Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 04, 2016 | |
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 | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 55,663,568 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 9,269 | $ 8,726 |
Investments available for sale | 8,599 | 9,954 |
Prepaid expenses and other current assets | 919 | 685 |
Total current assets | 18,787 | 19,365 |
Prepaid expenses - non-current | 2,663 | 2,759 |
Property and equipment, net | 44 | 48 |
Total assets | 21,494 | 22,172 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 3,926 | 2,283 |
Accrued payroll and related expenses | 0 | 1,383 |
Related-party payable | 0 | 11 |
Income tax liability | 400 | 400 |
Deferred revenue, current portion | 1,500 | 1,500 |
Total current liabilities | 5,826 | 5,577 |
Deferred revenue, non-current portion | $ 1,125 | $ 1,500 |
Commitments and contingencies (Note 4) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at March 31, 2016 and December 31, 2015, Issued and outstanding: 0 shares at March 31, 2016 and December 31, 2015 | $ 0 | $ 0 |
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at March 31, 2016 and December 31, 2015, Issued and outstanding: 54,889,855 shares and 53,198,835 shares, at March 31, 2016 and December 31, 2015, respectively | 5 | 5 |
Additional paid-in capital | 152,827 | 144,778 |
Accumulated deficit | (138,279) | (129,669) |
Accumulated other comprehensive loss | (10) | (19) |
Total stockholders' equity | 14,543 | 15,095 |
Total liabilities and stockholders' equity | $ 21,494 | $ 22,172 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 54,889,855 | 53,198,835 |
Common stock, shares outstanding (in shares) | 54,889,855 | 53,198,835 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) [Abstract] | ||
Revenue | $ 375 | $ 375 |
Operating expense: | ||
Research and development | 450 | 392 |
Selling, general and administrative | 8,543 | 5,742 |
Total operating expenses | 8,993 | 6,134 |
Loss from operations | (8,618) | (5,759) |
Loss on change in value of derivative liability | 0 | (117) |
Interest income, net | 15 | 23 |
Loss before taxes | (8,603) | (5,853) |
Provision for income taxes | (7) | (2) |
Net loss | $ (8,610) | $ (5,855) |
Basic and diluted loss per share (in dollars per share) | $ (0.16) | $ (0.11) |
Weighted average shares outstanding basic and diluted (in shares) | 54,135 | 52,027 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) [Abstract] | ||
Net loss | $ (8,610) | $ (5,855) |
Other comprehensive gain, net of tax: | ||
Change in unrealized gain on investments, net of tax | 9 | 8 |
Total other comprehensive gain, net of tax | 9 | 8 |
Comprehensive loss | $ (8,601) | $ (5,847) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (8,610) | $ (5,855) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 6 | 7 |
Stock-based compensation | 1,234 | 1,692 |
Amortization of warrant issuance costs | (30) | 0 |
Change in value of derivative liability | 0 | 117 |
Changes in assets and liabilities: | ||
Prepaid expenses | (108) | (208) |
Accounts payable and accrued liabilities | 1,643 | (2,248) |
Payroll accrual | (1,383) | 0 |
Income tax liability | 0 | (13) |
Related party payable | (11) | (81) |
Deferred revenue | (375) | (375) |
Net cash used in operating activities | (7,634) | (6,964) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (2) | (4) |
Purchase of investments | (2,752) | (2,932) |
Proceeds from sale or maturity of investments | 4,116 | 4,101 |
Net cash provided by investing activities | 1,362 | 1,165 |
Cash flows from financing activities: | ||
Proceeds from exercise of options | 20 | 0 |
Proceeds from exercise of warrants | 0 | 431 |
Proceeds from sale of common stock | 6,795 | 0 |
Net cash provided by financing activities | 6,815 | 431 |
Net increase (decrease) in cash and cash equivalents | 543 | (5,368) |
Cash and cash equivalents, beginning of period | 8,726 | 18,658 |
Cash and cash equivalents, end of period | $ 9,269 | $ 13,290 |
Business Description and Basis
Business Description and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Business Description and Basis of Presentation [Abstract] | |
Business Description and Basis of Presentation | Note 1 — Business Description and Basis of Presentation 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. Since 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, as well as license agreement revenues from settlements providing licensing for the continued use of our techology (see “Revenue Recognition”). Our portfolio of intellectual property is the foundation of our business model. We currently own approximately 46 U.S. and 69 foreign patents with approximately 75 pending patent applications worldwide. 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. All our U.S. and foreign patents and pending patent applications relate generally to securing communications over the internet and as such, cover all our technology and other products. 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, (f/k/a Science Applications International Corporation or SAIC) in 2006 and we are required to make payments to Leidos, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying Condensed Consolidated Balance Sheet as of March 31, 2016, the Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015, the Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2016, our results of operations for the three months ended March 31, 2016 and 2015, and our cash flows for the three months ended March 31, 2016 and 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 15, 2016. Use of Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in our accounting estimates are reasonably likely to occur. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, at the time they are made and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below. 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. 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 that requires payment to us over 4 years totaling $10,000 ("August 2013 Contract Settlement"). From the inception of that license to March 31, 2016, we received cash totaling $7,500, all of which is non-refundable, and in accordance with our revenue recognition policy. We will not recognize any of the $2,500 balance due until collected. We recognized $375 of revenue related to the August 2013 Contract Settlement during the three months ended March 31, 2016 and 2015. Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2015 $ 3,000 Less: Amount amortized as revenue 375 Deferred Revenue, March 31, 2016 $ 2,625 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 three months ended March 31, 2016 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 precluded 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 1 Warrants expired during the three months ended March 31, 2015. Prepaid Expenses Prepaid expenses at March 31, 2016 include the current portion of prepaid rent for a facility lease for corporate promotional and marketing purposes. From inception, the prepayment totaling $4,000 is being amortized over the 10-year term of the lease. The unamortized non-current portion of the prepayment is included in Prepaid expenses-non-current on the consolidated balance sheet. 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 estimate 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, which maximizes the use of observable inputs and minimize the use of unobservable inputs for recurring fair value measurements. Mutual Funds: U.S. government and U.S. Agency Securities 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 March 31, 2016 and December 31, 2015. March 31, 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 5,463 $ — $ — $ 5,463 $ 5,463 $ — Level 1: Mutual funds 3,201 — — 3,201 3,201 — U.S. government securities 1,804 1 — 1,805 — 1,805 U.S. agency securities 7,397 3 (1 ) 7,399 605 6,794 12,402 4 (1 ) 12,405 3,806 8,599 Total $ 17,865 $ 4 $ (1 ) $ 17,868 $ 9,269 $ 8,599 December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,296 $ — $ — $ 3,296 $ 3,296 $ — Level 1: Mutual funds 5,005 — — 5,005 5,005 — U.S. government securities 1,806 — (3 ) 1,803 — 1,803 U.S. agency securities 8,579 1 (4 ) 8,576 425 8,151 15,390 1 (7 ) 15,384 5,430 9,954 Total $ 18,686 $ 1 $ (7 ) $ 18,680 $ 8,726 $ 9,954 The following table sets forth a summary of changes in the fair value of our Level 3 liability stated at fair value for the three months ended March 31, 2015. Three Months Ended March 31, 2015 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Gain on derivative liability included in net loss 117 Settlements (333 ) Expiration of warrants (104 ) Balance March 31, 2015 $ — New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. We are currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements. In February of 2016, FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations. In November 2015, the FASB issued “ Accounting Standards Update No. 2015-17—Income Taxes (Topic 740)”. In April 2015, the FASB issued an ASU entitled “Interest - Imputation of Interest.” In February 2015, the FASB issued an ASU entitled “Consolidation.” In January 2015, the FASB issued an ASU entitled “Income Statement Extraordinary and Unusual Items.” In August 2014, the FASB issued Accounting Standards Update 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 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 | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | Note 3 — Income Taxes We had income tax expense of $7 for the three months ended March 31, 2016, as a result of minimum tax payments. During the three month periods ended March 31, 2016, we had net operating losses ("NOLs") which generated deferred tax assets for NOL carry-forwards. We 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 approximately $3,342 for the three months ended March 31, 2016. We had income tax expense of $2 for the three months ended March 31, 2015. During the three month period ended March 31, 2015, we had net operating losses ("NOLs") which generated deferred tax assets for NOL carry-forwards. We provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carry-forwards. Valuation allowances provided for our net deferred tax assets increased by approximately $2,214 for the three months ended March 31, 2015. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax 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 March 31, 2016 will not be fully realizable. Accordingly, management has maintained a valuation allowance against its net deferred tax assets at March 31, 2016. The valuation allowance carried against our net deferred tax assets was approximately $33,000 and $30,000 at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, we have federal and state net operating loss carry-forwards of approximately $59,000 and $37,000, respectively, expiring beginning in 2027 and 2016, respectively. 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 uncertain tax positions as a component of income tax expense. As of March 31, 2016, we had accrued immaterial amounts of interest and penalties related to the uncertain tax positions. |
Commitments And Related Party T
Commitments And Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
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 2017. We recognize rent expense on a straight-line basis over the term of the lease. We lease the use of an aircraft from K2 Investment Fund LLC (“LLC”) for business travel for employees of the Company. We incurred approximately $132 and $82 in rental fees and reimbursements to the LLC during the three months ended March 31, 2016 and 2015 respectively. Our Chief Executive Officer and Chief Administrative Officer are the managing partners and control the equity interests of the LLC. The lease term ends January 2017, non-exclusive, and provides for use of the plane at a rate of $8 per flight hour, and requires no minimum usage. The agreement contains other terms and conditions normal in such transactions and can be cancelled by either us or the LLC with 30 days’ notice. The lease renews on an annual basis unless terminated by the Lessor or Lessee. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
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”, or the Plan, which has been approved by our stockholders. The Plan provides for the granting of up to 14,124,469 shares of our common stock, including stock options and stock purchase rights (“RSUs”), and will expire in 2024. As of March 31, 2016, 1,069,552 shares remained available for grant under the Plan. During the three months ending March 31, 2016 there were no grants of options or RSUs. Stock-based compensation expense included in general and administrative expense was $1,234 and $1,692 for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016, the unrecognized stock-based and RSUs compensation expense related to non-vested stock options and RSUs was $5,145 and $2,851, respectively, which will be amortized over an estimated weighted average period of approximately 2.85 and 2.07 years, respectively. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Equity | Note 6 — Equity Common Stock On August 21, 2015 we filed a universal shelf registration statement with the SEC enabling us to offer and sell from time to time up to $100 million of equity, debt or other types of securities. We also entered into an at-the-market (“ATM”) equity offering sales agreement with Cowen & Company, LLC on August 20, 2015, under which we may offer and sell shares of our common stock having an aggregate value of up to $35 million. We have and expect to use proceeds from this offering for GABRIEL product development and marketing, and general corporate purposes, which may include working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies or businesses. From August 20, 2015 through March 31, 2016, we sold 2,475,719 shares under the ATM. The average sales price per common share was $4.19 and the aggregate proceeds from the sales totaled $10,383 during the period. Sales commissions, fees and other costs associated with the ATM totaled $311. During the three months ended March 31, 2016, we sold 1,640,663 shares under the ATM. The average sales price per common share was $4.27 and the aggregate proceeds from the sales totaled $6,795 during the period. Sales commissions, fees and other costs associated with the ATM totaled $210. Warrants In 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 three months ended March 31, 2016 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2015 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at March 31, 2016 Expiration Date 25,000 $ 7.00 25,000 — — — 25,000 April 2020 25,000 — — — 25,000 |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2016 | |
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 jury trial in this case was held on January 25, 2016. On February 4, 2016, a jury in the United States Court for the Eastern District of Texas, Tyler Division, awarded us $625.6 million in a verdict against Apple Inc. ("Apple") for infringing four of our US patents, marking it the second time a federal jury has found Apple liable for infringing VirnetX’s patented technology. The verdict includes royalties awarded to us based on an earlier patent infringement finding ( Case 6:10-CV-00417-LED) 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 USA, Inc. ("Aastra"), Apple, Cisco Systems, Inc. ("Cisco"), and NEC Corporation ("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 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 was 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 — Subsequent Events Subsequent to the period ended March 31, 2016, we sold 773,713 shares under the ATM. The average sales price per common share was $4.87 and the aggregate proceeds from the sales totaled $3,772 during the period. Sales commissions, fees and other costs associated with the ATM totaled $113. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying Condensed Consolidated Balance Sheet as of March 31, 2016, the Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015, the Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2016, our results of operations for the three months ended March 31, 2016 and 2015, and our cash flows for the three months ended March 31, 2016 and 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 15, 2016. |
Use of Estimates | Use of Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in our accounting estimates are reasonably likely to occur. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, at the time they are made and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below. |
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. |
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 that requires payment to us over 4 years totaling $10,000 ("August 2013 Contract Settlement"). From the inception of that license to March 31, 2016, we received cash totaling $7,500, all of which is non-refundable, and in accordance with our revenue recognition policy. We will not recognize any of the $2,500 balance due until collected. We recognized $375 of revenue related to the August 2013 Contract Settlement during the three months ended March 31, 2016 and 2015. Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2015 $ 3,000 Less: Amount amortized as revenue 375 Deferred Revenue, March 31, 2016 $ 2,625 |
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 three months ended March 31, 2016 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 precluded 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 1 Warrants expired during the three months ended March 31, 2015. |
Prepaid Expenses | Prepaid Expenses Prepaid expenses at March 31, 2016 include the current portion of prepaid rent for a facility lease for corporate promotional and marketing purposes. From inception, the prepayment totaling $4,000 is being amortized over the 10-year term of the lease. The unamortized non-current portion of the prepayment is included in Prepaid expenses-non-current on the consolidated balance sheet. |
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 estimate 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, which maximizes the use of observable inputs and minimize the use of unobservable inputs for recurring fair value measurements. Mutual Funds: U.S. government and U.S. Agency Securities 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 March 31, 2016 and December 31, 2015. March 31, 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 5,463 $ — $ — $ 5,463 $ 5,463 $ — Level 1: Mutual funds 3,201 — — 3,201 3,201 — U.S. government securities 1,804 1 — 1,805 — 1,805 U.S. agency securities 7,397 3 (1 ) 7,399 605 6,794 12,402 4 (1 ) 12,405 3,806 8,599 Total $ 17,865 $ 4 $ (1 ) $ 17,868 $ 9,269 $ 8,599 December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,296 $ — $ — $ 3,296 $ 3,296 $ — Level 1: Mutual funds 5,005 — — 5,005 5,005 — U.S. government securities 1,806 — (3 ) 1,803 — 1,803 U.S. agency securities 8,579 1 (4 ) 8,576 425 8,151 15,390 1 (7 ) 15,384 5,430 9,954 Total $ 18,686 $ 1 $ (7 ) $ 18,680 $ 8,726 $ 9,954 The following table sets forth a summary of changes in the fair value of our Level 3 liability stated at fair value for the three months ended March 31, 2015. Three Months Ended March 31, 2015 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Gain on derivative liability included in net loss 117 Settlements (333 ) Expiration of warrants (104 ) Balance March 31, 2015 $ — |
New Accounting Pronouncements | New Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. We are currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements. In February of 2016, FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations. In November 2015, the FASB issued “ Accounting Standards Update No. 2015-17—Income Taxes (Topic 740)”. In April 2015, the FASB issued an ASU entitled “Interest - Imputation of Interest.” In February 2015, the FASB issued an ASU entitled “Consolidation.” In January 2015, the FASB issued an ASU entitled “Income Statement Extraordinary and Unusual Items.” In August 2014, the FASB issued Accounting Standards Update 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 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 Accoun16
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of Deferred Revenue | Activity under the August 2013 Contract Settlement was as follows: Deferred Revenue, December 31, 2015 $ 3,000 Less: Amount amortized as revenue 375 Deferred Revenue, March 31, 2016 $ 2,625 |
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 March 31, 2016 and December 31, 2015. March 31, 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 5,463 $ — $ — $ 5,463 $ 5,463 $ — Level 1: Mutual funds 3,201 — — 3,201 3,201 — U.S. government securities 1,804 1 — 1,805 — 1,805 U.S. agency securities 7,397 3 (1 ) 7,399 605 6,794 12,402 4 (1 ) 12,405 3,806 8,599 Total $ 17,865 $ 4 $ (1 ) $ 17,868 $ 9,269 $ 8,599 December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,296 $ — $ — $ 3,296 $ 3,296 $ — Level 1: Mutual funds 5,005 — — 5,005 5,005 — U.S. government securities 1,806 — (3 ) 1,803 — 1,803 U.S. agency securities 8,579 1 (4 ) 8,576 425 8,151 15,390 1 (7 ) 15,384 5,430 9,954 Total $ 18,686 $ 1 $ (7 ) $ 18,680 $ 8,726 $ 9,954 |
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 three months ended March 31, 2015. Three Months Ended March 31, 2015 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance December 31, 2014 $ 320 Gain on derivative liability included in net loss 117 Settlements (333 ) Expiration of warrants (104 ) Balance March 31, 2015 $ — |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Information about Warrants Outstanding | Information about warrants outstanding during the three months ended March 31, 2016 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2015 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at March 31, 2016 Expiration Date 25,000 $ 7.00 25,000 — — — 25,000 April 2020 25,000 — — — 25,000 |
Business Description and Basi18
Business Description and Basis of Presentation (Details) | Mar. 31, 2016Patent |
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 | 46 |
Patents [Member] | Foreign [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Number of patents owned | 69 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016USD ($)Institution | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Activity under August 2013 contract settlement [Roll Forward] | ||||
Deferred Revenue, beginning balance | $ 3,000 | |||
Less: Amount amortized as revenue | 375 | $ 375 | ||
Deferred Revenue, ending balance | $ 2,625 | |||
Concentration of Credit Risk and Others Risks and Uncertainties [Abstract] | ||||
Number of financial institutions holding company's cash | Institution | 2 | |||
Prepaid Expenses [Abstract] | ||||
Prepayment of facility lease for corporate promotional and marketing purposes | $ 4,000 | |||
Lease term | 10 years | |||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | $ 9,269 | 13,290 | $ 8,726 | $ 18,658 |
Adjusted Cost | 12,402 | 15,390 | ||
Unrealized Gains | 4 | 1 | ||
Unrealized Losses | (1) | (7) | ||
Fair Value | 12,405 | 15,384 | ||
Adjusted Cost | 17,865 | 18,686 | ||
Fair Value | 17,868 | 18,680 | ||
Investments Available for Sale | 12,405 | 15,384 | ||
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 | 5,463 | 3,296 | ||
Fair Value | 5,463 | 3,296 | ||
Cash and Cash Equivalents | 5,463 | 3,296 | ||
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 | 3,201 | 5,005 | ||
Unrealized Gains | 0 | 0 | ||
Unrealized Losses | 0 | 0 | ||
Fair Value | 3,201 | 5,005 | ||
Investments Available for Sale | 3,201 | 5,005 | ||
U.S. Government 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 | 1,804 | 1,806 | ||
Unrealized Gains | 1 | 0 | ||
Unrealized Losses | 0 | (3) | ||
Fair Value | 1,805 | 1,803 | ||
Investments Available for Sale | 1,805 | 1,803 | ||
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 | 7,397 | 8,579 | ||
Unrealized Gains | 3 | 1 | ||
Unrealized Losses | (1) | (4) | ||
Fair Value | 7,399 | 8,576 | ||
Investments Available for Sale | 7,399 | 8,576 | ||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Member] | ||||
Changes in fair value of Level 3 liabilities [Roll Forward] | ||||
Beginning balance | 320 | |||
Gain on derivative liability included in net loss | 117 | |||
Settlements | (333) | |||
Expiration of warrants | (104) | |||
Ending balance | $ 0 | |||
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 | 9,269 | 8,726 | ||
Fair Value | 8,599 | 9,954 | ||
Cash and Cash Equivalents | 9,269 | 8,726 | ||
Investments Available for Sale | 8,599 | 9,954 | ||
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 | 5,463 | 3,296 | ||
Cash and Cash Equivalents | 5,463 | 3,296 | ||
Recurring [Member] | 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 | 3,806 | 5,430 | ||
Fair Value | 8,599 | 9,954 | ||
Cash and Cash Equivalents | 3,806 | 5,430 | ||
Investments Available for Sale | 8,599 | 9,954 | ||
Recurring [Member] | 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 | 3,201 | 5,005 | ||
Fair Value | 0 | 0 | ||
Cash and Cash Equivalents | 3,201 | 5,005 | ||
Investments Available for Sale | 0 | 0 | ||
Recurring [Member] | Level 1 [Member] | U.S. Government 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 | 0 | ||
Fair Value | 1,805 | 1,803 | ||
Cash and Cash Equivalents | 0 | 0 | ||
Investments Available for Sale | 1,805 | 1,803 | ||
Recurring [Member] | 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 | 605 | 425 | ||
Fair Value | 6,794 | 8,151 | ||
Cash and Cash Equivalents | 605 | 425 | ||
Investments Available for Sale | $ 6,794 | $ 8,151 | ||
August 2013 Contract [Member] | ||||
Deferred Revenue [Abstract] | ||||
Term of contract | 4 years | |||
Contract amount | $ 10,000 | |||
Non-refundable cash payment received to date | 7,500 | |||
Outstanding contract receivable | $ 2,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Taxes [Abstract] | |||
Income tax expense | $ 7 | $ 2 | |
Net change in valuation allowance | 3,342 | $ 2,214 | |
Valuation allowance carried against net deferred tax assets | 33,000 | $ 30,000 | |
Federal [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 59,000 | ||
Operating loss carryforwards, expiration dates | Dec. 31, 2027 | ||
State [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 37,000 | ||
Operating loss carryforwards, expiration dates | Dec. 31, 2016 |
Commitments And Related Party21
Commitments And Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Offices [Member] | ||
Operating Leased Assets [Line Items] | ||
Lease expiration date | Oct. 31, 2017 | |
K2 Investment Fund LLC [Member] | Aircraft [Member] | ||
Operating Leased Assets [Line Items] | ||
Lease expiration date | Jan. 31, 2017 | |
Rental fees incurred for use of plane | $ 132 | $ 82 |
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 ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 1,234 | $ 1,692 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 0 | |
Unrecognized stock-based compensation expense expected to be recognized | $ 5,145 | |
Weighted average vesting amortization period | 2 years 10 months 6 days | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 0 | |
Unrecognized stock-based compensation expense expected to be recognized | $ 2,851 | |
Weighted average vesting amortization period | 2 years 25 days | |
2013 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance (in shares) | 14,124,469 | |
Shares available for grant (in shares) | 1,069,552 |
Equity, Common Stock (Details)
Equity, Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 7 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Aug. 21, 2015 | Aug. 20, 2015 | |
Common Stock [Abstract] | |||||
Aggregate proceeds from sales of common stock | $ 6,795 | $ 0 | |||
Universal Shelf Registration Statement [Member] | |||||
Common Stock [Abstract] | |||||
Securities offered for sale, aggregate value | $ 100,000 | ||||
ATM Agreement [Member] | |||||
Common Stock [Abstract] | |||||
Securities offered for sale, aggregate value | $ 35,000 | ||||
Number of shares of common stock sold (in shares) | 1,640,663 | 2,475,719 | |||
Average sales price per common share (in dollars per share) | $ 4.27 | $ 4.19 | |||
Aggregate proceeds from sales of common stock | $ 6,795 | $ 10,383 | |||
Sales commissions, fees and other costs associated with issuance of common stock | $ 210 | $ 311 |
Equity, Warrants (Details)
Equity, Warrants (Details) - Warrants [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Information about warrants outstanding [Abstract] | ||
Exercisable, beginning of period (in shares) | 25,000 | |
Became exercisable (in shares) | 0 | |
Exercised (in shares) | 0 | |
Terminated/cancelled/expired (in shares) | 0 | |
Exercisable, end of period (in shares) | 25,000 | 25,000 |
Advisor Warrants [Member] | ||
Warrants [Abstract] | ||
Number of warrants issued (in shares) | 25,000 | |
Price of warrants issued (in dollars per share) | $ 7 | |
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 | 0.00% | |
Expected stock price volatility | 87.50% | |
Risk-free interest rate | 1.33% | |
Expected term | 5 years | |
Information about warrants outstanding [Abstract] | ||
Original number of warrants issued (in shares) | 25,000 | |
Exercise price per common share (in dollars per share) | $ 7 | |
Exercisable, beginning of period (in shares) | 25,000 | |
Became exercisable (in shares) | 0 | |
Exercised (in shares) | 0 | |
Terminated/cancelled/expired (in shares) | 0 | |
Exercisable, end of period (in shares) | 25,000 | 25,000 |
Expiration date | April 30, 2020 |
Litigation (Details)
Litigation (Details) - Positive Outcome of Litigation [Member] $ in Thousands | Feb. 04, 2016USD ($) | Feb. 26, 2013USD ($) | Nov. 06, 2012USD ($)Patent | Mar. 31, 2016Lawsuit |
Gain Contingencies [Line Items] | ||||
Number of intellectual property infringement lawsuits pending | Lawsuit | 1 | |||
Amount of damages awarded in patent infringement case | $ 625,600 | $ 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 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | May. 16, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 |
Subsequent Event [Line Items] | ||||
Aggregate proceeds from sales of common stock | $ 6,795 | $ 0 | ||
Stock Options [Member] | ||||
Subsequent Event [Line Items] | ||||
Options issued (in shares) | 0 | |||
ATM Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares of common stock sold (in shares) | 1,640,663 | 2,475,719 | ||
Aggregate proceeds from sales of common stock | $ 6,795 | $ 10,383 | ||
Sales commissions, fees and other costs associated with issuance of common stock | $ 210 | $ 311 | ||
Subsequent Event [Member] | ATM Agreement [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of shares of common stock sold (in shares) | 773,713 | |||
Average sales price per common share (in dollars per share) | $ 4.87 | |||
Aggregate proceeds from sales of common stock | $ 3,772 | |||
Sales commissions, fees and other costs associated with issuance of common stock | $ 113 |