Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 15, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | FORM Holdings Corp. | |
Entity Central Index Key | 1,410,428 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | FH | |
Entity Common Stock, Shares Outstanding | 19,565,531 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 11,673 | $ 17,910 |
Accounts receivable, net | 1,726 | 449 |
Inventory | 2,918 | 2,943 |
Other current assets | 1,379 | 2,242 |
Total current assets | 17,696 | 23,544 |
Restricted cash | 476 | 638 |
Property and equipment, net | 16,226 | 16,467 |
Intangible assets, net | 15,488 | 15,610 |
Goodwill | 27,486 | 25,166 |
Other assets | 1,330 | 1,382 |
Total assets | 78,702 | 82,807 |
Current liabilities | ||
Accounts payable, accrued expenses and other current liabilities | 10,497 | 11,630 |
Deferred revenue | 328 | 143 |
Total current liabilities | 10,825 | 11,773 |
Long-term liabilities | ||
Debt | 6,500 | 6,500 |
Derivative warrant liabilities | 233 | 259 |
Other liabilities | 807 | 106 |
Total liabilities | 18,365 | 18,638 |
Commitments and contingencies (see Note 10) | ||
Stockholders’ equity | ||
Common stock, $0.01 par value per share; 150,000,000 shares authorized; 19,198,454 and 18,304,881 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 192 | 183 |
Additional paid-in capital | 282,773 | 280,221 |
Accumulated deficit | (227,293) | (220,868) |
Accumulated other comprehensive loss | (57) | (13) |
Total stockholders’ equity attributable to the Company | 55,620 | 59,528 |
Noncontrolling interests | 4,717 | 4,641 |
Total stockholders’ equity | 60,337 | 64,169 |
Total liabilities and stockholders’ equity | 78,702 | 82,807 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders’ equity | ||
Preferred stock | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders’ equity | ||
Preferred stock | 0 | 0 |
Series C Junior Preferred Stock [Member] | ||
Stockholders’ equity | ||
Preferred stock | 0 | 0 |
Series D Convertible Preferred Stock [Member] | ||
Stockholders’ equity | ||
Preferred stock | $ 5 | $ 5 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, issued | 19,198,454 | 18,304,881 |
Common stock, outstanding | 19,198,454 | 18,304,881 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 500,000 | 500,000 |
Preferred stock, issued | 6,968 | 6,968 |
Preferred stock, outstanding | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 1,666,667 | 1,666,667 |
Preferred stock, outstanding | 0 | 0 |
Series C Junior Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 300,000 | 300,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Series D Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 500,000 | 500,000 |
Preferred stock, issued | 491,427 | 491,427 |
Preferred stock, outstanding | 491,427 | 491,427 |
Preferred Stock, Liquidation Preference, Value | $ 23,588 | $ 23,588 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenue | ||
Wellness | $ 10,984 | $ 0 |
Technology | 3,525 | 1,294 |
Intellectual property | 100 | 750 |
Total revenue | 14,609 | 2,044 |
Cost of sales | ||
Wellness | 8,835 | 0 |
Technology | 2,960 | 1,127 |
Intellectual property | 99 | 720 |
Total cost of sales | 11,894 | 1,847 |
Depreciation and amortization | 1,899 | 851 |
General and administrative | 6,860 | 2,952 |
Total expenses | 20,653 | 5,650 |
Operating loss | (6,044) | (3,606) |
Non-operating income, net | 111 | 337 |
Interest expense | (189) | (476) |
Extinguishment of debt | 0 | (210) |
Loss before income tax expense | (6,122) | (3,955) |
Income tax expense | (227) | 0 |
Consolidated net loss | (6,349) | (3,955) |
Net income attributable to noncontrolling interests | (76) | 0 |
Net loss attributable to the Company | (6,425) | (3,955) |
Consolidated net loss | (6,349) | (3,955) |
Other comprehensive loss: foreign currency translation | (44) | 0 |
Comprehensive loss | $ (6,393) | $ (3,955) |
Loss per share: | ||
Basic net loss per share | $ (0.34) | $ (0.28) |
Diluted net loss per share | $ (0.34) | $ (0.28) |
Weighted-average number of shares outstanding during the period: | ||
Basic | 18,862,715 | 14,158,680 |
Diluted | 18,862,715 | 14,158,680 |
Includes stock-based compensation expense, as follows: | ||
Total stock-based compensation expense | $ 741 | $ 463 |
General and Administrative [Member] | ||
Includes stock-based compensation expense, as follows: | ||
Total stock-based compensation expense | 741 | 395 |
Intellectual Property Cost [Member] | ||
Includes stock-based compensation expense, as follows: | ||
Total stock-based compensation expense | $ 0 | $ 68 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common stock [Member] | Preferred stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Total FORM Equity [Member] | Non-controlling Interest [Member] |
Balance at Dec. 31, 2015 | $ 40,516 | $ 132 | $ 0 | $ 237,246 | $ (196,862) | $ 0 | $ 40,516 | $ 0 |
Issuance of common stock for repayment of convertible debt and related interest | 2,996 | 18 | 0 | 2,978 | 0 | 0 | 2,996 | 0 |
Stock-based compensation | 463 | 0 | 0 | 463 | 0 | 0 | 463 | 0 |
Net loss for the period | (3,955) | 0 | 0 | 0 | (3,955) | 0 | (3,955) | 0 |
Foreign currency translation | 0 | |||||||
Balance at Mar. 31, 2016 | 40,020 | 150 | 0 | 240,687 | (200,817) | 0 | 40,020 | 0 |
Balance at Dec. 31, 2016 | 64,169 | 183 | 5 | 280,221 | (220,868) | (13) | 59,528 | 4,641 |
Issuance of common stock for services | 11 | 0 | 0 | 11 | 0 | 0 | 11 | 0 |
Shares of common stock issued for the acquisition of Excalibur | 1,809 | 9 | 0 | 1,800 | 0 | 0 | 1,809 | 0 |
Stock-based compensation | 741 | 0 | 0 | 741 | 0 | 0 | 741 | 0 |
Net loss for the period | (6,425) | 0 | 0 | 0 | (6,425) | 0 | (6,425) | 0 |
Foreign currency translation | (44) | 0 | 0 | 0 | 0 | (44) | (44) | 0 |
Noncontrolling interests | 76 | 0 | 0 | 0 | 0 | 0 | 0 | 76 |
Balance at Mar. 31, 2017 | $ 60,337 | $ 192 | $ 5 | $ 282,773 | $ (227,293) | $ (57) | $ 55,620 | $ 4,717 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities | ||
Consolidated net loss | $ (6,349) | $ (3,955) |
Items not affecting cash flows | ||
Depreciation and amortization | 1,899 | 851 |
Amortization of debt discount and debt issuance costs | 0 | 414 |
Stock-based compensation | 741 | 463 |
Amendment to warrants as part of debt modification | 0 | (281) |
Loss on extinguishment of debt | 0 | 356 |
Issuance of shares of common stock for services | 11 | 0 |
Change in fair value of derivative warrant liabilities and conversion feature | (26) | 11 |
Exchange rate gain, net | 0 | (86) |
Changes in current assets and liabilities net of effects of acquisition | ||
Increase in accounts receivable | (742) | (814) |
Decrease (increase) in inventory | 76 | (96) |
Increase in other current assets and other assets | 1,121 | 239 |
Decrease in accounts payable, accrued expenses and other current liabilities | (1,693) | (2,490) |
Increase in deferred revenue | 65 | 193 |
Decrease in other liabilities | (2) | (234) |
Net cash used in operating activities | (4,899) | (5,429) |
Cash flows from investing activities | ||
Cash acquired as part of acquisition | 26 | 0 |
Acquisition of property and equipment | (895) | 0 |
Acquisition of software | (64) | (86) |
Decrease in deposits | 0 | 1,173 |
Net cash provided by (used in) investing activities | (933) | 1,087 |
Cash flows from financing activities | ||
Repayment of line of credit | (361) | 0 |
Debt issuance costs | 0 | (50) |
Net cash used in financing activities | (361) | (50) |
Effect of exchange rate changes and foreign currency translation | (44) | 1 |
Decrease in cash and cash equivalents | (6,237) | (4,391) |
Cash and cash equivalents at beginning of period | 17,910 | 24,951 |
Cash and cash equivalents at end of period | 11,673 | 20,560 |
Cash paid during the year for | ||
Interest | 150 | 0 |
Noncash investing and financing transactions | ||
Issuance of common stock to repay debt and interest | 0 | 2,996 |
Cash acquired as part of acquisition | ||
Working capital (excluding cash and cash equivalents) | 79 | 0 |
Property and equipment | (21) | 0 |
Intangible assets | (556) | 0 |
Goodwill | (2,320) | 0 |
Deferred tax assets | (29) | 0 |
Line of credit with interest | 361 | 0 |
Other liabilities | 387 | 0 |
Fair value of shares of common stock issued | 1,809 | 0 |
Fair value of contingent liability | 316 | 0 |
Cash acquired as part of acquisition | $ 26 | $ 0 |
General
General | 3 Months Ended |
Mar. 31, 2017 | |
General [Abstract] | |
General | FORM Holdings Corp. (“FORM” or the “Company”) is a holding company of small to middle market growth companies. The Company has three operating segments: wellness, technology and intellectual property. The Company’s wellness operating segment consists of XpresSpa, which is a leading airport retailer of spa services. XpresSpa is a well-recognized airport spa brand with 53 locations in 40 terminals and 22 airports in the United States, Netherlands, and United Arab Emirates. XpresSpa offers travelers premium spa services, including massage, nail and hair as well as spa and travel products. The Company acquired XpresSpa in the fourth quarter of 2016. The Company’s technology operating segment consists of Group Mobile and FLI Charge as well as an 11 8.25 11 The Company’s intellectual property operating segment is engaged in the monetization of patents related to content and ad delivery, remote monitoring and mobile technologies. |
Accounting and Reporting Polici
Accounting and Reporting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Accounting and Reporting Policies | Note 2. Accounting and Reporting Policies 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, 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. Such adjustments are of a normal, recurring nature. The results of operations for the three-month period ended March 31, 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. 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 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. The Company recognizes revenue for the wellness operating segment from the sale of XpresSpa products and services at the point of sale, net of discounts and applicable sales taxes. Revenues from the XpresSpa wholesale and e-commerce businesses are recorded at the time goods are shipped. The Company excludes all sales taxes assessed to its customers. Sales taxes assessed on 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. 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 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. (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 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. 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 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 is permitted. The Company currently anticipates that the adoption of ASU 2017-04 will not have a material impact on its consolidated financial statements. ASU 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 aware 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 interim periods within those annual periods, beginning after December 15, 2017; early adoption is permitted. The Company is currently in the process of evaluating the potential impact of the adoption on its consolidated financial statements. Certain balances have been reclassified to conform to presentation requirements, including consistent presentation of cost of sales and general and administrative expenses to align presentation for operating segments. |
Net Loss per Share of Common St
Net Loss per Share of Common Stock | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Net Loss per Common Share | Note 3. Net Loss per Share of Common Stock Three months ended March 31, 2017 2016 Basic numerator: Net loss attributable to shares of common stock $ (6,425) $ (3,955) Basic denominator: Basic shares of common stock outstanding 18,862,715 14,158,680 Basic net loss per share of common stock $ (0.34) $ (0.28) Diluted numerator: Diluted net loss attributable to shares of common stock $ (6,425) $ (3,955) Diluted denominator: Diluted shares of common stock outstanding 18,862,715 14,158,680 Diluted net loss per share of common stock $ (0.34) $ (0.28) 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 5,138,732 862,484 Unvested restricted stock units (“RSUs”) to issue an equal number of shares of common stock of the Company 400,942 25,620 Warrants to purchase an equal number of shares of common stock of the Company 3,430,877 1,006,679 Preferred stock on an as converted basis 3,931,416 Conversion feature of notes 318,924 Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock 12,901,967 2,213,707 |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Combination | Note 4. Business Combination On February 2, 2017, the Company acquired 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 0.01 to the former stockholders of Excalibur (the “Excalibur Sellers”). In addition, the 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 Company. The fair value of the total purchase price is $ 2,125 316 1,809 Assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. The purchase price for the acquisition was allocated to the net tangible and intangible assets based on their fair values as of the acquisition date. 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 performed using the Company's estimates and assumptions, which are subject to change within the measurement period (up to one year from the acquisition date). |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Note 5. Segment Information Prior to January 1, 2017, the Company had four operating segments: XpresSpa, which was acquired on December 23, 2016, Group Mobile, FLI Charge and intellectual property. Following the acquisitions of XpresSpa in December 2016 and Excalibur in February 2017, the Company re-evaluated the operating segments and roles within the executive team to better align financial and human capital resources. 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 concluded that it conducts its business through three operating segments, which are also its 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. 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. Three months ended March 31, 2017 2016 Revenue Wellness $ 10,984 $ Technology 3,525 1,294 Intellectual property 100 750 Total revenue $ 14,609 $ 2,044 Cost of sales Wellness $ 8,835 $ Technology 2,960 1,127 Intellectual property 99 720 Total cost of sales $ 11,894 $ 1,847 Segment operating loss Wellness $ (2,371) $ Technology (1,475) (1,101) Intellectual property (5) (703) Corporate (2,193) (1,802) Total segment operating loss (6,044) (3,606) Non-operating expense, net (78) (349) Loss before income tax expense $ (6,122) $ (3,955) March 31, December 31, 2016 Assets Wellness $ 55,076 $ 57,527 Technology 12,838 8,634 Intellectual property 765 940 Corporate 10,023 15,706 Total assets $ 78,702 $ 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 currently operates in two geographical segments: United States and all other countries. Three months ended March 31, 2017 2016 Revenue United States $ 13,493 $ 2,044 All other countries 1,116 Total revenue $ 14,609 $ 2,044 Cost of sales United States $ 11,217 $ 1,847 All other countries 677 Total cost of sales $ 11,894 $ 1,847 Segment operating income (loss) United States $ (6,234) $ (3,606) All other countries 190 Total segment operating loss $ (6,044) $ (3,606) Non-operating expense, net (78) (349) Loss before income tax expense $ (6,122) $ (3,955) March 31, December 31, Assets United States $ 77,073 $ 80,053 All other countries 1,629 2,754 Total assets $ 78,702 $ 82,807 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 6. Fair Value Measurements 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) March 31, 2017: May 2015 Warrants $ 233 $ $ $ 233 December 31, 2016: May 2015 Warrants $ 259 $ $ $ 259 The Company measures its derivative 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. These derivative warrant liabilities were 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 March 31, 2017 and December 31, 2016, consisted of cash and cash equivalents, receivables, accounts payable and Debt. The carrying amounts of all the aforementioned financial instruments approximate fair value because of the short-term maturities of these instruments. May 2015 December 31, 2016 $ 259 Decrease in fair value of the derivative warrant liabilities (26) March 31, 2017 $ 233 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. March 31, 2017: Description Valuation technique Unobservable inputs Range May 2015 Warrants Black-Scholes-Merton Volatility 42.47 % Risk free interest rate 1.48 % Expected term, in years 3.09 Dividend yield 0.00 % December 31, 2016: 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 were the current market price of the Company’s common stock, the exercise price of the 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. 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 derivative warrant liabilities would each result in a directionally similar change in the estimated fair value of the Company’s 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 derivative warrant liabilities’ exercise 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 derivative warrant liabilities due to the dividend assumption. 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) March 31, 2017: Contingent liability $ 316 $ $ $ 316 The purchase consideration value of the contingent liability assumed by the Company following the acquisition of Excalibur on February 2, 2017 was determined using the Monte-Carlo simulation and, as such, was classified as Level 3 of the fair value hierarchy. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Share-based Compensation [Abstract] | |
Stock-based Compensation | Note 7. Stock-based Compensation As of March 31, 2017, 1,255,270 741 463 Title Grant date No. of Exercise Fair value at Vesting terms Assumptions used in 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% 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 RSUs Options Weighted Weighted average Weighted average No. of grant date No. of average Exercise grant date RSUs fair value options exercise price price range 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 (69,001) $ 25.92 $ 1.90 37.20 $ 17.58 Expired (16,368) $ 43.66 $ 9.94 55.00 $ 22.02 Outstanding as of March 31, 2017 400,942 $ 2.12 5,138,732 $ 5.59 $ 1.55 41.00 $ 3.85 Exercisable as of March 31, 2017 2,028,941 $ 11.39 $ 1.55 41.00 On January 20, 2017, the Company entered into amended employment agreements with its named executive officers. Under the terms of some 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 non-cash 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. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. 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 quarter ended March 31, 2017 reflect an estimated global annual effective tax rate of approximately - 7.27 Income tax expense for the quarter ended March 31, 2017 of $ 227 |
Related Parties Transactions
Related Parties Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | Note 9. Related Parties Transactions XpresSpa entered in a credit agreement and secured promissory note (the “Debt”) with Rockmore Investment Master Fund Ltd. (“Rockmore”) on April 22, 2015 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 $ 6,500 150 189 May 1, 2018 May 1, 2019 In addition, the Company paid $ 212 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Litigation and legal proceedings 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 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 its current knowledge, the Company’s management believes that the amount or range of a potential loss will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations or cash flows. However, the 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 The Company expenses legal fees in the period in which they are incurred. Wellness 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 March 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 2, 2017, the defendants filed a letter with the Court requesting a pre-motion conference in anticipation of the defendants’ filing of a motion to dismiss. On March 17, 2017, XpresSpa filed a First Amended Complaint against the defendants. Both the Cordial Litigation and Ross Litigation are pending before the respective courts; no schedule has been set in either matter. 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 drafting a formal settlement agreement incorporating the agreed-upon terms. 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. Intellectual Property The Company’s intellectual property operating segment is engaged in litigation, for which no liability is recorded, as the Company does not expect a material negative outcome. |
Accounting and Reporting Poli17
Accounting and Reporting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation and principles of consolidation | (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, 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. Such adjustments are of a normal, recurring nature. The results of operations for the three-month period ended March 31, 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. |
Use of estimates | (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 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. |
Revenue recognition | (c) Revenue recognition The Company recognizes revenue for the wellness operating segment from the sale of XpresSpa products and services at the point of sale, net of discounts and applicable sales taxes. Revenues from the XpresSpa wholesale and e-commerce businesses are recorded at the time goods are shipped. The Company excludes all sales taxes assessed to its customers. Sales taxes assessed on 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. 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 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. |
Cost of Sales | (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 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. |
Recently adopted accounting pronouncements | (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. |
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 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 is permitted. The Company currently anticipates that the adoption of ASU 2017-04 will not have a material impact on its consolidated financial statements. ASU 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 aware 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 interim periods within those annual periods, beginning after December 15, 2017; early adoption is permitted. The Company is currently in the process of evaluating the potential impact of the adoption on its consolidated financial statements. |
Reclassification | (g) Reclassification Certain balances have been reclassified to conform to presentation requirements, including consistent presentation of cost of sales and general and administrative expenses to align presentation for operating segments. |
Net Loss per Share of Common 18
Net Loss per Share of Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Computation of Net Loss per Common Share | The table below presents the computation of basic and diluted net losses per share of common stock: Three months ended March 31, 2017 2016 Basic numerator: Net loss attributable to shares of common stock $ (6,425) $ (3,955) Basic denominator: Basic shares of common stock outstanding 18,862,715 14,158,680 Basic net loss per share of common stock $ (0.34) $ (0.28) Diluted numerator: Diluted net loss attributable to shares of common stock $ (6,425) $ (3,955) Diluted denominator: Diluted shares of common stock outstanding 18,862,715 14,158,680 Diluted net loss per share of common stock $ (0.34) $ (0.28) 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 5,138,732 862,484 Unvested restricted stock units (“RSUs”) to issue an equal number of shares of common stock of the Company 400,942 25,620 Warrants to purchase an equal number of shares of common stock of the Company 3,430,877 1,006,679 Preferred stock on an as converted basis 3,931,416 Conversion feature of notes 318,924 Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock 12,901,967 2,213,707 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Components of Recognized Identified Assets Acquired and Liabilities Assumed | 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: 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 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Three months ended March 31, 2017 2016 Revenue Wellness $ 10,984 $ Technology 3,525 1,294 Intellectual property 100 750 Total revenue $ 14,609 $ 2,044 Cost of sales Wellness $ 8,835 $ Technology 2,960 1,127 Intellectual property 99 720 Total cost of sales $ 11,894 $ 1,847 Segment operating loss Wellness $ (2,371) $ Technology (1,475) (1,101) Intellectual property (5) (703) Corporate (2,193) (1,802) Total segment operating loss (6,044) (3,606) Non-operating expense, net (78) (349) Loss before income tax expense $ (6,122) $ (3,955) March 31, December 31, 2016 Assets Wellness $ 55,076 $ 57,527 Technology 12,838 8,634 Intellectual property 765 940 Corporate 10,023 15,706 Total assets $ 78,702 $ 82,807 |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The Company currently operates in two geographical segments: United States and all other countries. Three months ended March 31, 2017 2016 Revenue United States $ 13,493 $ 2,044 All other countries 1,116 Total revenue $ 14,609 $ 2,044 Cost of sales United States $ 11,217 $ 1,847 All other countries 677 Total cost of sales $ 11,894 $ 1,847 Segment operating income (loss) United States $ (6,234) $ (3,606) All other countries 190 Total segment operating loss $ (6,044) $ (3,606) Non-operating expense, net (78) (349) Loss before income tax expense $ (6,122) $ (3,955) March 31, December 31, Assets United States $ 77,073 $ 80,053 All other countries 1,629 2,754 Total assets $ 78,702 $ 82,807 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Measurements [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents the placement in the fair value hierarchy of liabilities measured at fair value on a recurring basis as of March 31, 2017 and December 31, 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) March 31, 2017: May 2015 Warrants $ 233 $ $ $ 233 December 31, 2016: May 2015 Warrants $ 259 $ $ $ 259 |
Changes in Liabilities Measured at Fair Value Using Significant Unobservable Inputs | The following table summarizes the changes in the Company’s liabilities measured at fair value using significant unobservable inputs (Level 3) during the three month period ended March 31, 2017: May 2015 December 31, 2016 $ 259 Decrease in fair value of the derivative warrant liabilities (26) March 31, 2017 $ 233 |
Fair Value Measurements Based Upon Sensitivity and Nature of Inputs | 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. March 31, 2017: Description Valuation technique Unobservable inputs Range May 2015 Warrants Black-Scholes-Merton Volatility 42.47 % Risk free interest rate 1.48 % Expected term, in years 3.09 Dividend yield 0.00 % December 31, 2016: 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 % |
Assets and Liabilities Measured at Fair Value on Nonrecurring Basis | The following table presents the placement in the fair value hierarchy of shares of the contingent liability assumed by the Company following the acquisition of Excalibur on February 2, 2017, which was measured at fair value on a non-recurring basis as of March 31, 2017: 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) March 31, 2017: Contingent liability $ 316 $ $ $ 316 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stock Options and Restricted Stock Units Activity | The activity related to stock options and RSUs during the three-month period ended March 31, 2017 consisted of the following: RSUs Options Weighted Weighted average Weighted average No. of grant date No. of average Exercise grant date RSUs fair value options exercise price price range 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 (69,001) $ 25.92 $ 1.90 37.20 $ 17.58 Expired (16,368) $ 43.66 $ 9.94 55.00 $ 22.02 Outstanding as of March 31, 2017 400,942 $ 2.12 5,138,732 $ 5.59 $ 1.55 41.00 $ 3.85 Exercisable as of March 31, 2017 2,028,941 $ 11.39 $ 1.55 41.00 |
Directors and Employees [Member] | |
Schedule of Options Granted | The following table illustrates the options granted during the three-month period ended March 31, 2017. Title Grant date No. of Exercise Fair value at Vesting terms Assumptions used in 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% |
Management and Employees [Member] | |
Schedule of Options Granted | The following table illustrates the RSUs granted during the three-month period ended March 31, 2017. 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 |
General (Additional Information
General (Additional Information) (Details) - Infomedia [Member] | Mar. 31, 2017 |
Maximum [Member] | |
Cost Method Investment Ownership Percentage | 11.00% |
Minimum [Member] | |
Cost Method Investment Ownership Percentage | 8.25% |
Net Loss per Share of Common 24
Net Loss per Share of Common Stock (Computation of basic and diluted net losses per common share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share Disclosure [Line Items] | ||
Net loss attributable to shares of common stock | $ (6,425) | $ (3,955) |
Basic shares of common stock outstanding | 18,862,715 | 14,158,680 |
Basic net loss per share of common stock | $ (0.34) | $ (0.28) |
Diluted net loss attributable to shares of common stock | $ (6,425) | $ (3,955) |
Diluted shares of common stock outstanding | 18,862,715 | 14,158,680 |
Diluted net loss per share of common stock | $ (0.34) | $ (0.28) |
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 12,901,967 | 2,213,707 |
Convertible Preferred Stock [Member] | ||
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 3,931,416 | 0 |
Basic Numerator [Member] | ||
Earnings Per Share Disclosure [Line Items] | ||
Net loss attributable to shares of common stock | $ (6,425) | $ (3,955) |
Basic Denominator [Member] | ||
Earnings Per Share Disclosure [Line Items] | ||
Basic shares of common stock outstanding | 18,862,715 | 14,158,680 |
Basic net loss per share of common stock | $ (0.34) | $ (0.28) |
Diluted Denominator [Member] | ||
Earnings Per Share Disclosure [Line Items] | ||
Diluted shares of common stock outstanding | 18,862,715 | 14,158,680 |
Vested and unvested options outstanding to purchase an equal number of shares of common stock of the Company [Member] | ||
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 5,138,732 | 862,484 |
Unvested Restricted Stock Units ("RSU") [Member] | ||
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 400,942 | 25,620 |
Warrants to purchase an equal number of shares of common stock of the Company [Member] | ||
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 3,430,877 | 1,006,679 |
Conversion feature of Senior Secured Notes [Member] | ||
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: | ||
Total number of potentially dilutive instruments excluded from the calculation of net loss per share of common stock | 0 | 318,924 |
Business Combinations (Addition
Business Combinations (Additional Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 02, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Business Combination [Line Items] | |||
Common Stock, Par Or Stated Value Per Share | $ 0.01 | $ 0.01 | $ 0.01 |
Business Combination, Consideration Transferred | $ 2,125 | ||
Stock Issued During Period, Shares, Acquisitions | 888,573 | ||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 316 | ||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 1,809 | ||
Business Combination, Control Obtained Description | to the former stockholders of Excalibur (the Excalibur Sellers). In addition, the 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 Companys common stock, at the election of the Company. | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 26 |
Business Combinations (Purchase
Business Combinations (Purchase Price The Net Tangible assets And Intangible Assets Allocation) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Feb. 02, 2017 | Dec. 31, 2016 |
Assets | |||
Current assets (including cash of $26) | $ 26 | ||
Goodwill | $ 27,486 | $ 25,166 | |
Excalibur [Member] | |||
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 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Revenue: | |||
Revenues | $ 14,609 | $ 2,044 | |
Cost of sales | |||
Total cost of sales | 11,894 | 1,847 | |
Segment operating loss: | |||
Operating Income Loss | (6,044) | (3,606) | |
Non-operating expense, net | (78) | (349) | |
Loss before income tax expense | (6,122) | (3,955) | |
Assets | |||
Assets | 78,702 | $ 82,807 | |
Corporate [Member] | |||
Segment operating loss: | |||
Operating Income Loss | (2,193) | (1,802) | |
Assets | |||
Assets | 10,023 | 15,706 | |
Intellectual Property [Member] | |||
Revenue: | |||
Revenues | 100 | 750 | |
Cost of sales | |||
Total cost of sales | 99 | 720 | |
Segment operating loss: | |||
Operating Income Loss | (5) | (703) | |
Assets | |||
Assets | 765 | 940 | |
Wellness Service [Member] | |||
Revenue: | |||
Revenues | 10,984 | 0 | |
Cost of sales | |||
Total cost of sales | 8,835 | 0 | |
Segment operating loss: | |||
Operating Income Loss | (2,371) | 0 | |
Assets | |||
Assets | 55,076 | 57,527 | |
Technology Service [Member] | |||
Revenue: | |||
Revenues | 3,525 | 1,294 | |
Cost of sales | |||
Total cost of sales | 2,960 | 1,127 | |
Segment operating loss: | |||
Operating Income Loss | (1,475) | $ (1,101) | |
Assets | |||
Assets | $ 12,838 | $ 8,634 |
Segment Information (Geographic
Segment Information (Geographical Revenue, Segment Operating Loss and Total Asset Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Revenue: | |||
Total revenue | $ 14,609 | $ 2,044 | |
Cost of sales | |||
Total cost of sales | 11,894 | 1,847 | |
Segment operating income (loss) | |||
Total segment operating gain (loss) | (6,044) | (3,606) | |
Non-operating expense, net | (78) | (349) | |
Loss before income tax expense | (6,122) | (3,955) | |
Assets: | |||
Assets | 78,702 | $ 82,807 | |
United States | |||
Revenue: | |||
Total revenue | 13,493 | 2,044 | |
Cost of sales | |||
Total cost of sales | 11,217 | 1,847 | |
Segment operating income (loss) | |||
Total segment operating gain (loss) | (6,234) | (3,606) | |
Assets: | |||
Assets | 77,073 | 80,053 | |
All other countries | |||
Revenue: | |||
Total revenue | 1,116 | 0 | |
Cost of sales | |||
Total cost of sales | 677 | 0 | |
Segment operating income (loss) | |||
Total segment operating gain (loss) | 190 | $ 0 | |
Assets: | |||
Assets | $ 1,629 | $ 2,754 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Warrant [Member] - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Liabilities | ||
Derivative liabilities | $ 233 | $ 259 |
Fair Value, Inputs, Level 1 [Member] | ||
Liabilities | ||
Derivative liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Liabilities | ||
Derivative liabilities | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Liabilities | ||
Derivative liabilities | $ 233 | $ 259 |
Fair Value Measurements (Change
Fair Value Measurements (Changes In Company's Liabilities Measured At Fair Value Using Significant Unobservable Inputs) (Details) - May Twenty Fifteen Warrants [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Derivative Liability, December 31, 2016 | $ 259 |
Decrease in fair value of the derivative warrant liabilities | (26) |
Derivative Liability, March 31, 2017 | $ 233 |
Fair Value Measurements (Based
Fair Value Measurements (Based Upon Sensitivity and Nature of Inputs) (Details) - May 2015 Warrants [Member] | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Volatility | 42.47% | 45.15% |
Risk free interest rate | 1.48% | 1.57% |
Expected term, in years | 3 years 1 month 2 days | 3 years 4 months 2 days |
Dividend yield | 0.00% | 0.00% |
Fair Value Measurement (Intangi
Fair Value Measurement (Intangible Assets Measured At Fair Value On A Non-Recurring Basis) (Details) - Patents [Member] $ in Thousands | Mar. 31, 2017USD ($) |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract] | |
Assets, Fair Value Disclosure, Nonrecurring | $ 316 |
Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract] | |
Assets, Fair Value Disclosure, Nonrecurring | 0 |
Fair Value Inputs Level 3 [Member] | |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract] | |
Assets, Fair Value Disclosure, Nonrecurring | 316 |
Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis, Alternative [Abstract] | |
Assets, Fair Value Disclosure, Nonrecurring | $ 0 |
Stock-based Compensation (Addit
Stock-based Compensation (Additional Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stockholders Equity [Line Items] | ||
Share-Based Compensation | $ 741 | $ 463 |
Two Thousand Twelve Stock Option Plan [Member] | ||
Stockholders Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,255,270 |
Stock-based Compensation (Sched
Stock-based Compensation (Schedule Of Common Stock Options Granted) (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Stockholders Equity [Line Items] | ||
Exercise price | $ 5.59 | $ 7.60 |
Fair value at grant date | 0.93 | |
Maximum [Member] | ||
Stockholders Equity [Line Items] | ||
Exercise price | 41 | 55 |
Minimum [Member] | ||
Stockholders Equity [Line Items] | ||
Exercise price | $ 1.55 | $ 1.55 |
Management Directors and Employees [Member] | Employee Stock Option [Member] | ||
Stockholders Equity [Line Items] | ||
Grant date | January 17, 2017 | |
No. of RSUs Options | 1,545,000 | |
Vesting terms | Over 1 year for directors; Over 3 years for management and employees | |
Volatility Rate, Minimum | 44.27% | |
Volatility Rate, Maximum | 44.90% | |
Risk free interest rate, Minimum | 1.95% | |
Risk free interest rate, Maximum | 2.16% | |
Dividend yield | 0.00% | |
Management Directors and Employees [Member] | Maximum [Member] | Employee Stock Option [Member] | ||
Stockholders Equity [Line Items] | ||
Exercise price | $ 2.15 | |
Fair value at grant date | $ 0.96 | |
Expected term, in years | 5 years 9 months 14 days | |
Management Directors and Employees [Member] | Minimum [Member] | Employee Stock Option [Member] | ||
Stockholders Equity [Line Items] | ||
Exercise price | $ 2.12 | |
Fair value at grant date | $ 0.89 | |
Expected term, in years | 5 years 3 months 14 days | |
Management and Employees [Member] | Restricted Stock Units (RSUs) [Member] | ||
Stockholders Equity [Line Items] | ||
Grant date | January 17, 2017 | |
No. of RSUs Options | 400,942 | |
Fair value at grant date | $ 2.12 | |
Vesting terms | Over 1 year period, vesting on 1 year anniversary of grant date |
Stock-based Compensation (Stock
Stock-based Compensation (Stock options and RSU activity) (Details) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Stockholders Equity [Line Items] | |
No. of options, Outstanding | shares | 3,679,101 |
No. of options, Granted | shares | 1,545,000 |
No. of options, Vested/Exercised | shares | 0 |
No. of options, Forfeited | shares | (69,001) |
No. of options, Expired | shares | (16,368) |
No. of options, Outstanding | shares | 5,138,732 |
No. of options, Exercisable | shares | 2,028,941 |
Exercise price range, Outstanding | $ 7.60 |
Exercise price range, Granted | 2.12 |
Exercise price range, Vested/Exercised | 0 |
Exercise price range, Forfeited | 25.92 |
Exercise price range, Expired | 43.66 |
Exercise price range, Outstanding | 5.59 |
Exercise price range, Exercisable | 11.39 |
Weighted average grant date fair value, Outstanding | 5.41 |
Weighted average grant date fair value, Granted | 0.93 |
Weighted average grant date fair value, Vested/Exercised | 0 |
Weighted average grant date fair value, Forfeited | 17.58 |
Weighted average grant date fair value, Expired | 22.02 |
Weighted average grant date fair value, Outstanding | $ 3.85 |
Restricted Stock [Member] | |
Stockholders Equity [Line Items] | |
No. of RSUS, Outstanding | shares | 0 |
No. of RSUs, Granted | shares | 400,942 |
No. of RSUs, Vested/Exercised | shares | 0 |
No. of RSUs, Forfeited | shares | 0 |
No. of RSUs, Expired | shares | 0 |
No. of RSUS, Outstanding | shares | 400,942 |
Weighted average grant date fair value, Outstanding | $ 0 |
Weighted average grant date fair value, Granted | 2.12 |
Weighted average grant date fair value, Vested/Exercised | 0 |
Weighted average grant date fair value, Forfeited | 0 |
Weighted average grant date fair value, Expired | 0 |
Weighted average grant date fair value, Outstanding | 2.12 |
Minimum [Member] | |
Stockholders Equity [Line Items] | |
Exercise price range, Outstanding | 1.55 |
Exercise price range, Granted | 2.12 |
Exercise price range, Forfeited | 1.90 |
Exercise price range, Expired | 9.94 |
Exercise price range, Outstanding | 1.55 |
Exercise price range, Exercisable | 1.55 |
Maximum [Member] | |
Stockholders Equity [Line Items] | |
Exercise price range, Outstanding | 55 |
Exercise price range, Granted | 2.15 |
Exercise price range, Forfeited | 37.20 |
Exercise price range, Expired | 55 |
Exercise price range, Outstanding | 41 |
Exercise price range, Exercisable | $ 41 |
Income Taxes (Additional Inform
Income Taxes (Additional Information) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Income Taxes [Line Items] | |
Effective Income Tax Rate Reconciliation, Percent | (7.27%) |
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 227 |
Related Parties Transactions (A
Related Parties Transactions (Additional Information) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Bruce T. Bernstein [Member] | |||
Payments for Legal Settlements | $ 212 | ||
XpresSpa Engagement [Member] | |||
Debt Instrument, Face Amount | $ 6,500 | $ 6,500 | $ 6,500 |
Payments For Interest Expenses | 150 | ||
Interest Expense, Debt | $ 189 | ||
Debt Instrument, Maturity Date Range, Start | May 1, 2018 | ||
Debt Instrument, Maturity Date Range, End | May 1, 2019 |
Commitments and Contingencies (
Commitments and Contingencies (Additional Information) (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Accrued Liabilities [Member] | |
Loss Contingencies [Line Items] | |
Estimated Litigation Liability, Current | $ 650 |