What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-31 · 231 added, 234 removed, 73 unchanged (86% of the section changed)

We are an Internet security software and technology company with industry-leading, patented technology for Zero Trust Network Access (“ZTNA”) based secure network

We are an Internet security software and technology company with patented technology for Zero Trust Network Access (“ZTNA”) based secure network

communications.

VirnetX’s software and technology solutions, including its Secure Domain Name Registry and Technology, VirnetX One™, War Room™, VirnetX Matrix™, and Gabriel Connection Technology™, are designed to be device- and

location-independent, and enable a secure real-time communication environment for all types of enterprise applications, services, and critical infrastructures.

Our technology generates secure connections on a “single-click” basis, significantly

simplifying the deployment of secure real-time communication solutions by eliminating the need for end-users to enter any encryption information.

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, and related services, and is used in all our technology and products, some of which were acquired by our principal operating subsidiary;

VirnetX, Inc., from Leidos, Inc., or Leidos, (f/k/a Science Applications International

Corporation, or SAIC) in 2006.

VirnetX’s software and technology solutions, including its Secure Domain Name Registry and Technology, VirnetX One™, War Room™, VirnetX Matrix™, and GABRIEL Connection Technology™, are designed to be device and location-independent,

and enable a secure real-time communication environment for all types of enterprise applications, services, and critical infrastructures.

Our technology generates secure connections on a “single-click” basis, significantly simplifying the

deployment of secure real-time communication solutions by eliminating the need for end-users to enter any encryption information.

Our product portfolio includes sophisticated technologies, products and services that are available for sale worldwide.

Our next-generation, VirnetX One™ platform

builds upon our patented Secure Domain Names and GABRIEL Connection Technology™ to further enhance the security and efficiency of our patented secure communication links.

VirnetX One ™ is a security-as-a-service platform that protects enterprise applications, services,

and infrastructure from cyber-attacks.

Our platform allows businesses and other enterprises of all sizes to add a “security umbrella” as an added layer on top of their existing infrastructure to further reduce risk and bolster security against

ever-growing cyberthreats to data, operating systems, other infrastructure products and gateway security controllers.

Our War Room™ software product provides an industry leading, safe, and secure video conferencing meeting environment where sensitive communications and data is invisible to those not authorized to view it.

Room™ validates permissions of all the users, and devices requesting access to any secure meeting room prior to granting access.

We believe our War Room™ will be an attractive solution for government and law enforcement agencies as well as all

professional sectors such as legal, financial, and medical where limiting access to confidential data is a critical requirement.

Our VirnetX Matrix™

product provides superior security for internet-enabled enterprise applications and their connected devices, and for control systems currently deployed by those enterprises (e.g., file servers, data back-up systems, VPN/firewalls).

Matrix TM provides a true “zero-trust” access protection, “single-click” ease of use, and is a highly-effective added layer of protection that is deployed simply, without the need for changes to an enterprise’s existing, in-place

infrastructure.

We believe VirnetX Matrix™ is an attractive solution for all businesses, cloud and on-premise application service providers, and OEMs, looking to improve visibility and management of their networks to mitigate morphing attacks

on their networks and for real time access and control of their users.

Our next-generation, VirnetX

One™ platform builds upon our patented Secure Domain Name Registry and Technology and GABRIEL Connection Technology™ to further enhance the security and efficiency of our patented secure communication links.

VirnetX One™ is a security-as-a-service

platform that protects enterprise applications, services, and infrastructure from cyber-attacks.

Our platform allows businesses and other enterprises of all sizes to add a “security umbrella” as an added layer on top of their existing

infrastructure to further reduce risk and bolster security against ever-growing cyberthreats to data, operating systems, other infrastructure products and gateway security controllers.

Our War Room™ software product provides safe and secure video conferencing meeting environment where sensitive communications and data is invisible to

those not authorized to view it.

War Room™ validates permissions of all the users, and devices requesting access to any secure meeting room prior to granting access.

We believe our War Room™ will be an attractive solution for government and law

enforcement agencies as well as all professional sectors such as legal, financial, and medical where limiting access to confidential data is a critical requirement.

Our VirnetX Matrix™ product provides superior security for internet-enabled enterprise applications and their connected devices, and for control

systems currently deployed by those enterprises (e.g., file servers, data back-up systems, VPN/firewalls).

VirnetX Matrix™ provides a true “zero-trust” access protection, “single-click” ease of use, and is a highly-effective added layer of

protection that is deployed simply, without the need for changes to an enterprise’s existing, in-place infrastructure.

We believe VirnetX Matrix™ is an attractive solution for all businesses, cloud and on-premise application service providers, and

original equipment manufacturers (“OEMs”), looking to improve visibility and management of their networks to mitigate morphing attacks on their networks and for real time access and control of their users.

Our GABRIEL Collaboration Suite™ is a set of communication applications and tools that use our GABRIEL Secure Communication Platform™.

It enables seamless and secure cross platform communications between devices

that are enrolled in our “VIRNETX SECURED” network and have our software installed.

Our GABRIEL Collaboration Suite™ is available for download and free trial, for Android, iOS, Windows, Linux, and Mac OS X platforms, at https://virnetx.com.

During the fourth quarter of 2022 and the first quarter of 2023, the Company engaged in discussions with certain third-parties to pitch the capabilities of VirnetX One™.

The Company believes that

these parties have interest to secure devices and systems in areas such as healthcare, finance, legal, oil and gas, medical, law enforcement, national defense and related support industries.

Although there can be no assurance in this regard, the Company believes that there are opportunities for Company products sales directly to, resale arrangements with and/or adoption as vendor standards by, one or more of these third parties.

We have an ongoing licensing program under which we offer licenses to a portion of our patent portfolio, technology, and software, including our secure domain name registry service, to domain infrastructure

providers, communication service providers as well as to system integrators.

Our GABRIEL Connection Technology™ License is offered to original equipment manufacturer (“OEM”) customers who want to adopt the GABRIEL Connection Technology™ as their

solution for establishing secure connections using secure domain names within their products.

We have developed GABRIEL Connection Technology™ Software Development Kit (“SDK”) to assist with rapid integration of these techniques into existing

software implementations.

Customers who want to develop their own implementation of the VirnetX patented techniques for supporting secure domain names, or other techniques that are covered by our patent portfolio for establishing secure

communication links, can purchase a patent license.

The number of patents licensed, and therefore the cost of the patent license to the customer, will depend upon which of the patents are used in a particular product or service.

These licenses

will typically include an initial license fee, as well as an ongoing royalty.

seamless and secure cross platform communications between devices that are enrolled in our “VIRNETX SECURED” network and have our software installed.

Effective May 31, 2023 we have ended the support for our GABRIEL Collaboration Suite™.

existing customers and partners have been notified of this announcement.

We have undertaken activities to commercialize our products and intellectual property in and outside the United States including VirnetX One™, War

Room™, VirnetX Matrix™, GABRIEL Connection Technology™ and our Secured Domain Name Registry and Technology.

We believe our product portfolio to secure devices and systems are suitable in areas such as City, County and State Governments, Healthcare,

Finance, Legal, Oil and Gas, Medical, Law Enforcement, National Defense and related support industries.

We continue to actively pursue new sales opportunities in and outside of United States.

During 2023, we actively engaged in discussions with certain third-parties to pitch the capabilities of VirnetX One™.

As a result of our efforts, we

made a series of announcements with Solution Synergy, WeSecure, Samsung, Envoy Data Corporation, and Object Security.

We also announced new deployments of our VirnetX Matrix™ product at City of Bridgeport, International Association of Certified

ISAOs (IACI) and SkinWalker Ranch.

Although there can be no assurance in this regard, the Company believes that there are opportunities for Company products’ sales directly to, resale arrangements with and/or adoption as vendor standards by, one or

more of these third parties.

We invested in two companies in the artificial intelligence (“AI”) sector partnering with them to augment the Company’s strategy to provide secure AI

to the marketplace.

The first investment was with L2 Holdings, LLC (“OmniTeq”), an AI, machine learning (“ML”) and predictive analytics-based solutions provider with a primary focus on selling into the space and defense sectors.

Under the terms of

our agreement, OmniTeq will deploy and integrate our VirnetX One™ family of products at SkinWalker Ranch to secure their data and protect against cyber hackers.

Our second investment was with OP Media, Inc, a dynamic software platform provider,

addressing a critical market requirement for transforming static infrastructure processes and knowledgebases into digital processes that can be continuously optimized using AI, ML, and blockchain technologies for making informed decisions and

creating streamlined workflows in real-time, without requiring coding or programming skills.

Further, under the terms of our respective agreements, both OmniTeq and OP Media have agreed to integrate our VirnetX One™ family of products and services

into their solutions and to resell them to their current and future customers.

Both companies have committed to using VirnetX as their exclusive global cybersecurity solution provider and go-to-market partner.

We have an ongoing licensing program under which we offer licenses to our technology, software, and some of our patented inventions, including our

secure domain name registry service, to domain infrastructure providers, communication service providers as well as to system integrators.

Our GABRIEL Connection Technology™ License is offered to OEM customers who want to adopt the GABRIEL

Connection Technology™ as their solution for establishing secure connections using secure domain names within their products.

We have developed GABRIEL Connection Technology™ Software Development Kit to assist with rapid integration of these

techniques into existing software implementations.

Our employees include the core development team behind our inventions, technology, and software.

Some members of this team have worked together for

over twenty years and were on the same team that invented and developed this technology while working at Leidos.

The team has continued its research and development work to refine our unique network security technology and make it more secure and

easy to deploy.

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, and related services, and is

used in all our technology and products, some of which were acquired by our principal operating subsidiary;

VirnetX, Inc., from Leidos, Inc., or Leidos, (f/k/a Science Applications International Corporation, or SAIC) in 2006.

We expect to continue to launch new and enhanced security platforms, software products, and services based on our GABRIEL Connection Technology™.

We will provide updates to new and existing customers as they are

released to the public.

will provide updates to new and existing customers as they are released to the public.

Many small and medium businesses have installed our software products in their corporate networks.

We intend to continue to expand our customer base with targeted promotions and direct sales initiatives.

Our employees include the core development team behind our patent portfolio, technology, and software.

Some members of this team have worked together for over twenty years and were on same team that invented and

developed this technology while working at Leidos.

The team has continued its research and development work and expanded the set of patents we acquired in 2006 from Leidos, into a larger patent portfolio.

This portfolio now serves as the

foundation of our products, services, and our licensing business.

It is expected to generate most of our future revenue in license fees and royalties.

We intend to continue our efforts to develop new products and technologies and further

strengthen and expand our patent portfolio.

We intend to continue using an outsourced and leveraged model to maintain efficiency and manage costs as we grow our licensing business by, for example, offering incentives to early licensing targets or

asserting our rights for use of our patents.

We intend to continue to expand our customer base with

targeted promotions and direct sales initiatives to large enterprise and governmental organizations.

Industry Overview & Trends

We believe that the rapid growth in remote work has accelerated digital business transformation initiatives that would have taken years, into a matter of months.

The demand to work remotely, explosive growth of

video conferencing tools and rapid growth in the cloud has created an opportunity to secure communications regardless of a user’s location, network, or BYOD (bring your own device).

The demand to work remotely, explosive

growth of video conferencing tools and rapid growth in the cloud has created an opportunity to secure communications regardless of a user’s location, network, or BYOD (bring your own device).

The shift to remote work and expansion of the enterprise network perimeter has driven the growth of ZTNA solutions.

The Zero Trust concept treats all networks like the Internet, where all users and devices are

untrusted by default.

The Zero Trust concept treats all networks like the Internet, where all users and

devices are untrusted by default.

Their location within the network is not a factor for deciding trust.

Each user and device on the network requires authentication and authorization, based on policy, prior to accessing any applications or resources on the

Each user and device on the network requires authentication and authorization, based on policy, prior to accessing any applications or resources

on the network.

ZTNA facilitates security around remote work, because Zero Trust policies enable granular access control, end-to-end encryption of network communications and remove application visibility from the public Internet which reduces the

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We believe Zero Trust represents a growing market and an ideal fit for our technology and products.

The global coronavirus COVID-19 pandemic forced many organizations to shift their business processes – and their employees are having to embrace a work-from-home or “hybrid” culture on a scale never before

Remote work has accelerated the adoption of video conferencing and meeting applications across all industries making them essential tools for connection with remote customers, workforces, and employees to limit person-to-person direct

Based on our estimates, using publicly available market data, we believe that the worldwide video conferencing market size is projected to grow from $7.69 billion in 2022 to $18.1 billion by 2027, at a CAGR of 18.7% during the forecast

This rapid adoption, learning curve and demand to continue working remotely has created significant security concerns and breaches for enterprises.

Our market research has focused on security conscious verticals such as healthcare,

banking, legal and government where security breaches can significantly impact outcomes.

In many cases, these enterprises adopted industry standard video conferencing tools and are now looking at more secure alternative solutions.

want video conferencing solutions that protect their information and allow them greater security control and visibility, while continuing to be reliable, easy to use and cost effective.

Enterprises in these verticals are also looking for video

conferencing solutions that integrate into their existing workflows and better align with specific use cases instead of forcing them to adapt to more one size fits all solutions on the market.

We believe our War Room™ represents a starting point

to offer secure video conferencing tools built on a Zero Trust architecture.

Cloud computing growth has rapidly expanded as enterprises continue to move applications and services to the cloud.

The cloud offers scalability, operations and development efficiency and remote access benefits for

their workforce.

The cloud offers scalability, operations and development efficiency and remote

access benefits for their workforce.

The cloud technology adoption is expected to continue to increase quite significantly in industries where the work-from-home initiative is helped to sustain enterprise business functions.

However, shifting critical data to the

cloud has resulted in security concerns and the need for enterprises to control access and gain visibility into how information is being used, who is accessing it and where it is going.

Based on our estimates, using publicly available market

data, we believe that the global cloud computing security market size is expected to grow from approximately $43.6 billion in 2022 to over $92.7 billion by 2028, at a CAGR of 13.4% during the forecast period.

We believe our scalable technology

allows enterprises to secure applications and services regardless of whether hosting is on-premise or in the cloud.

As billions of connected Internet of Things (“IoT”) devices come online in support of enterprise operations, products, and industrial controls they will need to be secured and integrated into the enterprise.

Facilitated by advancements in 4G/Advanced LTE and high-speed 5G networks, IoT devices will be able to operate from any network, transmit higher volumes of data including video streaming and sensor data collection and require real-time decisions

based on that data.

However, shifting

critical data to the cloud has resulted in security concerns and the need for enterprises to control access and gain visibility into how information is being used, who is accessing it and where it is going.

Based on our estimates, using publicly

available market data, we believe that the global cloud computing security market size is expected to grow from approximately $43.6 billion in 2022 to over $92.7 billion by 2028, at a CAGR of 13.4% during the forecast period.

We believe our

scalable technology allows enterprises to secure applications and services regardless of whether hosting is on-premise or in the cloud.

As billions of connected Internet of Things (“IoT”) devices come online in support of enterprise operations, products, and industrial controls they will need to be secured and integrated into the

decisions based on that data.

Without next generation security, these IoT devices represent a large attack surface that manages and controls critical enterprise infrastructure.

These IoT devices can operate from anywhere, and will need to be secured with

the same level of network security and ZTNA solutions enterprises are already deploying for their remote workforce.

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 5G and 4G/LTE Advanced wireless networks and IoT communications.

Based on our estimates, using publicly available market data, we believe that the size of the global Industrial IoT security

market is projected to grow from $4.76 billion in 2022 to approximately $23.17 billion by 2028 at a CAGR of 30.2% during the forecasted period with a growing investment in securing the infrastructure around these devices.

These IoT devices can operate from anywhere, and will need to be

secured with the same level of network security and ZTNA solutions enterprises are already deploying for their remote workforce.

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 5G and 4G/LTE Advanced wireless networks and IoT communications.

Based on our estimates, using publicly available market data, we believe that the size of the global Industrial

IoT security market size is projected to grow from $4.76 billion in 2022 to approximately $23.17 billion by 2028 at a CAGR of 30.2% during the forecasted period with a growing investment in securing the infrastructure around these devices.

Our Approach & Strategy

We believe that VirnetX One™ software products are positioned to help enterprises adapt to the rapidly evolving threat landscape in work environments and the growing need to secure communications regardless of a

user’s location, network, or device using our GABRIEL Connection Technology™.

We believe that VirnetX One™ software products are positioned to help enterprises adapt to the rapidly evolving threat landscape in work environments and the growing need to secure communications

regardless of a user’s location, network, or device using our GABRIEL Connection Technology™.

VirnetX One™ products deliver ZTNA, allowing enterprises to secure their information, control access and gain visibility into how information is being used, who is accessing it and where it is going.

technology allows enterprises to license our technology for integration into their products and services, easily deploy our technology through our VirnetX One™ family of products for endpoint security or securing their communications with our

mobile and desktop applications.

Our patented technology allows enterprises to license our technology for integration into their products and services, easily deploy our technology through our VirnetX One™ family of products for endpoint security or securing their communications

with our mobile and desktop applications.

Our strategy is to become the market leader in securing real-time communications over the Internet and to establish our VirnetX One™ and GABRIEL Connection Technology™ as the industry standard security platforms.

Key elements of our strategy are to:

elements of our strategy are to:

Direct sales efforts with larger users, particularly those engaged in defense and others govermental or national initiatives.

Actively recruit partners in various vertical markets, including healthcare, finance, legal, government to help us expand our enterprise customer base.

Promote our next-generation VirnetX One™ platform as a solution for delivering ZTNA, and securing enterprise applications, services, and infrastructure.

Combine with VirnetX One™ platform with technologies from the companies we have invested in, namely OmniTeq and OPMedia, to enhance their offerings and provide supplemental

sales channels for VirnetX One™

Continue to grow our technology licensing program to commercialize our intellectual property, including our GABRIEL Connection Technology™.

Grow registration of VirnetX Secure Domain Names as the network segmentation component of our ZTNA solution.

Establish VirnetX as the exclusive, universal registry of secure domain names and enable our

customers to act as registrars for their users and broker secure communication between devices.

Promote War Room TM video conferencing product in the general market for sale to end-user enterprises, directly and with

partners, with targeted promotions and other marketing programs to assist remote workers and offer an industry leading secure meeting solution.

Establish VirnetX as the exclusive, universal registry of secure domain names and enable our customers

to act as registrars for their users and broker secure communication between devices.

Promote War Room TM video conferencing product in the general market for sale to end-user enterprises, directly and with partners,

with targeted promotions and other marketing programs to assist remote workers and offer an industry leading secure meeting solution.

Promote VirnetX Matrix™ enterprise applications, services, and infrastructure.

Our patent portfolio serves as the foundation of our GABRIEL Connection Technology™, software products, services, and our licensing business.

We currently own approximately 205 total patents and pending

applications, including 72 U.S.

patents/patent applications and 133 foreign patents/validations/pending applications.

It is expected to generate the majority of our future revenue in license fees and royalties.

Competitive Strengths

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Unique patented technology.

We are focused on developing innovative technology for securing real-time communications over the Internet and establishing the exclusive secure domain name registry

in the United States and other key markets around the world.

Our unique solutions combine industry standard encryption methods and communication protocols with our patented techniques for automated DNS lookup mechanisms.

Our technology

and patented approach enable users to create a secure communication link by generating secure domain names.

We are focused on developing innovative technology for securing real-time communications over the Internet and establishing the exclusive secure

domain name registry in the United States and other key markets around the world.

Our unique solutions combine industry standard encryption methods and communication protocols with our patented techniques for automated DNS lookup

Our technology and patented approach enable users to create a secure communication link by generating secure domain names.

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 portfolio includes patents and pending patent applications in the United States and other key markets that support our secure domain name registry service for the Internet.

patents/patent applications and 133 foreign patents/validations/pending applications.

Our portfolio includes patents and pending patent applications in the United States and other key markets that support our secure domain name registry

service for the Internet.

Scalable licensing business model.

We are actively engaged in pursuing additional licensing agreements with industry participants OEMs, service providers and system integrators within the

IP-telephony, mobility, mobile-to-mobile communications, fixed-mobile convergence, and unified communications end-markets.

We are actively engaged in pursuing additional licensing agreements with industry participants OEMs, service providers and system

integrators within the IP-telephony, mobility, mobile-to-mobile communications, fixed-mobile convergence, and unified communications end-markets.

Highly experienced research and development team.

Our research and development team is comprised of nationally recognized network security and encryption technology scientists and experts that

have worked together as a team for over ten years.

Our research and development team is comprised of nationally recognized network security and encryption technology

scientists and experts that have worked together as a team for over ten years.

During their careers, this team has developed several cutting-edge technologies for U.S.

national defense, intelligence, and civilian agencies, many of which remain critical to our

national security today.

national defense, intelligence, and civilian agencies, many of which

remain critical to our national security today.

Prior to joining VirnetX, our team worked for Leidos, during which time they invented the core technology that is the foundation of our current technology and software.

Based on the collective knowledge and

experience of our development team, we believe that we have one of the most experienced and sophisticated groups of security experts researching vulnerability and threats to real-time communication over the Internet and developing

solutions to mitigate these problems.

Based on the collective

knowledge and experience of our development team, we believe that we have one of the most experienced and sophisticated groups of security experts researching vulnerability and threats to real-time communication over the Internet and

developing solutions to mitigate these problems.

License and Service Offerings

We offer a diversified portfolio of licenses, software and service offerings focused on securing real-time communications over the Internet.

We believe software products will allow enterprises to seamlessly

integrate ZTNA protection into their networks to secure their applications, services, virtualized resources, and data as it moves into the cloud.

Enterprises can quickly deploy VirnetX One software products to protect legacy applications, secure

new cloud-based services and remove application visibility from the public Internet.

We believe software products will allow enterprises to

seamlessly integrate ZTNA protection into their networks to secure their applications, services, virtualized resources, and data as it moves into the cloud.

Enterprises can quickly deploy VirnetX One software products to protect legacy

applications, secure new cloud-based services and remove application visibility from the public Internet.

Enterprises can move towards more granular network access control to protect their network at the edge and away from legacy VPN technologies.

VirnetX One family

of software products enables remote employees to securely interact with on-premise and cloud-based applications, regardless of their location.

Enterprises can use VirnetX One platform to secure open-source applications powering communications,

data and analytics, infrastructure, and business services with a focus on making those applications easier to secure, access and manage.

VirnetX One family of software products enables remote employees to securely interact with on-premise and cloud-based applications, regardless of their location.

Enterprises can use VirnetX One platform to secure open-source applications powering

communications, data and analytics, infrastructure, and business services with a focus on making those applications easier to secure, access and manage.

We believe our software products and technologies provide the foundation for securing real-time communications and collaboration applications for the enterprise remote workforce.

We are exploring creating a

marketplace of applications secured by our VirnetX One platform.

This approach will allow us to offer a portfolio of certified applications that can be deployed by the enterprise customers in their business networks with confidence in keeping

their confidential data and communications secure.

This marketplace strategy will allow us to offer more flexible licensing options to solve specific customer use-cases, align with partner product offerings and create upsell opportunities for our

Our software products are available for download and free trial, for Android, iOS, Windows, Linux, and Mac OS X platforms, at http://www.virnetx.com/.

We continue to enhance our products and add new functionality

to our products.

Small and medium businesses have installed our software products in their corporate networks.

We continue to expand our customer base with targeted promotions and direct sales initiatives.

We are exploring

creating a marketplace of applications secured by our VirnetX One platform.

This approach will allow us to offer a portfolio of certified applications that can be deployed by the enterprise customers in their business networks with confidence in

keeping their confidential data and communications secure.

This marketplace strategy will allow us to offer more flexible licensing options to solve specific customer use-cases, align with partner product offerings and create upsell opportunities

for our products.

We have undertaken activities to commercialize our products and intellectual property in and outside the United States including

VirnetX One TM , War Room TM , VirnetX Matrix TM , GABRIEL Connection Technology TM and our Secured Domain Name Registry and Technology.

We believe our product portfolio to secure devices and systems are

stable in areas such as City, County and State Governments, Healthcare, Finance, Legal, Oil and Gas, Medical, Law Enforcement, National Defense and related support industries.

We continue to actively pursue new sales opportunities in and one of

United States.

During 2023, we actively engaged in discussions with certain third-parties to pitch the capabilities of VimetX One TM .

As a result of our efforts, we made a series of announcements with Solution Synergy, WeSecure, Samsung, Every Data Corporation, and Object Security We also announced new deployments of our VimetX Matrix TM product at City of Bridgeport,

International Association of Certified ISAOs (IACI) and SkinWalker Ranch.

Although there can be no assurance in this regard, the Company believes that there are opportunities for Company products' sales directly to, resale arrangements with

and/or adoption as vendor standards by, one or more of these third parties.

We have signed Patent License Agreements with Aastra USA, Inc.

Avaya, Inc., Microsoft Corporation, Mitel Networks Corporation, NEC Corporation and NEC Corporation of America, Siemens Enterprise Communications GmbH

Avaya, Inc., Microsoft Corporation, Mitel Networks Corporation, NEC Corporation and NEC Corporation of America, Siemens Enterprise

Communications GmbH & Co.

KG, and Siemens Enterprise Communications Inc.

to license certain of our patents, for a one-time payment and an ongoing royalty for all future sales through the expiration of the licensed patents with respect to certain current and

future IP-encrypted products.

We are seeking further licensing of our technology, to developers and original equipment manufacturers, or OEMs, of chips, servers, Desktop, mobile devices such as smart phones, tablets, laptops, net books, and

other devices, within the IP-telephony, mobility, fixed- mobile convergence, and unified communications markets including 5G and 4G/LTE.

to license certain of our patents, for a one-time payment and an ongoing royalty for all future sales through the expiration of the licensed patents with respect to

certain current and future IP-encrypted products.

We are seeking further licensing of our technology, to developers and original equipment manufacturers, or OEMs, of chips, servers, Desktop, mobile devices such as smart phones, tablets, laptops, net

books, and other devices, within the IP-telephony, mobility, fixed- mobile convergence, and unified communications markets including 5G and 4G/LTE.

We have published our royalty rates and guidelines on our website.

All forward moving licenses have adhered

to these guidelines and have met or exceeded these rates and we will use these rates and guidelines in all future license negotiations.

All forward moving licenses have

adhered to these guidelines and have met or exceeded these rates and we will use these rates and guidelines in all future license negotiations.

Marketing and Sales

We employ a leveraged, partner-oriented, marketing strategy for our technology licenses and software product offerings.

We have successfully signed a number of Resellers & Managed Service Provider Agreements in

various market segments, including, healthcare, finance, legal, government, etc., to assist us in selling our software products to their customers.

A list of our partners can be found on our website at https://virnetx.com/partners.

continue working on a number of sales and marketing promotions, in the U.S.

and Japan, to recruit more resellers and partners along with direct sales programs as we seek to extend out our customer base internationally.

We plan to directly market our software products, domain name registry services to our service provider and system integrator customers.

We market our software products directly to small and medium businesses using

online marketing programs and tools.

We expect to leverage our relationship with Leidos, to extend our offering to departments and agencies within the federal government.

Leidos is a FORTUNE 500® scientific, engineering and technology applications

company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure, and health.

We intend to leverage our sales team for

managing current accounts and pursuing sales opportunities with new customers.

We continue to rapidly expand our customer base with targeted promotions and direct sales initiatives.

We employ a leveraged, partner-oriented marketing and sales strategy for software product and services offerings.

We have successfully signed several

Resellers & Managed Service Provider Agreements in various market segments, including healthcare, finance, legal, government, etc., to assist us in selling our software products to their customers.

We plan to directly market our software

products, domain name registry services to large enterprises and government organizations along with our service provider and system integrator customers.

We believe significant opportunities exist for our VirnetX One™, War Room™, VirnetX Matrix™ products and services in areas such as Local and State

Governments, Power and Energy generation, Healthcare, Finance, Legal, Oil and Gas, Medical, Law Enforcement, National Defense and related support industries.

We are actively pursuing a number of sales opportunities, in and outside the United

States, for as we seek to extend out our customer base globally.

We expect to leverage our relationship with OmniTeq and Op Media to extend our offering to departments and agencies within the federal government.

We added a Chief Operating Officer to our Japanese team to further our technology licensing efforts in Japan.

We have signed a non-exclusive Distribution and Service Agreement with IP Dream, a Japanese based

strategic technology developer and service provider, to sell our software products as well as VirnetX’s Secure Domain Name technology to its clients in Japan and greater Asia.

Jointly with IP Dream, we are currently pursuing several OEM

opportunities with some of the largest services providers in Japan.

Along with our efforts with IP Dream, we continue to explore alternative strategies to pursue opportunities to work with other third parties in Japan, and elsewhere, using an

approach that will seek to capitalize on these opportunities in part by placing more emphasis on the use of our own employees.

We intend to continue to license our patent portfolio, technology, and software, including our secure domain name registry service, to domain infrastructure providers, communication service providers as well as to

system integrators.

We intend to seek further license of our technology and software products, to enterprise customers, developers and original equipment manufacturers, or OEMs, of chips, servers, Desktop, mobile devices such as smart phones,

tablets, laptops, net books, and other devices, within the IP-telephony, mobility, fixed- mobile convergence, and unified communications markets including 5G and 4G/LTE.

We have published our royalty rates and guidelines on our website at

https://virnetx.com/licensing.

All forward moving licenses have adhered to these guidelines and have met or exceeded these rates and we will use these rates and guidelines in all future license negotiations.

We have signed a non-exclusive

Distribution and Service Agreement with IP Dream, a Japanese based strategic technology developer and service provider, to sell our software products as well as VirnetX’s Secure Domain Name technology to its clients in Japan and greater Asia.

Jointly with IP Dream, we are currently pursuing several OEM opportunities with some of the largest services providers in Japan.

Along with our efforts with IP Dream, we continue to explore alternative strategies to pursue opportunities to work

with other third parties in Japan, and elsewhere, using an approach that will seek to capitalize on these opportunities in part by placing more emphasis on the use of our own employees.

We intend to continue to license our patent portfolio, technology, and software, including our secure domain name registry service, to domain

infrastructure providers, communication service providers as well as to system integrators.

We intend to seek further license of our technology and software products, to enterprise customers, developers and original equipment manufacturers, or

OEMs, of chips, servers, Desktop, mobile devices such as smart phones, tablets, laptops, net books, and other devices, within the IP-telephony, mobility, fixed- mobile convergence, and unified communications markets including 5G and 4G/LTE.

Intellectual Property and Patent Rights

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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 portfolio includes many patents that describe unique systems and methods for 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 software and technology solutions also may have additional applications relating to operating systems and network security.

patents/patent applications and 133 foreign patents/validations/pending applications.

Our portfolio

includes many patents that describe unique systems and methods for 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 software and

technology solutions also may have additional applications relating to operating systems and network security.

A complete list of our U.S.

patents is available on our website

located at http://www.virnetx.com.

Each patent is publicly accessible on U.S.

patents is available on our website located at http://www.virnetx.com.

Each patent is publicly accessible on

Patent and Trademark Office website at http://www.uspto.gov.

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and foreign patents expire at various times during the period from 2023 to 2034.

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate future filings, the information set forth on the United States Patent and

Trademark Office (the “USPTO”) website, shall not be deemed to be a part of or incorporated by reference into any such filings.

We do not warrant the accuracy, or completeness or adequacy of the USPTO website, and expressly disclaim liability for

errors or omissions on such website.

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate future filings, the information set forth on the United

States Patent and Trademark Office (the “USPTO”) website, shall not be deemed to be a part of or incorporated by reference into any such filings.

We do not warrant the accuracy, completeness or adequacy of the USPTO website, and expressly disclaim

liability for errors or omissions on such website.

Assignment of Patents

Some of our issued patents and pending patent applications were acquired by our principal operating subsidiary, VirnetX, Inc., from Leidos, pursuant to an Assignment Agreement dated December 21, 2006, and a Patent

License and Assignment Agreement dated August 12, 2005, as amended on November 2, 2006, including documents prepared pursuant to the November amendment, and as further amended on March 12, 2008.

We recorded the assignment from Leidos, with the

and a Patent License and Assignment Agreement dated August 12, 2005, as amended on November 2, 2006, including documents prepared pursuant to the November amendment, and as further amended on March 12, 2008.

We recorded the assignment from Leidos,

with the U.S.

Patent Office on December 21, 2006.

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Patent Assignment .

Leidos, unconditionally and irrevocably conveyed, transferred, assigned, and quitclaimed all its right, title, and interest in and to the patents and patent applications, as

specifically set forth in the assignment document recorded with the U.S.

Leidos, unconditionally and irrevocably conveyed, transferred, assigned, and quitclaimed all its right, title, and interest in and to the patents and

patent applications, as specifically set forth in the assignment document recorded with the U.S.

Patent Office, including, without limitation, the right to sue for past infringement.

License to Leidos, Outside the Field of Use .

Effective March 12, 2008, we granted to Leidos, a non-exclusive, royalty free, fully paid, perpetual, worldwide, irrevocable, sub licensable and

transferable right and license permitting Leidos, and its assignees to make, have made, import, use, offer for sale, and sell products and services covered by, and to make improvements to, the patents and patent applications we acquired

from Leidos, solely outside our field of use.

Effective March 12, 2008, we granted to Leidos, a non-exclusive, royalty free, fully paid, perpetual, worldwide, irrevocable,

sub licensable and transferable right and license permitting Leidos, and its assignees to make, have made, import, use, offer for sale, and sell products and services covered by, and to make improvements to, the patents and patent

applications we acquired from Leidos, solely outside our field of use.

Compensation Obligations .

As consideration for the assignment of the patents and for the rights we obtained from Leidos, as amended, we are required to make payments to Leidos, based on cash or

certain other values generated from those patents.

As consideration for the assignment of the patents and for the rights we obtained from Leidos, as amended, we are required to make payments to

Leidos, based on cash or certain other values generated from those patents.

The amount of such payments depends upon the type of value generated, and certain categories are subject to maximums and other limitations.

In 2010, we met our maximum royalty payment

however, Leidos is also entitled under certain circumstances to receive a portion of the proceeds paid to us for certain acquisitions of VirnetX and the settlement of certain patent infringement claims of ours.

In 2010, we met our

maximum royalty payment requirement;

Government Regulation

We are subject to various federal, state, local, and foreign laws and regulations, including those relating to privacy, data protection and security, intellectual property, employment and labor, workplace safety,

consumer protection, anti-bribery, import and export controls, immigration, federal securities, and tax.

Additional laws and regulations relating to these areas likely will be passed in the future, and these or existing laws and regulations may

be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on how we operate our business.

We are subject to various federal, state, local, and foreign laws and regulations, including those relating to privacy, data protection and security, intellectual property, employment and labor,

workplace safety, consumer protection, anti-bribery, import and export controls, immigration, federal securities, and tax.

Additional laws and regulations relating to these areas likely will be passed in the future, and these or existing laws and

regulations may be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on how we operate our business.

In particular, the laws governing online secure communications remain unsettled in various respects, even in areas where there has been legislative action.

Uncertainty regarding the interpretation and enforcement

of laws governing matters such as intellectual property, privacy, data protection and libel in the context of online communications and media is likely to remain.

New and existing legislation, or changes in its interpretation and enforcement, may

interfere with the growth in use of online secure communications and decrease the acceptance of online secure communications as a viable solution, which could adversely affect our business.

Uncertainty regarding the interpretation and

enforcement of laws governing matters such as intellectual property, privacy, data protection and libel in the context of online communications and media is likely to remain.

New and existing legislation, or changes in its interpretation and

enforcement, may interfere with the growth in use of online secure communications and decrease the acceptance of online secure communications as a viable solution, which could adversely affect our business.

Due to the Internet’s increasing and evolving use, new laws regulating secure communications may be adopted.

These laws and regulations may cover, among other things, issues relating to privacy, data protection,

cybersecurity, pricing, taxation, telecommunications over the Internet, content, copyrights, distribution and quality of products and services.

We intend to work to comply with all new applicable laws and regulations as they are adopted and put

New and evolving laws and regulations, and changes in their enforcement and interpretation, may have material impacts upon our development and commercialization plans or business practices, and may significantly increase our compliance

costs and otherwise adversely affect our business, financial condition, and results of operations.

These laws and regulations may cover, among other things, issues relating to privacy, data

protection, cybersecurity, pricing, taxation, telecommunications over the Internet, content, copyrights, distribution and quality of products and services.

We intend to work to comply with all new applicable laws and regulations as they are adopted

and put in force.

compliance costs and otherwise adversely affect our business, financial condition, and results of operations.

government has controlled the authoritative domain name system, or DNS, root server since the inception of the Internet.

On July 1, 1997, the President of the United States directed the U.S.

Commerce to privatize the management of the domain name system in a manner that increases competition and facilitates international participation in its management.

Secretary of Commerce to privatize the management of the domain name system in a manner that increases competition and facilitates international participation in its management.

On September 29, 2006, the U.S.

Department of Commerce extended its delegation of authority by entering into a new agreement with the Internet Corporation for Assigned Names and Numbers, or ICANN, a California

non-profit corporation headquartered in Marina Del Rey, California.

ICANN is responsible for managing the accreditation of registry providers and registrars that manage the assignment of top- level domain names associated with the authoritative

DNS root directory.

Although it is possible to create and manage other DNS root directories privately without accreditation from ICANN, the possibility of conflicting name and number assignments makes it less likely that users would widely adopt

a top-level domain name associated with an alternative DNS root directory provided by a non-ICANN- accredited registry service.

Department of Commerce extended its delegation of authority by entering into a new agreement with the Internet Corporation for Assigned Names and Numbers, or ICANN, a

California non-profit corporation headquartered in Marina Del Rey, California.

ICANN is responsible for managing the accreditation of registry providers and registrars that manage the assignment of top- level domain names associated with the

authoritative DNS root directory.

widely adopt a top-level domain name associated with an alternative DNS root directory provided by a non-ICANN- accredited registry service.

Employees and Human Capital

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We have had a work-from-home workforce since our inception.

The emphasis of our employees is

on our technology research and product development with 14 employees focused on this effort.

Our team has been working on enhancing our products and adding new functionality along with successfully filing several new patent applications in 2022.

The emphasis of our

employees is on our technology research and product development with 14 employees focused on this effort.

Our team has been working on enhancing our products and adding new functionality along with successfully filing several new patent

applications in 2022.

We also continue building our sales and marketing teams to expand our product-lines and customer base.

In 2021, we added a Chief Operating Officer to our team in Japan who will be focused on growing our market and products in that region.

In 2024, the Chief Operating Officer to our team in Japan was promoted to Chief Operating Officer of the Company, who will

be focused on growing our operations, expanding the Company's line of security products into Japan as well as the broader Pacific Rim, and transacting with military-affiliated partners within the United States to facilitate the collaborative

development of next-generation cybersecurity and protective artificial intelligence solutions.

In addition to our regular employees, we also engage with consultants on a regular basis.

These consultants can be involved in our product development, customer relations, legal, and/or regulatory compliance and

These consultants can be involved in our product development, customer relations, legal, and/or regulatory

compliance and reporting.

We have experienced low employee turnover rates over the years with both employees and consultants participating in our equity incentive plan.

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Our website address is http://www.virnetx.com.

You may obtain,

free of charge on our website, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as

soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

may obtain, free of charge on our website, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange

Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

The information we post is intended for reference purposes only;

none of the information posted on our website is part of this report or

incorporated by reference herein.

The SEC also maintains website at http://www.sec.gov that contains reports, proxy and other information statements, and other information regarding issuers, including us, that file electronically with the SEC.

none of the information posted on our website is part of this report

or incorporated by reference herein.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business