VirnetX Holding (VHC) risk factors, FY2025 10-K

VirnetX Holding's FY2025 10-K, filed Mar 24, 2026, lists 34 risk factors in 2 groups. Against the prior year's 32: 6 new, 4 dropped, 9 substantially reworded.

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Risk factors listed
342 groups
New this year
6vs 32 last year
Dropped
4since the prior 10-K
Substantially reworded
9of those kept
Section length
8k wordsItem 1A

What the changes say

  • VirnetX reported a net loss of $18.2 million for 2025, bringing its accumulated deficit to $222.9 million.
  • The company highlights risks related to government sales cycles, security clearances, and new tax legislation.
  • VirnetX transitioned its stock listing from the NYSE to Nasdaq, with prices ranging between $6.80 and $24.84.

What changed since the prior 10-K

New

  • NewRisks Related to Our Business and Our Financial Reporting

    We had a net loss of $18.2 million for the year ended December 31, 2025 and a net loss of $18.2 million for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $222.9 million

    VirnetX reports ongoing net losses, an accumulated deficit of $222.9 million as of December 31, 2025, and faces intense competition and adoption hurdles for VirnetX One and other products.

  • NewRisks Related to Our Business and Our Financial Reporting

    Long sales cycles may increase the risk that our financial resources are exhausted before we are able to generate significant revenue

    Long and unpredictable sales cycles to local, state, federal, and foreign government agencies, as well as space and defense industries, risk exhausting financial resources before generating significant revenue.

  • NewRisks Related to Our Business and Our Financial Reporting

    We plan to offer our products to government entities, which are subject to a number of challenges and risks

    Government spending reductions, U.S. debt and budget issues, and slow adoption of modern products over legacy systems could adversely impact public sector transactions.

  • NewRisks Related to Our Business and Our Financial Reporting

    Our business could be adversely affected if our employees cannot obtain and maintain required personnel security clearances or we cannot establish and maintain a required facility security clearance

    Inability to obtain and maintain required personnel and facility security clearances for employees would prevent VirnetX from bidding on or winning classified government contracts.

  • NewRisks Related to Ownership of Our Common Stock

    The exercise of our outstanding stock options and the issuance of RSUs and restricted stock would result in a dilution of our current stockholders’ voting power and an increase in the number of shares eligible for future resale in the public market which may negatively impact the market price of our stock

    The exercise of 727,884 outstanding options and RSUs as of December 31, 2025, will dilute existing stockholders' voting power and increase shares eligible for resale, potentially depressing stock prices.

  • NewRisks Related to Ownership of Our Common Stock

    Changes in tax law could materially impact our business, results of operations and financial condition

    Changes in tax laws, including the newly enacted One Big Beautiful Bill Act (OBBB Act), could increase tax obligations and impact business operations.

Dropped

  • DroppedRisks Related to Our Business and Our Financial Reporting

    Our business has been, and may continue to be, negatively affected by activist shareholders

  • DroppedRisks Related to Ownership of Our Common Stock

    In addition, the provisions of Section 203 of the Delaware General Corporation Law govern us. These provisions may prohibit large stockholders, particularly those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time

  • DroppedRisks Related to Ownership of Our Common Stock

    Failure to meet the NYSE’s continued listing requirements could result in the suspension of trading of our common stock and a subsequent delisting of our common stock

  • DroppedRisks Related to Ownership of Our Common Stock

    General social, political, economic, and financial conditions, including significant volatility in the global financial markets

Reworded

  • 100% rewrittenRisks Related to Our Business and Our Financial Reporting

    Our operating results may not be consistent and may be difficult to predict, and we may not be able to achieve or sustain profitability in the future

    Updated 2025 financial figures, showing a net loss of $18.2 million and an accumulated deficit of $222.9 million as of December 31, 2025.

  • 72% rewrittenRisks Related to Ownership of Our Common Stock

    Trading in our common stock is limited and the price of our common shares may be subject to volatility

    Updated stock exchange listing from NYSE to Nasdaq and updated 2025 stock price trading range between $6.80 and $24.84.

  • 69% rewrittenRisks Related to Our Business and Our Financial Reporting

    We expect that we will experience long and unpredictable sales cycles, which may impact our operating results

    Removed reference to grant funding in sales cycle risk factors.

  • 68% rewrittenRisks Related to Ownership of Our Common Stock

    We do not regularly pay dividends on our common stock and thus stockholders must look to appreciation of our common stock to realize a gain on their investments

    Removed the dilution risk paragraph regarding stock options and warrants from the dividend policy risk factor.

  • 57% rewrittenRisks Related to Our Business and Our Financial Reporting

    Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks that we cannot control

    Added an index reference marker at the end of the risk factor regarding third-party communications infrastructure malfunctions.

  • 53% rewrittenRisks Related to Ownership of Our Common Stock

    Investors may have limited influence because ownership of our common stock is limited

    Updated executive and director beneficial ownership percentage from approximately 18% to 16% as of December 31, 2025.

  • 53% rewrittenRisks Related to Ownership of Our Common Stock

    Super majority requirement for stockholder amendments to the Restated Bylaws: Stockholder proposals to alter or amend our Restated Bylaws or to adopt new bylaws can only be approved by the affirmative vote of at least 66 2/3% of the outstanding shares of our common stock

    Moved Delaware General Corporation Law Section 203 takeover defense language into the super majority requirement for bylaw amendments risk.

  • 22% rewrittenRisks Related to Our Business and Our Financial Reporting

    Government export and import control regulations on selling products with encryption technology in certain international markets

    Removed phrasing regarding failing to increase revenue to offset operating expense increases from profitability risk.

  • 22% rewrittenRisks Related to Our Business and Our Financial Reporting

    The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed

All 34 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Our Financial Reporting

  1. 01Our operating results may not be consistent and may be difficult to predict, and we may not be able to achieve or sustain profitability in the future100% rewritten
  2. 02We had a net loss of $18.2 million for the year ended December 31, 2025 and a net loss of $18.2 million for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $222.9 millionNew
  3. 03Government export and import control regulations on selling products with encryption technology in certain international markets22% rewritten
  4. 04Our success depends in part on establishing and maintaining relationships with third parties to incorporate our products and services into their operations
  5. 05We expect that we will experience long and unpredictable sales cycles, which may impact our operating results69% rewritten
  6. 06Long sales cycles may increase the risk that our financial resources are exhausted before we are able to generate significant revenueNew
  7. 07We plan to offer our products to government entities, which are subject to a number of challenges and risksNew
  8. 08Our business could be adversely affected if our employees cannot obtain and maintain required personnel security clearances or we cannot establish and maintain a required facility security clearanceNew
  9. 09We have limited technical resources and are at an early stage in commercialization of our VirnetX One™ platform and software products, as well as our DE, DTE methods, MBSE, and cyber threat assessment services
  10. 10Protect our products from any system failures or other breaches
  11. 11The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed22% rewritten
  12. 12Our products are highly technical and may contain undetected errors, which could cause harm to our reputation and adversely affect our business
  13. 13Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks that we cannot control57% rewritten
  14. 14System failure or interruption or our failure to meet increasing demands on our systems could harm our business
  15. 15Physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorist attacks, and other events beyond our control
  16. 16If we are not able to adequately protect our patent rights and trade secrets, our business would be negatively impacted
  17. 17If we experience security breaches or incidents, we could be exposed to liability and our reputation and business could suffer
  18. 18Our products are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets
  19. 19Privacy and data security concerns, data collection, and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of our solutions and adversely affect our business

Risks Related to Ownership of Our Common Stock

  1. 20We do not regularly pay dividends on our common stock and thus stockholders must look to appreciation of our common stock to realize a gain on their investments68% rewritten
  2. 21The exercise of our outstanding stock options and the issuance of RSUs and restricted stock would result in a dilution of our current stockholders’ voting power and an increase in the number of shares eligible for future resale in the public market which may negatively impact the market price of our stockNew
  3. 22Investors may have limited influence because ownership of our common stock is limited53% rewritten
  4. 23Our protective provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it difficult for a third party to successfully acquire us even if you would like to sell your stock to them
  5. 24A staggered Board of Directors: Only one or two of five directors will be up for election at any given annual meeting, delaying the ability of stockholders to affect a change in control of us because it would take two annual meetings to effectively replace a majority of the Board of Directors
  6. 25Super majority requirement for stockholder amendments to the Restated Bylaws: Stockholder proposals to alter or amend our Restated Bylaws or to adopt new bylaws can only be approved by the affirmative vote of at least 66 2/3% of the outstanding shares of our common stock53% rewritten
  7. 26Our Restated Bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or employees
  8. 27However, notwithstanding the exclusive forum provisions, our Restated Bylaws explicitly state that they would not preclude the filing of claims brought to enforce any liability or duty created under federal securities laws, including the Securities Act or the Exchange Act
  9. 28We may need to raise additional capital to support our business growth, and this capital may be dilutive, may cause our stock price to drop or may not be available on acceptable terms, if at all
  10. 29The departure of Kendall Larsen, our Chief Executive Officer and President, and/or other key personnel could compromise our ability to execute our strategic plan and materially harm our business
  11. 30We will need to recruit and retain additional qualified personnel to successfully grow our business
  12. 31War, terrorism, other acts of violence, or natural or manmade disasters as well as macroeconomic conditions may affect the markets in which we operate, our clients and our service delivery
  13. 32Changes in tax law could materially impact our business, results of operations and financial conditionNew
  14. 33Trading in our common stock is limited and the price of our common shares may be subject to volatility72% rewritten
  15. 34We have broad discretion in how we apply our funds, and we may not use these funds effectively, which could affect our results of operations and cause our stock price to decline

Other VirnetX Holding 10-Ks

  • FY2024 10-K risk factors
    32 risks

    Operating losses and an accumulated deficit of $204.7 million threaten ongoing operations.

    Filed Mar 17, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.