VirnetX Holding (VHC) 10-Q 10 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 04, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	VirnetX Holding Corp
Entity Central Index Key	1,082,324
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 Common Stock, Shares Outstanding		52,363,585
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 13,044	$ 18,658
Investments available for sale	15,038	22,571
Prepaid expenses and other current assets	954	653
Total current assets	29,036	41,882
Prepaid expenses - non-current	2,951	3,144
Property and equipment, net	55	64
Total assets	32,042	45,090
Current liabilities:
Accounts payable and accrued liabilities	751	3,554
Royalty payable	7,989	6,100
Related-party payable	0	81
Income tax liability	395	408
Deferred revenue, current portion	1,250	1,500
Derivative liability	0	320
Total current liabilities	10,385	11,963
Deferred revenue, non-current portion	0	500
Total liabilities	$ 10,385	$ 12,463
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at June 30, 2015 and December 31, 2014, Issued and outstanding: 0 shares at June 30, 2015 and December 31, 2014	$ 0	$ 0
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at June 30, 2015 and December 31, 2014, Issued and outstanding: 52,189,380 shares and 51,996,701 shares, at June 30, 2015 and December 31, 2014, respectively	5	5
Additional paid-in capital	137,499	133,072
Accumulated deficit	(115,836)	(100,435)
Accumulated other comprehensive loss	(11)	(15)
Total stockholders' equity	21,657	32,627
Total liabilities and stockholders' equity	$ 32,042	$ 45,090

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
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)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	52,189,380	51,996,701
Common stock, outstanding (in shares)	52,189,380	51,996,701

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) [Abstract]
Revenue	$ 400	$ 268	$ 775	$ 518
Operating expense:
Royalty expense	4,236	0	4,236	0
Research and development	417	345	809	692
Selling, general and administrative	5,314	6,094	11,057	12,951
Total operating expense	9,967	6,439	16,102	13,643
Loss from operations	(9,567)	(6,171)	(15,327)	(13,125)
Gain (loss) on change in value of derivative liability	0	(530)	(117)	309
Interest income, net	21	31	45	60
Loss before taxes	(9,546)	(6,670)	(15,399)	(12,756)
Income tax expense	0	0	(2)	(2)
Net loss	$ (9,546)	$ (6,670)	$ (15,401)	$ (12,758)
Basic and diluted loss per share (in dollars per share)	$ (0.18)	$ (0.13)	$ (0.30)	$ (0.25)
Weighted average shares outstanding basic and diluted (in shares)	52,160	51,533	52,093	51,394

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) [Abstract]
Net loss	$ (9,546)	$ (6,670)	$ (15,401)	$ (12,758)
Other comprehensive income (loss):
Change in equity adjustment from foreign currency translation, net of tax	(3)	0	(3)	0
Change in unrealized gain (loss) on investments, net of tax	0	(9)	7	(20)
Total other comprehensive income (loss)	(3)	(9)	4	(20)
Comprehensive loss	$ (9,549)	$ (6,679)	$ (15,397)	$ (12,778)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (15,401)	$ (12,758)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	13	12
Amortization of warrant issuance costs	30	0
Stock-based compensation	3,437	3,731
Change in value of derivative liability	117	(309)
Changes in assets and liabilities:
Prepaid expenses and other assets	(17)	(3,869)
Income tax liability	(13)	0
Accounts payable and accrued liabilities	(2,803)	400
Related-party payable	(81)	0
Royalty payable	1,889	0
Deferred revenue	(750)	(500)
Net cash used in operating activities	(13,579)	(13,293)
Cash flows from investing activities:
Purchase of property and equipment	(4)	(6)
Purchase of investments	(4,921)	(6,587)
Proceeds from sale or maturity of investments	12,459	9,464
Net cash provided by investing activities	7,534	2,871
Cash flows from financing activities:
Proceeds from warrant exercise	431	0
Proceeds from exercise of stock options	0	68
Net cash provided by financing activities	431	68
Net decrease in cash and cash equivalents	(5,614)	(10,354)
Cash and cash equivalents, beginning of period	18,658	19,173
Cash and cash equivalents, end of period	13,044	8,819
Non-cash transactions
Fair value of warrants issued for services	$ 121	$ 0

Business Description and Basis

Business Description and Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Business Description and Basis of Presentation [Abstract]
Business Description and Basis of Presentation	Note 1 — Business Description and Basis of Presentation We develop software and technology solutions for securing real-time communications over the Internet. Our patented GABRIEL Connection Technology™ combines industry standard encryption protocols with our patented techniques for automated domain name system, or DNS, lookup mechanisms, and enables users to create a secure communication link using secure domain names over wired or wireless (4G/LTE) networks. We are currently beta testing our GABRIEL Connection Technology™ as part of our Secure Domain Name Initiative, or (SDNI), on various platforms including PCs, smart phones and tablets. We also intend to establish the exclusive secure domain name registry in the United States and other key markets around the world. Our portfolio of intellectual property is the foundation of our business model. We currently own approximately 47 U.S. and 65 foreign patents with over 75 pending applications. Our patent portfolio is primarily focused on securing real-time communications over the Internet, as well as related services such as the establishment and maintenance of a secure domain name registry. Our patented methods also have additional applications in the key areas of device operating systems and network security for Cloud services, M2M communications in areas of Smart City, Connected Car and Connected Home. We have submitted a declaration with the 3rd Generation Partnership Project, or 3GPP, identifying a group of our patents and patent applications that we believe are or may become essential to certain developing specifications in the 3GPP LTE, SAE project. We have agreed to make available a non-exclusive patent license under fair, reasonable and non-discriminatory terms and conditions, with compensation, or FRAND, to 3GPP members desiring to implement the technical specifications identified by us. We believe that we are positioned to license our essential security patents to 3GPP members as they move into 4G. We believe that the market opportunity for our software and technology solutions is large and expanding as secure domain names are now an integral part of securing the next generation 4G/LTE Advanced wireless networks and M2M communications in areas including Smart City, Connected Car and Connected Home. We also believe that all 4G/LTE Advanced mobile devices will require unique secure domain names and become part of a secure domain name registry. We intend to license our patent portfolio, technology and software, including our secure domain name registry service, to domain infrastructure providers, communication service providers as well as to system integrators. We intend to seek further license of our technology, including our GABRIEL Connection Technology™ to enterprise customers, developers and original equipment manufacturers, or OEMs, of chips, servers, smart phones, tablets, e-Readers, laptops, net books and other devices, within the IP-telephony, mobility, fixed-mobile convergence and unified communications markets including 4G/LTE. We have published our royalty rates and guidelines on our website. All forward moving licenses have adhered to these guidelines and have met or exceeded these rates and we will use these rates and guidelines in all future license negotiations. Our software and technology solutions, including our Secure Domain Name Registry and GABRIEL Connection Technology™, are designed to facilitate secure communications and provide the security platform required by next-generation Internet-based applications such as instant messaging, or IM, voice over Internet protocol, or VoIP, mobile services, streaming video, file transfer, remote desktop and, or M2M communications. Our technology generates secure connections on a “zero-click” or “single-click” basis, significantly simplifying the deployment of secure real-time communication solutions by eliminating the need for end-users to enter any encryption information. Our product Gabriel Secure Communication Platform™, unlike other collaboration and communication products and services on the market today, does not require access to user’s confidential data and minimizes the threat of hacking and data mining. It enables individuals and organizations to maintain complete ownership and control over their personal and confidential data, secured within their own private network, while enabling authorized secure encrypted access from anywhere at any time. Our Gabriel Collaboration Suite™ is a set of applications that run on top of our Gabriel Secure Communication Platform™. It enables seamless and secure cross-platform communications between user’s devices that have our software installed. Our Gabriel Collaboration Suite™ is now available for download and free trial, for Windows, Mac OS X, and Android platforms, at http://www.gabrielsecure.com/ . We intend to release our products on iOS platforms in the later part of 2015. We have signed Patent License Agreements with Avaya Inc., Aastra USA, Inc., Microsoft, Mitel Networks Corporation, NEC Corporation and NEC Corporation of America, Siemens Enterprise Communications GmbH & Co. KG, and Siemens Enterprise Communications Inc. to license certain of our patents, for a one-time payment and/or an ongoing royalty for all future sales through the expiration of the licensed patents with respect to certain current and future IP-encrypted products. We have engaged IPVALUE Management Inc. to assist us in commercializing our portfolio of patents on securing real-time communications over the Internet. Under the multi-year agreement, IPVALUE will originate and assist VirnetX with negotiating transactions related to patent licensing worldwide with respect to certain third parties. Our employees include the core development team behind our patent portfolio, technology and software. This team has worked together for over ten years and is the same team that invented and developed this technology while working at Leidos, is a FORTUNE 500® scientific, engineering and technology applications company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure and health. The team has continued its research and development work started at Leidos, and expanded the set of patents we acquired in 2006 from Leidos, into a larger portfolio with currently, approximately 47 U.S. and 65 foreign patents with over 75 pending applications. This portfolio now serves as the foundation of our licensing business and planned service offerings and is expected to generate the majority of our future revenue in license fees and royalties. We intend to continue our research and development efforts to further strengthen and expand our patent portfolio. See – Operations – Research and Development Expenses for a description of our research and development expenses for the three and six months ended June 30, 2015 and 2014. We intend to continue using an outsourced and leveraged model to maintain efficiency and manage costs as we seek to grow our licensing business by, for example, offering incentives to early licensing targets or asserting our rights for use of our patents. We also intend to expand our design pilot in participation with leading 4G/LTE companies (domain infrastructure providers, chipset manufacturers, service providers, and others) and build our secure domain name registry.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2 – Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the Securities and Exchange Commission’s (SEC) requirements for Form 10-Q and, in the opinion of management, contain all adjustments, of a normal and recurring nature, which are necessary for a fair statement of (i) the condensed consolidated statements of operations for the three and six month periods ended June 30, 2015 and 2014; (ii) the condensed consolidated statements of comprehensive loss for the three and six month periods ended June 30, 2015 and 2014; (iii) the condensed consolidated balance sheets at June 30, 2015 and December 31, 2014; and (iv) the condensed consolidated statements of cash flows for the six month periods ended June 30, 2015 and 2014. However, the accompanying unaudited condensed consolidated financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated balance sheet, included in this report, as of December 31, 2014 was derived from our 2014 audited financial statements, but does not include all disclosures required by U.S. GAAP. Basis of Consolidation The consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the fair values of financial instruments, fair values of stock-based awards, income taxes, and derivative liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 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 may be complex and 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 Financial Accounting Standards Board (“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 · Consideration for Past Sales · Current Royalty Payments · Non-Refundable Up-Front Fees and Minimum Fee Contracts · Non-Royalty Elements Deferred revenue In August 2013 we began receiving annual payments on a contract with a total value over 5 years of $10,000 (“August 2013 Contract Settlement”). From the inception of that license to June 30, 2015 we received cash totaling $5,000, all of which is non-refundable. We recognized $750 and $500 of revenue related to these payments in the six-month periods ended June 30, 2015 and June 30, 2014, respectively. Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2014 $ 2,000 Less: Amount amortized as revenue 750 Deferred Revenue, June 30, 2015 $ 1,250 Royalties Payable For the period ended June 30, 2015 we had $7,989 in royalties payable due to Leidos in accordance with our royalty agreement with them. Subsequent to the quarter ended June 30, 2015 we paid the amount in full. 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 are 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. 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. A portion of those balances are insured by the Federal Deposit Insurance Corporation. During the six months ended June 30, 2015 and 2014 we had funds which were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships with major financial institutions. We have not experienced any losses on our deposits of cash and cash equivalents. Derivative Instruments Our Series I Warrants were required to be accounted for as derivative liabilities and carried at fair value on our Condensed Consolidated Balance Sheets as a result of an anti-dilution provision which preclude them from being considered indexed to our stock. The warrant liabilities were marked-to-market each period and the change in the fair value was recorded as gain or loss on derivative liability in the accompanying Condensed Consolidated Statements of Operations. All remaining unexercised Series I Warrants expired during the three months ended March 31, 2015. Impairment of Long-Lived Assets On an annual basis we identify and record impairment losses on long-lived assets when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable. 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. Fair Value of Financial Instruments Fair value is the price that would result from an orderly transaction between market participants at the measurement date. A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Level 2 measurements utilize either directly or indirectly observable inputs in markets other than quoted prices in active markets. Our financial instruments are stated at amounts that equal, or approximate, fair value. When we approximate fair value, we utilize market data or assumptions that we believe market participants would use in pricing the financial instrument, including assumptions about risk and inputs to the valuation technique. We use valuation techniques, primarily the income and market approach that maximize the use of observable inputs and minimize the use of unobservable inputs for recurring fair value measurements. Mutual Funds: Corporate, Municipal and U.S. Agency Securities Series I Warrants The following tables show the adjusted cost, gross unrealized gains, gross unrealized losses and fair value of our securities by significant investment category as of June 30, 2015 and December 31, 2014. June 30, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,699 $ - $ - $ 3,699 $ 3,699 $ - Level 1: Mutual funds 7,937 - - 7,937 7,937 - Corporate securities 2,482 - - 2,482 - 2,482 Municipal securities 1,664 - - 1,664 1,408 256 U.S agency securities 12,295 5 - 12,300 - 12,300 24,378 5 - 24,383 9,345 15,038 Total $ 28,077 $ 5 $ - $ 28,082 $ 13,044 $ 15,038 December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 1,183 $ - $ - $ 1,183 $ 1,183 $ - Level 1: Mutual funds 10,139 - - 10,139 10,139 - Corporate securities 9,405 1 (3 ) 9,403 1,645 7,758 U.S agency securities 20,504 2 (2 ) 20,504 5,691 14,813 40,048 3 (5 ) 40,046 17,475 22,571 Total $ 41,231 $ 3 $ (5 ) $ 41,229 $ 18,658 $ 22,571 The following tables set forth by level within the fair value hierarchy, our liabilities stated at fair value as of December 31, 2014. December 31, 2014 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Series l Warrants $ — $ — $ 320 320 Total $ — $ — $ 320 320 The following table sets forth a summary of changes in the fair value of our Level 3 liability stated at fair value for the six months ended June 30, 2015 and 2014. Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Balance December 31, 2013 $ 2,564 Loss on derivative liability included in net loss 117 Gain on derivative liability included in net loss (309 ) Settlements (333 ) Settlements — Expiration of warrants (104 ) Expiration of warrants — Balance June 30, 2015 $ — Balance June 30, 2014 $ 2,255 New Accounting Pronouncements In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, “ Presentation of Financial Statements – Going Concern” Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” substantial doubt, In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation Accounting for Share-Based Payments.” In May 2014, the FASB issued ASU No. 2014-09 " Revenue from Contracts with Customers “Revenue Recognition”, “Other Assets and Deferred Costs—Contracts with Customers”.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Taxes [Abstract]
Income Taxes	Note 3 - Income Taxes We had no income tax expense for the three months ended June 30, 2015. The income tax expense for the six months ended June 30, 2015 was $2, related to minimum tax payments. During the three and six month periods ended June 30, 2015, we had net operating losses (“NOLs”) which generated deferred tax assets for NOL carryforwards. We have provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carryforwards. Valuation allowances provided for our net deferred tax assets increased by $3,359 and $5,569 for the three and six months ended June 30, 2015, respectively. We had no income tax expense for the three months ended June 30, 2014. The income tax expense for the six months ended June 30, 2014 was $2 related to minimum tax payments. During the three and six month periods ended June 30, 2014, we had net operating losses (“NOLs”) which generated deferred tax assets for NOL carryforwards. We provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carryforwards. 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, including our history of operating losses and the uncertainty of generating future taxable income, management believes it is more likely than not that the net deferred tax assets at June 30, 2015 will not be fully realizable. Accordingly, management has maintained a valuation allowance against our net deferred tax assets at June 30, 2015. The valuation allowance provided against our net deferred tax assets was approximately $26,000 and $20,000 at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, we have federal and state net operating loss carry-forwards of approximately $43,000 and $38,000, respectively, expiring beginning in 2027 and 2016, respectively. Effective January 1, 2009, we adopted accounting guidance for income taxes, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. We are now required to recognize in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Our tax years for 2005 and forward are subject to examination by the U.S. tax authority and various state tax authorities. These years are open due to net operating losses and tax credits remaining unutilized from such years. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of June 30, 2015, we had accrued immaterial amounts of interest and penalties related to uncertain tax positions.

Commitments and Related Party T

Commitments and Related Party Transactions	6 Months Ended
	Jun. 30, 2015
Commitments and Related Party Transactions [Abstract]
Commitments and Related Party Transactions	Note 4 — Commitments and Related Party Transactions We lease our offices under an operating lease with a third party expiring in October 2015 for $5 per month. We recognize rent expense on a straight-line basis over the term of the lease. On January 31, 2015 we entered into a 12 month non-exclusive lease for the use of an aircraft from K2 Investment Fund LLC (“LLC”) for business travel for employees of the Company. We incurred approximately $303 in rental fees (including fees and other reimbursements) to the LLC during the six months ended June 30, 2015. Our Chief Executive Officer and Chief Administrative Officer are the managing partners of the LLC and control the equity interests of the LLC. The lease for use of the plane calls for a rental-rate of $8 per flight hour, with no minimum usage requirement. The agreement contains other terms and conditions normal in such transactions and can be cancelled by either us or the LLC with a 30 day notice.

Stock Based Compensation

Stock Based Compensation	6 Months Ended
	Jun. 30, 2015
Stock Based Compensation [Abstract]
Stock Based Compensation	Note 5 — Stock-Based Compensation We have a stock incentive plan for employees and others called the VirnetX Holding Corporation 2013 Equity Incentive Plan (the "Plan"), which has been approved by our stockholders. The Plan provides for grants of 14,124,469 shares of our common stock, including stock options and stock purchase rights (“RSUs”), and will expire in 2023. As of June 30, 2015, 1,469,552 shares remained available for grant under the Plan. During the three months ended June 30, 2015, we granted options totaling 269,000 shares with a weighted average grant date fair value of $4.15. During the three months ended June 30, 2014, we granted options for a total of 55,000 shares with a weighted average grant date fair value of $10.34. During the six months ended June 30, 2015, we granted options for a total of 294,000 shares with a weighted average grant date fair value of $4.19. The fair values of options at the grant date were estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the six months ended June 30, 2015 (i) dividend yield on our common stock of 0 percent, expected stock price volatility average of 86 percent (iii) a risk-free interest rate average of 2.21 percent and expected option term average of 6 years. During the six months ended June 30, 2014, we granted options for a total of 55,000 shares. The weighted average fair values at the grant dates for options issued during the six months ended June 30, 2014 was $10.34 per option. The fair values of options at the grant date were estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the six months ended June 30, 2014 (i) dividend yield on our common stock of 0 percent, expected stock price volatility of 87 percent (iii) a risk-free interest rate of 2.56 percent an expected option term of 5.5 years. During the three months ended June 30, 2015 and 2014, we granted 162,665 and 16,666 RSUs, respectively. The weighted average fair values at the grant dates for RSUs issued during the three months ended June 30, 2015 and 2014 were $5.57 and $14.52 per RSU, respectively. There were no additional RSUs granted during the six months ended June 30, 2015 or 2014. RSUs, which are subject to forfeiture if employment terminates prior to the shares vesting, are expensed ratably over the vesting period. Stock-based compensation expense included in general and administrative expense was $1,745 and $3,437 for the three and six months ended June 30, 2015, respectively and $1,903 and $3,731 for the three and six months ended June 30, 2014, respectively. As of June 30, 2015, the unrecognized stock-based compensation expense related to non-vested stock options and RSUs was $8,182 and $3,917, respectively, which will be amortized over an estimated weighted average period of approximately 2.76 and 2.84 years, respectively. During the six month period ended June 30, 2015 we issued 72,518 new shares of common stock as a result of RSUs which vested and were paid out while no stock options were exercised during the period.

Warrants

Warrants	6 Months Ended
	Jun. 30, 2015
Warrants [Abstract]
Warrants	Note 6 — Warrants During the quarter ended June 30, 2015 we issued warrants (“Advisor Warrants”) for the purchase of 25,000 shares of common stock for $7 per share, which expire in April 2020. The Advisor Warrants were issued for advisory services provided by a third party. Our Advisor Warrants were recorded at fair value on the issuance date and included in Additional Paid in Capital on our Condensed Consolidated Balance Sheet. The Advisor Warrants are exercisable by the holder, in whole or in part, until expiration, and may also be net-share-settled. Terms of the warrant agreement include no registration requirements for the underlying common stock and there are no anti-dilution provisions. The fair value at issuance of the warrants was recorded in Prepaid Expenses and Other Current Assets, and is being amortized over the twelve month life of the service contract, with the expense included in Selling, General and Administrative Expense in our Condensed Consolidated Statements of Operations. The fair value of the Advisor Warrants at the issuance date of $121 was estimated utilizing the Black-Scholes valuation model with the following assumptions: (i) dividend yield on our common stock of 0 percent, (ii) expected stock price volatility of 87.5 percent, (iii) a risk-free interest rate of 1.33 percent, and (iv) an expected warrant term of 5 years. Information about warrants outstanding during the six months ended June 30, 2015 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2014 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at June 30, 2015 Expiration Date 2,619,036 (1) $ 3.59 157,467 — 120,161 37,306 — March 2015 25,000 (2) $ 7.00 — 25,000 — — 25,000 April 2020 (1) Referred to as Series 1 Warrants (2) Referred to as Advisor Warrants

Litigation

Litigation	6 Months Ended
	Jun. 30, 2015
Litigation [Abstract]
Litigation	Note 7 — Litigation We have one intellectual property infringement lawsuit pending against Apple, Inc. in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we allege that this party infringes on certain of our patents. We seek damages and injunctive relief in all the complaints. VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case On March 30, 2015, the United States Court for the Eastern District of Texas, Tyler Division, issued an order finding substantial overlap between the remanded portions of the Civil Action Case 6:10-CV-00417-LED (VirnetX vs. Cisco et. al.), and the ongoing Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. The court reset the jury trial date to January 25, 2016 with jury selection scheduled to start on January 18, 2016. All future updates will be provided under this case. VirnetX Inc. v. Cisco Systems, Inc. et al. (13-1489-LP VirnetX, Case 6:10-CV-00417-LED) 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 alleged that these parties infringe on certain of our patents. We sought damages and injunctive relief. Aastra and NEC agreed to sign license agreements with us and we agreed to drop all the accusations of infringement against them. At the pre-trial hearing, the judge decided to conduct separate jury trial for each defendant, and try only the case against Apple on the scheduled trial date. The jury trial of our case against Cisco was held on March 4, 2013. The jury in our case against Cisco came back with a verdict of non-infringement also determined that all our patents-in-suit patents are not invalid. Our motions for a new trial and Cisco’s infringement of certain VirnetX patents were denied and the case against Cisco was closed. The jury trial of our case against Apple was held on October 31, 2012. 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. On February 26, 2013, the court issued its Memorandum Opinion and Order regarding post-trial motions resulting from the prior jury verdict denying 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 and granted our motions for pre-judgment interest, post-judgment interest, and post-verdict damages to date. 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 and severed the future infringement portion into its own separate proceedings under Case 6:13-CV-00211-LED. 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 (USCAFC). On September 16, 2014, USCAFC issued their opinion, affirming the jury’s finding that all 4 of our patents are valid, confirming the jury’s finding of infringement of VPN on Demand under many of the asserted claims of our ‘135 and ‘151 patents, and confirming the district’s court’s decision to allow evidence concerning our licenses and royalty rates in connection with the determination of damages. In its opinion, the USCAFC also vacated the jury’s damages award and the district court’s claim construction with respect to parts of our ‘504 and ‘211 patents and remanded the damages award and determination of infringement with respect to FaceTime –for further proceedings consistent with its opinion. On October 16, 2014, we filed a petition with the USCAFC, requesting a rehearing and rehearing en banc of the Federal Circuit’s September 14, 2014, decision concerning VirnetX’s litigation against Apple Inc. On December 16, 2014, USCAFC denied our petition requesting a rehearing and rehearing en banc of the Federal Circuit's September 14, 2014, decision and remanded the case back to the Eastern District of Texas, Tyler Division, for further proceedings consistent with its opinion. On February 25, 2015, USCAFC granted Apple's motions to lift stay of proceedings and vacate Case 6:13-CV-00211-LED. All the issues at hand in Case 6:13-CV-00211-LED will now be addressed as a part of VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) - Consolidated Lead Case. On March 30, 2015, the court issued an order finding substantial overlap between the remanded portions of this case and the ongoing Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. All future updates will now be provided under VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) 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 an unspecified amount of 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 was held on May 20, 2014 and on August 8, 2014, issued its Markman Order, denying Apple’s motion for summary judgment of indefiniteness, in which Apple alleged that some of the disputed claims terms in the patents asserted by us were invalid for indefiniteness. In a separate order, the court granted in part and denied in part our motion for partial summary judgment on Apple’s invalidity counterclaims, precluding Apple from asserting invalidity as a defense against infringement of the claims that were tried before a jury in our prior litigation against Apple (VirnetX vs. Cisco et. al., Case 6:10-CV-00417-LED). The jury trial in this case is scheduled for October 13, 2015. On March 30, 2015, the court issued an order finding substantial overlap between this case and the remanded portions of Case 6:10-CV-00417-LED (VirnetX vs. Cisco et. al.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. All future updates will now be provided under VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case 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.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies [Abstract]
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the Securities and Exchange Commission’s (SEC) requirements for Form 10-Q and, in the opinion of management, contain all adjustments, of a normal and recurring nature, which are necessary for a fair statement of (i) the condensed consolidated statements of operations for the three and six month periods ended June 30, 2015 and 2014; (ii) the condensed consolidated statements of comprehensive loss for the three and six month periods ended June 30, 2015 and 2014; (iii) the condensed consolidated balance sheets at June 30, 2015 and December 31, 2014; and (iv) the condensed consolidated statements of cash flows for the six month periods ended June 30, 2015 and 2014. However, the accompanying unaudited condensed consolidated financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated balance sheet, included in this report, as of December 31, 2014 was derived from our 2014 audited financial statements, but does not include all disclosures required by U.S. GAAP.
Basis of Consolidation	Basis of Consolidation The consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the fair values of financial instruments, fair values of stock-based awards, income taxes, and derivative liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
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 may be complex and 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 Financial Accounting Standards Board (“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 · Consideration for Past Sales · Current Royalty Payments · Non-Refundable Up-Front Fees and Minimum Fee Contracts · Non-Royalty Elements
Deferred revenue	Deferred revenue In August 2013 we began receiving annual payments on a contract with a total value over 5 years of $10,000 (“August 2013 Contract Settlement”). From the inception of that license to June 30, 2015 we received cash totaling $5,000, all of which is non-refundable. We recognized $750 and $500 of revenue related to these payments in the six-month periods ended June 30, 2015 and June 30, 2014, respectively. Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2014 $ 2,000 Less: Amount amortized as revenue 750 Deferred Revenue, June 30, 2015 $ 1,250
Royalties Payable	Royalties Payable For the period ended June 30, 2015 we had $7,989 in royalties payable due to Leidos in accordance with our royalty agreement with them. Subsequent to the quarter ended June 30, 2015 we paid the amount in full.
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 are 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.
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. A portion of those balances are insured by the Federal Deposit Insurance Corporation. During the six months ended June 30, 2015 and 2014 we had funds which were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships with major financial institutions. We have not experienced any losses on our deposits of cash and cash equivalents.
Derivative Instruments	Derivative Instruments Our Series I Warrants were required to be accounted for as derivative liabilities and carried at fair value on our Condensed Consolidated Balance Sheets as a result of an anti-dilution provision which preclude them from being considered indexed to our stock. The warrant liabilities were marked-to-market each period and the change in the fair value was recorded as gain or loss on derivative liability in the accompanying Condensed Consolidated Statements of Operations. All remaining unexercised Series I Warrants expired during the three months ended March 31, 2015.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets On an annual basis we identify and record impairment losses on long-lived assets when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable. 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.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is the price that would result from an orderly transaction between market participants at the measurement date. A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Level 2 measurements utilize either directly or indirectly observable inputs in markets other than quoted prices in active markets. Our financial instruments are stated at amounts that equal, or approximate, fair value. When we approximate fair value, we utilize market data or assumptions that we believe market participants would use in pricing the financial instrument, including assumptions about risk and inputs to the valuation technique. We use valuation techniques, primarily the income and market approach that maximize the use of observable inputs and minimize the use of unobservable inputs for recurring fair value measurements. Mutual Funds: Corporate, Municipal and U.S. Agency Securities Series I Warrants The following tables show the adjusted cost, gross unrealized gains, gross unrealized losses and fair value of our securities by significant investment category as of June 30, 2015 and December 31, 2014. June 30, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,699 $ - $ - $ 3,699 $ 3,699 $ - Level 1: Mutual funds 7,937 - - 7,937 7,937 - Corporate securities 2,482 - - 2,482 - 2,482 Municipal securities 1,664 - - 1,664 1,408 256 U.S agency securities 12,295 5 - 12,300 - 12,300 24,378 5 - 24,383 9,345 15,038 Total $ 28,077 $ 5 $ - $ 28,082 $ 13,044 $ 15,038 December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 1,183 $ - $ - $ 1,183 $ 1,183 $ - Level 1: Mutual funds 10,139 - - 10,139 10,139 - Corporate securities 9,405 1 (3 ) 9,403 1,645 7,758 U.S agency securities 20,504 2 (2 ) 20,504 5,691 14,813 40,048 3 (5 ) 40,046 17,475 22,571 Total $ 41,231 $ 3 $ (5 ) $ 41,229 $ 18,658 $ 22,571 The following tables set forth by level within the fair value hierarchy, our liabilities stated at fair value as of December 31, 2014. December 31, 2014 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Series l Warrants $ — $ — $ 320 320 Total $ — $ — $ 320 320 The following table sets forth a summary of changes in the fair value of our Level 3 liability stated at fair value for the six months ended June 30, 2015 and 2014. Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Balance December 31, 2013 $ 2,564 Loss on derivative liability included in net loss 117 Gain on derivative liability included in net loss (309 ) Settlements (333 ) Settlements — Expiration of warrants (104 ) Expiration of warrants — Balance June 30, 2015 $ — Balance June 30, 2014 $ 2,255
New Accounting Pronouncements	New Accounting Pronouncements In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, “ Presentation of Financial Statements – Going Concern” Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” substantial doubt, In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation Accounting for Share-Based Payments.” In May 2014, the FASB issued ASU No. 2014-09 " Revenue from Contracts with Customers “Revenue Recognition”, “Other Assets and Deferred Costs—Contracts with Customers”.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies [Abstract]
Schedule of Deferred Revenue	Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2014 $ 2,000 Less: Amount amortized as revenue 750 Deferred Revenue, June 30, 2015 $ 1,250
Cash and Available-for-Sale Securities Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value by Significant Investment Category	The following tables show the adjusted cost, gross unrealized gains, gross unrealized losses and fair value of our securities by significant investment category as of June 30, 2015 and December 31, 2014. June 30, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,699 $ - $ - $ 3,699 $ 3,699 $ - Level 1: Mutual funds 7,937 - - 7,937 7,937 - Corporate securities 2,482 - - 2,482 - 2,482 Municipal securities 1,664 - - 1,664 1,408 256 U.S agency securities 12,295 5 - 12,300 - 12,300 24,378 5 - 24,383 9,345 15,038 Total $ 28,077 $ 5 $ - $ 28,082 $ 13,044 $ 15,038 December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 1,183 $ - $ - $ 1,183 $ 1,183 $ - Level 1: Mutual funds 10,139 - - 10,139 10,139 - Corporate securities 9,405 1 (3 ) 9,403 1,645 7,758 U.S agency securities 20,504 2 (2 ) 20,504 5,691 14,813 40,048 3 (5 ) 40,046 17,475 22,571 Total $ 41,231 $ 3 $ (5 ) $ 41,229 $ 18,658 $ 22,571
Financial Instrument Liabilities by Level within Fair Value Hierarchy	The following tables set forth by level within the fair value hierarchy, our liabilities stated at fair value as of December 31, 2014. December 31, 2014 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Series l Warrants $ — $ — $ 320 320 Total $ — $ — $ 320 320
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 liability stated at fair value for the six months ended June 30, 2015 and 2014. Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Balance December 31, 2013 $ 2,564 Loss on derivative liability included in net loss 117 Gain on derivative liability included in net loss (309 ) Settlements (333 ) Settlements — Expiration of warrants (104 ) Expiration of warrants — Balance June 30, 2015 $ — Balance June 30, 2014 $ 2,255

Warrants (Tables)

Warrants (Tables)	6 Months Ended
	Jun. 30, 2015
Warrants [Abstract]
Information about Warrants Outstanding	Information about warrants outstanding during the six months ended June 30, 2015 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2014 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at June 30, 2015 Expiration Date 2,619,036 (1) $ 3.59 157,467 — 120,161 37,306 — March 2015 25,000 (2) $ 7.00 — 25,000 — — 25,000 April 2020 (1) Referred to as Series 1 Warrants (2) Referred to as Advisor Warrants

Business Description and Basi17

Business Description and Basis of Presentation (Details) - Jun. 30, 2015 - Patent	Total
Business Description and Basis of Presentation [Abstract]
Period for which core development team has worked together	10 years
Finite-Lived Intangible Assets [Line Items]
Number of pending patent applications	75
Patents [Member] | U.S. [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents owned	47
Patents [Member] | Foreign [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents owned	65

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2015USD ($)PatentInstitution	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)$ / shares	Dec. 31, 2013USD ($)
Revenue Recognition [Abstract]
Number of patents license agreements | Patent	6
Deferred Revenue [Abstract]
Term of contract	5 years
Contract amount	$ 10,000
Annual payment on contract, received	5,000
Activity under August 2013 contract settlement [Roll Forward]
Deferred Revenue, Beginning Balance	2,000
Less: Amount amortized as revenue	750	$ 500
Deferred Revenue, Ending Balance	1,250		$ 2,000
Royalties payable [Abstract]
Royalties payable due to Leidos	$ 7,989		6,100
Concentration of Credit Risk and Others Risks and Uncertainties [Abstract]
Number of financial institutions holding company's cash | Institution	2
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	$ 13,044	8,819	18,658	$ 19,173
Adjusted Cost	24,378		40,048
Unrealized Gains	5		3
Unrealized Losses	0		(5)
Fair Value	24,383		40,046
Adjusted Cost	28,077		41,231
Fair Value	28,082		41,229
Investments Available for Sale	24,383		40,046
Fair value of liabilities [Abstract]
Series 1 Warrants			320
Cash [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	3,699		1,183
Fair Value	3,699		1,183
Cash and Cash Equivalents	3,699		1,183
Mutual Funds [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	7,937		10,139
Unrealized Gains	0		0
Unrealized Losses	0		0
Fair Value	7,937		10,139
Investments Available for Sale	7,937		10,139
Corporate securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	2,482		9,405
Unrealized Gains	0		1
Unrealized Losses	0		(3)
Fair Value	2,482		9,403
Investments Available for Sale	2,482		9,403
Municipal securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	1,664
Unrealized Gains	0
Unrealized Losses	0
Fair Value	1,664
Investments Available for Sale	1,664
U.S agency securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Adjusted Cost	12,295		20,504
Unrealized Gains	5		2
Unrealized Losses	0		(2)
Fair Value	12,300		20,504
Investments Available for Sale	12,300		$ 20,504
Series I Warrants [Member]
Fair value assumptions [Abstract]
Warrant exercise price (in dollars per share) | $ / shares			$ 3.59
Common share price (in dollars per share) | $ / shares			$ 5.49
Discount rate (in hundredths)			1.65%
Expected volatility rate (in hundredths)			89.60%
Fair value of liabilities [Abstract]
Series 1 Warrants			$ 320
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Series I Warrants [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			0
Significant Other Observable Inputs (Level 2) [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			0
Significant Other Observable Inputs (Level 2) [Member] | Series I Warrants [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			0
Significant Unobservable Inputs (Level 3) [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			320
Changes in fair value of Level 3 liabilities [Roll Forward]
Beginning Balance	320	2,564	2,564
(Gain) Loss on derivative liability included in net loss	117	(309)
Settlements	(333)	0
Expiration of warrants	(104)	0
Ending Balance	0	$ 2,255	320
Significant Unobservable Inputs (Level 3) [Member] | Series I Warrants [Member]
Fair value of liabilities [Abstract]
Series 1 Warrants			320
Recurring [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	13,044		18,658
Fair Value	15,038		22,571
Cash and Cash Equivalents	13,044		18,658
Investments Available for Sale	15,038		22,571
Recurring [Member] | Cash [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	3,699		1,183
Cash and Cash Equivalents	3,699		1,183
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	9,345		17,475
Fair Value	15,038		22,571
Cash and Cash Equivalents	9,345		17,475
Investments Available for Sale	15,038		22,571
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mutual Funds [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	7,937		10,139
Fair Value	0		0
Cash and Cash Equivalents	7,937		10,139
Investments Available for Sale	0		0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	0		1,645
Fair Value	2,482		7,758
Cash and Cash Equivalents	0		1,645
Investments Available for Sale	2,482		7,758
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Municipal securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	1,408
Fair Value	256
Cash and Cash Equivalents	1,408
Investments Available for Sale	256
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S agency securities [Member]
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract]
Fair Value	0		5,691
Fair Value	12,300		14,813
Cash and Cash Equivalents	0		5,691
Investments Available for Sale	$ 12,300		$ 14,813

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Taxes [Abstract]
Income tax expense	$ 0	$ 0	$ 2	$ 2
Net change in valuation allowance	3,359		5,569
Valuation allowance carried against net deferred tax assets	26,000		26,000		$ 20,000
Federal [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	43,000		$ 43,000
Operating loss carryforwards, expiration dates			Dec. 31, 2027
State [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 38,000		$ 38,000
Operating loss carryforwards, expiration dates			Dec. 31, 2016

Commitments and Related Party20

Commitments and Related Party Transactions (Details) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Total
Operating Leased Assets [Line Items]
Corporate headquarters, periodic monthly rental expenses	$ 5
Corporate headquarters, lease expiration date	Oct. 31, 2015
K2 Investment Fund LLC [Member] | Aircraft [Member]
Operating Leased Assets [Line Items]
Rental fees incurred for use of plane	$ 303
Rate of aircraft lease (in dollars per flight hour)	$ 8
Term of notice for cancellation of lease	30 days

Stock Based Compensation (Detai

Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,745	$ 1,903	$ 3,437	$ 3,731
New issue of shares of common stock as a result of RSUs which vested (in shares)			72,518
Options exercised (in shares)			0
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	269,000	55,000	294,000	55,000
Options granted, weighted average fair values (in dollars per share)	$ 4.15	$ 10.34	$ 4.19	$ 10.34
Dividend yield (in hundredths)			0.00%	0.00%
Expected stock price volatility (in hundredths)			86.00%	87.00%
Risk-free interest rate (in hundredths)			2.21%	2.56%
Expected life term			6 years	5 years 6 months
Unrecognized stock-based compensation expense expected to be recognized	$ 8,182		$ 8,182
Weighted average vesting amortization period			2 years 9 months 4 days
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs granted (in shares)	162,665	16,666	0	0
Weighted average grant date fair value of RSU's granted (in dollars per share)	$ 5.57	$ 14.52
Unrecognized stock-based compensation expense expected to be recognized	$ 3,917		$ 3,917
Weighted average vesting amortization period			2 years 10 months 2 days
2013 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for issuance (in shares)	14,124,469		14,124,469
Shares available for grant (in shares)	1,469,552		1,469,552

Warrants (Details)

Warrants (Details) - Jun. 30, 2015 - Advisor Warrants [Member] - USD ($) $ in Thousands	Total
Class of Warrant or Right [Line Items]
Life of service contract	12 months
Fair value of warrants issued	$ 121
Fair value assumptions used in estimating fair value of warrants [Abstract]
Dividends yield of common stock (in hundredths)	0.00%
Expected stock price volatility (in hundredths)	87.50%
Risk-free interest rate (in hundredths)	1.33%
Expected term	5 years

Warrants, Information about War

Warrants, Information about Warrants Outstanding (Details) - Jun. 30, 2015 - Warrants [Member] - $ / shares		Total
Series I Warrants [Member]
Class of Warrant or Right [Line Items]
Original number of warrants issued (in shares)	[1]	2,619,036
Exercise price per common share (in dollars per share)		$ 3.59
Exercisable, beginning of period (in shares)		157,467
Became exercisable (in shares)		0
Exercised (in shares)		120,161
Terminated/cancelled/expired (in shares)		37,306
Exercisable, end of period (in shares)		0
Expiration date		March 31, 2015
Advisor Warrants [Member]
Class of Warrant or Right [Line Items]
Original number of warrants issued (in shares)	[2]	25,000
Exercise price per common share (in dollars per share)		$ 7
Exercisable, beginning of period (in shares)		0
Became exercisable (in shares)		25,000
Exercised (in shares)		0
Terminated/cancelled/expired (in shares)		0
Exercisable, end of period (in shares)		25,000
Expiration date		April 30, 2020
[1]	Referred to as our Series I Warrants.
[2]	Referred to as Advisor Warrants.

Litigation (Details)

Litigation (Details) $ in Thousands	Nov. 06, 2012USD ($)	Jun. 30, 2015USD ($)PatentLawsuit
Litigation [Abstract]
Number of intellectual property infringement lawsuits pending | Lawsuit		1
Amount of damages awarded in patent infringement case	$ 368,000
Number of patents allegedly infringed upon by Apple, Inc. | Patent		4
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