SCOTTS VALLEY -- In a successful bid for expansion funds, Scotts Valley-based Internet technology company VirnetX Holding Corp. raised nearly $12.5 million in a public offering that closed Dec. 31.

The nine-person company led by Kendall Larsen, chief executive officer, president and chairman, is spending about $350,000 per month excluding capital expenditures, but monthly expenses were expected to climb to $800,000 per month by last November due to new hires, office expansion costs and increased research and development costs, according to documents filed with the Securities and Exchange Commission.

"We expect research and development expenses to increase significantly as employees are hired to provide in-house research and development while we continue to use outside contractors for additional product development on a limited basis," the company said in SEC documents.

Larsen was not available for comment.

Proceeds also will be used to fund litigation efforts in a patent infringement suit against Microsoft Corp. in Texas, according to a company statement.

The public offering involved the sale of 3 million shares at $4 each.

VirnetX also celebrated its move last month from the OTC Bulletin Board under the ticker VCXH to the American Stock Exchange under the ticker VHC, a change executives said would increase its visibility in the investor community.

"Being listed on one of the largest and most influential exchanges in the nation is yet another key milestone for VirnetX this year," the statement said. "Our progression from the OTC to the American Stock Exchange is a testament to our continued positive growth."

VirnetX incorporated in California in 1992 and developed and licensed software for Internet and Web-based communication until selling its assets in 2003. In 2005 the company reincorporated in Delaware and last year it merged with PASW Inc., another Internet technology company.