Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 02, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | VirnetX Holding Corp | ||
Entity Central Index Key | 1,082,324 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 219,195,396 | ||
Entity Common Stock, Shares Outstanding | 54,479,905 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 8,726 | $ 18,658 |
Investments available for sale | 9,954 | 22,571 |
Prepaid expenses and other current assets | 685 | 653 |
Total current assets | 19,365 | 41,882 |
Prepaid expenses - non-current | 2,759 | 3,144 |
Property and equipment, net | 48 | 64 |
Total assets | 22,172 | 45,090 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 2,283 | 3,327 |
Royalty payable | 0 | 6,100 |
Accrued payroll and related expenses | 1,383 | 227 |
Related-party payable | 11 | 81 |
Income tax liability | 400 | 408 |
Deferred revenue, current portion | 1,500 | 1,500 |
Derivative liability | 0 | 320 |
Total current liabilities | 5,577 | 11,963 |
Deferred revenue, non-current portion | $ 1,500 | $ 500 |
Commitments and contingencies (Note 5) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at December 31, 2015 and 2014, Issued and outstanding: 0 shares at December 31, 2015 and 2014 | $ 0 | $ 0 |
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at December 31, 2015 and 2014, Issued and outstanding: 53,198,835 shares and 51,996,701 shares, at December 31, 2015 and 2014, respectively | 5 | 5 |
Additional paid-in capital | 144,778 | 133,072 |
Accumulated deficit | (129,669) | (100,435) |
Accumulated other comprehensive loss | (19) | (15) |
Total stockholders' equity | 15,095 | 32,627 |
Total liabilities and stockholders' equity | $ 22,172 | $ 45,090 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 53,198,835 | 51,996,701 |
Common stock, outstanding (in shares) | 53,198,835 | 51,996,701 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
Revenue | $ 1,555 | $ 1,249 | $ 2,197 |
Operating expense: | |||
Royalty expense | 5,265 | 6,100 | 0 |
Research and development | 2,277 | 2,004 | 1,782 |
Selling, general and administrative | 23,190 | 28,310 | 29,002 |
Gain on settlement (Note 3) | 0 | (23,000) | 0 |
Total operating expenses | 30,732 | 13,414 | 30,784 |
Loss from operations | (29,177) | (12,165) | (28,587) |
Gain (loss) on change in value of embedded derivative and warrants | (117) | 2,238 | 1,608 |
Interest income, net | 68 | 40 | 122 |
Loss before taxes | (29,226) | (9,887) | (26,857) |
Income tax expense | (8) | (15) | (751) |
Net loss | $ (29,234) | $ (9,902) | $ (27,608) |
Basic and diluted loss per share (in dollars per share) | $ (0.56) | $ (0.19) | $ (0.54) |
Weighted average shares outstanding basic and diluted (in shares) | 52,384,494 | 51,570,472 | 51,188,006 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | |||
Net loss | $ (29,234) | $ (9,902) | $ (27,608) |
Other comprehensive income (loss), net of tax: | |||
Change in equity adjustment from foreign currency translation, net of tax | (1) | 0 | (12) |
Change in unrealized gain (loss) on investments, net of tax | (3) | 22 | (33) |
Total other comprehensive income (loss), net of tax | (4) | 22 | (45) |
Comprehensive loss | $ (29,238) | $ (9,880) | $ (27,653) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Income (Expense) [Member] | Total |
Balance at Dec. 31, 2012 | $ 5 | $ 116,856 | $ (62,925) | $ 8 | $ 53,944 |
Balance (in shares) at Dec. 31, 2012 | 51,150,242 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 7,563 | 7,563 | |||
Exercise of options | 170 | 170 | |||
Exercise of options (in shares) | 39,833 | ||||
Vested RSUs (in shares) | 46,066 | ||||
Comprehensive income: | |||||
Net loss | (27,608) | (27,608) | |||
Other comprehensive income (loss), net of tax | (45) | (45) | |||
Comprehensive loss | (27,653) | ||||
Balance at Dec. 31, 2013 | $ 5 | 124,589 | (90,533) | (37) | 34,024 |
Balance (in shares) at Dec. 31, 2013 | 51,236,141 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash exercise of warrants, net | 9 | 9 | |||
Stock issued for cash exercise of warrants (in shares) | 2,500 | ||||
Stock-based compensation | 8,189 | 8,189 | |||
Exercise of options | 278 | 278 | |||
Exercise of options (in shares) | 679,321 | ||||
Vested RSUs (in shares) | 78,739 | ||||
Derivative liability | 7 | 7 | |||
Comprehensive income: | |||||
Net loss | (9,902) | (9,902) | |||
Other comprehensive income (loss), net of tax | 22 | 22 | |||
Comprehensive loss | (9,880) | ||||
Balance at Dec. 31, 2014 | $ 5 | 133,072 | (100,435) | (15) | 32,627 |
Balance (in shares) at Dec. 31, 2014 | 51,996,701 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock issued for cash exercise of warrants, net | 431 | 431 | |||
Stock issued for cash exercise of warrants (in shares) | 120,161 | ||||
Stock issued for cash, net | 3,276 | 3,276 | |||
Stock issued for cash, net (in shares) | 835,056 | ||||
Advisor warrant issuance | 121 | 121 | |||
Stock-based compensation | 7,275 | 7,275 | |||
Exercise of options | 165 | 165 | |||
Exercise of options (in shares) | 143,100 | ||||
Vested RSUs (in shares) | 103,817 | ||||
Derivative liability | 438 | 438 | |||
Comprehensive income: | |||||
Net loss | (29,234) | (29,234) | |||
Other comprehensive income (loss), net of tax | (4) | (4) | |||
Comprehensive loss | (29,238) | ||||
Balance at Dec. 31, 2015 | $ 5 | $ 144,778 | $ (129,669) | $ (19) | $ 15,095 |
Balance (in shares) at Dec. 31, 2015 | 53,198,835 |
CONSOLIDATED STATEMENTS OF STO7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) | Dec. 31, 2015$ / shares |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Abstract] | |
Stock issued for cash exercise of warrants, net (in dollars per share) | $ 3.59 |
Stock issued for cash, net (in dollars per share) | $ 4.04 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net loss | $ (29,234) | $ (9,902) | $ (27,608) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 26 | 25 | 36 |
Amortization of warrant issuance costs | 91 | 0 | 0 |
Stock-based compensation | 7,275 | 8,189 | 7,563 |
Change in value of derivative liability | 117 | (2,238) | (1,608) |
Changes in assets and liabilities: | |||
Prepaid expenses and other current assets | (2) | (296) | (243) |
Prepaid expenses - Non-current | 385 | (3,144) | 0 |
Prepaid taxes | 0 | 0 | 14,963 |
Deferred revenue | 1,000 | 1,333 | 667 |
Accounts payable and accrued liabilities | (1,044) | 1,806 | (1,449) |
Accrued payroll and related expenses | 1,156 | 0 | 0 |
Royalty payable | (6,100) | 6,100 | 0 |
Related-party payable | (70) | 81 | 0 |
Income tax liability | (8) | 13 | 395 |
Net cash provided by (used in) operating activities | (26,408) | 1,967 | (7,284) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (10) | (35) | (7) |
Purchase of investments | (10,673) | (45,500) | (92,729) |
Proceeds from sale, maturity of investments | 23,287 | 42,766 | 99,362 |
Net cash provided by (used in) investing activities | 12,604 | (2,769) | 6,626 |
Cash flows from financing activities: | |||
Proceeds from sale of common stock | 3,276 | 0 | 0 |
Proceeds from exercise of options | 165 | 278 | 170 |
Proceeds from exercise of warrants | 431 | 9 | 0 |
Net cash provided by financing activities | 3,872 | 287 | 170 |
Net decrease in cash and cash equivalents | (9,932) | (515) | (488) |
Cash and cash equivalents, beginning of year | 18,658 | 19,173 | 19,661 |
Cash and cash equivalents, end of year | 8,726 | 18,658 | 19,173 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the year for taxes | 6 | 2 | 0 |
Cash paid during the year for interest | $ 0 | $ 0 | $ 0 |
Formation and Business of the C
Formation and Business of the Company | 12 Months Ended |
Dec. 31, 2015 | |
Formation and Business of the Company [Abstract] | |
Formation and Business of the Company | Note 1 - Formation and Business of the Company VirnetX Holding Corporation, which we refer to as” we”, “us”, “our”, “the Company” or “VirnetX”, is engaged in the business of commercializing a portfolio of patents. We seek to license our technology, including GABRIEL Connection Technology™, to various original equipment manufacturers, or OEMs, that use our technologies in the development and manufacturing of their own products within the IP-telephony, mobility, fixed-mobile convergence and unified communications markets. Prior to 2012 our revenue was limited to an insignificant amount of software royalties pursuant to the terms of a single license agreement. During 2013 and 2012 we had revenues from settlements of patent infringement disputes whereby we received consideration for past sales of licensees that utilized our technology, where there was no prior patent license agreement (see “Revenue Recognition”). Our portfolio of intellectual property is the foundation of our business model. We currently own approximately 39 U.S. and 66 foreign patents with approximately 75 pending patent applications worldwide. Our patent portfolio is primarily focused on securing real-time communications over the Internet, as well as related services such as the establishment and maintenance of a secure domain name registry. Our patented methods also have additional applications in the key areas of device operating systems and network security for Cloud services, M2M communications in areas of Smart City, Connected Car and Connected Home. 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. Our issued U.S. and foreign patents expire at various times during the period from 2019 to 2024. Some of our issued patents and pending patent applications were acquired by our principal operating subsidiary; VirnetX, Inc., from Leidos, (f/k/a Science Applications International Corporation or SAIC) in 2006 and we are required to make payments to Leidos, based on cash or certain other values generated from those patents. The amount of such payments depends upon the type of value generated, and certain categories are subject to maximums and other limitations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
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. Use of Estimates We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“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. Revenue Recognition We derive our revenue from patent licensing. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements may be complex and include multiple elements. These agreements may include, without limitation, elements related to the settlement of past patent infringement liabilities, up-front and non-refundable license fees for the use of patents, patent licensing royalties on covered products sold by licensees, and the compensation structure and ownership of intellectual property rights associated with contractual technology development arrangements. Licensing agreements are accounted for under the Financial Accounting Standards Board (“FASB”) revenue recognition guidance, “Revenue Arrangements with Multiple Deliverables.” This guidance requires consideration to be allocated to each element of an agreement that has stand-alone value using the relative fair value method. In other circumstances, such as those agreements involving consideration for past and expected future patent royalty obligations, after consideration of the particular facts and circumstances, the appropriate recording of revenue between periods may require the use of judgment. In all cases, revenue is only recognized after all of the following criteria are met: (1) written agreements have been executed; (2) delivery of technology or intellectual property rights has occurred or services have been rendered; (3) fees are fixed or determinable; and (4) collectability of fees is reasonably assured. Patent License Agreements • Consideration for Past Sales • Current Royalty Payments • Non-Refundable Up-Front Fees and Minimum Fee Contracts • Non-Royalty Elements Deferred revenue In August 2013 we began receiving annual payments on a contract that requires payment to us over 4 years of $10,000 (“August 2013 Contract Settlement”). From the inception of that license to December 31, 2015, we received cash totaling $7,500, all of which is non-refundable. We recognized $1,500, $1,167 and $1,833 of revenue related from the August 2013 Contract Settlement during the years ended December 31, 2015, 2014 and 2013 respectively. Activity under the August 2013 Contract Settlement was as follows: 2015 2014 2013 Deferred Revenue, beginning of year $ 2,000 $ 667 $ — Payment received 2,500 2,500 2,500 Less: Amount amortized as revenue 1,500 1,167 1,833 Deferred Revenue, end of year $ 3,000 $ 2,000 $ 667 Royalty Expense Royalty expense for the years ended December 31, 2015, 2014 and 2013 was $5,265, $6,100 and zero respectively and was a result of our royalty agreement with Leidos. There was no expense for the year ended December 31, 2013. The agreement provides for revenue sharing and legal reimbursements related to attorney time and expenses incurred by Leidos during discovery and other aspects of litigation matters that have been resolved. 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. Prepaid Expenses and Other Current Assets Prepaid Expense and Other Current Assets at December 31, 2015 includes the current portion of prepaid rent for a facility lease for corporate promotional and marketing purposes. Beginning March 2014, the prepayment totaling $4,000 is being amortized over the 10-year term of the lease. The unamortized non-current portion of the prepayment is included in Prepaid Expenses-Non-current on the consolidated balance sheet. 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. Unrealized gains and losses on our investments are included in other comprehensive income. 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 to seven years. Repair and maintenance costs are charged to expense as incurred. Concentration of Credit Risk and Other Risks and Uncertainties Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. During the year ended December 31, 2015 and 2014, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. Fair Value The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. Intangible Assets We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. Impairment of Long-Lived Assets We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. Research and Development Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. Income Taxes We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing if we will realize our deferred tax assets, we consider whether it is more likely than not that some portion of the deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. Consistent with our policy, and because of our history of operating losses, we do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards, that may be used to offset future taxable income. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. We account for our uncertain tax positions in accordance with U.S. GAAP. The purpose of this method is to clarify accounting for uncertain tax positions recognized. The U.S. GAAP method of accounting for uncertain tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. Derivative Instruments Our Series I Warrants were accounted for as derivative instruments as a result of an anti-dilution provision which, in accordance with U.S. GAAP, prevented them from being considered indexed to our stock and qualified for an exception to derivative accounting. We recognize derivative instruments as either assets or liabilities on the accompanying Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying Consolidated Statements of Operations. Stock-Based Compensation We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs net of the applicable forfeiture rate and recognize the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term of 4 years. We estimate the forfeiture rate based on our historical experience if any. See Note 7 - Stock-Based Compensation for additional information concerning our share-based compensation awards. In addition, as required we record stock and options granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued as they vest over the performance period. Earnings per Share Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. During 2015, 2014 and 2013 we incurred losses; therefore, the effect of any common stock equivalent would be anti-dilutive during these periods. Reclassifications Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year's presentation. New Accounting Pronouncements In November 2015 the Financial Accounting Standards Board (“FASB”) issued “ Accounting Standards Update (“ASU”) No. 2015-17—Income Taxes (Topic 740)”. In April 2015, the FASB issued an ASU entitled “Interest - Imputation of Interest.” In February 2015, the FASB issued an ASU entitled “Consolidation.” In January 2015, the FASB issued an ASU entitled “Income Statement Extraordinary and Unusual Items.” In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “ Presentation of Financial Statements – Going Concern” Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” substantial doubt, In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation for Share-Based Payments In May 2014, the FASB issued ASU No. 2014-09 “ Revenue from Contracts with Customers “Revenue Recognition” “Other Assets and Deferred Costs—Contracts with Customers”. |
Gain on Settlement
Gain on Settlement | 12 Months Ended |
Dec. 31, 2015 | |
Gain on Settlement [Abstract] | |
Gain on Settlement | Note 3 - Gain on Settlement In December 2014, we received a $23,000 cash settlement resulting from litigation with Microsoft (see Note 14 “Litigation”). In June 2010, we received a $200,000 cash settlement from litigation with Microsoft, in which we agreed to dismiss the pending lawsuits and any damages. The 2010 settlement agreement was amended in December 2014 to settle a subsequent lawsuit with Microsoft, raising the total cash settlement with Microsoft, as amended, to $223,000. In both the original settlement and the December 2014 amendment, we could not practically and objectively separate any settlement portion from the revenue element as discussed under the guidance of Accounting Standards Codification, or ASC, 605, “Revenue Recognition” |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 4 - Property and Equipment Our major classes of property and equipment were as follows: December 31 2015 2014 2013 Office furniture $ 70 $ 70 $ 70 Computer equipment 168 157 121 Total 238 227 191 Less accumulated depreciation (190 ) (163 ) (138 ) $ 48 $ 64 $ 53 Depreciation expense for the years ended December 31, 2015, 2014 and 2013 was $26, $25 and $24 respectively. |
Commitments and Related Party T
Commitments and Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Related Party Transactions [Abstract] | |
Commitments and Related Party Transactions | Note 5 – Commitments and Related Party Transactions We lease our offices under an operating lease with a third party expiring in October 2015. We recognize rent expense on a straight-line basis over the term of the lease. Rent expense was $56, $56 and $56 for the years ended December 31, 2015, 2014 and 2013, respectively. During 2015 and 2014 we leased the use of an aircraft from K2 Investment Fund LLC (“LLC”) for business travel for employees of the Company. We incurred approximately $593 and $296 in rental fees (including fees and other reimbursements) to the LLC during the year ended December 31, 2015 and 2014 respectively, for such use of which $11 remains payable at December 31, 2015. Our Chief Executive Officer and Chief Administrative Officer are the managing partners of the LLC and control the equity interests of the LLC. On January 31, 2015 we entered into a 12-month non-exclusive lease 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 lease renews on an annual basis unless terminated by the Lessor or Lessee. Neither party has yet exercised their termination rights. |
Stock Plan
Stock Plan | 12 Months Ended |
Dec. 31, 2015 | |
Stock Plan [Abstract] | |
Stock Plan | Note 6 - Stock Plan We have a stock incentive plan for employees and others called the VirnetX Holding Corporation 2013 Equity Incentive Plan (the “Plan”), which has been approved by our stockholders. The 2013 Plan provides for the issuance of up to 2,500,000 shares of our common stock. To the extent that any award should expire, become un-exercisable or is otherwise forfeited, the shares subject to such award will again become available for issuance under the 2013 Plan. The 2013 Plan provides for the granting of stock options and restricted stock purchase rights (“RSU”) to our employees and consultants. Stock options granted under the 2013 Plan may be incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) may only be granted to our employees (including officers and directors). Nonqualified stock options (“NSO”) and stock purchase rights may be granted to our employees and consultants. The 2013 Plan will expire in 2023. Options may be granted under the 2013 Plan with an exercise price determined by our Board of Directors, or a duly appointed committee thereof, provided, however, that the exercise price of an option granted to any employee shall be not less than 100% of the fair market value at the date of grant in the case of ISO or 85% of the fair market value at the date of grant in the case of an NSO. The exercise price of an ISO or NSO granted to one of our Named Executive Officers shall not be less than 100% fair market value of the shares at the date of grant and the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the fair market value of the shares on the date of grant. Stock options granted under the 2013 Plan typically vest over four years and have a 10-year term. All RSUs are considered to be granted at the fair value of our stock on the date of grant because they have no exercise price. RSUs typically vest over four years. At December 31, 2015 there were 1,069,552 shares available for grant under the 2013 Plan. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 7 - Stock-Based Compensation The following tables summarize information about stock-options and RSUs outstanding at December 31, 2015: Options Outstanding Options Vested and Exercisable Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $ 0.24- 1.58 821,402 3.11 $ 1.11 821,402 3.11 $ 1.11 $ 1.74- 6.95 2,924,901 3.82 4.74 2,308,933 2.27 4.84 $ 14.52- 35.25 1,253,625 6.71 23.16 987,800 6.40 23.99 4,999,928 4.43 $ 8.76 4,118,135 3.43 $ 8.69 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, 2012 4,776,224 6.94 — — Options granted 274,625 25.37 — — Options exercised (39,833 ) 4.27 — — Options cancelled (34,167 ) 20.57 — — Outstanding at December 31, 2013 4,976,849 7.86 — — Options granted 261,500 15.21 — — Options exercised (679,321 ) 0.41 — — Options cancelled (70,000 ) 13.38 — — Outstanding at December 31, 2014 4,489,028 $ 9.33 — — Options granted 694,000 4.47 — — Options exercised (143,100 ) 1.15 — — Options cancelled (40,000 ) 25.61 — — Outstanding at December 31, 2015 4,999,928 $ 8.76 4.43 $ 1,215 Options exercisable at December 31, 2015 4,118,135 $ 8.69 3.43 $ 1,215 RSUs Number of RSUs Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2012 151,665 $ 25.60 $ — RSUs granted 156,415 23.72 — RSUs vested (55,832 ) 27.06 — RSUs cancelled (3,333 ) 24.75 — Outstanding at December 31, 2013 248,915 $ 24.10 $ — RSUs granted 154,332 15.30 — RSUs vested (88,686 ) 24.08 — RSUs cancelled (4,167 ) 24.13 — Outstanding at December 31, 2014 310,394 $ 19.74 $ — RSUs granted 162,665 5.57 — RSUs vested (113,103 ) 20.11 — RSUs cancelled — — — Outstanding at December 31, 2015 359,956 $ 13.22 $ — Intrinsic value is calculated as the difference between the per-share market price of our common stock on the last trading day of 2015, which was $2.57, and the exercise price of the options. For options exercised, the intrinsic value is the difference between market price and the exercise price on the date of exercise. We received cash proceeds of $165, $278 and $170 from stock options exercised in 2015, 2014 and 2013 respectively. The total intrinsic value of options exercised was $203, $3,575 and $676 during the years ended December 31, 2015, 2014 and 2013, respectively. For RSUs vested, the intrinsic value is the difference between market price and the vested price on the date of vest. The total intrinsic value of the RSUs vested was zero during the year ended December 31, 2015. Stock-based compensation expense is included in general and administrative expense for each period as follows: Stock-Based Compensation by Type of Award Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Employee stock options $ 4,939 $ 5,951 $ 6,488 RSUs 2,336 2,238 1,075 Total stock-based compensation expense $ 7,275 $ 8,189 $ 7,563 As of December 31, 2015, there was $5,845 of unrecognized stock-based compensation expense expected to be recognized related to unvested employee stock options and $3,384 of unrecognized stock-based compensation expense to be recognized related to unvested RSUs. These costs are expected to be recognized over a weighted-average period of 3.02 and 2.32 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, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Expected stock price volatility 82% 88% 93% Risk-free interest rate 2.12% 2.56% 2.04% Expected life term (in years) 6.07 years 6.0 years 6.10 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 $3.17, $11.26 and $19.24 per share during the years ended December 31, 2015, 2014 and 2013, 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, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 8 - Earnings Per Share Basic earnings per share are based on the weighted average number of shares outstanding for a period. Diluted earnings per share are based upon the weighted average number of shares and potentially dilutive common shares outstanding. Potential common shares outstanding principally include stock options, under our stock plan and warrants. During 2015, 2014 and 2013 we incurred losses; therefore, the effect of any common stock equivalent would be anti-dilutive during those periods. The table below sets forth the basic and diluted loss per share calculations: Year Ended December 31, 2015 2014 2013 Net loss $ (29,234 ) $ (9,902 ) $ (27,608 ) Basic and diluted weighted average number of shares outstanding 52,384 51,570 51,188 Basic and diluted loss per share $ (0.56 ) $ (0.19 ) $ (0.54 ) |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2015 | |
Common Stock [Abstract] | |
Common Stock | Note 9 - Common Stock Each share of common stock has the right to one vote. The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. Our restated articles of incorporation authorize us to issue up to 100,000,000 shares of $.0001 par value common stock. On August 21, 2015 we filed a universal shelf registration statement with the SEC enabling us to offer and sell from time to time up to $100 million of equity, debt or other types of securities. We also entered into an at-the-market (“ATM”) equity offering sales agreement with Cowen & Company, LLC on August 20, 2015, under which we may offer and sell shares of our common stock having an aggregate value of up to $35 million. During the year ended December 31, 2015, we sold 835,056 shares under the ATM. The average sales price per common share was $4.04 and the aggregate proceeds from the sales totaled $3,378 during the period. Sales commissions, fees and other costs associated with the ATM totaled $101. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Equity | Note 10 – Equity Warrants During the year ended December 31, 2015 we issued warrants (“Advisor Warrants”) for the purchase of 25,000 shares of common stock for $7 per share, which expire in April 2020. The Advisor Warrants were issued for advisory services provided by a third party. Our Advisor Warrants were recorded at fair value on the issuance date and included in Additional Paid in Capital on our Consolidated Balance Sheet. The Advisor Warrants are exercisable by the holder, in whole or in part, until expiration, and may also be net-share-settled. Terms of the warrant agreement include no registration requirements for the underlying common stock and there are no anti-dilution provisions. The fair value at issuance of the warrants was recorded in Prepaid Expenses and Other Current Assets, and is being amortized over the twelve-month life of the service contract, with the expense included in Selling, General and Administrative Expense in our Consolidated Statements of Operations. Information about warrants outstanding during the twelve months ended December 31, 2015 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2014 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at December 31, 2015 Expiration Date 2,619,036(1) $3.59 157,467 — 120,161 37,306 — March 2015 25,000(2) $7.00 — 25,000 — — 25,000 April 2020 157,467 25,000 120,161 37,306 25,000 (1) Referred to as Series I Warrants. (2) Referred to as Advisor Warrants |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2015 | |
Employee Benefit Plan [Abstract] | |
Employee Benefit Plan | Note 11 - Employee Benefit Plan We sponsor a defined contribution, 401k plan, covering substantially all our employees. Our matching contribution to the plan was approximately $59 in 2015, $45 in 2014 and $47 in 2013. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | Note 12 - Income Taxes The income tax provision is comprised of the following: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Current: Federal $ 10 $ (13 ) $ (354 ) State (18 ) (2 ) (397 ) Foreign — — — (8 ) (15 ) (751 ) Deferred: Federal — — — State — — — — — — Total income tax provision $ (8 ) $ (15 ) $ (751 ) A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 United States federal statutory rate 35.00 % 35.00 % 35.00 % State taxes, net of federal benefit (0.04 )% (0.02 )% (1.48 )% Valuation allowance (33.36 )% (41.67 )% (37.11 )% Stock options (1.62 )% 0.39 % (0.17 )% Prior year true-up 0.03 % (0.13 )% (1.32 )% R&D Credit 0.38 % — — Warrants (0.14 )% 7.92 % 2.10 % Other (0.29 )% (1.64 )% 0.18 % Effective income tax rate (0.04 )% (0.15 )% (2.80 )% In 2015, 2014 and 2013, we had pre-tax losses of $21, $10, and $27 million, respectively, which are available for carry forward to offset future taxable income. We made determinations to provide full valuation allowances for our net deferred tax assets at the end of 2015, 2014 and 2013, including NOL carryforwards generated during the years, based on our evaluation of positive and negative evidence, including our history of operating losses and the uncertainty of generating future taxable income that would enable us to realize our deferred tax assets. The small provisions in 2015 and 2014 were related to the payment of miscellaneous penalties and minimum taxes. The 2013 tax provision of $751 was due primarily to a change in our estimate of taxable income for the 2012 period and a tax reserve for certain credits utilized in the 2010 tax return. Deferred tax assets (liabilities) consist of the following: Year Ended December 31, 2015 Year Ended December 31, 2014 Deferred tax assets: Reserves and accruals $ 462 $ — State tax 1 1 Research and development credits and other credits 908 924 Net operating loss carry forward 18,496 11,190 Stock based compensation 9,855 8,452 Other 102 127 Total deferred tax assets 29,824 20,694 Valuation allowance (29,814 ) (20,679 ) Deferred tax assets after valuation allowance 10 15 Deferred tax liability: Depreciation and amortization (10 ) (15 ) Total deferred tax liability (10 ) (15 ) Net deferred tax assets $ — $ — In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets at December 31, 2015 will not be fully realizable. Accordingly, management has maintained a full valuation allowance against its net deferred tax assets at December 31, 2015. The net change in the total valuation allowance for the 12 months ended December 31, 2015 was an increase of $9,135. At December 31, 2015, we had federal and state net operating loss carry-forwards of approximately $52,549 and $37,603, respectively, expiring beginning in 2028 and 2017, respectively. At December 31, 2015, we had federal research and development credit carry-forwards of approximately $908 expiring beginning in 2031. Internal Revenue Code Section 382 places a limitation (the “Section 382 Limitation”) on the amount of taxable income that can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. California the state in which our headquarters was once located has similar rules. Our capitalization described herein may have resulted in such a change. Generally, after a control change, a loss corporation cannot deduct net operating loss carry forwards generated in years prior to the deemed change of control under IRC Section 382 in excess of the Section 382 Limitation. We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. As a result, we have provided contingent reserve under ASC 740-10 of $316 and $316 at December 31, 2015, and December 31, 2014, respectively. Our tax returns are subject to review by various tax authorities. The returns subject to review are those from 2005 forward. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We have accrued interest or penalties during the 12-month period ended December 31, 2015 in the amount of $0. A reconciliation of beginning and ending amounts of unrecognized tax benefits follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Balance at the beginning of the year $ 316 $ 316 $ 128 Additions based on tax positions related to the current year — — — Additions for tax positions of prior years — — 188 Settlements — — — Lapse of applicable statute of limitations — — — Balance at the end of the year $ 316 $ 316 $ 316 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement | Note 13 - Fair Value Measurement We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The carrying amounts for cash and cash equivalents, investments in certificates of deposit, accounts payable and accrued expenses approximate their fair values due to the short period of time until maturity. Mutual Funds Corporate, Government and U.S. Agency securities Series I Warrants The following table shows our cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents of investments available for sale as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,296 $ — $ — $ 3,296 $ 3,296 $ — Level 1: Mutual funds 5,005 — — 5,005 5,005 — Government securities 1,806 — (3 ) 1,803 — 1,803 U.S agency securities 8,579 1 (4 ) 8,576 425 8,151 15,390 1 (7 ) 15,384 5,430 9,954 Total $ 18,686 $ 1 $ (7 ) $ 18,680 $ 8,726 $ 9,954 December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 1,183 $ — $ — $ 1,183 $ 1,183 $ — Level 1: Mutual funds 10,139 — — 10,139 10,139 — Corporate securities 9,405 1 (3 ) 9,403 1,645 7,758 U.S agency securities 20,504 2 (2 ) 20,504 5,691 14,813 40,048 3 (5 ) 40,046 17,475 22,571 Total $ 41,231 $ 3 $ (5 ) $ 41,229 $ 18,658 $ 22,571 The maturities of our marketable securities generally range from within one to two years. Actual maturities could differ from contractual maturities due to call or prepayment provisions. The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2014 (in thousands): Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Series l Warrants $ — $ — $ 320 $ 320 Total $ — $ — $ 320 $ 320 The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2015, 2014 and 2013 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Year ended December 31, 2015 Year ended December 31, 2014 Year ended December 31, 2013 Beginning Balance $ 320 $ 2,564 $ 4,172 (Gain) losses included in net losses 117 (2,237 ) (1,608 ) Settlements (333 ) (7 ) — Expiration of warrants (104 ) — — Ending Balance $ — $ 320 $ 2,564 |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2015 | |
Litigation [Abstract] | |
Litigation | Note 14 - Litigation We have one intellectual property infringement lawsuit pending against Apple, Inc. in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we allege that this party infringes on certain of our patents. We seek damages and injunctive relief in all the complaints. VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case On March 30, 2015, the United States Court for the Eastern District of Texas, Tyler Division, issued an order finding substantial overlap between the remanded portions of the Civil Action Case 6:10-CV-00417-LED (VirnetX vs. Cisco et. al.), and the ongoing Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. The jury trial in this case was held on January 25, 2016. On February 4, 2016, a jury in the United States Court for the Eastern District of Texas, Tyler Division, awarded us $625.6 million in a verdict against Apple Corporation for infringing four of our US patents, marking it the second time a federal jury has found Apple liable for infringing VirnetX’s patented technology. The verdict includes royalties awarded to us based on an earlier patent infringement finding ( Case 6:10-CV-00417-LED) VirnetX Inc. v. Cisco Systems, Inc. et al. (13-1489-LP VirnetX, Case 6:10-CV-00417-LED) On August 11, 2010, we initiated a lawsuit by filing a complaint against Aastra, Apple, Cisco, and NEC in the United States District Court for the Eastern District of Texas, Tyler Division, pursuant to which we alleged that these parties infringe on certain of our patents. We sought damages and injunctive relief. Aastra and NEC agreed to sign license agreements with us and we agreed to drop all the accusations of infringement against them. At the pre-trial hearing, the judge decided to conduct separate jury trial for each defendant, and try only the case against Apple on the scheduled trial date. The jury trial of our case against Cisco was held on March 4, 2013. The jury in our case against Cisco came back with a verdict of non-infringement also determined that all our patents-in-suit patents are not invalid. Our motions for a new trial and Cisco’s infringement of certain VirnetX patents were denied and the case against Cisco was closed. The jury trial of our case against Apple was held on October 31, 2012. On November 6, 2012, a jury in the United States Court for the Eastern District of Texas, Tyler Division, awarded us over $368 million in a verdict against Apple Corporation for infringing four of our patents. On February 26, 2013, the court issued its Memorandum Opinion and Order regarding post-trial motions resulting from the prior jury verdict denying Apple’s motion to reduce the damages awarded by the jury for past infringement. The Court further denied Apple’s request for a new trial on the liability and damages portions of the verdict and granted our motions for pre-judgment interest, post-judgment interest, and post-verdict damages to date. The Court ordered that Apple pay $34 in daily interest up to final judgment and $330 in daily damages for infringement up to final judgment for certain Apple devices included in the verdict. The Court denied our request for a permanent injunction and severed the future infringement portion into its own separate proceedings under Case 6:13-CV-00211-LED. On July 3, 2013, Apple filed an appeal of the judgment dated February 27, 2013 and order dated June 4, 2013 denying Apple’s motion to alter or amend the judgment to the United States Court of Appeals for the Federal Circuit (USCAFC). On September 16, 2014, USCAFC issued their opinion, affirming the jury’s finding that all 4 of our patents are valid, confirming the jury’s finding of infringement of VPN on Demand under many of the asserted claims of our ‘135 and ‘151 patents, and confirming the district’s court’s decision to allow evidence concerning our licenses and royalty rates in connection with the determination of damages. In its opinion, the USCAFC also vacated the jury’s damages award and the district court’s claim construction with respect to parts of our ‘504 and ‘211 patents and remanded the damages award and determination of infringement with respect to FaceTime –for further proceedings consistent with its opinion. On October 16, 2014, we filed a petition with the USCAFC, requesting a rehearing and rehearing en banc of the Federal Circuit’s September 14, 2014, decision concerning VirnetX’s litigation against Apple Inc. On December 16, 2014, USCAFC denied our petition requesting a rehearing and rehearing en banc of the Federal Circuit's September 14, 2014, decision and remanded the case back to the Eastern District of Texas, Tyler Division, for further proceedings consistent with its opinion. On February 25, 2015, USCAFC granted Apple's motions to lift stay of proceedings and vacate Case 6:13-CV-00211-LED. All the issues at hand in Case 6:13-CV-00211-LED will now be addressed as a part of VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) - Consolidated Lead Case. On March 30, 2015, the court issued an order finding substantial overlap between the remanded portions of this case and the ongoing Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. All future updates will now be provided under VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) On November 6, 2012, we filed a new complaint against Apple Inc., in the United States District Court for the Eastern District of Texas, Tyler Division for willfully infringing four of our patents, U.S. Patent Nos. 6,502,135, 7,418,504, 7,921,211 and 7,490,151, and seeking both an unspecified amount of damages and injunctive relief. The accused products include the iPhone 5, iPod Touch 5th Generation, iPad 4th Generation, iPad mini, and the latest Macintosh computers. Due to their release dates, these products were not included in the previous lawsuit that concluded with a Jury verdict on November 6, 2012 that was subsequently upheld by the United States District Court for the Eastern District of Texas, Tyler Division, on February 26, 2013. On July 1, 2013, we filed a consolidated and amended complaint to include U.S. Patent No. 8,051,181 and consolidate Civil Action No. 6:11-cv-00563-LED. On August 27, 2013, we filed an amended complaint including allegations of willful infringement related to U.S. Patent No. 8,504,697 seeking both damages and injunctive relief. The Markman hearing in this case was held on May 20, 2014 and on August 8, 2014, issued its Markman Order, denying Apple’s motion for summary judgment of indefiniteness, in which Apple alleged that some of the disputed claims terms in the patents asserted by us were invalid for indefiniteness. In a separate order, the court granted in part and denied in part our motion for partial summary judgment on Apple’s invalidity counterclaims, precluding Apple from asserting invalidity as a defense against infringement of the claims that were tried before a jury in our prior litigation against Apple (VirnetX vs. Cisco et. al., Case 6:10-CV-00417-LED). The jury trial in this case was scheduled for October 13, 2015. On March 30, 2015, the court issued an order finding substantial overlap between this case and the remanded portions of Case 6:10-CV-00417-LED (VirnetX vs. Cisco et. al.). The court consolidated the two civil actions under Civil Action Case 6:12-CV-00855-LED (VirnetX Inc. v. Apple, Inc.) and designated it as the lead case. All future updates will now be provided under VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) – Consolidated Lead Case One or more potential intellectual property infringement claims may also be available to us against certain other companies who have the resources to defend against any such claims. Although we believe these potential claims are worth pursuing, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we will prevail on such potential claims. In addition, bringing a lawsuit may lead to potential counterclaims which may preclude our ability to commercialize our initial products, which are currently in development. Currently, we are not a party to any other pending legal proceedings, and are not aware of any proceeding threatened or contemplated against us by any governmental authority or other party. |
Quarterly Financial Information
Quarterly Financial Information (unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information (unaudited) [Abstract] | |
Quarterly Financial Information (unaudited) | Note 15 - Quarterly Financial Information (unaudited) First Second Third Fourth (in thousands except per share) 2015 Revenue $ 375 $ 400 $ 375 $ 405 Loss from operations (5,759 ) (9,567 ) (6,102 ) (7,749 ) Net loss (5,855 ) (9,546 ) (6,097 ) (7,736 ) Basic earnings (loss) per common share $ (0.11 ) $ (0.18 ) $ (0.12 ) $ (0.15 ) Diluted earnings (loss) per common share $ (0.11 ) $ (0.18 ) $ (0.12 ) $ (0.15 ) First Second Third Fourth (in thousands except per share) 2014 Revenue $ 250 $ 268 $ 292 $ 439 Gain on settlement — — — 23,000 Income (loss) from operations (6,953 ) (6,171 ) (6,250 ) 6,870 Net income/ (loss) (6,087 ) (6,670 ) (4,468 ) 7,325 Basic earnings (loss) per common share $ (0.12 ) $ (0.13 ) $ (0.09 ) $ 0.14 Diluted earnings (loss) per common share $ (0.12 ) $ (0.13 ) $ (0.09 ) $ 0.14 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – Subsequent Events Subsequent to the year ended December 31, 2015, we sold 1,231,069 shares under the ATM. The average sales price per common share was $4.13 and the aggregate proceeds from the sales totaled $5,086 during the period. Sales commissions, fees and other costs associated with the ATM totaled $153. On February 4, 2016, a jury in the U.S. Court for the Eastern District of Texas, Tyler Division, awarded us $625.6 million in a verdict against Apple Corporation for infringing four of our patents. The verdict includes royalties awarded to us based on an earlier patent infringement finding against Apple. ln addition to determining the royalty owed by Apple for its prior infringement, this verdict also includes an award based on the jury’s finding that Apple’s modified VPN On Demand, iMessage and FaceTime services have continued to infringe our patents. We are uncertain if the court’s decision may be appealed, or if other actions may be taken which would impact the court’s decision. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“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. |
Revenue Recognition | Revenue Recognition We derive our revenue from patent licensing. The timing and amount of revenue recognized from each licensee depends upon a variety of factors, including the specific terms of each agreement and the nature of the deliverables and obligations. Such agreements may be complex and include multiple elements. These agreements may include, without limitation, elements related to the settlement of past patent infringement liabilities, up-front and non-refundable license fees for the use of patents, patent licensing royalties on covered products sold by licensees, and the compensation structure and ownership of intellectual property rights associated with contractual technology development arrangements. Licensing agreements are accounted for under the Financial Accounting Standards Board (“FASB”) revenue recognition guidance, “Revenue Arrangements with Multiple Deliverables.” This guidance requires consideration to be allocated to each element of an agreement that has stand-alone value using the relative fair value method. In other circumstances, such as those agreements involving consideration for past and expected future patent royalty obligations, after consideration of the particular facts and circumstances, the appropriate recording of revenue between periods may require the use of judgment. In all cases, revenue is only recognized after all of the following criteria are met: (1) written agreements have been executed; (2) delivery of technology or intellectual property rights has occurred or services have been rendered; (3) fees are fixed or determinable; and (4) collectability of fees is reasonably assured. Patent License Agreements • Consideration for Past Sales • Current Royalty Payments • Non-Refundable Up-Front Fees and Minimum Fee Contracts • Non-Royalty Elements |
Deferred Revenue | Deferred revenue In August 2013 we began receiving annual payments on a contract that requires payment to us over 4 years of $10,000 (“August 2013 Contract Settlement”). From the inception of that license to December 31, 2015, we received cash totaling $7,500, all of which is non-refundable. We recognized $1,500, $1,167 and $1,833 of revenue related from the August 2013 Contract Settlement during the years ended December 31, 2015, 2014 and 2013 respectively. Activity under the August 2013 Contract Settlement was as follows: 2015 2014 2013 Deferred Revenue, beginning of year $ 2,000 $ 667 $ — Payment received 2,500 2,500 2,500 Less: Amount amortized as revenue 1,500 1,167 1,833 Deferred Revenue, end of year $ 3,000 $ 2,000 $ 667 |
Royalty Expense | Royalty Expense Royalty expense for the years ended December 31, 2015, 2014 and 2013 was $5,265, $6,100 and zero respectively and was a result of our royalty agreement with Leidos. There was no expense for the year ended December 31, 2013. The agreement provides for revenue sharing and legal reimbursements related to attorney time and expenses incurred by Leidos during discovery and other aspects of litigation matters that have been resolved. |
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. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid Expense and Other Current Assets at December 31, 2015 includes the current portion of prepaid rent for a facility lease for corporate promotional and marketing purposes. Beginning March 2014, the prepayment totaling $4,000 is being amortized over the 10-year term of the lease. The unamortized non-current portion of the prepayment is included in Prepaid Expenses-Non-current on the consolidated balance sheet. |
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. Unrealized gains and losses on our investments are included in other comprehensive income. 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 to seven years. Repair and maintenance costs are charged to expense as incurred. |
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties Our cash and cash equivalents are primarily maintained at two major financial institutions in the United States. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. A portion of those balances are insured by the Federal Deposit Insurance Corporation, or FDIC. During the year ended December 31, 2015 and 2014, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents. |
Fair Value | Fair Value The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities. |
Intangible Assets | Intangible Assets We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. |
Research and Development | Research and Development Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred. |
Income Taxes | Income Taxes We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing if we will realize our deferred tax assets, we consider whether it is more likely than not that some portion of the deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. Consistent with our policy, and because of our history of operating losses, we do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards, that may be used to offset future taxable income. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations. We account for our uncertain tax positions in accordance with U.S. GAAP. The purpose of this method is to clarify accounting for uncertain tax positions recognized. The U.S. GAAP method of accounting for uncertain tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates. |
Derivative Instruments | Derivative Instruments Our Series I Warrants were accounted for as derivative instruments as a result of an anti-dilution provision which, in accordance with U.S. GAAP, prevented them from being considered indexed to our stock and qualified for an exception to derivative accounting. We recognize derivative instruments as either assets or liabilities on the accompanying Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the accompanying Consolidated Statements of Operations. |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs net of the applicable forfeiture rate and recognize the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term of 4 years. We estimate the forfeiture rate based on our historical experience if any. See Note 7 - Stock-Based Compensation for additional information concerning our share-based compensation awards. In addition, as required we record stock and options granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued as they vest over the performance period. |
Earnings Per Share | Earnings per Share Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. During 2015, 2014 and 2013 we incurred losses; therefore, the effect of any common stock equivalent would be anti-dilutive during these periods. |
Reclassifications | Reclassifications Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year's presentation. |
New Accounting Pronouncements | Reclassifications Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year's presentation. New Accounting Pronouncements In November 2015 the Financial Accounting Standards Board (“FASB”) issued “ Accounting Standards Update (“ASU”) No. 2015-17—Income Taxes (Topic 740)”. In April 2015, the FASB issued an ASU entitled “Interest - Imputation of Interest.” In February 2015, the FASB issued an ASU entitled “Consolidation.” In January 2015, the FASB issued an ASU entitled “Income Statement Extraordinary and Unusual Items.” In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “ Presentation of Financial Statements – Going Concern” Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” substantial doubt, In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation for Share-Based Payments In May 2014, the FASB issued ASU No. 2014-09 “ Revenue from Contracts with Customers “Revenue Recognition” “Other Assets and Deferred Costs—Contracts with Customers”. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Activity under August 2013 Contract Settlement | Activity under the August 2013 Contract Settlement was as follows: 2015 2014 2013 Deferred Revenue, beginning of year $ 2,000 $ 667 $ — Payment received 2,500 2,500 2,500 Less: Amount amortized as revenue 1,500 1,167 1,833 Deferred Revenue, end of year $ 3,000 $ 2,000 $ 667 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment [Abstract] | |
Classes of Property and Equipment | Our major classes of property and equipment were as follows: December 31 2015 2014 2013 Office furniture $ 70 $ 70 $ 70 Computer equipment 168 157 121 Total 238 227 191 Less accumulated depreciation (190 ) (163 ) (138 ) $ 48 $ 64 $ 53 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock-Based Compensation [Abstract] | |
Information about Stock Options Outstanding | The following tables summarize information about stock-options and RSUs outstanding at December 31, 2015: Options Outstanding Options Vested and Exercisable Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $ 0.24- 1.58 821,402 3.11 $ 1.11 821,402 3.11 $ 1.11 $ 1.74- 6.95 2,924,901 3.82 4.74 2,308,933 2.27 4.84 $ 14.52- 35.25 1,253,625 6.71 23.16 987,800 6.40 23.99 4,999,928 4.43 $ 8.76 4,118,135 3.43 $ 8.69 |
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, 2012 4,776,224 6.94 — — Options granted 274,625 25.37 — — Options exercised (39,833 ) 4.27 — — Options cancelled (34,167 ) 20.57 — — Outstanding at December 31, 2013 4,976,849 7.86 — — Options granted 261,500 15.21 — — Options exercised (679,321 ) 0.41 — — Options cancelled (70,000 ) 13.38 — — Outstanding at December 31, 2014 4,489,028 $ 9.33 — — Options granted 694,000 4.47 — — Options exercised (143,100 ) 1.15 — — Options cancelled (40,000 ) 25.61 — — Outstanding at December 31, 2015 4,999,928 $ 8.76 4.43 $ 1,215 Options exercisable at December 31, 2015 4,118,135 $ 8.69 3.43 $ 1,215 |
Restricted Stock Units Activity | RSUs Number of RSUs Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at December 31, 2012 151,665 $ 25.60 $ — RSUs granted 156,415 23.72 — RSUs vested (55,832 ) 27.06 — RSUs cancelled (3,333 ) 24.75 — Outstanding at December 31, 2013 248,915 $ 24.10 $ — RSUs granted 154,332 15.30 — RSUs vested (88,686 ) 24.08 — RSUs cancelled (4,167 ) 24.13 — Outstanding at December 31, 2014 310,394 $ 19.74 $ — RSUs granted 162,665 5.57 — RSUs vested (113,103 ) 20.11 — RSUs cancelled — — — Outstanding at December 31, 2015 359,956 $ 13.22 $ — |
Stock-Based Compensation by Type of Award | Stock-based compensation expense is included in general and administrative expense for each period as follows: Stock-Based Compensation by Type of Award Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Employee stock options $ 4,939 $ 5,951 $ 6,488 RSUs 2,336 2,238 1,075 Total stock-based compensation expense $ 7,275 $ 8,189 $ 7,563 |
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, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Expected stock price volatility 82% 88% 93% Risk-free interest rate 2.12% 2.56% 2.04% Expected life term (in years) 6.07 years 6.0 years 6.10 years Expected dividends 0% 0% 0% |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Loss Per Share Calculations | The table below sets forth the basic and diluted loss per share calculations: Year Ended December 31, 2015 2014 2013 Net loss $ (29,234 ) $ (9,902 ) $ (27,608 ) Basic and diluted weighted average number of shares outstanding 52,384 51,570 51,188 Basic and diluted loss per share $ (0.56 ) $ (0.19 ) $ (0.54 ) |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Information about Warrants Outstanding | Information about warrants outstanding during the twelve months ended December 31, 2015 follows: Original Number of Warrants Issued Exercise Price per Common Share Exercisable at December 31, 2014 Became Exercisable Exercised Terminated / Cancelled / Expired Exercisable at December 31, 2015 Expiration Date 2,619,036(1) $3.59 157,467 — 120,161 37,306 — March 2015 25,000(2) $7.00 — 25,000 — — 25,000 April 2020 157,467 25,000 120,161 37,306 25,000 (1) Referred to as Series I Warrants. (2) Referred to as Advisor Warrants |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Components of Income Tax Expense (Benefit) | The income tax provision is comprised of the following: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Current: Federal $ 10 $ (13 ) $ (354 ) State (18 ) (2 ) (397 ) Foreign — — — (8 ) (15 ) (751 ) Deferred: Federal — — — State — — — — — — Total income tax provision $ (8 ) $ (15 ) $ (751 ) |
Effective Income Tax Rate Reconciliation | A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 United States federal statutory rate 35.00 % 35.00 % 35.00 % State taxes, net of federal benefit (0.04 )% (0.02 )% (1.48 )% Valuation allowance (33.36 )% (41.67 )% (37.11 )% Stock options (1.62 )% 0.39 % (0.17 )% Prior year true-up 0.03 % (0.13 )% (1.32 )% R&D Credit 0.38 % — — Warrants (0.14 )% 7.92 % 2.10 % Other (0.29 )% (1.64 )% 0.18 % Effective income tax rate (0.04 )% (0.15 )% (2.80 )% |
Deferred Tax Assets and Liabilities | Deferred tax assets (liabilities) consist of the following: Year Ended December 31, 2015 Year Ended December 31, 2014 Deferred tax assets: Reserves and accruals $ 462 $ — State tax 1 1 Research and development credits and other credits 908 924 Net operating loss carry forward 18,496 11,190 Stock based compensation 9,855 8,452 Other 102 127 Total deferred tax assets 29,824 20,694 Valuation allowance (29,814 ) (20,679 ) Deferred tax assets after valuation allowance 10 15 Deferred tax liability: Depreciation and amortization (10 ) (15 ) Total deferred tax liability (10 ) (15 ) Net deferred tax assets $ — $ — |
Unrecognized Tax Benefits Reconciliation | A reconciliation of beginning and ending amounts of unrecognized tax benefits follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013 Balance at the beginning of the year $ 316 $ 316 $ 128 Additions based on tax positions related to the current year — — — Additions for tax positions of prior years — — 188 Settlements — — — Lapse of applicable statute of limitations — — — Balance at the end of the year $ 316 $ 316 $ 316 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurement [Abstract] | |
Cash and Available-for-Sale Securities Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value by Significant Investment Category | The following table shows our cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents of investments available for sale as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 3,296 $ — $ — $ 3,296 $ 3,296 $ — Level 1: Mutual funds 5,005 — — 5,005 5,005 — Government securities 1,806 — (3 ) 1,803 — 1,803 U.S agency securities 8,579 1 (4 ) 8,576 425 8,151 15,390 1 (7 ) 15,384 5,430 9,954 Total $ 18,686 $ 1 $ (7 ) $ 18,680 $ 8,726 $ 9,954 December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Investments Available for Sale Cash $ 1,183 $ — $ — $ 1,183 $ 1,183 $ — Level 1: Mutual funds 10,139 — — 10,139 10,139 — Corporate securities 9,405 1 (3 ) 9,403 1,645 7,758 U.S agency securities 20,504 2 (2 ) 20,504 5,691 14,813 40,048 3 (5 ) 40,046 17,475 22,571 Total $ 41,231 $ 3 $ (5 ) $ 41,229 $ 18,658 $ 22,571 |
Financial Instrument Liabilities by Level within Fair Value Hierarchy | The following table sets forth, by level within the fair value hierarchy, our financial instrument liabilities as of December 31, 2014 (in thousands): Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Series l Warrants $ — $ — $ 320 $ 320 Total $ — $ — $ 320 $ 320 |
Summary of Changes in Fair Value of Level 3 Liabilities | The following table sets forth a summary of changes in the fair value of our Level 3 financial instrument liability for the year ended December 31, 2015, 2014 and 2013 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Year ended December 31, 2015 Year ended December 31, 2014 Year ended December 31, 2013 Beginning Balance $ 320 $ 2,564 $ 4,172 (Gain) losses included in net losses 117 (2,237 ) (1,608 ) Settlements (333 ) (7 ) — Expiration of warrants (104 ) — — Ending Balance $ — $ 320 $ 2,564 |
Quarterly Financial Informati33
Quarterly Financial Information (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information (unaudited) [Abstract] | |
Quarterly Financial Information | First Second Third Fourth (in thousands except per share) 2015 Revenue $ 375 $ 400 $ 375 $ 405 Loss from operations (5,759 ) (9,567 ) (6,102 ) (7,749 ) Net loss (5,855 ) (9,546 ) (6,097 ) (7,736 ) Basic earnings (loss) per common share $ (0.11 ) $ (0.18 ) $ (0.12 ) $ (0.15 ) Diluted earnings (loss) per common share $ (0.11 ) $ (0.18 ) $ (0.12 ) $ (0.15 ) First Second Third Fourth (in thousands except per share) 2014 Revenue $ 250 $ 268 $ 292 $ 439 Gain on settlement — — — 23,000 Income (loss) from operations (6,953 ) (6,171 ) (6,250 ) 6,870 Net income/ (loss) (6,087 ) (6,670 ) (4,468 ) 7,325 Basic earnings (loss) per common share $ (0.12 ) $ (0.13 ) $ (0.09 ) $ 0.14 Diluted earnings (loss) per common share $ (0.12 ) $ (0.13 ) $ (0.09 ) $ 0.14 |
Formation and Business of the34
Formation and Business of the Company (Details) | Dec. 31, 2015Patent |
Formation and Business of the Company [Abstract] | |
Number of U.S. patents owned | 39 |
Number of foreign patents owned | 66 |
Number of pending patent applications | 75 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($)Institution | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Mar. 31, 2014USD ($) | |
Patent License Agreements [Abstract] | ||||
Minimum period after delivery in which fees are generally presumed not to be fixed or determinable, and revenue is deferred and recognized as earned | 12 months | |||
Activity under August 2013 contract settlement [Roll Forward] | ||||
Deferred Revenue, beginning of year | $ 2,000 | $ 667 | $ 0 | |
Payment received | 2,500 | 2,500 | 2,500 | |
Less: Amount amortized as revenue | 1,500 | 1,167 | 1,833 | |
Deferred Revenue, end of year | 3,000 | 2,000 | 667 | |
Royalty Expense [Abstract] | ||||
Royalties expense as a result of royalty agreement with Leidos | $ 5,265 | $ 6,100 | $ 0 | |
Prepaid Expense and Other Assets, Current [Abstract] | ||||
Prepayment of facility lease for corporate promotional and marketing purposes | $ 4,000 | |||
Lease term | 10 years | |||
Investments [Abstract] | ||||
Contractual maturities of highly liquid debt instruments, maximum | 2 years | |||
Concentration of Credit Risk and Others 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 | |||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful lives | 3 years | |||
Maximum [Member] | ||||
Property and Equipment [Abstract] | ||||
Useful lives | 7 years | |||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful lives | 15 years | |||
August 2013 Contract [Member] | ||||
Deferred Revenue [Abstract] | ||||
Contract amount | $ 10,000 | |||
Term of contract | 4 years | |||
Total payment on contract received | $ 7,500 |
Gain on Settlement (Details)
Gain on Settlement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 55 Months Ended | ||||||
Dec. 31, 2014 | Jun. 30, 2010 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Gain on Settlement [Abstract] | ||||||||||
Cash settlement resulting from litigation | $ 23,000 | $ 200,000 | $ 23,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 23,000 | $ 0 | $ 223,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property and Equipment [Line Items] | |||
Property and equipment, gross | $ 238 | $ 227 | $ 191 |
Less accumulated depreciation | (190) | (163) | (138) |
Property and equipment, net | 48 | 64 | 53 |
Depreciation expense | 26 | 25 | 24 |
Office Furniture [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 70 | 70 | 70 |
Computer Equipment [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | $ 168 | $ 157 | $ 121 |
Commitments and Related Party38
Commitments and Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Leased Assets [Line Items] | |||
Operating lease expiring date | Oct. 31, 2015 | ||
Rent expense | $ 56 | $ 56 | $ 56 |
Rent expense payable to related parties | $ 11 | 81 | |
Term of lease | 10 years | ||
K2 Investment Fund LLC [Member] | Aircraft [Member] | |||
Operating Leased Assets [Line Items] | |||
Rental fees incurred for use of plane | $ 593 | $ 296 | |
Rent expense payable to related parties | $ 11 | ||
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) | 12 Months Ended |
Dec. 31, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 4 years |
2013 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized (in shares) | 2,500,000 |
Shares available for grant (in shares) | 1,069,552 |
2013 Plan [Member] | Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Minimum exercise price of ISO granted | 100.00% |
Minimum exercise price of NSO granted | 85.00% |
Minimum exercise price of options granted to named executive officers | 100.00% |
Minimum exercise price of options granted to 10% shareholders | 110.00% |
Term of award | 10 years |
Vesting period | 4 years |
2013 Plan [Member] | Restricted Stock Purchase Rights ("RSU") [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
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, 2015$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options outstanding, number outstanding (in shares) | shares | 4,999,928 |
Options outstanding, weighted average remaining contractual life | 4 years 5 months 5 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 8.76 |
Options vested and exercisable, number exercisable (in shares) | shares | 4,118,135 |
Options vested and exercisable, weighted average remaining contractual life | 3 years 5 months 5 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 8.69 |
$0.24 - 1.58 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | 0.24 |
Exercise price range, upper range limit (in dollars per share) | $ 1.58 |
Options outstanding, number outstanding (in shares) | shares | 821,402 |
Options outstanding, weighted average remaining contractual life | 3 years 1 month 10 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 1.11 |
Options vested and exercisable, number exercisable (in shares) | shares | 821,402 |
Options vested and exercisable, weighted average remaining contractual life | 3 years 1 month 10 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 1.11 |
$1.74 - 6.95 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price range, lower range limit (in dollars per share) | 1.74 |
Exercise price range, upper range limit (in dollars per share) | $ 6.95 |
Options outstanding, number outstanding (in shares) | shares | 2,924,901 |
Options outstanding, weighted average remaining contractual life | 3 years 9 months 25 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 4.74 |
Options vested and exercisable, number exercisable (in shares) | shares | 2,308,933 |
Options vested and exercisable, weighted average remaining contractual life | 2 years 3 months 7 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 4.84 |
$14.52 - 35.25 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
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 | 1,253,625 |
Options outstanding, weighted average remaining contractual life | 6 years 8 months 16 days |
Options outstanding, weighted average exercise price (in dollars per share) | $ 23.16 |
Options vested and exercisable, number exercisable (in shares) | shares | 987,800 |
Options vested and exercisable, weighted average remaining contractual life | 6 years 4 months 24 days |
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 23.99 |
Stock-Based Compensation, Summa
Stock-Based Compensation, Summary of Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Options, additional disclosures [Abstract] | ||||
Per share market price of common stock on last trading day of year (in dollars per share) | $ 2.57 | |||
Proceeds from exercise of options | $ 165 | $ 278 | $ 170 | |
Stock Options [Member] | ||||
Options, number of shares [Roll Forward] | ||||
Outstanding, beginning of period (in shares) | 4,489,028 | 4,976,849 | 4,776,224 | |
Options granted (in shares) | 694,000 | 261,500 | 274,625 | |
Options exercised (in shares) | (143,100) | (679,321) | (39,833) | |
Options cancelled (in shares) | (40,000) | (70,000) | (34,167) | |
Outstanding, end of period (in shares) | 4,999,928 | 4,489,028 | 4,976,849 | |
Options exercisable, end of period (in shares) | 4,118,135 | |||
Options, weighted average exercise price [Roll Forward] | ||||
Outstanding, beginning of period (in dollars per share) | $ 9.33 | $ 7.86 | $ 6.94 | |
Options granted (in dollars per share) | 4.47 | 15.21 | 25.37 | |
Options exercised (in dollars per share) | 1.15 | 0.41 | 4.27 | |
Options cancelled (in dollars per share) | 25.61 | 13.38 | 20.57 | |
Outstanding, end of period (in dollars per share) | 8.76 | $ 9.33 | $ 7.86 | |
Options exercisable, end of period (in dollars per share) | $ 8.69 | |||
Options, additional disclosures [Abstract] | ||||
Options outstanding, weighted average remaining contractual life | 4 years 5 months 5 days | |||
Options exercisable, weighted average remaining contractual life | 3 years 5 months 5 days | |||
Options outstanding, aggregate intrinsic value | $ 1,215 | |||
Options exercisable, aggregate intrinsic value | 1,215 | |||
Total intrinsic value of options exercised | $ 203 | $ 3,575 | $ 676 | |
Restricted Stock Units (RSUs) [Member] | ||||
RSUs, number of RSUs [Roll Forward] | ||||
Outstanding, beginning of period (in shares) | 310,394 | 248,915 | 151,665 | |
RSUs granted (in shares) | 162,665 | 154,332 | 156,415 | |
RSUs vested (in shares) | (113,103) | (88,686) | (55,832) | |
RSUs cancelled (in shares) | 0 | (4,167) | (3,333) | |
Outstanding, end of period (in shares) | 359,956 | 310,394 | 248,915 | |
RSUs, weighted average grant date fair value [Abstract] | ||||
Outstanding, beginning of period (in dollars per share) | $ 19.74 | $ 24.10 | $ 25.60 | |
RSUs granted (in dollars per share) | 5.57 | 15.30 | 23.72 | |
RSUs vested (in dollars per share) | 20.11 | 24.08 | 27.06 | |
RSUs cancelled (in dollars per share) | 0 | 24.13 | 24.75 | |
Outstanding, end of period (in dollars per share) | $ 13.22 | $ 19.74 | $ 24.10 | |
RSUs, aggregate intrinsic value [Abstract] | ||||
Outstanding, end of period | $ 0 | $ 0 | $ 0 | $ 0 |
Total intrinsic value of RSUs vested | $ 0 |
Stock-Based Compensation, Stock
Stock-Based Compensation, Stock-Based Compensation by Type of Award (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 7,275 | $ 8,189 | $ 7,563 |
Employee Stock Options [Member] | |||
Compensation cost not yet recognized [Abstract] | |||
Unrecognized stock-based compensation expense expected to be recognized | $ 5,845 | ||
Weighted-average period for recognition of unrecognized stock-based compensation expense | 3 years 7 days | ||
Employee Stock Options [Member] | General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 4,939 | 5,951 | 6,488 |
Restricted Stock Units (RSUs) [Member] | |||
Compensation cost not yet recognized [Abstract] | |||
Unrecognized stock-based compensation expense expected to be recognized | $ 3,384 | ||
Weighted-average period for recognition of unrecognized stock-based compensation expense | 2 years 3 months 25 days | ||
Restricted Stock Units (RSUs) [Member] | General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 2,336 | $ 2,238 | $ 1,075 |
Stock-Based Compensation, Fair
Stock-Based Compensation, Fair Value Assumptions Used (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair value assumptions used in estimating fair value of each option grant [Abstract] | |||
Expected stock price volatility | 82.00% | 88.00% | 93.00% |
Risk-free interest rate | 2.12% | 2.56% | 2.04% |
Expected life term | 6 years 25 days | 6 years | 6 years 1 month 6 days |
Expected dividends | 0.00% | 0.00% | 0.00% |
Weighted average estimated fair value of employee stock options granted (in dollars per share) | $ 3.17 | $ 11.26 | $ 19.24 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Calculation of basic and diluted loss per share [Abstract] | |||||||||||
Net loss | $ (7,736) | $ (6,097) | $ (9,546) | $ (5,855) | $ 7,325 | $ (4,468) | $ (6,670) | $ (6,087) | $ (29,234) | $ (9,902) | $ (27,608) |
Basic and diluted weighted average number of shares outstanding (in shares) | 52,384,494 | 51,570,472 | 51,188,006 | ||||||||
Basic and diluted loss per share (in dollars per share) | $ (0.56) | $ (0.19) | $ (0.54) |
Common Stock (Details)
Common Stock (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015USD ($)Vote$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($) | Aug. 21, 2015USD ($) | Aug. 20, 2015USD ($) | |
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, voting rights | Each share of common stock has the right to one vote | ||||
Number of votes entitled to each share of common stock | Vote | 1 | ||||
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 | |||
Average sales price per common share (in dollars per share) | $ / shares | $ 2.57 | ||||
Aggregate proceeds from sales of common stock | $ 3,276 | $ 0 | $ 0 | ||
Universal Shelf Registration Statement [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Securities offered for sale, aggregate value | $ 100,000 | ||||
ATM Agreement [Member] | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Securities offered for sale, aggregate value | $ 35,000 | ||||
Number of shares of common stock sold (in shares) | shares | 835,056 | ||||
Average sales price per common share (in dollars per share) | $ / shares | $ 4.04 | ||||
Aggregate proceeds from sales of common stock | $ 3,378 | ||||
Sales commissions, fees and other costs associated with issuance of common stock | $ 101 |
Equity (Details)
Equity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Warrants [Abstract] | |||
Exercise Price per Common Share (in dollars per share) | $ 3.59 | $ 3.59 | |
Advisor Warrants [Member] | |||
Class of Warrant or Right [Line Items] | |||
Life of service contract | 12 months | ||
Warrants [Member] | |||
Warrants [Abstract] | |||
Exercisable, beginning of period (in shares) | 157,467 | ||
Became Exercisable (in shares) | 25,000 | ||
Exercised (in shares) | 120,161 | ||
Terminated/Cancelled/Expired (in shares) | 37,306 | ||
Exercisable, end of period (in shares) | 25,000 | 157,467 | |
Warrants [Member] | Series I Warrants [Member] | |||
Warrants [Abstract] | |||
Original Number of Warrants Issued (in shares) | [1] | 2,619,036 | |
Exercise Price per Common Share (in dollars per share) | $ 3.59 | ||
Exercisable, beginning of period (in shares) | 157,467 | ||
Became Exercisable (in shares) | 0 | ||
Exercised (in shares) | 120,161 | ||
Terminated/Cancelled/Expired (in shares) | 37,306 | ||
Exercisable, end of period (in shares) | 0 | 157,467 | |
Expiration date | March 31, 2015 | ||
Warrants [Member] | Advisor Warrants [Member] | |||
Warrants [Abstract] | |||
Original Number of Warrants Issued (in shares) | [2] | 25,000 | |
Exercise Price per Common Share (in dollars per share) | $ 7 | ||
Exercisable, beginning of period (in shares) | 0 | ||
Became Exercisable (in shares) | 25,000 | ||
Exercised (in shares) | 0 | ||
Terminated/Cancelled/Expired (in shares) | 0 | ||
Exercisable, end of period (in shares) | 25,000 | 0 | |
Expiration date | April 30, 2020 | ||
[1] | Referred to as Series I Warrants. | ||
[2] | Referred to as Advisor Warrants |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Benefit Plan [Abstract] | |||
Matching contribution to defined contribution plan | $ 59 | $ 45 | $ 47 |
Income Taxes, Components of Ben
Income Taxes, Components of Benefit (Provision) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current [Abstract] | |||
Federal | $ 10 | $ (13) | $ (354) |
State | (18) | (2) | (397) |
Foreign | 0 | 0 | 0 |
Current income taxes | (8) | (15) | (751) |
Deferred [Abstract] | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Deferred income taxes | 0 | 0 | 0 |
Total income tax provision | $ (8) | $ (15) | $ (751) |
Income Taxes, Reconciliation of
Income Taxes, Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Effective Tax Rate Reconciliation [Abstract] | |||
United States federal statutory rate | 35.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | (0.04%) | (0.02%) | (1.48%) |
Valuation allowance | (33.36%) | (41.67%) | (37.11%) |
Stock options | (1.62%) | 0.39% | (0.17%) |
Prior year true-up | 0.03% | (0.13%) | (1.32%) |
R&D Credit | 0.38% | 0.00% | 0.00% |
Warrants | (0.14%) | 7.92% | 2.10% |
Other | (0.29%) | (1.64%) | 0.18% |
Effective income tax rate | (0.04%) | (0.15%) | (2.80%) |
Income Taxes, Net Operating Los
Income Taxes, Net Operating Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes [Abstract] | |||
Net operating losses available for carry forward/backward | $ 21,000 | $ 10,000 | $ 27,000 |
Income Taxes, Components of Def
Income Taxes, Components of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets [Abstract] | ||
Reserves and accruals | $ 462 | $ 0 |
State tax | 1 | 1 |
Research and development credits and other credits | 908 | 924 |
Net operating loss carry forward | 18,496 | 11,190 |
Stock based compensation | 9,855 | 8,452 |
Other | 102 | 127 |
Total deferred tax assets | 29,824 | 20,694 |
Valuation allowance | (29,814) | (20,679) |
Deferred tax assets after valuation allowance | 10 | 15 |
Deferred tax liability [Abstract] | ||
Depreciation and amortization | (10) | (15) |
Total deferred tax liability | (10) | (15) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes, Valuation Allowan
Income Taxes, Valuation Allowance, Operating Loss Carryforwards and Tax Credit Carry-forwards (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Taxes [Abstract] | |
Net change in valuation allowance | $ 9,135 |
Federal operating loss carryforwards | 52,549 |
State operating loss carryforwards | $ 37,603 |
Income Taxes, Income Tax Uncert
Income Taxes, Income Tax Uncertainties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Abstract] | |||
Net change in gross deferred tax assets offset by a change in valuation allowance | $ 316 | $ 316 | |
Accrued interest and penalties | 0 | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at the beginning of the year | 316 | 316 | $ 128 |
Additions based on tax positions related to the current year | 0 | 0 | 0 |
Additions for tax positions of prior years | 0 | 0 | 188 |
Settlements | 0 | 0 | 0 |
Lapse of applicable statute of limitations | 0 | 0 | 0 |
Balance at the end of the year | $ 316 | $ 316 | $ 316 |
Fair Value Measurement, Assumpt
Fair Value Measurement, Assumptions Used to Measure Fair Value of Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2015 | |
Fair value assumptions [Abstract] | ||
Warrant exercise price (in dollars per share) | $ 3.59 | $ 3.59 |
Common share price (in dollars per share) | $ 2.57 | |
Series I Warrants [Member] | ||
Fair value assumptions [Abstract] | ||
Warrant exercise price (in dollars per share) | 3.59 | |
Common share price (in dollars per share) | $ 5.49 | |
Discount rate | 1.65% | |
Expected volatility rate | 89.60% |
Fair Value Measurement, Adjuste
Fair Value Measurement, Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value by Investment Category (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | $ 8,726 | $ 18,658 | $ 19,173 | $ 19,661 |
Adjusted Cost | 15,390 | 40,048 | ||
Unrealized Gains | 1 | 3 | ||
Unrealized Losses | (7) | (5) | ||
Fair Value | 15,384 | 40,046 | ||
Adjusted Cost | 18,686 | 41,231 | ||
Fair Value | 18,680 | 41,229 | ||
Investments Available for Sale | $ 15,384 | 40,046 | ||
Minimum [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Maturities of available for sale securities | 1 year | |||
Maximum [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Maturities of available for sale securities | 2 years | |||
Cash [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | $ 3,296 | 1,183 | ||
Fair Value | 3,296 | 1,183 | ||
Cash and Cash Equivalents | 3,296 | 1,183 | ||
Mutual Funds [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | 5,005 | 10,139 | ||
Unrealized Gains | 0 | 0 | ||
Unrealized Losses | 0 | 0 | ||
Fair Value | 5,005 | 10,139 | ||
Investments Available for Sale | 5,005 | 10,139 | ||
Corporate Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | 9,405 | |||
Unrealized Gains | 1 | |||
Unrealized Losses | (3) | |||
Fair Value | 9,403 | |||
Investments Available for Sale | 9,403 | |||
Government Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | 1,806 | |||
Unrealized Gains | 0 | |||
Unrealized Losses | (3) | |||
Fair Value | 1,803 | |||
Investments Available for Sale | 1,803 | |||
US Agency Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Adjusted Cost | 8,579 | 20,504 | ||
Unrealized Gains | 1 | 2 | ||
Unrealized Losses | (4) | (2) | ||
Fair Value | 8,576 | 20,504 | ||
Investments Available for Sale | 8,576 | 20,504 | ||
Recurring [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 8,726 | 18,658 | ||
Fair Value | 9,954 | 22,571 | ||
Cash and Cash Equivalents | 8,726 | 18,658 | ||
Investments Available for Sale | 9,954 | 22,571 | ||
Recurring [Member] | Cash [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 3,296 | 1,183 | ||
Cash and Cash Equivalents | 3,296 | 1,183 | ||
Recurring [Member] | Level 1 [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 5,430 | 17,475 | ||
Fair Value | 9,954 | 22,571 | ||
Cash and Cash Equivalents | 5,430 | 17,475 | ||
Investments Available for Sale | 9,954 | 22,571 | ||
Recurring [Member] | Level 1 [Member] | Mutual Funds [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 5,005 | 10,139 | ||
Fair Value | 0 | 0 | ||
Cash and Cash Equivalents | 5,005 | 10,139 | ||
Investments Available for Sale | 0 | 0 | ||
Recurring [Member] | Level 1 [Member] | Corporate Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 1,645 | |||
Fair Value | 7,758 | |||
Cash and Cash Equivalents | 1,645 | |||
Investments Available for Sale | 7,758 | |||
Recurring [Member] | Level 1 [Member] | Government Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 0 | |||
Fair Value | 1,803 | |||
Cash and Cash Equivalents | 0 | |||
Investments Available for Sale | 1,803 | |||
Recurring [Member] | Level 1 [Member] | US Agency Securities [Member] | ||||
Cash and available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category [Abstract] | ||||
Fair Value | 425 | 5,691 | ||
Fair Value | 8,151 | 14,813 | ||
Cash and Cash Equivalents | 425 | 5,691 | ||
Investments Available for Sale | $ 8,151 | $ 14,813 |
Fair Value Measurement, Financi
Fair Value Measurement, Financial Instrument Liabilities by Level within Fair Value Hierarchy (Details) $ in Thousands | Dec. 31, 2014USD ($) |
Fair value of liabilities [Abstract] | |
Series I Warrants | $ 320 |
Total | 320 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |
Fair value of liabilities [Abstract] | |
Series I Warrants | 0 |
Total | 0 |
Significant Other Observable Inputs (Level 2) [Member] | |
Fair value of liabilities [Abstract] | |
Series I Warrants | 0 |
Total | 0 |
Significant Unobservable Inputs (Level 3) [Member] | |
Fair value of liabilities [Abstract] | |
Series I Warrants | 320 |
Total | $ 320 |
Fair Value Measurement, Changes
Fair Value Measurement, Changes in Fair Value of Level 3 Financial Instrument Liability (Details) - Significant Unobservable Inputs (Level 3) [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Changes in fair value of Level 3 liabilities [Roll Forward] | |||
Beginning Balance | $ 320 | $ 2,564 | $ 4,172 |
(Gain) losses included in net losses | 117 | (2,237) | (1,608) |
Settlements | (333) | (7) | 0 |
Expiration of warrants | (104) | 0 | 0 |
Ending Balance | $ 0 | $ 320 | $ 2,564 |
Litigation (Details)
Litigation (Details) $ in Thousands | Feb. 04, 2016USD ($) | Nov. 06, 2012USD ($) | Dec. 31, 2015USD ($)PatentLawsuit |
Gain Contingencies [Line Items] | |||
Number of patents allegedly infringed upon by Apple, Inc. | Patent | 4 | ||
Subsequent Event [Member] | |||
Gain Contingencies [Line Items] | |||
Amount of damages awarded in patent infringement case | $ 625,600 | ||
Positive Outcome of Litigation [Member] | |||
Gain Contingencies [Line Items] | |||
Number of intellectual property infringement lawsuits pending | Lawsuit | 1 | ||
Amount of damages awarded in patent infringement case | $ 368,000 | ||
Number of patents allegedly infringed upon by Apple, Inc. | Patent | 4 | ||
Amount of interest payment awarded up to final judgment, per day | $ 34 | ||
Amount of damage infringement payment awarded up to final judgment, per day | $ 330 | ||
Positive Outcome of Litigation [Member] | Subsequent Event [Member] | |||
Gain Contingencies [Line Items] | |||
Amount of damages awarded in patent infringement case | $ 625,600 |
Quarterly Financial Informati59
Quarterly Financial Information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 55 Months Ended | ||||||||||
Dec. 31, 2014 | Jun. 30, 2010 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Quarterly Financial Information (unaudited) [Abstract] | ||||||||||||||
Revenue | $ 405 | $ 375 | $ 400 | $ 375 | $ 439 | $ 292 | $ 268 | $ 250 | $ 1,555 | $ 1,249 | $ 2,197 | |||
Gain on settlement | $ 23,000 | $ 200,000 | 23,000 | 0 | 0 | 0 | 0 | 23,000 | 0 | $ 223,000 | ||||
Income (loss) from operations | (7,749) | (6,102) | (9,567) | (5,759) | 6,870 | (6,250) | (6,171) | (6,953) | (29,177) | (12,165) | (28,587) | |||
Net income/ (loss) | $ (7,736) | $ (6,097) | $ (9,546) | $ (5,855) | $ 7,325 | $ (4,468) | $ (6,670) | $ (6,087) | $ (29,234) | $ (9,902) | $ (27,608) | |||
Basic earnings (loss) per common share (in dollars per share) | $ (0.15) | $ (0.12) | $ (0.18) | $ (0.11) | $ 0.14 | $ (0.09) | $ (0.13) | $ (0.12) | ||||||
Diluted earnings (loss) per common share (in dollars per share) | $ (0.15) | $ (0.12) | $ (0.18) | $ (0.11) | $ 0.14 | $ (0.09) | $ (0.13) | $ (0.12) |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands | Feb. 04, 2016USD ($) | Mar. 15, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)Patent$ / sharesshares | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) |
Subsequent Event [Line Items] | |||||
Average sales price per common share (in dollars per share) | $ / shares | $ 2.57 | ||||
Aggregate proceeds from sales of common stock | $ 3,276 | $ 0 | $ 0 | ||
Number of patents allegedly infringed upon by Apple, Inc. | Patent | 4 | ||||
ATM Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares of common stock sold (in shares) | shares | 835,056 | ||||
Average sales price per common share (in dollars per share) | $ / shares | $ 4.04 | ||||
Aggregate proceeds from sales of common stock | $ 3,378 | ||||
Sales commissions, fees and other costs associated with issuance of common stock | $ 101 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Amount of damages awarded in patent infringement case | $ 625,600 | ||||
Subsequent Event [Member] | ATM Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares of common stock sold (in shares) | shares | 1,231,069 | ||||
Average sales price per common share (in dollars per share) | $ / shares | $ 4.13 | ||||
Aggregate proceeds from sales of common stock | $ 5,086 | ||||
Sales commissions, fees and other costs associated with issuance of common stock | $ 153 |