Company: VHC
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001140361-25-018930
Chunk: 48

Company: VirnetX Holding Corp
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 2M
Chunk 48
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 enterprises, may elect to develop their
        own internal solutions. For any of these reasons, we may not be able to compete successfully against our competitors.

      Our products are highly technical and may contain undetected errors, which could cause harm to our reputation and adversely affect our business.

      Our products are highly technical and complex and, when deployed, may contain errors or defects. Despite testing, some errors in our products may only be discovered after a product has been installed
        and used by customers. Any errors or defects discovered in our products after commercial release could result in failure to achieve market acceptance, loss of revenue or delay in revenue recognition, loss of customers and increased service and
        warranty cost, any of which could adversely affect our business, operating results, and financial condition. In addition, we could face claims for product liability, tort, or breach of warranty, including claims relating to changes to our products
        made by our channel partners. The performance of our products could have unforeseen or unknown adverse effects on the networks over which they are delivered as well as on third-party applications and services that utilize our services, which could
        result in legal claims against us, harming our business. Furthermore, we expect to provide implementation, consulting, and other technical services in connection with the implementation and ongoing maintenance of our products, which typically
        involves working with sophisticated software, computing, and communications systems. We expect that our contracts with customers will contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. Defending
        a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, if our business liability insurance coverage proves inadequate or future coverage
        is unavailable on acceptable terms or at all, our business, operating results, and financial condition could be adversely impacted.

      Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks that we cannot control.

      Our business will depend upon, among other things, the capacity, reliability, security, and unimpeded access of the infrastructure owned by third parties that we will use to deploy our offerings. We
        have no control over the operation, quality, or maintenance of a significant portion of that infrastructure or whether those third parties will upgrade or improve their equipment. We depend on these companies to maintain the operational integrity
        of our connections. If one or more of these companies is unable or unwilling to supply or expand their levels