Company: VHC
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001140361-25-042294
Chunk: 111

Company: VirnetX Holding Corp
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 4C
Chunk 111
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 unpredictable sales cycles, which may impact our operating results.

The sales cycle between initial customer contact and the execution of a contract or license agreement with a customer or purchaser of our products can vary widely. We expect that our sales cycles will
        be long and unpredictable due to several factors, including but not limited to:

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              The need to educate potential customers about our product and service capabilities;

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              Our customers’ budgetary constraints and timing of their budget cycles;

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              Delays caused by time-consuming internal review processes customary with potential customers including large government agencies and institutions in the space and defense industries; and

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              Long sales cycles may increase the risk that our financial resources are exhausted before we are able to generate significant revenue. In addition, potential customers of our products include local, state, federal
                and foreign government agencies, as well as institutions in the space and defense industries. Sales processes to government authorities can be extensive and unpredictable. Government authorities generally have complex budgeting, purchasing,
                and regulatory processes that govern their capital spending, and their spending is likely to be adversely impacted by economic conditions. In addition, in many instances, sales to government authorities may require field trials and may be
                delayed by the time it takes for government officials to evaluate multiple competing bids, negotiate terms, and award contracts.

For these reasons, the sales cycle associated with our products is subject to a number of significant risks that are beyond our control. Consequently, if customer orders are delayed or not realized,
        our revenues and results of operations could be materially and adversely affected.

        We plan to offer our products to government entities, which are subject to a number of challenges and risks.

        Government entities have announced reductions in, or experienced increased pressure to reduce, government spending. Continued U.S. debt, income tax and budget issues, government shutdowns and delays
          in approving U.S. spending or reductions in such may adversely impact existing or future U.S. public sector transactions and affect future sales of our products and services to such entities. Additionally, any future government demand and payment
          for our products may be more volatile as they are affected by public sector budgetary cycles, funding authorizations, and the potential for funding reductions or delays, making the time to close such transactions more difficult to predict.

        In addition, sales to government entities are subject to a number of risks. Government entities may continue use of legacy products and services indefinitely and be slow to transition to