UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2016~~2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34785

FORM Holdings Corp.

~~(formerly Vringo, Inc.)~~

(Exact Name of Registrant as Specified in its Charter)

Delaware		20-4988129
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

780 Third Avenue, 12th Floor, New York, NY		10017
(Address of principal executive offices)		(Zip Code)

~~(212) 309-7549~~

(Registrant’s Telephone Number, Including Area Code):(212) 309-7549

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, par value $0.01 per share		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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):

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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 August ~~15, 2016, 15,762,072~~7, 2017, 26,483,467 shares of the registrant’s common stock were ~~outstanding, including 750,574 shares sold in private placement completed on August 8, 2016, but not yet allocated to investors.~~outstanding.

FORM Holdings Corp.

Table of Contents

		Page

PART I. FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2419
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3426
Item 4.	Controls and Procedures	3426

PART II. OTHER INFORMATION		3526

Item 1.	Legal Proceedings	3526
Item 1A.	Risk Factors	3526
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3728
Item 3.	Defaults Upon Senior Securities	3728
Item 4.	Mine Safety Disclosures	3728
Item 5.	Other Information	3728
Item 6.	Exhibits	3829

Part I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

FORM Holdings Corp. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

June 30,
2016
(Unaudited) December 31,
2015
(see Note 2)
Current assets
Cash and cash equivalents $ 27,449 $ 24,951
Deposits with courts — 1,930
Accounts receivable, net 530 246
Inventory 260 379
Other current assets 134 698
Total current assets 28,373 28,204

Intangible assets, net 3,426 16,476
Goodwill 4,863 4,863
Other assets 1,085 916
Total assets $ 37,747 $ 50,459

Current liabilities
Accounts payable, accrued expenses and other current liabilities $ 6,327 $ 5,855
Deferred revenue 439 175
Senior secured notes 800 3,111
Total current liabilities 7,566 9,141

Long-term liabilities
Derivative warrant liabilities 329 416
Other liabilities 140 386
Total liabilities 8,035 9,943
Commitments and contingencies (see Note 12)

Stockholders’ equity
Series A Convertible Preferred stock, $0.01 par value per share; 500,000 shares authorized; 6,968 issued and none outstanding — —
Series B Convertible Preferred stock, $0.01 par value per share, 5,000,000 shares authorized; 1,666,667 shares issued and none outstanding — —
Series C Junior Preferred stock, $0.01 par value per share; 300,000 shares authorized; none issued and outstanding — —
Common stock, $0.01 par value per share 150,000,000 shares authorized; 15,011,498 and 13,220,050 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively 150 132
Additional paid-in capital 241,186 237,246
Accumulated deficit (211,624 ) (196,862 )
Total stockholders’ equity 29,712 40,516
Total liabilities and stockholders’ equity $ 37,747 $ 50,459
June 30,
2017
(Unaudited) December 31,
2016
Current assets
Cash and cash equivalents $ 7,958 $ 17,910
Accounts receivable, net 2,216 404
Inventory 4,327 2,890
Other current assets 935 2,150
Assets held for disposal 467 1,507
Total current assets 15,903 24,861

Restricted cash 476 638
Property and equipment, net 14,377 16,284
Intangible assets, net 14,475 15,233
Goodwill 25,821 24,409
Other assets 1,330 1,382
Total assets $ 72,382 $ 82,807

Current liabilities
Accounts payable, accrued expenses and other current liabilities $ 11,437 $ 11,434
Deferred revenue 201 133
Liabilities held for disposal 97 206
Total current liabilities 11,735 11,773

Long-term liabilities
Debt 6,500 6,500
Derivative warrant liabilities 100 259
Other liabilities 794 106
Total liabilities 19,129 18,638
Commitments and contingencies (see Note 11)

Equity
Series A Convertible Preferred stock, $0.01 par value per share; 500,000 shares authorized; 6,968 issued and none outstanding — —
Series B Convertible Preferred stock, $0.01 par value per share; 5,000,000 shares authorized; 1,666,667 issued and none outstanding — —
Series C Junior Preferred stock, $0.01 par value per share; 300,000 shares authorized; none issued and outstanding — —
Series D Convertible Preferred Stock, $0.01 par value per share; 500,000 shares authorized; 475,208 issued and 429,948 outstanding with a liquidation value of $20,638 as of June 30, 2017; 491,427 issued and outstanding with a liquidation value of $23,588 as of December 31, 2016
4 5
Common stock, $0.01 par value per share; 150,000,000 shares authorized; 19,565,531 and 18,304,881 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively 196 183
Additional paid-in capital 282,603 280,221
Accumulated deficit (234,303 ) (220,868 )
Accumulated other comprehensive loss (164 ) (13 )
Total equity attributable to the Company 48,336 59,528
Noncontrolling interests 4,917 4,641
Total equity 53,253 64,169
Total liabilities and equity $ 72,382 $ 82,807

The accompanying notes form an integral part of these condensed consolidated financial statements.

3

FORM Holdings Corp. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)

Three months ended June 30, Six months ended June 30,
2016 2015 2016 2015
Revenue
Licensing revenue $ 8,912 $ — $ 9,675 $ 150
Product revenue 2,450 — 3,731 —
Total revenue 11,362 — 13,406 150

Costs and expenses*
Cost of goods sold 2,179 — 3,306 —
Operating legal costs 4,243 5,464 4,963 8,565
Amortization and impairment of intangible assets 12,350 813 13,201 1,617
General and administrative 3,305 2,298 6,257 5,296
Total operating expenses 22,077 8,575 27,727 15,478
Operating loss (10,715 ) (8,575 ) (14,321 ) (15,328 )
Gain on revaluation of warrants and conversion feature 99 695 369 695
Interest expense (272 ) (465 ) (748 ) (465 )
Extinguishment of debt — (210 ) (210 ) (210 )
Non-operating income (expense), net 81 46 148 (177 )
Net loss $ (10,807 ) $ (8,509 ) $ (14,762 ) $ (15,485 )
Loss per share:
Basic net loss per share $ (0.72 ) $ (0.90 ) $ (1.01 ) $ (1.65 )
Diluted net loss per share $ (0.72 ) $ (0.90 ) $ (1.01 ) $ (1.65 )
Weighted-average number of shares outstanding during the period:
Basic 14,993,686 9,469,162 14,576,183 9,405,181
Diluted 14,993,686 9,469,162 14,576,183 9,405,181

* Includes stock-based compensation expense, as follows:
Operating legal costs $ 64 $ 183 $ 132 $ 501
General and administrative 435 1,070 830 2,624
$ 499 $ 1,253 $ 962 $ 3,125
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Revenue
Wellness $ 12,927 $ — $ 23,911 $ —
Technology 3,450 2,450 6,941 3,727
Intellectual property — 8,900 100 9,650
Total revenue 16,377 11,350 30,952 13,377

Cost of sales
Wellness 10,401 — 19,236 —
Technology 2,690 2,180 5,618 3,304
Intellectual property* 118 4,243 217 4,963
Total cost of sales 13,209 6,423 25,071 8,267
Depreciation, amortization and impairment 3,094 12,329 4,955 13,159
General and administrative* 5,204 2,316 11,539 4,495
Total operating expenses 21,507 21,068 41,565 25,921
Operating loss from continuing operations (5,130 ) (9,718 ) (10,613 ) (12,544 )
Non-operating income (expense), net (50 ) 181 61 518
Interest expense (178 ) (272 ) (367 ) (748 )
Extinguishment of debt — — — (210 )
Loss from continuing operations before income taxes (5,358 ) (9,809 ) (10,919 ) (12,984 )
Income tax expense — — (227 ) —
Consolidated net loss from continuing operations (5,358 ) (9,809 ) (11,146 ) (12,984 )
Loss from discontinued operations before income taxes (1,552 ) (998 ) (2,113 ) (1,778 )
Income tax expense — — — —
Net loss from discontinued operations (1,552 ) (998 ) (2,113 ) (1,778 )
Consolidated net loss (6,910 ) (10,807 ) (13,259 ) (14,762 )
Net income attributable to noncontrolling interests (100 ) — (176 ) —
Net loss attributable to the Company $ (7,010 ) $ (10,807 ) $ (13,435 ) $ (14,762 )

Consolidated net loss from continuing operations $ (5,358 ) $ (9,809 ) $ (11,146 ) $ (12,984 )
Other comprehensive loss from continuing operations: foreign currency translations (107 ) — (151 ) —
Comprehensive loss from continuing operations (5,465 ) (9,809 ) (11,297 ) (12,984 )
Consolidated net loss from discontinued operations (1,552 ) (998 ) (2,113 ) (1,778 )
Other comprehensive loss from discontinued operations: foreign currency translations — — — —
Comprehensive loss from discontinued operations (1,552 ) (998 ) (2,113 ) (1,778 )
Comprehensive loss $ (7,017 ) $ (10,807 ) $ (13,410 ) $ (14,762 )

Loss per share:
Basic and diluted net loss per share
Loss per share from continuing operations $ (0.28 ) $ (0.65 ) $ (0.59 ) $ (0.89 )
Loss per share from discontinued operations (0.08 ) (0.07 ) (0.11 ) (0.12 )
Total basic and diluted net loss per share $ (0.36 ) $ (0.72 ) $ (0.70 ) $ (1.01 )
Weighted-average number of shares outstanding during the period:
Basic 19,310,994 14,993,686 19,178,769 14,576,183
Diluted 19,310,994 14,993,686 19,178,769 14,576,183

*Includes stock-based compensation expense, as follows:
Intellectual property $ — $ 64 $ — $ 132
General and administrative 732 435 1,473 830
Total stock-based compensation expense $ 732 $ 499 $ 1,473 $ 962

The accompanying notes form an integral part of these condensed consolidated financial statements.

4

FORM Holdings Corp. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~STOCKHOLDERS'~~ EQUITY
(Unaudited)
(In thousands)
Common
stock Additional
paid-in capital Accumulated
deficit Total
Balance as of December 31, 2015 $ 132 $ 237,246 $ (196,862 ) $ 40,516
Issuance of common stock for repayment of convertible debt and related interest 18 2,978 — 2,996
Stock-based compensation — 962 — 962
Net loss for the period — — (14,762 ) (14,762 )
Balance as of June 30, 2016 $ 150 $ 241,186 $ (211,624 ) $ 29,712

Common
stock Additional
paid-in capital Accumulated
deficit Total
Balance as of December 31, 2014 $ 93 $ 216,792 $ (185,705 ) $ 31,180
Reclassification of derivative Reload Warrants and Series 1 Warrants to equity warrants — 175 — 175
Issuance of common stock 3 1,398 1,401
Stock-based compensation — 3,125 — 3,125
Net loss for the period — — (15,485 ) (15,485 )
Balance as of June 30, 2015 $ 96 $ 221,490 $ (201,190 ) $ 20,396
Common
stock Preferred
stock Additional
paid-
in capital Accumulated
deficit Accumulated
other
comprehensive
loss Total
FORM
equity Non
controlling
interests Total
equity
December 31, 2016 $ 183 $ 5 $ 280,221 $ (220,868 ) $ (13 ) $ 59,528 $ 4,641 $ 64,169
Issuance of common stock for services — — 20 — — 20 — 20
Shares of common stock issued for the acquisition of Excalibur 9 — 1,800 — — 1,809 — 1,809
Decrease in shares of preferred stock issued to XpresSpa sellers — — (908 ) — — (908 ) — (908 )
Conversion of preferred stock to common stock 4 (1 ) (3 ) — — — — —
Stock-based compensation — — 1,473 — — 1,473 — 1,473
Net loss for the period — — — (13,435 ) — (13,435 ) 176 (13,259 )
Foreign currency translation — — — — (151 ) (151 ) — (151 )
Contributions from
noncontrolling interests — — — — — — 100 100
June 30, 2017 $ 196 $ 4 $ 282,603 $ (234,303 ) $ (164 ) $ 48,336 $ 4,917 $ 53,253
Common
stock Preferred
stock Additional
paid-
in capital Accumulated
deficit Accumulated
other
comprehensive
loss Total
FORM
equity Non
controlling
interests Total
equity
December 31, 2015 $ 132 $ — $ 237,246 $ (196,862 ) $ — $ 40,516 $ — $ 40,516
Issuance of common stock forrepayment of convertible debt and related interest 18 — 2,978 — — 2,996 — 2,996
Stock-based compensation — — 962 — — 962 — 962
Net loss for the period — — — (14,762 ) — (14,762 ) — (14,762 )
June 30, 2016 $ 150 $ — $ 241,186 $ (211,624 ) $ — $ 29,712 $ — $ 29,712

The accompanying notes form an integral part of these condensed consolidated financial statements.

5

FORM Holdings Corp. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Six months ended June 30,
2016 2015
Cash flows from operating activities
Net loss $ (14,762 ) $ (15,485 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Items not affecting cash flows
Depreciation and amortization 1,264 1,838
Impairment of intangible assets 11,937 —
Amortization of debt discount and debt issuance costs 660 310
Stock-based compensation 962 3,125
Amendment to warrants as part of debt modification (281 ) —
Extinguishment of debt 356 210
Change in fair value of warrants and conversion feature (87 ) (695 )
Exchange rate loss (gain) (71 ) 187
Changes in operating assets and liabilities
Increase in accounts receivable (284 ) —
Decrease in inventory 119 —
Decrease in other current assets and other assets 395 429
Increase in accounts payable, accrued expenses and other current liabilities 472 2,546
Increase in deferred revenue 264 —
Decrease in other liabilities (246 ) (178 )
Net cash provided by (used in) operating activities 698 (7,713 )
Cash flows from investing activities
Acquisition of property, equipment and technology (151 ) —
Decrease (increase) in deposits 2,001 (287 )
Net cash provided by (used in) investing activities 1,850 (287 )
Cash flows from financing activities
Net proceeds from senior secured notes and warrants — 12,425
Debt issuance costs (50 ) (218 )
Net cash provided by (used in) financing activities (50 ) 12,207

Effect of exchange rate changes on cash and cash equivalents — (3 )
Increase in cash and cash equivalents 2,498 4,204
Cash and cash equivalents at beginning of period 24,951 16,023
Cash and cash equivalents at end of period $ 27,449 20,227

Cash paid during the period for
Interest $ 40 $ —

Non-cash investing and financing transactions
Change in classification of derivative warrants to equity warrants — 175
Issuance of common stock to repay debt and interest 2,996 1,401
Debt discount — 2,961
Six months ended June 30,
2017 2016
Cash flows from operating activities
Consolidated net loss $ (13,259 ) $ (14,762 )
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities:
Items not affecting cash flows
Depreciation and amortization 4,955 1,222
Impairment of intangible assets — 11,937
Amortization of debt discount and debt issuance costs — 660
Stock-based compensation 1,473 962
Amendment to warrants as part of debt modification — (281 )
Extinguishment of debt — 356
Issuance of shares of common stock for services 20 —
Change in fair value of derivative warrant liabilities and conversion feature (159 ) (87 )
Exchange rate loss (gain), net — (75 )
Changes in current assets and liabilities net of effects of acquisition
Increase in accounts receivable (1,277 ) (139 )
Increase in inventory (1,386 ) (32 )
Decrease in other current assets and other assets 1,473 443
Increase (decrease) in accounts payable, accrued expenses and other current liabilities (557 ) 375
Increase (decrease) in deferred revenue (52 ) 146
Decrease in other liabilities (15 ) (246 )
Net cash provided by (used in) operating activities – continuing operations (8,784 ) 479
Net cash provided by operating activities - discontinued operations 931 219
Net cash provided by (used in) operating activities (7,853 ) 698
Cash flows from investing activities
Cash acquired as part of acquisition 26 —
Acquisition of property and equipment (1,565 ) (151 )
Acquisition of software (148 ) —
Decrease in deposits — 2,001
Net cash provided by (used in) investing activities (1,687 ) 1,850
Cash flows from financing activities
Repayment of line of credit (361 ) —
Net contributions from noncontrolling interests 100 —
Debt issuance costs — (50 )
Net cash used in financing activities (261 ) (50 )
Effect of exchange rate changes on cash and cash equivalents (151 ) —
Increase (decrease) in cash and cash equivalents (9,952 ) 2,498
Cash and cash equivalents at beginning of period 17,910 24,951
Cash and cash equivalents at end of period $ 7,958 $ 27,449
Cash paid during the period for
Interest $ 430 $ 40

Noncash investing and financing transactions
Issuance of common stock to repay debt and interest — 2,996

The accompanying notes form an integral part of these condensed consolidated financial statements.

6

FORM Holdings Corp. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except for share and per share data)

Note 1. General

~~Overview~~
~~On May 6, 2016, Vringo, Inc. changed its name to~~ FORM Holdings Corp. (“FORM” or the “Company”) has three operating segments: wellness, technology and ~~concurrently announced its repositioning as a holding company of small and middle market growth companies. The Company’s focus is on acquiring and building companies that would benefit from:~~
• ~~additional capital~~
• ~~exposure to visibility from the public markets~~
• ~~talent recruiting~~
• ~~rebranding and~~
• ~~implementation of best practices.~~
The Company’s management team is committed to execute on its strategy. The Company is industry agnostic, but limits the scope of its pipeline by looking only at companies with a clear path to grow in excess of $100,000 in revenue.intellectual property.

The Company’s ~~common stock, par value $0.01 per share,~~wellness operating segment consists of XpresSpa, which ~~was previously listed on the NASDAQ Capital Market under the trading symbol “VRNG,” has been listed under the trading symbol “FH” since May 9, 2016.~~
~~The Company currently has three operating segments:~~
• ~~Group Mobile~~
• ~~FLI Charge~~
• ~~Intellectual property~~
~~Group Mobile~~ is a ~~growing premier supplier~~leading airport retailer of innovative and full-service mobile technology solutions, including rugged computers, tablets, mobile devices, accessories, a full suite of professional services and other related products geared toward emergency first responders, municipalities and corporations. In addition, Group Mobile specializes in high-quality customer service and support for those products.
FLI Charge owns a patented conductive wireless charging technology and focuses on the development and commercialization of its technology through the direct-to-consumer sale of enablements, as well as partnerships and licensing agreements in various industries. FLI Charge is currently working with partners that are interested in implementing FLI Charge technology for smart furniture, Original Equipment Manufacturers, or “OEM,” and after-market automobiles and vaporizers. FLI Charge’s business model is based on licensing its technology in exchange for recurring licensing revenue as well as manufacturing and commercializing its own conductive charging pads and associated cases for phones, tablets and laptops.
The intellectual property operating segment is focused on the innovation, development and monetization of intellectual property. The Company’s portfolio consists of over 600 patents and patent applications covering telecom infrastructure, internet search, ad-insertion and mobile technologies.
7
~~Prior to December 31, 2013, the Company operated a global platform for the distribution of mobile social applications and~~spa services. On February 18, 2014, the Company sold its mobile social application business to InfoMedia Services Limited (“InfoMedia”), receiving an 8.25% ownership interest in InfoMedia as consideration and a seat on the board of directors of InfoMedia. As part of the transaction, the Company has the opportunity to license certain intellectual property assets and work with InfoMedia to identify and protect new intellectual property.
~~Each of the Company’s operating segments are described below.~~
~~Group Mobile~~
~~Group Mobile~~XpresSpa is a ~~growing~~well-recognized airport spa brand with 52 locations, including 48 domestic and innovative full, end-to-end solution provider for project lifecycle services including system integration, hardware service support, pre- and post-deployment and customer support helpdesk. Group Mobile provides total hardware solutions, including rugged laptops, tablets and handheld computers. Group Mobile also markets rugged mobile printers, vehicle computer docking and mounting gear, power accessories, wireless communication products, antennas, carrying cases, and other peripherals, accessories and add-ons needed to maximize productivity in a mobile- or field-computing environment.
Group Mobile operates a full-service e-commerce website with live chat, up-to-date product information and computer system configuration capabilities. Group Mobile’s goal is to ensure that its customers purchase the best products and services for their specific requirements.
Group Mobile purchases rugged mobile computing equipment and complementary products from its primary distribution and manufacturing partners and sells them to enterprises, resellers, and retail customers. Group Mobile’s primary customers range from corporations to local governments, emergency first responders and healthcare organizations. Group Mobile believes that its business is characterized by gross profits as a percentage of revenue slightly higher than is commonly found in resellers of computing devices. The market for rugged mobile computing products is trending towards an increase in the volume of unit sales combined with declining unit prices as the business transitions from primarily being comprised of laptops to one primarily comprised of rugged tablets. As this transition has occurred, Group Mobile is seeing shortened product life cycles and industry specific devices for segments such as healthcare. Group Mobile sets sale prices based on the market supply and demand characteristics for each particular product. Group Mobile is highly dependent on the end-market demand for rugged mobile computing products, which is influenced by many factors, including the introduction of new IT products by OEM, replacement cycles for existing rugged mobile computing products, overall economic growth, local and state budgets, and general business activity.
Product costs represent Group Mobile’s single largest expense and product inventory is one of the largest working capital investments for Group Mobile. Group Mobile’s primary suppliers include Synnex Corporation, Ingram Micro Inc., and Xplore Technologies Corporation, which, combined, represent approximately 80% of Group Mobile’s inventory purchases. Group Mobile has reseller agreements with most of its OEM and distribution partners. These agreements usually provide for nonexclusive resale and distribution rights. The agreements are generally short-term, subject to periodic renewal, and often contain provisions permitting termination by either Group Mobile or the supplier without cause upon relatively short notice. Furthermore, product procurement from the OEM suppliers is a highly complex process and, as such, efficient and effective purchasing operations are critical to Group Mobile’s success.
~~FLI Charge~~
FLI Charge is a wireless power company dedicated to simplifying the way people power and charge the multitude of mobile electronic devices they use on a daily basis. By eliminating the need to search and compete for outlets and charging cables, FLI Charge is improving the powering and charging experience for all currently existing battery and DC powered devices.
FLI Charge designs, develops, licenses, manufactures and markets wireless conductive power and charging solutions. FLI Charge is currently working with partners in several verticals to bring products to market. These verticals include education, office, hospitality, automotive and consumer electronics among others. To date, FLI Charge has not yet generated any substantial revenue from its product sales. The Company believes that FLI Charge’s patented technology is the only wireless power solution that is fully interoperable between different mobile devices ranging from smartphones to power tools, and many more. FLI Charge’s wireless power solution can simultaneously power multiple devices on the same pad no matter their power requirements or positions on the pad.
FLI Charge’s product line consists of power pads or surfaces as well as devices that are connected to or embedded with FLI Charge enabling technology. FLI Charge pads and surfaces are connected to a power source or battery. The surface of the pad has conductive contact strips that provide power and are constantly monitored by control circuitry that immediately halts power transfer if an unapproved load or short-circuit condition is detected. FLI Charge-enabled devices are embedded with the FLI Charge contact enablement that consists of four contact points, known as the “constellation.” The constellation is designed to make an immediate and continuous electrical connection with the contact strips regardless of the device’s orientation on the pad. The enablement monitors the power coming from the pad and ensures that the correct amount of power goes to the device. Once an approved FLI Charge device is placed on a pad, power is transferred immediately to charge or power the device.
~~FLI Charge launched its consumer product line on Indiegogo, a crowdfunding platform, on June 15, 2016; the campaign is ongoing~~4 international, as of June 30, ~~2016.~~2017. XpresSpa offers travelers premium spa services, including massage, nail and hair as well as spa and travel products. The Company ~~accounts for funds raised from crowdfunding campaigns and pre-sales, which was $177 as of June 30, 2016, as deferred revenue. FLI Charge expects to deliver products to the participants~~acquired XpresSpa in the fourth quarter of 2016.

8
The Company’s technology operating segment consists of Group Mobile as well as an 11% equity interest in InfoMedia Services Limited (“InfoMedia”). Group Mobile offers rugged hardware and software solutions, including laptops, tablets, and mobile printers, as well as installation and deployment services. The Company acquired Group Mobile in the fourth quarter of 2015 and Excalibur Integrated Systems Inc. (“Excalibur”), which was merged with Group Mobile, in the first quarter of 2017. The Company’s equity interest in InfoMedia increased from 8.25% to 11% in the first quarter of 2017 due to a realignment of ownership interests.

~~Intellectual Property~~As further detailed in Note 10 “Discontinued Operations and Assets and Liabilities Held for Disposal,” during June 2017, the Company concluded that the requirement to report the results of FLI Charge as discontinued operations was triggered.

The Company is currently evaluating strategic alternatives with respect to Group Mobile in an attempt to enhance stockholder value. These strategic alternatives may include a possible sale, merger, spin-off or other separation of Group Mobile or other forms of business combinations or strategic transactions. The Company is seeking to enter into one or more strategic transactions involving Group Mobile in the first quarter of 2018.
The Company’s intellectual property operating segment is ~~focused on~~engaged in the ~~innovation, development and~~ monetization of ~~intellectual property. The Company’s portfolio consists of over 600~~ patents related to content and ~~patent applications covering telecom infrastructure, internet search, ad-insertion~~ad delivery, remote monitoring and mobile technologies.
The Company is currently focused on monetizing its technology portfolio through a variety of value enhancing initiatives including, but not limited to, licensing, litigation and strategic partnerships.
~~Recent Developments~~
~~Name Change~~
On May 6, 2016, the Company changed its name from Vringo, Inc. to FORM Holdings Corp. (“FORM” or the “Company”) and concurrently announced its repositioning as a holding company of small and middle market growth companies. The Company’s focus is on acquiring and building companies that would benefit from:
• ~~additional capital~~
• ~~exposure to visibility from the public markets~~
• ~~talent recruiting~~
• ~~rebranding and~~
• ~~implementation of best practices.~~
The Company’s management team is committed to execute on its strategy. The Company is industry agnostic, but limits the scope of its pipeline by looking only at companies with a clear path to grow in excess of $100,000 in revenue.
The Company’s common stock, par value $0.01 per share, which was previously listed on the NASDAQ Capital Market under the trading symbol “VRNG,” has been listed under the trading symbol “FH” since May 9, 2016.
~~Impairment of Patents~~
The Company’s name change and repositioning as a holding company was deemed a triggering event, which required the Company’s patent assets to be tested for impairment. In performing this impairment test, the Company determined that the patent portfolios, which together represent an asset group, were subject to impairment testing. In the first step of the impairment test, the Company utilized its projections of future undiscounted cash flows based on its 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 as of May 6, 2016. As a result, following amortization for the month of 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 concluded that there were no changes in the estimated useful life.
~~Shareholder Rights Plan~~

On March 18, 2016, the Company announced that the Company’s Board of Directors adopted a shareholder 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 this plan, the Company filed a Certificate of Designation of Series C Junior Preferred Stock with the Secretary of State of the State of Delaware on March 18, 2016.
~~Senior Secured Notes~~
On March 9, 2016, the Company and the holders (the “Investors”) of the Company’s $12,500 Senior Secured Convertible Notes (the “Notes”), 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 the 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 and $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.
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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 and 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 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 warrants to purchase an aggregate of 537,500 shares of the Company’s common stock pursuant to the initial agreement (the “May 2015 Warrants”) from $10.00 to $3.00 per share and 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 prepaid in full its Amended Notes that were due on June 30, 2017. As required by the terms of the Amended Notes, notice of prepayment was delivered to the Investors on June 30, 2016. The Company repaid the Amended Notes in full, including repayment of the principal and accrued interest as well as an additional 15% 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 intellectual property, were released by the Investors.
~~Reverse Stock Split~~
Unless otherwise noted, the information contained in these condensed consolidated financial statements gives effect to a one-for-ten reverse stock split of our common stock effected on November 27, 2015 on a retroactive basis for 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, ~~2015.~~2016. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected by the ~~Company as required by Regulation S-X, Rule 10-01.~~Company. Such adjustments are of a normal, recurring nature. The results of operations for the three and six-month ~~period~~periods ended June 30, ~~2016~~2017 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.
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(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 ~~valuation 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) ~~Accounting guidance adopted in 2016~~Revenue recognition
~~ASU No. 2015-03, Imputation~~The Company recognizes revenue for the wellness operating segment from the sale of ~~Interest (Subtopic 835-30): Simplifying~~XpresSpa products and services at the ~~Presentation~~point of ~~Debt Issuance Costs~~
~~During~~sale, net of discounts and applicable sales taxes. Revenues from the ~~six-month period ended June 30, 2016,~~XpresSpa wholesale and e-commerce businesses are recorded at the time goods are shipped. The Company ~~adopted guidance~~excludes all sales taxes assessed to its customers. Sales taxes assessed on ~~a retrospective basis that requires debt issuance costs related to a recognized debt liability to be presented~~revenues are included in accounts payable, accrued expenses and other current liabilities in the condensed consolidated balance sheets until remitted to the state agencies.
The Company records revenue from product sales in the technology operating segment when title and risk of loss are passed to the customer, there is persuasive evidence of an arrangement for sale, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company’s shipping terms typically specify F.O.B. destination, at which time title and risk of loss have passed to the customer. At the time of sale of hardware products, the Company records an estimate for sales returns and allowances based on historical experience. Hardware products sold by the Company are warranted by the vendor.
7
The Company has drop-shipment arrangements with many of its hardware vendors and suppliers to deliver products directly to customers. Revenue for drop-shipment arrangements is recorded on a gross basis upon delivery to the customer with contract terms that typically specify F.O.B. destination. Revenue is recognized on a gross basis, as the Company is the principal in the transaction, as the primary obligor in the arrangement, assumes the inventory risk if the product is returned by the customer, sets the price of the product to the customer, assumes credit risk for the amounts invoiced, and works closely with the customers to determine their hardware specifications.
Freight billed to customers is recognized as net product revenue and the related freight costs as a ~~deduction~~cost of sales.
On certain occasions, the Company’s technology operating segment will enter into a bill and hold arrangement with a customer. When this occurs, the Company makes a determination as to when it will be the proper time to recognize revenue. In doing so, the Company takes the following into consideration:
whether the risks of ownership have passed to the customer;
the customer must have made a fixed commitment to purchase the goods;
the customer must request and have a substantial business purpose for ordering on a bill and hold basis;
there must be a fixed schedule for delivery that is reasonable and consistent with the customer’s business purpose;
the Company cannot retain any specific performance obligations that would make the earnings process incomplete;
the goods must be segregated from remaining inventory (i.e., they cannot be used to fill orders for others); and
the goods must be complete and ready for shipment.
For multiple-element arrangements in the Company’s technology operating segment that include hardware products, services and maintenance, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. The Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered.
Revenue from patent licensing is recognized if collectability is reasonably assured, persuasive evidence of an arrangement exists, the sales price is fixed or determinable and delivery of the service has been rendered. Currently, revenue arrangements related to intellectual property provide for the payment of contractually determined fees and other consideration for the grant of certain intellectual property rights related to the Company’s patents. These rights typically include some combination 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 release of the licensee from certain claims, and (iii) the dismissal of any pending litigation. The intellectual property rights granted typically extend until the expiration of the related patents. Pursuant to the terms of these agreements, the Company has no further obligation with respect to the grant 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 grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of 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.
8
(d) Cost of sales
Cost of sales for the Company’s wellness operating segment consists of store-level costs. Store-level costs include all costs that are directly attributable to the store operations and include:
payroll and related benefits for store operations and store-level management;
rent, percentage rent and occupancy costs;
the cost of merchandise;
freight, shipping and handling costs;
production costs;
inventory shortage and valuation adjustments, including purchase price allocation increase in fair values which was recorded as part of acquisition; and
costs associated with sourcing operations.
Cost of sales for the Company’s technology operating segment includes costs to acquire or manufacture goods for inventory.
Cost of sales for the Company’s intellectual property operating segment mainly includes expenses incurred in 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.
(e) Recently adopted accounting pronouncements
ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business
In January 2017, the FASB issued Accounting Standards Update No. 2017-01 (“ASU 2017-01”) “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU 2017-01 provides guidance to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single asset or a group of similar assets, the assets acquired (or disposed of) are not considered a business. The Company adopted ASU 2017-01 as of January 1, 2017 on a prospective basis.
(f) Recent issued accounting pronouncements not yet adopted
ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (“ASU 2017-04”) “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of ~~such debt. As a result of this~~net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption ~~the~~is permitted. 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~~currently anticipates that the six-month period ended June 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 to provide related footnote disclosures. The adoption of ~~this guidance did~~ASU 2017-04 will not have a material ~~effect~~impact on ~~the Company’s condensed~~its consolidated financial statements.

ASU ~~2014-16, Derivatives~~No. 2017-09, Stock Compensation (Topic 718): Scope of Modification Accounting
In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (“ASU 2017-09”) “Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this update. ASU 2017-09 is effective for annual periods, and ~~Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued~~interim periods within those annual periods, beginning after December 15, 2017; early adoption is permitted. The Company is currently in the ~~Form~~process of ~~a Share is More Akin to Debt or to Equity~~
~~During the six-month period ended June 30, 2016, the Company adopted the standard that clarifies how current U.S. GAAP should be interpreted in~~ evaluating the ~~economic characteristics and risks~~potential impact 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~~its consolidated financial statements.

~~(d)~~(g) Reclassification
On November 27, 2015, the Company implemented 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 outstanding common stock were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of the Company’s stockholders owning a fractional share, which was rounded up to the 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 the Company’s authorized shares.
Certain balances have been reclassified to conform to presentation requirements, including ~~to retroactively present the effect~~presentation of ~~the Reverse Stock Split. All references~~discontinued operations and assets and liabilities held for disposal with respect to the ~~number of shares of common stock, price per share and weighted average shares of common stock have been adjusted~~Company’s FLI Charge business (refer 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 of~~~~ASU No. 2015-03~~on a retrospective basis, during the six-month period ended June 30, 2016, the Company reclassified $73 of debt issuance costs as of December 31, 2015 from other current assets to senior secured notes.
~~(e) Intangible assets~~
~~Intangible assets include purchased patents, which are recorded based on the cost to acquire them,~~Note 10), as well as ~~trade names, customer relationships~~consistent presentation of cost of sales and ~~technology, which were acquired as part of the acquisition of International Development Group Limited (“IDG”) in the fourth quarter of 2015~~general and ~~are recorded based on the estimated fair value in purchase price allocation. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated~~administrative expenses to align presentation for ~~reasonableness.~~operating segments.
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’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.
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~~(f) Deferred revenue~~
Deferred revenue includes (i) payments received from customers in advance of providing the product and (ii) amounts deferred if other conditions of revenue recognition have not been met. The Company accounts for funds raised from crowdfunding campaigns and pre-sales as deferred revenue.

Note 3. Net Loss per Share of Common Stock
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 a net loss in all 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 such instruments was anti-dilutive.

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

Three months ended June 30, Six months ended June 30,
2016 2015 2016 2015
Basic Numerator:
Loss from attributable to shares of common stock $ (10,807 ) $ (8,509 ) $ (14,762 ) $ (15,485 )
Net loss attributable to shares of common stock $ (10,807 ) $ (8,509 ) $ (14,762 ) $ (15,485 )
Basic Denominator:
Weighted average number of shares of common stock outstanding during the period 14,993,686 9,469,162 14,576,183 9,405,181
Basic common stock shares outstanding 14,993,686 9,469,162 14,576,183 9,405,181
Basic net loss per common stock share $ (0.72 ) $ (0.90 ) $ (1.01 ) $ (1.65 )

Diluted Numerator:
Net loss attributable to shares of common stock $ (10,807 ) $ (8,509 ) (14,762 ) $ (15,485 )
Increase in net loss attributable to derivative liabilities and interest expense — — — —
Diluted net loss attributable to shares of common stock $ (10,807 ) $ (8,509 ) (14,762 ) $ (15,485 )

Diluted Denominator:
Basic common stock shares outstanding 14,993,686 9,469,162 14,576,183 9,405,181
Weighted average number of derivative liabilities in the money — — — —
Diluted common stock shares outstanding 14,993,686 9,469,162 14,576,183 9,405,181
Diluted net loss per common stock share $ (0.72 ) $ (0.90 ) (1.01 ) $ (1.65 )

Net loss per share data presented excludes from the calculation of diluted net loss the following potentially dilutive securities, as they had an anti-dilutive impact:
Vested and unvested options outstanding to purchase an equal number of shares of common stock of the Company 1,492,434 888,047 1,492,434 888,047
Unvested RSUs to issue an equal number of shares of common stock of the Company 7,808 60,990 7,808 60,990
Warrants to purchase an equal number of shares of common stock of the Company 1,006,679 956,679 1,006,679 956,679
Conversion feature of senior secured notes — 1,250,000 159,462 1,250,000
Total number of potentially dilutive instruments, excluded from the calculation of net loss per share 2,506,921 3,155,716 2,666,383 3,155,716
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Basic numerator:
Net loss from continuing operations attributable to shares of common stock $ (5,458 ) $ (9,809 ) $ (11,322 ) $ (12,984 )
Net loss from discontinued operations attributable to shares of common stock (1,552 ) (998 ) (2,113 ) (1,778 )
Net loss attributable to shares of common stock $ (7,010 ) $ (10,807 ) $ (13,435 ) $ (14,762 )
Basic denominator:
Basic shares of common stock outstanding 19,310,994 14,993,686 19,178,769 14,576,183
Basic loss per share of common stock from continuing operations $ (0.28 ) $ (0.65 ) $ (0.59 ) $ (0.89 )
Basic loss per share of common stock from discontinued operations (0.08 ) (0.07 ) (0.11 ) (0.12 )
Basic net loss per share of common stock $ (0.36 ) $ (0.72 ) $ (0.70 ) $ (1.01 )

Diluted numerator:
Net loss from continuing operations attributable to shares of common stock $ (5,458 ) $ (9,809 ) $ (11,322 ) $ (12,984 )
Net loss from discontinued operations attributable to shares of common stock (1,552 ) (998 ) (2,113 ) (1,778 )
Net loss attributable to shares of common stock $ (7,010 ) $ (10,807 ) $ (13,435 ) $ (14,762 )
Diluted denominator:
Diluted shares of common stock outstanding 19,310,994 14,993,686 19,178,769 14,576,183
Diluted loss per share of common stock from continuing operations $ (0.28 ) $ (0.65 ) $ (0.59 ) $ (0.89 )
Diluted loss per share of common stock from discontinued operations (0.08 ) (0.07 ) (0.11 ) (0.12 )
Diluted net loss per share of common stock $ (0.36 ) $ (0.72 ) $ (0.70 ) $ (1.01 )

Net loss per share data presented excludes from the calculation of diluted net loss the following potentially dilutive securities, as they had an anti-dilutive impact:
Both vested and unvested options to purchase an equal number of shares of common stock of the Company 5,135,399 1,492,434 5,135,399 1,492,434
Unvested restricted stock units (“RSUs”) to issue an equal number of shares of common stock of the Company 400,942 7,808 400,942 7,808
Warrants to purchase an equal number of shares of common stock of the Company 3,430,877 1,006,679 3,430,877 1,006,679
Preferred stock on an as converted basis 3,439,587 — 3,620,626 —
Conversion feature of senior secured notes — — — 159,462
Total number of potentially dilutive instruments, excluded from the calculation of net loss per share 12,406,805 2,506,921 12,587,844 2,666,383

Note 4. Business ~~Combination~~Combinations
XpresSpa
During the three months ended June 30, 2017, the Company learned new information about legal and other professional costs which existed as of the acquisition date of XpresSpa. As a result, the Company and the sellers of XpresSpa (the “XpresSpa Sellers”) agreed to reduce the total amount of Series D Convertible Preferred Stock (“FORM Preferred Stock”), which was previously issued to the XpresSpa Sellers in conjunction with the acquisition of XpresSpa. The Company reduced the number of the FORM Preferred Stock by 16,219 shares and estimated that the fair value of the reduction of the consideration was $908, which was recorded as a reduction of preferred equity and goodwill.
Additionally, during the three months ended June 30, 2017, certain XpresSpa Sellers converted 45,260 shares of their FORM Preferred Stock into 362,077 shares of the Company’s common stock, par value $0.01 per share.
As a result of these events, the total number of shares of FORM Preferred Stock was reduced from 491,427 as of December 31, 2016 to 429,948 shares as of June 30, 2017 and the face value (and liquidation preference) was reduced from $23,588 to $20,638.
Group Mobile

On ~~October 15, 2015,~~February 2, 2017, the Company acquired ~~IDG. Pursuant~~Excalibur, which is an end-to-end solutions provider of mobile hardware devices, wireless network security, data networking, telephony and mobile application development and software solutions. Following the acquisition, Excalibur was merged with Group Mobile within the Company’s technology operating segment.
In consideration for the acquisition, the Company issued 888,573 unregistered shares of the Company’s common stock, par value $0.01 per share, to the ~~Purchase Agreement,~~former stockholders of Excalibur (the “Excalibur Sellers”). In addition, the ~~Company acquired 100%~~Excalibur Sellers will, in the three years following the closing of this transaction, also receive $500 for each $2,000 of gross profit generated by a specified list of Excalibur accounts annually, until such cumulative gross profit reaches $6,000, and an additional $500 when such cumulative profit reaches $10,000, such amounts are payable in either cash or the Company’s common stock, at the election of the capital stock of IDG. Group Mobile and 70% 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.Company.

The fair value of the total purchase price is $2,125 and includes a fair value of contingent consideration of $316 and fair value of unregistered shares of common stock issued of $1,809.
1210

As consideration for the acquisition, the Company issued an equivalent of 1,666,667 common stock (after giving effect to the Reverse Stock Split), which were issued as follows: (i) 1,604,167 shares of the Company’s newly designated Series B Convertible Preferred Stock (“Series B Preferred”), convertible into 1,604,167 shares of the 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) 5,000 shares of the Company’s common stock for transaction related services. 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. On April 20, 2016, 85,121 shares of common stock were released from escrow.
Purchase consideration value was determined based on the market value of the Company’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 been accounted for as a business combination.~~ Assets acquired and liabilities assumed were recorded at their fair values atas of the ~~closing~~acquisition date. ~~The purchase price consideration was as follows:~~
October 15, 2015 Acquisition: Fair
Value
Series B Preferred Stock $ 5,378
Debt assumed, settled in shares 193
Total share value issued $ 5,571
The purchase price for the acquisition was allocated to the net tangible and intangible assets based on their fair values as of the ~~closing~~acquisition date. The excess of the purchase price over the net tangible assets and intangible assets was recorded as goodwill. The table below presents preliminary allocation of the purchase ~~price allocation was as follows:~~price:

Fair Value
Assets:
Cash and cash equivalents $ 144
Accounts receivable 245
Inventory 234
Prepaid expenses 18
Current Assets 641
Intangible assets 2,146
Goodwill 4,863
Total Assets 7,650

Liabilities:
Accounts payable 464
Credit line 270
Accrued expenses 44
Other current liabilities 173
Deferred tax liabilities 866
Total liabilities 1,817
Non-controlling interest in FLI Charge 262
Total $ 5,571
Fair Value
Assets
Current assets (including cash of $26) $ 628
Deferred tax assets 29
Property and equipment 21
Intangible assets 556
Goodwill 2,320
Total assets 3,554

Liabilities
Accounts payable and accrued expenses 1,214
Deferred tax liabilities 215
Total liabilities 1,429
Net assets, fair value $ 2,125

The allocation of the purchase price was based upon a preliminary valuation ~~and~~performed using the Company's estimates and assumptions, which are subject to change within the measurement period (up to one year from the acquisition ~~dates)~~date). ~~The principal area of potential purchase price adjustments relate to the shares placed in escrow.~~
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In connection with the acquisition, the Company also entered into a Consulting Agreement with IDG’s former chief executive officer and director for a term of six 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 as an expense in general and administrative expenses.
On December 28, 2015, the Company acquired the remaining 30% interest in FLI Charge from third parties. In conjunction with the transaction, the Company issued 110,000 shares of its unregistered common stock for total consideration of $262. The fair value of the consideration for financial reporting purposes was determined based on the market value of the shares at the date of the transaction, discounted due to the restricted nature of the shares and the effect this has on their marketability. The issuance of these shares have no impact on the allocation of the purchase consideration pursuant to~~FASB ASC 810~~ ~~and was recorded as an equity transaction.~~
~~Note 5. Intangible Assets~~
~~The following table provides information regarding the Company’s intangible assets, which consist of the following:~~
June 30, 2016 December 31, 2015
Gross
Carrying
Amount Accumulated
Amortization
and Impairment Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization
and Impairment Net
Carrying
Amount Weighted average
amortization period
(years)
Patents $ 28,213 $ (26,741 ) 1,472 $ 28,213 $ (13,782 ) $ 14,431 8.60
Customer relationships 1,163 (210 ) 953 1,163 (62 ) 1,101 3.91
Trade name 504 (73 ) 431 504 (21 ) 483 4.90
Technology 479 (60 ) 419 479 (18 ) 461 5.68
Additions:
Software 151 — 151 — — — —
Total intangible assets $ 30,510 $ (27,084 ) $ 3,426 $ 30,359 $ (13,883 ) $ 16,476
The Company 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 several major patent portfolios, which were acquired from third parties, as well as a number of internally-developed patents. The costs related to internally-developed patents are expensed as incurred.
The Company’s intangible assets are amortized over their expected useful lives. During the three-month periods ended June 30, 2016 and 2015, the Company recorded amortization expense of $413 and $813, respectively. During the six-month periods ended June 30, 2016 and 2015, the Company recorded amortization expense of $1,264 and $1,617, respectively.
During the three-month period ended June 30, 2016, the Company determined that there were impairment indicators related to certain of its patents. A significant factor considered when making this determination occurred on May 6, 2016, when “Vringo, Inc.” changed its name to “FORM Holdings Corp.” and concurrently announced its repositioning as a holding company of small and middle market growth companies. The Company concluded that this factor was deemed a “triggering” event, which required the related patent assets to be tested for impairment. In performing this impairment test, the Company determined that the patent portfolios, which together represent an asset group, were 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 impairment by calculating the asset group’s fair value as of May 6, 2016.
14
As a result, following amortization for the month of April, the Company recorded an impairment charge of $11,937, or 88.7% of the carrying value of the 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 indicators related to any of the Company’s other amortizable intangible assets during the period ended June 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 June 30, 2016.
Group Mobile $ 4,106
FLI Charge 757
Total Goodwill $ 4,863

Note 6.5. Segment Information

The Company’s operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the enterprise’s chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company ~~currently has~~concluded that it conducts its business through three operating segments, ~~Group Mobile, FLI Charge and intellectual property that accumulate revenue and expenses. Additionally, the Company allocates certain expenses to~~which are also 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.reportable segments:
Three months ended June 30, Six months ended June 30,
2016 2015 2016 2015
Revenue:
Group Mobile $ 2,450 $ — $ 3,727 $ —
FLI Charge 12 — 29 —
Intellectual property 8,900 — 9,650 150
Total Revenue $ 11,362 $ — $ 13,406 $ 150

Segment operating loss:
Group Mobile $ (326 ) $ — $ (648 ) $ —
FLI Charge (998 ) — (1,777 ) —
Intellectual property (7,577 ) (6,276 ) (8,280 ) (10,032 )
Corporate (1,814 ) (2,299 ) (3,616 ) (5,296 )
Total segment operating loss (10,715 ) (8,575 ) (14,321 ) (15,328 )

Corporate non-operating income (expense), net (92 ) 66 (441 ) (157 )
Net loss $ (10,807 ) $ (8,509 ) $ (14,762 ) $ (15,485 )

15
wellness (XpresSpa);

June 30,
2016 December 31,
2015
Assets:
Group Mobile $ 7,013 $ 6,228
FLI Charge 1,734 1,583
Intellectual property 2,654 17,528
Corporate 26,346 25,120
Total Assets $ 37,747 $ 50,459
technology (Group Mobile); and
intellectual property
Segment operating results reflect losses before corporate and unallocated shared expenses, interest expense and income taxes. Corporate and unallocated shared expenses principally consist of costs for corporate functions, rent for office space, stock-based compensation, executive management and certain unallocated administrative support functions.

~~The corporate segment’s assets are mainly comprised of cash and cash equivalents.~~
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Revenue
Wellness $ 12,927 $ — $ 23,911 $ —
Technology 3,450 2,450 6,941 3,727
Intellectual property — 8,900 100 9,650
Total revenue 16,377 11,350 30,952 13,377

Cost of sales
Wellness 10,401 — 19,236 —
Technology 2,690 2,180 5,618 3,304
Intellectual property 118 4,243 217 4,963
Total cost of sales 13,209 6,423 25,071 8,267

Segment operating loss
Wellness (1,992 ) — (4,363 ) —
Technology (742 ) (327 ) (1,656 ) (648 )
Intellectual property (126 ) (7,577 ) (131 ) (8,280 )
Corporate (2,270 ) (1,814 ) (4,463 ) (3,616 )
Total segment operating loss (5,130 ) (9,718 ) (10,613 ) (12,544 )
Corporate non-operating expense, net (228 ) (91 ) (306 ) (440 )
Loss from continuing operations before income taxes $ (5,358 ) $ (9,809 ) $ (10,919 ) $ (12,984 )

~~Note 7. Senior Secured Notes~~
On May 4, 2015 (the “Closing Date”), the Company entered into a securities purchase agreement with certain Investors in a registered direct offering of $12,500 of Notes and May 2015 Warrants to purchase 537,500 shares of the Company’s common stock (after giving effect to the Reverse Stock Split). On the Closing Date, the Company issued the Notes, which were convertible into shares of the Company’s common stock at $10.00 per share, had 8% interest and matured in 21 months from the date of issuance, unless earlier converted. In addition, the Company issued the May 2015 Warrants to purchase shares of the Company’s common stock, which were exercisable at $10.00 per share for a period of five years, beginning on November 4, 2015. In connection with the issuance of the Notes and the May 2015 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 were capitalized as debt issuance costs and reported as a reduction in senior secured notes, 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 were 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 June 30, 2016, all covenants were met and there were no events of default.
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 $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 data. As such, the Company issued 1,032,332 shares in lieu of principal payments and recorded $210 as extinguishment of debt expense in the condensed consolidated statements of operations.
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 reduction of $1,267 of the outstanding aggregate principal amount of the Notes and $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 Notes and the Indenture dated May 4, 2015, as supplemented by a First Supplemental Indenture dated May 4, 2015 and further supplemented 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 Maturity 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 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.

1611

June 30, 2017 December 31, 2016
Assets
Wellness $ 53,137 $ 57,527
Technology 4,602 8,634
Intellectual property 825 940
Corporate 13,818 15,706
Total assets $ 72,382 $ 82,807
General and administrative costs are allocated among the operating segments and non-operating corporate segment. The non-operating corporate segment does not have any revenue, but does incur expenses such as compensation expenses, rent and infrastructure costs. The non-operating corporate segment’s assets are mainly comprised of cash.
The Company ~~has concluded~~currently operates in two geographical regions: United States and all other countries. The following table represents the geographical revenue, regional operating loss, and total asset information as of and for the three and six months ended June 30, 2017 and 2016. There were no concentrations of geographical revenue, regional operating loss or total assets related to any single foreign country that were material to the ~~Exchange Note Agreement does not constitute a troubled debt restructuring as it has not experienced~~Company’s condensed consolidated financial difficulty. Furthermore, since the Investors remained the same before and after the Exchange Note Agreement, the Company has made a quantitative test, in order to determine whether the Amended Notes are substantially different from the original Notes.statements.
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Revenue
United States $ 15,115 $ 11,350 $ 28,574 $ 13,377
All other countries 1,262 — 2,378 —
Total revenue 16,377 11,350 30,952 13,377

Cost of sales
United States 12,384 6,423 23,569 8,267
All other countries 825 — 1,502 —
Total cost of sales 13,209 6,423 25,071 8,267

Segment operating income (loss)
United States (5,636 ) (9,713 ) (11,309 ) (12,541 )
All other countries 506 (5 ) 696 (3 )
Total segment operating income (loss) (5,130 ) (9,718 ) (10,613 ) (12,544 )
Corporate non-operating expense, net (228 ) (91 ) (306 ) (440 )
Loss from continuing operations before income taxes $ (5,358 ) $ (9,809 ) $ (10,919 ) $ (12,984 )

Based on the accounting analysis performed and considering various scenarios for the cash flow test, the Company concluded that the Amended Notes were not substantially different from the original Notes and, as such, accounted for the Exchange Note Agreement as a modification:
· No gain or loss is recorded and a new effective interest rate is established based on the carrying value of the Notes and the revised cash flows of the Notes. Immediately before the Exchange Note Agreement, the fair value of the conversion option of the Notes was $10.00 per share.
· The change in the fair value of the May 2015 Warrants is capitalized similar to certain debt issuance costs. The fair value of the May 2015 Warrants increased by $281 as a result of the reduction of the exercise price from $10.00 to $3.00. Other terms of the May 2015 Warrants remain the same and continue to be recorded as derivative warrant liabilities. The capitalized amount of $281, along with any existing unamortized debt discount or premium, is amortized to interest expense over the remaining term of the Notes.
· Pursuant to the Exchange Note Agreement, on March 9, 2016, 703,644 shares were issued in exchange for the reduction of $1,267 of the outstanding principal amount and $49 of accrued interest and are also considered a noncash consideration. The fair value of the shares issued was $1,499. As such, the Company capitalized the fair value difference of $183 similar to certain debt issuance costs, which is amortized to interest expense over the remaining term of the Notes.
· The original transactions cost as of March 9, 2016, in the amount of $49, continue to be deferred. New transaction costs paid to the Investors, in the amount of $50, are capitalized and recorded as an offset to the debt. New transaction costs, in the amount of $65, paid to third parties are recognized as an expense and are included in general and administrative expense.
June 30, 2017 December 31, 2016
Assets
United States $ 70,380 $ 80,053
All other countries 2,002 2,754
Total assets $ 72,382 $ 82,807

~~The table below summarizes changes in the book value of the Notes from December 31, 2015 to June 30, 2016:~~
Book value as of December 31, 2015 (net of unamortized portion of debt issuance costs of $73) $ 3,111
Debt repayments in January and February 2016 (1,190 )
Amortization of debt discount and debt issuance costs, included in interest expense 356
Book value of Notes before the Exchange Note Agreement on March 9, 2016 2,277

Fair value of the considerations provided to the Investors, including:
Increase in fair value of May 2015 Warrants due to reduced exercise price 281
Repayment of Notes in shares of common stock 1,267
Repayment of $1,267 of Notes in shares of common stock at a discount to the market 183
Restructuring fee paid to the Investors 50
Total fair value of the considerations provided to the Investors 1,781

Book value of Amended Notes after the Exchange Note Agreement on March 9, 2016 496
Amortization of debt discount and debt issuance costs, included in interest expense 304
Book value of Amended Notes as of June 30, 2016 $ 800
1712

On July 1, 2016, the Company prepaid in full its Amended Notes that were due on June 30, 2017. As required by the terms of the Amended Notes, notice of prepayment was delivered to the Investors on June 30, 2016. The Company repaid the Amended Notes in full, including repayment of the principal and accrued interest as well as an additional 15% 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.

Note 8.6. Fair Value Measurements
Derivative Warrant Liabilities

The following table presents the placement in the fair value hierarchy of derivate warrant liabilities measured at fair value on a recurring basis as of June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:

Fair value measurement at reporting date using
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Balance assets (Level 1) inputs (Level 2) inputs (Level 3)
June 30, 2016:
May 2015 Warrants $ 329 $ — $ — $ 329

December 31, 2015:
May 2015 Warrants $ 416 $ — $ — $ 416
Conversion feature $ 1 $ — $ — $ 1
Fair value measurement at reporting date using
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Balance assets (Level 1) inputs (Level 2) inputs (Level 3)
June 30, 2017:
May 2015 Warrants $ 100 $ — $ — $ 100

December 31, 2016:
May 2015 Warrants $ 259 $ — $ — $ 259

The Company measures its derivative warrant liabilities at fair value. The May 2015 Warrants were classified within Level 3 because they were valued using the Black-Scholes-Merton model, which utilizes significant inputs that are unobservable in the market. ~~They are recorded as~~These derivative warrant 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 Investors 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 warrant liabilities arewere initially measured at fair value and are marked to market at each balance sheet date.

In addition to the above, the Company’s financial instruments as of June 30, ~~2016~~2017 and December 31, ~~2015~~2016 consisted of cash and cash equivalents, receivables, accounts payable ~~deposits~~ and ~~Notes.~~Debt. The carrying amounts of all the aforementioned financial instruments approximate fair value because of the short-term maturities of these instruments.
18

The following table summarizes the changes in the Company’s derivative warrant liabilities measured at fair value using significant unobservable inputs (Level 3) during the three- and six-month ~~period~~periods ended June 30, ~~2016:~~2017:

May 2015
Warrants Conversion
feature
December 31, 2015 $ 416 $ 1
Decrease in fair value of the warrants and conversion feature (368 ) (1 )
Increase in fair value as a result of debt modification 281 —
June 30, 2016 $ 329 $ —
May 2015
Warrants
December 31, 2016 $ 259
Decrease in fair value of the derivative warrant liabilities (159 )
June 30, 2017 $ 100

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.

June 30, ~~2016:~~2017:

Description Valuation technique Unobservable inputs Range
May 2015 Warrants Black-Scholes-Merton Volatility ~~59.55~~42.12 %
~~Risk-free~~Risk free interest rate ~~0.88~~1.51 %
Expected term, in years ~~3.84~~2.84
Dividend yield 0.00 %

December 31, ~~2015:~~2016:

Description Valuation technique Unobservable inputs Range
Conversion feature Monte-Carlo model Volatility 82.46 %
Risk free interest rate 0.46 %
Expected term, in years 0.51
Conversion price $ 10.00

May 2015 Warrants Black-Scholes-Merton Volatility 79.13 %
Risk free interest rate 1.68 %
Expected term, in years 4.34
Dividend yield 0.00 %
Description Valuation technique Unobservable inputs Range
May 2015 Warrants Black-Scholes-Merton Volatility 45.15 %
Risk-free interest rate 1.57 %
Expected term, in years 3.34
Dividend yield 0.00 %

Sensitivity of Level 3 measurements to changes in significant unobservable inputs

The inputs to estimate the fair value of the Company’s derivative warrant liabilities ~~and conversion feature~~ were the current market price of the Company’s common stock, the exercise price of the ~~warrants and conversion feature,~~derivative warrant liabilities, their remaining expected term, the volatility of the Company’s common stock price and the risk-free interest rate over the expected term. Significant changes in any of those inputs in isolation can result in a significant change in the fair value measurement.

13
Generally, an increase in the market price of the Company’s shares of common stock, an increase in the volatility of the Company’s shares of common stock, and an increase in the remaining term of the ~~warrants and conversion feature~~derivative warrant liabilities would each result in a directionally similar change in the estimated fair value of the Company’s ~~warrants.~~derivative warrant liabilities. Such changes would increase the associated liability while decreases in these assumptions would decrease the associated liability. An increase in the risk-free interest rate or a decrease in the differential between the ~~warrants’ and conversion feature’s~~derivative warrant liabilities’ exercise ~~prices~~price and the market price of the Company’s shares of common stock would result in a decrease in the estimated fair value measurement and thus a decrease in the associated liability. The Company has not, and does not plan to, declare dividends on its common stock and, as such, there is no change in the estimated fair value of the ~~warrants and conversion feature~~derivative warrant liabilities due to the dividend assumption.
19

Other Fair Value Measurements

The following table presents the placement in the fair value hierarchy of ~~intangible assets~~shares of the contingent consideration assumed by the Company following the acquisition of Excalibur, which is measured at fair value on a recurring basis, and the decrease in shares of FORM Preferred Stock issued to the XpresSpa Sellers, which was measured at fair value on a non-recurring basis as of ~~June 30, 2016 due~~April 4, 2017 (the “Valuation Date”):
Fair value measurement at reporting date using
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Balance assets (Level 1) inputs (Level 2) inputs (Level 3)
June 30, 2017:
Contingent consideration $ 316 $ — $ — $ 316
FORM Preferred Stock $ 908 $ — $ — $ 908
The purchase value of the contingent consideration assumed by the Company following the acquisition of Excalibur and the fair value of the decrease in shares of FORM Preferred Stock issued to ~~impairment. There was no impairment of intangible assets for~~ the ~~period ended December 31, 2015~~XpresSpa Sellers were determined using the Monte-Carlo simulation and, as such, ~~no fair value measurement was performed:~~
Fair value measurement at reporting date using
Quoted prices in
active markets Significant other Significant
for identical observable unobservable
Balance assets (Level 1) inputs (Level 2) inputs (Level 3)
June 30, 2016:
Patents $ 1,472 $ — $ — $ 1,472
During the six-month period ended June 30, 2016, the Company recorded a noncash impairment charge of $11,937 to reduce the net carrying value of its patent assets to its estimated fair value of $1,526. Following the impairment charge, the net carrying value of the patent assets was reduced to $1,472 as of June 30, 2016 due to additional amortization expense during the period. The fair value of these assets were classified as Level 3 of the fair value ~~hierarchy using an income-based approach.~~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.

~~Note 9. Warrants~~Valuation processes for Level 3 Fair Value Measurements

~~The following table summarizes information about warrant activity during~~To estimate the ~~six-month period ended June 30, 2016:~~
No. of warrants Weighted average
exercise price Exercise
price range
December 31, 2015 1,006,679 $ 12.92 $5.00 - $17.60
Granted — — —
Exercised — — —
Expired — — —
June 30, 2016 1,006,679 $ 9.18 $3.00 - $17.60
On March 9, 2016, the Company modified the exercise price of the May 2015 Warrants, which are recorded as derivative warrant liabilities, from $10.00 to $3.00. There were no changes to other terms of the May 2015 Warrants (see Note 7). The change in fair value of the ~~May 2015 Warrants as a result~~decrease in shares of FORM Preferred Stock, the Monte-Carlo simulation was performed using the following variables:
Description Valuation technique Variables Range
FORM Preferred Stock Monte-Carlo Share price as of the Valuation Date $ 1.95
Volatility 46.0 %
Risk free interest rate 2.22 %
Additionally, the Monte-Carlo simulation used the value of the ~~exercise price modification was accounted for as a debt discount~~underlying equity value issued to ~~be amortized over~~XpresSpa Sellers on the ~~remaining term~~date of the ~~Amended Notes.~~
~~Certain~~XpresSpa acquisition, December 23, 2016, which is comprised of the aggregation of the fair value of the shares of the Company’s ~~outstanding warrants are classified as equity warrants~~common stock, shares of FORM Preferred Stock and ~~certain are classified as derivative warrant liabilities. The Company’s outstanding equity warrants as of June 30, 2016 consist of the following:~~warrants.
No. outstanding Exercise price Remaining
contractual life Expiration Date
Series 1 Warrants 149,025 $ 17.60 1.05 years July 19, 2017
Series 2 Warrants 194,352 $ 17.60 1.05 years July 19, 2017
Reload Warrants 75,802 $ 17.60 0.61 years February 6, 2017
October 2015 Warrants 50,000 $ 5.00 4.79 years April 15, 2021
Outstanding as of June 30, 2016 469,179
~~The Company’s outstanding derivative warrants as of June 30, 2016 consist of the following:~~
No. outstanding Exercise price Remaining
contractual life Expiration Date
May 2015 Warrants 537,500 $ 3.00 3.84 years May 4, 2020
20

Note ~~10.~~7. Stock-based Compensation

~~The Company has a stock-based compensation plan available to grant stock options and restricted stock units (“RSUs”) to~~As of June 30, 2017, 1,258,603 shares of the Company’s ~~directors, employees and consultants. Under~~common stock were available for future grants under the Company’s 2012 Employee, Director and Consultant Equity Incentive ~~Plan (the “Plan”), a maximum of 1,560,000 shares of common stock may be awarded (after giving effect to~~Plan. Total stock-based compensation expense for the ~~one-for-ten reverse stock split). In 2015, the Company amended its Plan, so that a maximum of shares of common stock that may be awarded was increased to 2,100,000. As of~~six-month periods ended June 30, 2017 and 2016 ~~302,510 shares were available for future grants under the Plan.~~was $1,473 and $962, respectively. Total stock-based compensation expense for the three-month periods ended June 30, 2017 and 2016 was $732 and ~~2015 was~~ $499, ~~and $1,253,~~ respectively. ~~Total stock-based compensation expense for~~
The following table illustrates the options granted during the six-month ~~periods~~period ended June 30, ~~2016 and 2015 was $962 and $3,125, respectively.~~2017.
Title Grant date No. of
options Exercise
price Fair value at
grant date Vesting terms Assumptions used in
Black-
Scholes option pricing
model
Directors, management, and employees January 2017 1,545,000 $2.12 – $2.15 $0.89 – $0.96 Over 1 year for directors; Over 3 years for management and employees
Volatility: 44.27% – 44.90%
Risk free interest rate: 1.95% – 2.16%
Expected term, in years: 5.29 – 5.79
Dividend yield: 0.00%

The following table illustrates the RSUs granted during the six-month period ~~ended~~ June 30, ~~2016.~~
2017.

Title Grant date No. of RSUs Exercise price Fair market
value at grant date Vesting term
Consultant March 9, 2016 10,000 — $ 2.13 0.33 years
Title Grant date No. of RSUs Fair value at grant date Vesting term
Management and employees January 2017 400,942 $ 2.12 Over 1 year period, vesting on 1 year anniversary of grant date

The activity related to stock options and RSUs during the six-month period ended June 30, ~~2016~~2017 consisted of the following:

RSUs Options
No. of
RSUs Weighted average
grant date fair
value No. of
options Weighted average
exercise price Exercise price
range Weighted average
grant date fair
value
Outstanding at January 1, 2016 53,280 $ 36.31 871,484 $ 30.65 $ 5.10 - 55.00 $ 20.49
Granted 10,000 $ 2.13 730,000 $ 1.66 $ 1.55 - 1.92 $ 0.89
Vested/Exercised (55,472 ) $ 30.03 — — — —
Forfeited — — (100,050 ) $ 27.88 $ 5.90 – 41.00 $ 17.04
Expired — — (9,000 ) $ 55.00 $ 55.00 $ 26.20
Outstanding at June 30, 2016 7,808 $ 37.20 1,492,434 $ 16.51 $ 1.55 – 55.00 $ 10.64
Exercisable at June 30, 2016 — — 880,767 $ 26.03 $ 1.55 – 55.00
RSUs Options
No. of
RSUs Weighted
average
grant date
fair value No. of
options Weighted
average
exercise
price Exercise
price range Weighted
average
grant date
fair value
Outstanding as of January 1, 2017 — — 3,679,101 $ 7.60 $ 1.55 – 55.00 $ 5.41
Granted 400,942 $ 2.12 1,545,000 $ 2.12 $ 2.12 – 2.15 $ 0.93
Vested/Exercised — — — — — —
Forfeited — — (72,334 ) $ 24.80 $ 1.55 – 37.20 $ 16.81
Expired — — (16,368 ) $ 43.66 $ 9.94 – 55.00 $ 22.02
Outstanding as of June 30, 2017 400,942 $ 2.12 5,135,399 $ 5.60 $ 1.55 – 41.00 $ 3.85
Exercisable as of June 30, 2017 — 2,459,982 $ 9.72 $ 1.55 – 41.00
15
On January 20, 2017, the Company entered into amended employment agreements with its named executive officers. Under the terms of certain of these agreements, certain of these officers are entitled to a percentage of the amount equal to the total amount of cash and the fair market value of all noncash consideration paid or payable to the Company or its stockholders in connection with an initial public offering or a change of control of certain subsidiaries of the Company. The amended employment agreements also allow for the granting of equity awards to certain officers in connection with an initial public offering of certain subsidiaries of the Company.

The Company did not recognize tax benefits related to its stock-based compensation as there is a full valuation allowance recorded.

21
Note 8. Income Taxes

~~Note 11. Income Taxes~~
The Company’s provision for income taxes consists of federal, state, local, and foreign taxes in amounts necessary to align the Company’s year-to-date provision for income taxes with the effective tax rate that the Company expects to achieve for the full year. Each quarter, the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as deemed necessary. The income tax provisions for the six months ended June 30, 2017 reflect an estimated global annual effective tax rate of approximately -3.96% from continuing operations. Discontinued operations for the six months ended June 30, 2017 reflect an annual effective tax rate of 0.58%.

As of June 30, ~~2016,~~2017, deferred tax assets generated from the Company’s U.S. activities were offset by a valuation allowance because realization depends on generating future taxable income, which, in the Company’s estimation, is not more likely than not to be generated before such net operating loss carryforwards expire. The Company expects its effective tax rate for its current fiscal year to be significantly lower than the statutory rate as a result of a full valuation allowance; therefore, any loss before income taxes does not generate a corresponding income tax benefit.

~~The Company did not have any material unrecognized~~Income tax ~~benefits as of~~expense for the six months ended June 30, ~~2016.~~2017 of approximately $227 was attributable primarily to tax deductions related to goodwill, for which there is no corresponding financial statement amortization expense, partially offset by the reduction in the valuation allowance needed following the acquisition of Excalibur's deferred tax liability. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates. Although the Company has an immaterial amount of uncertain tax positions, the Company does not expect to record any additional material provisions for unrecognized tax benefits ~~within~~with the next year.
Note 9. Related Parties Transactions
On April 22, 2015, XpresSpa entered into a credit agreement and secured promissory note (the “Debt”) with Rockmore Investment Master Fund Ltd. (“Rockmore”) that was amended on August 8, 2016. Rockmore is an investment entity controlled by the Company’s board member, Bruce T. Bernstein. The Debt had an outstanding balance of $6,500 as of both June 30, 2017 and December 31, 2016, which is included in long-term liabilities in the condensed consolidated balance sheets. During the six-month period ended June 30, 2017, XpresSpa paid $430 of interest and recorded $365 of interest expense. During May 2017, per the original agreement and with Rockmore’s consent, the Company elected to extend the maturity date of the Debt from May 1, 2018 to May 1, 2019. No other material terms of the Debt were modified.
In addition, the Company paid $212 to Mr. Bernstein in March 2017 for the legal costs incurred in conjunction with the acquisition of XpresSpa and certain legal proceedings related to litigation with Amiral Holdings SAS (“Amiral”) prior to the completion of such acquisition, as Mr. Bernstein was indemnified by XpresSpa and was a defendant in the Amiral legal proceedings. These costs are included in accounts payable, accrued expenses and other current liabilities in the condensed consolidated balance sheet as of December 31, 2016.
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Note 10. Discontinued Operations and Assets and Liabilities Held For Disposal
During June 2017, the Company concluded that the requirement to report the results of FLI Charge, a wholly-owned subsidiary included in its technology operating segment, as discontinued operations was triggered. The Company is currently negotiating the terms of an agreement to sell FLI Charge to a third-party investor in exchange for a minority investment in the form of shares of preferred stock in the newly created entity, which will own and operate FLI Charge. The Company will not be providing any continued management or financing support to FLI Charge. The transaction is expected to close in the third quarter of 2017. In connection with this agreement, a non-cash impairment loss of $1,092 relating to FLI Charge’s technology assets and goodwill was recorded as of June 30, 2017. The following table represents the components of operating results from discontinued operations, as presented in the condensed consolidated statements of operations and comprehensive loss:
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Revenue $ 19 13 53 $ 29
Cost of sales (36 ) — (68 ) (2 )
Depreciation, amortization and impairment (1,130 ) (21 ) (1,168 ) (42 )
General and administrative (405 ) (990 ) (930 ) (1,763 )
Loss from discontinued operations before income taxes (1,552 ) (998 ) (2,113 ) (1,778 )
Income tax expense — — — —
Net loss from discontinued operations $ (1,552 ) $ (998 ) $ (2,113 ) $ (1,778 )
In addition, the following table presents the carrying amounts of the major classes of assets and liabilities held for sale as of June 30, 2017 and December 31, 2016, as presented in the condensed consolidated balance sheets.
June 30, 2017 December 31, 2016
Accounts receivable, net $ 39 $ 45
Inventory 208 53
Other current assets 24 92
Property and equipment, net 196 183
Intangible assets, net — 377
Goodwill — 757
Assets held for disposal $ 467 $ 1,507

Accounts payable, accrued expenses and other current liabilities $ 88 $ 196
Deferred revenue 9 10
Liabilities held for disposal $ 97 $ 206

Note ~~12.~~11. Commitments and Contingencies

~~FLI Charge~~
Litigation and legal proceedings
~~FLI Charge launched~~
Certain of the Company’s outstanding legal matters include speculative claims for substantial or indeterminate amounts of damages. The Company regularly evaluates developments in its ~~consumer product line~~legal matters that could affect the amount of any potential liability and makes adjustments as appropriate. Significant judgment is required to determine both the likelihood of there being a liability and the estimated amount of a loss related to such matters.
With respect to the Company’s outstanding legal matters, based on ~~Indiegogo,~~its current knowledge, the Company’s management believes that the amount or range of a ~~crowdfunding platform,~~potential loss will not, either individually or in the aggregate, have a material adverse effect on ~~June 15, 2016;~~its business, consolidated financial position, results of operations or cash flows. However, the ~~campaign was ongoing~~outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Company evaluated the matters described below, and assessed the probability and likelihood of the occurrence of liability. Based on management’s estimates, the Company recorded $650, which is included in accounts payable, accrued expenses, and other current liabilities in the condensed consolidated balance sheet as of June 30, ~~2016, at which time funds raised from the crowdfunding campaign was $177. FLI Charge expects to deliver products to the participants in the fourth quarter of 2016.~~
~~Litigation and legal proceedings~~
~~ZTE~~
On December 7, 2015, the Company entered into a confidential settlement and license agreement (the “Settlement Agreement”) with ZTE Corporation and its affiliates (collectively, “ZTE”), pursuant to which the parties withdrew all pending litigations and proceedings against each other and the Company granted ZTE a non-exclusive, non-transferable, worldwide perpetual license to certain patents and patent applications owned by the Company.
~~Pursuant to the Settlement Agreement, the parties have taken steps to withdraw all pending litigations and proceedings against one another.~~
In several jurisdictions, though ZTE requested that government organizations close proceedings against FORM, those organizations make such determinations on their own volition. In China, ZTE requested that the National Developmental and Reform Commission (“NDRC”) conclude its investigation against FORM; however, the NDRC has not yet closed its investigation.
In addition, in China and the Netherlands, FORM continues to appeal patent invalidity rulings issued in connection with proceedings originally brought by ZTE. In each instance, ZTE has indicated that it will not oppose FORM’s appeals, though FORM must still plead its case before the respective adjudicatory body in each jurisdiction. On August 3, 2016, the European Patent Office dismissed an opposition action filed on one of FORM’s recently issued European patents. No contingent liability is expected or recorded for the ZTE-related legal proceedings.
~~ASUS~~
FORM had filed patent infringement lawsuits against ASUSTeK Computer Inc. and its subsidiaries (collectively, “ASUS”) in Germany, India, and Spain. In March 2016, the parties settled their disputes and ended all litigations between them. However, Google, Inc. (“Google”) intervened as a party in FORM’s litigation against ASUS in India, and, notwithstanding the settlement between FORM and ASUS, the lawsuit remains pending with respect to FORM and Google. As such, as of June 30, 2016, the Company had reversed $222 of contingent liabilities related to potential legal fees that were previously accrued for the proceedings related to this matter.
~~Deposits with courts~~2017.

The Company ~~made deposits with courts during 2015 and 2014, related to its proceedings~~expenses legal fees in ~~Germany, Brazil, Romania and Malaysia. Deposits with courts paid~~the period in ~~local currency~~which they are remeasured on the balance sheet date based on the related foreign exchange rate on that date. As of December 31, 2015, deposits with courts, which are recorded as current assets, totaled $1,930. As of June 30, 2016, all deposits that had been posted with the courts in connection with its litigation with ZTE have been returned to the Company.incurred.
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Cordial
Effective October 2014, XpresSpa terminated its former Airport Concession Disadvantaged Business Enterprise (“ACDBE”) partner, Cordial Endeavor Concessions of Atlanta, LLC (“Cordial”), in several store locations at Hartsfield-Jackson Atlanta International Airport.
On January 3, 2017, XpresSpa filed a lawsuit in the Supreme Court of the State of New York, County of New York against Cordial and several related parties. The lawsuit alleges breach of contract, unjust enrichment, breach of fiduciary duty, fraudulent inducement, fraudulent concealment, tortious interference, and breach of good faith and fair dealing related to XpresSpa’s former partnership with Cordial as XpresSpa’s ACDBE partner in several store locations at Hartsfield-Jackson Atlanta International Airport (the “Cordial Litigation”). On March 3, 2017, XpresSpa filed a first amended complaint against Cordial. On April 5, 2017, Cordial filed a motion to dismiss the Cordial Litigation.
On January 4, 2017, XpresSpa filed a lawsuit in the United States District Court for the Southern District of New York against its former attorney, Kevin Ross, and his law firm, alleging malpractice, unjust enrichment, breach of fiduciary duty, fraudulent inducement, fraudulent concealment, tortious interference, and promissory estoppel related to XpresSpa’s former partnership with Cordial, as well as XpresSpa’s engagement of Kevin Ross as its attorney (the “Ross Litigation”). On March 17, 2017, XpresSpa filed a First Amended Complaint against the defendants. On June 2, 2017, the Ross Defendants filed their answer.
Both the Cordial Litigation and Ross Litigation are pending before the respective courts.
In re Chen et al.
On March 16, 2015, four former employees of XpresSpa who worked at locations in John F. Kennedy International Airport and LaGuardia Airport filed a putative class and collective action wage-hour litigation in the United States District Court for the Eastern District of New York, claiming that they and other spa technicians were misclassified, and that overtime was unpaid. On September 23, 2016, the Court conditionally certified the class. The parties held a mediation on February 28, 2017 and reached an agreement on a settlement in principle. The parties are in the process of finalizing a formal settlement agreement, and preparing a motion to the Court for preliminary approval of a classwide settlement.

Other

XpresSpa is involved in various other claims and legal actions that arise in the ordinary course of business. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on XpresSpa’s financial position, results of operations, liquidity, or capital resources. However, a significant increase in the number of these claims, or one or more successful claims under which the Company incurs greater liabilities than the Company currently anticipates, could materially and adversely affect the Company’s business, financial condition, results of operations and cash flows.
The Company’s intellectual property operating segment is ~~also~~ engaged in ~~additional~~ litigation, for which no ~~contingent~~ liability is recorded, as the Company does not expect ~~any~~a material negative outcome.
The Company is currently in discussions with the previous owner of some of its patents regarding whether the entirety of the payment received from ZTE in December 2015 is subject to the royalty rate under the Confidential Patent Purchase Agreement dated August 9, 2012.
~~Leases~~
In January 2014, the Company entered into an amended lease agreement for its corporate executive office in New York for the lease of a different office space within the same building. The initial annual rental fee for this new office was approximately $403 (subject to certain future escalations and adjustments) beginning on August 1, 2014, which was the date when the new office space became available. This lease will expire in October 2019. Group Mobile has a lease for its office space in Chandler, AZ. The annual rental fee is approximately $72; the current lease, which originally was due to expire on June 30, 2016, was amended in February 2016 and extended until July 31, 2019. Rent expense for operating leases for the three and six-month periods ended June 30, 2016 were $109 and $218, respectively. Rent expense for operating leases for the three and six-month periods ended June 30, 2015 were $91 and $183, respectively.

Note ~~13.~~12. Subsequent Events

On ~~August 8, 2016,~~July 26, 2017, the Company entered into an ~~Agreement and Plan of Merger~~underwriting agreement (the ~~“Merger~~“Underwriting Agreement”) with ~~FHXMS,~~Roth Capital Partners, LLC, ~~a Delaware limited liability company and wholly-owned subsidiary of~~acting as the Company (the “Merger Sub”), XpresSpa Holdings, LLC, a Delaware limited liability company (“XpresSpa”), the unitholders of XpresSpa who are parties thereto (the “Unitholders”) and Mistral XH Representative, LLC, as representative of the ~~Unitholders~~several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale (the ~~“Representative”~~“Offering”)~~, pursuant to which the Merger Sub will merge with and into XpresSpa, with XpresSpa being the surviving entity and a wholly-owned subsidiary~~ of 6,900,000 shares of the ~~Company (the “Surviving Entity”~~Company’s common stock, par value $0.01 per share (“FORM Common Stock”) including 900,000 shares subject to the Underwriters’ over-allotment option, which was exercised on August 2, 2017 and closed on August 4, 2017. The price to the public in the Offering was $1.10 per share and the ~~Unitholders becoming stockholders of FORM (the “Merger”).~~
~~XpresSpa is a leading airport retailer of spa services and related products, and also sells spa products through its internet site. Services and products include: (i) massage services for~~Underwriters agreed to purchase the neck, back, feet and whole body, (ii) nail care, such as pedicures, manicures and polish changes, (iii) beauty care services such as waxing and facials, (iv) hair care, such as haircuts and blow outs, (v) spa products such as massagers, lotions and aromatherapy aids and (vi) travel products such as neck pillows and eye masks.
Upon completion of the Merger, (i) the then-outstanding common units of XpresSpa (other than those held by the Company, which will be cancelled without any consideration) and (ii) the then-outstanding preferred units of XpresSpa (other than those held by the Company, which will be cancelled without any consideration) will be automatically converted into the right to receive an aggregate of:
~~(a)~~ ~~2,500,000 shares of FORM common stock, par value $0.01 per share (“FORM Common Stock”),~~
~~(b)~~ 494,792 shares of newly designated Series D Convertible Preferred Stock, par value $0.01 per share, of FORM (“FORM Preferred Stock”) with an aggregate initial liquidation preference of $23,750, and
~~(c)~~ five-year warrants to purchase an aggregate of 2,500,000 shares of FORM Common Stock, at an exercise price of $3.00 per share, each subject to adjustment in the event of a stock split, dividend or similar events.
~~The FORM Preferred Stock shall be initially convertible into an aggregate of 3,958,336~~ shares of FORM Common Stock ~~which equals a $6.00 per share conversion price, and each holder of FORM Preferred Stock shall be entitled to vote on an as converted basis. The FORM Preferred Stock is senior~~from the Company pursuant to the FORM Common Stock and the terms of the FORM Preferred Stock contain no restrictions on the Company’s ability to issue additional senior preferred securities or the Company’s ability to incur additional preferred securities in the future. The Company has the right, but not the obligation, upon ten trading days’ notice to convert the outstanding shares of FORM Preferred Stock into FORM Common Stock at the then applicable conversion ratio, at any time or from time to time, if the volume weighted average price per share of the FORM Common Stock exceeds $9.00 for over any 20 days in a 30 consecutive trading day period. The term of the FORM Preferred Stock is seven years, after which time FORM can repay the holders in shares of FORM Common Stock or cash at the Company’s election. FORM Preferred Stock will accrue interest at 9% per annum, or $4.32 per share of FORM Preferred Stock.
~~In addition, the Company entered into subscription agreements to sell 750,574 shares of its unregistered Common Stock to certain holders of XpresSpa,~~Underwriting Agreement at a purchase price of ~~$2.31~~$1.023 per ~~share, for an aggregate purchase price of $1,734.~~
On August 8, 2016, FORM agreed to purchase from XpresSpa an aggregate of 1,733,826 of Series C Preferred Units of XpresSpa, at a per unit purchase price of $1.00 per unit, for an aggregate purchase price of $1,734.share. The ~~Series C Preferred Units of XpresSpa will have a preference in the amount of its initial investment and shall bear 12% interest until the closing of the anticipated merger agreement.~~
~~Immediately following the completion of the Merger (without taking into account any shares of FORM Common Stock held by XpresSpa equity holders prior~~net proceeds to the ~~completion of~~Company from the ~~Merger), the former Unitholders of XpresSpa are expected to own~~Offering were approximately ~~18% of the outstanding FORM Common Stock (or 33% of the outstanding FORM Common Stock calculated on a fully diluted basis)~~$6,700 after deducting underwriting discounts and ~~the current stockholders of the Company are expected to own approximately 82% of the outstanding FORM Common Stock (or 67% of the outstanding FORM Common Stock calculated on a fully diluted basis).~~
~~The Company engaged various third parties to perform legal, financial~~commissions and tax due diligence associated with the Merger. In addition, the Company engaged a third-party valuation firm to perform a valuation of the purchase considerations and purchase price allocation. Among the service providers, the Company engaged Redridge Lender Services LLC to perform financial due diligence. The Company’s CEO and certain members of his family own a minority equity position in Redridge Lender Services LLC, which may be considered a related party. The fee for this engagement is $101, of which approximately $10 was incurred in the three-month period ended June 30, 2016 and is reflected in general and administrative expenses for the three- and six-month periods ended June 30, 2016 in the condensed consolidated statements of operations.
other estimated offering expenses.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipates,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “will be,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed on March ~~10, 2016~~30, 2017 (the ~~“2015~~“2016 Annual Report”) and this Quarterly Report on Form 10-Q and any future reports we file with the Securities and Exchange Commission (“SEC”). The forward-looking statements set forth herein speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements, except as required by law.

All references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” refer to FORM Holdings Corp. (prior to May 5, 2016, known as “Vringo, Inc.”), a Delaware corporation, and its consolidated subsidiaries.

Overview

~~On May 6, 2016, we changed the name of our company from Vringo, Inc. to~~
FORM Holdings Corp. (“FORM” or the “Company”) ~~and concurrently announced our repositioning as a holding company of small and middle market growth companies. Our focus is on acquiring and building companies that would benefit from:~~
• ~~additional capital~~
• ~~exposure to visibility from the public markets~~
• ~~talent recruiting~~
• ~~rebranding and~~
• ~~implementation of best practices.~~
Our management team is committed to execute on our strategy. We are industry agnostic, but limit the scope of our pipeline by looking only at companies with a clear path to grow in excess of $100,000,000 in revenue.
~~Our common stock, par value $0.01 per share, which was previously listed on The NASDAQ Capital Market under the trading symbol “VRNG,”~~ has ~~been listed under the trading symbol “FH” since May 9, 2016.~~
~~We currently have~~ three operating segments:
~~Group Mobile~~
~~FLI Charge~~
~~Intellectual property~~
Prior to December 31, 2013, we operated a global platform for the distribution of mobile social applications and services. On February 18, 2014, we sold our mobile social application business to InfoMedia Services Limited (“InfoMedia”), receiving an 8.25% ownership interest in InfoMedia as consideration and a seat on the board of directors of InfoMedia. As part of the transaction, we have the opportunity to license certain intellectual property assets and work with InfoMedia to identify and protect new intellectual property.
24
~~Segments~~
~~We operate in three operating segments: Group Mobile, FLI Charge~~ wellness, technology and intellectual property.

Our ~~Strategy and Outlook~~
~~Group Mobile~~wellness operating segment consists of XpresSpa, which is a ~~supplier~~leading airport retailer of built-to-order rugged computers, mobile devices and accessories. We plan to increase Group Mobile’s revenue, which we believe can be achieved by adding new products, exploring new distribution verticals, such as military and government, and increasing the sales team’s geographic coverage.~~In addition, we plan to continue to enhance our intellectual property rights around our FLI Charge technology and products.FLI Charge~~ plans to strengthen and develop partnerships in numerous markets including automotive, education, office, healthcare, power tools and vaporizers. Our strategy for our intellectual property operating segment is to continue to monetize our existing portfolio of intellectual property through licensing and strategic partnerships.
~~Group Mobile~~
~~Group Mobile~~spa services. XpresSpa is a ~~growing~~well-recognized airport spa brand with 52 locations, including 48 domestic and innovative full, end-to-end solution provider for project lifecycle services including system integration, hardware service support, pre- and post-deployment and customer support helpdesk. Group Mobile provides total hardware solutions, including rugged laptops, tablets, and handheld computers. Group Mobile also markets rugged mobile printers, vehicle computer docking and mounting gear, power accessories, wireless communication products, antennas, carrying cases and other peripherals, accessories and add-ons needed to maximize productivity in a mobile- or field-computing environment. Group Mobile’s professional service offerings are evolving into project lifecycle services including technology consultations, development and deployment, project and asset management, equipment installation, break-fix, hardware service technical support, 24-7 helpdesk and more.
Group Mobile is moving aggressively to provide industry leading Law Enforcement In-Vehicle “Video and Body Worn” camera solutions to meet the complex mobile technology demands of thousands of law enforcement agencies and officers in the United States (“U.S.”) market. Key to the Group Mobile long-term strategy is the complete professional services, post deployment services and lifecycle management of Group Mobile offerings to bring stability to the customer mobile technology platforms.
Group Mobile purchases rugged mobile computing equipment and complementary products from its primary distribution and manufacturing partners and sells them to enterprises, resellers, and retail customers. Our primary customers range from corporations to local governments, emergency first responders and healthcare organizations. We believe that Group Mobile’s business is characterized by gross profits as a percentage of revenue slightly higher than is commonly found in resellers of computing devices. The market for rugged mobile computing products is trending towards an increase in the volume of unit sales combined with declining unit prices as the business transitions from primarily being comprised of laptops to one primarily comprised of rugged tablets. As this transition has occurred, Group Mobile is seeing shortened product life cycles and industry specific devices for segments such as healthcare. Group Mobile sets sale prices based on the market supply and demand characteristics for each particular product. Group Mobile is highly dependent on the end-market demand for rugged mobile computing products, which is influenced by many factors including the introduction of new IT products by OEM, replacement cycles for existing rugged mobile computing products, overall economic growth, local and state budgets, and general business activity.
Product costs represent the single largest expense and product inventory is one of the largest working capital investments for Group Mobile. Group Mobile’s primary suppliers include Synnex Corporation, Ingram Micro Inc., and Xplore Technologies Corporation, which, combined, represent approximately 80% of Group Mobile’s inventory purchases. We have reseller agreements with most of our OEM and distribution partners. These agreements usually provide for nonexclusive resale and distribution rights. The agreements are generally short-term, subject to periodic renewal, and often contain provisions permitting termination by either our supplier or us without cause upon relatively short notice. Furthermore, product procurement from the OEM suppliers is a highly complex process and as such, efficient and effective purchasing operations are critical to Group Mobile’s success.
~~FLI Charge~~
FLI Charge is a wireless power company dedicated to making it easier for people to power and charge the multitude of mobile electronic devices they use on a daily basis. By eliminating the need to search and compete for outlets and charging cables, we are improving the powering and charging experience for all battery and DC powered devices.
FLI Charge designs, develops, licenses, manufactures and markets wireless conductive power and charging solutions. FLI Charge is currently working with partners in several verticals to bring products to market. These verticals include education, office, hospitality, automotive and consumer electronics among others. To date, we have not yet generated any substantial revenue from our products. We believe that FLI Charge’s patented technology is the only wireless power solution that is fully interoperable between different mobile devices ranging from smartphones to power tools, and many more. FLI Charge’s wireless power solution can simultaneously power multiple devices on the same pad no matter their power requirements or positions on the pad.
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The FLI Charge ecosystem consists of power pads or surfaces as well as devices that are connected to or embedded with FLI Charge enabling technology. FLI Charge pads and surfaces are connected to a power source or battery. The surface of the pad has conductive contact strips that provide power and are constantly monitored by control circuitry that immediately halts power transfer if an unapproved load or short-circuit condition is detected. FLI Charge-enabled devices are embedded with the FLI Charge contact enablement that consists of four contact points, known as the FLI Charge “constellation.” The constellation is designed to make an immediate and continuous electrical connection with the contact strips regardless of the device’s orientation on the pad. The enablement monitors the power coming from the pad and ensures that the correct amount of power goes to the device. Once an approved FLI Charge device is placed on a pad, power is transferred immediately to charge or power the device.
There are several competing wireless charging technologies on the market or under development today. The most popular competing technology is inductive wireless charging, in which magnetic induction uses a magnetic coil to create resonance, which can transmit energy over a relatively short distance. The amount of power delivered is a function of the size of the coils, and the coils must be aligned and paired within a typical distance of less than one inch. Products utilizing magnetic induction have been available for 10+ years in products such as rechargeable electronic toothbrushes and pace makers. The leading inductive technologies deliver a maximum of 10-15 watts. Other competing technologies include magnetic resonance, RF harvesting, laser and ultrasound.
~~As compared to each of the competing wireless technologies above, we believe that our conductive technology exhibits many competitive advantages including:~~
~~charge rates/efficiency – FLI Charge pads charge devices nearly as fast as plugging them into a wall outlet;~~
~~multiple devices – FLI Charge pads can charge or power multiple devices at the same time without reducing the charging speed;~~
~~safety – FLI Charge’s technology is as safe as plugging devices into a wall outlet;~~
maximum power – FLI Charge pads can supply as much as 150 watts of power, which is enough to charge or power devices with relatively high power requirements such as power tool batteries and flat screen monitors;
~~positioning freedom – FLI Charge’s technology allows for devices to be placed in any orientation, anywhere on the pad, without sacrificing any charging speed; and~~
~~compatibility – all FLI Charge enabled electronic devices are compatible with all FLI Charge pads.~~
~~FLI Charge launched its consumer product line on Indiegogo, a crowdfunding platform, on June 15, 2016; the campaign was ongoing~~4 international, as of June 30, ~~2016, at which time funds raised from the crowdfunding campaign was $177,000. FLI Charge expects to deliver products to the participants~~2017. XpresSpa offers travelers premium spa services, including massage, nail and hair as well as spa and travel products. We acquired XpresSpa in the fourth quarter of 2016.

~~Intellectual Property~~Our technology operating segment consists of Group Mobile as well as an 11% equity interest in InfoMedia Services Limited (“InfoMedia”). Group Mobile offers rugged hardware and software solutions, including laptops, tablets, and mobile printers, as well as installation and deployment services. In the first quarter 2017, we completed the acquisition of Excalibur Integrated Systems, Inc. (“Excalibur”) which is an end-to-end solutions provider of mobile hardware devices, wireless network security, data networking, telephony and mobile application development and software solutions. Following the acquisition, Excalibur was merged with Group Mobile within our technology operating segment. Our equity interest in InfoMedia, which is accounted for under the cost method of investment, increased from 8.25% to 11% in the first quarter of 2017 due to a realignment of ownership interests.
As of June 30, 2017, our FLI Charge business is reflected as discontinued operations in our condensed consolidated statements of operations and comprehensive loss and assets held for disposal and liabilities held for disposal in our condensed consolidated balance sheets as a result of an offer from a third party to finance its ongoing operations.
We are currently evaluating strategic alternatives with respect to Group Mobile in an attempt to enhance stockholder value. These strategic alternatives may include a possible sale, merger, spin-off or other separation of Group Mobile or other forms of business combinations or strategic transactions. We are seeking to enter into one or more strategic transactions involving Group Mobile in the first quarter of 2018.

Our intellectual property operating segment is engaged in the ~~innovation, development and~~ monetization of ~~intellectual property. Our portfolio consists of over 600~~ patents related to content and ~~patent applications covering telecom infrastructure, internet search, ad-insertion~~ad delivery, remote monitoring and mobile technologies.

~~We are currently focused on monetizing~~
Subsequent to June 30, 2017, we completed a public offering of 6,900,000 shares of our ~~technology portfolio through a variety~~common stock, at $1.10 per share, for net proceeds of value enhancing initiatives including, but not limited to, licensing, litigation and strategic partnerships. For further information regarding our intellectual property enforcement activities, refer to Part II, Item 1, Legal Proceedings, in this Quarterly Report on Form 10-Q.approximately $6.7 million.

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~~Recent Developments~~
Second Quarter 2017 Highlights

~~Name Change~~
Three Months Ended June 30, 2017
Wellness Technology Intellectual
Property Corporate Total
Total revenue $ 12,927,000 $ 3,450,000 $ — $ — $ 16,377,000

Cost of sales
Products 1,124,000 2,690,000 — — 3,814,000
Labor 5,783,000 — — — 5,783,000
Occupancy 1,983,000 — — — 1,983,000
Other operating costs 1,511,000 — 118,000 — 1,629,000
Total cost of sales 10,401,000 2,690,000 118,000 — 13,209,000

Gross profit 2,526,000 760,000 (118,000 ) — 3,168,000
Gross profit as a % of total revenue 19.6 % 22.0 % — — 19.3 %

Depreciation and amortization
Depreciation 2,327,000 14,000 — 7,000 2,348,000
Amortization 592,000 148,000 6,000 — 746,000
Total depreciation and amortization 2,919,000 162,000 6,000 7,000 3,094,000

General and administrative
Stock-based compensation — — — 732,000 732,000
Other general and administrative 1,599,000 1,340,000 2,000 1,531,000 4,472,000
Total general and administrative 1,599,000 1,340,000 2,000 2,263,000 5,204,000

Operating loss from continuing operations $ (1,992,000 ) $ (742,000 ) $ (126,000 ) $ (2,270,000 ) $ (5,130,000 )
On May 6, 2016, we changed the name of our company from Vringo, Inc. to FORM Holdings Corp. (“FORM” or the “Company”) and concurrently announced our repositioning as a holding company of small and middle market growth companies. Our focus is on acquiring and building companies that would benefit from:
• ~~additional capital~~
• ~~exposure to visibility from the public markets~~
• ~~talent recruiting~~
• ~~rebranding and~~
• ~~implementation of best practices.~~
Our management team is committed to execute on our strategy. We are industry agnostic, but limit the scope of our pipeline by looking only at companies with a clear path to grow in excess of $100,000,000 in revenue.

~~Impairment of Patents~~
We use GAAP and non-GAAP measurements to assess the trends in our business. With respect to XpresSpa, we review XpresSpa’s Adjusted EBITDA, a non-GAAP measure, which we define as earnings before interest, tax, depreciation and amortization expense, excluding one-time costs (e.g., merger and acquisition and integration related costs) and stock-based compensation.

Our name change and repositioning as a holding company was deemed a triggering event, which required our patent assets to be tested for impairment. In performing this impairment test, we determined that the patent portfolios, which together represent an asset group, were subject to impairment testing. In the first step of the impairment test, we utilized our projections of future undiscounted cash flows based on our existing plans for the patents. As a result, it was determined that our projections of future undiscounted cash flows were less than the carrying value of the asset group. Accordingly, we performed 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 result, following amortization for the month of April, we recorded an impairment charge of $11,937,000, which resulted in a new carrying value of $1,526,000 on May 6, 2016. Following the impairment, we reevaluated the remaining useful life and concluded that there were no changes in the estimated useful life.
~~Shareholder Rights Plan~~
On March 18, 2016, we announced that our Board of Directors adopted a shareholder rights plan in the form of a Section 382 Rights Agreement designed to preserve our tax assets. As a part of the plan, our Board of Directors declared a dividend of one preferred-share-purchase right for each share of our common stock outstanding as of March 29, 2016. Effective on March 18, 2016, if any group or person acquires 4.99% or more of our outstanding shares of common stock, or if a group or person that already owns 4.99% or more of our common stock acquires additional shares representing 0.5% or more of our common stock, then, subject to certain exceptions, there would be a triggering event under the plan. The rights would then separate from our common stock and would be adjusted to become exercisable to purchase shares of our 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. Our Board of DirectorsAdjusted EBITDA has the discretion to exempt any acquisition of our common stock from the provisions of the plan and has the ability to terminate the plan prior to a triggering event. In connection with this plan, we filed a Certificate of Designation of Series C Junior Preferred Stock with the Secretary of State of the State of Delaware on March 18, 2016.
~~Senior Secured Notes~~
On March 9, 2016, we entered into an exchange note agreement (the “Exchange Note Agreement”) with the holders (the “Investors”) of our $12,500,000 Senior Secured Notes (the “Notes”), which we originally issued in a registered direct offering on May 4, 2015. Pursuant to the Exchange Note Agreement, we issued to the Investors an aggregate of 703,644 shares of our common stock, par value $0.01 per share, in exchange for the reduction of $1,267,000 of the outstanding aggregate principal amount of the Notes and $49,000 of accrued interest. As a result, the outstanding aggregate principal amount under the Notes was reduced from $3,016,000 to $1,749,000 as of March 9, 2016.
In addition, on March 9, 2016, with the consent of each of the Investors, we 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 our common stock and will be payable by us 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) we 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) we will pay to the Investors on the Maturity Date 102% of the outstanding aggregate principal amount of the Amended Notes. We also agreed to maintain a cash balance (including cash equivalents) of not less than $2,900,000.
In addition, we agreed to reduce the exercise price of the warrants to purchase an aggregate of 537,500 shares of our common stock granted as part of the initial agreement (the “May 2015 Warrants”) from $10.00 to $3.00 per share and 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, we paid a restructuring fee of $50,000 to the Investors.
On July 1, 2016, we prepaid in full our Amended Notes that were due on June 30, 2017. As required by the terms of the Amended Notes, notice of prepayment was delivered to the Investors on June 30, 2016. We repaid the Amended Notes in full, including repayment of the principal and accrued interest as well as an additional 15% for early repayment. We used an aggregate of $2,011,000 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 our assets, including intellectual property, were released by the Investors.
~~Reverse Stock Split~~
~~Unless otherwise noted, the information contained~~been presented in this Quarterly Report on Form 10-Q ~~gives effect~~and is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We consider Adjusted EBITDA to ~~a one-for-ten reverse stock split~~be an important indicator for the performance of our ~~common stock effected~~business, but not a measure of performance or liquidity calculated in accordance with U.S. GAAP. We have included this non-GAAP financial measure because management utilizes this information for assessing our performance and liquidity, and as an indicator of our ability to make capital expenditures and finance working capital requirements. We believe that Adjusted EBITDA is a measurement that is commonly used by analysts and some investors in evaluating the performance and liquidity of companies such as us. In particular, we believe that it is useful for analysts and investors to understand this relationship because it excludes transactions not related to our core cash operating activities. We believe that excluding these transactions allows investors to meaningfully analyze the performance of our core cash operations. Adjusted EBITDA should not be considered in isolation or as an alternative to cash flow from operating activities or as an alternative to operating income or as an indicator of operating performance or any other measure of performance derived in accordance with GAAP. In evaluating our performance as measured by Adjusted EBITDA, we recognize and consider the limitations of this measurement. Adjusted EBITDA does not reflect our obligations for the payment of income taxes, interest expense, or other obligations such as capital expenditures. Accordingly, Adjusted EBITDA is only one of the measurements that management utilizes.
The following table provides a reconciliation of operating loss from continuing operations for our three operating segments and corporate to Adjusted EBITDA income (loss) for the three months ended June 30, 2017:
Three Months Ended June 30, 2017
Wellness Technology Intellectual
Property Corporate Total
Operating loss from continuing operations $ (1,992,000 ) $ (742,000 ) $ (126,000 ) $ (2,270,000 ) $ (5,130,000 )
Plus:
Depreciation and amortization 2,919,000 162,000 6,000 7,000 3,094,000
Stock-based compensation — — — 732,000 732,000
Merger and acquisition, integration and one-time costs 200,000 — — 110,000 310,000
Adjusted EBITDA income (loss) $ 1,127,000 $ (580,000 ) $ (120,000 ) $ (1,421,000 ) $ (994,000 )
Our operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the enterprise’s chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. We concluded that we conduct our business through three operating segments, which are also our reportable segments: wellness, technology and intellectual property.
Segment operating results reflect losses before corporate and unallocated shared expenses, interest expense, income taxes and noncontrolling interests.
Wellness
Our wellness operating segment recognized revenue of $12,927,000 during the second quarter of 2017, which was generated by XpresSpa for services provided and health and beauty products sold. We acquired XpresSpa on ~~November 27, 2015 on~~December 23, 2016 and are actively integrating its corporate functions and optimizing the operating segment’s performance. During the six-month period ended June 30, 2017, we opened three new flagship locations, consisting of one location at John F. Kennedy International Airport’s Terminal 4 and two locations at Phoenix Sky Harbor International Airport. We also closed two small temporary kiosks to better align our resources. During the second quarter of 2017, we also started a ~~retroactive basis for all periods presented.~~major renovation to another location in John F. Kennedy International Airport’s Terminal 4; this renovation is expected to be completed in the third quarter of 2017. A number of our stores will be undergoing maintenance or renovations during the third quarter of 2017. Wherever possible, we seek to receive lease extensions or other concessions when we undergo these processes. As of June 30, 2017, we operated a total of 52 XpresSpa locations.

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Store-level costs include all costs that are directly attributable to the store operations and include:
payroll and related benefits for our store operations and store-level management;
rent, percentage rent and occupancy costs;
the cost of merchandise;
freight, shipping and handling costs;
production costs;
inventory shortage and valuation adjustments, including purchase price allocation increase in fair values which was recorded as part of acquisition; and
costs associated with our sourcing operations.
General and administrative costs include insurance, infrastructure, payroll and benefits, inventory planning, marketing and other costs. Also included in general and administrative costs are expenses related to the integration of XpresSpa as well as office consolidation and moving costs, which amounted to $310,000 during the second quarter of 2017.
Depreciation and amortization costs include the depreciation of leasehold improvements and equipment and the amortization of the brand and customer relationship intangible assets, which were recorded at fair value as of the acquisition date.
Technology
Our technology operating segment predominantly includes revenues and cost of sales generated by Group Mobile and Excalibur. During the second quarter of 2017, Group Mobile’s revenue increased 40.8% from $2,450,000 for the three-month period ended June 30, 2016 to $3,450,000 for the three-month period ended June 30, 2017, respectively. This was mainly due to the increased sales pipeline throughout 2016 and early 2017.
Intellectual Property
The intellectual property operating segment includes revenues from one-time patent licenses as well as expenses incurred in connection with our patent licensing and related internal payroll expenses.
Corporate
Corporate and unallocated shared expenses principally consist of costs for corporate functions, rent for office space, stock-based compensation, executive management and certain unallocated administrative support functions.
Discontinued Operations
During June 2017, we concluded that the requirement to report the results of FLI Charge, a wholly-owned subsidiary included in our technology operating segment, as discontinued operations was triggered. We are currently negotiating the terms of an agreement to sell FLI Charge to a third-party investor in exchange for a minority investment in the form of shares of preferred stock in the newly created entity which will own and operate FLI Charge. We will not be providing any continued management or financing support to FLI Charge. The transaction is expected to close in the third quarter of 2017. In connection with this agreement, a non-cash impairment loss of $1,092,000 relating to FLI Charge’s technology assets and goodwill was recorded as of June 30, 2017. The results of operations for FLI Charge are presented on the condensed consolidated statements of operations and comprehensive loss as consolidated net loss from discontinued operations, which totaled $1,552,000 and $2,113,000 for the three- and six-month periods ended June 30, 2017, respectively. In addition, the carrying amounts of assets and liabilities belonging to FLI Charge are presented on the condensed consolidated balance sheets as assets held for disposal and liabilities held for disposal, respectively.

Results of Operations

Three-month period ended June 30, ~~2016~~2017 compared to the three-month period ended June 30, ~~2015~~2016

Revenue

~~We generate revenue through our three operating segments:Group Mobile, FLI Charge and intellectual property~~.
Three months ended June 30,
2017 2016 Change
Revenue $ 16,377,000 $ 11,350,000 $ 5,027,000

Three months ended June 30,
2016 2015 Change
Licensing revenue $ 8,912,000 $ — $ 8,912,000
Product revenue 2,450,000 — 2,450,000
Total revenue $ 11,362,000 $ — $ 11,362,000
During the three-month period ended June 30, ~~2016,~~2017, we recorded total revenue of ~~$11,362,000. There was no~~$16,377,000, which represents an increase of $5,027,000 (or 44.3%) compared to the three-month period ended June 30, 2016. XpresSpa generated $12,927,000 of revenue ~~recognized~~in the second quarter of 2017. Our technology operating segment demonstrated 40.8% growth in quarterly revenues from $2,450,000 for the three-month period ended June 30, ~~2015. The increase was attributable~~2016 to each of our operating segments. Group Mobile recognized $2,450,000 of product revenue, FLI Charge recognized $12,000 of licensing revenue in connection with an ongoing license agreement with a customer, and$3,450,000 for the three-month period ended June 30, 2017.
During the three-month period ended June 30, 2016, our intellectual property operating segment recognized a one-time lump sum payment of $8,900,000 in connection with an executed confidential license agreement. ~~We did not recognize any revenue generated by Group Mobile or FLI Charge prior to their acquisition on October 15, 2015.~~
We believe that growth in Group Mobile’s revenue can be achieved by adding new products, exploring new distribution verticals, such as military and government, and increasing the sales team’s geographic coverage.~~In addition, we plan to enhance our intellectual property rights around our FLI Charge technology and products.FLI Charge~~ plans to strengthen and develop partnerships in numerous markets including automotive, education, office, healthcare, power tools and vaporizers. We intend to continue to monetize our existing portfolio of intellectual property through licensing and strategic partnerships.

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Cost of ~~goods sold~~sales

~~We incur cost of goods sold through two of our operating segments:Group Mobile and FLI Charge~~.
Three months ended June 30,
2017 2016 Change
Cost of sales $ 13,209,000 $ 6,423,000 $ 6,786,000
Three months ended June 30,
2016 2015 Change
Cost of goods sold $ 2,179,000 $ — $ 2,179,000
During the three-month period ended June 30, ~~2016,~~2017, we recorded total cost of ~~goods sold~~sales of ~~$2,179,000,~~$13,209,000, which represents ~~the costs~~an increase of ~~products sold by Group Mobile for the period. We did not recognize any cost of goods sold for FLI Charge during~~$6,786,000 (or 105.7%) compared to the three-month period ended June 30, ~~2016 and we did not recognize any expenses incurred by Group Mobile or FLI Charge prior to their acquisition on October 15, 2015. We expect the~~2016. XpresSpa recorded total cost of ~~goods sold to~~sales of $10,401,000, which represent direct costs incurred for store operations. As result, our wellness operating segment’s gross profit for the quarter was 19.6%. Our technology operating segment recorded $2,690,000 of cost of sales, which is driven by the increase ~~over time as~~in sales during the quarter. As a result, our ~~product revenue increases.~~
~~Operating legal costs~~
~~Operating legal costs relate to our intellectual property~~technology operating ~~segment.~~
Three months ended June 30,
2016 2015 Change
Operating legal costs $ 4,243,000 $ 5,464,000 $ (1,221,000 )
segment generated 22.0% gross margin during the quarter.

During the three-month period ended June 30, 2016, our ~~operating legal~~intellectual property costs were $4,243,000, which ~~represents a decrease of $1,221,000 (or 22.3%) from operating~~include legal ~~costs recorded for the three-month period ended June 30, 2015. This decrease was primarily due to the timing~~ and ~~nature of~~ consulting ~~and patent litigation~~ costs related to ~~legal proceedings against ZTE and ASUS, especially as costs pertaining to our ZTE campaign declined significantly following the execution of~~ the confidential ~~settlement and~~ license agreement ~~in December 2015. Costs in 2016 also include~~reached during the quarter and royalty expenses to a previous owner of some of our patents. These costs decreased to $118,000 for the three-month period ended June 30, 2017.
As a percentage of total revenue, cost of sales were 80.7% in the second quarter of 2017 compared to 56.6% in the second quarter of 2016, which is driven by the direct cost of sales generated by XpresSpa.

We expect our cost of sales will grow over time as our revenues increase. We expect that total cost of sales as a percentage of sales will decline gradually over time as a result of the improvement of store-level performance by our ~~legal costs will continue to significantly decrease over time.~~wellness operating segment and as our technology operating segment implements new offerings.

~~Amortization~~Depreciation, amortization and impairment ~~of intangible assets~~

Three months ended June 30,
2016 2015 Change
Amortization and impairment of intangible assets $ 12,350,000 $ 813,000 $ 11,537,000
Three months ended June 30,
2017 2016 Change
Depreciation, amortization and impairment $ 3,094,000 $ 12,329,000 $ (9,235,000 )

During the three-month period ended June 30, ~~2016,~~2017, depreciation and amortization ~~and impairment expenses related to our intangible assets~~expense totaled ~~$12,350,000,~~$3,094,000, which represents ~~an increase~~a decrease of ~~$11,537,000~~$9,235,000 (or ~~1,419.1%~~74.9%), compared to the amortization ~~expense recorded during the three-month period ended June 30, 2015. There was no~~and impairment expense recorded during the three-month period ended June 30, ~~2015. The increase~~2016. There was ~~due~~no impairment expense for the three-month period ended June 30, 2017 and no depreciation expense recorded for the three-month period ended June 30, 2016. Amortization and impairment expense for the three months ended June 30, 2016 was significantly higher and was primarily attributed to ~~the~~an $11,937,000 impairment ofcharge to our patents asset group.

The overall decrease in depreciation, amortization and impairment expense was partially offset by an increase in depreciation expense resulting from leasehold improvements and equipment of $2,327,000 and the amortization of the brand and customer relationship intangible assets of $592,000, which were acquired as part of our acquisition of XpresSpa within our wellness operating segment in December 2016. The depreciation expense of $2,327,000 is higher than the typical depreciation expense for the quarter due to a formal decision made in April 2017 to perform a complete renovation of our flagship JFK location, at which point useful lives were revised to fully depreciate all remaining assets by the store close date.
We expect depreciation and amortization expense will increase gradually over time as we open more stores in our wellness operating segment and will remain somewhat constant in our technology operating segment.
General and administrative
Three months ended June 30,
2017 2016 Change
General and administrative $ 5,204,000 $ 2,316,000 $ 2,888,000
During the three-month period ended June 30, ~~2016, we determined that there were impairment indicators related~~2017, general and administrative expenses increased by $2,888,000 (or 124.7%) compared to certain of our patents. A significant factor considered when making this determination occurred on May 6, 2016, when we changed the name of our company from “Vringo, Inc.” to “FORM Holdings Corp.” and concurrently announced our repositioning as a holding company of small and middle market growth companies. We concluded that this factor was deemed a “triggering” event, which required the related patent assets to be tested for impairment. In performing this impairment test, we determined that the patent portfolios, which together represent an asset group, were subject to impairment testing. In the first step of the impairment test, we utilized our projections of future undiscounted cash flows based on our existing plans for the patents. As a result, it was determined that our projections of future undiscounted cash flows were less than the carrying value of the asset group. Accordingly, we performed 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 result, following amortization for the month of April, we recorded an impairment charge of $11,937,000, or 88.7% of the carrying value of the patents prior to impairment, which resulted in a new carrying value of $1,526,000 on May 6, 2016. Following the impairment, we reevaluated the remaining useful life and concluded that there were no changes in the estimated useful life. There were no impairment indicators related to any of our other amortizable intangible assets during the three-month period ended June 30, 2016. As a percentage of revenue, total general and administrative expenses were 31.8% and 20.4% during the second quarter of 2017 and 2016, respectively.
The results of the three-month period ended June 30, 2017 include incremental general and administrative expenses associated with our recent acquisitions of XpresSpa and Excalibur. The increase for the three-month period ended June 30, 2017 compared to the same period ended June 30, 2016 is primarily attributed to $1,599,000 of general and administrative expenses associated with XpresSpa. We did not recognize any general and administrative expenses generated by Excalibur prior to its acquisition on February 2, 2017 or XpresSpa prior to its acquisition on December 23, 2016. Additionally, there was an increase in stock-based compensation expense of $297,000, which was a result of equity awards granted to our directors, management and employees in January 2017.
Non-operating expense, net
Three months ended June 30,
2017 2016 Change
Non-operating expense, net $ (228,000 ) $ (91,000 ) $ (137,000 )

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~~General and administrative~~
Three months ended June 30,
2016 2015 Change
General and administrative $ 3,305,000 $ 2,298,000 $ 1,007,000

During the three-month period ended June 30, ~~2016, general and administrative expenses increased by $1,007,000 (or 43.8%), to $3,305,000,~~2017, we recorded total net non-operating expense in the amount of $228,000 compared to ~~$2,298,000 that was~~total net non-operating expense in the amount of $91,000 recorded during the three-month period ended June 30, 2015. The overall increase was primarily a direct result of our acquisition of Group Mobile and FLI Charge on October 15, 2015. Following the acquisition, we experienced increases in salaries and benefits due to our expanded workforce, advertising and marketing for Group Mobile and FLI Charge’s product lines, and product development as we continue to develop and improve FLI Charge’s product line. Additionally, we experienced an increase in legal and consulting costs related to potential acquisitions resulting from our repositioning to a holding company of small and middle market growth companies. These increases in general and administrative expenses were offset by a decrease in stock-based compensation expense, which was a result of equity awards granted in 2012 and 2013 becoming fully vested during the latter half of 2015.
2016.

~~Non-operating expense, net~~
Three months ended June 30,
2016 2015 Change
Non-operating income (expense), net $ (92,000 ) $ 66,000 $ (158,000 )
~~During~~For the three-month period ended June 30, ~~2016,~~2017, we recorded ~~net~~interest expense of $178,000 mainly related to XpresSpa’s Debt. This was reduced by a gain of $133,000 on the revaluation of the derivative warrant liabilities and additional non-operating expense ~~in the amount~~ of ~~$92,000 compared to net non-operating income in the amount of $66,000 recorded during the three-month period ended June 30, 2015.~~
$183,000.

For the three-month period ended June 30, 2016, we recorded interest expense of $272,000 for the amortization of the debt discount and debt issuance ~~costs.~~
costs associated with debt that was repaid during July 2016. The non-operating expenses reported during the three-month period ended June 30, 2016 were reduced by a gain of $99,000 on the revaluation of the derivative warrant ~~liabilities related to the Amended Notes.~~liabilities.

The total non-operating income, net, of $66,000 for the three-month period ended June 30, 2015 was primarily comprised of a $695,000 gain on the revaluation of warrants and conversion feature related to the Notes offset by interest expense of $465,000 and loss on extinguishment of debt of $210,000.
Six-month period ended June 30, ~~2016~~2017 compared to the six-month period ended June 30, ~~2015~~2016

Revenue

~~We generate revenue through our three operating segments:Group Mobile, FLI Charge and intellectual property~~.
Six months ended June 30,
2017 2016 Change
Revenue $ 30,952,000 $ 13,377,000 $ 17,575,000

Six months ended June 30,
2016 2015 Change
Licensing revenue $ 9,675,000 $ 150,000 $ 9,525,000
Product revenue 3,731,000 — 3,731,000
Total Revenue $ 13,406,000 $ 150,000 $ 13,256,000
During the six-month period ended June 30, ~~2016,~~2017, we recorded total revenue of ~~$13,406,000,~~$30,952,000, which represents an increase of ~~$13,256,000~~$17,575,000 (or ~~8,837.3%~~131.4%) as compared to ~~$150,000~~$13,377,000 recorded in the six-month period ended June 30, ~~2015.~~2016. The ~~increase was attributable to each~~results of the six-month period ended June 30, 2017 include incremental revenues associated with our ~~operating segments. Group Mobile recognized $3,727,000~~recent acquisitions of XpresSpa and FLI Charge recognized $4,000 of product revenue, FLI Charge also recognized $25,000 of licensing revenue in connection with an ongoing license agreement with a customer, and our intellectual property operating segment recognized $9,650,000 of revenue for the amounts received in connection with two separate executed confidential license agreement.Excalibur. We did not recognize any revenue generated by ~~Group Mobile or FLI Charge~~Excalibur prior to ~~their~~its acquisition on ~~October 15, 2015. Revenue during~~February 2, 2017 or XpresSpa prior to its acquisition on December 23, 2016. Our technology operating segment demonstrated 86.2% growth in revenue from $3,727,000 for the six-month period ended June 30, ~~2015 of $150,000 was due~~2016 to ~~a one-time payment in connection with a license and settlement agreement~~$6,941,000 for ~~certain of our owned intellectual property.~~
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~~We believe that growth in Group Mobile’s revenue can be achieved by adding new products, exploring new distribution verticals, such as military and government, and increasing~~ the ~~sales team’s geographic coverage.In addition, we plan to enhance our intellectual property rights around our FLI Charge technology and products.FLI Charge~~ plans to strengthen and develop partnerships in numerous markets including automotive, education, office, healthcare, power tools and vaporizers. We intend to continue to monetize our existing portfolio of intellectual property through licensing and strategic partnerships.three-month period ended June 30, 2017.

Cost of ~~goods sold~~sales

~~We incur cost of goods sold through two of our operating segments:Group Mobile and FLI Charge~~.
Six months ended June 30,
2017 2016 Change
Cost of sales $ 25,071,000 $ 8,267,000 $ 16,804,000

Six months ended June 30,
2016 2015 Change
Cost of goods sold $ 3,306,000 $ �� $ 3,306,000
During the six-month period ended June 30, ~~2016,~~2017, we recorded total cost of ~~goods sold~~sales of ~~$3,306,000,~~$25,071,000, which ~~mainly~~ represents an increase of $16,804,000 (or 203.3%) compared to the ~~costs~~six-month period ended June 30, 2016. The results of ~~products sold by Group Mobile during~~ the ~~period.~~six-month period ended June 30, 2017 include incremental cost of sales associated with our recent acquisitions of XpresSpa and Excalibur. We did not recognize any cost of ~~goods sold for Group Mobile or FLI Charge~~sales generated by Excalibur prior to ~~their~~its acquisition on ~~October 15, 2015.~~February 2, 2017 or XpresSpa prior to its acquisition on December 23, 2016. We expect the cost of ~~goods sold~~sales to increase over time as ~~our product revenue increases.~~we incur the full results of operations of XpresSpa and Excalibur.

~~Operating legal costs~~Depreciation, amortization and impairment

~~Operating legal costs relate to our intellectual property operating segment.~~
Six months ended June 30,
2017 2016 Change
Depreciation, amortization and impairment $ 4,955,000 $ 13,159,000 $ (8,204,000 )

Six months ended June 30,
2016 2015 Change
Operating legal costs $ 4,963,000 $ 8,565,000 $ (3,602,000 )
During the six-month period ended June 30, ~~2016, our operating legal costs were $4,963,000,~~2017, depreciation and amortization expense totaled $4,955,000, which represents a decrease of ~~$3,602,000~~$8,204,000 (or ~~42.1%~~62.3%) from operating legal costs recorded for the six months ended June 30, 2015. This decrease was primarily due to the timing and nature of consulting and patent litigation costs related to legal proceedings against ZTE and ASUS, especially as costs pertaining to our ZTE campaign declined significantly following the execution of the confidential settlement and license agreement in December 2015. Costs in 2016 also include royalty expenses to a previous owner of some of our patents.
~~We expect that our legal costs will continue to significantly decrease over time.~~
~~Amortization and impairment of intangible assets~~
Six months ended June 30,
2016 2015 Change
Amortization and impairment of intangible assets $ 13,201,000 $ 1,617,000 $ 11,584,000
~~During the six-month period ended June 30, 2016, amortization and impairment expenses related to our intangible assets totaled $13,201,000, which represents an increase of $11,584,000 (or 716.4%)~~, compared to the amortization ~~expense of $1,617,000 recorded during the six-month period ended June 30, 2015. There was no~~and impairment expense recorded during the six-month period ended June 30, ~~2015. The increase~~2016. There was ~~due~~no impairment expense for the six-month period ended June 30, 2017 and no depreciation expense recorded for the six-month period ended June 30, 2016.
Amortization and impairment expense for the six months ended June 30, 2016 was significantly higher and was primarily attributed to ~~the~~an $11,937,000 impairment ofcharge to our patents asset group.
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During the six-month period ended June 30, 2016, we determined that there were impairment indicators related to certain of our patents. A significant factor considered when making this determination occurred on May 6, 2016, when we changed the name of our company from “Vringo, Inc.” to “FORM Holdings Corp.” and concurrently announced our repositioning as a holding company of ~~small~~small- and ~~middle market~~middle-market growth companies. We concluded that this factor was deemed a “triggering” event, which required the related patent assets to be tested for impairment. In performing this impairment test, we determined that the patent portfolios, which together represent an asset group, were subject to impairment testing. In the first step of the impairment test, we utilized our projections of future undiscounted cash flows based on our existing plans for the patents. As a result, it was determined that our projections of future undiscounted cash flows were less than the carrying value of the asset group. Accordingly, we performed 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 result, following amortization for the month of April, we recorded an impairment charge of $11,937,000, or 88.7% of the carrying value of the patents prior to impairment, which resulted in a new carrying value of $1,526,000 on May 6, 2016. Following the impairment, we reevaluated the remaining useful life and concluded that there were no changes in the estimated useful life. There were no impairment indicators related to any of our other amortizable intangible assets during the six-month period ended June 30, 2017.
The overall decrease in depreciation, amortization and impairment expense, when comparing the six-month period ended June 30, 2017 to the six-month period ended June 30, 2016, was partially offset by an increase in depreciation expense resulting from leasehold improvements and equipment of $3,456,000 and the amortization of the brand and customer relationship intangible assets of $1,177,000, which were acquired as part of our acquisition of XpresSpa within our wellness operating segment in December 2016. The depreciation expense of $3,456,000 is higher than the typical depreciation expense for the six-month period due to a formal decision made in April 2017 to perform a complete renovation of our flagship JFK location which resulted in a revision to the useful lives. This resulted in an additional $1,100,000 of depreciation expense related to the JFK location.
We expect depreciation and amortization expense will increase gradually over time as we open more stores in our wellness operating segment and new locations and will remain somewhat constant in our technology operating segment.

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General and administrative

Six months ended June 30,
2016 2015 Change
General and administrative $ 6,257,000 $ 5,296,000 $ 961,000
Six months ended June 30,
2017 2016 Change
General and administrative $ 11,539,000 $ 4,495,000 $ 7,044,000

During the six-month period ended June 30, ~~2016,~~2017, general and administrative expenses increased by ~~$961,000~~$7,044,000 (or ~~18.1%~~156.7%)~~, to $6,257,000,~~ compared to ~~$5,296,000 that~~the six-month period ended June 30, 2016. As a percentage of revenue, total general and administrative expenses were 37.3% and 33.6% during the six-month periods ended June 30, 2017 and 2016, respectively.
The results of the six-month period ended June 30, 2017 include incremental general and administrative expenses associated with our recent acquisitions of XpresSpa and Excalibur. The increase for the six-month period ended June 30, 2017 compared to the same period ended June 30, 2016 is primarily attributed to $4,404,000 of general and administrative expenses associated with XpresSpa, of which $484,000 related to merger and acquisition and integration costs. We did not recognize any general and administrative expenses generated by Excalibur prior to its acquisition on February 2, 2017 or XpresSpa prior to its acquisition on December 23, 2016. Additionally, there was an increase in stock-based compensation expense of $643,000, which was a result of equity awards granted to our directors, management and employees in January 2017.
Non-operating expense, net
Six months ended June 30,
2017 2016 Change
Non-operating expense, net $ (306,000 ) $ (440,000 ) $ 134,000
During the six-month period ended June 30, 2017, we recorded total net non-operating expense in the amount of $306,000 compared to total net non-operating expense in the amount of $440,000 recorded during the six-month period ended June 30, 2015. The overall increase was primarily a direct result of our acquisition of Group Mobile and FLI Charge on October 15, 2015. Following the acquisition, we experienced increases in salaries and benefits due to our expanded workforce, advertising and marketing for Group Mobile and FLI Charge’s product lines, and product development as we continue to develop and improve FLI Charge’s product line. Additionally, we experienced an increase in legal and consulting costs related to potential acquisitions resulting from our repositioning to a holding company of small and middle market growth companies. These increases in general and administrative expenses were offset by a decrease in stock-based compensation expense, which was a result of equity awards granted in 2012 and 2013 becoming fully vested during the latter half of 2015.
~~Non-operating income (expense), net~~
Six months ended June 30,
2016 2015 Change
Non-operating income (expense), net $ (441,000 ) $ (157,000 ) $ (284,000 )
2016.

~~During~~For the six-month period ended June 30, ~~2016,~~2017, we recorded ~~net~~interest expense of $367,000 mainly related to XpresSpa’s Debt. This was reduced by a gain of $159,000 on the revaluation of the derivative warrant liabilities and additional non-operating expense ~~in the amount~~ of ~~$441,000 compared to net non-operating expense in the amount of $157,000 recorded during the six-month period ended June 30, 2015.~~$98,000.

For the six-month period ended June 30, 2016, we recorded interest expense of $748,000 for the interest recorded related to the monthly interest payments and the amortization of the debt discount and debt issuance costs as well as accrued interest calculated using the effective interest ~~method.~~method associated with debt that was repaid during July 2016. In addition, we elected to repay principal installments for this debt for January and February 2016 in shares of our common stock, which were issued at a discount of 15% to market prices, which resulted in a $210,000 ~~recorded as a~~ loss on the extinguishment of debt.

The net non-operating expenses reported during the six-month period ended June 30, 2016 were reduced by a gain of $369,000 on the revaluation of the derivative warrant ~~liabilities related to the Amended Notes.~~
The net non-operating expense of $157,000 for the six-month period ended June 30, 2015 was primarily comprised of interest expense of $465,000, loss on extinguishment of debt of $210,000 and foreign exchanges losses in connection with our deposits with courts. These expenses were partially offset by a $695,000 gain on the revaluation of warrants and conversion feature related to the Notes.liabilities.

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We expect that our non-operating income (expense) will remain highly volatile, and we may choose to fund our operations through additional financing. In particular, non-operating income (expense) will be affected by the adjustments to the fair value of our derivative instruments. Fair value of these derivative instruments depends on a variety of assumptions, such as estimations regarding triggering of down-round protection and estimated future share price. An estimated increase in the price of our common stock increases the value of the warrants and thus results in a loss on our statements of operations. In addition, high estimated probability of a down-round protection increases the value of the warrants and again results in a loss on our statements of operations.

Liquidity and Capital Resources

Our primary liquidity and capital requirements are for new XpresSpa locations for our wellness operating segment, as well as working capital for our technology operating segment. As of June 30, ~~2016,~~2017, we had cash and cash equivalents of $7,958,000 that we expect to utilize, along with cash flows from operations, to provide capital to support the growth of our business, primarily through opening new XpresSpa locations, maintaining our existing XpresSpa locations, purchasing inventory for Group Mobile to support the growth in sales and maintaining corporate functions. In addition, we have approximately $7,478,000 of trade receivables, inventory and other current assets to support our working capital needs.
On July 26, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC, acting as the representative of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale (the “Offering”) of 6,900,000 shares of our common stock, par value $0.01 per share (“FORM Common Stock”) including 900,000 shares subject to the Underwriters’ over-allotment option, which was exercised on August 2, 2017 and closed on August 4, 2017. The price to the public in the Offering was $1.10 per share and the Underwriters agreed to purchase the shares of FORM Common Stock from us pursuant to the Underwriting Agreement at a purchase price of $1.023 per share. Our net proceeds from the Offering were approximately $6,700,000 after deducting underwriting discounts and commissions and other estimated offering expenses.
Our total cash ~~balance of $27,449,000, which represents an increase of $2,498,000 compared to our cash balance~~decreased from $17,910,000 as of December 31, ~~2015. We anticipate that our need for capital will continue~~2016 to ~~decline~~$7,958,000 as project-based activities related to the improvement of systems and digital marketing attributed to Group Mobile near completion and litigation costs for our intellectual property operating segment continue to decline. Cash expenditures during the six-month period ended June 30, 2016 were offset by cash received for refunds of court fees and our deposits with the courts in Germany, Brazil, and Romania, as well as cash received by our Group Mobile and intellectual property operating segments during the normal course of business. As of June 30, ~~2016, all bonds posted with~~2017. Of the ~~courts~~$9,952,000 decrease, approximately $6,697,000 was related either to non-recurring payments, capital expenditures or payments for inventory, the latter of which is reflected as a current asset in ~~connection with our litigation with ZTE have been returned back to~~ the ~~Company.~~condensed consolidated balance sheets.

~~Our average monthly net cash provided by operations for the six-month period ended~~Key payments and items from December 31, 2016 to June 30, ~~2016 was approximately $116,000 compared to net cash used in operations of approximately $1,285,000 during the six-month period ended June 30, 2015.~~2017:
Group Mobile and XpresSpa inventory $ 1,644,000
Overdue payables acquired as part of XpresSpa 1,500,000
Capital expenditures 1,263,000
Merger and acquisition and integration-related professional fees 776,000
Leases and tax-related matters 453,000
Interest paid on Debt 430,000
Repayment of line of credit upon Excalibur acquisition 361,000
Severance 250,000
$ 6,677,000

Based on our current operating plans, we expect to have sufficient funds for at least the next 12 months ~~and beyond.~~of operations. In addition, we may choose to raise additional funds in connection with new store openings and potential acquisitions of operating assets, ~~patent portfolios or other businesses that we may pursue.~~which will be complementary to our wellness operating segment. There can be no assurance, however, that any such opportunities will materialize.
On March 9, 2016, pursuant to the Exchange Note Agreement, we issued to the Investors an aggregate of 703,644 shares of our common stock, par value $0.01 per share, in exchange for the reduction of $1,267,000 of the outstanding principal amount of the Notes and $49,000 of accrued interest. As a result, the outstanding aggregate principal amount under the Notes was reduced from $3,016,000 to $1,749,000 as of March 9, 2016.
On July 1, 2016, we prepaid in full our Amended Notes that were due on June 30, 2017. As required by the terms of the Amended Notes, notice of prepayment was delivered to the Investors on June 30, 2016. We repaid the Amended Notes in full, including repayment of the principal and accrued interest as well as an additional 15% for early repayment. We used an aggregate of $2,011,000 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 our assets, including intellectual property, were released by the Investors.
On August 8, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with FHXMS, LLC, a Delaware limited liability company and ones of our wholly-owned subsidiaries (the “Merger Sub”), XpresSpa Holdings, LLC, a Delaware limited liability company (“XpresSpa”), the unitholders of XpresSpa who are parties thereto (the “Unitholders”) and Mistral XH Representative, LLC, as representative of the Unitholders (the “Representative”), pursuant to which the Merger Sub will merge with and into XpresSpa, with XpresSpa being the surviving entity and one of our wholly-owned subsidiaries (the “Surviving Entity”) and the Unitholders becoming our stockholders the “Merger”).
XpresSpa is a leading airport retailer of spa services and related products, and also sells spa products through its internet site. Services and products include: (i) massage services for the neck, back, feet and whole body, (ii) nail care, such as pedicures, manicures and polish changes, (iii) beauty care services such as waxing and facials, (iv) hair care, such as haircuts and blow outs, (v) spa products such as massagers, lotions and aromatherapy aids and (vi) travel products such as neck pillows and eye masks.
Upon completion of the Merger, (i) the then-outstanding common units of XpresSpa (other than those held by us, which will be cancelled without any consideration) and (ii) the then-outstanding preferred units of XpresSpa (other than those held by us, which will be cancelled without any consideration) will be automatically converted into the right to receive an aggregate of:
~~(a)~~ ~~2,500,000 shares of our common stock, par value $0.01 per share (“FORM Common Stock”),~~
~~(b)~~ 494,792 shares of our newly designated Series D Convertible Preferred Stock, par value $0.01 per share, (“FORM Preferred Stock”) with an aggregate initial liquidation preference of $23,750,000, and
~~(c)~~ five-year warrants to purchase an aggregate of 2,500,000 shares of FORM Common Stock, at an exercise price of $3.00 per share, each subject to adjustment in the event of a stock split, dividend or similar events.
The FORM Preferred Stock shall be initially convertible into an aggregate of 3,958,336 shares of FORM Common Stock, which equals a $6.00 per share conversion price, and each holder of FORM Preferred Stock shall be entitled to vote on an as converted basis. The FORM Preferred Stock is senior to the FORM Common Stock and the terms of the FORM Preferred Stock contain no restrictions on our ability to issue additional senior preferred securities or our ability to incur additional preferred securities in the future. We have the right, but not the obligation, upon ten trading days’ notice to convert the outstanding shares of FORM Preferred Stock into FORM Common Stock at the then applicable conversion ratio, at any time or from time to time, if the volume weighted average price per share of the FORM Common Stock exceeds $9.00 for over any 20 days in a 30 consecutive trading day period. The term of the FORM Preferred Stock is seven years, after which time we can repay the holders in shares of FORM Common Stock or cash at our election. FORM Preferred Stock will accrue interest at 9% per annum, or $4.32 per share of FORM Preferred Stock.
In addition, we entered into subscription agreements to sell 750,574 shares of our unregistered common stock to certain holders of XpresSpa, at a purchase price of $2.31 per share, for an aggregate purchase price of $1,734,000.
On August 8, 2016, we agreed to purchase from XpresSpa an aggregate of 1,733,826 of Series C Preferred Units of XpresSpa, at a per unit purchase price of $1.00 per unit, for an aggregate purchase price of $1,734,000. The Series C Preferred Units of XpresSpa will have a preference in the amount of its initial investment and shall bear 12% interest until the closing of the anticipated merger agreement.
Immediately following the completion of the Merger (without taking into account any shares of FORM Common Stock held by XpresSpa equity holders prior to the completion of the Merger), the former Unitholders of XpresSpa are expected to own approximately 18% of the outstanding FORM Common Stock (or 33% of the outstanding FORM Common Stock calculated on a fully diluted basis) and our current stockholders of the Company are expected to own approximately 82% of the outstanding FORM Common Stock (or 67% of the outstanding FORM Common Stock calculated on a fully diluted basis).
~~Cash flows~~
Six months ended June 30,
2016 2015 Change
Net cash provided by (used in) operating activities $ 698,000 $ (7,713,000 ) $ 8,411,000
Net cash provided by (used in) investing activities $ 1,850,000 $ (287,000 ) $ 2,137,000
Net cash provided by (used in) financing activities $ (50,000 ) $ 12,207,000 $ (12,257,000 )
~~Operating activities~~
During the six-month period ended June 30, 2016, net cash provided by operating activities totaled $698,000 compared to net cash used in operating activities of $7,713,000 during the six-month period ended June 30, 2015. The increase of $8,411,000 was mainly due to cash received from our Group Mobile and intellectual property operating segments during the normal course of business.
Our net cash used in operating activities could increase if we engage in future business development activities. As we expect to move towards greater revenue generation in the future, we expect that these amounts will be offset over time by operating expenses. There is no assurance that our licensing efforts will be successful in the future. Furthermore, there is no guarantee that we will generate sufficient revenue to offset future operating expenses and our ability to raise additional capital may be limited.
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~~Investing activities~~
During the six-month period ended June 30, 2016, net cash provided by investing activities totaled $1,850,000, mainly attributable to the refunds of our deposits with the German, Brazilian and Romanian courts. These proceeds were offset by $151,000 net cash used to acquire software related to Group Mobile’s website. During the six-month period ended June 30, 2015, net cash used in investing activities totaled $287,000, which represents the deposit we made to a Romanian court to enforce an injunction against ZTE in Romania and the deposit we made in Germany to enforce review of ZTE’s accounting records.
~~We expect that net cash used in investing activities will increase as we intend to continue to acquire and develop supporting infrastructure and systems for our operating segments.~~
~~Financing activities~~
During the six-month period ended June 30, 2016, net cash used in financing activities totaled $50,000, which is the amount paid to the Investors related to their expenses incurred as a result of the debt modification. During the six-month period ended June 30, 2015, we received net proceeds of $12,425,000 from a securities purchase in a registered direct offering of $12,500,000 of Notes and warrants to purchase up to 537,500 shares of our common stock. This amount was offset by the $218,000 of debt issuance costs that were paid in relation to the agreement.
A significant portion of our issued and outstanding warrants, for which the underlying shares of common stock held by non-affiliates are freely tradable, are currently “out of the money.” Therefore, the potential of additional incoming funds from exercises by our warrant holders is currently very limited. To the extent that any of our issued and outstanding warrants were “in the money,” it could be used as a source of additional funding if the warrant holders choose to exercise their warrants for cash.
We may also choose to raise additional funds in connection with any acquisitions of patent portfolios or other assets or other businesses that we may pursue. There can be no assurance, however, that any such opportunity will materialize. Moreover, any such financing would most likely be dilutive to our current stockholders.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

Critical Accounting Estimates

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on March ~~10, 2016,~~30, 2017, which includes a description of our critical accounting policies that involve subjective and complex judgments that could potentially affect reported results. While there have been no material changes to our critical accounting policies as to the methodologies or assumptions we apply under them, we continue to monitor such methodologies and assumptions.
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Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Not required as we are a smaller reporting company.

Item 4. Controls and Procedures.

~~Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our~~We maintain disclosure controls and procedures ~~pursuant to~~(as defined in Rule 13a-15(e) ~~and 15d-15(e)~~promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)~~, as of the end of the period covered by this Quarterly Report on Form 10-Q.~~
~~Based on this evaluation, our chief executive officer and chief financial officer concluded~~) that ~~as of June 30, 2016, our disclosure controls and procedures~~ are designed ~~at a reasonable assurance level and are effective~~ to ~~provide reasonable assurance~~ensure that information ~~we are~~ required to ~~disclose~~be disclosed in ~~reports that we file or submit under the~~ Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer, or persons performing similar functions,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

~~Changes in Internal Control Over~~As of June 30, 2017, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial ~~Reporting~~Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

~~On October 15, 2015, we~~The scope of management's assessment of the effectiveness of internal control over financial reporting includes all of our subsidiaries except XpresSpa and Excalibur, which were acquired ~~IDG. During~~on December 23, 2016 and February 2, 2017, respectively. Our consolidated revenue for the six-month period ended June 30, ~~2016, IDG's processes~~2017 was $30,952,000, of which XpresSpa and ~~systems did not significantly impact internal control over financial reporting. Our management performed due diligence procedures associated with the acquisition~~Excalibur represented $23,911,000 and $2,086,000, respectively, and our total assets as of ~~IDG.~~
June 30, 2017 were $72,382,000, of which XpresSpa and Excalibur represented $53,137,000 and $4,178,000, respectively.

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II~~Part II-~~– OTHER INFORMATION

Item 1.Legal Proceedings.

~~Infrastructure Patents~~
~~ZTE~~
~~On December 7, 2015, we entered into a confidential settlement~~For information regarding legal proceedings, see Note 11 “Commitments and license agreement (the “Settlement Agreement”) with ZTE Corporation and its affiliates (collectively, “ZTE”), pursuant to which: (i) ZTE paid us a total of $21,500,000, net of all withholding, value added or other taxes; (ii) the parties withdrew all pending litigations and proceedings against each other including the litigations related to ZTE’s breach of its non-disclosure agreement with us; and (iii) we granted ZTE certain rights with respect toContingencies” in our ~~patents including a non-exclusive, non-transferable, worldwide perpetual license to certain of our owned patents and patent applications.~~
~~Pursuant~~notes to the ~~Settlement Agreement, the parties have taken steps to withdraw all pending litigations and proceedings against one another.~~
In several jurisdictions, though ZTE requested that government organizations close proceedings against FORM, those organizations make such determinations on their own volition. In China, ZTE requested that the National Developmental and Reform Commission (“NDRC”) conclude its investigation against FORM; however, the NDRC has not yet closed its investigation.
~~In addition,~~condensed consolidated financial statements included in China and the Netherlands, FORM continues to appeal patent invalidity rulings issued in connection with proceedings originally brought by ZTE. In each instance, ZTE has indicated that it will not oppose FORM’s appeals, though FORM must still plead its case before the respective adjudicatory body in each jurisdiction.“Item 1. Financial Statements.”
~~ASUS~~
FORM had filed patent infringement lawsuits against ASUSTeK Computer Inc. and its subsidiaries (collectively, “ASUS”) in Germany, India, and Spain. In March 2016, the parties settled their disputes and ended all litigations between them. However, Google, Inc. (“Google”) intervened as a party in FORM’s litigation against ASUS in India, and, notwithstanding the settlement between FORM and ASUS, the lawsuit remains pending with respect to FORM and Google.
~~Confidential License Agreement~~
On April 25, 2016, we entered into a Confidential License Agreement (the “License Agreement”). Pursuant to the terms of the License Agreement, the licensee paid us a one-time lump sum payment of $8,900,000 on May 30, 2016. As a result, we granted to the licensee a non-exclusive, non-transferable, worldwide perpetual license to certain patents and patent applications we own.
~~Content Distribution~~
In 2012, we 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, we filed suit against DirecTV in the United States District Court for the Southern District of New York.
On May 25, 2016, Iron Gate Security, Inc. (“Iron Gate”), one of our subsidiaries, filed a Second Amended Complaint (the “Complaint”) against Lowe’s Companies, Inc. (“Lowe’s”) in the U.S. District Court for the Southern District of New York. In the Complaint, Iron Gate alleged that Lowe’s infringes U.S. Patent No. 7,203,693 (“the ’693 Patent”). On June 13, 2016, Lowe’s filed a motion to dismiss under 35 U.S.C. Section 101 asserting that the claims of the ‘693 Patent were directed to subject matter that was not patentable. On July 27, 2016, the Court held a hearing on the motion and, on August 3, 2016, the Court denied Lowe’s motion.

Item 1A.Risk Factors.

~~There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015, except as follows:~~
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Anti-takeover provisions of Delaware law, provisions in our charter and bylaws and our stockholder rights plan could delay, discourage or make more difficult a third-party acquisition of control of us.
We are a Delaware corporation and, as such, certain provisions of Delaware law could delay, discourage or make more difficult a third-party acquisition of control of us, even if the change in control would be beneficial to stockholders or the stockholders regard it as such. We are subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which prohibits certain “business combination” transactions (as defined in Section 203) with an “interested stockholder” (defined in Section 203 as a 15% or greater stockholder) for a period of three years after a stockholder becomes an “interested stockholder,” unless the attaining of “interested stockholder” status or the transaction is pre-approved by our Board of Directors, the transaction results in the attainment of at least an 85% ownership level by an acquirer or the transaction is later approved by our Board of Directors and by our stockholders by at least a 66 2/3 percent vote of our stockholders other than the “interested stockholder,” each as specifically provided in Section 203. We have also adopted a shareholder rights plan in the form of a Section 382 Rights Agreement (the “NOL rights plan”), designed to help protect and preserve our substantial tax attributes primarily associated with our NOLs and research tax credits under Sections 382 and 383 of the Internal Revenue Code and related U.S. Treasury regulations. Although this is not the purpose of the NOL rights plan, it could have the effect of making it uneconomical for a third party to acquire us on a hostile basis.
These provisions of the DGCL, our certificate of incorporation and bylaws, and the NOL rights plan may delay, discourage or make more difficult certain types of transactions in which our stockholders might otherwise receive a premium for their shares over the current market price, and might limit the ability of our stockholders to approve transactions that they think may be in their best interest.
~~Future acquisitions or~~Our business, ~~opportunities could involve unknown risks that could harm our business and adversely affect our financial condition and results of operations.~~
We strive to be a diversified holding company that owns interests in a number of different businesses. We have in the past, and may in the future, acquire businesses or make investments, directly or indirectly through our subsidiaries, that involve unknown risks, some of which will be particular to the industry in which the investment or acquisition targets operate, including risks in industries with which we are not familiar or experienced. Although we intend to conduct appropriate business, financial and legal due diligence in connection with the evaluation of future investment or acquisition opportunities, there can be no assurance our due diligence investigations will identify every matter that could have a material adverse effect on us. We may be unable to adequately address the financial, legal and operational risks raised by such investments or acquisitions, especially if we are unfamiliar with the relevant industry. The realization of any unknown risks could expose us to unanticipated costs and liabilities and prevent or limit us from realizing the projected benefits of the investments or acquisitions, which could adversely affect our financial condition and liquidity.
~~Future acquisitions and investments are possible, changing the components of our assets and liabilities, and, if unsuccessful, could reduce the value of our common stock.~~
~~Any future acquisitions may result in significant changes in the composition of our assets and liabilities. Consequently, our~~ financial condition, results of operations and the trading price of our common stock ~~may~~could be materially adversely affected by ~~factors different from those affecting~~any of the following risks as well as the other risks highlighted in our Form 10-K for the year ended December 31, 2016 filed with the SEC on March 30, 2017. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially affect our business, financial condition and results of ~~operations and trading price.~~operations.
Risks Related to XpresSpa
~~We may be unsuccessful in identifying suitable acquisition candidates, which may negatively impact~~
Our growth strategy is highly dependent on our ~~growth strategy.~~ability to successfully identify and open new XpresSpa locations.

~~There can be no assurance given that we~~Our growth strategy primarily contemplates expansion through procuring new XpresSpa locations and opening new XpresSpa stores and kiosks. Implementing this strategy depends on our ability to successfully identify new store locations. We will also need to assess and mitigate the risk of any new store locations, to open the stores on favorable terms and to successfully integrate their operations with ours. We may not be able to ~~implement our strategy and~~successfully identify ~~suitable acquisition candidates~~opportunities that meet these criteria, or, ~~consummate future acquisitions on acceptable terms. Our failure~~if we do, we may not be able to successfully negotiate and open new stores on a timely basis. If we are unable to identify ~~suitable acquisition candidates or consummate future acquisitions on acceptable terms could have an adverse effect on~~and open new XpresSpa locations in accordance with our ~~prospects, business activities, cash flow,~~operating plan, our revenue growth rate and financial ~~condition, results~~performance may fall short of ~~operations and stock price.~~our expectations.

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~~Failure~~Risks Related to ~~complete the Merger or delays in completing the Merger could negatively impact our business, financial condition, or results of operations or our stock price.~~Our Common Stock

~~The completion of~~We may fail to meet publicly announced financial guidance or other expectations about our business, which would cause our stock to decline in value.
From time to time, we provide preliminary financial results or forward looking financial guidance, to our investors. Such statements are based on our current views, expectations and assumptions that may not prove to be accurate and may vary from actual results and involve known and unknown risks and uncertainties that may cause actual results, performance, achievements or share prices to be materially different from any future results, performance, achievements or share prices expressed or implied by such statements. Such risks and uncertainties include the ~~Merger is subject~~risk factors contained herein and in our Form 10-K for the year ended December 31, 2016. If we fail to ~~a number of conditions and there can be no assurance that the conditions to the completion of the Merger will be satisfied at all~~ meet our projections and/or ~~satisfied in a timely manner. If the Merger is not completed or is delayed, we will be subject to several risks, including:~~ other financial guidance for any reason, our stock price could decline.

·27 the current trading price of our common stock may reflect a market assumption that the Merger will occur, meaning that a failure to complete the Merger or delays in completing the Merger could result in a decline in the price of our common stock;

· certain of our executive officers and/or directors or XpresSpa’s may seek other employment opportunities, and the departure of any of our or XpresSpa’s executive officers and the possibility that we would be unable to recruit and hire experienced executives could negatively impact our future business;

· ~~our board of directors will need to reevaluate our strategic alternatives, such alternatives will include other merger and acquisition opportunities;~~
· under certain circumstances, if the Merger is terminated by either us or XpresSpa in connection with or due to our entering into an alternate transaction constituting a superior proposal, then we are required to pay to XpresSpa a fee equal to $750,000, plus an amount in cash equal to XpresSpa’s reasonable out-of-pocket fees and expenses incurred in connection with the Merger, in an amount not to exceed $500,000;
· ~~we are expected to incur substantial transaction costs in connection with the Merger whether or not the Merger is completed; and~~
· ~~we would not realize any of the anticipated benefits of having completed the Merger.~~
~~If the Merger is not completed or is delayed, these risks may materialize and materially and adversely affect our business, financial condition, results of operations, and our stock price.~~
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.~~
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.
~~Item 3. Defaults Upon Senior Securities.~~
Item 3. Defaults Upon Senior Securities.

None.
~~Item 4. Mine Safety Disclosures.~~
Item 4. Mine Safety Disclosures.

Not applicable.
~~Item 5. Other Information.~~
Item 5. Other Information.

None.
3728

Item 6. Exhibits.

~~Item 6. Exhibits.~~
Exhibit
No.
Description

~~2.1~~10.1 Amendment No. 4 to the Employment Agreement ~~and Plan of Merger~~dated October 13, 2015, by and ~~among FORM Holdings Corp., FHXMS, LLC, XpresSpa Holdings, LLC,~~between the ~~unitholders of XpresSpa who are parties thereto~~Company and ~~Mistral XH Representative, LLC, as representative of the unitholders, dated as of August 8, 2016~~Clifford Weinstein (incorporated by reference tofrom Exhibit ~~2.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).~~
3.1* Amended and Restated Certificate of Incorporation, as amended by the Certificate of Amendment to the Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on May 5, 2016.
~~3.2~~ ~~Second Amended and Restated Bylaws of the Company, effective May 6, 2016 (incorporated by reference to Exhibit 3.2~~10.1 to our Current Report on Form 8-K filed with the SEC on May 5, ~~2016).~~
~~3.3~~ Form of Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).
~~10.1~~ Amendment No. 2 to Employment Agreement, dated June 27, 2016, by and between FORM Holdings Corp. and David L. Cohen (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 1, 2016).
~~10.2~~ Subscription Agreement, dated as of August 8, 2016, by and between FORM Holdings Corp. and Mistral Spa Holdings, LLC (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).
~~10.3~~ Subscription Agreement and Joinder, dated as of August 8, 2016, by and between XpresSpa Holdings, LLC and FORM Holdings Corp (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on August 8, 2016)2015).

31.1* Certification of Principal Executive Officer pursuant to Exchange Act, Rules 13a - 14(a) and 15d - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a - 14(a) and 15d - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32** Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.
** Furnished herein.

3829

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the ~~15th~~9th day of August ~~2016.~~2017.

FORM Holdings Corp.

By: /s/ ANASTASIA NYRKOVSKAYA
Anastasia Nyrkovskaya
Chief Financial Officer
(Principal Financial and Accounting Officer)
3930

	June 30, 2016 (Unaudited)			December 31, 2015 (see Note 2)
Current assets
Cash and cash equivalents	$	27,449		$	24,951
Deposits with courts		—			1,930
Accounts receivable, net		530			246
Inventory		260			379
Other current assets		134			698
Total current assets		28,373			28,204

Intangible assets, net		3,426			16,476
Goodwill		4,863			4,863
Other assets		1,085			916
Total assets	$	37,747		$	50,459

Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	6,327		$	5,855
Deferred revenue		439			175
Senior secured notes		800			3,111
Total current liabilities		7,566			9,141

Long-term liabilities
Derivative warrant liabilities		329			416
Other liabilities		140			386
Total liabilities		8,035			9,943
Commitments and contingencies (see Note 12)

Stockholders’ equity
Series A Convertible Preferred stock, $0.01 par value per share; 500,000 shares authorized; 6,968 issued and none outstanding		—			—
Series B Convertible Preferred stock, $0.01 par value per share, 5,000,000 shares authorized; 1,666,667 shares issued and none outstanding		—			—
Series C Junior Preferred stock, $0.01 par value per share; 300,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.01 par value per share 150,000,000 shares authorized; 15,011,498 and 13,220,050 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		150			132
Additional paid-in capital		241,186			237,246
Accumulated deficit		(211,624	)		(196,862	)
Total stockholders’ equity		29,712			40,516
Total liabilities and stockholders’ equity	$	37,747		$	50,459

	June 30, 2017 (Unaudited)			December 31, 2016
Current assets
Cash and cash equivalents	$	7,958		$	17,910
Accounts receivable, net		2,216			404
Inventory		4,327			2,890
Other current assets		935			2,150
Assets held for disposal		467			1,507
Total current assets		15,903			24,861

Restricted cash		476			638
Property and equipment, net		14,377			16,284
Intangible assets, net		14,475			15,233
Goodwill		25,821			24,409
Other assets		1,330			1,382
Total assets	$	72,382		$	82,807

Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	11,437		$	11,434
Deferred revenue		201			133
Liabilities held for disposal		97			206
Total current liabilities		11,735			11,773

Long-term liabilities
Debt		6,500			6,500
Derivative warrant liabilities		100			259
Other liabilities		794			106
Total liabilities		19,129			18,638
Commitments and contingencies (see Note 11)

Equity
Series A Convertible Preferred stock, $0.01 par value per share; 500,000 shares authorized; 6,968 issued and none outstanding		—			—
Series B Convertible Preferred stock, $0.01 par value per share; 5,000,000 shares authorized; 1,666,667 issued and none outstanding		—			—
Series C Junior Preferred stock, $0.01 par value per share; 300,000 shares authorized; none issued and outstanding		—			—
Series D Convertible Preferred Stock, $0.01 par value per share; 500,000 shares authorized; 475,208 issued and 429,948 outstanding with a liquidation value of $20,638 as of June 30, 2017; 491,427 issued and outstanding with a liquidation value of $23,588 as of December 31, 2016		4			5
Common stock, $0.01 par value per share; 150,000,000 shares authorized; 19,565,531 and 18,304,881 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively		196			183
Additional paid-in capital		282,603			280,221
Accumulated deficit		(234,303	)		(220,868	)
Accumulated other comprehensive loss		(164	)		(13	)
Total equity attributable to the Company		48,336			59,528
Noncontrolling interests		4,917			4,641
Total equity		53,253			64,169
Total liabilities and equity	$	72,382		$	82,807

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Revenue
Licensing revenue	$	8,912		$	—		$	9,675		$	150
Product revenue		2,450			—			3,731			—
Total revenue		11,362			—			13,406			150

Costs and expenses*
Cost of goods sold		2,179			—			3,306			—
Operating legal costs		4,243			5,464			4,963			8,565
Amortization and impairment of intangible assets		12,350			813			13,201			1,617
General and administrative		3,305			2,298			6,257			5,296
Total operating expenses		22,077			8,575			27,727			15,478
Operating loss		(10,715	)		(8,575	)		(14,321	)		(15,328	)
Gain on revaluation of warrants and conversion feature		99			695			369			695
Interest expense		(272	)		(465	)		(748	)		(465	)
Extinguishment of debt		—			(210	)		(210	)		(210	)
Non-operating income (expense), net		81			46			148			(177	)
Net loss	$	(10,807	)	$	(8,509	)	$	(14,762	)	$	(15,485	)
Loss per share:
Basic net loss per share	$	(0.72	)	$	(0.90	)	$	(1.01	)	$	(1.65	)
Diluted net loss per share	$	(0.72	)	$	(0.90	)	$	(1.01	)	$	(1.65	)
Weighted-average number of shares outstanding during the period:
Basic		14,993,686			9,469,162			14,576,183			9,405,181
Diluted		14,993,686			9,469,162			14,576,183			9,405,181

* Includes stock-based compensation expense, as follows:
Operating legal costs	$	64		$	183		$	132		$	501
General and administrative		435			1,070			830			2,624
	$	499		$	1,253		$	962		$	3,125

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Revenue
Wellness	$	12,927		$	—		$	23,911		$	—
Technology		3,450			2,450			6,941			3,727
Intellectual property		—			8,900			100			9,650
Total revenue		16,377			11,350			30,952			13,377

Cost of sales
Wellness		10,401			—			19,236			—
Technology		2,690			2,180			5,618			3,304
Intellectual property*		118			4,243			217			4,963
Total cost of sales		13,209			6,423			25,071			8,267
Depreciation, amortization and impairment		3,094			12,329			4,955			13,159
General and administrative*		5,204			2,316			11,539			4,495
Total operating expenses		21,507			21,068			41,565			25,921
Operating loss from continuing operations		(5,130	)		(9,718	)		(10,613	)		(12,544	)
Non-operating income (expense), net		(50	)		181			61			518
Interest expense		(178	)		(272	)		(367	)		(748	)
Extinguishment of debt		—			—			—			(210	)
Loss from continuing operations before income taxes		(5,358	)		(9,809	)		(10,919	)		(12,984	)
Income tax expense		—			—			(227	)		—
Consolidated net loss from continuing operations		(5,358	)		(9,809	)		(11,146	)		(12,984	)
Loss from discontinued operations before income taxes		(1,552	)		(998	)		(2,113	)		(1,778	)
Income tax expense		—			—			—			—
Net loss from discontinued operations		(1,552	)		(998	)		(2,113	)		(1,778	)
Consolidated net loss		(6,910	)		(10,807	)		(13,259	)		(14,762	)
Net income attributable to noncontrolling interests		(100	)		—			(176	)		—
Net loss attributable to the Company	$	(7,010	)	$	(10,807	)	$	(13,435	)	$	(14,762	)

Consolidated net loss from continuing operations	$	(5,358	)	$	(9,809	)	$	(11,146	)	$	(12,984	)
Other comprehensive loss from continuing operations: foreign currency translations		(107	)		—			(151	)		—
Comprehensive loss from continuing operations		(5,465	)		(9,809	)		(11,297	)		(12,984	)
Consolidated net loss from discontinued operations		(1,552	)		(998	)		(2,113	)		(1,778	)
Other comprehensive loss from discontinued operations: foreign currency translations		—			—			—			—
Comprehensive loss from discontinued operations		(1,552	)		(998	)		(2,113	)		(1,778	)
Comprehensive loss	$	(7,017	)	$	(10,807	)	$	(13,410	)	$	(14,762	)

Loss per share:
Basic and diluted net loss per share
Loss per share from continuing operations	$	(0.28	)	$	(0.65	)	$	(0.59	)	$	(0.89	)
Loss per share from discontinued operations		(0.08	)		(0.07	)		(0.11	)		(0.12	)
Total basic and diluted net loss per share	$	(0.36	)	$	(0.72	)	$	(0.70	)	$	(1.01	)
Weighted-average number of shares outstanding during the period:
Basic		19,310,994			14,993,686			19,178,769			14,576,183
Diluted		19,310,994			14,993,686			19,178,769			14,576,183

*Includes stock-based compensation expense, as follows:
Intellectual property	$	—		$	64		$	—		$	132
General and administrative		732			435			1,473			830
Total stock-based compensation expense	$	732		$	499		$	1,473		$	962

	Common stock		Additional paid-in capital		Accumulated deficit			Total
Balance as of December 31, 2015	$	132	$	237,246	$	(196,862	)	$	40,516
Issuance of common stock for repayment of convertible debt and related interest		18		2,978		—			2,996
Stock-based compensation		—		962		—			962
Net loss for the period		—		—		(14,762	)		(14,762	)
Balance as of June 30, 2016	$	150	$	241,186	$	(211,624	)	$	29,712

	Common stock		Preferred stock			Additional paid- in capital			Accumulated deficit			Accumulated other comprehensive loss			Total FORM equity			Non controlling interests		Total equity
December 31, 2016	$	183	$	5		$	280,221		$	(220,868	)	$	(13	)	$	59,528		$	4,641	$	64,169
Issuance of common stock for services		—		—			20			—			—			20			—		20
Shares of common stock issued for the acquisition of Excalibur		9		—			1,800			—			—			1,809			—		1,809
Decrease in shares of preferred stock issued to XpresSpa sellers		—		—			(908	)		—			—			(908	)		—		(908	)
Conversion of preferred stock to common stock		4		(1	)		(3	)		—			—			—			—		—
Stock-based compensation		—		—			1,473			—			—			1,473			—		1,473
Net loss for the period		—		—			—			(13,435	)		—			(13,435	)		176		(13,259	)
Foreign currency translation		—		—			—			—			(151	)		(151	)		—		(151	)
Contributions from noncontrolling interests		—		—			—			—			—			—			100		100
June 30, 2017	$	196	$	4		$	282,603		$	(234,303	)	$	(164	)	$	48,336		$	4,917	$	53,253

	•	~~additional capital~~

	•	~~exposure to visibility from the public markets~~

	•	~~talent recruiting~~

	•	~~rebranding and~~

	•	~~implementation of best practices.~~

	•	~~Group Mobile~~

	•	~~FLI Charge~~

	•	~~Intellectual property~~

October 15, 2015 Acquisition:	Fair Value
Series B Preferred Stock	$	5,378
Debt assumed, settled in shares		193
Total share value issued	$	5,571

	Fair Value
Assets:
Cash and cash equivalents	$	144
Accounts receivable		245
Inventory		234
Prepaid expenses		18
Current Assets		641
Intangible assets		2,146
Goodwill		4,863
Total Assets		7,650

Liabilities:
Accounts payable		464
Credit line		270
Accrued expenses		44
Other current liabilities		173
Deferred tax liabilities		866
Total liabilities		1,817
Non-controlling interest in FLI Charge		262
Total	$	5,571

	Fair Value
Assets
Current assets (including cash of $26)	$	628
Deferred tax assets		29
Property and equipment		21
Intangible assets		556
Goodwill		2,320
Total assets		3,554

Liabilities
Accounts payable and accrued expenses		1,214
Deferred tax liabilities		215
Total liabilities		1,429
Net assets, fair value	$	2,125

	June 30, 2016							December 31, 2015
	Gross Carrying Amount		Accumulated Amortization and Impairment			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Impairment			Net Carrying Amount		Weighted average amortization period (years)
Patents	$	28,213	$	(26,741	)		1,472	$	28,213	$	(13,782	)	$	14,431		8.60
Customer relationships		1,163		(210	)		953		1,163		(62	)		1,101		3.91
Trade name		504		(73	)		431		504		(21	)		483		4.90
Technology		479		(60	)		419		479		(18	)		461		5.68
Additions:
Software		151		—			151		—		—			—		—
Total intangible assets	$	30,510	$	(27,084	)	$	3,426	$	30,359	$	(13,883	)	$	16,476

	June 30, 2016		December 31, 2015
Assets:
Group Mobile	$	7,013	$	6,228
FLI Charge		1,734		1,583
Intellectual property		2,654		17,528
Corporate		26,346		25,120
Total Assets	$	37,747	$	50,459

Book value as of December 31, 2015 (net of unamortized portion of debt issuance costs of $73)	$	3,111
Debt repayments in January and February 2016		(1,190	)
Amortization of debt discount and debt issuance costs, included in interest expense		356
Book value of Notes before the Exchange Note Agreement on March 9, 2016		2,277

Fair value of the considerations provided to the Investors, including:
Increase in fair value of May 2015 Warrants due to reduced exercise price		281
Repayment of Notes in shares of common stock		1,267
Repayment of $1,267 of Notes in shares of common stock at a discount to the market		183
Restructuring fee paid to the Investors		50
Total fair value of the considerations provided to the Investors		1,781

Book value of Amended Notes after the Exchange Note Agreement on March 9, 2016		496
Amortization of debt discount and debt issuance costs, included in interest expense		304
Book value of Amended Notes as of June 30, 2016	$	800

			Fair value measurement at reporting date using
			Quoted prices in
			active markets		Significant other		Significant
			for identical		observable		unobservable
	Balance		assets (Level 1)		inputs (Level 2)		inputs (Level 3)
June 30, 2016:
May 2015 Warrants	$	329	$	—	$	—	$	329

December 31, 2015:
May 2015 Warrants	$	416	$	—	$	—	$	416
Conversion feature	$	1	$	—	$	—	$	1

	May 2015 Warrants			Conversion feature
December 31, 2015	$	416		$	1
Decrease in fair value of the warrants and conversion feature		(368	)		(1	)
Increase in fair value as a result of debt modification		281			—
June 30, 2016	$	329		$	—

	May 2015 Warrants
December 31, 2016	$	259
Decrease in fair value of the derivative warrant liabilities		(159	)
June 30, 2017	$	100

Description	Valuation technique	Unobservable inputs	Range
May 2015 Warrants	Black-Scholes-Merton	Volatility		~~59.55~~42.12	%
		~~Risk-free~~Risk free interest rate		~~0.88~~1.51	%
		Expected term, in years		~~3.84~~2.84
		Dividend yield		0.00	%

	No. of warrants		Weighted average exercise price		Exercise price range
December 31, 2015		1,006,679	$	12.92		$5.00 - $17.60
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
June 30, 2016		1,006,679	$	9.18		$3.00 - $17.60

Description	Valuation technique	Variables	Range
FORM Preferred Stock	Monte-Carlo	Share price as of the Valuation Date	$	1.95
		Volatility		46.0	%
		Risk free interest rate		2.22	%

	No. outstanding		Exercise price		Remaining contractual life	Expiration Date
Series 1 Warrants		149,025	$	17.60	1.05 years	July 19, 2017
Series 2 Warrants		194,352	$	17.60	1.05 years	July 19, 2017
Reload Warrants		75,802	$	17.60	0.61 years	February 6, 2017
October 2015 Warrants		50,000	$	5.00	4.79 years	April 15, 2021
Outstanding as of June 30, 2016		469,179

	RSUs					Options
	No. of RSUs			Weighted average grant date fair value		No. of options			Weighted average exercise price		Exercise price range		Weighted average grant date fair value
Outstanding at January 1, 2016		53,280		$	36.31		871,484		$	30.65	$	5.10 - 55.00	$	20.49
Granted		10,000		$	2.13		730,000		$	1.66	$	1.55 - 1.92	$	0.89
Vested/Exercised		(55,472	)	$	30.03		—			—		—		—
Forfeited		—			—		(100,050	)	$	27.88	$	5.90 – 41.00	$	17.04
Expired		—			—		(9,000	)	$	55.00	$	55.00	$	26.20
Outstanding at June 30, 2016		7,808		$	37.20		1,492,434		$	16.51	$	1.55 – 55.00	$	10.64
Exercisable at June 30, 2016		—			—		880,767		$	26.03	$	1.55 – 55.00

	Three Months Ended June 30, 2017
	Wellness			Technology			Intellectual Property			Corporate			Total
Total revenue	$	12,927,000		$	3,450,000		$	—		$	—		$	16,377,000

Cost of sales
Products		1,124,000			2,690,000			—			—			3,814,000
Labor		5,783,000			—			—			—			5,783,000
Occupancy		1,983,000			—			—			—			1,983,000
Other operating costs		1,511,000			—			118,000			—			1,629,000
Total cost of sales		10,401,000			2,690,000			118,000			—			13,209,000

Gross profit		2,526,000			760,000			(118,000	)		—			3,168,000
Gross profit as a % of total revenue		19.6	%		22.0	%		—			—			19.3	%

Depreciation and amortization
Depreciation		2,327,000			14,000			—			7,000			2,348,000
Amortization		592,000			148,000			6,000			—			746,000
Total depreciation and amortization		2,919,000			162,000			6,000			7,000			3,094,000

General and administrative
Stock-based compensation		—			—			—			732,000			732,000
Other general and administrative		1,599,000			1,340,000			2,000			1,531,000			4,472,000
Total general and administrative		1,599,000			1,340,000			2,000			2,263,000			5,204,000

Operating loss from continuing operations	$	(1,992,000	)	$	(742,000	)	$	(126,000	)	$	(2,270,000	)	$	(5,130,000	)

Group Mobile and XpresSpa inventory	$	1,644,000
Overdue payables acquired as part of XpresSpa		1,500,000
Capital expenditures		1,263,000
Merger and acquisition and integration-related professional fees		776,000
Leases and tax-related matters		453,000
Interest paid on Debt		430,000
Repayment of line of credit upon Excalibur acquisition		361,000
Severance		250,000
	$	6,677,000

	~~(a)~~	~~2,500,000 shares of our common stock, par value $0.01 per share (“FORM Common Stock”),~~

	~~(b)~~	494,792 shares of our newly designated Series D Convertible Preferred Stock, par value $0.01 per share, (“FORM Preferred Stock”) with an aggregate initial liquidation preference of $23,750,000, and

	~~(c)~~	five-year warrants to purchase an aggregate of 2,500,000 shares of FORM Common Stock, at an exercise price of $3.00 per share, each subject to adjustment in the event of a stock split, dividend or similar events.

Exhibit No.		Description

~~2.1~~10.1		Amendment No. 4 to the Employment Agreement ~~and Plan of Merger~~dated October 13, 2015, by and ~~among FORM Holdings Corp., FHXMS, LLC, XpresSpa Holdings, LLC,~~between the ~~unitholders of XpresSpa who are parties thereto~~Company and ~~Mistral XH Representative, LLC, as representative of the unitholders, dated as of August 8, 2016~~Clifford Weinstein (incorporated by reference tofrom Exhibit ~~2.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).~~

3.1*		Amended and Restated Certificate of Incorporation, as amended by the Certificate of Amendment to the Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on May 5, 2016.

~~3.2~~		~~Second Amended and Restated Bylaws of the Company, effective May 6, 2016 (incorporated by reference to Exhibit 3.2~~10.1 to our Current Report on Form 8-K filed with the SEC on May 5, ~~2016).~~

~~3.3~~		Form of Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).

~~10.1~~		Amendment No. 2 to Employment Agreement, dated June 27, 2016, by and between FORM Holdings Corp. and David L. Cohen (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 1, 2016).

~~10.2~~		Subscription Agreement, dated as of August 8, 2016, by and between FORM Holdings Corp. and Mistral Spa Holdings, LLC (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on August 8, 2016).

~~10.3~~		Subscription Agreement and Joinder, dated as of August 8, 2016, by and between XpresSpa Holdings, LLC and FORM Holdings Corp (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on August 8, 2016)2015).

31.1*		Certification of Principal Executive Officer pursuant to Exchange Act, Rules 13a - 14(a) and 15d - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a - 14(a) and 15d - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32**		Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

*		Filed herewith.
**		Furnished herein.

	FORM Holdings Corp.

	By:	/s/ ANASTASIA NYRKOVSKAYA
		Anastasia Nyrkovskaya
		Chief Financial Officer
		(Principal Financial and Accounting Officer)