0001140361-22-019120 | 10-K/A | XBRL Viewer

Income Taxes, Components of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets [Abstract]
Reserves and accruals	$ 58	$ 48
Research and development credits and other credits	92	13
Net operating loss carry forward	9,519	598
Stock based compensation	6,287	8,998
Other	0	3
Total deferred tax assets	15,956	9,660
Valuation allowance	0	(611)
Deferred tax assets after valuation allowance	15,956	9,049
Total deferred tax liability - depreciation	(6)	0
Net deferred tax assets	$ 15,950	$ 9,049

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies [Abstract]

Use of Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss further below. We have reviewed our critical accounting policies and estimates with the Audit Committee of our Board of Directors.

Basis of Consolidation

The consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Leases

The Company determines if an arrangement is a lease at inception in accordance with Accounting Standards Codification (“ASC”) Topic 842. Operating lease right-of-use (“ROU”) assets are included in Prepaid expenses, and other assets on the Condensed Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

Revenue Recognition

The Company derives revenue from licensing and royalty fees from contracts with customers which often span several years. We account for this revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Our revenue arrangements may consist of multiple-element arrangements, with revenue for each unit of accounting recognized as the product or service is delivered to the customer.

With the licensing of our patents, performance obligations are generally satisfied at a point in time as work is complete when our patent rights are transferred to our customers. We generally have no further obligation to our customers regarding our technology.

Certain contracts may require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the servicing contract.

The Company actively monitors and enforces its intellectual property (“IP”) rights, including seeking appropriate compensation from third parties that utilize the Company’s IP without a license. As a result, the Company may, from time to time, receive payments as part of a settlement or compensation for a patent infringement dispute. Proceeds received are allocated to each element identified in the settlement or compensation, based on the fair value of each element. Generally, settlements and compensation may include the following elements: the value of a license or royalty agreement, cost reimbursement, damages, and interest. Elements identified related to licensing and royalty are recognized as revenue. Elements identified as reimbursed costs are generally recorded as a reduction to the reported expenses. Elements identified as damages or interest are generally recorded in other income in the condensed consolidated statement of operations. During the year ended December 31, 2020, the Company collected a lump sum payment of $454,034 from Apple, Inc., because of a favorable court decision relating to a patent infringement case. The court decision identified the following as the basis of the award: $302,428 for past royalties, $41,271 in damages for willful infringement, $108,221 for interest, and $2,114 in reimbursement for court costs and attorney’s fees. Elements of the payment were recognized in the Company’s condensed consolidated statement of operations as follows:

Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended:
	December 31, 2020
Revenue (royalties)	$	302,428
Operating expenses: selling, general and administrative (reimbursed litigation costs)		2,114
Other income: gain (willful infringement)		41,271
Other income: interest income (pre- and post-judgment interest)		108,221
Total cash received	$	454,034

Licensing Costs

Included in operating expenses are licensing costs we incurred in conjunction with the proceeds received from Apple Inc., pursuant to a favorable court decision relating to a patent infringement case.

Contingent Gains

ASC Topic 450-30-25, Contingent Gains, prohibits recognition of contingent gains until realized. Accordingly, we do not record contingent gains ahead of such realization. Management generally considers any such gains as realized only upon the collection of cash.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments.

Investments

Investments are classified as available-for-sale and are recorded at fair market value. Unrealized gains and losses are reported as other comprehensive income. Realized gains and losses are recorded in income in the period they are realized using specific identification of each security’s cost basis. We invest our excess cash primarily in highly liquid debt instruments including corporate, government and federal agency securities, with contractual maturities less than two years. By policy, we limit the amount of credit exposure to any one issuer.

Property and Equipment

Property and equipment are stated at historical cost, less accumulated depreciation, and amortization. Depreciation and amortization are computed using the accelerated and straight-line methods over the estimated useful lives of the assets, which range from five 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. In 2021, we had, at times, funds that were uninsured. We do not believe that we are subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships. We have not experienced any losses on our deposits of cash and cash equivalents.

Fair Value

The carrying amounts of our financial instruments, including cash equivalents, accounts payable, and accrued liabilities, approximate fair value because of their generally short maturities.

Intangible Assets

We record intangible assets at cost, less accumulated amortization. Amortization of intangible assets is provided over their estimated useful lives, which can range from 3 to 15 years, on either a straight-line basis or as revenue is generated by the assets.

Impairment of Long-Lived Assets

We identify and record impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable, but not less than annually. Recoverability is measured by comparison of the anticipated future net undiscounted cash flows to the related assets’ carrying value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset.

Research and Development

Research and development costs include expenses paid to outside development consultants and compensation related expenses for our engineering staff. Research and development costs are expensed as incurred.

Income Taxes

We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years. The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing our deferred tax assets, we consider whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.

A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. We continually assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our statements of operations.

We account for our uncertain tax positions in accordance with U.S. GAAP, which utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates.

Stock-Based Compensation

We account for stock-based compensation using the fair value recognition method in accordance with U.S. GAAP. We recognize these compensation costs on a straight-line basis over the requisite service period of the award, which is generally a vesting term of 4 years. We recognize forfeitures, if any, when they occur. In addition, we record stock-based compensation expense for awards granted to non-employees at fair value of the consideration received or the fair value of the equity instruments issued, as they vest, over the performance period (See Note 6 - Stock-Based Compensation).

Earnings per Share

Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued.

New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 Income Taxes (Topic 740). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U. S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted this ASU on January 1, 2021 and there was no material impact on our financial position or cash flows as a result.

Stock-Based Compensation, Fair Value Assumptions Used (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Fair value assumptions used in estimating fair value of each option grant [Abstract]
Expected stock price volatility	90.58%	93.45%	92.34%
Risk-free interest rate	1.06%	0.63%	2.09%
Expected life term	6 years 2 months 19 days	6 years 2 months 15 days	6 years 1 month 20 days
Expected dividends	0.00%	0.00%	0.00%
Options granted, weighted average grant date fair value (in dollars per share)	$ 3.32	$ 4.62	$ 4.63

Stock Plan (Details) - shares	1 Months Ended	12 Months Ended
Stock Plan (Details) - shares	Apr. 30, 2021	Dec. 31, 2021
Stock Plan [Abstract]
Vesting period		4 years
2013 Plan [Member]
Stock Plan [Abstract]
Increase of shares authorized (in shares)	2,500,000
Shares available for grant (in shares)		2,240,296
2013 Plan [Member] \| Stock Options [Member]
Stock Plan [Abstract]
Vesting period		4 years
Term of award		10 years
2013 Plan [Member] \| Stock Options [Member] \| Named Executive Officers [Member] \| Minimum [Member]
Stock Plan [Abstract]
Exercise price of option granted as percentage of fair market value of shares at date of grant		100.00%
2013 Plan [Member] \| Stock Options [Member] \| 10% Shareholder [Member] \| Minimum [Member]
Stock Plan [Abstract]
Exercise price of option granted as percentage of fair market value of shares at date of grant		110.00%
2013 Plan [Member] \| Incentive Stock Options [Member] \| Minimum [Member]
Stock Plan [Abstract]
Exercise price of option granted as percentage of fair market value of shares at date of grant		100.00%
2013 Plan [Member] \| Nonqualified Stock Options [Member] \| Minimum [Member]
Stock Plan [Abstract]
Exercise price of option granted as percentage of fair market value of shares at date of grant		85.00%
2013 Plan [Member] \| Restricted Stock Purchase Rights ("RSU") [Member]
Stock Plan [Abstract]
Vesting period		4 years

Employee Benefit Plan (Details) - USD ($) $ in Thousands	12 Months Ended
Employee Benefit Plan (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Employee Benefit Plan [Abstract]
Matching contribution to defined contribution plan	$ 145	$ 112	$ 101

Earnings Per Share

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Note 7 − Earnings Per Share

Basic earnings per share are based on the weighted average number of shares outstanding for a period. Diluted earnings per share are based upon the weighted average number of shares and potentially dilutive common shares outstanding. Potential common shares outstanding principally include stock options and RSUs under our stock plan and warrants. During 2021 and 2019, we incurred losses; therefore, the effect of any common stock equivalent would be anti-dilutive during the years.

The table below sets forth the basic and diluted loss per share calculations:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020		Year Ended December 31, 2019
Net (loss) income	$	(42,921	)	$	280,429	$	(19,180	)

Basic weighted average number of shares outstanding		71,159			70,850		68,564
Effect of dilutive securities		—			766		—
Diluted weighted average number of shares outstanding		71,159			71,616		68,564

Basic (loss) earnings per share	$	(0.60	)	$	3.96	$	(0.28	)
Diluted (loss) earnings per share	$	(0.60	)	$	3.92	$	(0.28	)

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

Note 10 − Income Taxes

The income tax provision (benefit) is comprised of the following:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
Current:
Federal	$	661		$	35,122		$	—
State		35			950			(393	)
Foreign		—			—			—
		696			36,072			(393	)
Deferred:
Federal		(7,025	)		(8,816	)		—
State		124			(233	)		—
		(6,901	)		(9,049	)		—
Total income tax (benefit) provision	$	(6,205	)	$	27,023		$	(393	)

A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
United States federal statutory rate		21.00	%		21.00	%		21.00	%
State taxes, net of federal benefit		(0.31	)%		0.17	%		1.99	%
Valuation allowance		—			(12.22	)%		(21.96	)%
Stock based compensation		(6.68	)%		(0.01	)%		—
R&D Credit		0.19	%		(0.21	)%		1.34	%
Other		(1.57	)%		0.06	%		(0.38	)%
Effective income tax rate		12.63	%		8.79	%		1.99	%

The Company’s effective tax rate for 2021 was substantially lower than the statutory Federal income tax rate primarily due to stock-based compensation and expiring stock options requiring us to reduce our deferred tax asset. The Company’s effective tax rate for both 2020 and 2019 was significantly lower than the statutory federal income tax rate primarily due to the change of valuation allowance. Due to the income in 2020, our valuation allowance against federal net deferred tax assets was fully released in 2020.

Deferred tax assets (liabilities) consist of the following:

	As restated As of December 31, 2021			As of December 31, 2020
Deferred tax assets:
Reserves and accruals	$	58		$	48
Research and development credits and other credits		92			13
Net operating loss carry forward		9,519			598
Stock based compensation		6,287			8,998
Other		—			3
Total deferred tax assets	$	15,956		$	9,660

Valuation allowance		—			(611	)
Deferred tax assets after valuation allowance		15,956			9,049

Total deferred tax liability – depreciation		(6	)		—

Net deferred tax assets	$	15,950		$	9,049

In 2021, 2020 and 2019, we had pre-tax losses of $49,126, pre-tax income of $307,452, and pre-tax losses of $19,573, respectively. At December 31, 2021, we had federal and state net operating loss carryforwards of approximately $45,326 and $107,989, respectively. However, none of the state net operating loss carryover is apportioned to a deferred tax asset, because currently we do not have operations in the state where losses accumulated. The state net operating loss carryforward will be expiring beginning in 2029.

A valuation allowance is provided for deferred tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized; management determined no valuation allowance is necessary for 2021.

We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. At December 31, 2021, we have no uncertain tax positions.

Our tax years for 2005 and forward are subject to examination by the U.S. tax authority and various state tax authorities. These years are open due to NOLs and tax credits generated in these years were utilized in 2020. The statute of limitation for these years shall expire three years after the date of filing 2020 income tax returns.

Our policy is to recognize interest and penalties, if any, accrued on any unrecognized tax benefits, as a component of income tax expense. We had no interest or penalties accrued for 2021 and 2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2021
Employee Benefit Plan [Abstract]
Employee Benefit Plan	Note 9 − Employee Benefit Plan We sponsor a defined contribution 401k plan covering substantially all our employees. Our matching contribution to the plan was approximately $145, $112, and $101 in 2021, 2020 and 2019, respectively.

- Definition

The entire disclosure for retirement benefits.

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+ Details

Commitments, Contingencies and Related Party Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Commitments, Contingencies and Related Party Transactions [Abstract]
Future minimum rents due in 2022	$ 56
Future minimum rents due in 2023	$ 46
Offices [Member]
Commitments, Contingencies and Related Party Transactions [Abstract]
Operating lease, expiration date	Oct. 31, 2023
Rent expense	$ 56	$ 56	$ 56
K2 Investment Fund LLC [Member] \| Aircraft [Member]
Commitments, Contingencies and Related Party Transactions [Abstract]
Rental fees incurred for use of aircraft	$ 791	$ 324	$ 1,790
Term of lease	12 months
Rate of aircraft lease (in dollars per flight hour)	$ 8
Term of notice for cancellation of lease	30 days

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Basic and Diluted Loss Per Share Calculations

The table below sets forth the basic and diluted loss per share calculations:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020		Year Ended December 31, 2019
Net (loss) income	$	(42,921	)	$	280,429	$	(19,180	)

Basic weighted average number of shares outstanding		71,159			70,850		68,564
Effect of dilutive securities		—			766		—
Diluted weighted average number of shares outstanding		71,159			71,616		68,564

Basic (loss) earnings per share	$	(0.60	)	$	3.96	$	(0.28	)
Diluted (loss) earnings per share	$	(0.60	)	$	3.92	$	(0.28	)

Summary of Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) Institution	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Revenue Recognition [Abstract]
Revenue (royalties)	$ 35	$ 302,636	$ 85
Other Income [Abstract]
Gain (willful infringement)	0	41,271	0
Licensing Costs [Abstract]
Costs accrued in conjunction with proceeds from litigation	$ (9,083)	90,101	$ 0
Concentration of Credit Risk and Other Risks and Uncertainties [Abstract]
Number of financial institutions holding company's cash \| Institution	2
Stock-Based Compensation [Abstract]
Option vesting term	4 years
Minimum [Member]
Property and Equipment [Abstract]
Useful lives	5 years
Intangible Assets [Abstract]
Estimated useful lives	3 years
Maximum [Member]
Property and Equipment [Abstract]
Useful lives	7 years
Intangible Assets [Abstract]
Estimated useful lives	15 years
Positive Outcome of Litigation [Member]
Revenue Recognition [Abstract]
Revenue (royalties)		302,428
Operating expense [Abstract]
Selling, general and administrative (reimbursed litigation costs)		2,114
Other Income [Abstract]
Gain (willful infringement)		41,271
Interest income (pre- and post-judgment interest)		108,221
Total cash received		$ 454,034
Highly Liquid Debt Investments [Member] \| Maximum [Member]
Investments [Abstract]
Contractual maturities of investment securities	2 years

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	71,232,856	71,058,570
Common stock, shares outstanding (in shares)	71,232,856	71,058,570

Income Taxes, Income Tax Uncertainties (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Income Taxes [Abstract]
Uncertain tax positions	$ 0
Accrued interest and penalties	$ 0	$ 0

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock and Additional Paid-in Capital [Member]	Accumulated Deficit (Retained Earnings) [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Dec. 31, 2018	$ 208,324	$ (198,422)	$ (14)	$ 9,888
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued for cash, net	10,539
Common stock issued for options/RSUs, net	670
Warrants issued for services	0
Stock-based compensation	3,711
Net (loss) income		(19,180)		(19,180)
Dividends		0
Change in unrealized investment (loss) gain, net			3	3
Change in foreign currency translation, net			(3)	(3)
Balance at Dec. 31, 2019	223,244	(217,602)	(14)	5,628
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued for cash, net	4,488
Common stock issued for options/RSUs, net	690
Warrants issued for services	104
Stock-based compensation	3,938
Net (loss) income		280,429		280,429
Dividends		(70,841)
Change in unrealized investment (loss) gain, net			0	0
Change in foreign currency translation, net			1	1
Balance at Dec. 31, 2020	232,464	(8,014)	(13)	224,437
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued for cash, net	0
Common stock issued for options/RSUs, net	(196)
Warrants issued for services	0
Stock-based compensation	4,184
Net (loss) income		(42,921)		(42,921)
Dividends		0
Change in unrealized investment (loss) gain, net			(51)	(51)
Change in foreign currency translation, net			(4)	(4)
Balance at Dec. 31, 2021	$ 236,452	$ (50,935)	$ (68)	$ 185,449

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2021

Stock-Based Compensation [Abstract]

Information about Stock Options Outstanding

The following tables summarize information about stock options and RSUs outstanding at December 31, 2021:

Options Outstanding							Options Vested and Exercisable
Range of 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
$ 2.88 - 6.95		5,533,812		6.66	$	4.50		4,050,084		5.82	$	4.34
$ 14.52 - 35.25		863,625		1.31	$	22.95		863,625		1.32	$	22.95
		6,397,437		5.94	$	6.99		4,913,709		5.03	$	7.61

Stock Option Activity

The following tables summarize activity under the Plan for the indicated periods:

	Options
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2018		5,998,837		$	7.72		—	$	—
Options granted		345,000			6.06		—		—
Options exercised		(663,816	)		1.23		—		—
Options cancelled		(50,000	)		4.95		—		—
Outstanding at December 31, 2019		5,630,021		$	8.49		—	$	—
Options granted		747,500			6.07		—		—
Options exercised		(262,031	)		3.99		—		—
Options cancelled		(302,969	)		5.30		—		—
Outstanding at December 31, 2020		5,812,521		$	8.55		—	$	—
Options granted		999,500			4.43		—		—
Options exercised		—			—		—		—
Options cancelled		(414,584	)		22.54		—		—
Outstanding at December 31, 2021		6,397,437		$	6.99		5.94	$	6
Options exercisable at December 31, 2021		4,913,709		$	7.61		5.03	$	6

	RSUs
	Number of RSUs			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2018		504,994		$	3.83	$	—
RSUs granted		229,996			6.06		—
RSUs vested		(207,334	)		4.07		—
RSUs cancelled		(29,167	)		4.65		—
Outstanding at December 31, 2019		498,489		$	4.71	$	—
RSUs granted		218,329			6.89		—
RSUs vested		(212,495	)		4.63		—
RSUs cancelled		—			—		—
Outstanding at December 31, 2020		504,323		$	5.69	$	—
RSUs granted		236,661			4.61		—
RSUs vested		(215,165	)		5.23		—
RSUs cancelled		(16,664	)		5.45		—
Outstanding at December 31, 2021		509,155		$	5.38	$	—

Stock-Based Compensation by Type of Award

Stock-based compensation expense is included in operating expense for each period as follows:

Stock-Based Compensation by Type of Award	Year Ended December 31, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
Stock options	$	3,067	$	2,872	$	2,756
RSUs		1,117		1,066		955
Total stock-based compensation expense	$	4,184	$	3,938	$	3,711

Fair Value Assumptions

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

	Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
Expected stock price volatility		90.58	%		93.45	%		92.34	%
Risk-free interest rate		1.06	%		0.63	%		2.09	%
Expected life term	6.22 years			6.21 years				6.14 years
Expected dividends		0	%		0	%		0	%

Common Stock (Tables)

12 Months Ended

Dec. 31, 2021

Common Stock [Abstract]

Information about Warrants Outstanding

Warrants Issued		Exercise Price		Outstanding and Exercisable December 31, 2020		Issued		Exercised		Terminated / Cancelled		Outstanding and Exercisable December 31, 2021		Expiration Date
25,000		$5.75		25,000		—		—		—		25,000		April 30, 2025

Stock Plan	12 Months Ended
Stock Plan	Dec. 31, 2021
Stock Plan [Abstract]
Stock Plan	Note 5 − Stock Plan We have an equity incentive plan for employees and others called the VirnetX Holding Corporation 2013 Equity Incentive Plan (the “2013 Plan”), which has been approved by our stockholders. To the extent that any award should expire, become un-exercisable or is otherwise forfeited, the shares subject to such award will again become available for issuance under the 2013 Plan. The 2013 Plan provides for the granting of stock options and restricted stock units purchase rights (“RSUs”) to our employees and consultants. Stock options granted under the 2013 Plan may be incentive stock options or nonqualified stock options. Incentive stock options (“ISOs”) may only be granted to our employees (including officers and directors). Nonqualified stock options (“NSOs”) and stock purchase rights may be granted to our employees and consultants. The 2013 Plan expires in 2023. In April 2021, the Board approved an amendment and restatement of the 2013 Plan to, among other things, increase the shares reserved under the Plan by 2,500,000 shares (the “Plan Amendment”). Our stockholders approved the Plan Amendment at the 2021 Annual Meeting of the Stockholders held on June 3, 2021. The 2013 Plan generally provides for the granting of shares of our common stock, including stock options and RSUs. Options may be granted under the 2013 Plan with an exercise price determined by our Board of Directors, or a duly appointed committee thereof, provided, however, that the exercise price of an option granted to any employee shall be not less than 100% of the fair market value at the date of grant in the case of ISOs or 85% of the fair market value at the date of grant in the case of an NSO. The exercise price of an ISO or NSO granted to one of our Named Executive Officers shall not be less than 100% fair market value of the shares at the date of grant and the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the fair market value of the shares on the date of grant. Stock options granted under the 2013 Plan typically vest over four years and have a 10-year term. All RSUs are considered to be granted at the fair value of our stock on the date of grant because they have no exercise price. RSUs typically vest over four years. As of December 31, 2021, there were 2,240,296 shares available for grant under the 2013 Plan.

Income Taxes, Components of Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current [Abstract]
Federal	$ 661	$ 35,122	$ 0
State	35	950	(393)
Foreign	0	0	0
Current income tax provision (benefit)	696	36,072	(393)
Deferred [Abstract]
Federal	(7,025)	(8,816)	0
State	124	(233)	0
Deferred income tax provision (benefit)	(6,901)	(9,049)	0
Total income tax (benefit) provision	$ (6,205)	$ 27,023	$ (393)

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 142,018	$ 192,908
Investments available for sale	27,254	28,348
Accounts receivables	17	8
Prepaid income tax	0	2,905
Prepaid expenses and other current assets	203	263
Total current assets	169,492	224,432
Prepaid expenses and other assets	1,056	1,301
Property and equipment, net	18	11
Deferred tax asset	15,950	9,049
Total assets	186,516	234,793
Current liabilities:
Accounts payable and accrued liabilities	338	654
Accrued payroll and related expenses	270	220
Accrued licensing costs	355	9,438
Other liabilities, current	58	44
Total current liabilities	1,021	10,356
Other liabilities	46	0
Total liabilities	1,067	10,356
Commitments and contingencies (Note 4)
Stockholders' equity:
Preferred stock, par value $0.0001 per share Authorized: 10,000,000 shares at December 31, 2021 and December 31, 2020, Issued and outstanding: 0 shares at December 31, 2021 and December 31, 2020	0	0
Common stock, par value $0.0001 per share Authorized: 100,000,000 shares at December 31, 2021 and December 31, 2020, Issued and outstanding: 71,232,856 shares and 71,058,570 shares, at December 31, 2021 and December 31, 2020, respectively	7	7
Additional paid-in capital	236,445	232,457
Accumulated deficit	(50,935)	(8,014)
Accumulated other comprehensive loss	(68)	(13)
Total stockholders' equity	185,449	224,437
Total liabilities and stockholders' equity	$ 186,516	$ 234,793

Summary of Significant Accounting Policies, Restatement of Previously Issued Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Balance Sheet [Abstract]
Deferred tax asset	$ 15,950	$ 9,049
Total assets	186,516	234,793
Accumulated deficit	(50,935)	(8,014)
Total stockholders' equity	185,449	224,437	$ 5,628	$ 9,888
Total liabilities and stockholders' equity	186,516	234,793
Consolidated Statement of Operations [Abstract]
Income tax benefit	6,205	(27,023)	393
Net loss	$ (42,921)	$ 280,429	$ (19,180)
Basic loss per share (in dollars per share)	$ (0.60)	$ 3.96	$ (0.28)
Diluted loss per share (in dollars per share)	$ (0.60)	$ 3.92	$ (0.28)
Consolidated Statement of Comprehensive Loss [Abstract]
Net loss	$ (42,921)	$ 280,429	$ (19,180)
Comprehensive loss	(42,976)	280,430	(19,180)
Consolidated Statement of Stockholders' Equity [Abstract]
Net loss	(42,921)	280,429	(19,180)
Balance	185,449	224,437	5,628	9,888
Consolidated Statement of Cash Flows [Abstract]
Net loss	(42,921)	280,429	(19,180)
Deferred income taxes	(6,901)	(9,049)	0
Note 7 - Earnings Per Share [Abstract]
Net loss	$ (42,921)	$ 280,429	$ (19,180)
Basic loss per share (in dollars per share)	$ (0.60)	$ 3.96	$ (0.28)
Diluted loss per share (in dollars per share)	$ (0.60)	$ 3.92	$ (0.28)
Note 10 - Income Taxes, Income Tax Provision [Abstract]
Deferred income tax benefit, Federal	$ (7,025)	$ (8,816)	$ 0
Deferred income tax benefit, State	124	(233)	0
Total deferred income tax benefit	(6,901)	(9,049)	0
Total income tax benefit	$ (6,205)	$ 27,023	$ (393)
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract]
State taxes, net of federal benefit	(0.31%)	0.17%	1.99%
Stock based compensation	(6.68%)	(0.01%)	0.00%
Effective income tax rate	12.63%	8.79%	1.99%
Note 10 - Income Taxes, Deferred Tax Assets [Abstract]
Stock based compensation	$ 6,287	$ 8,998
Total deferred tax assets	15,956	9,660
Deferred tax assets after valuation allowance	15,956	9,049
Net deferred tax assets	15,950	9,049
Accumulated Deficit [Member]
Consolidated Balance Sheet [Abstract]
Total stockholders' equity	(50,935)	(8,014)	$ (217,602)	(198,422)
Consolidated Statement of Operations [Abstract]
Net loss	(42,921)	280,429	(19,180)
Consolidated Statement of Comprehensive Loss [Abstract]
Net loss	(42,921)	280,429	(19,180)
Consolidated Statement of Stockholders' Equity [Abstract]
Net loss	(42,921)	280,429	(19,180)
Balance	(50,935)	(8,014)	(217,602)	$ (198,422)
Consolidated Statement of Cash Flows [Abstract]
Net loss	(42,921)	280,429	(19,180)
Note 7 - Earnings Per Share [Abstract]
Net loss	(42,921)	$ 280,429	$ (19,180)
As Previously Reported [Member]
Consolidated Balance Sheet [Abstract]
Deferred tax asset	19,278
Total assets	189,844
Accumulated deficit	(47,607)
Total stockholders' equity	188,777
Total liabilities and stockholders' equity	189,844
Consolidated Statement of Operations [Abstract]
Income tax benefit	9,533
Net loss	$ (39,593)
Basic loss per share (in dollars per share)	$ (0.56)
Diluted loss per share (in dollars per share)	$ (0.56)
Consolidated Statement of Comprehensive Loss [Abstract]
Net loss	$ (39,593)
Comprehensive loss	(39,648)
Consolidated Statement of Stockholders' Equity [Abstract]
Net loss	(39,593)
Balance	188,777
Consolidated Statement of Cash Flows [Abstract]
Net loss	(39,593)
Deferred income taxes	(10,229)
Note 7 - Earnings Per Share [Abstract]
Net loss	$ (39,593)
Basic loss per share (in dollars per share)	$ (0.56)
Diluted loss per share (in dollars per share)	$ (0.56)
Note 10 - Income Taxes, Income Tax Provision [Abstract]
Deferred income tax benefit, Federal	$ (10,293)
Deferred income tax benefit, State	64
Total deferred income tax benefit	(10,229)
Total income tax benefit	$ (9,533)
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract]
State taxes, net of federal benefit	(0.19%)
Stock based compensation	(0.02%)
Effective income tax rate	19.41%
Note 10 - Income Taxes, Deferred Tax Assets [Abstract]
Stock based compensation	$ 9,615
Total deferred tax assets	19,284
Deferred tax assets after valuation allowance	19,284
Net deferred tax assets	19,278
As Previously Reported [Member] \| Accumulated Deficit [Member]
Consolidated Balance Sheet [Abstract]
Total stockholders' equity	(47,607)
Consolidated Statement of Stockholders' Equity [Abstract]
Balance	(47,607)
Error Related to Accounting for Deferred Taxes [Member] \| Restatement Adjustment [Member]
Consolidated Balance Sheet [Abstract]
Deferred tax asset	(3,328)
Total assets	(3,328)
Accumulated deficit	(3,328)
Total stockholders' equity	(3,328)
Total liabilities and stockholders' equity	(3,328)
Consolidated Statement of Operations [Abstract]
Income tax benefit	(3,328)
Net loss	$ (3,328)
Basic loss per share (in dollars per share)	$ (0.04)
Diluted loss per share (in dollars per share)	$ (0.04)
Consolidated Statement of Comprehensive Loss [Abstract]
Net loss	$ (3,328)
Comprehensive loss	(3,328)
Consolidated Statement of Stockholders' Equity [Abstract]
Net loss	(3,328)
Balance	(3,328)
Consolidated Statement of Cash Flows [Abstract]
Net loss	(3,328)
Deferred income taxes	3,328
Note 7 - Earnings Per Share [Abstract]
Net loss	$ (3,328)
Basic loss per share (in dollars per share)	$ (0.04)
Diluted loss per share (in dollars per share)	$ (0.04)
Note 10 - Income Taxes, Income Tax Provision [Abstract]
Deferred income tax benefit, Federal	$ (3,268)
Deferred income tax benefit, State	60
Total deferred income tax benefit	(3,208)
Total income tax benefit	$ 3,328
Note 10 - Income Taxes, Reconciliation of Income Tax Rate [Abstract]
State taxes, net of federal benefit	(0.12%)
Stock based compensation	(6.66%)
Effective income tax rate	(6.78%)
Note 10 - Income Taxes, Deferred Tax Assets [Abstract]
Stock based compensation	$ (3,328)
Total deferred tax assets	(3,328)
Deferred tax assets after valuation allowance	(3,328)
Net deferred tax assets	(3,328)
Error Related to Accounting for Deferred Taxes [Member] \| Restatement Adjustment [Member] \| Accumulated Deficit [Member]
Consolidated Balance Sheet [Abstract]
Total stockholders' equity	(3,328)
Consolidated Statement of Stockholders' Equity [Abstract]
Balance	$ (3,328)

Litigation	12 Months Ended
Litigation	Dec. 31, 2021
Litigation [Abstract]
Litigation	Note 12 – Litigation (all dollar amounts in this section are expressed in thousands except for rates per device) We have several intellectual property infringement lawsuits pending in the United States Court of Appeals for the Federal Circuit (“USCAFC”). VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) (“Apple II”) This case began on November 6, 2012, when we had filed a complaint against Apple in United States District Court (“USDC”) in which we alleged that Apple infringed on certain of our patents, (U.S. Patent Nos. 6,502,135, 7,418,504, 7,921,211 and 7,490,151). We sought damages and injunctive relief. The accused products include the iPhone 5, iPod Touch 5th Generation, iPad 4th Generation, iPad mini, and the latest Macintosh computers. Post-trial motions hearing was held on July 18, 2018. On August 31, 2018, the USDC entered a Final Judgment and issued its Memorandum Opinion and Order regarding post-trial motions, affirming the jury’s verdict of $502,600 and granting VirnetX motions for supplemental damages, a sunset royalty, and the royalty rate of $1.20 per infringing iPhone, iPad and Mac products, pre-judgment and post-judgment interest and costs. Apple filed a notice of appeal with the USCAFC in the Apple II case. On October 9, 2018, USCAFC docketed the appeal as Case No. 19-1050 - VirnetX Inc. v. Apple Inc. On January 24, 2019 Apple filed its opening brief. We filed our response brief on March 1, 2019. Apple filed its reply brief on April 5, 2019. The oral arguments were heard on October 4, 2019. On November 22, 2019, the USCAFC issued an opinion affirming the district court’s findings that Apple is precluded from making certain invalidity arguments and that Apple infringed the ’135 and ’151 patents; reversing the USDC’s finding that Apple infringed the ’504 and ’211 patents; and remanding the case for proceedings on damages. Apple sought panel and en banc rehearing, which the USCAFC denied on February 10, 2020. On February 22, 2020, the USDC issued a scheduling order for the parties to brief the court about the need for a new trial for recalculating the damages. We filed our motion for entry of judgment on February 28, 2020. The arguments on this matter were heard on April 14, 2020. In its order, unsealed on May 1, 2020, the USDC denied VirnetX’s motion for entry of a new judgment based on the prior jury verdict and ordered a new jury trial on damages. On August 10, 2020, the USDC granted Apple’s motion for continuance and reset the date to October 26, 2020. On October 30, 2020, a jury returned a $502,800 verdict in favor of VirnetX based on Apple’s infringement of two network security patents: VirnetX US Patents No. 6,502,135 and No. 7,490,151. The jury verdict called for damages of $0.84 per accused device since the 2013 launch of Apple’s iOS 7 operating system and represents 598,629,580 infringing units from US sales only. On January 15, 2021, the district court denied Apple’s motion for judgment as a matter of law, and on February 4, 2021, Apple filed a notice of appeal to the USCAFC. On February 22, 2021, USCAFC docketed the appeal as Case No. 19-1672. Apple’s opening brief was filed on June 2, 2021. VirnetX filed its responsive brief on July 26, 2021. Apple filed its reply brief on September 13, 2021. The briefing is complete, and we are awaiting the court order with the schedule for oral arguments in this matter. VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., Apple Inc. (USCAFC Case 20-2271) and VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., Apple Inc., and Black Swamp, LLC (USCAFC Case 20-2272) On September 15, 2020, we filed with the USCAFC an appeal of the invalidity findings by the Patent Trial and Appeal Board (“PTAB”) in inter-partes review proceedings IPR2015-01046 and IPR2016-00062 involving our U.S. Patent No. 6,502,135, and an appeal of the invalidity findings by the PTAB in inter partes review proceedings IPR2015-1047, IPR2016- 00063, and IPR2016-00167 involving our U.S. Patent No. 7,490,151. On September 25, 2020, the USCAFC issued an order consolidating the two appeals. On December 15, 2020, we filed a motion to vacate the PTAB decisions below and to remand these appeals to the PTAB. On March 16, 2021, the USCAFC denied the motion without prejudice to us raising the challenges made in the motion in our opening brief. Our opening brief was filed on June 7, 2021. On June 23, 2021, the USCAFC entered an order directing us (and parties in other appeals that raised Appointments Clause challenges) to file a brief explaining how they believe their cases should proceed in light of the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). On July 7, 2021, we filed a brief in response to the court’s order. Other parties, including the U.S. Patent and Trademark Office (“PTO”) filed their responses on July 21, 2021. On August 19, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the USPTO. The USCAFC retained jurisdiction over the appeals in the meantime. On September 20, 2021, we filed our requests for Director rehearing with the PTO. On October 29, 2021, our requests for Director rehearing were denied. We subsequently filed an amended opening brief to the USCAFC on December 10, 2021, the other parties filed response briefs on February 2, 2022, and we filed a reply brief on February 22, 2022. All the briefings have been completed. We are awaiting the court order with the schedule for oral arguments in this matter. VirnetX Inc. v. Hirshfeld (USCAFC Case 17-2593, -2594) On September 22, 2017, we filed with the USCAFC an appeal of the invalidity findings by the PTAB in inter-partes review proceeding IPR2016-00693 involving our U.S. Patent No. 7,418,504, and an appeal of the invalidity findings by the PTAB in inter partes review proceeding IPR2016-00957 involving our U.S. Patent No. 7,921,211. On September 16, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the PTO. The USCAFC retained jurisdiction over the appeals in the meantime. On October 18, 2021, we filed our requests for Director rehearing with the PTO. On January 7, 2022, our requests for Director rehearing were denied. On January 21, 2022, we informed the USCAFC about the denial of Director rehearing and requested that the court dismiss the appeal involving IPR2016-00957 as moot and vacate the PTAB’s underlying decision. On February 15, 2022, the USCAFC directed the PTO to respond to our request. The PTO’s response is due on March 8, 2022. VirnetX Inc. v. Cisco Systems, Inc. (USCAFC Case 19-1671) On March 18, 2019, we filed with the USCAFC an appeal of the invalidity findings by the PTAB in inter-partes reexamination proceeding 95/001,679 involving our U.S. Patent No. 6,502,135. On October 5, 2021, USCAFC issued an order remanding these appeals for the limited purpose of allowing VirnetX the opportunity to request rehearing of the PTAB’s final written decisions by the Director of the PTO. The USCAFC retained jurisdiction over the appeals in the meantime. Our request for Director rehearing with the PTO was filed on November 5, 2021. On January 10, 2022, our request for Director rehearing was denied. We informed the USCAFC about the denial of Director rehearing and are awaiting the court order with a schedule for briefings in this matter. McKool Smith P.C. v. VirnetX, Inc., AAA Case No. 01-20-0003-7975 On March 23, 2020, the law firm of McKool Smith, P.C. (“McKool”) filed a Demand for Arbitration against VirnetX, Inc. with the American Arbitration Association (“AAA”). In its demand, McKool claimed that a retention agreement it entered into in 2010 with VirnetX entitled it to a contingency fee arising from the recent 2020 payment made in the Apple I case. McKool claimed it was owed approximately $36,300 (or 8% of the Apple I payment). We filed a general response with the AAA denying McKool’s claim and contested the matter vigorously. An evidentiary hearing was held on the matter during the week of February 22, 2021 and the parties submitted additional briefings. On April 19, 2021, the arbitrator awarded McKool $36,323 in damages, plus pre-judgment interest in the amount of 5% simple interest from March 23, 2020 to April 18, 2021, and post-judgment interest in the amount of 5%, compounded annually, until payment of the award. We accrued the resulting $38,284 as of March 31, 2021 and paid that amount to McKool on April 20, 2021. This matter is now closed. Other Legal Matters One or more potential intellectual property infringement claims may also be available to us against certain other companies who have the resources to defend against any such claims. Although we believe these potential claims are likely valid, commencing a lawsuit can be expensive and time-consuming, and there is no assurance that we could prevail on such potential claims if we made them. In addition, bringing a lawsuit may lead to potential counterclaims which may distract our management and our other resources, including capital resources, from efforts to successfully commercialize our products. Currently, we are not a party to any other pending legal proceedings and are not aware of any proceeding threatened or contemplated against us.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 − Summary of Significant Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The critical accounting policies we employ in the preparation of our consolidated financial statements are those which involve impairment of long-lived assets, income taxes, fair value of financial instruments and stock-based compensation.

Restatement of Previously issued Financial Statements

On March 16, 2022, the Company filed with the SEC the Original Form 10-K, together with all exhibits thereto, which included consolidated financial statements as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019. On May 9, 2022, Company management concluded the December 31, 2021 consolidated financial statements included in the Original Form 10-K should no longer be relied upon because of an error related to accounting for deferred taxes. The error was deemed material to the consolidated financial statements for the year ended December 31, 2021 and resulted in a restatement more fully described below.

The error related to the carrying balance of our deferred taxes that included the fair value of nonqualified stock options (“NSO”) expensed for book purposes but the tax impact of that expense is deferred for income tax purposes. In connection with accounting for NSOs, the Company expenses the fair value of NSOs granted over the vesting period of the NSOs. For income tax purposes, the tax impact of that expense is deferred as part of our deferred tax asset, until the NSO holder converts the NSO to stock, at which time the deferred tax asset is reduced and income tax expense is recognized. If an NSO is never exercised, and then expires in accordance with the terms of the contract, any amounts included in our deferred tax asset are written off and income tax expense is recognized. As of December 31, 2021, the Company incorrectly included $3,328 in deferred tax assets related to expired NSOs as of the end of the Affected Period, which should have reduced our income tax benefit when the NSOs expired.

The Company has restated the consolidated financial statements as of and for the year ended December 31, 2021 from amounts previously reported on the Original Form 10-K to reduce our deferred tax asset in our consolidated balance sheet and our income tax benefit in our consolidated statement of operations by $3,328; the restatement also resulted in changes to Note 2 - Summary of Significant Accounting Policies, Restatement of Previously Issued Financial Statements, Note 7 – Earnings per share and Note 10 – Income Taxes.

The following tables present the impact of the restatement adjustment on the previously issued consolidated financial statements and footnotes as of and for the year ended December 31, 2021:

	As of and for the year ended December 31, 2021
	As Previously Reported			Restatement Adjustment			As Restated
Consolidated Balance Sheet
Deferred tax asset	$	19,278		$	(3,328	)	$	15,950
Total assets		189,844			(3,328	)		186,516
Accumulated deficit		(47,607	)		(3,328	)		(50,935	)
Total stockholders’ equity		188,777			(3,328	)		185,449
Total liabilities and stockholders’ equity		189,844			(3,328	)		186,516

Consolidated Statement of Operations
Income tax benefit	$	9,533		$	(3,328	)	$	6,205
Net loss		(39,593	)		(3,328	)		(42,921	)
Basic loss per share		(0.56	)		(0.04	)		(0.60	)
Diluted loss per share		(0.56	)		(0.04	)		(0.60	)

Consolidated Statement of Comprehensive Loss
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Comprehensive loss		(39,648	)		(3,328	)		(42,976	)

Consolidated Statement of Stockholders’ Equity
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Ending balance, accumulated deficit		(47,607	)		(3,328	)		(50,935	)
Total liabilities and stockholders’ equity		188,777			(3,328	)		185,449

Consolidated Statement of Cash Flows
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Deferred income taxes		(10,229	)		3,328			(6,901	)

Note 7 - Earnings per share
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Basic loss per share		(0.56	)		(0.04	)		(0.60	)
Diluted loss per share		(0.56	)		(0.04	)		(0.60	)

Note 10 - Income Taxes, income tax provision
Deferred income tax benefit, Federal	$	(10,293	)	$	(3,268	)	$	(7,025	)
Deferred income tax benefit, State		64			60			124
Total deferred income tax benefit		(10,229	)		(3,208	)		(6,901	)
Total income tax benefit		(9,533	)		3,328			(6,205	)

Note 10 - Income Taxes, reconciliation of income tax rate
State taxes, net of federal benefit		(0.19	)%		(0.12	)%		(0.31	)%
Stock based compensation		(0.02	)%		(6.66	)%		(6.68	)%
Effective income tax rate		19.41	%		(6.78	)%		12.63	%

Note 10 - Income Taxes, deferred tax assets
Stock based compensation	$	9,615		$	(3,328	)	$	6,287
Total deferred tax assets		19,284			(3,328	)		15,956
Deferred tax assets after valuation allowance		19,284			(3,328	)		15,956
Net deferred tax assets		19,278			(3,328	)		15,950

Use of Estimates

Basis of Consolidation

The consolidated financial statements include the accounts of VirnetX Holding Corporation and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Leases

Revenue Recognition

Certain contracts may require our customers to enter into a hosting arrangement with us and for these arrangements, revenue is recognized over time, generally over the life of the servicing contract.

Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended:
	December 31, 2020
Revenue (royalties)	$	302,428
Operating expenses: selling, general and administrative (reimbursed litigation costs)		2,114
Other income: gain (willful infringement)		41,271
Other income: interest income (pre- and post-judgment interest)		108,221
Total cash received	$	454,034

Licensing Costs

Contingent Gains

Cash and Cash Equivalents

Investments

Property and Equipment

Concentration of Credit Risk and Other Risks and Uncertainties

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

Impairment of Long-Lived Assets

Research and Development

Income Taxes

Stock-Based Compensation

Earnings per Share

New Accounting Pronouncements

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Calculation of basic and diluted loss per share [Abstract]
Net (loss) income	$ (42,921)	$ 280,429	$ (19,180)
Basic weighted average number of shares outstanding (in shares)	71,159,458	70,850,311	68,564,321
Effect of dilutive securities (in shares)	0	766,000	0
Diluted weighted average number of shares outstanding (in shares)	71,159,458	71,615,843	68,564,321
Basic (loss) earnings per share (in dollars per share)	$ (0.60)	$ 3.96	$ (0.28)
Diluted (loss) earnings per share (in dollars per share)	$ (0.60)	$ 3.92	$ (0.28)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

Commitments, Contingencies and Related Party Transactions	12 Months Ended
	Dec. 31, 2021
Commitments, Contingencies and Related Party Transactions [Abstract]
Commitments, Contingencies and Related Party Transactions	Note 4 − Commitments, Contingencies and Related Party Transactions We lease our offices under an operating lease with a third party expiring in October 2023. We recognize rent expense on a straight-line basis over the term of the lease. Rent expense was $56, for each of the years 2021, 2020 and 2019. Future minimum rents due under the lease total $56 in 2022 and $46 in 2023 when the lease expires. We entered into a service agreement for the use of an aircraft from K2 Investment Fund LLC (“LLC”) for business travel for employees of the Company. We incurred approximately $791, $324, and $1,790 in rental fees and reimbursements to the LLC during the years 2021, 2020 and 2019, respectively. We pay for the Company’s usage of the aircraft and have no rights to purchase. Our Chief Executive Officer and Chief Administrative Officer are the managing partners of the LLC and control the equity interests of the LLC. We entered into a 12-month non-exclusive agreement with the LLC for use of the plane at a rate of $8 per flight hour, with no minimum usage requirement. The agreement contains other terms and conditions normal in such transactions and can be cancelled by either us or the LLC with 30 days’ notice. The agreement renews on an annual basis unless terminated by either party. Neither party has exercised their termination rights.

Income Taxes, Pre-tax Income (Losses) and Operating Loss Carryforwards (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Taxes [Abstract]
Pre-tax Income (losses)	$ (49,126)	$ 307,452	$ (19,573)
Income Taxes [Abstract]
Valuation allowance	0	$ 611
Federal [Member]
Income Taxes [Abstract]
Net operating loss carryforwards	45,326
State [Member]
Income Taxes [Abstract]
Net operating loss carryforwards	$ 107,989
Operating loss carryforwards, expiration date	Dec. 31, 2029

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

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+ Details

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies [Abstract]

Restatement of Previously issued Financial Statements

The following tables present the impact of the restatement adjustment on the previously issued consolidated financial statements and footnotes as of and for the year ended December 31, 2021:

	As of and for the year ended December 31, 2021
	As Previously Reported			Restatement Adjustment			As Restated
Consolidated Balance Sheet
Deferred tax asset	$	19,278		$	(3,328	)	$	15,950
Total assets		189,844			(3,328	)		186,516
Accumulated deficit		(47,607	)		(3,328	)		(50,935	)
Total stockholders’ equity		188,777			(3,328	)		185,449
Total liabilities and stockholders’ equity		189,844			(3,328	)		186,516

Consolidated Statement of Operations
Income tax benefit	$	9,533		$	(3,328	)	$	6,205
Net loss		(39,593	)		(3,328	)		(42,921	)
Basic loss per share		(0.56	)		(0.04	)		(0.60	)
Diluted loss per share		(0.56	)		(0.04	)		(0.60	)

Consolidated Statement of Comprehensive Loss
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Comprehensive loss		(39,648	)		(3,328	)		(42,976	)

Consolidated Statement of Stockholders’ Equity
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Ending balance, accumulated deficit		(47,607	)		(3,328	)		(50,935	)
Total liabilities and stockholders’ equity		188,777			(3,328	)		185,449

Consolidated Statement of Cash Flows
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Deferred income taxes		(10,229	)		3,328			(6,901	)

Note 7 - Earnings per share
Net loss	$	(39,593	)	$	(3,328	)	$	(42,921	)
Basic loss per share		(0.56	)		(0.04	)		(0.60	)
Diluted loss per share		(0.56	)		(0.04	)		(0.60	)

Note 10 - Income Taxes, income tax provision
Deferred income tax benefit, Federal	$	(10,293	)	$	(3,268	)	$	(7,025	)
Deferred income tax benefit, State		64			60			124
Total deferred income tax benefit		(10,229	)		(3,208	)		(6,901	)
Total income tax benefit		(9,533	)		3,328			(6,205	)

Note 10 - Income Taxes, reconciliation of income tax rate
State taxes, net of federal benefit		(0.19	)%		(0.12	)%		(0.31	)%
Stock based compensation		(0.02	)%		(6.66	)%		(6.68	)%
Effective income tax rate		19.41	%		(6.78	)%		12.63	%

Note 10 - Income Taxes, deferred tax assets
Stock based compensation	$	9,615		$	(3,328	)	$	6,287
Total deferred tax assets		19,284			(3,328	)		15,956
Deferred tax assets after valuation allowance		19,284			(3,328	)		15,956
Net deferred tax assets		19,278			(3,328	)		15,950

Classification of Payment Received in Condensed Consolidated Statement of Operations

Classification of Payment Received in the Company’s Condensed Consolidated Statement of Operations Year Ended:
	December 31, 2020
Revenue (royalties)	$	302,428
Operating expenses: selling, general and administrative (reimbursed litigation costs)		2,114
Other income: gain (willful infringement)		41,271
Other income: interest income (pre- and post-judgment interest)		108,221
Total cash received	$	454,034

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract]
Dividends per share (in dollars per share)	$ 0	$ 1.00	$ 0

Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 6 − Stock-Based Compensation

The following tables summarize information about stock options and RSUs outstanding at December 31, 2021:

Options Outstanding							Options Vested and Exercisable
Range of 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
$ 2.88 - 6.95		5,533,812		6.66	$	4.50		4,050,084		5.82	$	4.34
$ 14.52 - 35.25		863,625		1.31	$	22.95		863,625		1.32	$	22.95
		6,397,437		5.94	$	6.99		4,913,709		5.03	$	7.61

The following tables summarize activity under the Plan for the indicated periods:

	Options
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2018		5,998,837		$	7.72		—	$	—
Options granted		345,000			6.06		—		—
Options exercised		(663,816	)		1.23		—		—
Options cancelled		(50,000	)		4.95		—		—
Outstanding at December 31, 2019		5,630,021		$	8.49		—	$	—
Options granted		747,500			6.07		—		—
Options exercised		(262,031	)		3.99		—		—
Options cancelled		(302,969	)		5.30		—		—
Outstanding at December 31, 2020		5,812,521		$	8.55		—	$	—
Options granted		999,500			4.43		—		—
Options exercised		—			—		—		—
Options cancelled		(414,584	)		22.54		—		—
Outstanding at December 31, 2021		6,397,437		$	6.99		5.94	$	6
Options exercisable at December 31, 2021		4,913,709		$	7.61		5.03	$	6

	RSUs
	Number of RSUs			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2018		504,994		$	3.83	$	—
RSUs granted		229,996			6.06		—
RSUs vested		(207,334	)		4.07		—
RSUs cancelled		(29,167	)		4.65		—
Outstanding at December 31, 2019		498,489		$	4.71	$	—
RSUs granted		218,329			6.89		—
RSUs vested		(212,495	)		4.63		—
RSUs cancelled		—			—		—
Outstanding at December 31, 2020		504,323		$	5.69	$	—
RSUs granted		236,661			4.61		—
RSUs vested		(215,165	)		5.23		—
RSUs cancelled		(16,664	)		5.45		—
Outstanding at December 31, 2021		509,155		$	5.38	$	—

Intrinsic value is calculated as the difference between the per-share market price of our common stock on the last trading day of 2021, which was $2.60 and the exercise price of the options. For options exercised, the intrinsic value is the difference between market price and the exercise price on the date of exercise. In 2021, no options were exercised. In 2020 and 2019, we received cash proceeds of $1,046 and $816 from stock options exercised, respectively. The total intrinsic value of options exercised was $151 and $2,473 in 2020 and 2019, respectively.

Stock-based compensation expense is included in operating expense for each period as follows:

Stock-Based Compensation by Type of Award	Year Ended December 31, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
Stock options	$	3,067	$	2,872	$	2,756
RSUs		1,117		1,066		955
Total stock-based compensation expense	$	4,184	$	3,938	$	3,711

As of December 31, 2021, there was $5,403 of unrecognized stock-based compensation expense related to unvested stock options and $2,098 of unrecognized stock-based compensation expense related to unvested RSUs. These costs are expected to be recognized over a weighted-average period of 2.86 and 2.37 years, respectively.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

	Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
Expected stock price volatility		90.58	%		93.45	%		92.34	%
Risk-free interest rate		1.06	%		0.63	%		2.09	%
Expected life term	6.22 years			6.21 years				6.14 years
Expected dividends		0	%		0	%		0	%

Based on the Black-Scholes option pricing model, the weighted average estimated fair value of employee stock options granted was $3.32, $4.62 and $4.63 per share during 2021, 2020 and 2019, respectively.

The expected life was determined using the simplified method outlined in ASC 718, “Compensation - Stock Compensation”. Expected volatility of the stock options was based upon historical data and other relevant factors.

Litigation (Details) $ in Thousands						1 Months Ended
Litigation (Details) $ in Thousands	Apr. 20, 2021 USD ($)	Apr. 19, 2021 USD ($)	Oct. 30, 2020 USD ($) Patent Infringment $ / Device	Mar. 23, 2020 USD ($)	Aug. 31, 2018 USD ($) $ / Device	Apr. 18, 2021	Mar. 31, 2021 USD ($)
VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) ("Apple II") [Member]
Litigation [Abstract]
Amount of damages awarded in patent infringement case			$ 502,800
Number of patents allegedly infringed upon by Apple, Inc. \| Patent			2
Damages awarded per accused device \| $ / Device			0.84
Number of infringing units \| Infringment			598,629,580
McKool Smith P.C. v. VirnetX, Inc., AAA (Case No. 01-20-0003-7975) [Member]
Litigation [Abstract]
Amount of damages awarded in patent infringement case		$ 36,323
Contingency fee sought by plaintiff				$ 36,300
Contingency fee as percentage of payment				8.00%
Pre-judgment interest percentage						5.00%
Post-judgment interest percentage		5.00%
Contingency accrued amount							$ 38,284
Contingency accrued amount paid	$ 38,284
Positive Outcome of Litigation [Member] \| VirnetX Inc. v. Apple, Inc. (Case 6:12-CV-00855-LED) ("Apple II") [Member]
Litigation [Abstract]
Amount of damages awarded in patent infringement case					$ 502,600
Royalty rate per device used in calculating infringement damages \| $ / Device					1.20

Common Stock

12 Months Ended

Dec. 31, 2021

Common Stock [Abstract]

Common Stock

Note 8 − Common Stock

Each share of common stock has the right to one vote. The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. Our restated articles of incorporation authorize us to issue up to 100,000,000 shares of $0.0001 par value common stock.

On July 30, 2018 we filed a $100,000 universal shelf registration statement on SEC Form S-3. This replacement registration statement was declared effective by the SEC on August 16, 2018. We also entered a new ATM with Cowen on August 31, 2018, under which we could offer and sell shares of our common stock having an aggregate value of up to $50,000.

We use the ATM proceeds for development and marketing of our software product and services, and general corporate purposes, which may include working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies, or businesses. As of August 16, 2021, the universal shelf registration expired.

We sold zero shares of common stock under the ATM program during 2021. In 2020, we sold 1,049,382 shares of common stock under the ATM program. The average sales price per common share sold during the year ended December 31, 2020 was $4.41 and the aggregate proceeds from the sales totaled $4,627 during the period. Sales commissions, fees and other costs associated with the ATM transactions totaled $139 for 2020. In 2019, we sold 1,860,483 shares under the ATM. The average sales priced during the year ended December 31, 2019 per common share was $5.84 and the aggregate proceeds from the sales totaled $10,866 during the period. Sales commissions, fees and other costs associated with the ATM totaled $327.

Dividends

On May 8, 2020, we declared a one-time cash dividend to shareholders of record as of the close of business on May 18, 2020 of $1 per share of common stock, payable on May 26, 2020. The timing and amounts of future dividends, if any, will depend on market conditions, corporate business and financial considerations and regulatory requirements.

Warrants

In 2020, we issued warrants for the purchase of 25,000 shares of common stock at an exercise price of $5.75 per share, exercisable on the date of grant expiring in April 2025. The weighted average fair value at the grant date was $4.16 per warrant. The fair value at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions (i) dividend yield on our common stock of 0 percent (ii) expected stock price volatility of 97 percent (iii) a risk-free interest rate of 0.27 percent and (iv) and expected option term of 5 years.

Warrants Issued		Exercise Price		Outstanding and Exercisable December 31, 2020		Issued		Exercised		Terminated / Cancelled		Outstanding and Exercisable December 31, 2021		Expiration Date
25,000		$5.75		25,000		—		—		—		25,000		April 30, 2025

In April 2020, 25,000 warrants with an exercise price of $7.00 per share expired.

Property and Equipment

12 Months Ended

Dec. 31, 2021

Property and Equipment [Abstract]

Property and Equipment

Note 3 − Property and Equipment

Our major classes of property and equipment were as follows:

	December 31
	2021			2020
Office furniture	$	79		$	79
Computer equipment		92			81
Total		171			160
Less accumulated depreciation		(153	)		(149	)
Total property and equipment, net	$	18		$	11

Depreciation expense for 2021, 2020 and 2019 was $4, $5, and $7 respectively.

Fair Value Measurement (Details) - USD ($) $ in Thousands	12 Months Ended
Fair Value Measurement (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	$ 169,322	$ 221,255
Fair Value	$ 169,272	221,256
Minimum [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Matutiries of investments	1 year
Maximum [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Matutiries of investments	2 years
Cash [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	$ 35,428	121,785
Fair Value	35,428	121,785
Total Investment Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	133,894	99,470
Unrealized Gains	0	2
Unrealized Losses	(50)	(1)
Fair Value	133,844	99,471
Mutual Funds [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	106,590	70,996
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	106,590	70,996
US Agency Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	16,658	13,767
Unrealized Gains	0	2
Unrealized Losses	(26)	0
Fair Value	16,632	13,769
US Treasury Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Adjusted Cost	10,646	14,707
Unrealized Gains	0	0
Unrealized Losses	(24)	(1)
Fair Value	10,622	14,706
Recurring [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	142,018	192,908
Investments Available for Sale	27,254	28,348
Recurring [Member] \| Cash [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	35,428	121,785
Recurring [Member] \| Level 1 [Member] \| Total Investment Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	106,590	71,123
Investments Available for Sale	27,254	28,348
Recurring [Member] \| Level 1 [Member] \| Mutual Funds [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	106,590	70,996
Investments Available for Sale	0	0
Recurring [Member] \| Level 1 [Member] \| US Agency Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	0	127
Investments Available for Sale	16,632	13,642
Recurring [Member] \| Level 1 [Member] \| US Treasury Securities [Member]
Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets [Abstract]
Cash and Cash Equivalents	0	0
Investments Available for Sale	$ 10,622	$ 14,706

Income Taxes, Reconciliation of Federal Statutory Income Tax Rate to Effective Income Tax Rate (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Effective Tax Rate Reconciliation [Abstract]
United States federal statutory rate	21.00%	21.00%	21.00%
State taxes, net of federal benefit	(0.31%)	0.17%	1.99%
Valuation allowance	0.00%	(12.22%)	(21.96%)
Stock based compensation	(6.68%)	(0.01%)	0.00%
R&D Credit	0.19%	(0.21%)	1.34%
Other	(1.57%)	0.06%	(0.38%)
Effective income tax rate	12.63%	8.79%	1.99%

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2021

Property and Equipment [Abstract]

Property and Equipment

Our major classes of property and equipment were as follows:

	December 31
	2021			2020
Office furniture	$	79		$	79
Computer equipment		92			81
Total		171			160
Less accumulated depreciation		(153	)		(149	)
Total property and equipment, net	$	18		$	11

Fair Value Measurement

12 Months Ended

Dec. 31, 2021

Fair Value Measurement [Abstract]

Fair Value Measurement

Note 11 − Fair Value Measurement

Fair value is the price that would result from an orderly transaction between market participants at the measurement date. A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Level 2 measurements utilize either directly or indirectly observable inputs in markets other than quoted prices in active markets.

Our financial instruments are stated at amounts that equal, or approximate, fair value. When we estimate fair value, we utilize market data or assumptions that we believe market participants would use in pricing the financial instrument, including assumptions about risk and inputs to the valuation technique. We use valuation techniques, primarily the income and market approach, which maximizes the use of observable inputs and minimize the use of unobservable inputs for recurring fair value measurements.

Mutual funds: Valued at the quoted net asset value (NAV) of shares held.

U.S. agency and treasury securities: Fair value measured at the closing price reported on the active market on which the individual securities are traded.

The following table shows the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our financial assets as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Investments Available for Sale
Cash	$	35,428	$	—	$	—		$	35,428	$	35,428	$	—
Level 1:
Mutual funds		106,590		—		—			106,590		106,590		—
U.S. agency securities		16,658		—		(26	)		16,632		—		16,632
U.S. treasury securities		10,646		—		(24	)		10,622		—		10,622
		133,894		—		(50	)		133,844		106,590		27,254
Total	$	169,322	$	—	$	(50	)	$	169,272	$	142,018	$	27,254

	December 31, 2020
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Investments Available for Sale
Cash	$	121,785	$	—	$	—		$	121,785	$	121,785	$	—
Level 1:
Mutual funds		70,996		—		—			70,996		70,996		—
U.S. agency securities		13,767		2		—			13,769		127		13,642
U.S. treasury securities		14,707		—		(1	)		14,706		—		14,706
		99,470		2		(1	)		99,471		71,123		28,348
Total	$	221,255	$	2	$	(1	)	$	221,256	$	192,908	$	28,348

The maturities of our investments generally range from within one to two years. Actual maturities could differ from contractual maturities due to call or prepayment provisions.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Formation and Business of the Company (Details) - Patents [Member]	Dec. 31, 2021 Patent
Formation and Business of the Company Disclosure [Abstract]
Number of patents and pending applications	205
U.S. [Member]
Formation and Business of the Company Disclosure [Abstract]
Number of patents and pending applications	72
Foreign [Member]
Formation and Business of the Company Disclosure [Abstract]
Number of patents and pending applications	133

Common Stock, Summary (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021 Vote $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	May 08, 2020 $ / shares	Aug. 31, 2018 USD ($)	Jul. 30, 2018 USD ($)
Common Stock [Abstract]
Common stock, shares authorized (in shares) \| shares	100,000,000	100,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001
Dividend [Abstract]
Dividend declared date	May 08, 2020
Cash dividend (in dollars per share) \| $ / shares				$ 1
Dividend payable date	May 26, 2020
Dividend record date	May 18, 2020
Common Stock [Member]
Common Stock [Abstract]
Number of votes entitled to each share of common stock \| Vote	1
Common stock, shares authorized (in shares) \| shares	100,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001
Universal Shelf Registration Statement [Member] \| Common Stock [Member] \| Maximum [Member]
Common Stock [Abstract]
Securities offered for sale, aggregate value \| $						$ 100,000
ATM Agreement [Member] \| Common Stock [Member]
Common Stock [Abstract]
Number of shares of common stock sold (in shares) \| shares	0	1,049,382	1,860,483
Average sales price per common share (in dollars per share) \| $ / shares		$ 4.41	$ 5.84
Aggregate proceeds from sales of common stock \| $		$ 4,627	$ 10,866
Sales commissions, fees and other costs associated with issuance of common stock \| $		$ 139	$ 327
ATM Agreement [Member] \| Common Stock [Member] \| Maximum [Member]
Common Stock [Abstract]
Securities offered for sale, aggregate value \| $					$ 50,000

Leases (Details) - USD ($) $ in Thousands	12 Months Ended
Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Building [Member]
Leases [Abstract]
Lease expense	$ 56	$ 56	$ 56
Office [Member]
Leases [Abstract]
Operating lease ROU assets	98	44
Lease liability	98	44
Lease expense	$ 56	56	56
Corporate Promotional and Marketing Facility [Member]
Leases [Abstract]
Lease extension period	1 year
Operating lease ROU assets	$ 948	1,248
Lease expense	$ 300	$ 356	$ 385

Formation and Business of the Company	12 Months Ended
Formation and Business of the Company	Dec. 31, 2021
Formation and Business of the Company [Abstract]
Formation and Business of the Company	Note 1 − Formation and Business of the Company VirnetX Holding Corporation, which we refer to as “we”, “us”, “our”, “the Company” or “VirnetX”, is engaged in the business of commercializing a portfolio of patents. We derive revenue from selling our software products and licensing our technology, including GABRIEL Connection Technology™, to various original equipment manufacturers (“OEMs”), that use our technologies in the development and manufacturing of their own products within the IP-telephony, mobility, fixed-mobile convergence, and unified communications markets. During 2020, we had revenues from settlement of a patent infringement dispute whereby we received consideration for past sales of licensee that utilized our technology, where there was no prior patent license agreement. Our portfolio of intellectual property is the foundation of our business model. We currently own approximately 205 total patents and pending applications, including 72 U.S. patents/patent applications and 133 foreign patents/validations/pending applications. Our patent portfolio is primarily focused on securing real-time communications over the Internet, as well as related services such as the establishment and maintenance of a secure domain name registry. Our patented methods also have additional applications in the key areas of device operating systems and network security for Cloud services, M2M communications in areas of Smart City, Connected Car and Connected Home. The subject matter of all our U.S and foreign patents and pending applications relates generally to securing communications over the Internet and such covers all our technology and other products. Some of our issued U.S. and foreign patents expire at various times during the period from 2021 to 2034.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Revenue	$ 35	$ 302,636	$ 85
Operating expense:
Licensing costs	(9,083)	90,101	0
Research and development	5,577	8,830	3,845
Selling, general and administrative expenses	52,715	45,812	15,905
Total operating expense	49,209	144,743	19,750
(Loss) income from operations	(49,174)	157,893	(19,665)
Gain on settlement	0	41,271	0
Interest and other income, net	48	108,288	92
(Loss) income before taxes	(49,126)	307,452	(19,573)
Income tax benefit (provision)	6,205	(27,023)	393
Net (loss) income	$ (42,921)	$ 280,429	$ (19,180)
Basic (loss) earnings per share (in dollars per share)	$ (0.60)	$ 3.96	$ (0.28)
Diluted (loss) earnings per share (in dollars per share)	$ (0.60)	$ 3.92	$ (0.28)
Weighted average shares outstanding - basic (in shares)	71,159,458	70,850,311	68,564,321
Weighted average shares outstanding - diluted (in shares)	71,159,458	71,615,843	68,564,321

Leases	12 Months Ended
Leases	Dec. 31, 2021
Leases [Abstract]
Leases	Note 13 – Leases We lease office space under an operating lease which expires on October 31, 2023. At December 31, 2021, the underlying ROU asset and lease liability totaled $98. At December 31, 2020, the underlying ROU asset and lease liability totaled $44. Lease expense totaled $56 in 2021, 2020 and 2019. We also lease a facility for corporate promotional and marketing purposes which was prepaid at inception and originally expired in 2024. In September 2020, the lease was extended for one year to 2025, due to COVID use-restrictions. No other terms of the original agreement were affected and there was no impact on cash flow. At December 31, 2021 and 2020, the ROU asset totaled $948 and $1,248, respectively; lease expense totaled $300, $356 and $385, during 2021, 2020 and 2019, respectively.

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property and Equipment [Abstract]
Property and equipment, gross	$ 171	$ 160
Less accumulated depreciation	(153)	(149)
Property and equipment, net	18	11
Depreciation expense	4	5	$ 7
Office Furniture [Member]
Property and Equipment [Abstract]
Property and equipment, gross	79	79
Computer Equipment [Member]
Property and Equipment [Abstract]
Property and equipment, gross	$ 92	$ 81

Stock-Based Compensation, Summary of Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation [Abstract]
Per share market price of common stock on last trading day of year (in dollars per share)	$ 2.60
Proceeds from exercise of options	$ 0	$ 1,046	$ 816
Stock Options [Member]
Options, number of shares [Roll Forward]
Outstanding, beginning of period (in shares)	5,812,521	5,630,021	5,998,837
Options granted (in shares)	999,500	747,500	345,000
Options exercised (in shares)	0	(262,031)	(663,816)
Options cancelled (in shares)	(414,584)	(302,969)	(50,000)
Outstanding, end of period (in shares)	6,397,437	5,812,521	5,630,021
Options exercisable, end of period (in shares)	4,913,709
Options, weighted average exercise price [Roll Forward]
Outstanding, beginning of period (in dollars per share)	$ 8.55	$ 8.49	$ 7.72
Options granted (in dollars per share)	4.43	6.07	6.06
Options exercised (in dollars per share)	0	3.99	1.23
Options cancelled (in dollars per share)	22.54	5.30	4.95
Outstanding, end of period (in dollars per share)	6.99	$ 8.55	$ 8.49
Options exercisable, end of period (in dollars per share)	$ 7.61
Options, additional disclosures [Abstract]
Options outstanding, weighted average remaining contractual life	5 years 11 months 8 days
Options exercisable, weighted average remaining contractual life	5 years 10 days
Options outstanding, aggregate intrinsic value	$ 6	$ 0
Options exercisable, aggregate intrinsic value	$ 6
Share-based Compensation [Abstract]
Proceeds from exercise of options		1,046	$ 816
Total intrinsic value of options exercised		$ 151	$ 2,473
Restricted Stock Units (RSUs) [Member]
RSUs, number of RSUs [Roll Forward]
Outstanding, beginning of period (in shares)	504,323	498,489	504,994
RSUs granted (in shares)	236,661	218,329	229,996
RSUs vested (in shares)	(215,165)	(212,495)	(207,334)
RSUs cancelled (in shares)	(16,664)	0	(29,167)
Outstanding, end of period (in shares)	509,155	504,323	498,489
RSUs, weighted average grant date fair value [Abstract]
Outstanding, beginning of period (in dollars per share)	$ 5.69	$ 4.71	$ 3.83
RSUs granted (in dollars per share)	4.61	6.89	6.06
RSUs vested (in dollars per share)	5.23	4.63	4.07
RSUs cancelled (in dollars per share)	5.45	0	4.65
Outstanding, end of period (in dollars per share)	$ 5.38	$ 5.69	$ 4.71
RSUs, aggregate intrinsic value [Abstract]
Outstanding, end of period	$ 0	$ 0	$ 0	$ 0

Common Stock, Warrants (Details) - $ / shares	1 Months Ended	12 Months Ended
Common Stock, Warrants (Details) - $ / shares	Apr. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Warrants [Abstract]
Dividend yield		0.00%	0.00%	0.00%
Expected stock price volatility		90.58%	93.45%	92.34%
Risk-free interest rate		1.06%	0.63%	2.09%
Expected option term		6 years 2 months 19 days	6 years 2 months 15 days	6 years 1 month 20 days
Warrants [Member]
Warrants [Abstract]
Exercise price (in dollars per share)	$ 7.00
Terminated/ cancelled (in shares)	(25,000)
Warrants [Member] \| Warrants Issued in 2020 [Member]
Warrants [Abstract]
Weighted average fair value of warrants at grant date (in dollars per share)			$ 4.16
Dividend yield			0.00%
Expected stock price volatility			97.00%
Risk-free interest rate			0.27%
Expected option term		5 years
Warrants issued (in shares)			25,000
Exercise price (in dollars per share)			$ 5.75
Outstanding and Exercisable (in shares)		25,000
Issued (in shares)		0
Exercised (in shares)		0
Terminated/ cancelled (in shares)		0
Outstanding and Exercisable (in shares)		25,000	25,000
Expiration date		Apr. 30, 2025

Stock-Based Compensation, Stock-Based Compensation by Type of Award (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation [Abstract]
Stock-based compensation expense	$ 4,184	$ 3,938	$ 3,711
Operating Expense [Member]
Share-based Compensation [Abstract]
Stock-based compensation expense	4,184	3,938	3,711
Stock Options [Member]
Compensation cost not yet recognized [Abstract]
Unrecognized stock-based compensation expense expected to be recognized related to unvested stock options	$ 5,403
Weighted-average period for recognition of unrecognized stock-based compensation expense	2 years 10 months 9 days
Stock Options [Member] \| Operating Expense [Member]
Share-based Compensation [Abstract]
Stock-based compensation expense	$ 3,067	2,872	2,756
RSUs [Member]
Compensation cost not yet recognized [Abstract]
Unrecognized stock-based compensation expense expected to be recognized related to unvested RSUs	$ 2,098
Weighted-average period for recognition of unrecognized stock-based compensation expense	2 years 4 months 13 days
RSUs [Member] \| Operating Expense [Member]
Share-based Compensation [Abstract]
Stock-based compensation expense	$ 1,117	$ 1,066	$ 955

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net (loss) income	$ (42,921)	$ 280,429	$ (19,180)
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation	4	5	7
Stock-based compensation	4,184	3,938	3,711
Amortization of warrants issuance costs	34	69	0
Deferred income taxes	(6,901)	(9,049)	0
Changes in assets and liabilities:
Prepaid expenses and other current assets	271	419	374
Accounts payable and accrued liabilities	(316)	(692)	296
Other liabilities	60	(193)	97
Accrued payroll and related expenses	50	(67)	10
Accrued licensing costs	(9,083)	9,438	0
Accounts receivable	(9)	(3)	1
Prepaid income taxes	2,905	(2,905)	(396)
Net cash (used in) provided by operating activities	(51,722)	281,389	(15,080)
Cash flows from investing activities:
Purchase of property and equipment	(11)	0	(14)
Purchase of investments	(26,332)	(33,065)	(5,784)
Proceeds from sale or maturity of investments	27,371	7,112	5,192
Net cash provided by (used in) investing activities	1,028	(25,953)	(606)
Cash flows from financing activities:
Proceeds from exercise of options	0	1,046	816
Proceeds from sale of common stock	0	4,488	10,539
Dividends paid on common stock	0	(70,841)	0
Taxes paid on cashless exercise of restricted stock units	(196)	(356)	(145)
Net cash (used in) provided by financing activities	(196)	(65,663)	11,210
Net (decrease) increase in cash and cash equivalents	(50,890)	189,773	(4,476)
Cash and cash equivalents, beginning of period	192,908	3,135	7,611
Cash and cash equivalents, end of period	142,018	192,908	3,135
Cash paid for income taxes	$ 2	$ 38,977	$ 4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract]
Net (loss) income	$ (42,921)	$ 280,429	$ (19,180)
Other comprehensive (loss) income, net of tax:
Change in unrealized (loss) gain on investments, net	(51)	0	3
Change in foreign currency translation, net	(4)	1	(3)
Total other comprehensive (loss) gain, net of tax	(55)	1	0
Comprehensive (loss) income	$ (42,976)	$ 280,430	$ (19,180)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Stock-Based Compensation, Information about Stock Options Outstanding (Details) - Stock Options [Member]	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Information about Stock Options Outstanding [Abstract]
Options outstanding, number outstanding (in shares) \| shares	6,397,437
Options outstanding, weighted average remaining contractual life	5 years 11 months 8 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 6.99
Options vested and exercisable, number exercisable (in shares) \| shares	4,913,709
Options vested and exercisable, weighted average remaining contractual life	5 years 10 days
Options vested and exercisable, weighted average exercise price (in dollars per share)	$ 7.61
$2.35 - 6.95 [Member]
Information about Stock Options Outstanding [Abstract]
Exercise price range, lower range limit (in dollars per share)	2.88
Exercise price range, upper range limit (in dollars per share)	$ 6.95
Options outstanding, number outstanding (in shares) \| shares	5,533,812
Options outstanding, weighted average remaining contractual life	6 years 7 months 28 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 4.50
Options vested and exercisable, number exercisable (in shares) \| shares	4,050,084
Options vested and exercisable, weighted average remaining contractual life	5 years 9 months 25 days
Options vested and exercisable, weighted average exercise price (in dollars per share)	$ 4.34
$14.52 - 35.25 [Member]
Information about Stock Options Outstanding [Abstract]
Exercise price range, lower range limit (in dollars per share)	14.52
Exercise price range, upper range limit (in dollars per share)	$ 35.25
Options outstanding, number outstanding (in shares) \| shares	863,625
Options outstanding, weighted average remaining contractual life	1 year 3 months 21 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 22.95
Options vested and exercisable, number exercisable (in shares) \| shares	863,625
Options vested and exercisable, weighted average remaining contractual life	1 year 3 months 25 days
Options vested and exercisable, weighted average exercise price (in dollars per share)	$ 22.95

Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Measurement [Abstract]

Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Financial Assets

The following table shows the adjusted cost, gross unrealized gains, gross unrealized losses, and fair value of our financial assets as of December 31, 2021 and 2020 (in thousands):

	December 31, 2021
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Investments Available for Sale
Cash	$	35,428	$	—	$	—		$	35,428	$	35,428	$	—
Level 1:
Mutual funds		106,590		—		—			106,590		106,590		—
U.S. agency securities		16,658		—		(26	)		16,632		—		16,632
U.S. treasury securities		10,646		—		(24	)		10,622		—		10,622
		133,894		—		(50	)		133,844		106,590		27,254
Total	$	169,322	$	—	$	(50	)	$	169,272	$	142,018	$	27,254

	December 31, 2020
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Investments Available for Sale
Cash	$	121,785	$	—	$	—		$	121,785	$	121,785	$	—
Level 1:
Mutual funds		70,996		—		—			70,996		70,996		—
U.S. agency securities		13,767		2		—			13,769		127		13,642
U.S. treasury securities		14,707		—		(1	)		14,706		—		14,706
		99,470		2		(1	)		99,471		71,123		28,348
Total	$	221,255	$	2	$	(1	)	$	221,256	$	192,908	$	28,348

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Tax Provision (Benefit)

The income tax provision (benefit) is comprised of the following:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
Current:
Federal	$	661		$	35,122		$	—
State		35			950			(393	)
Foreign		—			—			—
		696			36,072			(393	)
Deferred:
Federal		(7,025	)		(8,816	)		—
State		124			(233	)		—
		(6,901	)		(9,049	)		—
Total income tax (benefit) provision	$	(6,205	)	$	27,023		$	(393	)

Effective Income Tax Rate Reconciliation

A reconciliation of the United States federal statutory income tax rate to our effective income tax rate is as follows:

	As restated Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019
United States federal statutory rate		21.00	%		21.00	%		21.00	%
State taxes, net of federal benefit		(0.31	)%		0.17	%		1.99	%
Valuation allowance		—			(12.22	)%		(21.96	)%
Stock based compensation		(6.68	)%		(0.01	)%		—
R&D Credit		0.19	%		(0.21	)%		1.34	%
Other		(1.57	)%		0.06	%		(0.38	)%
Effective income tax rate		12.63	%		8.79	%		1.99	%

Deferred Tax Assets and Liabilities

Deferred tax assets (liabilities) consist of the following:

	As restated As of December 31, 2021			As of December 31, 2020
Deferred tax assets:
Reserves and accruals	$	58		$	48
Research and development credits and other credits		92			13
Net operating loss carry forward		9,519			598
Stock based compensation		6,287			8,998
Other		—			3
Total deferred tax assets	$	15,956		$	9,660

Valuation allowance		—			(611	)
Deferred tax assets after valuation allowance		15,956			9,049

Total deferred tax liability – depreciation		(6	)		—

Net deferred tax assets	$	15,950		$	9,049