20 | ' | ' | ' |
Number of options outstanding (in shares) | 1,277,574 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '3 years 6 months 22 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $4.20 | ' | ' | ' |
Number of options exercisable (in shares) | 1,277,574 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '3 years 6 months 22 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $4.20 | ' | ' | ' |
Exercise Price Range $5.88 - $6.47 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2007 | ' | ' | ' |
Number of options outstanding (in shares) | 563,931 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '3 years 11 months 26 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $5.88 | ' | ' | ' |
Number of options exercisable (in shares) | 563,931 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '3 years 11 months 26 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $5.88 | ' | ' | ' |
Exercise Price Range $5.88 - $6.47 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $5.88 | ' | ' | ' |
Exercise Price Range $5.88 - $6.47 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $6.47 | ' | ' | ' |
Exercise Price Range $1.74 - $6.20 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2008 | ' | ' | ' |
Number of options outstanding (in shares) | 169,500 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '4 years 4 months 13 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $5.13 | ' | ' | ' |
Number of options exercisable (in shares) | 169,500 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '4 years 4 months 13 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $5.13 | ' | ' | ' |
Exercise Price Range $1.74 - $6.20 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $1.74 | ' | ' | ' |
Exercise Price Range $1.74 - $6.20 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $6.20 | ' | ' | ' |
Exercise Price Range $1.15 - $1.58 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2009 | ' | ' | ' |
Number of options outstanding (in shares) | 933,211 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '5 years 3 months 4 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $1.16 | ' | ' | ' |
Number of options exercisable (in shares) | 933,211 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '5 years 3 months 4 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $1.16 | ' | ' | ' |
Exercise Price Range $1.15 - $1.58 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $1.15 | ' | ' | ' |
Exercise Price Range $1.15 - $1.58 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $1.58 | ' | ' | ' |
Exercise Price Range $5.48 - $6.03 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2010 | ' | ' | ' |
Number of options outstanding (in shares) | 279,896 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '6 years 2 months 1 day | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $5.49 | ' | ' | ' |
Number of options exercisable (in shares) | 268,440 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '6 years 2 months 1 day | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $5.49 | ' | ' | ' |
Exercise Price Range $5.48 - $6.03 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $5.48 | ' | ' | ' |
Exercise Price Range $5.48 - $6.03 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $6.03 | ' | ' | ' |
Exercise Price Range $19.85 - $23.62 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2011 | ' | ' | ' |
Number of options outstanding (in shares) | 425,000 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '7 years 4 months 13 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $23.62 | ' | ' | ' |
Number of options exercisable (in shares) | 290,416 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '7 years 4 months 13 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $23.62 | ' | ' | ' |
Exercise Price Range $19.85 - $23.62 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $19.85 | ' | ' | ' |
Exercise Price Range $19.85 - $23.62 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $23.62 | ' | ' | ' |
Exercise Price Range $23.84 - $35.25 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2012 | ' | ' | ' |
Number of options outstanding (in shares) | 362,500 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '8 years 4 months 20 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $27 | ' | ' | ' |
Number of options exercisable (in shares) | 164,166 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '8 years 4 months 6 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $27.16 | ' | ' | ' |
Exercise Price Range $23.84 - $35.25 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $23.84 | ' | ' | ' |
Exercise Price Range $23.84 - $35.25 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $35.25 | ' | ' | ' |
Exercise Price Range $23.72 - $35.05 [Member] | Stock Options [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2013 | ' | ' | ' |
Number of options outstanding (in shares) | 274,625 | ' | ' | ' |
Options outstanding, weighted average remaining contractual term, at end of period | '9 years 4 months 13 days | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $25.37 | ' | ' | ' |
Number of options exercisable (in shares) | 52,561 | ' | ' | ' |
Options, vested and exercisable, weighted average remaining contractual term | '9 years 4 months 10 days | ' | ' | ' |
Options vested and exercisable weighted average exercise price (in dollars per share) | $25.70 | ' | ' | ' |
Exercise Price Range $23.72 - $35.05 [Member] | Stock Options [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $23.72 | ' | ' | ' |
Exercise Price Range $23.72 - $35.05 [Member] | Stock Options [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $35.05 | ' | ' | ' |
Exercise Price Range $24.75 - $29.90 [Member] | Restricted Stock Units (RSUs) [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2012 | ' | ' | ' |
Number of options outstanding (in shares) | 92,500 | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $24.75 | ' | ' | ' |
Exercise Price Range $24.75 - $29.90 [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $24.75 | ' | ' | ' |
Exercise Price Range $24.75 - $29.90 [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $29.90 | ' | ' | ' |
Exercise Price Range $23.72 [Member] | Restricted Stock Units (RSUs) [Member] | ' | ' | ' | ' |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' |
Stock Options, Year Issued | '2013 | ' | ' | ' |
Weighted average price of shares vested and exercisable (in dollars per share) | $23.72 | ' | ' | ' |
Number of options outstanding (in shares) | 156,415 | ' | ' | ' |
Outstanding, weighted average exercise price, balance at end of period (in dollars per share) | $23.72 | ' | ' | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Calculation of basic loss per share [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | ($7,554) | ($5,134) | ($7,029) | ($7,891) | ($7,234) | ($4,719) | ($10,264) | ($4,707) | ($27,608) | ($26,924) | ($17,263) |
Weighted average number of shares outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 51,188,006 | 50,934,266 | 50,028,413 |
Diluted weighted average number of shares outstanding | ' | ' | ' | ' | ' | ' | ' | ' | 51,188,006 | 50,934,266 | 50,028,413 |
Basic and diluted loss per share (in dollars per share) | ($0.15) | ($0.10) | ($0.14) | ($0.15) | ($0.14) | ($0.09) | ($0.20) | ($0.09) | ($0.54) | ($0.53) | ($0.35) |
Common_Stock_Details
Common Stock (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Vote | ||
Common Stock [Abstract] | ' | ' |
Common Stock, Voting Rights | 'Each share of common stock has the right to one vote | ' |
Number of votes to right for common stock | 1 | ' |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Warrants_Details
Warrants (Details) (Warrants [Member], USD $) | 12 Months Ended | |
Dec. 31, 2013 | ||
Warrants [Line Items] | ' | |
Exercisable at beginning of year (in shares) | 159,967 | |
Became exercisable (in shares) | 0 | |
Exercised (in shares) | 0 | |
Terminated/cancelled/expired (in shares) | 0 | |
Exercisable (in shares) | 159,967 | |
Series I Warrants [Member] | ' | |
Warrants [Line Items] | ' | |
Original number of warrants issued (in shares) | 2,619,036 | [1] |
Exercise price per common share (in dollars per share) | 3.59 | |
Exercisable at beginning of year (in shares) | 159,967 | |
Became exercisable (in shares) | 0 | |
Exercised (in shares) | 0 | |
Terminated/cancelled/expired (in shares) | 0 | |
Exercisable (in shares) | 159,967 | |
Expiration date | 'March 2015 | |
[1] | Referred to as our Series I Warrants. |
Employee_Benefit_Plan_Details
Employee Benefit Plan (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Employee Benefit Plan [Abstract] | ' | ' | ' |
Matching contribution to defined contribution plan | $47 | $41 | $36 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current [Abstract] | ' | ' | ' |
Federal | ($354) | $12,154 | $8,036 |
State | -397 | 428 | 767 |
Foreign | 0 | 0 | 9 |
Current Income Tax Expense (Benefit), Total | -751 | 12,582 | 8,812 |
Deferred [Abstract] | ' | ' | ' |
Federal | 0 | -40 | -3,331 |
State | 0 | -7 | -1 |
Deferred Income Tax Expense (Benefit), Total | 0 | -47 | -3,332 |
Total (benefit) provision for income taxes | -751 | 12,535 | 5,480 |
Effective Tax Rate Reconciliation [Abstract] | ' | ' | ' |
United States federal statutory rate (in hundredths) | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit (in hundredths) | -1.48% | 1.07% | 2.19% |
Valuation allowance (in hundredths) | -37.11% | -4.41% | -4.39% |
Stock options (in hundredths) | -0.17% | 0.14% | -1.92% |
Prior year true-up (in hundredths) | -1.32% | 1.03% | 0.00% |
Warrants (in hundredths) | 2.10% | -0.82% | -8.60% |
Other (in hundredths) | 0.18% | -0.32% | 1.79% |
Balance at the end of the year (in hundredths) | -2.80% | 31.69% | 24.07% |
Deferred tax assets [Abstract] | ' | ' | ' |
Reserves and accruals | 58 | 50 | 46 |
State taxes | 1 | 1 | 1 |
Research and development credits and other credits | 907 | 0 | 0 |
Net operating loss carry forward | 8,249 | 2,254 | 2,822 |
Stock based compensation | 6,600 | 4,506 | 3,155 |
Other | 154 | 177 | 211 |
Total deferred tax assets | 15,969 | 6,988 | 6,235 |
Valuation allowance | -15,955 | -6,969 | -6,168 |
Deferred tax assets after valuation allowance | 14 | 19 | 67 |
Deferred tax liability [Abstract] | ' | ' | ' |
Depreciation and amortization | -14 | -19 | -20 |
Total deferred tax liabilities | -14 | -19 | -20 |
Net deferred tax assets | 0 | 0 | 47 |
Net change in valuation allowance | 8,986 | ' | ' |
Federal operating loss carryforwards | 23,468 | ' | ' |
State operating loss carryforwards | 37,993 | ' | ' |
Net change in gross deferred tax assets offset by a change in valuation allowance | 316 | 128 | 128 |
Accrued interest and penalties | 79 | ' | ' |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ' | ' | ' |
Balance at the beginning of the year | 128 | 128 | 128 |
Additions based on tax positions related to the current year | 0 | 0 | 0 |
Additions for tax positions of prior years | 188 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Lapse of applicable statute of limitations | 0 | 0 | 0 |
Balance at the end of the year | $316 | $128 | $128 |
Fair_Value_Measurement_Details
Fair Value Measurement (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | $39,014 | $46,146 | ' |
Unrealized Gains | 0 | 8 | ' |
Unrealized Losses | -25 | 0 | ' |
Fair value | 38,988 | 46,154 | ' |
Cash and cash equivalents | 19,173 | 19,661 | ' |
Investments Available for Sale | 19,815 | 26,493 | ' |
Unobservable input reconciliation [Roll Forward] | ' | ' | ' |
Balance at beginning of period | 4,172 | 4,699 | 14,364 |
Gain (losses) included in losses | -1,608 | 927 | 5,595 |
Settlements | 0 | -1,454 | -15,260 |
Balance at end of period | 2,564 | 4,172 | 4,699 |
Minimum [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Matutiries of available for sale securities | '1 year | ' | ' |
Maximum [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Matutiries of available for sale securities | '2 years | ' | ' |
Cash [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 11,699 | 19,661 | ' |
Unrealized Gains | 0 | 0 | ' |
Unrealized Losses | 0 | 0 | ' |
Fair value | 11,699 | 19,661 | ' |
Cash and cash equivalents | 11,699 | 19,661 | ' |
Investments Available for Sale | 0 | 0 | ' |
Series I Warrants [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Series I warrants | 2,564 | 4,172 | ' |
Fair value inputs [Abstract] | ' | ' | ' |
Exercise price per common share (in dollars per share) | $3.59 | $3.59 | ' |
Common share price (in dollars per share) | $19.41 | $29.28 | ' |
Discount rate (in hundredths) | 1.75% | 0.72% | ' |
Volatility rate (in hundredths) | 91.55% | 94.15% | ' |
Level 1 [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 27,315 | 26,485 | ' |
Unrealized Gains | 0 | 8 | ' |
Unrealized Losses | -25 | 0 | ' |
Fair value | 27,289 | 26,493 | ' |
Cash and cash equivalents | 7,474 | 0 | ' |
Investments Available for Sale | 19,815 | 26,493 | ' |
Level 1 [Member] | Certificates of Deposit [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | ' | 17,836 | ' |
Unrealized Gains | ' | 0 | ' |
Unrealized Losses | ' | 0 | ' |
Fair value | ' | 17,836 | ' |
Cash and cash equivalents | ' | 0 | ' |
Investments Available for Sale | ' | 17,836 | ' |
Level 1 [Member] | Mutual Funds [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 73 | ' | ' |
Unrealized Gains | 0 | ' | ' |
Unrealized Losses | 0 | ' | ' |
Fair value | 73 | ' | ' |
Cash and cash equivalents | 73 | ' | ' |
Investments Available for Sale | 0 | ' | ' |
Level 1 [Member] | Corporate Securities [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 10,782 | 8,649 | ' |
Unrealized Gains | 0 | 8 | ' |
Unrealized Losses | 0 | 0 | ' |
Fair value | 10,782 | 8,657 | ' |
Cash and cash equivalents | 2,325 | 0 | ' |
Investments Available for Sale | 8,457 | 8,657 | ' |
Level 1 [Member] | Municipal Securities [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 2,173 | ' | ' |
Unrealized Gains | 0 | ' | ' |
Unrealized Losses | 0 | ' | ' |
Fair value | 2,173 | ' | ' |
Cash and cash equivalents | 665 | ' | ' |
Investments Available for Sale | 1,508 | ' | ' |
Level 1 [Member] | US Agency Securities [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Adjustment Cost | 14,287 | ' | ' |
Unrealized Gains | 0 | ' | ' |
Unrealized Losses | -25 | ' | ' |
Fair value | 14,262 | ' | ' |
Cash and cash equivalents | 4,411 | ' | ' |
Investments Available for Sale | 9,851 | ' | ' |
Level 1 [Member] | Series I Warrants [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Series I warrants | 0 | 0 | ' |
Level 2 [Member] | Series I Warrants [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Series I warrants | 0 | 0 | ' |
Level 3 [Member] | Series I Warrants [Member] | ' | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' | ' |
Series I warrants | $2,564 | $4,172 | ' |
Patent_Portfolio_Details
Patent Portfolio (Details) | Dec. 31, 2013 |
Patent | |
Patent Portfolio [Abstract] | ' |
Number of patents owned | 80 |
Number of pending applications for patents | 100 |
Litigation_Details
Litigation (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Feb. 26, 2013 | Dec. 31, 2013 | Apr. 03, 2013 | Nov. 06, 2012 | |
Lawsuit | Patent | Patent | ||
Litigation [Abstract] | ' | ' | ' | ' |
Number of intellectual property infringement lawsuits pending | ' | 4 | ' | ' |
Amount of damages awarded in patent infringement case | ' | $368,000 | ' | ' |
Amount of interest payment awarded up to final judgment, per day | ' | 34 | ' | ' |
Amount of damage infringement payment awarded up to final judgment, per day | ' | $330 | ' | ' |
Court order mediation interval | '45 days | ' | ' | ' |
Number of patents allegedly infringed upon by Apple, Inc. | ' | ' | 4 | 4 |
Percentage of proceedings obtain in the lawsuit to be paid | ' | 25.00% | ' | ' |
Quarterly_Financial_Informatio2
Quarterly Financial Information (unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Quarterly Financial Information (unaudited) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | $286 | $1,612 | $6 | $293 | $8 | $368 | $36 | $0 | $2,197 | $412 | $20 |
Loss from operations | -7,347 | -5,133 | -6,578 | -9,529 | -10,533 | -9,371 | -11,734 | -7,223 | -28,587 | -38,861 | -17,376 |
Net loss | ($7,554) | ($5,134) | ($7,029) | ($7,891) | ($7,234) | ($4,719) | ($10,264) | ($4,707) | ($27,608) | ($26,924) | ($17,263) |
Basic and diluted loss per common share (in dollars per share) | ($0.15) | ($0.10) | ($0.14) | ($0.15) | ($0.14) | ($0.09) | ($0.20) | ($0.09) | ($0.54) | ($0.53) | ($0.35) |