1.

To elect Michael F. Angelo as our Class III director;

2.

To ratify the appointment of Farber Hass Hurley LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and

3.

To transact such other business that may properly come before the Annual Meeting.

1.

To elect Michael F. Angelo as our Class III director;

2.

To ratify the appointment of Farber Hass Hurley LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and

3.

To transact such other business that may properly come before the Annual Meeting.

Q:

Why am I receiving these materials?

A:

We have made these materials available to you online or, upon your request, have delivered versions of these materials to you by mail or email, in connection with our solicitation of proxies for use at the Annual Meeting, which will take place on Friday, June 3, 2022. As a VirnetX stockholder as of the Record Date, you are invited to attend the Annual Meeting and are entitled to and requested to vote on the items of business described in the Proxy Statement.

Q:

Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials this year instead of a full set of proxy materials?

A:

Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials online. Accordingly, the Notice containing instructions on how to access our proxy materials is first being mailed on or around April 20, 2022. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

Q:

What is included in the proxy materials?

A:

The proxy materials include:

•

the Proxy Statement; and

•

the Annual Report, which includes our audited consolidated financial statements.

Q:

How can I get electronic access to the proxy materials?

A:

The Notice will provide you with instructions regarding how to:

•

view our proxy materials for the Annual Meeting online; and

•

instruct us to send future proxy materials to you electronically by email.

Q:

How may I obtain the Annual Report?

A:

Stockholders may request a free copy of the Annual Report by writing to us at P.O. Box 439, Zephyr Cove, NV 89448 (Attention: Investor Relations). You may also obtain a copy free of charge from our website at www.virnetx.com. You may also obtain a copy of the Annual Report filed with the SEC on March 16, 2022 online at www.sec.gov.

Q:

Who pays for the expenses of soliciting proxies and what are the means of solicitation?

A:

The expenses associated with the Company’s solicitation of proxies for the Annual Meeting are to be paid by the Company. Such solicitation of proxies may be made by means of personal calls to, or telephonic, facsimile or electronic communications with, stockholders or their representatives by our directors, officers and employees, who will not be specially compensated for such services. We may, on request, reimburse brokerage firms and other nominees for their expenses in forwarding proxy materials to beneficial owners.

Q:

How can I attend the Annual Meeting?

A:

The Annual Meeting will be a completely virtual meeting of stockholders, which we believe provides the opportunity for participation by a broader group of stockholders while reducing the environmental impact and the costs associated with in-person meetings. Stockholders of record and street name stockholders with a legal proxy from their broker, bank or other nominee will be able to attend the Annual Meeting by visiting https://agm.issuerdirect.com/vhc, which will allow such stockholders to submit questions during the meeting and vote shares electronically at the meeting.

Q:

Who is entitled to vote at the Annual Meeting?

A:

Stockholders who our records show owned shares of VirnetX as of the close of business on the Record Date may vote at the Annual Meeting. On the Record Date, we had a total of 71,232,856 shares of common stock outstanding. The stock transfer books will not be closed between the Record Date and the date of the Annual Meeting.

Q:

What is the difference between holding shares as a registered stockholder and as a street name stockholder?

A:

Registered Stockholders. If your shares are registered directly in your name with VirnetX’s transfer agent, you are considered the stockholder of record with respect to those shares, and the Proxy Statement was provided to you directly. As a stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote at the Annual Meeting.

Q:

What am I voting on?

A:

Our stockholders will vote on the following matters at the Annual Meeting:

1.

Election of Michael F. Angelo as our Class III director;

2.

Ratification of the appointment of Farber Hass Hurley LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and

3.

Any other business that may properly come before the Annual Meeting.

Q:

How does the Board recommend I vote on these proposals?

A:

The Board recommends a vote:

1.

FOR the election of Michael F. Angelo as our Class III director; and

2.

FOR the ratification of the appointment of Farber Hass Hurley LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.

Q:

How do I vote?

A:

You may either vote “FOR” the nominee to the Board or you may “WITHHOLD” your vote for the nominee to the Board. For each of the other matters to be voted on, you may vote “FOR” or “AGAINST,” or “ABSTAIN” from voting.

•

At the Annual Meeting. Stockholders who attend the Annual Meeting may vote at the Meeting. Please see “How can I attend the Annual Meeting?” above for further information;

•

By Mail. If printed copies of the proxy materials were mailed to you, you can complete, sign and date the proxy card and return it in the prepaid envelope provided;

•

By Telephone. Stockholders of record as of the Record Date who live in the United States or Canada may submit proxies by following the “Vote by Phone” instructions on their proxy cards or the Notice or by following the voting instructions provided by email or over the internet; or

•

Online. Stockholders of record with internet access may submit proxies via the internet by following the “Vote by Internet” instructions described in the Notice.

•

By Mail. If printed copies of the proxy materials were mailed to you, you may vote by signing, dating and returning your voting instruction card in the enclosed pre-addressed envelope provided to you;

•

By Methods Listed on Voting Instruction Card. Please refer to your voting instruction card or other information provided by your bank, broker or other nominee to determine whether you may vote by telephone or electronically on the internet, and follow the instructions on the voting instruction card or other information provided by the record holder; or

•

At the Annual Meeting with a Proxy from the Record Holder. A street name stockholder who wishes to vote at the Annual Meeting will need to obtain a legal proxy from his or her broker, bank or other nominee. Please consult the voting instruction card provided to you by your broker, bank or other nominee to determine how to obtain a legal proxy in order to vote at the Annual Meeting.

Q:

How many votes do I have?

A:

On each matter to be voted upon, you have one vote for each share of common stock you own as of the Record Date. Stockholders may not cumulate votes.

Q:

Will there be any other items of business on the agenda?

A:

We do not know of any business to be considered at the Annual Meeting other than the proposals described in the Proxy Statement. However, if any other business is properly presented at the Annual Meeting pursuant to guidelines described in our bylaws, the accompanying proxy gives discretionary authority to the persons named on the proxy with respect to any other matters that might be brought before the Annual Meeting. Such matters include, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place, including without limitation, for the purpose of soliciting additional proxies.

Q:

If I submit a proxy, how will it be voted?

A:

When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of the Board, as follows:

1.

FOR the election of Michael F. Angelo as our Class III director; and

2.

FOR the ratification of the appointment of Farber Hass Hurley LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.

Q:

Can I change my vote after submitting my proxy?

A:

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any of the following ways:

•

you may submit another properly completed proxy card with a later date;

•

you may send a written notice that you are revoking your proxy to VirnetX Holding Corporation, P.O. Box 439, Zephyr Cove, Nevada 89448;

•

you may vote again on a later date online or by telephone (only your latest online or telephone proxy submitted prior to the Annual Meeting will be counted); or

•

you may attend the Annual Meeting and vote (attendance at the Annual Meeting will not by itself revoke a previously granted proxy).

•

by submitting new voting instructions to your broker, bank or nominee; or

•

if you have obtained a legal proxy from the broker, bank or other nominee that holds your shares giving you the right to vote the shares, by attending the Annual Meeting and voting (attendance at the Annual Meeting will not by itself revoke a previously granted proxy).

Q:

How are votes counted?

A:

For Proposal I - Election of One Class III Director, you may vote “FOR” the nominee or your vote may be “WITHHELD” with respect to the nominee. Votes that are withheld will be excluded entirely and will have no effect in the election of the director. If you hold your shares in street name, please note that your broker, bank or other nominee may not vote your shares in the election of the director without instructions from you. Thus, if you hold your shares in street name and you do not instruct your broker, bank or other nominee how to vote in the election of the director, no votes will be cast on your behalf, but your proxy will be counted for the purpose of establishing a quorum.

Q:

What is the quorum requirement?

A:

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares of common stock are represented by stockholders as of the Record Date present at the meeting (including virtually) or by proxy.

Q:

What effect do abstentions and broker non-votes have on quorum requirements?

A:

Abstentions and broker non-votes are counted as present for establishing a quorum for the transaction of business at the Annual Meeting. A “broker non-vote” occurs when a broker votes on a matter it does not have authority to vote on.

Q:

I share an address with another stockholder, and we received only one copy of the Notice. How may I obtain an additional copy of the Notice or proxy materials?

A:

In an effort to reduce printing costs and postage fees, we have adopted a practice approved by the SEC called “householding.” Under this practice, stockholders who have the same address and last name and do not

Q:

What does it mean if I receive more than one Notice?

A:

It means that you hold shares in more than one account. To ensure that all your shares are voted, sign, date and return each proxy card.

Q:

Who tabulates the votes and how will I know the results of the voting at the Annual Meeting?

A:

The votes will be tabulated by an independent inspector of election, who will be a representative of Issuer Direct Corporation.

Q:

How do I contact the Board?

A:

You can send written communications to the Board or any individual director in accordance with our bylaws, addressed to:

Q:

Where are your principal executive offices?

A:

Our principal executive offices are located at 308 Dorla Court, Zephyr Cove, Nevada 89448. Our telephone number is (775) 548-1785.

Q:

How do I submit a stockholder proposal for the 2023 Annual Meeting of Stockholders?

A:

Stockholders may present proper proposals for inclusion in the Company’s proxy statement and for consideration at the next annual meeting of its stockholders by submitting their proposals in writing to the Company in a timely manner. In order to be included in the proxy statement for the 2023 Annual Meeting of Stockholders, stockholder proposals must be received by the Company no later than December 14, 2022 and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Q:

What if I have questions about lost stock certificates or need to change my mailing address?

A:

You may contact our transfer agent, Equiniti Trust Company, by telephone at 1-866-877-6270, or by facsimile at 1-866-729-7680, if you have lost your stock certificate or need to change your mailing address.

•

providing general oversight of the business;

•

approving corporate strategy;

•

approving major management initiatives;

•

providing oversight of legal and ethical conduct;

•

overseeing our management of cybersecurity and technology risks;

•

overseeing our management of significant business risks;

•

selecting, compensating, and evaluating director nominees;

•

evaluating Board processes and performance; and

•

reviewing and implementing recommendations and reports of the committees of the Board.

•

the Company’s annual incentive compensation is based on performance that promotes disciplined progress towards longer-term Company goals;

•

the Company does not offer significant short-term incentives that might drive high-risk investments at the expense of long-term Company value;

•

the Company’s compensation programs are weighted toward offering long-term incentives that reward sustainable performance; and

•

the Company’s compensation awards are established at reasonable and sustainable levels, as determined by a review of the Company’s economic position and prospects, as well as the compensation offered by comparable companies.

•

assisting the Board in identifying prospective director nominees and recommending to the Board director nominees for each annual meeting of stockholders, vacancy, or newly created director position;

•

providing oversight with respect to corporate governance and ethical conduct;

•

developing and recommending to the Board the Code of Ethics and assessing such Code of Ethics and recommending changes; and

•

delegating such of its authority and responsibilities as it deems proper to members of the nominating and corporate governance committee or a subcommittee thereof.

•

appointment of and approval of compensation for our independent public accounting firm and overseeing its performance and independence;

•

overseeing our accounting and financial reporting processes;

•

overseeing the audits of our financial statements;

•

overseeing the effectiveness of our internal controls over financial reporting; and

•

preparing the audit committee report that the SEC requires in our annual proxy statement.

(1)

Reflects the fees approved by the Company and billed or to be billed by Farber Hass Hurley LLP with respect to services performed for the audit and other services for the applicable fiscal year.

•

exclusive authority to determine the amount and form of compensation paid to the Company’s Chief Executive Officer;

•

determining the amount and form of compensation paid to the Company’s executive officers, officers, employees, consultants and advisors;

•

administering our equity incentive plans;

•

engaging, compensating and terminating compensation consultants, legal counsel and such other advisors to assist the compensation committee;

•

reviewing and discussing with management to Company’s proposed disclosure under “Compensation Discussion and Analysis” as set forth in Regulation S-K and recommending to the Board whether such disclosure should be included in the Company’s public filings, as applicable;

•

preparing the compensation committee report that the SEC requires in our annual proxy statement, as applicable;

•

recommending the compensation of non-employee directors to the Board; and

•

making regular reports to the Board with respect to significant actions and determinations made by the compensation committee.

•

each non-employee director receives an annual cash retainer of $44,000;

•

each non-employee director who serves as a member of our audit committee receives an annual cash retainer of $6,600; each non-employee director who serves as a member of our compensation committee receives an annual cash retainer of $5,500; and each non-employee director who serves as a member of our nominating and corporate governance committee receives an annual cash retainer of $2,200; and

•

each non-employee director who serves as a chair of our audit committee receives an annual cash retainer of $18,150; each non-employee director who serves as a chair of our compensation committee receives an annual cash retainer of $9,900; and each non-employee director who serves as a chair of our nominating and corporate governance committees receives an annual cash retainer of $5,500.

•

Upon the initial election or appointment to the Board of a new non-employee director, such individual will be granted, under our 2013 Plan, an option to purchase 30,000 shares of our Common Stock with a per-share exercise price equal to the fair market value of that stock on the date of grant and which will vest monthly with respect to 1/36th of the total number of shares subject to the option, conditioned upon continued service as a director; provided that all vesting shall be accelerated such that the shares underlying such option shall be vested and become exercisable in full on the close of business on the day prior to the Company’s third annual meeting of stockholders to take place after the director’s initial election or appointment to the Board; and provided further that these options automatically become fully vested immediately prior to a “change in control” of the Company.

•

each existing non-employee director will be automatically granted, under the 2013 Plan, an option to purchase 12,500 shares of our Common Stock at each year’s annual meeting of stockholders with a per-share exercise price equal to the fair market value of that stock on the date of grant and which will fully vest upon the earlier of (a) the one-year anniversary of such a grant or (b) the close of business on the day prior to the following year’s annual meeting of stockholders, conditioned upon continued service as a director; provided that these options automatically become fully vested immediately prior to a “change in control” of the Company.

•

each existing non-employee director will be automatically granted, under the 2013 Plan, an award for 8,333 restricted stock units (“RSUs”) at each year’s annual meeting of stockholders, which will fully vest upon the earlier of (a) the one-year anniversary of such grant or (b) the close of business on the day prior to the following year’s annual meeting of stockholders, conditioned upon continued service as a director; provided that these RSUs automatically become fully vested immediately prior to a “change in control” of the Company.

(1)

This table includes the compensation of only non-employee directors. For compensation of Mr. Larsen and Dr. Short, please see “Executive Compensation and Other Matters” of this Proxy Statement.

(2)

The amounts in this column reflect the aggregate grant date fair value of the stock awards and option awards computed in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or FASB ASC Topic 718. There can be no assurance that these amounts will ever be realized. For information on the valuation assumptions used in valuing these stock option awards, refer to Note 6 titled “Stock-Based Compensation” in the Notes to the Financial Statements contained in the Company’s Annual Report on Form 10-K for fiscal 2021.

•

all persons known to us, based on statements filed by such persons pursuant to Section 13(d) or 13(g) of the Exchange Act or in statements made to us, to be the beneficial owners of more than 5% of our Common Stock;

•

each director and nominee for director;

•

each of our named executive officers as listed in the “Summary Compensation Table” of this Proxy Statement; and

•

all current directors and executive officers as a group.

(*)

Less than 1%.

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Securities that are exercisable, convertible or to which a holder has a right to acquire within 60 days of March 1, 2022 are deemed outstanding for purposes of computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. The indication herein that shares are beneficially owned is not an admission on the part of the listed stockholder that he, she or it is or will be a direct or indirect beneficial owner of those shares.

(2)

Includes (i) 1,079,578 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022, of which, 494,893 are held by Kathleen Larsen, (ii) 300,000 shares held of record by K2 Investment Fund, LLC, of which Mr. Larsen and Mrs. Larsen are the sole member-managers, and (iii) 460,194 shares of common stock held by Mrs. Larsen. Excludes 613,530 shares obtained prior to fiscal 2021 and held by the Kathleen Sheehan Revocable Trust dated 2/5/2009 and shares, stock options, and RSUs held by Mr. and Mrs. Larsen’s adult children. Mr. Larsen disclaims beneficial ownership of the excluded shares.

(3)

The information is based solely on a Schedule 13G filed by this stockholder on February 3, 2022. The stockholder’s business address is 55 East 52nd Street, New York, New York 10055. This stockholder has sole dispositive power over all such shares.

(4)

The information is based solely on a Schedule 13G filed by this stockholder on February 10, 2022. The stockholder’s business address is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. This stockholder has sole dispositive power with respect to 3,116,784 of such shares and shared dispositive power over 64,826 of such shares.

(5)

Includes (i) 1,294,893 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022 and (ii) 188,883 shares of common stock owned by the Short Revocable Living Trust.

(6)

Includes 112,500 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022.

(7)

Includes 112,500 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022.

(8)

Includes 105,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022.

(9)

Includes 3,333 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022.

(10)

Includes the following securities beneficially held by our current directors and executive officers as a group: 2,707,804 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of March 1, 2022.

•

Ongoing market development by the sales team for adoption of Gabriel Secure Communication Platform™ and Gabriel Collaboration Suite™, including recognition of Gabriel as the “Standard for Secure Communications” for the Information Sharing and Analysis Organizations (ISAOs) and expansion in multiple vertical markets such as healthcare, government, financial services, home security automation and manufacturing;

•

Application of Gabriel technology as the foundation for our new VirnetX One, our security-as-a-service platform that protects communications using Zero Trust Network Access (ZTNA) for enterprise applications, services and infrastructure from cyber-attacks;

•

Continuous development of VirnetX One in preparation for launching of the War Room™ software in March 2022, the first product on the VirnetX One platform that builds upon our patented Gabriel technology to further enhance the security and efficiency of our patented secure communication links;

•

Continuing to expand the exploration of alternative strategies with opportunities to work with third parties in Japan, including adding a Chief Operating Officer to our Japanese team to further technology licensing efforts in Japan, and elsewhere;

•

Employing a leveraged, partner-oriented, marketing strategy for our technology license and software product offerings;

•

Management of multiple legal proceedings; and

•

Significant growth in our patent portfolio, including grant of multiple new U.S. and foreign patents and filing of numerous new U.S. and foreign patent applications.

•

attracting and retaining the most talented and dedicated executives possible;

•

correlating annual and long-term cash and stock incentives to achievement of measurable performance objectives; and

•

aligning executives’ incentives with stockholder value creation.

•

review the Company’s current compensation practices;

•

review and compare proposed cash and equity compensation adjustments for named executive officers in fiscal 2021 relative to competitive market data previously developed by Compensia for the compensation committee; and

•

provide the compensation committee with input on the proposed cash and equity compensation adjustments for named executive officers in fiscal 2021 based, in part, on the competitive market data previously developed by Compensia.

•

Base Salary. Base salaries for our named executive officers are established based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions. Generally, the program is designed to deliver executive base salaries within the range of salaries for executives with the requisite skills in similar positions with similar responsibilities at comparable companies, in line with our compensation philosophy. Executives with more experience, critical skills, and/or considered key performers may be compensated above the range as part of our strategy for attracting, motivating and retaining highly experienced and high performing employees. Base salaries are reviewed annually and adjusted from time to time after taking into account relevant market data, individual responsibilities, performance, and experience.

•

Annual Incentive Bonus. Each year, the compensation committee establishes a target annual incentive bonus amount for each named executive officer based on a percentage of the executive’s base salary. The target bonus, combined with base salary, is intended to provide our executive officers with a competitive cash compensation package that will aid in the retention of the employee, as well as provide an incentive and a reward for strong Company and individual performance. The chief executive officer and the compensation committee agree on general performance objectives for our named executive officers for the year, but the compensation committee has the sole discretion to determine following the end of the fiscal year whether, and the extent to which, the performance objectives were met and the amount of the annual incentive bonuses to be paid. Given the Company’s rapidly evolving business model, this structure provides the compensation committee with flexibility to reward strategic and operational goals that may not be quantifiable and allows the compensation committee to take into account the Company’s overall performance based on a multitude of factors. The compensation committee generally utilizes the annual incentive bonuses to compensate officers for achieving financial and operational goals and for individual performance. Performance factors considered when determining bonuses typically include strategic factors such as establishment and maintenance of key strategic relationships, development and implementation of our licensing strategy, development of our product, identification and advancement of additional products, successful litigation strategies and financial factors such as improving our results of operations, and increasing the price per share of our Common Stock.

•

Long-Term Incentive Program. We believe that long-term performance is achieved through an ownership culture that encourages high performance by our named executive officers through the use of stock-based awards. Our 2013 Plan was established to provide our employees, including our named executive officers, with incentives to help align those employees’ interests with the interests of stockholders. Our compensation committee believes that the use of stock-based awards offers the best approach to achieving our compensation goals. Our 2013 Plan allows for stock options, restricted stock, RSUs, stock appreciation rights, performance units, performance shares and performance bonus awards. In fiscal 2021, we granted both stock options and RSUs under our 2013 Plan to our named executive officers.

•

align the interests of executives with those of the stockholders, support a pay-for-performance culture, foster employee stock ownership, and focus the management team on increasing value for the stockholders;

•

are performance-based in that any value received by the recipient from a stock option is based on the growth of the stock price from the grant date and value received from RSUs is tied directly to our stock price performance over time and declines if our price declines;

•

help to provide a balance to the overall executive compensation program as base salary and our annual bonus program focus on short-term compensation, while the vesting of stock options and RSUs provide incentives to increase stockholder value over the longer term; and

•

include vesting restrictions that encourage executive retention and the preservation of stockholder value.

•

increases to the base salaries for fiscal 2021 for each of our named executive officers;

•

increases to the number of shares underlying stock option grants for fiscal 2021; and

•

no increases to the number of shares underlying RSU grants for fiscal 2021.

(1)

The target bonus level for cash incentive opportunities is calculated as a percentage of base salary.

(2)

The actual bonus level for cash incentive opportunities is calculated as a percentage of base salary.

(3)

The bonus amounts in this column reflect the annual incentive bonuses paid for fiscal 2021.

(4)

Stock option grants and stock awards made under the 2013 Plan.

(5)

Reflects a payment of $56,175 for accrued, but unused vacation in fiscal 2021.

(6)

Ms. Allanson’s base salary is $295,000, but because she joined us in September 2021, her compensation for fiscal 2021 was pro-rated to $98,333.

(7)

Mr. Nance’s base salary was $187,938, but his compensation for fiscal 2021 was in fact $109,630.

(8)

Mr. Nance’s unvested options and RSUs, including these grants made in June 2021, were returned to the Company’s 2013 Plan.

(9)

Reflects a payment of $2,052 for accrued, but unused vacation in fiscal 2021.

(1)

Subject to the continued service of the named executive officer, 1/4 of the total number of Shares subject to the Option shall vest and become exercisable on the one-year anniversary of the grant date, and 1/48 of the total number of Shares subject to the Option shall vest and become exercisable on each monthly anniversary thereafter.

(2)

All stock options indicated in the table have an exercise price equal to the closing sales price of our common stock traded on NYSE as of the applicable grant date.

(3)

Subject to the continued service of the named executive officer, the stock award shall vest in four equal annual installments beginning on the one-year anniversary of the grant date.

(1)

Actual salary earned during fiscal years 2019, 2020 and 2021.

(2)

These amounts reflect the grant date fair value of such award computed in accordance with FASB ASC Topic 718 and do not reflect the actual amounts earned. For information on the valuation assumptions used in valuing these awards, refer to Note 6 titled “Stock-Based Compensation” in the Notes to the Financial Statements contained in the Company’s Annual Report on Form 10-K for fiscal 2021.

(3)

Includes payment of $56,175 for accrued, but unused vacation in fiscal 2021.

(4)

Reflects (i) a special bonus payment of $506,386, approved by the Board in March 2020 (the “March Special Bonus”), and (ii) an annual incentive bonus payment of $526,642 for fiscal 2020.

(5)

Reflects (i) an adjustment payment of $691,666 related to the 2020 Dividend (defined below) and (ii) payment of $51,937 and $54,014 in fiscal 2020 for accrued, but unused vacation in fiscal 2019 and 2020, respectively. Mr. Larsen additionally received a dividend payment of $1.00 per share of common stock held by him in connection with the 2020 Dividend, which is not reflected in this amount. In May 2020, the Board declared a special cash dividend to shareholders of record as of the close of business on May 18, 2020 of $1.00 per share of common stock, payable on May 26, 2020 (the “2020 Dividend”). For additional information relating to the 2020 Dividend, please see “Fiscal 2020 Dividend” in the 2021 proxy statement.

(6)

Includes payment of $49,940 for accrued, but unused vacation in fiscal 2018.

(7)

Reflects (i) a March Special Bonus payment of $322,189 and (ii) an annual incentive bonus payment of $335,076 for fiscal 2020.

(8)

Reflects an adjustment payment of $1,368,334 related to the 2020 Dividend. Dr. Short additionally received a dividend payment of $1.00 per share of common stock held by him in connection with the 2020 Dividend, which is not reflected in this amount.

(9)

Ms. Allanson’s base salary is $295,000, but because she joined us in September 2021, her compensation for fiscal 2021 was pro-rated to $98,333.

(10)

Mr. Nance’s base salary was $187,938, but his compensation for fiscal 2021 was in fact $109,630. These options and RSUs, granted in June 2021, were unvested and returned to the Company’s 2013 Plan.

(11)

Includes payment of $2,052 for accrued, but unused vacation in fiscal 2021.

(12)

Reflects (i) a March Special Bonus payment of $130,319 and (ii) an annual incentive bonus payment of $135,532 for fiscal 2020.

(13)

Reflects (i) an adjustment payment of $107,996 related to the 2020 Dividend and (ii) payment of $13,901 in fiscal 2020 for accrued, but unused vacation in fiscal 2020. Mr. Nance additionally received a dividend payment of $1.00 per share of common stock held by him in connection with the 2020 Dividend, which is not reflected in this amount.

(1)

These amounts reflect the grant date fair value of such award computed in accordance with FASB ASC Topic 718 and do not reflect the actual amounts earned. For information on the valuation assumptions used in valuing these awards, refer to Note 6 titled “Stock-Based Compensation” in the Notes to the Financial Statements contained in the Company’s Annual Report on Form 10-K for fiscal 2021.

(1)

This table does not include options or RSUs granted to Mrs. Larsen, which are discussed in the notes to the Beneficial Ownership Table, included in this Proxy Statement at page 19.

(2)

The shares subject to this option are fully vested and exercisable as of December 31, 2021.

(3)

The shares subject to the option vest and become exercisable in 48 equal monthly installments beginning on the one month anniversary of the grant date, subject to the optionee’s continued status as a service provider of the Company on each such date.

(4)

The RSUs shall vest in four equal annual installments beginning on the one year anniversary of the grant date.

(5)

25% of the shares subject to this option vest and become exercisable on the one-year anniversary of the grant date, and the remaining vest in 36 equal installments on the one month anniversary of the grant date, subject to the optionee’s continued status as a service provider of the Company on each date.

(6)

Mr. Nance ceased to be a service provider of the Company on July 4, 2021; his unvested options and RSUs were returned to the Company’s 2013 Plan, and his vested options remained outstanding and may be exercised until first anniversary of his death.

(1)

Reflects the market value of our common stock on the vesting date.

(2)

Excludes Mrs. Larsen’s options exercised and stock awards vested, which are discussed in the notes to the Beneficial Ownership Table, included in this Proxy Statement at page 19.

(3)

Includes the 3,533 shares that Dr. Short had withheld for tax purposes.

(4)

Includes only stock awards that vested up to June 2021.

(1)

The aggregate market value is computed by multiplying (i) the number of shares of our common stock underlying unvested and outstanding stock options on December 31, 2021, that would become vested by (ii) the positive difference, if any, between $2.60 (the closing market price of our common stock on the NYSE on December 31, 2021, the last trading day in fiscal 2021) and the exercise price of such option. Because no options had an exercise price below $2.60, there would have been no value associated with their acceleration.

(2)

The aggregate market value is computed by multiplying (i) the number of unvested shares of our common stock subject to outstanding restricted stock unit awards on December 31, 2021 that would become vested by (ii) $2.60 (the closing market price of our common stock on the NYSE on December 31, 2021, the last trading day in fiscal 2021).

•

The annual total compensation of the employee identified as our median employee as of December 31, 2021 (other than our Chief Executive Officer) was $333,391;

•

The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table in this Proxy Statement, was $1,601,266; and

•

Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee was 4.8:1.

•

To identify the median employee, we calculated compensation of our employees using their fiscal 2021 annual base salaries, cash bonus amounts earned for performance in fiscal 2021 and the aggregate grant date fair value of equity awards granted in fiscal 2021.

•

We determined that as of December 31, 2021, our employee population consisted of 24 full-time and part-time employees.

•

We did not exclude any employees from our employee population.

•

Once the median employee was identified, we calculated the total compensation for our median employee using the same methodology we used to calculate Mr. Larsen’s total compensation as disclosed in the Summary Compensation Table.

•

the amounts involved exceeded or will exceed $120,000; and

•

any of our directors, executive officers or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.

•

reviewed and discussed our audited financial statements for fiscal 2021 with our management and our independent registered public accounting firm, including discussions related to critical accounting policies, financial reporting principles and practices, the reasonableness of significant estimates, and the effectiveness of internal control over financial reporting;

•

discussed with our independent registered accountants, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Commission; and

•

received the written disclosures and the letter from our independent registered public accounting firm discussing the matters required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with our independent registered public accounting firm its independence.