UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 20152016

For the transition period from to

Commission file number: 001-34785

VRINGO, INC.FORM Holdings Corp.

(formerly Vringo, Inc.)

(Exact Name of Registrant as Specified in its Charter)

(212) 309-7549

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx       No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx        No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨       Nox

As of November 9, 2015, 112,720,8382016, 15,804,881 shares of the registrant’s common stock were outstanding.

VRINGO, INC.FORM Holdings Corp.

Table of Contents

Part I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Vringo, Inc.FORM Holdings Corp. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

Impairment of Patents

The Company’s infrastructure patents are primarily made up ofname change and repositioning as a holding company was deemed a triggering event, which required the Company’s patent portfolio purchased from Nokia Corporation (“Nokia”) in 2012. Thisassets to be tested for impairment. In performing this impairment test, the Company determined that the patent portfolio is comprised of 124 patent families with counterparts in certain jurisdictions worldwide and encompass technologies relatingportfolios, which together represent an asset group, were subject to telecom infrastructure, including communication management, data and signal transmission, mobility management, radio resources management and services. Declarations were filed by Nokia indicating that 31impairment testing. In the first step of the 124 patent families acquired may be essential to wireless communications standards. Theimpairment test, the Company also owns other acquired infrastructure patent portfolios and has filed over 60 internally developed patent applications.utilized its projections of future undiscounted cash flows based on its existing plans for the patents. As onea result, it was determined that the Company’s projections of future undiscounted cash flows were less than the means of realizing thecarrying value of the patents on telecom infrastructure,asset group. Accordingly, the Company has filedperformed the second step of the impairment test to measure the potential impairment by calculating the asset group’s fair value as of May 6, 2016. As a numberresult, following amortization for the month of suits against ZTE Corporation (“ZTE”), ASUSTeK Computer Inc. (“ASUS”),April, the Company recorded an impairment charge of $11,937, which resulted in a new carrying value of $1,526 on May 6, 2016. Following the impairment, the Company reevaluated the remaining useful life and certain of their subsidiaries, affiliates and other companiesconcluded that there were no changes in the United States (“U.S.”), European jurisdictions, India, Australia, Brazil, and Malaysia alleging infringement of certain U.S., European, Indian, Australian, Brazilian, and Malaysian patents. In response, ZTE Corporation or its affiliates have filed a number of counterclaims and other responsive cases in various countries such as the U.S., certain European jurisdictions, the People’s Republic of China (“China”) and others.estimated useful life.

Stockholder Rights Plan

To date,

On March 18, 2016, the Company announced that the Company’s Board of Directors adopted a stockholder rights plan in the form of a Section 382 Rights Agreement designed to preserve the Company’s tax assets. As a part of the plan, the Company’s Board of Directors declared a dividend of one preferred-share-purchase right for each share of the Company’s common stock outstanding as of March 29, 2016. Effective on March 18, 2016, if any group or person acquires 4.99% or more of the Company’s outstanding shares of common stock, or if a group or person that already owns 4.99% or more of the Company’s common stock acquires additional shares representing 0.5% or more of the Company’s common stock, then, subject to certain exceptions, there would be a triggering event under the plan. The rights would then separate from the Company’s common stock and would be adjusted to become exercisable to purchase shares of the Company’s common stock having a market value equal to twice the purchase price of $9.50, resulting in significant dilution in the ownership interest of the acquiring person or group. The Company’s Board of Directors has the discretion to exempt any acquisition of the Company’s common stock from the provisions of the plan and has the ability to terminate the plan prior to a triggering event. In connection with the suits filed against ZTE, Vringo’s patents have been found to be infringed in the United Kingdom (“UK”) and Germany, and preliminary relief has been granted in India, Brazil, Romania, and the Netherlands. Separately, Vringo has entered into settlement and license agreements with ADT, Tyco, D-Link, Belkin, Hop On, Inc., and two other parties. Vringo continues to license its home monitoring portfolio.

Quantum Stream

In 2012, the Company purchased a portfolio of patents invented by Tayo Akadiri relating to content distribution. The portfolio includes seven patents as well as several pending patent applications. As one of the means of realizing the value of these patents, on October 20, 2015,this plan, the Company filed suit against DirecTV ina Certificate of Designation of Series C Junior Preferred Stock with the United States District Court for the Southern DistrictSecretary of New York.State of Delaware on March 18, 2016.

fliCharge

Founded in 2014, fliCharge owns a patented, conductive, wire-free charging technology that is already on the market and available to consumers. The patented fliCharge technology consists of a wire-free charging solution that can simultaneously charge multiple battery operated devices on the same charging pad regardless of their power requirement or position on the pad; users simply place their enabled device onto a fliCharge pad.fliCharge is currently commercializing, partnering or developing products in numerous markets including automotive, education, office, healthcare, power tools and vaporizers.

Group Mobile

Founded in 2002, Group Mobile is a supplier of built-to-order rugged computers, mobile devices and accessories. Group Mobile provides a high touch sales experience with full service technical and customer support in the rugged mobile computer market. Group Mobile’s customers include large corporations, military suppliers, small businesses and individuals. Rugged products sold by Group Mobile can be found in military helicopters, police cruisers and ambulance fleets as well as on construction sites, oil rigs and manufacturing facilities. Vringo intends to expand this business through expanding available product lines and further augmenting sales and marketing.

Search PatentsSenior Secured Notes

On September 15, 2011,March 9, 2016, the Company’s wholly-owned subsidiary, I/P Engine, Inc. (“I/P Engine”), initiated litigation against AOL Inc., Google, Inc., IAC Search & Media, Inc., Gannett Company Inc., and Target Corporation (collectively, the “Defendants”) for infringement of claims of certain of its owned patents. Trial commenced during 2012, and, on November 6, 2012, the jury ruled in favor of I/P Engine and against the Defendants. On August 15, 2014, the Court of Appeals for the Federal Circuit (“Federal Circuit”) held that the claims of the patents-in-suit asserted by I/P Engine against the Defendants are invalid for obviousness. The Company sought review by the Supreme Court of the United States (“Supreme Court”holders (the “Investors”) of the Federal Circuit’s opinion, and, on October 5, 2015, the Supreme Court denied Vringo’s petition for a writ of certiorari.

Financial condition

As of September 30, 2015, the Company had a cash balance of $14,402. The Company’s average monthly cash spent in operations for the nine month periods ended September 30, 2015 and 2014 was approximately $1,500 and $2,200, respectively. In addition, the Company holds $1,970 in deposits with courts related to proceedings in Germany, Brazil, Romania, and Malaysia. As of September 30, 2015 and December 31, 2014, the Company’s total stockholders' equity was $16,702 and $31,180, respectively. The decrease in stockholders’ equity since December 31, 2014 is due to the operating loss during the nine month period ended September 30, 2015.

On May 4, 2015 (the “Closing Date”), the Company entered into a securities purchase agreement with certain institutional investors in a registered direct offering of $12,500 of Senior Secured Convertible Notes (the “Notes”) and warrants, which were originally issued by the Company in a registered direct offering on May 4, 2015, entered into an exchange note agreement (the “Exchange Note Agreement”). Pursuant to purchase up to 5,375,000 shares of the Company’s common stock. On the Closing Date,Exchange Note Agreement, the Company issued to the Investors an aggregate of 703,644 shares of its common stock, par value $0.01 per share, in exchange for the reduction of $1,267 of the outstanding aggregate principal amount of the Notes whichand $49 of accrued interest. As a result, the outstanding aggregate principal amount under the Notes was reduced from $3,016 to $1,749 as of March 9, 2016.

In addition, on March 9, 2016, the Company, with the consent of each of the Investors, agreed to amend the Notes. Pursuant to the Amended and Restated Senior Secured Notes (the “Amended Notes”) and the Indenture dated May 4, 2015, as supplemented by a First Supplemental Indenture dated May 4, 2015 and further supplemented by a Second Supplemental Indenture (the “Second Supplemental Indenture”) dated March 9, 2016: (i) the Amended Notes are no longer convertible into shares of the Company’s common stock at $1.00and will be payable by the Company on the Maturity Date (as defined below) in cash only, (ii) the Maturity Date of the Amended Notes will extend to June 30, 2017 (the “Maturity Date”), (iii) the Company will discontinue the payment of principal prior to the Maturity Date (subject to certain exceptions), (iv) the interest rate increased from 8% to 10% per share, bear 8% interestannum and mature in 21 months fromwill accrue on the dateoutstanding aggregate principal amount of issuance, unless earlier converted. the Amended Notes, payable monthly, and (v) the Company will pay to the Investors on the Maturity Date 102% of the outstanding aggregate principal amount of the Amended Notes. The Company also agreed to maintain a cash balance (including cash equivalents) of not less than $2,900.

In addition, the Company issued 5,375,000agreed to reduce the exercise price of the warrants to purchase an aggregate of 537,500 shares of the Company’s common stock which are exercisable at $1.00pursuant to the initial agreement (the “May 2015 Warrants”) from $10.00 to $3.00 per share and are exercisable for a periodthe parties also agreed to remove from the May 2015 Warrants certain anti-dilution features. Other terms of five years. Inthe May 2015 Warrants remained the same. Furthermore, in connection with the issuance of theAmended Notes, and warrants, the Company received net cash proceedspaid a restructuring fee of $12,425. The Company’s obligations under$50 to the outstanding Notes are secured by a first priority perfected security interest in substantially all of the Company’s U.S. assets. In addition, stock of certain subsidiaries ofInvestors.

On July 1, 2016, the Company has been pledged. The outstandingrepaid in full its Amended Notes contain customary events of default, as well as covenants which include restrictionsthat were due on the assumption of new debtJune 30, 2017. As required by the Company.

The principal amount of the outstanding Notes is being repaid monthly, and the Company may make such payments and related interest payments in cash or, subject to certain conditions, in registered shares of the Company’s common stock, at its election. If the Company chooses to repay the Notes in shares of its common stock, the shares are issued at a 15% discount, based on the then-current market price data of the Company’s common stock. The Company may also repay the Notes in advance of the maturity schedule subject to early repayment penalties.

During August 2015, the holders of the Notes accelerated six principal installments in exchange for common stock as permitted under the securities purchase agreement. The debt is now expected to mature in July 2016.

The Company’s operating plans include efforts to increase revenue through the licensing of its intellectual property, strategic partnerships, and litigation, when required, which may be resolved through a settlement or collection, and generation of revenue from sales of wire-free charging stations, rugged computers and mobile devices. Disputes regarding the assertion of patents and other intellectual property rights are highly complex and technical. The majority of the Company’s expenditures consist of costs related to the Company’s litigation campaigns. In the cases against ZTE and ASUS, the Company incurred costs during the nine month period ended September 30, 2015 related to the preparation and filing of briefs and other court documents, as well as case preparation and management. A large percentage of these costs were incurred in the UK and the U.S. In civil law jurisdictions, such as Germany, France, Spain, and others, the majority of costs are incurred in the early stages of litigation. With respect to the Company’s litigation in such countries, the respective campaigns are currently in the later stages and therefore the Company has already incurred the large majority of the related anticipated costs. As such, based on the Company’s plans, costs in these jurisdictions are projected to be lower in the remainder of 2015 and other future periods.

Despite the Company’s plans, its legal proceedings may continue for several years and may require significant expenditures for legal fees and other expenses. Further, should the Company be deemed the losing party in certain of its litigations, it may be liable for some or all of its opponents’ legal fees. In addition, in connection with litigation, the Company has made several affirmative financial guarantees to courts around the world, and might face the need to make additional guarantees in the future.

In addition, the Company’s plans to continue to expand its planned operations through acquisitions may be time consuming, complex and costly to consummate. The Company may utilize many different transaction structures in its acquisitions and the terms of such acquisition agreements tendthe Amended Notes, notice of repayment was delivered to be heavily negotiated. The Company’s future ability to raise capital, if necessary, may be limited. Even if the Company is able to acquire other businesses, there is no guarantee that it will generate sufficient revenue related to those assets to offset the acquisition costs. Therefore, no assurance can be given at this time as to whether the Company will be able to achieve its objectives or whether it will have the sources of liquidity for follow through with its operating plans.

In addition, until the Company generates sufficient revenue, the Company may need to raise additional funds, which may be achieved through the issuance of additional equity or debt, or through loans from financial institutions. There can be no assurance, however, that any such opportunities will materialize.Investors on June 30, 2016. The Company may also be able to raise additional funds throughrepaid the exerciseAmended Notes in full, including a 15% fee for early repayment. The Company used an aggregate of its outstanding warrants and options, however, substantially all$2,011 of such outstanding equity instruments are currently “outcash on hand for repayment of the money.”

Amended Notes. As a result of the events and circumstances described above, includingrepayment in full of the cash proceeds received in connection with the May 2015 financing transaction andAmended Notes, all liens on the Company’s operating plans, which include payingassets, including intellectual property, were released by the principal and interest relatedInvestors.

Reverse Stock Split

Unless otherwise noted, the information contained in these condensed consolidated financial statements gives effect to the Notes in sharesa one-for-ten reverse stock split of the Company’sour common stock the Company believes that it currently has sufficient cash to continue its current operationseffected on November 27, 2015 (the “Reverse Stock Split”) on a retroactive basis for at least the next twelve months.all periods presented.

Note 2. Accounting and Reporting Policies

(a) Basis of presentation and principles of consolidation

The accompanying interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and the instructions to Rule 10-01 of Regulation S-X, and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2014.2015. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected by the Company.Company as required by Regulation S-X, Rule 10-01. Such adjustments are of a normal, recurring nature. The results of operations for the three month and nine month periodsnine-month period ended September 30, 20152016 are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. All significant intercompany balances and transactions have been eliminated in consolidation.

(b) Use of estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from such estimates. Significant items subject to such estimates and assumptions include the Company’s intangiblesvaluation of intangible assets, the useful lives of the Company’s intangible assets, the valuation of the Company’s derivative warrants, the valuation of stock-based compensation, deferred tax assets and liabilities, income tax uncertainties, and other contingencies.

(c) Translation into U.S. dollarsAccounting guidance adopted in 2016

TheASU No. 2015-03, Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

During the nine-month period ended September 30, 2016, the Company conducts certain transactionsadopted guidance on a retrospective basis that requires debt issuance costs related to a recognized debt liability to be presented in foreign currencies, which are recorded at the exchange ratecondensed consolidated balance sheets as a deduction from the carrying amount of such debt. As a result of this adoption, the Company reclassified $73 of debt issuance costs as of December 31, 2015 from other current assets to senior secured notes.

ASU No. 2014-15, Presentation of Financial Statements (Topic 205): Going Concern

During the transaction date. All exchange gainsnine-month period ended September 30, 2016, the Company adopted the standard that provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and losses occurring fromto provide related footnote disclosures. The adoption of this guidance did not have a material effect on the remeasurement of monetary balance sheet items denominatedCompany’s condensed consolidated financial statements.

ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in non-U.S. dollar currencies are reflected as non-operating income or expensea Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity

During the nine-month period ended September 30, 2016, the Company adopted the standard that clarifies how current U.S. GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated statements of operations.financial statements.

(d) Cash and cash equivalentsReclassification

TheOn November 27, 2015, the Company invests its cash in money market funds with financial institutions. The Company has established guidelines relating to diversificationimplemented the Reverse Stock Split, which became effective at the opening of trading on the NASDAQ on that date. As of November 27, 2015, every 10 shares of the Company’s issued and maturitiesoutstanding common stock were combined into one share of its investmentscommon stock, except to the extent that the Reverse Stock Split resulted in orderany of the Company’s stockholders owning a fractional share, which was rounded up to minimize credit riskthe next highest whole share. In connection with the Reverse Stock Split, there was no change in the nominal par value per share of $0.01 and maintain high liquiditythe Company’s authorized shares.

Certain balances have been reclassified to conform to presentation requirements, including to retroactively present the effect of funds.the Reverse Stock Split. All highly liquid investments with original maturitiesreferences to the number of three months or less at acquisition date are considered cash equivalents.shares of common stock, price per share and weighted average shares of common stock have been adjusted to reflect the Reverse Stock Split on a retroactive basis for all periods presented, unless otherwise noted.

As a result of the adoption by the Company ofASU No. 2015-03on a retrospective basis, during the nine-month period ended September 30, 2016, the Company reclassified $73 of debt issuance costs as of December 31, 2015 from other current assets to senior secured notes.

(e) Derivative instruments

The Company recognizes all derivative instruments as either assets or liabilities in the consolidated balance sheets at their respective fair values. The Company's derivative instruments have been recorded as liabilities at fair value, and are revalued at each reporting date, with changes in the fair value of the instruments included in the consolidated statements of operations as non-operating income (expense). The Company reviews the terms of features embedded in non-derivative instruments to determine if such features require bifurcation and separate accounting as derivative financial instruments. Equity-linked derivative instruments are evaluated in accordance with FASB Accounting Standard Codification 815-40, Contracts in an Entity’s Own Equity to determine if such instruments are indexed to the Company’s own stock and qualify for classification in equity.

(f) Intangible assets

Intangible assets include purchased patents, which are recorded based on the cost to acquire them. Thesethem, as well as trade names, customer relationships and technology, which were acquired as part of the acquisition of International Development Group Limited (“IDG”) in the fourth quarter of 2015 and are recorded based on the estimated fair value in purchase price allocation. The intangible assets are amortized over their remaining estimated useful lives, which are periodically evaluated for reasonableness.

The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of the Company'sCompany’s intangible assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, the Company may be required to record impairment charges related to its intangible assets.

(g) Revenue recognition(f) Deferred revenue

RevenueDeferred revenue includes (i) payments received from patent licensingcustomers in advance of providing the product and enforcement is recognized(ii) amounts deferred if collectability is reasonably assured, persuasive evidenceother conditions of an arrangement exists, the sales price is fixed or determinable and delivery of the service hasrevenue recognition have not been rendered.met. The Company uses management's best estimateaccounts for funds raised from crowdfunding campaigns and pre-sales as deferred revenue.

Note 3. Net Loss per Share of selling priceCommon Stock

Basic net loss per share is computed by dividing the net loss for individual elementsthe period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period. However, as the Company generated net loss in multiple-element arrangements, where vendor specific evidence or third party evidenceall periods presented, some potentially dilutive securities, including certain warrants and stock options, were not reflected in diluted net loss per share because the impact of selling price is not available.such instruments was anti-dilutive.

The table below presents the computation of basic and diluted net loss per share of common stock:

Currently,Note 4. Business Combination

On October 15, 2015, the Company’s revenue arrangements provide forCompany acquired IDG. Pursuant to the paymentPurchase Agreement, the Company acquired 100% of contractually determined feesthe capital stock of IDG. Group Mobile and other70% of FLI Charge were also acquired through the purchase of IDG. Group Mobile is a company with full-service customer support in rugged computers, mobile devices and accessories. FLI Charge owns patented conductive wireless charging technology and is focused on innovation, sales, manufacturing and licensing its technology in various industries, such as automotive, furniture and others.

As consideration for the grantacquisition, the Company issued an equivalent of certain intellectual property rights related1,666,667 common stock (after giving effect to the Company’s patents. These rights typically include some combinationReverse Stock Split), which were issued as follows: (i) 1,604,167 shares of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patents, (ii) the releaseCompany’s newly designated Series B Convertible Preferred Stock (“Series B Preferred”), convertible into 1,604,167 shares of the licensee from certain claims,Company’s common stock, (ii) 57,500 shares of the Company’s unregistered common stock issued to one of the sellers, who is a former chief executive officer and director of IDG, in consideration of his forgiveness of debt and (iii) the dismissal of any pending litigation. The intellectual property rights granted typically extend until the expiration5,000 shares of the Company’s common stock for transaction related patents. Pursuantservices. A total of 240,625 Series B Preferred shares were placed in escrow to secure certain of the sellers’ indemnity obligations under the Purchase Agreement for a period of up to 12 months. On November 27, 2015, all Series B Preferred outstanding shares were converted into unregistered common stock of the Company, resulting in the issuance of 1,604,167 shares of common stock. Shares held in escrow were released to the termssellers in April and November 2016.

Purchase consideration value was determined based on the market value of these agreements, the CompanyCompany’s common stock at the date of the transactions, discounted for the fact that the shares are restricted as to their marketability for a period of six months from the issuance date.

The transaction has no further obligation with respectbeen accounted for as a business combination. Assets acquired and liabilities assumed were recorded at their fair values at the closing date. The purchase price consideration was as follows:

The purchase price for the acquisition was allocated to the grantnet tangible and intangible assets based on their fair values as of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on the Company’s part to maintain or upgrade the related technology, or provide future support or services. Generally, the agreements provide for the grantclosing date. The excess of the licenses, covenants-not-to-sue, releases,purchase price over the net tangible assets and other significant deliverables upon executionintangible assets was recorded as goodwill. The purchase price allocation was as follows:

The allocation of the agreement, orpurchase price was based upon receipta valuation and the Company's estimates and assumptions, which are subject to change within the measurement period (up to one year from the acquisition dates). The principal area of potential purchase price adjustments relate to the upfront payment. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, upon receipt of the upfront fee, and when all other revenue recognition criteria have been met.shares placed in escrow.

(h) Operating legal costs

Operating legal costs mainly include expenses incurred inIn connection with the Company’s patent licensing and enforcement activities, patent-related legal expenses paid to external patent counsel (including contingent legal fees), licensing and enforcement related research, consulting and other expenses paid to third parties, as well as related internal payroll expenses and stock-based compensation. In addition, amounts received byacquisition, the Company also entered into a Consulting Agreement with IDG’s former chief executive officer and director for reimbursementsa term of legal fees in connection with its litigation campaigns aresix months and payment of $9 per month. The Company also issued to a finder a warrant to purchase up to an aggregate of 50,000 shares of common stock of the Company, at an exercise price of $5.00 per share, expiring on April 15, 2021. The fair value of the warrant was $114 and was recorded in Operating legal costs as an offset to legal expense.

(i) Stock-based compensation

Stock-based compensation is recognized as an expense in general and administrative expenses.

On December 28, 2015, the consolidated statementsCompany acquired the remaining 30% interest in FLI Charge from third parties. In conjunction with the transaction, the Company issued 110,000 shares of operations and such cost is measured at the grant-dateits unregistered common stock for total consideration of $262. The fair value of the equity-settled award. The fairconsideration for financial reporting purposes was determined based on the market value of stock options is estimatedthe shares at the date of grant using the Black-Scholes-Merton option-pricing model. The expense is recognized on a straight-line basis, over the requisite service period. The Company uses the simplified method to estimate the expected term of optionstransaction, discounted due to insufficient history and high turnover in the past. Since the Company lacks sufficient history, expected volatility is estimated based on a weighted average historical volatilityrestricted nature of the Companyshares and comparable entities with publicly traded shares.the effect this has on their marketability. The risk-free rate forissuance of these shares has no impact on the expected termallocation of the option is based on the U.S. Treasury yield curve at the date of grant.

purchase consideration pursuant to(j) Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)ASC 810, which impacts virtually all aspects of and was recorded as an entity's revenue recognition. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance was amended in July 2015 and is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.equity transaction.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Topic 205): Going Concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.

In November 2014, the FASB issued ASU 2014-16,Derivatives and Hedging: Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity. The new standard clarifies how current U.S. GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03,Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the corresponding debt liability, consistent with debt discounts. The new standard does not change the amortization of debt issuance costs, which are reported as interest expense in the consolidated statements of operations. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact of the adoption on its consolidated financial statements.

(k) Reclassification

Certain balances have been reclassified to conform to presentation requirements.

Note 3.5. Intangible Assets

The following table provides information regarding the Company’s intangible assets, which consist of its patents:the following:

The Company’s patentsCompany recorded customer relationships, trade name and technology as part of the acquisition of Group Mobile and FLI Charge completed on October 15, 2015. Additionally, during 2016, the Company has capitalized costs for software related to the build-out of Group Mobile’s new website. Amortization has not been recorded for the software as it has not yet been placed into service. The patent assets consist of threeseveral major patent portfolios, which were acquired from third parties, as well as a number of internally developedinternally-developed patents. The costs related to internally developedinternally-developed patents are expensed as incurred.

In August 2012, the Company purchased a portfolio from Nokia consisting of various patents and patent applications as described in Note 1. The total consideration paid for the portfolio was $22,000 and the Company capitalized certain costs related to the acquisition of patents in the total amount of $548. Under the terms of the purchase agreement, to the extent that the gross revenue generated by such portfolio exceeds $22,000, the Company is obligated to pay a royalty of 35% of such excess. The Company has not recorded any amounts in respect of this contingent consideration, as both the amounts of future potential revenue, if any, and the timing of such revenue cannot be reasonably estimated.

The Company’s patentsintangible assets are amortized over their expected useful lives (i.e., through the expiration date of the patent).lives. During the three and nine monththree-month periods ended September 30, 2016 and 2015, the Company recorded amortization expense of $203 and $819, and $2,436, respectively, related to its patents.respectively. During the three and nine monthnine-month periods ended September 30, 2014,2016 and 2015, the Company recorded amortization expense of $978$1,467 and $2,903, respectively, related to its patents.$2,436, respectively.

During the third quarter of 2014,nine-month period ended September 30, 2016, the Company determined that there were impairment indicators related to certain of its patents. A significant factor that was considered when making this determination included the announcementoccurred on May 6, 2016, when “Vringo, Inc.” changed its name to “FORM Holdings Corp.” and concurrently announced its repositioning as a holding company of the Federal Circuit’s decision on August 15, 2014.small and middle market growth companies. The Company concluded that this factor was deemed a “triggering” event, requiring thatwhich required the related patent assets to be tested for impairment during the third quarter of 2014.impairment. In performing this impairment test, the Company determined that the patent portfolio containing the patents-in-suit in I/P Engine's litigation against AOL Inc., Google Inc. et al.,portfolios, which representstogether represent an asset group, waswere subject to impairment testing. In the first step of the impairment test, the Company utilized its projections of future undiscounted cash flows based on the Company’s existing plans for the patents. As a result, it was determined that the Company’s projections of future undiscounted cash flows were less than the carrying value of the asset group. Accordingly, the Company performed the second step of the impairment test to measure the potential impairment by calculating the asset group’s fair value. This resulted invalue as of May 6, 2016.

As a result, following amortization for the month of April, the Company recorded an impairment charge of $1,355 during the third quarter$11,937, or 88.7% of 2014, related to the asset group, which represents the difference between the fair value and the carrying value of the asset group.patents prior to impairment. This resulted in a new carrying value of $1,526 on May 6, 2016. The impairment charge is included in amortization and impairment of intangible assets in the condensed consolidated statements of operations. Following the impairment, the Company reevaluated the remaining useful life and concluded that there were no changes in the estimated useful life. There were no impairment chargesindicators related to any of the Company’s patentsother amortizable intangible assets during the nine monthnine-month period ended September 30, 2016.

The following table provides information regarding the Company’s goodwill, which relates to the purchase of IDG completed on October 15, 2015. There were no indicators of impairment of goodwill as of September 30, 2016.

Note 4. Net Loss per Common Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period. However, as the Company generated net losses in all periods presented, some potentially dilutive securities that relate to the continuing operations, including certain warrants and stock options, were not reflected in diluted net loss per share because the impact of such instruments was anti-dilutive.

The table below presents the computation of basic and diluted net losses per common share:

Note 6. General and administrative expenses

Note 5. Discontinued Operations

On February 18, 2014,The Company’s general and administrative expenses grew significantly for both the Company executedthree-month and nine-month periods ended September 30, 2016 as compared to the sale of its mobile social application businessthree-month and nine-month periods ended September 30, 2015. The increases were primarily due to InfoMedia. As consideration for the assetstwo key factors: 1) merger and agreementsacquisition costs related to the Company’s mobile social application business, the Company received 18 Class B shares of InfoMedia, which represent an 8.25% ownership interest in InfoMedia. Additionally, the Company’s Chief Executive Officer was appointed as a full voting member on InfoMedia’s board of directorsMerger with XpresSpa and the Company received a number of customary protective rights. The InfoMedia Class B shares are accounted for as a cost-method investment at the carrying amount of $7872) general and are included in Other assets in the consolidated balance sheets as of September 30, 2015administrative costs associated with Group Mobile and December 31, 2014.FLI Charge. During the nine month periodthree-month and nine-month periods ended September 30, 2015, there were no events or changes in circumstances that would indicate that the carrying amount of this investment may no longer be recoverable.

In connection with the sale of its mobile social application business,2016, the Company is requiredincurred $952 and $1,008 of merger and acquisition costs, respectively, associated with legal, diligence, valuation, and other costs pertaining to present the resultsMerger with XpresSpa. Following the acquisition of Group Mobile and FLI Charge during the fourth quarter of 2015, the Company experienced an increase in salaries and benefits due to the expanded workforce of the Company’s mobile social application businessadditional operating segments and incurred advertising and marketing costs for Group Mobile and FLI Charge’s product lines and product development costs as discontinued operationsFLI Charge continued to develop and improve its product line. These increases in general and administrative expenses were offset by significant decreases in the consolidated statementsstock-based compensation expense, which resulted from equity awards granted in 2012 and 2013 becoming fully vested during the latter half of operations. The following table represents the components of operating results from discontinued operations for the nine month period ended September 30, 2014, as presented in the consolidated statements of operations:

Note 6. Senior Secured Convertible Notes

On May 4, 2015, (the “Closing Date”), the Company entered into a securities purchase agreement with certain institutional investors in a registered direct offering of $12,500 of Senior Secured Convertible Notes (the “Notes”) and warrants to purchase 5,375,000 shares of the Company’s common stock. On the Closing Date, the Company issued the Notes, which are convertible into shares of the Company’s common stock at $1.00 per share, bear 8% interest and mature in 21 months from the date of issuance, unless earlier converted. In addition, the Company issued 5,375,000 warrants to purchase shares of the Company’s common stock, which are exercisable at $1.00 per share and are exercisable for a period of five years, beginning on November 5, 2015. In connection with the issuance of the Notes and warrants, the Company received net cash proceeds of $12,425. The Company also incurred third party costs directly associated with the issuance of Notes of $218, which are capitalized as debt issuance costs and included in Other assets, and are amortized over the term of the Note. The Company’s obligations under the outstanding Notes are secured by a first priority perfected security interest in substantially all of the Company’s U.S. assets. In addition, stock of certain subsidiaries of the Company has been pledged. The outstanding Notes contain customary events of default, as well as covenants which include restrictions on the assumption of new debt by the Company. As of September 30, 2015, all covenants were metinsurance, accounting, and there were no events of default.audit fees.

The principal amount of the outstanding Notes is being repaid monthly, and the Company may make such payments and related interest payments in cash or, subject to certain conditions, in registered shares of the Company’s common stock, at its election. On each of the principal installment dates, the Company’s scheduled principal amortization payment is an amount equal to $595. If the Company chooses to repay the Notes in shares of its common stock, the shares are issued at a 15% discount, based on the then-current market price data of the Company’s common stock. The Company may also repay the Notes in advance of the maturity schedule subject to early repayment penalties. The holders of the Notes may accelerate up to six principal installment payments on each of the principal installment dates. The Company may choose to settle such amounts in cash or shares issued at a 15% discount, based on the then-current market price data of the Company’s common stock. Further, the Notes contain provisions that under certain events of default, as defined in the agreement, the amount owed could increase by amounts ranging from 115% to 120% of the face value depending on when the event occurred, and additionally, the interest rates would increase to 16.5% per annum upon the occurrence and continuance of an event of default. In addition, the Company may choose to repay the Notes early at a premium ranging from 115% to 120% of the face value depending on when the election is made.

The 8% interest is paid quarterly, beginning July 1, 2015,following table shows the breakout of key categories of general and the Company may make such payments in cash or registered shares of the Company’s common stock, at its election. If the Company chooses to repay the Notes in shares of its common stock, the shares for the payment of interest are issued at the then-current market price of the Company’s common stock.

Upon issuance of the Notes on May 4, 2015, the Company recorded the following as of June 30, 2015 and September 30, 2015:

The debt discount is attributable to the value of the separately accounted for conversion feature and May 2015 Warrants issued in connection with the financing. The embedded conversion feature derivatives relate to the conversion option, redemption in case of an event of default, and redemption in the case of a change in control features of the Notes. The embedded derivatives were evaluated under ASC topic 815-15, were bifurcated from the debt host, and were classified as liabilities in the consolidated balance sheet. The debt discount is amortized using the effective interest method over the term of the Notes. For the three and nine months ended September 30, 2015, the Company recorded $1,436 and $1,725, respectively, of debt discount amortization included in interest expense on the consolidated statements of operations. In addition,administrative expenses for the three and nine months ended September 30, 2015, the Company recorded $93 and $114, respectively, of amortization of debt issuance costs included in interest expense and recorded an interest accrual of $179 included in Accounts payable and accrued expenses2016 as of September 30, 2015.

During August 2015, the holders of the Notes accelerated six principal installments in exchange for common stock as permitted under the securities purchase agreement. The debt is now expectedcompared to mature in July 2016.

During the three and nine months ended September 30, 2015,2015.

Note 7. Segment Information

The Company currently has three operating segments, Group Mobile, FLI Charge and intellectual property, which accumulate revenue and expenses. Additionally, the Company allocates certain expenses to its non-operating corporate segment. The corporate segment represents general and administrative expenses as well as net non-operating income (expense) that are not specific to any of FORM’s operating segments, but represent expenses incurred on behalf of the parent company, a holding company.

The corporate segment’s assets are mainly comprised of cash and cash equivalents.

Note 8. Senior Secured Notes

As of December 31, 2015, total outstanding principal was $4,206. Between January 1, 2016 and March 9, 2016, the Company made two principal payments in the aggregate amount of $5,912 and $7,103, respectively.$1,190. The Company elected to make these principal payments in shares of the Company’s common stock, which are issued at a 15% discount to the market price.price data. As such, the Company issued 14.6 million shares and 16.9 million1,032,332 shares in lieu of principal payments for the three and nine months ended September 30, 2015, and recorded $1,044 and $1,254$210 as extinguishment of debt expense onin the condensed consolidated statements of operationsoperations.

On March 9, 2016, the Company and the Investors entered into the Exchange Note Agreement. Pursuant to the Exchange Note Agreement, the Company issued to the Investors an aggregate of 703,644 shares of its common stock in exchange for the threereduction of $1,267 of the outstanding aggregate principal amount of the Notes and nine months ended September 30, 2015, respectively.$49 of accrued interest. As a result, the outstanding aggregate principal amount under the Notes was reduced from $3,016 to $1,749 as of March 9, 2016.

See Note 7In addition, on March 9, 2016, the Company, with the consent of each of the Investors, agreed to amend the Notes. Pursuant to the Amended Notes and 8 forthe Indenture dated May 4, 2015, as supplemented by a First Supplemental Indenture dated May 4, 2015 and further detailsupplemented by the Second Supplemental Indenture dated March 9, 2016: (i) the Amended Notes are no longer convertible into shares of the Company’s common stock and will be payable by the Company on the fair valueMaturity Date in cash only, (ii) the Maturity Date of the Amended Notes will extend to June 30, 2017, (iii) the Company will discontinue the payment of principal prior to the Maturity Date (subject to certain exceptions), (iv) the interest rate increased from 8% to 10% per annum and will accrue on the outstanding aggregate principal amount of the Amended Notes, payable monthly, and (v) the Company will pay to the Investors on the Maturity Date 102% of the outstanding aggregate principal amount of the Amended Notes. The Company also agreed to maintain a cash balance (including cash equivalents) of not less than $2,900.

In addition, the Company agreed to reduce the exercise price of the May 2015 Warrants from $10.00 to $3.00 per share and conversion feature.the parties also agreed to remove from the May 2015 Warrants certain anti-dilution features. Other terms of the May 2015 Warrants remained the same. Furthermore, in connection with the Amended Notes, the Company paid a restructuring fee of $50 to the Investors.

On July 1, 2016, the Company repaid in full its Amended Notes that were due on June 30, 2017. As required by the terms of the Amended Notes, notice of repayment was delivered to the Investors on June 30, 2016. The Company repaid the Amended Notes in full, including a 15% fee for early repayment. The Company used an aggregate of $2,011 of cash on hand for repayment of the Amended Notes. As a result of the repayment in full of the Amended Notes, all liens on the Company’s assets, including its intellectual property, were released by the Investors.

The table below summarizes changes in the book value of the Notes from December 31, 2015 to September 30, 2016:

Note 7.9. Fair Value Measurements

The Company measures fair value in accordance with FASB Accounting Standard Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures. FASB ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received by selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, FASB ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following table presents the placement in the fair value hierarchy of liabilities measured at fair value on a recurring basis as of September 30, 20152016 and December 31, 2014:2015:

The Company measures its derivative liabilities at fair value. The Conversion Warrants, the derivative Reload Warrants and the derivative Series 1 Warrants were classified within Level 3 because they were valued using the Black-Scholes-Merton and the Monte-Carlo models, as these warrants included down-round protection clauses, which utilize significant inputs that are unobservable in the market. On January 1, 2015, the down-round protection clauses associated with all of the Company’s outstanding derivative warrants expired and, as a result, these warrants no longer meet the criteria for liability classification. As such, the related liabilities were revalued as of January 1, 2015 and the balance of $175, which was comprised of long-term derivative liability warrants of $174 and short-term derivative liability warrants of $1, was reclassified to equity.

The May 2015 Warrants were classified within Level 3 because they were valued using the Black-Sholes-MertonBlack-Scholes-Merton model, which utilizes significant inputs that are unobservable in the market. They are recorded as derivative liability warrantswarrant liabilities as they are freestanding instruments and there are several features within the warrants that may require the Company to cash settle or partially cash settle. In particular, the Company may have to cash settle, partially cash settle, or make cash payments to the holdersInvestors including cash settlement upon exercise when insufficient shares are authorized to be issued, and that the Company is obligated to issue registered shares when the warrants are exercised. The derivative liability iswarrant liabilities are initially measured at fair value and marked to market at each balance sheet date.

The conversion feature was classified within Level 3 because it was valued using the Monte-Carlo model, which utilizes significant inputs that are unobservable in the market. The embedded conversion feature derivatives relate to the conversion option, redemption in case of an event of default, and redemption in the case of a change in control features of the Notes. The conversion feature was separated from the host debt contract and accounted for as a derivative instrument because the feature is not clearly and closely related to the debt host and a separate instrument with the same terms as the embedded derivative would be a derivative instrument.

In addition to the above, the Company’s financial instruments as of September 30, 20152016 and December 31, 20142015 consisted of cash, cash equivalents, receivables, accounts payable, deposits and deposits.Notes. The carrying amounts of all the aforementioned financial instruments approximate fair value because of the short-term maturities of these instruments.

The following table summarizes the changes in the Company’s liabilities measured at fair value using significant unobservable inputs (Level 3) during the nine monthnine-month period ended September 30, 2015:2016:

During August 2015, the holders of the Notes accelerated six principal installments in exchange for common stock as permitted under the securities purchase agreement. The debt is now expected to mature in July 2016. These events resulted in a significant decline in the value of the conversion feature between May 4, 2015 and September 30, 2015, which resulted in a concurrent gain on the revaluation of the conversion feature.

Valuation processes for Level 3 Fair Value Measurements

Fair value measurement of the derivative warrant liabilities falls within Level 3 of the fair value hierarchy. The fair value measurements are evaluated by management to ensure that changes are consistent with expectations of management based upon the sensitivity and nature of the inputs.