Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 11, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Amendment Description | On May 9, 2022, the Company’s board of directors concluded, after discussion with management, that the consolidated financial statements included in the Original Form 10-K should no longer be relied upon because of an error related to accounting for deferred taxes. The error related to the carrying balance of our deferred tax asset that included the fair value of nonqualified stock options (“NSO”) expensed for book purposes but the tax impact of that expense is deferred for income tax purposes. In connection with accounting for NSOs, the Company expenses the fair value of NSOs granted over the vesting period of the NSOs. For income tax purposes, the tax impact of that expense is deferred as part of our deferred tax asset, until the NSO holder converts the NSO to stock, at which time the deferred tax asset is reduced and tax expense is recognized. If an NSO is never exercised, and then expires in accordance with the terms of the contract, any amounts included in our deferred tax asset are written off and income tax expense is recognized. As of December 31, 2021, the Company incorrectly included approximately $3 million in deferred tax assets related to expired NSOs, which should have reduced the income tax benefit when the NSOs expired. The Company has reduced the deferred tax asset in the consolidated balance sheet and the income tax benefit in the consolidated statement of operations by approximately $3 million for the Affected Period; the restatement also resulted in changes to Note 2 – Summary of Significant Accounting Policies, Restatement of Previously Issued Financal Statements, Note 7 – Earnings per share and Note 10 – Income Taxes. | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Transition Report | false | ||
Entity File Number | 001-33852 | ||
Entity Registrant Name | VirnetX Holding Corp | ||
Entity Central Index Key | 0001082324 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 77-0390628 | ||
Entity Address, Address Line One | 308 Dorla Court | ||
Entity Address, Address Line Two | Suite 206 | ||
Entity Address, City or Town | Zephyr Cove | ||
Entity Address, State or Province | NV | ||
Entity Address, Postal Zip Code | 89448 | ||
City Area Code | 775 | ||
Local Phone Number | 548-1785 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | VHC | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 268,027,097 | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 71,232,856 | ||
Auditor Name | Farber Hass Hurley LLP | ||
Auditor Location | Chatsworth, California | ||
Auditor Firm ID | 223 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 142,018 | $ 192,908 |
Investments available for sale | 27,254 | 28,348 |
Accounts receivables | 17 | 8 |
Prepaid income tax | 0 | 2,905 |
Prepaid expenses and other current assets | 203 | 263 |
Total current assets | 169,492 | 224,432 |
Prepaid expenses and other assets | 1,056 | 1,301 |
Property and equipment, net | 18 | 11 |
Deferred tax asset | 15,950 | 9,049 |
Total assets | 186,516 | 234,793 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 338 | 654 |
Accrued payroll and related expenses | 270 | 220 |
Accrued licensing costs | 355 | 9,438 |
Other liabilities, current | 58 | 44 |
Total current liabilities | 1,021 | 10,356 |
Other liabilities | 46 | 0 |
Total liabilities | 1,067 | 10,356 |
Commitments and contingencies (Note 4) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at December 31, 2021 and December 31, 2020, Issued and outstanding: 0 shares at December 31, 2021 and December 31, 2020 | 0 | 0 |
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at December 31, 2021 and December 31, 2020, Issued and outstanding: 71,232,856 shares and 71,058,570 shares, at December 31, 2021 and December 31, 2020, respectively | 7 | 7 |
Additional paid-in capital | 236,445 | 232,457 |
Accumulated deficit | (50,935) | (8,014) |
Accumulated other comprehensive loss | (68) | (13) |
Total stockholders' equity | 185,449 | 224,437 |
Total liabilities and stockholders' equity | $ 186,516 | $ 234,793 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
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) | 71,232,856 | 71,058,570 |
Common stock, shares outstanding (in shares) | 71,232,856 | 71,058,570 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
Revenue | $ 35 | $ 302,636 | $ 85 |
Operating expense: | |||
Licensing costs | (9,083) | 90,101 | 0 |
Research and development | 5,577 | 8,830 | 3,845 |
Selling, general and administrative expenses | 52,715 | 45,812 | 15,905 |
Total operating expense | 49,209 | 144,743 | 19,750 |
(Loss) income from operations | (49,174) | 157,893 | (19,665) |
Gain on settlement | 0 | 41,271 | 0 |
Interest and other income, net | 48 | 108,288 | 92 |
(Loss) income before taxes | (49,126) | 307,452 | (19,573) |
Income tax benefit (provision) | 6,205 | (27,023) | 393 |
Net (loss) income | $ (42,921) | $ 280,429 | $ (19,180) |
Basic (loss) earnings per share (in dollars per share) | $ (0.60) | $ 3.96 | $ (0.28) |
Diluted (loss) earnings per share (in dollars per share) | $ (0.60) | $ 3.92 | $ (0.28) |
Weighted average shares outstanding - basic (in shares) | 71,159,458 | 70,850,311 | 68,564,321 |
Weighted average shares outstanding - diluted (in shares) | 71,159,458 | 71,615,843 | 68,564,321 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract] | |||
Net (loss) income | $ (42,921) | $ 280,429 | $ (19,180) |
Other comprehensive (loss) income, net of tax: | |||
Change in unrealized (loss) gain on investments, net | (51) | 0 | 3 |
Change in foreign currency translation, net | (4) | 1 | (3) |
Total other comprehensive (loss) gain, net of tax | (55) | 1 | 0 |
Comprehensive (loss) income | $ (42,976) | $ 280,430 | $ (19,180) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock and Additional Paid-in Capital [Member] | Accumulated Deficit (Retained Earnings) [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Dec. 31, 2018 | $ 208,324 | $ (198,422) | $ (14) | $ 9,888 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued for cash, net | 10,539 | |||
Common stock issued for options/RSUs, net | 670 | |||
Warrants issued for services | 0 | |||
Stock-based compensation | 3,711 | |||
Net (loss) income | (19,180) | (19,180) | ||
Dividends | 0 | |||
Change in unrealized investment (loss) gain, net | 3 | 3 | ||
Change in foreign currency translation, net | (3) | (3) | ||
Balance at Dec. 31, 2019 | 223,244 | (217,602) | (14) | 5,628 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued for cash, net | 4,488 | |||
Common stock issued for options/RSUs, net | 690 | |||
Warrants issued for services | 104 | |||
Stock-based compensation | 3,938 | |||
Net (loss) income | 280,429 | 280,429 | ||
Dividends | (70,841) | |||
Change in unrealized investment (loss) gain, net | 0 | 0 | ||
Change in foreign currency translation, net | 1 | 1 | ||
Balance at Dec. 31, 2020 | 232,464 | (8,014) | (13) | 224,437 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued for cash, net | 0 | |||
Common stock issued for options/RSUs, net | (196) | |||
Warrants issued for services | 0 | |||
Stock-based compensation | 4,184 | |||
Net (loss) income | (42,921) | (42,921) | ||
Dividends | 0 | |||
Change in unrealized investment (loss) gain, net | (51) | (51) | ||
Change in foreign currency translation, net | (4) | (4) | ||
Balance at Dec. 31, 2021 | $ 236,452 | $ (50,935) | $ (68) | $ 185,449 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract] | |||
Dividends per share (in dollars per share) | $ 0 | $ 1 | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (42,921) | $ 280,429 | $ (19,180) |
Adjustments to reconcile net (loss) income to net cash from operating activities: | |||
Depreciation | 4 | 5 | 7 |
Stock-based compensation | 4,184 | 3,938 | 3,711 |
Amortization of warrants issuance costs | 34 | 69 | 0 |
Deferred income taxes | (6,901) | (9,049) | 0 |
Changes in assets and liabilities: | |||
Prepaid expenses and other current assets | 271 | 419 | 374 |
Accounts payable and accrued liabilities | (316) | (692) | 296 |
Other liabilities | 60 | (193) | 97 |
Accrued payroll and related expenses | 50 | (67) | 10 |
Accrued licensing costs | (9,083) | 9,438 | 0 |
Accounts receivable | (9) | (3) | 1 |
Prepaid income taxes | 2,905 | (2,905) | (396) |
Net cash (used in) provided by operating activities | (51,722) | 281,389 | (15,080) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (11) | 0 | (14) |
Purchase of investments | (26,332) | (33,065) | (5,784) |
Proceeds from sale or maturity of investments | 27,371 | 7,112 | 5,192 |
Net cash provided by (used in) investing activities | 1,028 | (25,953) | (606) |
Cash flows from financing activities: | |||
Proceeds from exercise of options | 0 | 1,046 | 816 |
Proceeds from sale of common stock | 0 | 4,488 | 10,539 |
Dividends paid on common stock | 0 | (70,841) | 0 |
Taxes paid on cashless exercise of restricted stock units | (196) | (356) | (145) |
Net cash (used in) provided by financing activities | (196) | (65,663) | 11,210 |
Net (decrease) increase in cash and cash equivalents | (50,890) | 189,773 | (4,476) |
Cash and cash equivalents, beginning of period | 192,908 | 3,135 | 7,611 |
Cash and cash equivalents, end of period | 142,018 | 192,908 | 3,135 |
Cash paid for income taxes | $ 2 | $ 38,977 | $ 4 |
Formation and Business of the C
Formation and Business of the Company | 12 Months Ended |
Dec. 31, 2021 | |
Formation and Business of the Company [Abstract] | |
Formation and Business of the Company | Note 1 − Formation and Business of the Company VirnetX Holding Corporation, which we refer to as “we”, “us”, “our”, “the Company” or “VirnetX”, is engaged in the business of commercializing a portfolio of patents. We derive revenue from selling our software products and licensing our technology, including GABRIEL Connection Technology™, to various original equipment manufacturers (“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. During 2020, we had revenues from settlement of a patent infringement dispute whereby we received consideration for past sales of licensee that utilized our technology, where there was no prior patent license agreement. Our portfolio of intellectual property is the foundation of our business model. We currently own approximately 205 total patents and pending applications, including 72 U.S. patents/patent applications and 133 foreign patents/validations/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. The subject matter of all our U.S and foreign patents and pending applications relates generally to securing communications over the Internet and such covers all our technology and other products. Some of our issued U.S. and foreign patents expire at various times during the period from 2021 to 2034. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 − Summary of Significant Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The critical accounting policies we employ in the preparation of our consolidated financial statements are those which involve impairment of long-lived assets, income taxes, fair value of financial instruments and stock-based compensation. Restatement of Previously issued Financial Statements On March 16, 2022, the Company filed with the SEC the Original Form 10-K, together with all exhibits thereto, which included consolidated financial statements as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019. On May 9, 2022, Company management concluded the December 31, 2021 consolidated financial statements included in the Original Form 10-K should no longer be relied upon because of an error related to accounting for deferred taxes. The error was deemed material to the consolidated financial statements for the year ended December 31, 2021 and resulted in a restatement more fully described below. The error related to the carrying balance of our deferred taxes that included the fair value of nonqualified stock options (“NSO”) expensed for book purposes but the tax impact of that expense is deferred for income tax purposes. In connection with accounting for NSOs, the Company expenses the fair value of NSOs granted over the vesting period of the NSOs. For income tax purposes, the tax impact of that expense is deferred as part of our deferred tax asset, until the NSO holder converts the NSO to stock, at which time the deferred tax asset is reduced and income tax expense is recognized. If an NSO is never exercised, and then expires in accordance with the terms of the contract, any amounts included in our deferred tax asset are written off and income tax expense is recognized. As of December 31, 2021, the Company incorrectly included $3,328 in deferred tax assets related to expired NSOs as of the end of the Affected Period, which should have reduced our income tax benefit when the NSOs expired. The Company has restated the consolidated financial statements as of and for the year ended December 31, 2021 from amounts previously reported on the Original Form 10-K to reduce our deferred tax asset in our consolidated balance sheet and our income tax benefit in our consolidated statement of operations by $3,328; the restatement also resulted in changes to Note 2 - Summary of Significant Accounting Policies, Restatement of Previously Issued Financial Statements The following tables present the impact of the restatement adjustment on the previously issued consolidated financial statements and footnotes as of and for the year ended December 31, 2021: As of and for the year ended December 31, 2021 As Previously Reported Restatement Adjustment As Restated Consolidated Balance Sheet Deferred tax asset $ 19,278 $ (3,328 ) $ 15,950 Total assets 189,844 (3,328 ) 186,516 Accumulated deficit (47,607 ) (3,328 ) (50,935 ) Total stockholders’ equity 188,777 (3,328 ) 185,449 Total liabilities and stockholders’ equity 189,844 (3,328 ) 186,516 Consolidated Statement of Operations Income tax benefit $ 9,533 $ (3,328 ) $ 6,205 Net loss (39,593 ) (3,328 ) (42,921 ) Basic loss per share (0.56 ) (0.04 ) (0.60 ) Diluted loss per share (0.56 ) (0.04 ) (0.60 ) Consolidated Statement of Comprehensive Loss Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Comprehensive loss (39,648 ) (3,328 ) (42,976 ) Consolidated Statement of Stockholders’ Equity Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Ending balance, accumulated deficit (47,607 ) (3,328 ) (50,935 ) Total liabilities and stockholders’ equity 188,777 (3,328 ) 185,449 Consolidated Statement of Cash Flows Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Deferred income taxes (10,229 ) 3,328 (6,901 ) Note 7 - Earnings per share Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Basic loss per share (0.56 ) (0.04 ) (0.60 ) Diluted loss per share (0.56 ) (0.04 ) (0.60 ) Note 10 - Income Taxes, income tax provision Deferred income tax benefit, Federal $ (10,293 ) $ (3,268 ) $ (7,025 ) Deferred income tax benefit, State 64 60 124 Total deferred income tax benefit (10,229 ) (3,208 ) (6,901 ) Total income tax benefit (9,533 ) 3,328 (6,205 ) Note 10 - Income Taxes, reconciliation of income tax rate State taxes, net of federal benefit (0.19 )% (0.12 )% (0.31 )% Stock based compensation (0.02 )% (6.66 )% (6.68 )% Effective income tax rate 19.41 % (6.78 )% 12.63 % Note 10 - Income Taxes, deferred tax assets Stock based compensation $ 9,615 $ (3,328 ) $ 6,287 Total deferred tax assets 19,284 (3,328 ) 15,956 Deferred tax assets after valuation allowance 19,284 (3,328 ) 15,956 Net deferred tax assets 19,278 (3,328 ) 15,950 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 the accounting estimates are reasonably likely to occur from period to period. 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, 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. We have reviewed our critical accounting policies and estimates with the Audit Committee of our Board of Directors. 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. Leases The Company determines if an arrangement is a lease at inception in accordance with Accounting Standards Codification (“ASC”) Topic 842. Operating lease right-of-use (“ROU”) assets are included in Prepaid expenses, and other assets on the Condensed Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Revenue Recognition The Company derives revenue from licensing and royalty fees from contracts with customers which often span several years. We account for this revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our revenue arrangements may consist of multiple-element arrangements, with revenue for each unit of accounting recognized as the product or service is delivered to the customer. With the Certain contracts may require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the servicing contract. The Company actively monitors and enforces its intellectual property (“IP”) rights, including seeking appropriate compensation from third parties that utilize the Company’s IP without a license. As a result, the Company may, from time to time, receive payments as part of a settlement or compensation for a patent infringement dispute. Proceeds received are allocated to each element identified in the settlement or compensation, based on the fair value of each element. Generally, settlements and compensation may include the following elements: the value of a license or royalty agreement, cost reimbursement, damages, and interest. Elements identified related to licensing and royalty are recognized as revenue. Elements identified as reimbursed costs are generally recorded as a reduction to the reported expenses. Elements identified as damages or interest are generally recorded in other income in the condensed consolidated statement of operations. During the year ended December 31, 2020, the Company collected a lump sum payment of $454,034 from Apple, Inc., because of a favorable court decision relating to a patent infringement case. The court decision identified the following as the basis of the award: $302,428 for past royalties, $41,271 in damages for willful infringement, $108,221 for interest, and $2,114 in reimbursement for court costs and attorney’s fees. Elements of the payment were recognized in the Company’s condensed consolidated statement of operations as follows: Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended: December 31, 2020 Revenue (royalties) $ 302,428 Operating expenses: selling, general and administrative (reimbursed litigation costs) 2,114 Other income: gain (willful infringement) 41,271 Other income: interest income (pre- and post-judgment interest) 108,221 Total cash received $ 454,034 Licensing Costs Included in operating expenses are licensing costs we incurred in conjunction with the proceeds received from Apple Inc., pursuant to a favorable court decision relating to a patent infringement case. Contingent Gains ASC Topic 450-30-25, Contingent Gains, prohibits recognition of contingent gains until realized. Accordingly, we do not record contingent gains ahead of such realization. Management generally considers any such gains as realized only upon the collection of cash. Cash and Cash Equivalents We consider all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments. Investments Investments are classified as available-for-sale and are recorded at fair market value. Unrealized gains and losses are reported as other comprehensive income. Realized gains and losses are recorded in income in the period they are realized using specific identification of each security’s cost basis. We invest our excess cash primarily in highly liquid debt instruments including corporate, government and federal agency securities, with contractual maturities less than two years. By policy, we limit the amount of credit exposure to any one issuer. Property and Equipment Property and equipment are stated at historical cost, less accumulated depreciation, and amortization. Depreciation and amortization are computed using the accelerated and straight-line methods over the estimated useful lives of the assets, which range from five Concentration of Credit Risk and Other Risks and Uncertainties Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. In 2021, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. Fair Value The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. Intangible Assets We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. Impairment of Long-Lived Assets We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. Research and Development Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. Income Taxes We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing our deferred tax assets, we consider whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. We account for our uncertain tax positions in accordance with U.S. GAAP, which utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. Stock-Based Compensation We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs on a straight-line basis over the requisite service period of the award, which is generally a vesting term of 4 years. We recognize forfeitures, if any, when they occur. In addition, we record stock-based compensation expense for awards granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued, as they vest, over the performance period (See Note 6 - Stock-Based Compensation). Earnings per Share Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. New Accounting Pronouncements In |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 3 − Property and Equipment Our major classes of property and equipment were as follows: December 31 2021 2020 Office furniture $ 79 $ 79 Computer equipment 92 81 Total 171 160 Less accumulated depreciation (153 ) (149 ) Total property and equipment, net $ 18 $ 11 Depreciation expense for 2021, 2020 and 2019 was $4, $5, and $7 respectively. |
Commitments, Contingencies and
Commitments, Contingencies and Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Commitments, Contingencies and Related Party Transactions [Abstract] | |
Commitments, Contingencies and Related Party Transactions | Note 4 − Commitments, Contingencies and Related Party Transactions We lease our offices under an operating lease with a third party expiring in October 2023 We entered into a service agreement for the use of an aircraft from K2 Investment Fund LLC (“LLC”) for business travel for employees of the Company. We incurred approximately $791, $324, and $1,790 in rental fees and reimbursements to the LLC during the years 2021, 2020 and 2019, respectively. We pay for the Company’s usage of the aircraft and have no rights to purchase. Our Chief Executive Officer and Chief Administrative Officer are the managing partners of the LLC and control the equity interests of the LLC. We entered into a 12-month non-exclusive agreement with the LLC for use of the plane at a 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 30 days’ notice. The agreement renews on an annual basis unless terminated by either party. Neither party has exercised their termination rights. |
Stock Plan
Stock Plan | 12 Months Ended |
Dec. 31, 2021 | |
Stock Plan [Abstract] | |
Stock Plan | Note 5 − Stock Plan We have an equity incentive plan for employees and others called the VirnetX Holding Corporation 2013 Equity Incentive Plan (the “2013 Plan”), which has been approved by our stockholders. To the extent that any award should expire, become un-exercisable or is otherwise forfeited, the shares subject to such award will again become available for issuance under the 2013 Plan. The 2013 Plan provides for the granting of stock options and restricted stock units purchase rights (“RSUs”) to our employees and consultants. Stock options granted under the 2013 Plan may be incentive stock options or nonqualified stock options. Incentive stock options (“ISOs”) may only be granted to our employees (including officers and directors). Nonqualified stock options (“NSOs”) and stock purchase rights may be granted to our employees and consultants. The 2013 Plan expires in 2023. In April 2021, the Board approved an amendment and restatement of the 2013 Plan to, among other things, increase the shares reserved under the Plan by 2,500,000 shares (the “Plan Amendment”). Our stockholders approved the Plan Amendment at the 2021 Annual Meeting of the Stockholders held on June 3, 2021. The 2013 Plan generally provides for the granting of shares of our common stock, including stock options and RSUs. Options may be granted under the 2013 Plan with an exercise price determined by our Board of Directors, or a duly appointed committee thereof, provided, however, that the exercise price of an option granted to any employee shall be not less than 100% of the fair market value at the date of grant in the case of ISOs or 85% of the fair market value at the date of grant in the case of an NSO. The exercise price of an ISO or NSO granted to one of our Named Executive Officers shall not be less than 100% fair market value of the shares at the date of grant and the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the fair market value of the shares on the date of grant. Stock options granted under the 2013 Plan typically vest over four years and have a 10-year term. All RSUs are considered to be granted at the fair value of our stock on the date of grant because they have no exercise price. RSUs typically vest over four years. As of December 31, 2021, there were 2,240,296 shares available for grant under the 2013 Plan. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 6 − Stock-Based Compensation The following tables summarize information about stock options and RSUs outstanding at December 31, 2021: Options Outstanding Options Vested and Exercisable Range of Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $ 2.88 6.95 5,533,812 6.66 $ 4.50 4,050,084 5.82 $ 4.34 $ 14.52 35.25 863,625 1.31 $ 22.95 863,625 1.32 $ 22.95 6,397,437 5.94 $ 6.99 4,913,709 5.03 $ 7.61 The following tables summarize activity under the Plan for the indicated periods: Options Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2018 5,998,837 $ 7.72 — $ — Options granted 345,000 6.06 — — Options exercised (663,816 ) 1.23 — — Options cancelled (50,000 ) 4.95 — — Outstanding at December 31, 2019 5,630,021 $ 8.49 — $ — Options granted 747,500 6.07 — — Options exercised (262,031 ) 3.99 — — Options cancelled (302,969 ) 5.30 — — Outstanding at December 31, 2020 5,812,521 $ 8.55 — $ — Options granted 999,500 4.43 — — Options exercised — — — — Options cancelled (414,584 ) 22.54 — — Outstanding at December 31, 2021 6,397,437 $ 6.99 5.94 $ 6 Options exercisable at December 31, 2021 4,913,709 $ 7.61 5.03 $ 6 RSUs Number of RSUs Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2018 504,994 $ 3.83 $ — RSUs granted 229,996 6.06 — RSUs vested (207,334 ) 4.07 — RSUs cancelled (29,167 ) 4.65 — Outstanding at December 31, 2019 498,489 $ 4.71 $ — RSUs granted 218,329 6.89 — RSUs vested (212,495 ) 4.63 — RSUs cancelled — — — Outstanding at December 31, 2020 504,323 $ 5.69 $ — RSUs granted 236,661 4.61 — RSUs vested (215,165 ) 5.23 — RSUs cancelled (16,664 ) 5.45 — Outstanding at December 31, 2021 509,155 $ 5.38 $ — Intrinsic value is calculated as the difference between the per-share market price of our common stock on the last trading day of 2021, which was $2.60 and the exercise price of the options. For options exercised, the intrinsic value is the difference between market price and the exercise price on the date of exercise. In 2021, no options were exercised. In 2020 and 2019, we received cash proceeds of $1,046 and $816 from stock options exercised, respectively. The total intrinsic value of options exercised was $151 and $2,473 in 2020 and 2019, respectively. Stock-based compensation expense is included in operating expense for each period as follows: Stock-Based Compensation by Type of Award Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Stock options $ 3,067 $ 2,872 $ 2,756 RSUs 1,117 1,066 955 Total stock-based compensation expense $ 4,184 $ 3,938 $ 3,711 As of December 31, 2021, there was $5,403 of unrecognized stock-based compensation expense related to unvested stock options and $2,098 of unrecognized stock-based compensation expense related to unvested RSUs. These costs are expected to be recognized over a weighted-average period of 2.86 and 2.37 years, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Expected stock price volatility 90.58 % 93.45 % 92.34 % Risk-free interest rate 1.06 % 0.63 % 2.09 % Expected life term 6.22 years 6.21 years 6.14 years Expected dividends 0 % 0 % 0 % Based on the Black-Scholes option pricing model, the weighted average estimated fair value of employee stock options granted was $3.32, $4.62 and $4.63 per share during 2021, 2020 and 2019, respectively. The expected life was determined using the simplified method outlined in ASC 718, “ Compensation - Stock Compensation |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 7 − Earnings Per Share Basic earnings per share are based on the weighted average number of shares outstanding for a period. Diluted earnings per share are based upon the weighted average number of shares and potentially dilutive common shares outstanding. Potential common shares outstanding principally include stock options and RSUs under our stock plan and warrants. During 2021 and 2019, we incurred losses; therefore, the effect of any common stock equivalent would be anti-dilutive during the years. The table below sets forth the basic and diluted loss per share calculations: As restated Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Net (loss) income $ (42,921 ) $ 280,429 $ (19,180 ) Basic weighted average number of shares outstanding 71,159 70,850 68,564 Effect of dilutive securities — 766 — Diluted weighted average number of shares outstanding 71,159 71,616 68,564 Basic (loss) earnings per share $ (0.60 ) $ 3.96 $ (0.28 ) Diluted (loss) earnings per share $ (0.60 ) $ 3.92 $ (0.28 ) |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2021 | |
Common Stock [Abstract] | |
Common Stock | Note 8 − Common Stock Each share of common stock has the right to one vote . The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. Our restated articles of incorporation authorize us to issue up to shares of $ par value common stock. On July 30, 2018 we filed a $100,000 universal shelf registration statement on SEC Form S-3. This replacement registration statement was declared effective by the SEC on August 16, 2018. We also entered a new ATM with Cowen on August 31, 2018, under which we could offer and sell shares of our common stock having an aggregate value of up to $50,000. We use the ATM proceeds for development and marketing of , and general corporate purposes, which may include working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies, or businesses. As of August 16, 2021, the universal shelf registration expired. We sold zero shares of common stock under the ATM program during 2021. In 2020, we sold 1,049,382 shares of common stock under the ATM program. The average sales price per common share sold during the year ended December 31, 2020 was $4.41 and the aggregate proceeds from the sales totaled $4,627 during the period. Sales commissions, fees and other costs associated with the ATM transactions totaled $139 for 2020. Dividends On May 8, 2020, we declared a one-time cash dividend to shareholders of record as of the close of business on May 18, 2020 of $1 per share of common stock, payable on May 26, 2020. The timing and amounts of future dividends, if any, will depend on market conditions, corporate business and financial considerations and regulatory requirements. Warrants In 2020, we issued warrants for the purchase of 25,000 shares of common stock at an exercise price of $5.75 per share, exercisable on the date of grant expiring in April 2025 Warrants Issued Exercise Price Outstanding and Exercisable December 31, 2020 Issued Exercised Terminated / Cancelled Outstanding and Exercisable December 31, 2021 Expiration Date 25,000 $5.75 25,000 — — — 25,000 April 30, 2025 In April 2020, 25,000 warrants with an exercise price of $7.00 per share expired. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2021 | |
Employee Benefit Plan [Abstract] | |
Employee Benefit Plan | Note 9 − Employee Benefit Plan We sponsor a defined contribution 401k plan covering substantially all our employees. Our matching contribution to the plan was approximately $145, $112, and $101 in 2021, 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes [Abstract] | |
Income Taxes | Note 10 − Income Taxes The income tax provision (benefit) is comprised of the following: As restated Year Ended Year Ended Year Ended Current: Federal $ 661 $ 35,122 $ — State 35 950 (393 ) Foreign — — — 696 36,072 (393 ) Deferred: Federal (7,025 ) (8,816 ) — State 124 (233 ) — (6,901 ) (9,049 ) — Total income tax (benefit) provision $ (6,205 ) $ 27,023 $ (393 ) A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: As restated Year Ended Year Ended Year Ended United States federal statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit (0.31 )% 0.17 % 1.99 % Valuation allowance — (12.22 )% (21.96 )% Stock based compensation (6.68 )% (0.01 )% — R&D Credit 0.19 % (0.21 )% 1.34 % Other (1.57 )% 0.06 % (0.38 )% Effective income tax rate 12.63 % 8.79 % 1.99 % The Company’s effective tax rate for 2021 was substantially lower than the statutory Federal income tax rate primarily due to stock-based compensation and expiring stock options requiring us to reduce our deferred tax asset. Deferred tax assets (liabilities) consist of the following: As restated As of As of Deferred tax assets: Reserves and accruals $ 58 $ 48 Research and development credits and other credits 92 13 Net operating loss carry forward 9,519 598 Stock based compensation 6,287 8,998 Other — 3 Total deferred tax assets $ 15,956 $ 9,660 Valuation allowance — (611 ) Deferred tax assets after valuation allowance 15,956 9,049 Total deferred tax liability – depreciation (6 ) — Net deferred tax assets $ 15,950 $ 9,049 In 2021, 2020 and 2019, we had pre-tax losses of $49,126, pre-tax income of $307,452, and pre-tax losses of $19,573, respectively. At December 31, 2021, we had federal and state net operating loss carryforwards of approximately $45,326 and $107,989, respectively. However, none of the state net operating loss carryover is apportioned to a deferred tax asset, because currently we do not have operations in the state where losses accumulated. The state net operating loss carryforward will be expiring beginning in 2029 A valuation allowance is provided for deferred tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized; management determined no valuation allowance is necessary for 2021. We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. At December 31, 2021, we have no uncertain tax positions. 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 NOLs and tax credits generated in these years were utilized in 2020. The statute of limitation for these years shall expire three years after the date of filing 2020 income tax returns. Our policy is to recognize interest and penalties, if any, accrued on any unrecognized tax benefits, as a component of income tax expense. We had no interest or penalties accrued for 2021 and 2020. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement | Note 11 − Fair Value Measurement 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. agency and treasury securities: The following table shows the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our financial assets as of December 31, 2021 and 2020 (in thousands): December 31, 2021 Adjusted Unrealized Unrealized Fair Cash Investments Cash $ 35,428 $ — $ — $ 35,428 $ 35,428 $ — Level 1: Mutual funds 106,590 — — 106,590 106,590 — U.S. agency securities 16,658 — (26 ) 16,632 — 16,632 U.S. treasury securities 10,646 — (24 ) 10,622 — 10,622 133,894 — (50 ) 133,844 106,590 27,254 Total $ 169,322 $ — $ (50 ) $ 169,272 $ 142,018 $ 27,254 December 31, 2020 Adjusted Unrealized Unrealized Fair Cash Investments Cash $ 121,785 $ — $ — $ 121,785 $ 121,785 $ — Level 1: Mutual funds 70,996 — — 70,996 70,996 — U.S. agency securities 13,767 2 — 13,769 127 13,642 U.S. treasury securities 14,707 — (1 ) 14,706 — 14,706 99,470 2 (1 ) 99,471 71,123 28,348 Total $ 221,255 $ 2 $ (1 ) $ 221,256 $ 192,908 $ 28,348 The maturities of our investments generally range from within one |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2021 | |
Litigation [Abstract] | |
Litigation | Note 12 – Litigation (all dollar amounts in this section are expressed in thousands except for rates per device) We have several intellectual property infringement lawsuits pending in the United States Court of Appeals for the Federal Circuit (“USCAFC”). VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) (“Apple II”) This case began on November 6, 2012, when we had filed a complaint against Apple in United States District Court (“USDC”) in which we alleged that Apple infringed on certain of our patents, (U.S. Patent Nos. 6,502,135, 7,418,504, 7,921,211 and 7,490,151). We sought 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. Post-trial motions hearing was held on July 18, 2018. On August 31, 2018, the USDC entered a Final Judgment and issued its Memorandum Opinion and Order regarding post-trial motions, affirming the jury’s verdict of $502,600 and granting VirnetX motions for supplemental damages, a sunset royalty, and the royalty rate of $1.20 per infringing iPhone, iPad and Mac products, pre-judgment and post-judgment interest and costs. Apple filed a notice of appeal with the USCAFC in the Apple II case. On October 9, 2018, USCAFC docketed the appeal as Case No. 19-1050 - VirnetX Inc. v. Apple Inc. On January 24, 2019 Apple filed its opening brief. We filed our response brief on March 1, 2019. Apple filed its reply brief on April 5, 2019. The oral arguments were heard on October 4, 2019. On November 22, 2019, the USCAFC issued an opinion affirming the district court’s findings that Apple is precluded from making certain invalidity arguments and that Apple infringed the ’135 and ’151 patents; reversing the USDC’s finding that Apple infringed the ’504 and ’211 patents; and remanding the case for proceedings on damages. Apple sought panel and en banc rehearing, which the USCAFC denied on February 10, 2020. On February 22, 2020, the USDC issued a scheduling order for the parties to brief the court about the need for a new trial for recalculating the damages. We filed our motion for entry of judgment on February 28, 2020. The arguments on this matter were heard on April 14, 2020. In its order, unsealed on May 1, 2020, the USDC denied VirnetX’s motion for entry of a new judgment based on the prior jury verdict and ordered a new jury trial on damages. On August 10, 2020, the USDC granted Apple’s motion for continuance and reset the date to October 26, 2020. On October 30, 2020, a jury returned a $502,800 verdict in favor of VirnetX based on Apple’s infringement of two network security patents: VirnetX US Patents No. 6,502,135 and No. 7,490,151. The jury verdict called for damages of $0.84 per accused device since the 2013 launch of Apple’s iOS 7 operating system and represents 598,629,580 infringing units from US sales only. On January 15, 2021, the district court denied Apple’s motion for judgment as a matter of law, and on February 4, 2021, Apple filed a notice of appeal to the USCAFC. On February 22, 2021, USCAFC docketed the appeal as Case No. 19-1672. Apple’s opening brief was filed on June 2, 2021. VirnetX filed its responsive brief on July 26, 2021. Apple filed its reply brief on September 13, 2021. The briefing is complete, and we are awaiting the court order with the schedule for oral arguments in this matter. VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., Apple Inc. (USCAFC Case 20-2271) and VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., Apple Inc., and Black Swamp, LLC (USCAFC Case 20-2272) On September 15, 2020, we filed with the USCAFC an appeal of the invalidity findings by the Patent Trial and Appeal Board (“PTAB”) in inter-partes review proceedings IPR2015-01046 and IPR2016-00062 involving our U.S. Patent No. 6,502,135, and an appeal of the invalidity findings by the PTAB in inter partes review proceedings IPR2015-1047, IPR2016- 00063, and IPR2016-00167 involving our U.S. Patent No. 7,490,151. On September 25, 2020, the USCAFC issued an order consolidating the two appeals. On December 15, 2020, we filed a motion to vacate the PTAB decisions below and to remand these appeals to the PTAB. On March 16, 2021, the USCAFC denied the motion without prejudice to us raising the challenges made in the motion in our opening brief. Our opening brief was filed on June 7, 2021. On June 23, 2021, the USCAFC entered an order directing us (and parties in other appeals that raised Appointments Clause challenges) to file a brief explaining how they believe their cases should proceed in light of the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). On July 7, 2021, we filed a brief in response to the court’s order. Other parties, including the U.S. Patent and Trademark Office (“PTO”) filed their responses on July 21, 2021. On August 19, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the USPTO. The USCAFC retained jurisdiction over the appeals in the meantime. On September 20, 2021, we filed our requests for Director rehearing with the PTO. On October 29, 2021, our requests for Director rehearing were denied. We subsequently filed an amended opening brief to the USCAFC on December 10, 2021, the other parties filed response briefs on February 2, 2022, and we filed a reply brief on February 22, 2022. All the briefings have been completed. We are awaiting the court order with the schedule for oral arguments in this matter. VirnetX Inc. v. Hirshfeld (USCAFC Case 17-2593, -2594) On September 22, 2017, we filed with the USCAFC an appeal of the invalidity findings by the PTAB in inter-partes review proceeding IPR2016-00693 involving our U.S. Patent No. 7,418,504, and an appeal of the invalidity findings by the PTAB in inter partes review proceeding IPR2016-00957 involving our U.S. Patent No. 7,921,211. On September 16, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the PTO. The USCAFC retained jurisdiction over the appeals in the meantime. On October 18, 2021, we filed our requests for Director rehearing with the PTO. On January 7, 2022, our requests for Director rehearing were denied. On January 21, 2022, we informed the USCAFC about the denial of Director rehearing and requested that the court dismiss the appeal involving IPR2016-00957 as moot and vacate the PTAB’s underlying decision. On February 15, 2022, the USCAFC directed the PTO to respond to our request. The PTO’s response is due on March 8, 2022. VirnetX Inc. v. Cisco Systems, Inc. (USCAFC Case 19-1671) On March 18, 2019, we filed with the USCAFC an appeal of the invalidity findings by the PTAB in inter-partes reexamination proceeding 95/001,679 involving our U.S. Patent No. 6,502,135. On October 5, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the PTO. The USCAFC retained jurisdiction over the appeals in the meantime. Our request for Director rehearing with the PTO was filed on November 5, 2021. On January 10, 2022, our request for Director rehearing was denied. We informed the USCAFC about the denial of Director rehearing and are awaiting the court order with a schedule for briefings in this matter. McKool Smith P.C. v. VirnetX, Inc., AAA Case No. 01-20-0003-7975 On March 23, 2020, the law firm of McKool Smith, P.C. (“McKool”) filed a Demand for Arbitration against VirnetX, Inc. with the American Arbitration Association (“AAA”). In its demand, McKool claimed that a retention agreement it entered into in 2010 with VirnetX entitled it to a contingency fee arising from the recent 2020 payment made in the Apple I case. McKool claimed it was owed approximately $36,300 (or 8% of the Apple I payment). We filed a general response with the AAA denying McKool’s claim and contested the matter vigorously. An evidentiary hearing was held on the matter during the week of February 22, 2021 and the parties submitted additional briefings. On April 19, 2021, the arbitrator awarded McKool $36,323 in damages, plus pre-judgment interest in the amount of 5% simple interest from March 23, 2020 to April 18, 2021, and post-judgment interest in the amount of 5%, compounded annually, until payment of the award. We accrued the resulting $38,284 as of March 31, 2021 and paid that amount to McKool on April 20, 2021. This matter is now closed. Other Legal Matters 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 likely valid, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we could prevail on such potential claims if we made them. In addition, bringing a lawsuit may lead to potential counterclaims which may distract our management and our other resources, including capital resources, from efforts to successfully commercialize our products. Currently, we are not a party to any other pending legal proceedings and are not aware of any proceeding threatened or contemplated against us. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Note 13 – Leases We lease office space under an operating lease which expires on October 31, 2023. At December 31, 2021, the underlying ROU asset and lease liability totaled $98. At December 31, 2020, the underlying ROU asset and lease liability totaled $44. Lease expense totaled $56 in 2021, 2020 and 2019. We also lease a facility for corporate promotional and marketing purposes which was prepaid at inception and originally expired in 2024. In September 2020, the lease was extended for one year to 2025, due to COVID use-restrictions. No other terms of the original agreement were affected and there was no impact on cash flow. At December 31, 2021 and 2020, the ROU asset totaled $948 and $1,248, respectively; lease expense totaled $300, $356 and $385, during 2021, 2020 and 2019, respectively. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
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 the accounting estimates are reasonably likely to occur from period to period. 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, 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. We have reviewed our critical accounting policies and estimates with the Audit Committee of our Board of Directors. |
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. |
Leases | Leases The Company determines if an arrangement is a lease at inception in accordance with Accounting Standards Codification (“ASC”) Topic 842. Operating lease right-of-use (“ROU”) assets are included in Prepaid expenses, and other assets on the Condensed Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. |
Revenue Recognition | Revenue Recognition The Company derives revenue from licensing and royalty fees from contracts with customers which often span several years. We account for this revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our revenue arrangements may consist of multiple-element arrangements, with revenue for each unit of accounting recognized as the product or service is delivered to the customer. With the Certain contracts may require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the servicing contract. The Company actively monitors and enforces its intellectual property (“IP”) rights, including seeking appropriate compensation from third parties that utilize the Company’s IP without a license. As a result, the Company may, from time to time, receive payments as part of a settlement or compensation for a patent infringement dispute. Proceeds received are allocated to each element identified in the settlement or compensation, based on the fair value of each element. Generally, settlements and compensation may include the following elements: the value of a license or royalty agreement, cost reimbursement, damages, and interest. Elements identified related to licensing and royalty are recognized as revenue. Elements identified as reimbursed costs are generally recorded as a reduction to the reported expenses. Elements identified as damages or interest are generally recorded in other income in the condensed consolidated statement of operations. During the year ended December 31, 2020, the Company collected a lump sum payment of $454,034 from Apple, Inc., because of a favorable court decision relating to a patent infringement case. The court decision identified the following as the basis of the award: $302,428 for past royalties, $41,271 in damages for willful infringement, $108,221 for interest, and $2,114 in reimbursement for court costs and attorney’s fees. Elements of the payment were recognized in the Company’s condensed consolidated statement of operations as follows: Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended: December 31, 2020 Revenue (royalties) $ 302,428 Operating expenses: selling, general and administrative (reimbursed litigation costs) 2,114 Other income: gain (willful infringement) 41,271 Other income: interest income (pre- and post-judgment interest) 108,221 Total cash received $ 454,034 |
Licensing Costs | Licensing Costs Included in operating expenses are licensing costs we incurred in conjunction with the proceeds received from Apple Inc., pursuant to a favorable court decision relating to a patent infringement case. |
Contingent Gains | Contingent Gains ASC Topic 450-30-25, Contingent Gains, prohibits recognition of contingent gains until realized. Accordingly, we do not record contingent gains ahead of such realization. Management generally considers any such gains as realized only upon the collection of cash. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments. |
Investments | Investments Investments are classified as available-for-sale and are recorded at fair market value. Unrealized gains and losses are reported as other comprehensive income. Realized gains and losses are recorded in income in the period they are realized using specific identification of each security’s cost basis. We invest our excess cash primarily in highly liquid debt instruments including corporate, government and federal agency securities, with contractual maturities less than two years. By policy, we limit the amount of credit exposure to any one issuer. |
Property and Equipment | Property and Equipment Property and equipment are stated at historical cost, less accumulated depreciation, and amortization. Depreciation and amortization are computed using the accelerated and straight-line methods over the estimated useful lives of the assets, which range from five |
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. In 2021, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. |
Fair Value | Fair Value The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. |
Intangible Assets | Intangible Assets We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. |
Research and Development | Research and Development Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. |
Income Taxes | Income Taxes We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing our deferred tax assets, we consider whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. We account for our uncertain tax positions in accordance with U.S. GAAP, which utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs on a straight-line basis over the requisite service period of the award, which is generally a vesting term of 4 years. We recognize forfeitures, if any, when they occur. In addition, we record stock-based compensation expense for awards granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued, as they vest, over the performance period (See Note 6 - Stock-Based Compensation). |
Earnings per Share | Earnings per Share Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. |
New Accounting Pronouncements | New Accounting Pronouncements In |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Restatement of Previously issued Financial Statements | The following tables present the impact of the restatement adjustment on the previously issued consolidated financial statements and footnotes as of and for the year ended December 31, 2021: As of and for the year ended December 31, 2021 As Previously Reported Restatement Adjustment As Restated Consolidated Balance Sheet Deferred tax asset $ 19,278 $ (3,328 ) $ 15,950 Total assets 189,844 (3,328 ) 186,516 Accumulated deficit (47,607 ) (3,328 ) (50,935 ) Total stockholders’ equity 188,777 (3,328 ) 185,449 Total liabilities and stockholders’ equity 189,844 (3,328 ) 186,516 Consolidated Statement of Operations Income tax benefit $ 9,533 $ (3,328 ) $ 6,205 Net loss (39,593 ) (3,328 ) (42,921 ) Basic loss per share (0.56 ) (0.04 ) (0.60 ) Diluted loss per share (0.56 ) (0.04 ) (0.60 ) Consolidated Statement of Comprehensive Loss Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Comprehensive loss (39,648 ) (3,328 ) (42,976 ) Consolidated Statement of Stockholders’ Equity Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Ending balance, accumulated deficit (47,607 ) (3,328 ) (50,935 ) Total liabilities and stockholders’ equity 188,777 (3,328 ) 185,449 Consolidated Statement of Cash Flows Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Deferred income taxes (10,229 ) 3,328 (6,901 ) Note 7 - Earnings per share Net loss $ (39,593 ) $ (3,328 ) $ (42,921 ) Basic loss per share (0.56 ) (0.04 ) (0.60 ) Diluted loss per share (0.56 ) (0.04 ) (0.60 ) Note 10 - Income Taxes, income tax provision Deferred income tax benefit, Federal $ (10,293 ) $ (3,268 ) $ (7,025 ) Deferred income tax benefit, State 64 60 124 Total deferred income tax benefit (10,229 ) (3,208 ) (6,901 ) Total income tax benefit (9,533 ) 3,328 (6,205 ) Note 10 - Income Taxes, reconciliation of income tax rate State taxes, net of federal benefit (0.19 )% (0.12 )% (0.31 )% Stock based compensation (0.02 )% (6.66 )% (6.68 )% Effective income tax rate 19.41 % (6.78 )% 12.63 % Note 10 - Income Taxes, deferred tax assets Stock based compensation $ 9,615 $ (3,328 ) $ 6,287 Total deferred tax assets 19,284 (3,328 ) 15,956 Deferred tax assets after valuation allowance 19,284 (3,328 ) 15,956 Net deferred tax assets 19,278 (3,328 ) 15,950 |
Classification of Payment Received in Condensed Consolidated Statement of Operations | Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended: December 31, 2020 Revenue (royalties) $ 302,428 Operating expenses: selling, general and administrative (reimbursed litigation costs) 2,114 Other income: gain (willful infringement) 41,271 Other income: interest income (pre- and post-judgment interest) 108,221 Total cash received $ 454,034 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment [Abstract] | |
Property and Equipment | Our major classes of property and equipment were as follows: December 31 2021 2020 Office furniture $ 79 $ 79 Computer equipment 92 81 Total 171 160 Less accumulated depreciation (153 ) (149 ) Total property and equipment, net $ 18 $ 11 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation [Abstract] | |
Information about Stock Options Outstanding | The following tables summarize information about stock options and RSUs outstanding at December 31, 2021: Options Outstanding Options Vested and Exercisable Range of Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $ 2.88 6.95 5,533,812 6.66 $ 4.50 4,050,084 5.82 $ 4.34 $ 14.52 35.25 863,625 1.31 $ 22.95 863,625 1.32 $ 22.95 6,397,437 5.94 $ 6.99 4,913,709 5.03 $ 7.61 |
Stock Option Activity | The following tables summarize activity under the Plan for the indicated periods: Options Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at December 31, 2018 5,998,837 $ 7.72 — $ — Options granted 345,000 6.06 — — Options exercised (663,816 ) 1.23 — — Options cancelled (50,000 ) 4.95 — — Outstanding at December 31, 2019 5,630,021 $ 8.49 — $ — Options granted 747,500 6.07 — — Options exercised (262,031 ) 3.99 — — Options cancelled (302,969 ) 5.30 — — Outstanding at December 31, 2020 5,812,521 $ 8.55 — $ — Options granted 999,500 4.43 — — Options exercised — — — — Options cancelled (414,584 ) 22.54 — — Outstanding at December 31, 2021 6,397,437 $ 6.99 5.94 $ 6 Options exercisable at December 31, 2021 4,913,709 $ 7.61 5.03 $ 6 RSUs Number of RSUs Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2018 504,994 $ 3.83 $ — RSUs granted 229,996 6.06 — RSUs vested (207,334 ) 4.07 — RSUs cancelled (29,167 ) 4.65 — Outstanding at December 31, 2019 498,489 $ 4.71 $ — RSUs granted 218,329 6.89 — RSUs vested (212,495 ) 4.63 — RSUs cancelled — — — Outstanding at December 31, 2020 504,323 $ 5.69 $ — RSUs granted 236,661 4.61 — RSUs vested (215,165 ) 5.23 — RSUs cancelled (16,664 ) 5.45 — Outstanding at December 31, 2021 509,155 $ 5.38 $ — |
Stock-Based Compensation by Type of Award | Stock-based compensation expense is included in operating expense for each period as follows: Stock-Based Compensation by Type of Award Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Stock options $ 3,067 $ 2,872 $ 2,756 RSUs 1,117 1,066 955 Total stock-based compensation expense $ 4,184 $ 3,938 $ 3,711 |
Fair Value Assumptions | The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Expected stock price volatility 90.58 % 93.45 % 92.34 % Risk-free interest rate 1.06 % 0.63 % 2.09 % Expected life term 6.22 years 6.21 years 6.14 years Expected dividends 0 % 0 % 0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Loss Per Share Calculations | The table below sets forth the basic and diluted loss per share calculations: As restated Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Net (loss) income $ (42,921 ) $ 280,429 $ (19,180 ) Basic weighted average number of shares outstanding 71,159 70,850 68,564 Effect of dilutive securities — 766 — Diluted weighted average number of shares outstanding 71,159 71,616 68,564 Basic (loss) earnings per share $ (0.60 ) $ 3.96 $ (0.28 ) Diluted (loss) earnings per share $ (0.60 ) $ 3.92 $ (0.28 ) |
Common Stock (Tables)
Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Common Stock [Abstract] | |
Information about Warrants Outstanding | Warrants Issued Exercise Price Outstanding and Exercisable December 31, 2020 Issued Exercised Terminated / Cancelled Outstanding and Exercisable December 31, 2021 Expiration Date 25,000 $5.75 25,000 — — — 25,000 April 30, 2025 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes [Abstract] | |
Income Tax Provision (Benefit) | The income tax provision (benefit) is comprised of the following: As restated Year Ended Year Ended Year Ended Current: Federal $ 661 $ 35,122 $ — State 35 950 (393 ) Foreign — — — 696 36,072 (393 ) Deferred: Federal (7,025 ) (8,816 ) — State 124 (233 ) — (6,901 ) (9,049 ) — Total income tax (benefit) provision $ (6,205 ) $ 27,023 $ (393 ) |
Effective Income Tax Rate Reconciliation | A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: As restated Year Ended Year Ended Year Ended United States federal statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit (0.31 )% 0.17 % 1.99 % Valuation allowance — (12.22 )% (21.96 )% Stock based compensation (6.68 )% (0.01 )% — R&D Credit 0.19 % (0.21 )% 1.34 % Other (1.57 )% 0.06 % (0.38 )% Effective income tax rate 12.63 % 8.79 % 1.99 % |
Deferred Tax Assets and Liabilities | Deferred tax assets (liabilities) consist of the following: As restated As of As of Deferred tax assets: Reserves and accruals $ 58 $ 48 Research and development credits and other credits 92 13 Net operating loss carry forward 9,519 598 Stock based compensation 6,287 8,998 Other — 3 Total deferred tax assets $ 15,956 $ 9,660 Valuation allowance — (611 ) Deferred tax assets after valuation allowance 15,956 9,049 Total deferred tax liability – depreciation (6 ) — Net deferred tax assets $ 15,950 $ 9,049 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurement [Abstract] | |
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets | The following table shows the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our financial assets as of December 31, 2021 and 2020 (in thousands): December 31, 2021 Adjusted Unrealized Unrealized Fair Cash Investments Cash $ 35,428 $ — $ — $ 35,428 $ 35,428 $ — Level 1: Mutual funds 106,590 — — 106,590 106,590 — U.S. agency securities 16,658 — (26 ) 16,632 — 16,632 U.S. treasury securities 10,646 — (24 ) 10,622 — 10,622 133,894 — (50 ) 133,844 106,590 27,254 Total $ 169,322 $ — $ (50 ) $ 169,272 $ 142,018 $ 27,254 December 31, 2020 Adjusted Unrealized Unrealized Fair Cash Investments Cash $ 121,785 $ — $ — $ 121,785 $ 121,785 $ — Level 1: Mutual funds 70,996 — — 70,996 70,996 — U.S. agency securities 13,767 2 — 13,769 127 13,642 U.S. treasury securities 14,707 — (1 ) 14,706 — 14,706 99,470 2 (1 ) 99,471 71,123 28,348 Total $ 221,255 $ 2 $ (1 ) $ 221,256 $ 192,908 $ 28,348 |
Formation and Business of the_2
Formation and Business of the Company (Details) - Patents [Member] | Dec. 31, 2021Patent |
Formation and Business of the Company Disclosure [Abstract] | |
Number of patents and pending applications | 205 |
U.S. [Member] | |
Formation and Business of the Company Disclosure [Abstract] | |
Number of patents and pending applications | 72 |
Foreign [Member] | |
Formation and Business of the Company Disclosure [Abstract] | |
Number of patents and pending applications | 133 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies, Restatement of Previously Issued Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Balance Sheet [Abstract] | ||||
Deferred tax asset | $ 15,950 | $ 9,049 | ||
Total assets | 186,516 | 234,793 | ||
Accumulated deficit | (50,935) | (8,014) | ||
Total stockholders' equity | 185,449 | 224,437 | $ 5,628 | $ 9,888 |
Total liabilities and stockholders' equity | 186,516 | 234,793 | ||
Consolidated Statement of Operations [Abstract] | ||||
Income tax benefit | 6,205 | (27,023) | 393 | |
Net loss | $ (42,921) | $ 280,429 | $ (19,180) | |
Basic loss per share (in dollars per share) | $ (0.60) | $ 3.96 | $ (0.28) | |
Diluted loss per share (in dollars per share) | $ (0.60) | $ 3.92 | $ (0.28) | |
Consolidated Statement of Comprehensive Loss [Abstract] | ||||
Net loss | $ (42,921) | $ 280,429 | $ (19,180) | |
Comprehensive loss | (42,976) | 280,430 | (19,180) | |
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Balance | 185,449 | 224,437 | 5,628 | 9,888 |
Consolidated Statement of Cash Flows [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Deferred income taxes | (6,901) | (9,049) | 0 | |
Note 7 - Earnings Per Share [Abstract] | ||||
Net loss | $ (42,921) | $ 280,429 | $ (19,180) | |
Basic loss per share (in dollars per share) | $ (0.60) | $ 3.96 | $ (0.28) | |
Diluted loss per share (in dollars per share) | $ (0.60) | $ 3.92 | $ (0.28) | |
Note 10 - Income Taxes, Income Tax Provision [Abstract] | ||||
Deferred income tax benefit, Federal | $ (7,025) | $ (8,816) | $ 0 | |
Deferred income tax benefit, State | 124 | (233) | 0 | |
Total deferred income tax benefit | (6,901) | (9,049) | 0 | |
Total income tax benefit | $ (6,205) | $ 27,023 | $ (393) | |
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract] | ||||
State taxes, net of federal benefit | (0.31%) | 0.17% | 1.99% | |
Stock based compensation | (6.68%) | (0.01%) | 0.00% | |
Effective income tax rate | 12.63% | 8.79% | 1.99% | |
Note 10 - Income Taxes, Deferred Tax Assets [Abstract] | ||||
Stock based compensation | $ 6,287 | $ 8,998 | ||
Total deferred tax assets | 15,956 | 9,660 | ||
Deferred tax assets after valuation allowance | 15,956 | 9,049 | ||
Net deferred tax assets | 15,950 | 9,049 | ||
Accumulated Deficit [Member] | ||||
Consolidated Balance Sheet [Abstract] | ||||
Total stockholders' equity | (50,935) | (8,014) | $ (217,602) | (198,422) |
Consolidated Statement of Operations [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Consolidated Statement of Comprehensive Loss [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Balance | (50,935) | (8,014) | (217,602) | $ (198,422) |
Consolidated Statement of Cash Flows [Abstract] | ||||
Net loss | (42,921) | 280,429 | (19,180) | |
Note 7 - Earnings Per Share [Abstract] | ||||
Net loss | (42,921) | $ 280,429 | $ (19,180) | |
As Previously Reported [Member] | ||||
Consolidated Balance Sheet [Abstract] | ||||
Deferred tax asset | 19,278 | |||
Total assets | 189,844 | |||
Accumulated deficit | (47,607) | |||
Total stockholders' equity | 188,777 | |||
Total liabilities and stockholders' equity | 189,844 | |||
Consolidated Statement of Operations [Abstract] | ||||
Income tax benefit | 9,533 | |||
Net loss | $ (39,593) | |||
Basic loss per share (in dollars per share) | $ (0.56) | |||
Diluted loss per share (in dollars per share) | $ (0.56) | |||
Consolidated Statement of Comprehensive Loss [Abstract] | ||||
Net loss | $ (39,593) | |||
Comprehensive loss | (39,648) | |||
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Net loss | (39,593) | |||
Balance | 188,777 | |||
Consolidated Statement of Cash Flows [Abstract] | ||||
Net loss | (39,593) | |||
Deferred income taxes | (10,229) | |||
Note 7 - Earnings Per Share [Abstract] | ||||
Net loss | $ (39,593) | |||
Basic loss per share (in dollars per share) | $ (0.56) | |||
Diluted loss per share (in dollars per share) | $ (0.56) | |||
Note 10 - Income Taxes, Income Tax Provision [Abstract] | ||||
Deferred income tax benefit, Federal | $ (10,293) | |||
Deferred income tax benefit, State | 64 | |||
Total deferred income tax benefit | (10,229) | |||
Total income tax benefit | $ (9,533) | |||
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract] | ||||
State taxes, net of federal benefit | (0.19%) | |||
Stock based compensation | (0.02%) | |||
Effective income tax rate | 19.41% | |||
Note 10 - Income Taxes, Deferred Tax Assets [Abstract] | ||||
Stock based compensation | $ 9,615 | |||
Total deferred tax assets | 19,284 | |||
Deferred tax assets after valuation allowance | 19,284 | |||
Net deferred tax assets | 19,278 | |||
As Previously Reported [Member] | Accumulated Deficit [Member] | ||||
Consolidated Balance Sheet [Abstract] | ||||
Total stockholders' equity | (47,607) | |||
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Balance | (47,607) | |||
Error Related to Accounting for Deferred Taxes [Member] | Restatement Adjustment [Member] | ||||
Consolidated Balance Sheet [Abstract] | ||||
Deferred tax asset | (3,328) | |||
Total assets | (3,328) | |||
Accumulated deficit | (3,328) | |||
Total stockholders' equity | (3,328) | |||
Total liabilities and stockholders' equity | (3,328) | |||
Consolidated Statement of Operations [Abstract] | ||||
Income tax benefit | (3,328) | |||
Net loss | $ (3,328) | |||
Basic loss per share (in dollars per share) | $ (0.04) | |||
Diluted loss per share (in dollars per share) | $ (0.04) | |||
Consolidated Statement of Comprehensive Loss [Abstract] | ||||
Net loss | $ (3,328) | |||
Comprehensive loss | (3,328) | |||
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Net loss | (3,328) | |||
Balance | (3,328) | |||
Consolidated Statement of Cash Flows [Abstract] | ||||
Net loss | (3,328) | |||
Deferred income taxes | 3,328 | |||
Note 7 - Earnings Per Share [Abstract] | ||||
Net loss | $ (3,328) | |||
Basic loss per share (in dollars per share) | $ (0.04) | |||
Diluted loss per share (in dollars per share) | $ (0.04) | |||
Note 10 - Income Taxes, Income Tax Provision [Abstract] | ||||
Deferred income tax benefit, Federal | $ (3,268) | |||
Deferred income tax benefit, State | 60 | |||
Total deferred income tax benefit | (3,208) | |||
Total income tax benefit | $ 3,328 | |||
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract] | ||||
State taxes, net of federal benefit | (0.12%) | |||
Stock based compensation | (6.66%) | |||
Effective income tax rate | (6.78%) | |||
Note 10 - Income Taxes, Deferred Tax Assets [Abstract] | ||||
Stock based compensation | $ (3,328) | |||
Total deferred tax assets | (3,328) | |||
Deferred tax assets after valuation allowance | (3,328) | |||
Net deferred tax assets | (3,328) | |||
Error Related to Accounting for Deferred Taxes [Member] | Restatement Adjustment [Member] | Accumulated Deficit [Member] | ||||
Consolidated Balance Sheet [Abstract] | ||||
Total stockholders' equity | (3,328) | |||
Consolidated Statement of Stockholders' Equity [Abstract] | ||||
Balance | $ (3,328) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)Institution | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Revenue Recognition [Abstract] | |||
Revenue (royalties) | $ 35 | $ 302,636 | $ 85 |
Other Income [Abstract] | |||
Gain (willful infringement) | 0 | 41,271 | 0 |
Licensing Costs [Abstract] | |||
Costs accrued in conjunction with proceeds from litigation | $ (9,083) | 90,101 | $ 0 |
Concentration of Credit Risk and Other Risks and Uncertainties [Abstract] | |||
Number of financial institutions holding company's cash | Institution | 2 | ||
Stock-Based Compensation [Abstract] | |||
Option vesting term | 4 years | ||
Minimum [Member] | |||
Property and Equipment [Abstract] | |||
Useful lives | 5 years | ||
Intangible Assets [Abstract] | |||
Estimated useful lives | 3 years | ||
Maximum [Member] | |||
Property and Equipment [Abstract] | |||
Useful lives | 7 years | ||
Intangible Assets [Abstract] | |||
Estimated useful lives | 15 years | ||
Positive Outcome of Litigation [Member] | |||
Revenue Recognition [Abstract] | |||
Revenue (royalties) | 302,428 | ||
Operating expense [Abstract] | |||
Selling, general and administrative (reimbursed litigation costs) | 2,114 | ||
Other Income [Abstract] | |||
Gain (willful infringement) | 41,271 | ||
Interest income (pre- and post-judgment interest) | 108,221 | ||
Total cash received | $ 454,034 | ||
Highly Liquid Debt Investments [Member] | Maximum [Member] | |||
Investments [Abstract] | |||
Contractual maturities of investment securities | 2 years |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property and Equipment [Abstract] | |||
Property and equipment, gross | $ 171 | $ 160 | |
Less accumulated depreciation | (153) | (149) | |
Property and equipment, net | 18 | 11 | |
Depreciation expense | 4 | 5 | $ 7 |
Office Furniture [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | 79 | 79 | |
Computer Equipment [Member] | |||
Property and Equipment [Abstract] | |||
Property and equipment, gross | $ 92 | $ 81 |
Commitments, Contingencies an_2
Commitments, Contingencies and Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments, Contingencies and Related Party Transactions [Abstract] | |||
Future minimum rents due in 2022 | $ 56 | ||
Future minimum rents due in 2023 | $ 46 | ||
Offices [Member] | |||
Commitments, Contingencies and Related Party Transactions [Abstract] | |||
Operating lease, expiration date | Oct. 31, 2023 | ||
Rent expense | $ 56 | $ 56 | $ 56 |
K2 Investment Fund LLC [Member] | Aircraft [Member] | |||
Commitments, Contingencies and Related Party Transactions [Abstract] | |||
Rental fees incurred for use of aircraft | $ 791 | $ 324 | $ 1,790 |
Term of lease | 12 months | ||
Rate of aircraft lease (in dollars per flight hour) | $ 8 | ||
Term of notice for cancellation of lease | 30 days |
Stock Plan (Details)
Stock Plan (Details) - shares | 1 Months Ended | 12 Months Ended |
Apr. 30, 2021 | Dec. 31, 2021 | |
Stock Plan [Abstract] | ||
Vesting period | 4 years | |
2013 Plan [Member] | ||
Stock Plan [Abstract] | ||
Increase of shares authorized (in shares) | 2,500,000 | |
Shares available for grant (in shares) | 2,240,296 | |
2013 Plan [Member] | Stock Options [Member] | ||
Stock Plan [Abstract] | ||
Vesting period | 4 years | |
Term of award | 10 years | |
2013 Plan [Member] | Stock Options [Member] | Named Executive Officers [Member] | Minimum [Member] | ||
Stock Plan [Abstract] | ||
Exercise price of option granted as percentage of fair market value of shares at date of grant | 100.00% | |
2013 Plan [Member] | Stock Options [Member] | 10% Shareholder [Member] | Minimum [Member] | ||
Stock Plan [Abstract] | ||
Exercise price of option granted as percentage of fair market value of shares at date of grant | 110.00% | |
2013 Plan [Member] | Incentive Stock Options [Member] | Minimum [Member] | ||
Stock Plan [Abstract] | ||
Exercise price of option granted as percentage of fair market value of shares at date of grant | 100.00% | |
2013 Plan [Member] | Nonqualified Stock Options [Member] | Minimum [Member] | ||
Stock Plan [Abstract] | ||
Exercise price of option granted as percentage of fair market value of shares at date of grant | 85.00% | |
2013 Plan [Member] | Restricted Stock Purchase Rights ("RSU") [Member] | ||
Stock Plan [Abstract] | ||
Vesting period | 4 years |
Stock-Based Compensation, Infor
Stock-Based Compensation, Information about Stock Options Outstanding (Details) - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Information about Stock Options Outstanding [Abstract] | |
Options outstanding, number outstanding (in shares) | shares | 6,397,437 |
Options outstanding, weighted average remaining contractual life | 5 years 11 months 8 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 6.99 |
Options vested and exercisable, number exercisable (in shares) | shares | 4,913,709 |
Options vested and exercisable, weighted average remaining contractual life | 5 years 10 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 7.61 |
$2.35 - 6.95 [Member] | |
Information about Stock Options Outstanding [Abstract] | |
Exercise price range, lower range limit (in dollars per share) | 2.88 |
Exercise price range, upper range limit (in dollars per share) | $ 6.95 |
Options outstanding, number outstanding (in shares) | shares | 5,533,812 |
Options outstanding, weighted average remaining contractual life | 6 years 7 months 28 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 4.50 |
Options vested and exercisable, number exercisable (in shares) | shares | 4,050,084 |
Options vested and exercisable, weighted average remaining contractual life | 5 years 9 months 25 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 4.34 |
$14.52 - 35.25 [Member] | |
Information about Stock Options Outstanding [Abstract] | |
Exercise price range, lower range limit (in dollars per share) | 14.52 |
Exercise price range, upper range limit (in dollars per share) | $ 35.25 |
Options outstanding, number outstanding (in shares) | shares | 863,625 |
Options outstanding, weighted average remaining contractual life | 1 year 3 months 21 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 22.95 |
Options vested and exercisable, number exercisable (in shares) | shares | 863,625 |
Options vested and exercisable, weighted average remaining contractual life | 1 year 3 months 25 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 22.95 |
Stock-Based Compensation, Summa
Stock-Based Compensation, Summary of Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation [Abstract] | ||||
Per share market price of common stock on last trading day of year (in dollars per share) | $ 2.60 | |||
Proceeds from exercise of options | $ 0 | $ 1,046 | $ 816 | |
Stock Options [Member] | ||||
Options, number of shares [Roll Forward] | ||||
Outstanding, beginning of period (in shares) | 5,812,521 | 5,630,021 | 5,998,837 | |
Options granted (in shares) | 999,500 | 747,500 | 345,000 | |
Options exercised (in shares) | 0 | (262,031) | (663,816) | |
Options cancelled (in shares) | (414,584) | (302,969) | (50,000) | |
Outstanding, end of period (in shares) | 6,397,437 | 5,812,521 | 5,630,021 | |
Options exercisable, end of period (in shares) | 4,913,709 | |||
Options, weighted average exercise price [Roll Forward] | ||||
Outstanding, beginning of period (in dollars per share) | $ 8.55 | $ 8.49 | $ 7.72 | |
Options granted (in dollars per share) | 4.43 | 6.07 | 6.06 | |
Options exercised (in dollars per share) | 0 | 3.99 | 1.23 | |
Options cancelled (in dollars per share) | 22.54 | 5.30 | 4.95 | |
Outstanding, end of period (in dollars per share) | 6.99 | $ 8.55 | $ 8.49 | |
Options exercisable, end of period (in dollars per share) | $ 7.61 | |||
Options, additional disclosures [Abstract] | ||||
Options outstanding, weighted average remaining contractual life | 5 years 11 months 8 days | |||
Options exercisable, weighted average remaining contractual life | 5 years 10 days | |||
Options outstanding, aggregate intrinsic value | $ 6 | $ 0 | ||
Options exercisable, aggregate intrinsic value | $ 6 | |||
Share-based Compensation [Abstract] | ||||
Proceeds from exercise of options | 1,046 | $ 816 | ||
Total intrinsic value of options exercised | $ 151 | $ 2,473 | ||
Restricted Stock Units (RSUs) [Member] | ||||
RSUs, number of RSUs [Roll Forward] | ||||
Outstanding, beginning of period (in shares) | 504,323 | 498,489 | 504,994 | |
RSUs granted (in shares) | 236,661 | 218,329 | 229,996 | |
RSUs vested (in shares) | (215,165) | (212,495) | (207,334) | |
RSUs cancelled (in shares) | (16,664) | 0 | (29,167) | |
Outstanding, end of period (in shares) | 509,155 | 504,323 | 498,489 | |
RSUs, weighted average grant date fair value [Abstract] | ||||
Outstanding, beginning of period (in dollars per share) | $ 5.69 | $ 4.71 | $ 3.83 | |
RSUs granted (in dollars per share) | 4.61 | 6.89 | 6.06 | |
RSUs vested (in dollars per share) | 5.23 | 4.63 | 4.07 | |
RSUs cancelled (in dollars per share) | 5.45 | 0 | 4.65 | |
Outstanding, end of period (in dollars per share) | $ 5.38 | $ 5.69 | $ 4.71 | |
RSUs, aggregate intrinsic value [Abstract] | ||||
Outstanding, end of period | $ 0 | $ 0 | $ 0 | $ 0 |
Stock-Based Compensation, Stock
Stock-Based Compensation, Stock-Based Compensation by Type of Award (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation [Abstract] | |||
Stock-based compensation expense | $ 4,184 | $ 3,938 | $ 3,711 |
Operating Expense [Member] | |||
Share-based Compensation [Abstract] | |||
Stock-based compensation expense | 4,184 | 3,938 | 3,711 |
Stock Options [Member] | |||
Compensation cost not yet recognized [Abstract] | |||
Unrecognized stock-based compensation expense expected to be recognized related to unvested stock options | $ 5,403 | ||
Weighted-average period for recognition of unrecognized stock-based compensation expense | 2 years 10 months 9 days | ||
Stock Options [Member] | Operating Expense [Member] | |||
Share-based Compensation [Abstract] | |||
Stock-based compensation expense | $ 3,067 | 2,872 | 2,756 |
RSUs [Member] | |||
Compensation cost not yet recognized [Abstract] | |||
Unrecognized stock-based compensation expense expected to be recognized related to unvested RSUs | $ 2,098 | ||
Weighted-average period for recognition of unrecognized stock-based compensation expense | 2 years 4 months 13 days | ||
RSUs [Member] | Operating Expense [Member] | |||
Share-based Compensation [Abstract] | |||
Stock-based compensation expense | $ 1,117 | $ 1,066 | $ 955 |
Stock-Based Compensation, Fair
Stock-Based Compensation, Fair Value Assumptions Used (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair value assumptions used in estimating fair value of each option grant [Abstract] | |||
Expected stock price volatility | 90.58% | 93.45% | 92.34% |
Risk-free interest rate | 1.06% | 0.63% | 2.09% |
Expected life term | 6 years 2 months 19 days | 6 years 2 months 15 days | 6 years 1 month 20 days |
Expected dividends | 0.00% | 0.00% | 0.00% |
Options granted, weighted average grant date fair value (in dollars per share) | $ 3.32 | $ 4.62 | $ 4.63 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Calculation of basic and diluted loss per share [Abstract] | |||
Net (loss) income | $ (42,921) | $ 280,429 | $ (19,180) |
Basic weighted average number of shares outstanding (in shares) | 71,159,458 | 70,850,311 | 68,564,321 |
Effect of dilutive securities (in shares) | 0 | 766,000 | 0 |
Diluted weighted average number of shares outstanding (in shares) | 71,159,458 | 71,615,843 | 68,564,321 |
Basic (loss) earnings per share (in dollars per share) | $ (0.60) | $ 3.96 | $ (0.28) |
Diluted (loss) earnings per share (in dollars per share) | $ (0.60) | $ 3.92 | $ (0.28) |
Common Stock, Summary (Details)
Common Stock, Summary (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021Vote$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | May 08, 2020$ / shares | Aug. 31, 2018USD ($) | Jul. 30, 2018USD ($) | |
Common Stock [Abstract] | ||||||
Common stock, shares authorized (in shares) | shares | 100,000,000 | 100,000,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Dividend [Abstract] | ||||||
Dividend declared date | May 8, 2020 | |||||
Cash dividend (in dollars per share) | $ / shares | $ 1 | |||||
Dividend payable date | May 26, 2020 | |||||
Dividend record date | May 18, 2020 | |||||
Common Stock [Member] | ||||||
Common Stock [Abstract] | ||||||
Number of votes entitled to each share of common stock | Vote | 1 | |||||
Common stock, shares authorized (in shares) | shares | 100,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||
Universal Shelf Registration Statement [Member] | Common Stock [Member] | Maximum [Member] | ||||||
Common Stock [Abstract] | ||||||
Securities offered for sale, aggregate value | $ | $ 100,000 | |||||
ATM Agreement [Member] | Common Stock [Member] | ||||||
Common Stock [Abstract] | ||||||
Number of shares of common stock sold (in shares) | shares | 0 | 1,049,382 | 1,860,483 | |||
Average sales price per common share (in dollars per share) | $ / shares | $ 4.41 | $ 5.84 | ||||
Aggregate proceeds from sales of common stock | $ | $ 4,627 | $ 10,866 | ||||
Sales commissions, fees and other costs associated with issuance of common stock | $ | $ 139 | $ 327 | ||||
ATM Agreement [Member] | Common Stock [Member] | Maximum [Member] | ||||||
Common Stock [Abstract] | ||||||
Securities offered for sale, aggregate value | $ | $ 50,000 |
Common Stock, Warrants (Details
Common Stock, Warrants (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants [Abstract] | ||||
Dividend yield | 0.00% | 0.00% | 0.00% | |
Expected stock price volatility | 90.58% | 93.45% | 92.34% | |
Risk-free interest rate | 1.06% | 0.63% | 2.09% | |
Expected option term | 6 years 2 months 19 days | 6 years 2 months 15 days | 6 years 1 month 20 days | |
Warrants [Member] | ||||
Warrants [Abstract] | ||||
Exercise price (in dollars per share) | $ 7 | |||
Terminated/ cancelled (in shares) | (25,000) | |||
Warrants [Member] | Warrants Issued in 2020 [Member] | ||||
Warrants [Abstract] | ||||
Weighted average fair value of warrants at grant date (in dollars per share) | $ 4.16 | |||
Dividend yield | 0.00% | |||
Expected stock price volatility | 97.00% | |||
Risk-free interest rate | 0.27% | |||
Expected option term | 5 years | |||
Warrants issued (in shares) | 25,000 | |||
Exercise price (in dollars per share) | $ 5.75 | |||
Outstanding and Exercisable (in shares) | 25,000 | |||
Issued (in shares) | 0 | |||
Exercised (in shares) | 0 | |||
Terminated/ cancelled (in shares) | 0 | |||
Outstanding and Exercisable (in shares) | 25,000 | 25,000 | ||
Expiration date | Apr. 30, 2025 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Employee Benefit Plan [Abstract] | |||
Matching contribution to defined contribution plan | $ 145 | $ 112 | $ 101 |
Income Taxes, Components of Pro
Income Taxes, Components of Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current [Abstract] | |||
Federal | $ 661 | $ 35,122 | $ 0 |
State | 35 | 950 | (393) |
Foreign | 0 | 0 | 0 |
Current income tax provision (benefit) | 696 | 36,072 | (393) |
Deferred [Abstract] | |||
Federal | (7,025) | (8,816) | 0 |
State | 124 | (233) | 0 |
Deferred income tax provision (benefit) | (6,901) | (9,049) | 0 |
Total income tax (benefit) provision | $ (6,205) | $ 27,023 | $ (393) |
Income Taxes, Reconciliation of
Income Taxes, Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effective Tax Rate Reconciliation [Abstract] | |||
United States federal statutory rate | 21.00% | 21.00% | 21.00% |
State taxes, net of federal benefit | (0.31%) | 0.17% | 1.99% |
Valuation allowance | 0.00% | (12.22%) | (21.96%) |
Stock based compensation | (6.68%) | (0.01%) | 0.00% |
R&D Credit | 0.19% | (0.21%) | 1.34% |
Other | (1.57%) | 0.06% | (0.38%) |
Effective income tax rate | 12.63% | 8.79% | 1.99% |
Income Taxes, Components of Def
Income Taxes, Components of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets [Abstract] | ||
Reserves and accruals | $ 58 | $ 48 |
Research and development credits and other credits | 92 | 13 |
Net operating loss carry forward | 9,519 | 598 |
Stock based compensation | 6,287 | 8,998 |
Other | 0 | 3 |
Total deferred tax assets | 15,956 | 9,660 |
Valuation allowance | 0 | (611) |
Deferred tax assets after valuation allowance | 15,956 | 9,049 |
Total deferred tax liability - depreciation | (6) | 0 |
Net deferred tax assets | $ 15,950 | $ 9,049 |
Income Taxes, Pre-tax Income (L
Income Taxes, Pre-tax Income (Losses) and Operating Loss Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Abstract] | |||
Pre-tax Income (losses) | $ (49,126) | $ 307,452 | $ (19,573) |
Income Taxes [Abstract] | |||
Valuation allowance | 0 | $ 611 | |
Federal [Member] | |||
Income Taxes [Abstract] | |||
Net operating loss carryforwards | 45,326 | ||
State [Member] | |||
Income Taxes [Abstract] | |||
Net operating loss carryforwards | $ 107,989 | ||
Operating loss carryforwards, expiration date | Dec. 31, 2029 |
Income Taxes, Income Tax Uncert
Income Taxes, Income Tax Uncertainties (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Income Taxes [Abstract] | ||
Uncertain tax positions | $ 0 | |
Accrued interest and penalties | $ 0 | $ 0 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | $ 169,322 | $ 221,255 |
Fair Value | $ 169,272 | 221,256 |
Minimum [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Matutiries of investments | 1 year | |
Maximum [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Matutiries of investments | 2 years | |
Cash [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | $ 35,428 | 121,785 |
Fair Value | 35,428 | 121,785 |
Total Investment Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | 133,894 | 99,470 |
Unrealized Gains | 0 | 2 |
Unrealized Losses | (50) | (1) |
Fair Value | 133,844 | 99,471 |
Mutual Funds [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | 106,590 | 70,996 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 106,590 | 70,996 |
US Agency Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | 16,658 | 13,767 |
Unrealized Gains | 0 | 2 |
Unrealized Losses | (26) | 0 |
Fair Value | 16,632 | 13,769 |
US Treasury Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Adjusted Cost | 10,646 | 14,707 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (24) | (1) |
Fair Value | 10,622 | 14,706 |
Recurring [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 142,018 | 192,908 |
Investments Available for Sale | 27,254 | 28,348 |
Recurring [Member] | Cash [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 35,428 | 121,785 |
Recurring [Member] | Level 1 [Member] | Total Investment Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 106,590 | 71,123 |
Investments Available for Sale | 27,254 | 28,348 |
Recurring [Member] | Level 1 [Member] | Mutual Funds [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 106,590 | 70,996 |
Investments Available for Sale | 0 | 0 |
Recurring [Member] | Level 1 [Member] | US Agency Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 0 | 127 |
Investments Available for Sale | 16,632 | 13,642 |
Recurring [Member] | Level 1 [Member] | US Treasury Securities [Member] | ||
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract] | ||
Cash and Cash Equivalents | 0 | 0 |
Investments Available for Sale | $ 10,622 | $ 14,706 |
Litigation (Details)
Litigation (Details) $ in Thousands | Apr. 20, 2021USD ($) | Apr. 19, 2021USD ($) | Oct. 30, 2020USD ($)InfringmentPatent$ / Device | Mar. 23, 2020USD ($) | Aug. 31, 2018USD ($)$ / Device | Apr. 18, 2021 | Mar. 31, 2021USD ($) |
VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) ("Apple II") [Member] | |||||||
Litigation [Abstract] | |||||||
Amount of damages awarded in patent infringement case | $ 502,800 | ||||||
Number of patents allegedly infringed upon by Apple, Inc. | Patent | 2 | ||||||
Damages awarded per accused device | $ / Device | 0.84 | ||||||
Number of infringing units | Infringment | 598,629,580 | ||||||
McKool Smith P.C. v. VirnetX, Inc., AAA (Case No. 01-20-0003-7975) [Member] | |||||||
Litigation [Abstract] | |||||||
Amount of damages awarded in patent infringement case | $ 36,323 | ||||||
Contingency fee sought by plaintiff | $ 36,300 | ||||||
Contingency fee as percentage of payment | 8.00% | ||||||
Pre-judgment interest percentage | 5.00% | ||||||
Post-judgment interest percentage | 5.00% | ||||||
Contingency accrued amount | $ 38,284 | ||||||
Contingency accrued amount paid | $ 38,284 | ||||||
Positive Outcome of Litigation [Member] | VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) ("Apple II") [Member] | |||||||
Litigation [Abstract] | |||||||
Amount of damages awarded in patent infringement case | $ 502,600 | ||||||
Royalty rate per device used in calculating infringement damages | $ / Device | 1.20 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Building [Member] | |||
Leases [Abstract] | |||
Lease expense | $ 56 | $ 56 | $ 56 |
Office [Member] | |||
Leases [Abstract] | |||
Operating lease ROU assets | 98 | 44 | |
Lease liability | 98 | 44 | |
Lease expense | $ 56 | 56 | 56 |
Corporate Promotional and Marketing Facility [Member] | |||
Leases [Abstract] | |||
Lease extension period | 1 year | ||
Operating lease ROU assets | $ 948 | 1,248 | |
Lease expense | $ 300 | $ 356 | $ 385 |