SCOTTS VALLEY — VirnetX, a small software company focused on securing real-time communications over the Internet, announced slim revenues for the third quarter and said in papers filed Wednesday with the Securities and Exchange Commission that ongoing patent infringement litigation was expected to be costly and lengthy.
The company reported $3,000 in revenues for the quarter compared to $15,000 a year ago and net income of $5.88 million, compared to a loss last year of $25.42 million.
A company spokesman confirmed this week that VirnetX is in the process of moving its main executive office from Scotts Valley to Zephyr Cove, Nev.
Last year, the company won a $200 million licensing and patent settlement from Microsoft Corp. By the end of the September quarter, the company had about $50.6 million in cash and cash equivalents and said there are no plans to pay regular dividends in the foreseeable future.
“Instead, we generally intend to retain future earnings to fund our business plan,” the company said in the SEC filing.
Before entering into the Microsoft settlement, the company allocated a large part of cash expenditures to legal fees and associated expenses.
The company said it had enough cash on hand to fund operations and pay for legal expenses for ongoing complaints against Aastra, Apple, Cisco, NEC, Siemens, Mitel and Avaya in the U.S. District Court of the Eastern District of Texas, as well as a newly filed complaint with the U.S. International Trade Commission for at least the next 36 months.
The company’s growing patent portfolio includes 19 U.S. patents and 20 foreign patents in addition to several that are pending.
The company intends to license its patents, technology and software to domain infrastructure providers, communication service providers and system integrators.
“We believe that the market opportunity for our software and technology solutions is large and expanding as secure domain names are now an integral part of securing the next generation 4G/LTE wireless networks,” the company said. “We also believe that all 4G mobile devices will require their own individual and unique secure domain name and become part of a secure domain name registry.”
Executive officers and directors own about 21 percent of the stock outstanding at the end of September. Another 12 percent is owned by a group that has agreed to vote all its shares in favor of director nominees approved by the board of directors.
AT A GLANCE
VirnetX Holding Corp.
WHAT: The company provides technology and services related to real-time communication via the Internet and secure domain name registry.
HEADQUARTERS: 308 Dorla Court, Suite 206, Zephyr Cove, Nev.
INFORMATION: 438-8200; www.virnetx.com
HISTORY: Founded in August 2005
STOCK: VirnetX shares trading on the AMX as VHC were down 63 cents Wednesday to close at $21.51. In the last year, shares have traded between $11.01 and $41.87.
FINANCIALS: Third quarter revenues were $3,000 compared to $15,000 a year ago in the same quarter. Net income was $5.88 million compared to a loss last year of $25.42 million. Diluted earnings per share were 11 cents compared to a loss of 54 cents a year ago. The company reported cash and cash equivalents of about $50.62 million and short-term investments of about $14.61 million.
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