SecProbe.io

September 17, 2010

William Sliney
Chief Financial Officer
VirnetX Holding Corporation
5615 Scotts Valley Drive, Suite 100
Scotts Valley, CA 95066
Also via facsimile at : (831) 438-3078

Re:  VirnetX Holding Company
Form 10 -K for Fiscal Y ear Ended December 31, 200 9
Filed March 31, 2010
Form 10-Q for Fiscal Quarter Ended June 30, 2009
Filed August 9, 2010
File No. 001 -33852

Dear Mr. Sliney :

We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comments, we may have additional comments.

General

1. We note your pending request for confidential treatment in connection with portions of
Exhibit 10.1  to your Form 10 -Q for the Fiscal Quarter Ended June 30 , 2010.  We are
currently processing this request and will issue comments to you in a forthcoming letter.

Form 10 -K for Fiscal Year Ended Decemb er 31, 2009

Notes to Financial Statements

Note 8.  Warrants, page 55

2. We note you issued Series I and I I warrants in connection with the private placement
transaction that closed on September 11, 2009.   It is unclear to us based on your

William Sliney
VirnetX Holding Company
September 17, 2010
Page 2

disclosures on page 32, as well as in Not e 8, how you determined that  these instruments
should receive equity classif ication.  For both Series I and Series II warrants, please
clarify for us the terms of the warrants and provide the analysis you performed pursuant
to ASC 815 -40-15 in order to determine the appropriate accounting classification and
treatment for these ins truments.

Item 9A. Controls and Procedures

Management’s Report on Inte rnal Control Over Financial Reporting, page 62

3. You have disclosed that your annual report does not include an attestation report from the
company’s registered public accounting firm regarding internal control over financ ial
reporting.  However, such a  report was provided on page 61.  Please remove this
disclosure from future filings when the report from the registered public accounting firm
is included.

Item 12. Security O wnership of Certain Beneficial Owners and Management and Related
Stockholder Matters Equity Compensation Plan Information  (Incorporated by Reference from
Definitive Proxy Statement on Schedule 14A, filed April 29, 2010)

Voting Securities and Principal Hol ders, page 35

4. We note from your risk factor disclosure on page 27 that a group of stockholders  entered
into a voting agreement, which  requires them to vote all of their shares of voting stock in
a particular manner .  In your  future filings, consider supplementing the tabular
information require d by Item 403 of Regulation S -K by including, for example, footnote
disclosure , that concisely describe s the effective impact of the voting agreement on the
number of shares and percent age ownership as to which the directors and/or affiliates
effectively exercise voting rights  over the shares .

Form 10 -Q for Fiscal  Quarter ending June 30, 2010

Notes to the Financial Statements

Note 11 – Litigation, page 10

5. We note that in May 2010 you entered into a Settlement and License Agreement with
Microsoft  for $200 million .  With regards to this Agreement , please provide us with the
following information:
 Describe in further detail the terms, arrangements, obligations and rights associated
with the litigation settlement.  Tel l us each element specified in the Agreement and
how you considered the allocation guidance of ASC 605 -25-25, by analogy, with
regards to bifurcating such elements;
 Tell us  how you determined the value of each element;
 Tell us how you determined that clas sification of the entire payment as revenue
during the three months ended June 30, 2010 was appropriate.  In your response,

William Sliney
VirnetX Holding Company
September 17, 2010
Page 3

please address how you determined that the payment to SAIC should be classified as
a cost of revenue versus a reduction to revenue;
 Please cite  the specific  accounting guidance you relied upon ; and
 Tell us your consideration to include a discussion of your accounting policy for such
arrangement s in your Summary of Significant Accounting Policies footnote
disclosures.

Item 2 – Management’s Discussion and Analysis of F inancial Condition and Results of
Operations

Liquidity and Capital Resources, page 15

6. We note that you expect to use the net proceeds from the settlement agreement with
Microsoft Corporation to fund your operations and provide working capital for general
corporate purposes for at least the next 12 months.  Given that your revenue s generated
for the three months ended June 30, 2010 substantially increased from $7,207 in three
months ended June 30, 2009 to approximately $200 million in the three months ended
June 30, 2010, consider expand ing your disc losure to ad dress any known trends  and/or
material commitments for capital expenditures and the general purpose of such
commitments, to help investors better understand your financial condition .  Briefly
describe in your response letter and with a view towards enhance d disclosure in future
filings, the impact of these revenues on your business operations and whether the
revenues received from the settlement agreement should be deemed an unusual or
infrequent event to your results of operations.

Item 1A – Risk Factors

“We expect that we will be substantially dependent on a conc entrated number of customers. …”
page 22

7. To the extent that you have chosen to include risk factor disclosure, please note that
quantitative information should be included when necessary to provide the context
needed to appreciate the extent of the conditi ons or unce rtainties identified  in the  risk
factor .  As an example, your risk factor , in which you may be substantially dependent on
a limited number of customers , should be updated to quantify the number of customers
upon which you depend.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable  Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

William Sliney
VirnetX Holding Company
September 17, 2010
Page 4

 In responding to our comments, p lease provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Co mmission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Melissa Kindelan, Staff Accountant, at (202) 551-3564 or the
undersigned at (202) 551-3499 if you have any questions regarding  comments on the financial
statements and related matters .  Please address questions regarding all other comments to
Stephani Bouvet , Staff Attorney at (202) 551 -3545  or Mark Shuman , legal branch chief  at (202)
551-3462 .

Sincerely,

Kathleen Collins
Accounting Branch Chief