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EXP is a graduate from The University of Wall Street and serves as the CEO / Chief Stock Strategist at EXPstocktrader.com research firm. With over 30 years of trading the market, EXP is an experienced investor using a fundamental and technical approach as a market analyst, chartist, visual... More
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  • VirnetX Files Quarterly 10Q - Shows Healthy Financial Position 0 comments
    Aug 10, 2012 10:33 AM | about stocks: VHC

    VirnetX (NYSEMKT:VHC) just reported it's latest 10Q last night in after hours and we have summarized the key topics concerning investors today. As a special note: Firms in litigation like VirnetX will usually only release a 10Q like they did which is the only requirement per securities regulations. Also, no conference call is scheduled and they have never had one regarding their earnings releases.

    First and foremost, we wanted to know what the balance sheet looked like and we can clearly see that they have adequate capital with $63.7 million in cash and equivalents vs. what they reported 6 months ago with $63.9 million in cash.

    The expenses are another key area that we wanted to review. They are actually falling in line and there is nothing alarming there, so this is another good sign for shareholders to be aware of. Legal expenses are expected and have been budgeted for. There is nothing of concern there either. Legal expenses and hard costs are expected to wind down and decrease in the coming months. The peak of the litigation costs are behind them, especially if they experience more settlements.

    The key element that we see here is that the working capital has been increased to 48 months vs. 36 months of working capital that they had reported in their previous filing. This is a positive increase. Also, the company seems to be in "great shape" because they alleviated any concerns that the working capital might have dropped. or depleted. This didn't happen.

    What this report says:
    This report says that the company is in great financial shape and there is no need for any type of capital raise or offering at this time and we don't expect to see one which would result in shareholder dilution. They are from it.

    Lastly, as you may be aware, VirnetX is in litigation with Apple (NASDAQ:AAPL), Cisco (NASDAQ:CSCO) and others on patent infringement relating to several Internet patents. The concern here that investors worry about is their staying power in order to face and fight the current allegations against these large firms. These financials reported in after hours last night show that they do have staying power moving forward.

    It is also encouraging to know that the three companies who have already settled: Aastra, Mitel (NASDAQ:MITL), and NEC (NEC) have met or exceeded VirnetX's published royalty rates. We would expect more settlements to come in the future as well. Please stay tuned. More settlements should be coming and could happen at any time?

    See the 10Q filing:biz.yahoo.com/e/120809/vhc10-q.html

    Disclosure: I am long VHC.

    Stocks: VHC
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