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VirnetX Posts Q2 Revenues of $200 Million
Many Financial Milestones Achieved

SCOTTS VALLEY, Calif., Aug 09, 2010 /PRNewswire via COMTEX/ --

VirnetX Holding Corporation (NYSE Amex: VHC), an Internet security software and technology company, today reported financial results for the three and six months ended June 30, 2010. Financial highlights include:

  • Profitable second quarter 2010 with $200,023,392 in revenues vs. $7,207 in second quarter 2009
  • Income from operations of $115,101,373 in second quarter 2010 vs. ($3,928,346) in second quarter 2009.
  • Net income of $81,112,974 in second quarter 2010 vs. ($3,927,102) in second quarter 2009.
  • Earnings per share of $1.83 in second quarter 2010 vs. ($0.11) in second quarter 2009.
  • Special dividend of $0.50 per common share declared in second quarter 2010.
  • Cash flows from operating activities of $76,656,936 for first six months of 2010 vs. (7,330,109) for first six months of 2009.
  • Cash and cash equivalents of $127,179,912 as of June 30, 2010 vs. $414,735 as of December 31, 2009.

The Company will file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission for the quarterly period ended June 30, 2010 today, August 9, 2010.

"During our second quarter 2010, we achieved many new and important milestones," said Kendall Larsen, VirnetX CEO and President. "I am particularly pleased with the validation of our patent rights that came out of our first nine figure license with Microsoft. With that, we had the opportunity to pay a special dividend to our shareholders and provide what we believe to be adequate capital to pursue our business objectives."


                 VIRNETX HOLDING CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF
                          OPERATIONS
                         (Unaudited)




                                     Three          Three
                                    Months         Months
                                     Ended          Ended
                                   June 30,       June 30,
                                     2010           2009
                                  ---------      ---------
     Revenue - royalties         $200,023,392        $7,207
     Operating expense:
        Royalty expense            59,239,274           ---
        Research and
         development                1,227,688       220,558
        General, selling and
         administrative            24,455,057     3,714,995
                                   ----------     ---------
       Total operating expense    (84,922,019)   (3,935,553)
                                  -----------    ----------
     Income (loss) from
      operations                  115,101,373    (3,928,346)
     Interest and other
      income, net                      11,601         1,244
                                       ------         -----
     Income (loss) before
      taxes                       115,112,974    (3,927,102)
                                  -----------    ----------
     Income taxes                  34,000,000           ---
                                   ----------           ---
     Net Income (loss)            $81,112,974   $(3,927,102)
                                  ===========   ===========
     Basic earnings (loss)
      per share:                        $1.83        $(0.11)
                                        -----        ------
     Diluted earnings (loss)
      per share:                        $1.72        $(0.11)
                                        -----        ------
      Weighted average shares
       outstanding basic           44,277,422    37,369,985
                                   ----------    ----------
      Weighted average shares
       outstanding dilutive        47,266,249    37,369,985
                                   ----------    ----------
      Dividends declared per
       common share                     $0.50         $0.00
                                        -----         -----





                                      Six            Six
                                    Months         Months
                                     Ended          Ended
                                   June 30,       June 30,
                                     2010           2009
                                  ---------      ---------
     Revenue - royalties         $200,044,161       $10,361
     Operating expense:
        Royalty expense            59,239,274           ---
        Research and
         development                1,749,923       442,257
        General, selling and
         administrative            28,410,942     6,901,684
                                   ----------     ---------
       Total operating expense    (89,400,139)   (7,343,941)
                                  -----------    ----------
     Income (loss) from
      operations                  110,644,022    (7,333,580)
     Interest and other
      income, net                      12,914         3,471
                                       ------         -----
     Income (loss) before
      taxes                       110,656,936    (7,330,109)
                                  -----------    ----------
     Income taxes                  34,000,000           ---
                                   ----------           ---
     Net Income (loss)            $76,656,936   $(7,330,109)
                                  ===========   ===========
     Basic earnings (loss)
      per share:                        $1.79        $(0.20)
                                        -----        ------
     Diluted earnings (loss)
      per share:                        $1.69        $(0.20)
                                        -----        ------
      Weighted average shares
       outstanding basic           42,720,896    36,974,239
                                   ----------    ----------
      Weighted average shares
       outstanding dilutive        45,248,343    36,974,239
                                   ----------    ----------
      Dividends declared per
       common share                     $0.50         $0.00
                                        -----         -----



           VIRNETX HOLDING CORPORATION
      CONDENSED CONSOLIDATED BALANCE SHEETS




                                         June         December
                                          30,            31,
                                             2010           2009
                                             ----           ----
                                     (Unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents        $127,179,912     $2,011,470
    Accounts receivable, net                7,717          6,842
    Prepaid expense and other
     current assets                        61,601         43,863
                                           ------         ------
      Total current assets            127,249,230      2,062,175
                                      -----------      ---------
    Property and equipment, net            19,240         23,430
    Intangible and other assets           132,000        156,000
                                          -------        -------
      Total assets                   $127,400,470     $2,241,605
                                     ============     ==========
    Current liabilities:
    Accounts payable and accrued
     liabilities                         $572,115     $4,478,325
        Income tax liability           34,000,000            ---
        Accrued dividend               23,598,000            ---
    Current portion of long-
     term obligation                          ---         40,000
      Total current liabilities        58,170,115      4,518,325
    Long-term obligation, net
     of current portion                       ---        120,000
    Commitments and
     contingencies
    Stockholders' equity
     (deficit):
     Preferred stock, par value
      $0.0001 per share                         -              -
      Authorized 10,000,000 shares
       issued and outstanding:
      0 shares at June 30, 2010
       and December 31, 2009,
       respectively
     Common stock, par value
      $0.0001 per share                     4,720          3,975
      Authorized 100,000,000
       shares, issued and
       outstanding:
    47,195,477 shares at June
     30, 2010 and 39,750,927 at
    December 31, 2009,
     respectively
     Additional paid in capital        52,297,611     33,730,217
     Retained earnings (Deficit
      accumulated during the           16,928,024    (36,130,912)
    development stage)
     Total stockholders' equity
      (deficit)                        69,230,355     (2,396,720)
      Total liabilities and
       stockholders' equity
       (deficit)                     $127,400,470     $2,241,605





                 VIRNETX HOLDING CORPORATION
          CONDENSED CONSOLIDATED STATEMENTS OF CASH
                            FLOWS
                         (Unaudited)

                                                   Six
                                                               Months
                                                                Ended
                                                 June 30,
                                                                 2009
                                                ---------
                                     Six
                                   Months
                                    Ended
                                  June 30,
                                     2010
                                  ---------
     Cash flows from operating
      activities:
      Net (loss)                 $76,656,936   $(7,330,109)
     Adjustments to reconcile net
      loss to net cash used in
      operating activities:
     Stock-based
      compensation                 1,565,822     1,434,036
     Depreciation and
      amortization                    29,794        19,738
     Changes in assets and
      liabilities:
      Receivables and other
       current assets                (18,612)      (24,574)
      Accounts payable and
       accrued liabilities        30,093,790     2,537,993
                                  ----------     ---------
     Net cash provided (used)
      by operating activities    108,327,730    (3,362,916)
                                 -----------    ----------
     Cash flows from investing
      activities:
     Purchase of property and
      equipment                       (1,603)       (3,429)
     Net cash used in
      investing activities            (1,603)       (3,429)
                                      ------        ------
     Cash flows from financing
      activities:
     Payment of royalty
      obligation less imputed
      interest                      (160,000)      (44,000)
     Proceeds from exercise
      of options                     272,208           ---
     Proceeds from exercise
      of warrants                 16,730,107           ---
     Proceeds from sale of
      common stock                       ---     3,367,925
                                         ---     ---------
     Net cash provided by
      financing activities        16,842,315     3,323,925
                                  ----------     ---------
     Net increase (decrease)
      in cash and cash
      equivalents                125,168,442       (42,420)
     Cash and cash
      equivalents, beginning
      of period                    2,011,470       457,155
                                   ---------       -------
     Cash and cash
      equivalents, end of
      period                    $127,179,912      $414,735
                                ============      ========
     Supplemental disclosure of cash
      flow information:
     Cash paid during the
      period for taxes                 $----        $2,173
                                       =====        ======
     Cash paid during the
      period for interest            $10,000        $6,000
                                     =======        ======
     Supplemental disclosure of
      noncash investing and financing
      activities:



About VirnetX

VirnetX Holding Corporation, an Internet security software and technology company, is engaged in commercializing its patent portfolio by developing a licensing program as well as developing software products designed to create a secure environment for real-time communication applications such as instant messaging, VoIP, smart phones, eReaders and video conferencing. The Company's patent portfolio includes over 48 U.S. and international patents and pending applications that were recently declared as essential for 4G security specifications and provide the foundation for the Company's unique GABRIEL Connection Technology. For more information, please visit www.virnetx.com.

Forward Looking Statements

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission, including those under the heading "Risk Factors" in Company's Annual Report on Form 10-K filed with the SEC on March 31, 2010 and Quarterly Report on Form 10-Q filed on August 9, 2010.


    Contact:
    Greg Wood
    VirnetX Holding Corporation
    831.438.8200
    greg_wood@virnetx.com


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