SecProbe.io

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

         October 26, 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 Year Ended December 31, 2009
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 letter dated Oct ober 1, 2010 in connection with the above-
referenced filings and have the following comment.  In our comment, 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 advi sing us when you will provide the requested
response.  If you do not believe our comment applies to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to this comment, we may have addi tional comments.  Unless otherwise noted, where
prior comments are referred to they refe r to our letter dated September 17, 2010

Form 10-K for the Fiscal Year ending December 31, 2009

Notes to Financial Statements

Note 8.  Warrants, page 55

1. We note the company’s analysis in response to  our previous comment 2.  With regards to
the Series I warrants, the disclo sure on page 32 states that the exercise price is subject to
anti-dilution protection that c ould reduce the exercise price to 100% of the closing price
on September 2, 2009 if the company complete s other financings while the Series I
warrants are outstanding at a price per share less than the exercise price per share of the

William Sliney
VirnetX Holding Company October 26, 2010 Page 2
Series I warrants.  As the settlement appear s to be affected by future equity offerings
undertaken by the company, please tell us how you considered the occurrence of the sale of common stock by the company in determini ng whether the warrants are indexed to the
company’s own stock.  In your response speci fically address your consideration of the
guidance in Example 9 in ASC 815-40-55-33 and 55-34 and how you concluded that the
occurrence of a sale of common stock by the co mpany at market would be considered an
input to the fair value of a fixe d-for-fixed option on equity shares .

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

Notes to the Financial Statements

Note 11 – Litigation, page 10

2. We have read your response to prior co mment number 5 and it is unclear how you
concluded that the Settlement and License  Agreement with Microsoft has only one
deliverable.  In this regard, we note from th e settlement agreement, included as Exhibit
10.1 with the June 30, 2010 Form 10-Q, that pa yment is in full and complete settlement
of all claims asserted against Microsoft as we ll as consideration of the licenses, releases,
waivers and other covenants and rights in the agreement.  Please explain further and specifically address, at a minimum, why you believe that  there is not a separate
measurable and recognizable element related to the litigation sett lement. Consequently,
unless you are able to develop a reasonable ba sis to allocate the proceeds to each element
and support a pattern of recogni tion, recording any part of su ch settlements as revenue
may not be appropriate. Please provide us w ith a revised analysis of your accounting for
the settlement that incor porates these concepts.
 General

3. We are continuing to review your application for confidential treatment and will process
the amendment promptly.  We will provide fu rther comments, if any, upon completion of
such review.

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

      S i n c e r e l y ,
         Kathleen Collins
Accounting Branch Chief