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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Mar. 15, 2019	Jun. 29, 2018
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Registrant Name	XpresSpa Group, Inc.
Entity Central Index Key	0001410428
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 5,400,389
Trading Symbol	XSPA
Entity Common Stock, Shares Outstanding		1,932,326
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	true

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 3,403	$ 6,368
Inventory	782	1,159
Other current assets	1,465	2,120
Assets held for disposal	109	6,446
Total current assets	5,759	16,093
Restricted cash	487	487
Property and equipment, net	11,795	15,797
Intangible assets, net	9,167	11,547
Goodwill	0	19,630
Other assets	3,376	1,686
Total assets	30,584	65,240
Current liabilities
Accounts payable, accrued expenses and other current liabilities	8,132	8,736
Debt	6,500	0
Convertible notes	1,986	0
Liabilities held for disposal	40	3,761
Total current liabilities	16,658	12,497
Long-term liabilities
Debt	0	6,500
Derivative warrant liabilities	476	34
Other liabilities	315	370
Total liabilities	17,449	19,401
Commitments and contingencies (see Note 18)
Stockholders' equity
Common Stock, $0.01 par value per share 7,500,000 shares authorized; 1,761,802 and 1,327,284 shares issued and outstanding as of December 31, 2018 and 2017, respectively	352	265
Additional paid-in capital	295,904	290,396
Accumulated deficit	(286,913)	(249,708)
Accumulated other comprehensive loss	(251)	(74)
Total stockholders' equity attributable to the Company	9,106	40,883
Noncontrolling interests	4,029	4,956
Total stockholders' equity	13,135	45,839
Total liabilities and stockholders' equity	30,584	65,240
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	4	4
Series E Convertible Preferred Stock [Member]
Stockholders' equity
Preferred stock	$ 10	$ 0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	7,500,000	7,500,000
Common stock, issued	1,761,802	1,327,284
Common stock, outstanding	1,761,802	1,327,284
Series A Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	348	348
Preferred stock, issued	348	348
Preferred stock, outstanding	0	0
Series B Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	80,458	80,458
Preferred stock, issued	80,458	80,458
Preferred stock, outstanding	0	0
Series C Junior Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	15,000	15,000
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	25,000	25,000
Preferred stock, issued	23,760	23,760
Preferred stock, outstanding	21,027	21,027
Preferred Stock, Liquidation Preference, Value	$ 20,186	$ 20,186
Series E Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	73,665	73,665
Preferred stock, issued	48,387	48,387
Preferred stock, outstanding	48,387	48,387
Preferred Stock, Liquidation Preference, Value	$ 3,023	$ 3,023

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenue
Product and services	$ 49,294	$ 48,373
Other	800	450
Total revenue	50,094	48,823
Cost of sales
Labor	24,369	24,327
Occupancy	8,118	7,621
Products and other operating costs	6,964	7,038
Total cost of sales	39,451	38,986
Depreciation and amortization	9,498	7,976
Goodwill impairment	19,630	0
General and administrative	16,240	16,577
Total operating expenses	84,819	63,539
Operating loss from continuing operations	(34,725)	(14,716)
Interest expense	(1,827)	(731)
Extinguishment of debt	145	0
Other non-operating income (expense), net	498	(554)
Loss from continuing operations before income taxes	(35,909)	(16,001)
Income tax benefit (expense)	278	(111)
Consolidated net loss from continuing operations	(35,631)	(16,112)
Loss from discontinued operations before income taxes	(1,115)	(12,265)
Income tax expense	0	(12)
Consolidated net loss from discontinued operations	(1,115)	(12,277)
Consolidated net loss	(36,746)	(28,389)
Net income attributable to noncontrolling interests	(459)	(451)
Net loss attributable to the Company	(37,205)	(28,840)
Comprehensive loss	$ (36,923)	$ (28,450)
Loss per share
Loss per share from continuing operations	$ (24.83)	$ (14.86)
Loss per share from discontinued operations	(0.77)	(11.02)
Total basic and diluted net loss per share	$ (25.60)	$ (25.88)
Weighted-average number of shares outstanding during the year
Basic	1,453,635	1,114,349
Diluted	1,453,635	1,114,349
Includes stock-based compensation expense, as follows:
Total stock-based compensation expense	$ 916	$ 2,745
General and Administrative [Member]
Includes stock-based compensation expense, as follows:
Total stock-based compensation expense	916	2,177
Continuing Operations [Member]
Cost of sales
Consolidated net loss from continuing operations	(35,631)	(16,112)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(177)	(61)
Comprehensive loss	(35,808)	(16,173)
Discontinued Operations [Member]
Cost of sales
Consolidated net loss from discontinued operations	(1,115)	(12,277)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	0	0
Comprehensive loss	(1,115)	(12,277)
Includes stock-based compensation expense, as follows:
Total stock-based compensation expense	$ 0	$ 568

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred stock	Common stock	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Total Company equity	Non-controlling interest
Balance at Dec. 31, 2016	$ 64,169	$ 5	$ 183	$ 280,221	$ (220,868)	$ (13)	$ 59,528	$ 4,641
Issuance of Common Stock for services	27	0	0	27	0	0	27	0
Shares of Common Stock issued for acquisition of Excalibur	1,809	0	9	1,800	0	0	1,809	0
Net proceeds from sale and issuance of shares of Common Stock in public offering	6,584	0	69	6,515	0	0	6,584	0
Decrease in shares of preferred stock issued to XpresSpa sellers	(908)	0	0	(908)	0	0	(908)	0
Conversion of preferred stock to Common Stock	(1)	(1)	4	(4)	0	0	(1)	0
Stock-based compensation	2,745	0	0	2,745	0	0	2,745	0
Net income (loss) for the year	(28,389)	0	0	0	(28,840)	0	(28,840)	451
Foreign currency translation	(61)	0	0	0	0	(61)	(61)	0
Contributions from noncontrolling interests	316	0	0	0	0	0	0	316
Distributions to noncontrolling interests	(452)	0	0	0	0	0	0	(452)
Balance at Dec. 31, 2017	45,839	4	265	290,396	(249,708)	(74)	40,883	4,956
Vesting of restricted stock units ("RSUs")	0	0	6	(6)	0	0	0	0
Issuance of equity warrants	64	0	0	64	0	0	64	0
Issuance of Series E Convertible Preferred Stock	3,000	10	0	2,990	0	0	3,000	0
Issuance of Common Stock for services	247	0	5	242	0	0	247	0
Issuance of Common Stock for repayment of debt and interest	1,378	0	76	1,302	0	0	1,378	0
Stock-based compensation	916	0	0	916	0	0	916	0
Net income (loss) for the year	(36,746)	0	0	0	(37,205)	0	(37,205)	459
Foreign currency translation	(177)	0	0	0	0	(177)	(177)	0
Contributions from noncontrolling interests	250	0	0	0	0	0	0	250
Distributions to noncontrolling interests	(1,636)	0	0	0	0	0	0	(1,636)
Balance at Dec. 31, 2018	$ 13,135	$ 14	$ 352	$ 295,904	$ (286,913)	$ (251)	$ 9,106	$ 4,029

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Consolidated net loss	$ 36,746	$ 28,389
Consolidated net loss from discontinued operations	1,115	12,277
Consolidated net loss from continuing operations	(35,631)	(16,112)
Items not affecting cash flows
Depreciation, impairment, and amortization	9,498	7,976
Impairment of goodwill	19,630	0
Amortization of debt discount and debt issuance costs	986	0
Stock-based compensation	916	2,177
Issuance of warrants	64	0
Conversion of shares of preferred stock to shares of Common Stock	0	(1)
Issuance of shares of Common Stock for services	247	27
Issuance of Common Stock for repayment of debt and interest	310	0
Gain on disposal of assets	0	(148)
Change in fair value of derivative warrant liabilities	(1,520)	(225)
Contingent liability as a result of acquisition	0	316
Gain on the sale of patents	(450)	0
Changes in assets and liabilities net of effects of acquisition
Decrease in inventory	377	1,347
Increase in other current assets and other assets	(1,835)	(636)
Decrease in accounts payable, accrued expenses and other current liabilities	(604)	(3,114)
Decrease in other liabilities	(55)	(368)
Net cash used in operating activities - continuing operations	(8,067)	(8,761)
Net cash provided by (used in) operating activities - discontinued operations	1,501	(3,411)
Net cash used in operating activities	(6,566)	(12,172)
Cash flows from investing activities
Cash acquired as part of acquisition	0	26
Acquisition of property and equipment	(3,031)	(4,479)
Acquisition of software	(85)	(233)
Proceeds from the sale of subsidiary	800	250
Proceeds from the sale of cost method investment	200	0
Proceeds from sale of patents	250	150
Net cash used in investing activities - continuing operations	(1,866)	(4,286)
Net cash used in investing activities - discontinued operations	0	(1,110)
Net cash used in investing activities	(1,866)	(5,396)
Cash flows from financing activities
Proceeds from convertible notes and warrants	4,350	0
Debt issuance costs	(320)	0
Issuance of shares of Series E Convertible Preferred Stock	3,000	0
Net proceeds from sale and issuance of shares of Common Stock in public offering	0	6,584
Contributions from noncontrolling interests	250	316
Distributions to noncontrolling interests	(1,636)	(452)
Net cash provided by financing activities - continuing operations	5,644	6,448
Net cash used in financing activities - discontinued operations	0	(361)
Net cash provided by financing activities	5,644	6,087
Effect of exchange rate changes	(177)	(61)
Decrease in cash and cash equivalents	(2,965)	(11,542)
Cash, cash equivalents, and restricted cash at beginning of the year	6,855	18,397
Cash, cash equivalents, and restricted cash at end of the year	3,890	6,855
Cash paid during the year for
Interest	731	731
Non-cash investing and financing transactions
Issuance of shares of Common Stock to repay $1,068 of debt and interest	1,378	0
Issuance of shares of Common Stock, preferred stock and warrants for the acquisition of XpresSpa	0	(908)
Issuance of shares of Common Stock for the acquisition of Excalibur	0	1,809
Issuance of shares of Common Stock for services	247	0
Non-cash acquisition of cost method investment	2,075	0
Debt discount related to issuance of convertible notes	1,962	0
Non-cash acquisition of construction-in-progress	$ 228	$ 1,154

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	7 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Repayments of Debt	$ 1,068	$ 1,068	$ 1,068

General

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

Note 1. General

Overview

On January 5, 2018, the Company changed its name to XpresSpa Group, Inc. (“XpresSpa Group” or the “Company”) from FORM Holdings Corp. The Company’s common stock, par value $0.01 per

share (the “Common Stock”), which

had previously been listed under the trading symbol “FH” on the Nasdaq Capital Market, has been listed under the trading symbol “XSPA” since January 8, 2018. Rebranding to XpresSpa Group aligned the Company’s corporate strategy to build a pure-play health and wellness services company, which the Company commenced following its acquisition of XpresSpa Holdings, LLC (“XpresSpa”) on December 23, 2016.

As a result of the transition to a pure-play health and wellness services company, the Company currently has one operating segment that is also its sole reporting unit, XpresSpa, a leading airport retailer of spa services. XpresSpa is a well-recognized airport spa brand with 56 locations, consisting of 51 domestic and 5 international locations as of December 31, 2018. XpresSpa offers travelers premium spa services, including massage, nail and skin care, as well as spa and travel products. During 2018 and 2017, XpresSpa generated $49,294 and $48,373 of

revenue, respectively. In 2018 and 2017, approximately 83% and

82%, respectively, of XpresSpa’s total revenue was generated by services, primarily massage and nailcare, and 17% and 18%, respectively, was generated by retail products, primarily travel accessories.

XpresSpa is a leading airport retailer of spa services and related products. As of December 31, 2018, XpresSpa operated 56 total locations in 23 airports, and one off-airport location in New York City, in three countries including the United States, Netherlands and United Arab Emirates. Services and products include:

•

massage services for the neck, back, feet and whole body;

•

nail care, such as pedicures, manicures and polish changes;

•

travel products, such as neck pillows, blankets and massage tools; and

•

new offerings, such as cryotherapy services, NormaTec compression services, and Dermalogica personal care services and retail products.

For over 15 years, increased security requirements have led travelers to spend more time at the airport. In addition, in anticipation of the long and often stressful security lines, travelers allow for more time to get through security and, as a result, often experience increased downtime prior to boarding. Consequently, travelers at large airport hubs have idle time in the terminal after passing through security.

XpresSpa was developed to address the stress and idle time spent at the airport, allowing travelers to spend this time productively, by relaxing and focusing on personal care and wellness. XpresSpa is well positioned to benefit from consumers’ growing interest in health and wellness and increasing demand for spa services and related wellness products.

In addition, a confluence of microeconomic events has created favorable conditions for the expansion of retail concepts at airports, in particular retail concepts that attract higher spending from air travelers. The competition for airplane landings has forced airports to lower landing fees, which in turn has necessitated augmenting their retail offerings to offset budget shortfalls. Infrastructure projects at airports across the country, intended to make an airport more desirable to airlines, require funding from bond issuances that in turn rely upon, in part, the expected minimum rent guarantees and expected income from concessionaires.

The Company owns certain patent portfolios, which it looks to monetize through sales and licensing agreements. During the year ended December 31, 2018, the Company determined that its former intellectual property operating segment would no longer be an area of focus and, as such, will no longer operate as a separate operating segment, as it is not expected to generate any material revenues or operating costs.

In October 2017, the Company completed the sale of FLI Charge, Inc. (“FLI Charge”) and in March 2018, the Company completed the sale of Group Mobile Int’l LLC (“Group Mobile”). These two entities previously comprised the Company’s technology operating segment. The results of operations for FLI Charge and Group Mobile are presented in the consolidated statements of operations and comprehensive loss as consolidated net loss from discontinued operations. The carrying amounts of assets and liabilities belonging to Group Mobile as of December 31, 2018, and FLI Charge and Group Mobile as of December 31, 2017, are presented in the consolidated balance sheets as assets held for disposal and liabilities held for disposal, respectively.

Liquidity and Going Concern

As of December 31, 2018, the Company had approximately $3,403 of cash and cash equivalents, $2,247 of inventory and prepaid expenses and $109 of assets held for disposal, which amount to total current assets of $5,759. The Company’s total current liabilities balance, which includes accounts payable, accrued expenses, debt, and the current portion of Convertible Notes, was $16,658 as of December 31, 2018. The working capital deficiency of $10,899 as of December 31, 2018 includes $1,986 of convertible notes classified as short-term for which principal repayments may be made in shares of Common Stock at the Company’s election. In addition, included in total current liabilities is approximately $1,742 which relates to obligations that will not settle in cash, and an additional $465 of liabilities that are not expected to settle in the next twelve months.

While the Company has aggressively reduced operating and overhead expenses, and while the Company continues to focus on its overall profitability, the Company has continued to generate negative cash flows from operations and expects to incur net losses in the foreseeable future. The report of the Company’s independent registered public accounting firm on its financial statements for the years ended December 31, 2018 and 2017 includes an explanatory paragraph indicating that there is substantial doubt about the Company’s ability to continue as a going concern. The receipt of this explanatory paragraph with respect to the Company’s financial statements for the years ended December 31, 2018 and 2017 will result in a breach of a covenant under the Senior Secured Note which, if unremedied for a period of 30 days after the date hereof, will constitute an event of default under the Senior Secured Note. Upon the occurrence of an event of default under the Senior Secured Note, Rockmore may, among other things, declare the Senior Secured Note and all accrued and unpaid interest thereon and all other amounts owing under the Senior Secured Note to be due and payable. If the maturity date of the Senior Secured Note is accelerated as a result of the event of default referenced above, an event of default under the Convertible Notes would be triggered. If an event of default under the Convertible Notes occurs, the outstanding principal amount of the Convertible Notes, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the holder’s election, immediately due and payable in cash.

The Company has taken actions to improve its overall cash position and access to liquidity by exploring valuable strategic partnerships, right-sizing its corporate structure, and stream-lining operations. The Company expects that the actions taken in 2018 and early 2019 will enhance its liquidity and financial environment. In addition, the Company expects to generate additional liquidity through the monetization of certain investments and other assets. The Company expects that these actions will be executed in alignment with the anticipated timing of its liquidity needs. There can be no assurance, however, that any such opportunities will materialize.

The Company’s historical operating results indicate that there is substantial doubt related to the Company's ability to continue as a going concern. The Company believes it is probable that the actions discussed above will transpire and will successfully mitigate the substantial doubt raised by its historical operating results and will satisfy its liquidity needs 12 months from the issuance of the financial statements. However, the Company cannot reasonably predict with any certainty that the results of its planned actions will generate the expected liquidity required to satisfy its liquidity needs.

If the Company continues to experience operating losses, and the Company is not able to generate additional liquidity through the actions described above or through some combination of other actions, while not expected, the Company may not be able to access additional funds and the Company might need to secure additional sources of funds, which may or may not be available. Additionally, a failure to generate additional liquidity could negatively impact its access to inventory or services that are important to the operation of the business.

Recent Developments

CEO Transition

On February 8, 2019, Edward Jankowski resigned as Chief Executive Officer of the Company and as a director of the Company. Mr. Jankowski’s resignation was not as a result of any disagreement with the Company on any matters related to the Company’s operations, policies or practices. Mr. Jankowski will receive termination benefits including $375 payable in equal installments over a twelve-month term commencing on February 13, 2019 and COBRA continuation coverage paid in full by the Company for up to a maximum of twelve months.

Effective as of February 11, 2019, Douglas Satzman was appointed by the Company’s board of directors as the Chief Executive Officer of the Company and as a director of the Company.

Reverse Stock Split

On February 22, 2019, The Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to effect a 1-for-20 reverse stock split of the Company’s shares of Common Stock. Such amendment and ratio were previously approved by the Company’s stockholders and board of directors, respectively.

As a result of the reverse stock split, every twenty (20) shares of the Company’s pre-reverse split Common Stock were combined and reclassified into one (1) share of Common Stock. Proportionate voting rights and other rights of Common Stock holders were affected by the reverse stock split. Stockholders who would have otherwise held a fractional share of Common Stock received payment in cash in lieu of any such resulting fractional shares of Common Stock as the post-reverse split amounts of Common Stock were rounded down to the nearest full share. Such cash payment in lieu of a fractional share of Common Stock was calculated by multiplying such fractional interest in one share of Common Stock by the closing trading price of the Company’s Common Stock on February 22, 2019, and rounded to the nearest cent. No fractional shares were issued in connection with the reverse stock split.

The Company’s Common Stock began trading on the Nasdaq Capital Market on a post-reverse split basis at the open of business on February 25, 2019.

Dispositions

On October 20, 2017, the Company sold FLI Charge to a group of private investors and FLI Charge management, who now own and operate FLI Charge. In February 2019, the Company entered into an agreement to release FLI Charge’s obligation to pay any royalties on FLI Charge’s perpetual gross revenues with regard to conductive wireless charging, power, or accessories, and to cancel its warrants exercisable in FLI Charge in exchange for cash proceeds of $1,100, which were received in full on February 15, 2019.

On March 22, 2018, the Company sold Group Mobile to a third party. The Company has not provided any continued management or financing support to FLI Charge or Group Mobile.

Rebranding

On January 5, 2018, the Company changed its name to XpresSpa Group, Inc. from FORM Holdings Corp, which aligned the Company’s corporate strategy to build a pure-play health and wellness services company. The Company’s Common Stock, par value $0.01 per share, which had previously been listed under the trading symbol “FH” on the Nasdaq Capital Market, has been listed under the trading symbol “XSPA” since January 8, 2018.

Sale of Patents

In January 2018, the Company sold certain patents to Crypto Currency Patent Holdings Company LLC, a unit of Marathon Patent Group, Inc. (“Marathon”), for approximately $1,250, comprised of $250 in cash and 250,000 shares of

Marathon Common Stock valued

at approximately $1,000 at

the time of the transaction. The Marathon Common Stock was subject to a lockup period (the “Lockup Period”) which commenced on the transaction date and ended on July 11, 2018, subject to a leak-out provision. The Marathon Common Stock is recognized as a cost method investment and, as such, was required to be measured at cost on the date of acquisition, which, as of the transaction date, approximated fair value. The fair value of the Marathon Common Stock was estimated by multiplying the number of shares as they become tradeable by the price per share as of the transaction date; however, due to the fact that the Marathon Common Stock is restricted during the Lockup Period, the Company applied a discount on the lack of marketability to estimate the fair value at the measurement date. The fair value of the consideration as of the Transaction Date was determined to be $450.

Collaboration Agreement

On November 12, 2018, the Company entered into a Product Sale and Marketing Agreement (the “Collaboration Agreement”) with Calm.com, Inc. (“Calm”) primarily related to the display, marketing, promotion, offer for sale and sale of Calm’s products in each of the Company’s branded stores throughout the United States.

The Collaboration Agreement will remain in effect until July 31, 2019, unless terminated earlier in accordance with its terms, and automatically renew for successive terms of six months unless either party provides written notice of termination no later than thirty days prior to any such automatic renewal.

Financings

Secured Convertible Notes

On May 15, 2018, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to sell up to (i) an aggregate principal amount of $4,438 in 5% Secured Convertible Notes due on November 16, 2019, which included $88

of convertible notes issued to Palladium Capital Advisors as Placement Agent (the “Convertible Notes”), convertible into shares of its Common Stock

at a conversion price of $12.40 per share, (ii) Class A Warrants (the “Class A Warrants”) to purchase 357,862 shares of Common Stock at an exercise price of $12.40 per share and (iii) Class B Warrants (the “Class B Warrants,” and together with the Class A Warrants, the “Warrants”) to purchase 178,931 shares of Common Stock at an exercise price of $12.40 per share. The Convertible Notes bear interest at a rate of 5% per annum. The Convertible Notes are senior secured obligations of the Company and are secured by certain of its personal property. Unless earlier converted or redeemed, the Convertible Notes will mature on November 16, 2019. The transaction closed on May 17, 2018, at which time the Company received $4,350 in gross proceeds from the Investors.

The principal amount of the outstanding Convertible Notes was originally to be repaid monthly in the amount of approximately

$296,

beginning on September 17, 2018, and the Company may make such payments and related interest payments in cash or, subject to certain conditions, in registered shares of its Common Stock (or a combination thereof), at its election. If the Company chooses to repay the Convertible Notes in shares of its Common Stock, the shares will be issued at a

10%

discount to the volume weighted average price of its Common Stock for the five (5) trading days commencing eight (8) days prior to the relevant repayment date and ending on the fourth (4

) trading day prior to such repayment date, subject to a minimum floor price of not less than

20%

of the conversion price of the Convertible Notes on the issue date. The Company may also repay the Convertible Notes in advance of the maturity schedule subject to an early repayment penalty of

15%.

On August 14, 2018, the Company entered into an Amendment Agreement (the “First Amendment Agreement”)

whereby the initial monthly principal repayment and accrued interest due on the Convertible Notes of $351 was settled in 103,350 shares of Common Stock on August 15, 2018. All other material terms of the Securities Purchase Agreement remained unchanged. During the year ended December 31, 2018, several of the Investors converted their monthly principal payments and accrued interest due on the Convertible Notes into shares of Common Stock pursuant to

the First Amendment Agreement, resulting

in the issuance of an additional 377,109 shares of Common Stock.

On December 11, 2018, the Company entered into a Second Amendment Agreement (the “Second Amendment Agreement”) whereby each Holder waived the Company’s obligation to make any monthly payments for the months of January, February and March 2019. Pursuant to the Second Amendment Agreement, each Holder was permitted to convert its pro-rata share of the Convertible Notes, at a conversion price of $4.00 per share of Common Stock, such that the maximum number of shares to be issued pursuant to the Second Amendment Agreement shall not exceed 250,000 shares of Common Stock. All other material terms of the Securities Purchase Agreement remained unchanged. During the three-month period ended December 31, 2018, one of the Investors converted a portion of their allotted shares, in settlement of $23, into shares of Common Stock pursuant to the Second Amendment Agreement, resulting in the issuance of an additional 5,627 shares of Common Stock.

Collaboration Agreement and Series E Preferred Stock Financing

In connection with the entry into the Collaboration Agreement, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with Calm, pursuant to which the Company issued to Calm an aggregate of 32,258 shares of the Company’s newly designated Series E Convertible Preferred Stock, par value $0.01 per share (the “Series E Preferred Stock”), which are initially convertible into 161,290 shares of Common Stock, par value $0.01 per share, at a conversion price of $12.40 per share, subject to certain adjustments. The purchase price per share of the Series E Preferred Stock was $62.00 per share for gross proceeds to the Company of $2,000. In addition, on December 28, 2018, in satisfaction of the conditions under the Purchase Agreement, the Company sold, and Calm purchased, 16,129 additional shares of Series E Preferred Stock (the “Additional Series E Shares”), which are initially convertible into 80,645 shares of Common Stock at a conversion price of $12.40 per share, subject to certain adjustments, for gross proceeds to the Company of $1,000. The sale of Additional Series E Shares were on the same terms and conditions as those contained in the Purchase Agreement.

Accounting and Reporting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Accounting and Reporting Policies

Note 2. Accounting and Reporting Policies

(a) Basis of presentation and principles of consolidation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company, and all entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

(b) Use of estimates

The preparation of the accompanying 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 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 intangibles assets, the useful lives of the Company’s intangible assets, the valuation of the Company’s derivative warrant liabilities, the valuation of stock-based compensation, deferred tax assets and liabilities, income tax uncertainties, and other contingencies.

The Company conducts certain transactions in foreign currencies, which are recorded at the exchange rate as of the transaction date. All exchange gains and losses occurring from the remeasurement of monetary balance sheet items denominated in non-dollar currencies are included in non-operating income (expense) in the consolidated statements of operations and comprehensive loss.

Accounts of the foreign subsidiaries of XpresSpa are translated into United States dollars. Assets and liabilities have been translated at year end exchange rates and revenues and expenses have been translated at average monthly rates for the year. The translation adjustments arising from the use of different exchange rates are included as foreign currency translation within the consolidated statements of operations and comprehensive loss and consolidated statements of changes in stockholders’ equity.

(d) Cash and cash equivalents

The Company maintains cash in checking accounts with financial institutions. The Company has established guidelines relating to diversification and maturities of its investments in order to minimize credit risk and maintain high liquidity of funds. Cash equivalents include amounts due from third-party financial institutions for credit and debit card transactions which typically settle in less than five days. As of December 31, 2018 and 2017, cash and cash equivalents included $260 and $336 of credit card receivables, respectively. As of December 31, 2018, the Company held significant portions of its cash balance in overseas accounts, totaling

$1,143,

which is not insured by the Federal Deposit Insurance Corporation (“FDIC”). If the Company were to distribute the amounts held overseas, the Company would need to follow an approval and distribution process as defined in its operating and partnership agreements, which may delay and/or reduce the availability of cash to the Company. In addition, as of December 31, 2018 and 2017, there was an additional $487 of restricted cash held by a third party recorded as restricted cash on the Consolidated Balance Sheet.

(e) Derivative instruments

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

Contracts in an Entity’s Own Equity”

to determine if such instruments are indexed to the Company’s own stock and qualify for classification in equity.

(f) Accounts receivable

Accounts receivable are recorded net of an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. In developing the allowance, the Company considers historical loss experience, the overall quality of the receivable portfolio and specifically identified customer risks. The Company periodically reviews the adequacy of the allowance and the factors used in the estimation making adjustments to the estimate as necessary. Accounts receivable pertaining to continuing operations are included in other current assets in the consolidated balance sheets. As of December 31, 2018 and 2017, there was no allowance for doubtful accounts.

(g) Inventory

All inventory is valued at the lower of cost or net realizable value. Cost is determined using a weighted-average cost method. Inventory is included in current assets in the consolidated balance sheets.

(h) Intangible assets

Intangible assets include trade names, customer relationships, and technology, which were acquired as part of the acquisition of XpresSpa in December 2016 and are recorded based on the estimated fair value in purchase price allocation. Intangible assets also include purchased patents. The intangible assets are amortized over their estimated useful lives, which are periodically evaluated for reasonableness. Gain or loss on dispositions of intangible assets is

reflected in general and administrative expense in the consolidated statements of operations

and comprehensive loss.

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.

(i) Property and equipment

Property and equipment is recorded at historical cost and primarily consists of leasehold improvements, furniture and fixtures, and other operating equipment. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of the lease term or economic useful life. Maintenance and repairs are charged to expense, and renovations or improvements that extend the service lives of the Company’s assets are capitalized over the lesser of the extension period or life of the improvement. Gain or loss on dispositions of property and equipment is reflected in the consolidated net loss from discontinued operations in the consolidated statements of operations and comprehensive loss. Property and equipment is tested for impairment on at least an annual basis or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

(j) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Goodwill is reviewed for impairment at least annually, and when triggering events occur, in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 350, Intangibles – Goodwill and Other

. The Company evaluates goodwill impairment at the reporting unit level and performs its annual goodwill impairment test on December 31. The Company has adopted

ASU No. 2017-14, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

effective January 1, 2018. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then they would not need to perform the quantitative impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative assessment, then the qualitative goodwill impairment test is used to identify potential impairment by comparing the fair value of the reporting unit with its carrying amount, including goodwill.

If the fair value of the reporting unit exceeds its carrying value, then the goodwill is not impaired. If the fair value of the reporting unit is less than its carrying value, an impairment charge will be recorded based on the excess of a reporting unit’s carrying amount over its fair value. A significant amount of judgment is required in performing goodwill impairment tests including estimating the fair value of a reporting unit and the implied fair value of goodwill.

As of December 31, 2018, the Company’s goodwill was fully impaired. See

“Note 6. Intangible Assets and Goodwill”

for further details on the assessment and conclusion on the goodwill impairment recorded during the year ended December 31, 2018.

(k) Restricted cash and other assets

Restricted cash, which is listed as its own line item in the consolidated balance sheets, represents balances at financial institutions to secure bonds and letters of credit as required by the Company’s various lease agreements. Other assets include cost basis investments.

Prior to December 31, 2013, the Company operated a global platform for the distribution of mobile social applications and 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. The Company’s equity interest increased from 8.25% to 11% in the first quarter of 2017 due to a realignment of ownership interests. The Company’s investment in InfoMedia is included in other assets in the consolidated balance sheets for the years ended December 31, 2018 and 2017.

(l) Revenue recognition

The Company recognizes revenue 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. Accordingly, the Company recognizes revenue for its single performance obligation related to both in-store and online sales at the point at which the service has been performed or the control of the merchandise has passed to the customer. 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 consolidated balance sheets until remitted to the state agencies.

The Company also has a franchise agreement with an unaffiliated franchisee to operate an XpresSpa location. The Company has identified the franchise right as a distinct performance obligation that transfers over time, and therefore any portion of the non-recurring initial franchise fee that is allocated to the franchise right should be recognized over the course of the contract rather than all upfront as would be the case with distinct performance obligations. Under the Company’s franchising model, all initial franchising fees relate to the franchise right and therefore are recognized over the course of the contract which commences upon signing of the agreement. Upon receipt of the non-recurring, non-refundable initial franchise fee, management records a deferred revenue asset and recognizes revenue on a straight-line basis over the contract term. As of December 31, 2018, there were no franchise royalty revenues as operations have not yet commenced. Once operations commence, franchise royalty revenue will be recorded in the period earned.

Other revenue relates to one-time intellectual property licenses as well as the sale of certain of the Company’s intellectual property. Revenue from patent licensing is recognized when the Company transfers promised intellectual property rights to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those intellectual property rights. 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, receipt of the upfront fee, and transfer of the promised intellectual property rights.

(m) Gift cards and customer rewards program

XpresSpa offers no-fee, non-expiring gift cards to its customers. No revenue is recognized upon issuance of a gift card and a liability is established for the gift card’s cash value. The liability is relieved, and revenue is recognized upon redemption by the customer. As the gift cards have no expiration date, there is no provision for reduction in the value of unused card balances.

In addition, XpresSpa maintains a rewards program in which customers earn loyalty points, which can be redeemed for future services. Loyalty points are rewarded upon joining the loyalty program, for customer birthdays, and based upon customer spending. When a customer redeems loyalty points, the Company recognizes revenue for the redeemed cash value and reduces the related loyalty program liability. On June 1, 2018, the Company adopted a formal expiration policy whereby any loyalty members with inactivity for an 18-month period will forfeit any unused loyalty rewards.

The costs associated with gift cards and reward points are accrued as the rewards are earned by the cardholder and are included in accounts payable, accrued expenses and other current liabilities in the consolidated balance sheets until remitted to the state agencies.

(n) Segment reporting

The Company’s continuing 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. As a result of the Company’s transition to a pure-play health and wellness services company, it currently has one operating segment that is also its sole reporting unit, XpresSpa.

(o) Rent expense

Minimum rent expense is recognized over the term of the lease, starting when possession of the property is taken from the landlord, which normally includes a construction period prior to the store opening. When a lease contains a predetermined fixed escalation of the minimum rent, the Company recognizes the related rent expense on a straight-line basis and records the difference between the recognized rent expense and the amounts payable under the lease as a short-term or long-term deferred rent liability. Costs related to common area maintenance, insurance, real estate taxes, and other occupancy costs the Company is obligated to pay are excluded from minimum rent expense.

Certain leases provide for contingent rents that are not measurable at inception. These contingent rents are primarily based on a percentage of sales that are in excess of a predetermined level and/or rent increase based on a change in the consumer price index or fair market value. These amounts are excluded from minimum rent and are included in the determination of rent expense when it is probable that the expense has been incurred and the amount can be reasonably estimated.

(p) Pre-opening costs

Pre-opening and start-up activity costs, which include rent and occupancy, supplies, advertising, and other direct expenses incurred prior to the opening of a new store, are expensed in the period in which they are incurred.

(q) 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 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.

(r) Stock-based compensation

Stock-based compensation is recognized as an expense in the consolidated statements of operations and comprehensive loss and such cost is measured at the grant-date fair value of the equity-settled award. The fair value of stock options is estimated as of the date of grant using the Black-Scholes-Merton (“Black-Scholes”) option-pricing model. The fair value of RSUs is calculated as of the date of grant using the grant date closing share price multiplied by the number of RSUs granted. The expense is recognized on a straight-line basis, over the requisite service period. The Company uses the simplified method to estimate the expected term of options due to insufficient history and high turnover in the past. Expected volatility is estimated based on a weighted average historical volatility of the Company and comparable entities with publicly traded shares. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve as of the date of grant.

(s) Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not more likely than not to be realized. Tax benefits related to excess deductions on stock-based compensation arrangements are recognized when they reduce taxes payable.

On December 22, 2017, the United States government enacted comprehensive tax reform, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“Tax Act”). The Tax Act makes changes to the corporate tax rate, business-related deductions and taxation of foreign earnings, among other changes, that generally became effective for tax years beginning after December 31, 2017.

In assessing the need for a valuation allowance, the Company looks at cumulative losses in recent years, estimates of future taxable earnings, feasibility of tax planning strategies, the ability to realize tax benefit carryforwards, and other relevant information. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable earnings. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict. In the event that actual results differ from these estimates in future periods, the Company will be required to adjust the valuation allowance.

Significant judgment is required in evaluating the Company's federal, state, local, and foreign tax positions and in the determination of its tax provision. Despite management's belief that the Company's liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matters. The Company may adjust these accruals as relevant circumstances evolve, such as guidance from the relevant tax authority, its tax advisors, or resolution of issues in the courts. The Company's tax expense includes the impact of accrual provisions and changes to accruals that it considers appropriate. These adjustments are recognized as a component of income tax expense entirely in the period in which new information is available. The Company records interest related to unrecognized tax benefits in interest expense and penalties in the consolidated statements of operations and comprehensive loss as general and administrative expenses.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

(t) Noncontrolling interests

Noncontrolling interests represent the noncontrolling holders’ percentage share of earnings or losses from the subsidiaries, in which the Company holds a majority, but less than 100%, ownership interest and the results of which are included in the Company’s consolidated statements of operations and comprehensive loss. Net earnings attributable to noncontrolling interests represents the proportionate share of the noncontrolling holders' ownership in certain subsidiaries of XpresSpa.

(u) Net loss per common share

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

(v) Commitments and contingencies

Liabilities for loss contingencies arising from assessments, estimates or other sources are to be recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs expected to be incurred in connection with a loss contingency are expensed as incurred.

(w) Reclassification

Certain balances have been reclassified to conform to presentation requirements, including presentation of discontinued operations and assets and liabilities held for disposal with respect to the Company’s FLI Charge and Group Mobile businesses, as well as consistent presentation of cost of sales and general and administrative expenses to align the presentation for operating segments.

(x) Fair value measurements

The Company measures fair value in accordance with FASB ASC 820-10,

Fair Value Measurements and Disclosures

. FASB ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received by selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, FASB ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1

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

Level 2

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

Level 3

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

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

(y) Recently issued accounting pronouncements

ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)

The core principle of this new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance was amended in July 2015 and is effective for annual reporting periods beginning after December 15, 2017. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2014-15, Presentation of Financial Statements — Going Concern, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern

This standard requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The amendments in this Update are effective for the annual period beginning after December 15, 2016.

ASU No. 2016-01, Financial Instruments – Overall (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

This standard amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. With respect to the Company’s consolidated financial statements, the most significant impact relates to the accounting for equity investments. It will impact the disclosure and presentation of financial assets and liabilities. The amendments in this update are effective for annual reporting periods, and interim periods within those years beginning after December 15, 2017. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2016-02, Leases (Topic 842)

This standard provides new guidance related to accounting for leases and supersedes GAAP on lease accounting with the intent to increase transparency. This standard requires operating leases to be recorded on the balance sheet as assets and liabilities and requires disclosure of key information about leasing arrangements. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations and comprehensive loss.

In 2016, FASB issued ASU 2016-02, Leases, and several amendments (collectively, “ASU 2016-02”), which requires the Company to recognize assets and liabilities arising from most operating leases on the consolidated statements of financial condition. In 2018, the FASB issued ASU 2018-11, Targeted Improvements (“ASU 2018-11”), which provides a transition option to not apply the new lease standard to the comparative periods presented in the consolidated statements of financial condition. Under this transition option, the Company shall apply the new leases standard at the adoption date and recognizes any cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company adopted ASU 2016-02 effective for the fiscal year beginning after December 15, 2018 on a modified retrospective basis. The Company applied the transition option permitted by ASU 2018-11 and elected the package of practical expedients to alleviate certain operational and reporting complexities related to the adoption. The Company expects to recognize right-of-use assets and lease liabilities in the range of $10 million to $12 million for its current operating leases upon adoption of ASU 2016-02 and does not expect the adoption to have a material impact on its results of operations or cash flows.

ASU No. 2016-13, Financial Instruments -

Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

This standard changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments, including trade receivables, from an incurred loss model to an expected loss model and adds certain new required disclosures. Under the expected loss model, entities will recognize estimated credit losses to be incurred over the entire contractual term of the instrument rather than delaying recognition of credit losses until it is probable the loss has been incurred. The new standard is effective for the fiscal year beginning after December 15, 2019, with early adoption permitted. The Company is currently in the process of evaluating the potential impact of the adoption on its consolidated financial statements.

ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts, Cash Payments, and Restricted Stock

This standard provides new guidance to help clarify whether certain items should be categorized as operating, investing, or financing in the statement of cash flows. This ASU No. 2016-15 provides guidance on eight specific cash flow issues. The new standard is effective for the fiscal year beginning after December 15, 2017, with early adoption permitted. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash

This amendment clarifies the classification and presentation of restricted cash in the consolidated statement of cash flows under Topic 230. In addition to providing explanation on the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new standard is effective for the fiscal year beginning after December 15, 2017, with early adoption permitted. We adopted ASU 2016-18 effective January 1, 2018. As a result of the adoption of ASU 2016-18, in the consolidated statement of cash flows for the year ended December 31, 2018, we reclassified $487 of restricted cash.

ASU No. 2017-09, Stock Compensation (Topic 718): Scope of Modification Accounting

This standard provides guidance about which changes to the terms or conditions of a stock-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 interim periods within those annual periods, beginning after December 15, 2017; early adoption is permitted. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815)

This standard provides new guidance to address the complexity of accounting for certain financial instruments with down round features. The amendments of this ASU change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. A down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. A freestanding equity-linked financial instrument (or embedded conversion feature) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The new standard is effective for the fiscal year beginning after December 15, 2018 with early adoption permitted. The Company early adopted this standard effective January 1, 2018. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

This standard was created to provide more specific guidance and to simplify the application of hedge accounting in current U.S. GAAP to facilitate financial reporting that more closely reflects an entity’s risk management activities. The new standard is effective for the fiscal year beginning after December 15, 2018. The Company is currently in the process of evaluating the potential impact of the adoption on its consolidated financial statements.

ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

This standard provides guidance on the reclassification of certain tax effects from AOCI to retained earnings in the period in which the effects of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded. The new standard is effective for the fiscal year beginning after December 15, 2018. The Company is currently in the process of evaluating the potential impact of the adoption on its consolidated financial statements.

ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

This amendment provides updates to the disclosure requirements on fair value measures in Topic 820 which includes the changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements, the option of additional quantitative information surrounding unobservable inputs and the elimination of disclosures around the valuation processes for Level 3 measurements. The new standard is effective for the fiscal year beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the adoption of this standard on its consolidated financial statements.

Net Loss per Share of Common Stock

12 Months Ended

Dec. 31, 2018

Earnings Per Share, Basic and Diluted [Abstract]

Net Loss per Share of Common Stock

Note 3. Net Loss per Share of Common Stock

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

	For the years ended December 31,
	2018			2017
Basic numerator:
Net loss from continuing operations attributable to shares of Common Stock	$	(36,090	)	$	(16,563	)
Net loss from discontinued operations attributable to shares of Common Stock		(1,115	)		(12,277	)
Net loss attributable to the Company	$	(37,205	)	$	(28,840	)
Basic denominator:
Basic shares of Common Stock outstanding*		1,453,635			1,114,349
Basic loss per share of Common Stock from continuing operations	$	(24.83	)	$	(14.86	)
Basic loss per share of Common Stock from discontinued operations		(0.77	)		(11.02	)
Basic net loss per share of Common Stock	$	(25.60	)	$	(25.88	)

Diluted numerator:
Net loss from continuing operations attributable to shares of Common Stock	$	(36,090	)	$	(16,563	)
Net loss from discontinued operations attributable to shares of Common Stock		(1,115	)		(12,277	)
Net loss attributable to the Company	$	(37,205	)	$	(28,840	)

Diluted denominator:
Diluted shares of Common Stock outstanding *		1,453,635			1,114,349
Diluted loss per share of Common Stock from continuing operations	$	(24.83	)	$	(14.86	)
Diluted loss per share of Common Stock from discontinued operations		(0.77	)		(11.02	)
Diluted net loss per share of Common Stock	$	(25.60	)	$	(25.88	)

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 outstanding to purchase an equal number of shares of Common Stock of the Company		101,979			215,897
Unvested RSUs to issue an equal number of shares of Common Stock of the Company		17,750			18,278
Warrants to purchase an equal number of shares of Common Stock of the Company		703,670			154,375
Preferred stock on an as converted basis		6,364,328			168,216
Conversion feature of senior secured notes		217,500			—
Total number of potentially dilutive instruments, excluded from the calculation of net loss per share *		7,405,227			556,767

*Adjusted to reflect the impact of the 1:20 reverse stock split that became effective on February 22, 2019.

Cash, Cash Equivalents, and Restricted Cash

12 Months Ended

Dec. 31, 2018

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Note 4. Cash, Cash Equivalents, and Restricted Cash

	December 31,
	2018		2017
Cash denominated in United States dollars	$	2,000	$	3,924
Cash denominated in currency other than United States dollars		1,143		2,108
Credit and debit card receivables		260		336
	$	3,403	$	6,368

In addition, as of December 31, 2018 and 2017, there was an additional $487 of restricted cash held by a third party recorded as restricted cash on the Consolidated Balance Sheet.

Other Assets

12 Months Ended

Dec. 31, 2018

Other Non current Assets [Abstract]

Other Assets Non current

Note 5. Other Assets

Other assets in the consolidated balance sheets are comprised of the following as of December 31, 2018 and 2017:

	December 31, 2018		December 31, 2017
Cost method investments	$	2,482	$	834
Lease deposits		894		852
Other assets	$	3,376	$	1,686

As of December 31, 2018, the Company’s other assets included:



1,625

cost method investment in Route1 Inc. (“Route1”), which the Company received from the disposition of Group Mobile in March 2018;



787

cost method investment in InfoMedia Services Limited (“InfoMedia”), which the Company acquired in 2014;



cost method investment in Marathon Patent Group, Inc. (“Marathon”), which the Company acquired in January 2018 with an acquisition date fair value of $

450

. Based on the Company’s evaluation of the investment, it was determined that certain unrealized losses represented an other-than-temporary impairment as of December 31, 2018 and the Company recognized an impairment charge of $

148

for the year ended December 31, 2018, equal to the excess of carrying value over fair value. During the year ended December 31, 2018, the Company sold

205,646

shares of Marathon Common Stock, with a carrying value of $

279

, for net proceeds of $

200

;

		$ 47 cost method investment in FLI Charge, which the Company received from the disposition of FLI Charge in October 2017; and

		$ 894 deposits made pursuant to various lease agreements, which will be returned to the Company at the end of the leases.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 6. Intangible Assets and Goodwill

Intangible assets

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

	December 31, 2018							December 31, 2017
	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)
Trade name	$	13,309	$	(4,485	)	$	8,824	$	13,309	$	(2,269	)	$	11,040		6.00
Customer relationships		312		(312	)		—		312		(156	)		156		2.00
Software		312		(69	)		243		233		(4	)		229		3.00
Patents		26,897		(26,797	)		100		26,897		(26,775	)		122		13.69
Total intangible assets	$	40,830	$	(31,663	)	$	9,167	$	40,751	$	(29,204	)	$	11,547

The Company’s trade name relates to the value of the XpresSpa trade name, customer relationships represent the value of the loyalty customers, software relates to certain capitalized third-party costs related to a new point-of-sale system, and patents consist of intellectual property portfolios acquired from third parties.

The Company’s intangible assets are amortized over their expected useful lives. During the year ended December 31, 2018, the Company recorded amortization expense of $2,465. During the year ended December 31, 2017, the Company recorded amortization and impairment expense of $2,403 related to its intangible assets.

There were no impairment indicators related to any of the Company’s amortizable intangible assets during the year ended December 31, 2018 for the Company’s continuing operations.

Estimated amortization expense for the Company’s intangible assets for each of the five succeeding years and thereafter at December 31, 2018 is as follows:

Years ending December 31,	Amount
2019	$	2,305
2020		2,293
2021		2,284
2022		2,232
2023		15
Thereafter		38
Total	$	9,167

Goodwill

On January 5, 2018, the Company changed its name to XpresSpa Group as part of a rebranding effort to carry out its corporate strategy to build a pure-play health and wellness services company, which the Company commenced following its acquisition of XpresSpa on December 23, 2016. The Company completed the sale of Group Mobile on March 22, 2018, which was the only remaining component of the Company’s technology operating segment. Following the sale of Group Mobile, the Company’s management made the decision that its intellectual property operating segment would no longer be an area of focus and would no longer be a separate operating segment as it is not expected to generate any material revenues. This completed the transition of the Company into a pure-play health and wellness company with only one operating segment, consisting of its XpresSpa business.

The Company’s market capitalization is sensitive to the volatility of its stock price. On January 2, 2018, the first trading day of fiscal year 2018, the Company’s stock price opened at $544.00 and closed at $29.00. The closing price of the Company’s stock on March 29, 2018, the last trading day of the first quarter of fiscal 2018, was $14.40. The average closing stock price of the Company from January 2, 2018 through March 29, 2018 was approximately $20.40, ranging from $14.20 to $36.00 during that period.

On April 19, 2018, the Company entered into a separation agreement with its Chief Executive Officer regarding his resignation as Chief Executive Officer and as a Director the Company. On that same date, the Company’s Senior Vice President and Chief Executive Officer of XpresSpa was appointed by the Board of Directors as the Chief Executive Officer and as a Director of the Company.

These events were identified by the Company’s management as triggering events requiring that goodwill be tested for impairment as of March 31, 2018. In addition to the Company’s rebranding efforts to a pure-play health and wellness services company, its stock price continued to decline even after the announcement of the new Chief Executive Officer. As the stock price had not rebounded, the Company determined that the impairment was incurred during the three-month period ended March 31, 2018.

The Company performed a quantitative goodwill impairment test, in which the Company compared the carrying value of the reporting unit to its estimated fair value, which was calculated using an income approach. The key assumptions for this approach were projected future cash flows and a discount rate, which was based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected future cash flows. As a result of the quantitative goodwill impairment test performed as of March 31, 2018, the Company determined that the fair value of the reporting unit did not exceed its carrying amount and, therefore, goodwill of the reporting unit was considered impaired.

Based on the estimated fair value of goodwill, the Company recorded an impairment charge of $19,630, to reduce the carrying value of goodwill to its fair value, which was determined to be zero. This impairment charge is included in goodwill impairment in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2018.

The fair value measurement of goodwill was classified within Level 3 of the fair value hierarchy because the income approach was used, which utilizes significant inputs that are unobservable in the market. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date.

The following table provides information regarding the Company’s goodwill, which relates to the acquisition of XpresSpa completed in December 2016, and related impairment charge recorded during the year ended December 31, 2018.

See “Note 16 –

Discontinued Operations and Assets and Liabilities Held for Disposal

” for impairment charges pertaining to discontinued operations for the year ended December 31, 2017.

Goodwill as of December 31, 2016	$	20,303
Adjustments to XpresSpa goodwill		(673	)
Goodwill as of December 31, 2017		19,630
Impairment of goodwill		(19,630	)
Goodwill as of December 31, 2018	$	—

Segment Information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Information

Note 7. Segment Information

The Company’s continuing operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the enterprise’s CODM in deciding how to allocate resources and in assessing performance. As a result of the Company’s transition to a pure-play health and wellness services company, it currently has one operating segment that is also its sole reporting unit, XpresSpa.

The Company 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 years ended December 31, 2018 and 2017. There were no concentrations of geographical revenue, regional operating loss or total assets related to any single foreign country that were material to the Company’s consolidated financial statements.

	For the years ended December 31,
	2018			2017
Revenue
United States	$	44,738		$	43,555
All other countries		5,356			5,268
Total revenue		50,094			48,823

Cost of sales
United States		36,017			35,844
All other countries		3,434			3,142
Total cost of sales		39,451			38,986

Segment operating income (loss)
United States		(36,125	)		(16,282	)
All other countries		1,400			1,566
Operating loss from continuing operations		(34,725	)		(14,716	)
Corporate non-operating expense, net		(1,184	)		(1,285	)
Loss from continuing operations before income taxes	$	(35,909	)	$	(16,001	)

Assets
United States	$	27,809		$	55,152
All other countries		2,666			3,642
Assets held for disposal		109			6,446
Total assets	$	30,584		$	65,240

Debt and Convertible Notes

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt and Convertible Notes

Note 8. Debt and Convertible Notes

Debt

As part of the acquisition of XpresSpa, which was completed on December 23, 2016, the Company recorded the debt described below.

XpresSpa entered into a credit agreement and secured promissory note (the “Debt”) with Rockmore Investment Master Fund Ltd. (“Rockmore”), a related party, on April 22, 2015 that was amended on August 8, 2016. Rockmore is an investment entity controlled by the Company’s Chairman of the Board of Directors, Bruce T. Bernstein.

The total principal of the Debt is $6,500 payable in full upon maturity on December 31, 2019. In 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. The Debt bears 11.24% interest per year (based on 360 days in a year) that is payable as follows:



9.24% annual interest, calculated on a monthly basis, which is payable in arrears on the last business day of each month plus



2% annual interest, calculated on a monthly basis, which accrues monthly and becomes due and payable on the Debt anniversary dates.

On May 14, 2018, the Company and Rockmore agreed to extend the maturity date of the Debt from May 1, 2019 to December 31, 2019. No other material terms of the Debt were modified. As consideration for the agreement to extend the maturity date of the Debt and the consent to the Securities Purchase Agreement, the Company issued to Rockmore 250,000 Class A Warrants. These Class A Warrants were issued on the same terms and conditions as the Class A Warrants issued pursuant to the Securities Purchase Agreement. The warrants issued to Rockmore were classified as equity warrants in the consolidated balance sheet as of December 31, 2018.

The Debt can be prepaid by XpresSpa at a 4% penalty at any point at its election. The Debt is secured by substantially all of the assets of XpresSpa. In addition, XpresSpa needs consent of Rockmore to incur any additional debt, except for:



debt to finance acquisition, construction, or improvement of fixed and capital assets;



performance bonds, bid bonds, appeal bonds, surety bonds, and similar;



pension fund and employee benefit plan obligations;



unsecured debt not exceeding $1,000;



convertible notes not exceeding $5,000; and



letters of credit, bank guarantees and others in the ordinary course of business.

In addition, Rockmore was entitled to certain reporting rights and annual audited financial information, which Rockmore waived in March 2017.

During the years-ended December 31, 2018 and 2017, XpresSpa paid and recorded $731 of interest expense in connection with the Rockmore debt.

Convertible Notes

On May 15, 2018, the Company entered into the Securities Purchase Agreement with the Investors, pursuant to which the Company agreed to sell up to (i) an aggregate principal amount of $4,438 in the Convertible Notes, which includes $88 of Convertible Notes issued to Palladium Capital Advisors as Placement Agent, convertible into Common Stock at a conversion price of $12.40 per share, (ii) Class A Warrants to purchase 357,862 shares of Common Stock at an exercise price of $12.40 per share and (iii) Class B Warrants to purchase up to 178,931 shares of Common Stock at an exercise price of $12.40 per share. The Convertible Notes bear interest at a rate of 5% per annum. The Convertible Notes are senior secured obligations of the Company and are secured by certain of its personal property. Unless earlier converted or redeemed, the Convertible Notes will mature on November 16, 2019. The transaction closed on May 17, 2018.

The principal amount of the outstanding Convertible Notes was originally to be repaid monthly in the amount of $296, beginning on September 17, 2018, and the Company may make such payments and related interest payments in cash or, subject to certain conditions, in registered shares of Common Stock (or a combination thereof), at its election. If the Company chooses to repay the Convertible Notes in shares of Common Stock, the shares will be issued at a 10% discount to the volume weighted average price of Common Stock for the five (5) trading days commencing eight (8) days prior to the relevant repayment date and ending on the fourth (4

) trading day prior to such repayment date, subject to a minimum floor price of not less than 20% of the conversion price of the Convertible Notes on the issue date. The Company may also repay the Convertible Notes in advance of the maturity schedule subject to an early repayment penalty of 15%.

On August 14, 2018, the Company and each of the Investors entered into an Amendment Agreement (“First Amendment Agreement”) whereby the initial monthly principal repayment and accrued interest due on the Convertible Notes of $351 was settled in 2,067 shares of Common Stock on August 15, 2018. All other material terms of the Securities Purchase Agreement remained unchanged. During the three-month period ended September 30, 2018, several of the Investors converted their monthly principal payments and accrued interest due on the Convertible Notes into shares of Common Stock pursuant to the First Amendment Agreement, resulting in the issuance of an additional 2,737 shares of Common Stock.

On December 11, 2018, the Company entered into a Second Amendment Agreement (“Second Amendment Agreement”) whereby certain investors waived the Company’s obligation to make any monthly payments for the months of January, February and March 2019. Pursuant to the Second Amendment Agreement, each of such investors was permitted to convert its pro-rata share of the Convertible Notes, at a conversion price of $4.00 per share of Common Stock, such that the maximum number of shares to be issued pursuant to this amendment shall not exceed 250,000 shares of Common Stock. All other material terms of the Securities Purchase Agreement remained unchanged. During the three-month period ended December 31, 2018, one of the investors converted a portion of their allotted shares, in settlement of $23,000, into shares of Common Stock pursuant to the Second Amendment Agreement, resulting in the issuance of an additional 5,627 shares of Common Stock.

The table below summarizes the initial fair value of the Convertible Notes and Warrants as of May 17, 2018:

Class A Warrants	$	1,827
Class B Warrants		135
Convertible Notes		2,388
Total Fair Value	$	4,350

The table below summarizes changes in the book value of the Convertible Notes from May 17, 2018 to December 31, 2018:

Book value as of May 17, 2018	$	2,388
Debt issuance costs		(320	)
Book value as of May 17, 2018		2,068
Debt repayments in the period		(1,068	)
Amortization of debt discount and debt issuance costs, included in interest expense		986
Book value as of December 31, 2018	$	1,986

The debt discount and debt issuance costs will be amortized on a straight-line basis over the remaining term of the Convertible Notes. During the year ended December 31, 2018, the Company recorded $986

of amortization of debt discount and debt issuance costs, which was included in interest expense for the year ended December 31, 2018. Additionally, for the year ended December 31, 2018, the Company recorded

$110

of interest expense related to the Convertible Notes, which was included in interest expense.

Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9. Fair Value Measurements

The following table presents the placement in the fair value hierarchy of liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017:

May 2015 Warrants

			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)
December 31, 2018:
May 2015 Warrants	$	—	$	—	$	—	$	—

December 31, 2017:
May 2015 Warrants	$	34	$	—	$	—	$	34

May 2018 Warrants

			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)
December 31, 2018:
A Warrants	$	476	$	—	$	—	$	476
B Warrants		—		—		—		—
Total	$	476	$	—	$	—	$	476

May 17, 2018:
A Warrants	$	1,827	$	—	$	—	$	1,827
B Warrants		135		—		—		135
Total	$	1,962	$	—	$	—	$	1,962

The Company measures its derivative warrant liabilities at fair value. The derivative warrant liabilities 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. The derivative warrant liabilities are recorded as derivative warrant liabilities in the consolidated balance sheets and the revaluation of the derivative warrants liabilities is included in other non-operating income (expense) in the consolidated statements of operations and comprehensive loss.

In addition to the above, the Company’s financial instruments as of December 31, 2018 and 2017 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.

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 year ended December 31, 2018:

December 31, 2017	$	34
Issuance of warrants May 17, 2018		1,962
Decrease in fair value of the derivative warrant liabilities		(1,520	)
December 31, 2018	$	476

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.

May 2015 Warrants

December 31, 2018:

Description	Valuation technique	Unobservable inputs	Range
May 2015 Warrants	Black-Scholes-Merton	Volatility		71.16	%
		Risk-free interest rate		2.49	%
		Expected term, in years		1.34
		Dividend yield		0.00	%

December 31, 2017:

Description	Valuation technique	Unobservable inputs	Range
May 2015 Warrants	Black-Scholes-Merton	Volatility		39.64	%
		Risk-free interest rate		1.88	%
		Expected term, in years		2.34
		Dividend yield		0.00	%

May 2018 Warrants

December 31, 2018:

Dividend yield

0.00

Description	Valuation technique	Unobservable inputs	Range
Derivative warrant liabilities – A Warrants	Black-Scholes-Merton	Volatility		70.61	%
		Risk-free interest rate		2.53	%
		Expected term, in years		4.38
		Dividend yield		0.00	%

Description	Valuation technique	Unobservable inputs	Range
Derivative warrant liabilities – B Warrants	Black-Scholes-Merton	Volatility		84.02	%
		Risk-free interest rate		2.25	%
		Expected term, in years		0.12
		Dividend yield		0.00	%

May 17, 2018:

Description	Valuation technique	Unobservable inputs	Range
Derivative warrant liabilities – A Warrants	Black-Scholes-Merton	Volatility		71.13	%
		Risk-free interest rate		2.98	%
		Expected term, in years		5.00
		Dividend yield		0.00	%

Description	Valuation technique	Unobservable inputs	Range
Derivative warrant liabilities – B Warrants	Black-Scholes-Merton	Volatility		72.88	%
		Risk-free interest rate		1.99	%
		Expected term, in years		0.50
		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.

Marathon Common Stock

On January 11, 2018 (the “Transaction Date”), the Company entered into a Patent Rights Purchase and Assignment Agreement (the “Agreement”) with Crypto Currency Patent Holding Company LLC (the “Buyer”) and its parent company, Marathon, pursuant to which the Buyer agreed to purchase certain of the Company’s patents. As consideration for the patents, the Buyer paid $250 and Marathon issued 250,000 shares of Marathon Common Stock (the “Marathon Common Stock”) to the Company. The Marathon Common Stock was subject to a lockup period (the “Lockup Period”) which commenced on the Transaction Date and ended on July 11, 2018, subject to a leak-out provision.

The Marathon Common Stock is recognized as a cost method investment and, as such, was required to be measured at cost on the date of acquisition, which, as of the Transaction Date, approximated fair value. The following table presents the placement in the fair value hierarchy of the Marathon Common Stock measured at fair value on a nonrecurring basis as of the Transaction 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)
January 11, 2018	$	450	$	—	$	450	$	—

December 31, 2018	$	23	$	23	$	—	$	—

The fair value of the Marathon Common Stock was estimated by multiplying the number of shares as they become tradeable by the price per share as of the Transaction Date, information that falls within Level 1 of the fair value hierarchy, quoted prices in active markets for identical assets; however, due to the fact that the Marathon Common Stock was restricted during the Lockup Period, the Company applied a discount on the lack of marketability to estimate the fair value at the measurement date, which is a significant other observable input resulting in placement in Level 2 of the fair value hierarchy. The fair value of the consideration as of the Transaction Date was determined to be $450. Based on the Company’s evaluation of the investment, it was determined that certain unrealized losses represented an other-than-temporary impairment as of December 31, 2018 and the Company recognized an impairment charge of $148 for the year ended December 31, 2018, equal to the excess of carrying value over fair value. The fair value of the remaining Marathon Common Stock held as of December 31, 2018 was determined to be $23, which is included in other assets in the consolidated balance sheet as of December 31, 2018.

On July 11, 2018, the Lockup Period concluded and the Company was permitted to begin trading the Marathon Common Stock, subject to a leak-out provision whereby the shares were released from lockup in equal increments over a twenty-day period. As of December 31, 2018, the remaining 44,354 shares of Marathon Common Stock were no longer restricted pursuant to the Lockup Period and leak-out provision, and the Company determined that the investments are classified within Level 1 of the fair value hierarchy.

During the year ended December 31, 2018, the Company sold 205,646 shares of Marathon Common Stock, with a carrying value of $279, for net proceeds of $200.

The following table summarizes the changes in the Company’s investment in Marathon Common Stock, measured at fair value using significant other observable inputs (Level 2) as of Transaction Date and measured at fair value using quoted prices in active markets for identical assets (Level 1) during the year ended December 31, 2018:

January 11, 2018	$	450
Carrying value of Marathon Common Stock sold		(279	)
Decrease in fair value of the Marathon Common Stock		(148	)
December 31, 2018	$	23

Other Fair Value Measurements

The following table presents the placement in the fair value hierarchy of the contingent consideration assumed by the Company following the acquisition of Excalibur Integrated Systems, Inc. (“Excalibur”), which is measured at fair value on a recurring basis as of December 31, 2018 and 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)
December 31, 2018:
Contingent consideration	$	316	$	—	$	—	$	316
December 31, 2017:
Contingent consideration	$	316	$	—	$	—	$	316

The purchase value of the contingent consideration assumed by the Company following the acquisition of Excalibur was determined using the Monte-Carlo simulation and, as such, was classified as 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Warrants

12 Months Ended

Dec. 31, 2018

Warrants and Rights Note Disclosure [Abstract]

Warrants

Note 10. Warrants*

The following table summarizes information about warrant activity during the years ended December 31, 2018 and 2017:

	No. of warrants*		Weighted average exercise price*		Exercise price range*
December 31, 2017		154,375	$	60.60		$ 60.00 – 100.00
Granted		549,294	$	12.40	$	12.40
Exercised		—		—		—
Expired		—		—		—
December 31, 2018		703,669	$	23.00		$ 12.40 – 100.00

The Company’s outstanding equity warrants as of December 31, 2018 consist of the following:

	No. outstanding*		Exercise price*		Remaining contractual life	Expiration Date
October 2015 Warrants		2,500	$	100.00	2.29 years	April 15, 2021
December 2016 Warrants		125,000	$	60.00	2.98 years	December 23, 2021
May 2018 Warrants		12,500	$	12.40	4.88 years	November 17, 2023
Outstanding as of December 31, 2018		140,000

The Company’s outstanding derivative warrants as of December 31, 2018 consist of the following:

No. outstanding*

Exercise price*

Remaining

contractual life

Expiration Date

May 2015 Warrants

26,875

60.00

1.34 years

May 4, 2020

*Adjusted to reflect the impact of the 1:20 reverse stock split that became effective on February 22, 2019.

Stock-based Compensation

12 Months Ended

Dec. 31, 2018

Share-based Compensation [Abstract]

Stock-based Compensation

Note 11. Stock-based Compensation*

The Company has a stock-based compensation plan available to grant stock options and RSUs to the Company’s directors, employees and consultants. Under the 2012 Employee, Director and Consultant Equity Incentive Plan (the “Plan”), a maximum of 78,000 shares of Common Stock may be awarded. In 2015 and 2016, the Company amended the Plan so that a maximum number of shares of Common Stock that may be awarded was increased to 355,000. As of December 31, 2018, 191,569 shares were available for future grants under the Plan.

Total stock-based compensation expense for the years ended December 31, 2018 and 2017 was $916 and $2,745, respectively, of which stock-based compensation expense included in the discontinued operations was $0 and $586, respectively.

There were no stock options granted during the year ended December 31, 2018.

The following table illustrates the RSUs granted during the year ended December 31, 2018:

Grant date	No. of RSUs*		Fair market value at grant date*		Vesting term
February 28, 2018		2,670	$	18.80	Vesting immediately upon grant
April 19, 2018		7,500	$	12.00	Vesting immediately upon grant
May 15, 2018		23,250	$	12.00	Over one year, vesting on one-year anniversary of grant date

The following tables summarize information about stock options and RSU activity during the year ended December 31, 2018:

	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, 2018		18,278		$	42.40		215,897		$	113.40	$	22.00 – 820.00	$	77.20
Granted		33,420		$	12.60		—			—		—		—
Vested/Exercised		(28,448	)	$	32.20		—			—		—		—
Forfeited		(5,500	)	$	12.00		(111,302	)	$	119.00	$	31.00 – 820.00	$	78.60
Expired		—			—		(2,616	)	$	324.80	$	192.00 – 330.00	$	194.20
Outstanding as of December 31, 2018		17,750		$	12.00		101,979		$	99.80	$	22.00 – 820.00	$	62.40
Exercisable as of December 31, 2018		—			—		94,688		$	101.80	$	22.00 – 820.00	$	63.20

	Non-vested stock options:					Non-vested RSU:
	No. of options*			Weighted average grant date fair value*		No. of RSUs*			Weighted average grant date fair value*
Balance at January 1, 2018		65,313		$	23.80		18,278		$	42.40
Granted		—		$	—		33,420		$	12.60
Vested		(24,729	)	$	24.00		(28,448	)		32.20
Forfeited		(33,292	)	$	25.60		(5,500	)	$	12.00
Balance at December 31, 2018		7,292		$	20.00		17,750		$	12.00

The following table summarizes information about employee and non-employee stock options outstanding as of December 31, 2018:

Exercise price range		No. options outstanding*		No. options exercisable*		Weighted average remaining contractual life (years)
$	0.01-200.00		91,979		84,688		8.00
$	200.00-400.00		—		—		—
$	400.00-600.00		2,000		2,000		5.57
$	600.00-800.00		5,300		5,300		5.35
$	800.00-1000.00		2,700		2,700		6.14
			101,979		94,688

*Adjusted to reflect the impact of the 1:20 reverse stock split that became effective on February 22, 2019.

As of December 31, 2018, there was no aggregate intrinsic value associated with either the options outstanding or the options exercisable, as they were out-of-the-money. As of December 31, 2017, the total aggregate intrinsic values of options outstanding was $14, and there was no aggregate intrinsic value associated with the options exercisable as they were out-of-the-money. There were no options exercised during the years ended December 31, 2018 and 2017.

The total fair value of stock options that vested in the years ended December 31, 2018 and 2017 was $565 and $1,932, respectively. As of December 31, 2018, there was approximately $153 of total unrecognized stock-based payment cost related to non-vested options, shares, and RSUs granted under the incentive stock option plans. Overall, the cost is expected to be recognized over a weighted average of 1.00 years.

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

Related Parties Transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions Disclosure

Note 12. Related Parties Transactions

On April 14, 2018, the Company entered into a consulting agreement with an employee of Mistral Equity Partners, which is a significant shareholder of the Company and whose Chief Executive Officer is a member of the Board of Directors of the Company, to consult on certain business-related matters. The total consideration is approximately $10

per month through December 31, 2018. The agreement may be terminated by either party at any time upon delivery of written notice. Pursuant to the agreement, the Company recorded consulting expense of $85 for the year ended December 31, 2018. The consulting agreement was extended through June 30, 2019. No other material terms of the agreement were modified.

In connection with the Collaboration Agreement with Calm, the Company sold Calm subscriptions and certain Calm-branded retail products in its spas, beginning in November 2018. During the year ended December 31, 2018, the Company recorded revenue of

$11

from the sale of Calm’s branded products in its spas which is included in products and services revenue in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2018.

Property and Equipment

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure

Note 13. Property and Equipment

The following table summarizes information about property and equipment activity during the years ended December 31, 2018 and 2017:

Balance of property and equipment as of December 31, 2016	$	16,266
Additions		5,104
Depreciation expense		(5,573	)
Balance of property and equipment as of December 31, 2017		15,797
Additions		3,031
Depreciation expense		(7,033	)
Balance of property and equipment as of December 31, 2018	$	11,795

Property and equipment is comprised of three categories: leasehold improvements, furniture and fixtures, and other operating equipment.

During the years ended December 31, 2018 and 2017, the Company recorded $7,033 and $5,573 of depreciation expense from continuing operations,

respectively. Included in the depreciation expense from continuing operations for the year ended December 31, 2018 was a $2,100 expense for impairment of fixed assets in locations where the Company has obligations under long-term leases. Included

in the depreciation expense from continuing operations for the year ended December 31, 2017 is $1,131 of accelerated depreciation related to the closure of one of XpresSpa’s JFK locations in June 2017. The assets related to the JFK location are not included in the net book value of property and equipment and accumulated depreciation, as noted in the table below.

As of December 31, 2018 and 2017, the Company had capitalized $770 and $860, respectively, related to construction-in-progress based on percentage of completion of each in-progress project. In October 2017, the Company recorded a $235 reduction of construction-in-progress within property and equipment and an increase to goodwill, which represents amounts as of the acquisition date of XpresSpa that were related to two old projects for stores that never actually opened.

	December 31,
	2018			2017			Useful Life
Furniture and fixtures	$	1,264		$	1,164		3 - 4 years
Leasehold improvements		18,932			17,704		Average 5 - 8 years
Other operating equipment		2,322			1,488		Maximum 5 years
		22,518			20,356
Accumulated depreciation		(10,723	)		(4,559	)
Total property and equipment, net	$	11,795		$	15,797

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated over the shorter of remaining lease term or economic useful life (which is on average

years).

Other Current Assets

12 Months Ended

Dec. 31, 2018

Disclosure Text Block Supplement [Abstract]

Other Current Assets

Note 14. Other Current Assets

As of December 31, 2018, and 2017, the Company’s other current assets were comprised of the following:

	December 31,
	2018		2017
Prepaid expenses	$	1,204	$	1,212
Notes receivable		—		800
Other		261		108
Total other current assets	$	1,465	$	2,120

Prepaid expenses are predominantly comprised of prepaid insurance policies which have terms of one year or less. The note receivable, which related to the sale of FLI Charge, was collected in February 2018.

Accounts Payable, Accrued Expenses and Other Current Liabilities

12 Months Ended

Dec. 31, 2018

Payables and Accruals [Abstract]

Accounts Payable, Accrued Expenses and Other Current Liabilities

Note 15. Accounts Payable, Accrued Expenses and Other Current Liabilities

As of December 31, 2018 and 2017, the Company’s accounts payable, accrued expenses and other current liabilities were comprised of the following:

	December 31,
	2018		2017
Accounts payable	$	3,825	$	3,362
Accrued expenses		1,704		3,160
Accrued compensation		1,126		1,074
Tax-related liabilities		719		615
Gift certificates and loyalty reward program liabilities		674		474
Other		84		51
Total accounts payable, accrued expenses and other current liabilities	$	8,132	$	8,736

Accrued liability for insurance

XpresSpa carries several annual insurance policies including indemnity, fire, umbrella, and workers’ compensation. XpresSpa financed a total of $1,184, or 80%, of the total insurance premiums with a third-party provider, at a weighted average rate of 4.06% per year payable in ten monthly installments.

As of December 31, 2018, XpresSpa had an outstanding balance of its financing arrangement of approximately $897, which is included in accounts payable, accrued expenses and other current liabilities on the consolidated balance sheets, scheduled to be repaid in 2019.

Merchant financing

In February 2017, XpresSpa entered into a merchant financing arrangement with a top tier credit card company for $500. As of December 31, 2017, the outstanding balance of the advance was $112. This balance was repaid in full in February 2018. No further merchant financing has been obtained.

Discontinued Operations and Assets and Liabilities Held for Disposal

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets Held For Sale

Note 16. Discontinued Operations and Assets and Liabilities Held for Disposal

FLI Charge

In 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. As a result, a non-cash impairment loss to discontinued operations of $1,092 relating to FLI Charge’s technology assets and goodwill was recorded during the year ended December 31, 2017.

On October 20, 2017 (the “Closing Date”), the Company sold FLI Charge to a group of private investors and FLI Charge management, to own and operate FLI Charge. The Company did not provide any continued management or financing support to FLI Charge after the Closing Date.

Total consideration for the sale of FLI Charge was $1,250, payable in installments. The consideration was secured by a note and security agreement. Additionally, the Company is entitled to a 5% royalty, in perpetuity, on the gross revenue of FLI Charge and of any affiliate of FLI Charge with regard to conductive wireless charging, power, or accessories. The Company also received a warrant exercisable in FLI Charge or an affiliate of FLI Charge upon an initial public offering or certain defined events in connection with a change of control. The warrant has a five-year life and is based on a valuation of the lesser of $30,000 or the financing valuation of FLI Charge preceding the initial public offering or certain defined events.

The fair value of the total consideration was determined to be $1,052, which resulted in a gain on disposal of $629 in consolidated net loss from discontinued operations. The fair value of the consideration for the FLI Charge disposition was determined using a combination of valuation methods including: (i) the face value of the upfront cash installment of $250; (ii) the present value of the deferred cash installments was calculated by multiplying the face value of the installments by the acquirer’s default probability and discounted by the risk-free rate; (iii) the Black-Scholes model was used to obtain the value of the warrants; and (iv) the value of the 5% royalty was calculated using a discounted cash flow model. The Company’s fair value measurements are evaluated by management to ensure that they are consistent with expectations of management based upon the sensitivity and nature of the inputs.

Group Mobile

In December 2017, the Company concluded that the requirement to report the results of Group Mobile, a wholly-owned subsidiary included in its technology operating segment, as discontinued operations was triggered.

On March 7, 2018 (the “Signing Date”), the Company entered into a membership purchase agreement (the “Purchase Agreement”) with Route1 Security Corporation, a Delaware corporation (the “Buyer”), and Route1 Inc., an Ontario corporation (“Route1”), pursuant to which the Buyer agreed to acquire Group Mobile (the “Disposition”). The transaction closed on March 22, 2018 (the “Closing Date”), after which the Company no longer had any involvement with Group Mobile.

In consideration for the Disposition, the Buyer issued to the Company:

2,250,000 shares of common stock of Route1 (“Route1 common stock”);

warrants to purchase 30,000,000 shares of Route1 common stock, which will feature an exercise price of CAD 5 cents per share of common stock and will be exercisable for a three-year period; and

certain other payments over the three-year period pursuant to an earn-out provision in the Purchase Agreement.

The Company retained certain inventory with a value of $555 to be disposed of separately from the transaction with Route1 in the first half of 2018. Of this amount, $110 was sold and the remaining inventory excluded from the transaction was subsequently determined to be obsolete and unsalable and was fully written off in June 2018. Assets held for disposal includes $109 of accounts receivable, net of allowance, associated with the sale of the inventory excluded from the transaction with Route1.

Post-closing, the Company owned approximately 6.7% of Route1 common stock. The Route1 common stock is not tradable until a date no earlier than 12 months after the Closing Date; 50%, or 12,500,000 shares, of Route1 common stock are tradeable after 12 months plus an additional 2,083,333 shares of Route1 common stock are tradeable each month until 18 months after the Closing Date, subject to a change of control provision. The Company has the ability to sell the Route1 common stock and warrants to qualified institutional investors. The Group Mobile Purchase Agreement also contains representations, warranties, and covenants customary for transactions of this type.

The total consideration of the Disposition is recognized as a cost method investment and, as such, must be measured at cost on the date of acquisition, which, as of the Closing Date, approximates fair value. The fair value of the total consideration as of the Closing Date was determined to be $1,625, which is less than the carrying value of the asset, and is included in other assets in the consolidated balance sheet as of December 31, 2018. This resulted in a loss on disposal of $301, which is included in consolidated net loss from discontinued operations in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2018.

The value of the total consideration for the Group Mobile disposition was determined using a combination of valuation methods including:

(i)

The value of the Route 1 common stock was determined to be $308, which was estimated by multiplying the number of shares as they become tradeable by the price per share as of the Closing Date.

(ii)

The value of the warrants was determined to be $176, which was obtained using the Black-Scholes-Merton model.

(iii)

The value of the earn-out provision was determined to be $1,141, which was estimated using a Monte-Carlo simulation analysis.

The sale of Group Mobile was completed on March 22, 2018, after which the Company had no further involvement with Group Mobile.

Operating Results and Assets and Liabilities Held for Sale

The following table represents the components of operating results from discontinued operations, as presented in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2018 and 2017:

	For the years ended December 31,
	2018			2017
Revenue	$	2,834		$	15,454
Cost of sales		(2,305	)		(12,373	)
Depreciation and amortization		(131	)		(770	)
Impairment		—			(8,577	)
General and administrative		(1,190	)		(5,986	)
Loss on disposal		(301	)		—
Non-operating expense		(22	)		(13	)
Loss from discontinued operations before income taxes		(1,115	)		(12,265	)
Income tax expense		—			(12	)
Consolidated net loss from discontinued operations	$	(1,115	)	$	(12,277	)

In addition, the following table presents the carrying amounts of the major classes of assets and liabilities held for sale as of December 31, 2018 and 2017, as presented in the consolidated balance sheets:

	December 31,
	2018		2017
Cash	$	—	$	150
Accounts receivable, net		109		2,920
Inventory		—		1,935
Other current assets		—		3
Property and equipment, net		—		874
Intangible assets, net		—		564
Assets held for disposal	$	109	$	6,446

Accounts payable, accrued expenses and other current liabilities	$	40	$	3,142
Deferred revenue		—		619
Liabilities held for disposal	$	40	$	3,761

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 17. Income Taxes

For the years ended December 31, 2018 and 2017, the loss from continuing operations before income taxes consists of the following:

	2018			2017
Domestic	$	(36,506	)	$	(16,536	)
Foreign		597			535
	$	(35,909	)	$	(16,001	)

Income tax expense attributable to continuing and discontinued operations for the years ended December 31, 2018 and 2017 consisted of the following:

	2018			2017
Continuing operations
Current:
Federal	$	(6	)	$	—
State		22			—
Foreign		22			62
Deferred:
Federal		(316	)		49
State		—			—
Foreign		—			—
	$	(278	)	$	111

	2018		2017
Discontinued operations
Current:
Federal	$	—	$	11
State		—		1
Foreign		—		—
Deferred:
Federal		—		—
State		—		—
Foreign		—		—
	$	—	$	12

Income tax expense attributable to continuing operations differed from the amounts computed by applying the applicable United States federal income tax rate to loss from continuing operations before taxes on income as a result of the following:

	For the years ended December 31,
	2018			2017
Loss from continuing operations before income taxes	$	(35,909	)	$	(16,001	)
Tax rate		21	%		35	%

Computed “expected” tax benefit		(7,541	)		(5,600	)
State taxes, net of federal income tax benefit		(1,422	)		(647	)
Change in valuation allowance		7,539			(19,554	)
Nondeductible expenses		242			800
Tax Reform Rate impact		—			24,486
Other items		904			626
Income tax expense (benefit) for continuing operations	$	(278	)	$	111

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 are as follows:

	December 31,
	2018			2017
Deferred income tax assets
Net operating loss carryforwards	$	39,972		$	35,743
Stock-based compensation		4,468			4,238
Intangible assets and other		4,308			1,020
Net deferred income tax assets		48,748			41,001
Less:
Valuation allowance		(48,748	)		(41,209	)
Net deferred income tax assets	$	—		$	(208	)

The Company assesses the need for a valuation allowance related to its deferred income tax assets by considering whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. A valuation allowance has been recorded against the Company’s deferred income tax assets, as it is in the opinion of management that it is more likely than not that the net operating loss carryforwards (“NOLs”) will not be utilized in the foreseeable future.

The cumulative valuation allowance as of December 31, 2018 is $

48,748

which will be reduced if and when the Company determines that the deferred income tax assets are more likely than not to be realized.

The following table presents the changes to the valuation allowance during the years presented:

As of January 1, 2017	$	58,914
Charged to cost and expenses – continuing operations		(19,206	)
Charged to cost and expenses – discontinued operations		1,455
Return to provision true-up and other		46
As of December 31, 2017		41,209
Charged to cost and expenses – continuing operations		8,300
Charged to cost and expenses – discontinued operations		342
Return to provision true-up and other		(1,103	)
As of December 31, 2018	$	48,748

As of

December 31, 2018

, the Company’s estimated aggregate total

NOLs

were $

150,926

for U.S. federal purposes, expiring

years from the respective tax years to which they relate, and $23,139 for U.S. federal purposes with an indefinite life due to new regulations in the TCJA of 2017. The NOL amounts are presented before Internal Revenue Code, Section 382 limitations (“Section 382”). The Tax Reform Act of 1986 imposed substantial restrictions on the utilization of NOL and tax credits in the event of an ownership change of a corporation. Thus, the Company’s ability to utilize all such NOL and credit carryforwards may be limited. The NOLs available post-merger that the Company completed in 2012 that are not subject to limitation amount to $134,463. The remaining NOLs of

39,601

are subject to the limitation of Section

382

. The annual limitation is approximately $

2,000

The Company files its tax returns in the U.S. federal jurisdiction, as well as in various state and local jurisdictions. XpresSpa Group has open tax years for 2015 through 2017.

On December 22, 2017, the United States government enacted the Tax Act, which made changes to the corporate tax rate, business-related deductions and taxation of foreign earnings, among other changes, that was generally effective for tax years beginning after December 31, 2017. After the one-year evaluation under SAB 118, the Company determined that there was no material impact from the TCJA.

As a result of the reduction to the corporate tax rate, the Company was required to remeasure its deferred tax assets and liabilities and any associated adjustment to the valuation allowance. As the Company was in a full valuation allowance in both 2018 and 2017, the net impact to the financial statements associated with the rate change was immaterial.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 18. 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 any potential liability and the estimated amount of a loss related to the Company’s legal 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 outstanding legal matters and assessed the probability and likelihood of the occurrence of liability. Based on management’s estimates, the Company recorded $290 as of December 31, 2018 and $250 as of December 31, 2017, which are included in accounts payable, accrued expenses and other current liabilities in the consolidated balance sheets.

The Company expenses legal fees in the period in which they are incurred.

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.

Cordial filed a series of complaints with the City of Atlanta, both before and after the termination, in which Cordial alleged, among other things, that the termination was not valid and that XpresSpa unlawfully retaliated against Cordial when Cordial raised concerns about the joint venture. In response to the numerous complaints it received from Cordial, the City of Atlanta required the parties to engage in two mediations.

After the termination of the relationship with Cordial, XpresSpa sought to substitute two new ACDBE partners in place of Cordial.

In April 2015, Cordial filed a complaint with the United States Federal Aviation Administration (“FAA”), which oversees the City of Atlanta with regard to airport ACDBE programs, and, in December 2015, the FAA instructed that the City of Atlanta review XpresSpa’s request to substitute new partners in lieu of Cordial and Cordial’s claims of retaliation. In response to the FAA instruction, pursuant to a corrective action plan approved by the FAA, the City of Atlanta held a hearing in February 2016 and ruled in favor of XpresSpa such substitution and claims of retaliation. Cordial submitted a further complaint to the FAA claiming that the City of Atlanta was biased against Cordial and that the City of Atlanta’s decision was wrong. In August 2016, the parties met with the FAA. On October 4, 2016, the FAA sent a letter to the City of Atlanta directing that the City of Atlanta retract previous findings on Cordial’s allegations and engage an independent third party to investigate issues previously decided by Atlanta. The FAA also directed that the City of Atlanta determine monies potentially due to Cordial.

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. XpresSpa is seeking damages, declaratory judgment, rescission/termination of certain agreements, disgorgement of revenue, fees and costs, and various other relief. On February 21, 2017, the defendants filed a motion to dismiss. On March 3, 2017, XpresSpa filed a first amended complaint against the defendants. On April 5, 2017, Cordial filed a motion to dismiss. On September 12, 2017, the Court held a hearing on the motion to dismiss. On November 2, 2017, the Court granted the motion to dismiss which was entered on November 13, 2017. On December 22, 2017, XpresSpa filed a notice of appeal, and on September 24, 2018, XpresSpa perfected its appellate rights and submitted a brief to the Supreme Court of New York, First Department appellate court. Oral arguments on the appeal are expected to take place in early

2019. Oral argument on the appeal went forward on March 20, 2019, and the court likely will rule in the coming months.

On March 30, 2018, Cordial filed a lawsuit against XpresSpa, a subsidiary of XpresSpa, and several additional parties in the Superior Court of Fulton County, Georgia, alleging the violation of Cordial’s civil rights, tortious interference, breach of fiduciary duty, civil conspiracy, conversion, retaliation, and unjust enrichment. Cordial has threated to seek punitive damages, attorneys’ fees and litigation expenses, accounting, indemnification, and declaratory judgment as to the status of the membership interests of XpresSpa and Cordial in the joint venture and Cordial’s right to profit distributions and management fees from the joint venture. On May 3, 2018, the Court issued an order extending the time for the defendants to respond to Cordial’s lawsuit until June 25, 2018. On May 4, 2018, the defendants moved the lawsuit to the United States District Court for the Northern District of Georgia. On June 5, 2018, the Court granted an extension of time for the defendants’ response until August 17, 2018. On August 9, 2018, the Court granted an additional extension of time for the defendants’ response until September 7, 2018, and thereafter provided another extension pending the Court’s consideration of XpresSpa’s Motion to Stay all action in the Georgia lawsuit, pending resolution of the New York lawsuit and the FAA action. On October 29, 2018, XpresSpa’s Motion to Stay was denied. Prior to resolution of the Motion to Stay, Cordial filed a Motion for Temporary Restraining Order (“TRO Motion”), seeking to enjoin the defendants and specifically XpresSpa, from, among other things, distributing any cash flow, net profits, or management fees, or otherwise expending resources beyond necessary operation expenses. XpresSpa filed an opposition and, in a decision entered December 26, 2018, the Court denied Cordial’s TRO Motion entirely. Defendants filed a Motion to Dismiss the Complaint in its entirety on November 20, 2018, which is pending decision by the Court.

In re Chen et al.

In March 2015, four former XpresSpa employees who worked at XpresSpa 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, Eastern District of New York.

In re Chen et al.

, CV 15-1347 (E.D.N.Y.). Plaintiffs claim that they and other spa technicians around the country were misclassified as exempt commissioned salespersons under Section 7(i) of the federal Fair Labor Standards Act (“FLSA”). Plaintiffs also assert class claims for unpaid overtime on behalf of New York spa technicians under the New York Labor Law, and discriminatory employment practices under New York State and City laws. On July 1, 2015, the plaintiffs moved to have the court authorize notice of the FLSA misclassification claim sent to all employees in the spa technician job classification at XpresSpa locations around the country in the last three years. Defendants opposed the motion. On February 16, 2016, the Magistrate Judge assigned to the case issued a Report & Recommendation, recommending that the District Court Judge grant the plaintiffs’ motion. On March 1, 2016, the defendants filed Opposition to the Magistrate Judge’s Report & Recommendation, arguing that the District Court Judge should reject the Magistrate Judge’s findings. On September 23, 2016, the court ruled in favor of the plaintiffs and conditionally certified the class. The parties held a mediation on February 28, 2017 and reached an agreement on a settlement in principle. On September 6, 2017, the parties entered into a settlement agreement. On September 15, 2017, the parties filed a motion for settlement approval with the Court. XpresSpa subsequently paid the agreed-upon settlement amount to the settlement claims administrator to be held in escrow pending a fairness hearing and final approval by the Court. On March 30, 2018, the Court entered a Memorandum and Order denying the motion without prejudice to renewal due to questions and concerns the Court had about certain settlement terms. On April 24, 2018 the parties jointly submitted a supplemental letter to the Court advocating for the fairness and adequacy of the settlement and appeared in Court on April 25, 2018 for a hearing to discuss the settlement terms in greater detail with the assigned Magistrate Judge. At the conclusion of the hearing, the Court still had questions about the adequacy and fairness of the settlement terms, and the Judge asked that the parties jointly submit additional information to the Court addressing the open issues. The parties submitted such information to the Court on May 18, 2018 and are awaiting the Court’s ruling on the open issues.

Binn v. FORM Holdings Corp. et al.

On November 6, 2017, Moreton Binn and Marisol F, LLC, former stockholders of XpresSpa, filed a lawsuit against the Company and its directors in the United States District Court for the Southern District of New York. The lawsuit alleged violations of various sections of the Securities Exchange Act of 1934 (“Exchange Act”), material omissions and misrepresentations (negligent and fraudulent), fraudulent omission, expropriation, breach of fiduciary duties, aiding and abetting, and unjust enrichment in the defendants’ conduct related to the Company’s acquisition of XpresSpa, and sought rescission of the transaction, damages, equitable and injunctive relief, fees and costs, and various other relief. On January 17, 2018, the defendants filed a motion to dismiss the complaint. On February 7, 2018, the plaintiffs amended their complaint. On February 28, 2018, the defendants filed a motion to dismiss the amended complaint. By March 30, 2018, the motion to dismiss was fully briefed. On August 7, 2018, the Court ruled on the defendants’ motion, dismissing eight of the plaintiffs’ ten claims and denying the defendants’ motion to dismiss with respect to the two remaining claims, related to the Exchange Act. On October 30, 2018, the Court ordered that the plaintiffs could file an amended complaint and, in response, the defendants could move for summary judgment. Consistent with the Court’s Order, on November 16, 2018, the plaintiffs filed a second amended complaint, modifying their allegations, and asserting claims pursuant to the Exchange Act, the Securities Act of 1933, and bringing a breach of contract claim. On December 17, 2018, the defendants filed a motion for summary judgment seeking dismissal of all claims. On February 1, 2019, the plaintiffs filed an opposition to defendants’ motion and filed a counter motion for partial summary judgment concerning one of the alleged misstatements. The defendants’ motion for summary judgment was fully briefed as of March 1, 2019. The plaintiffs’ partial motion for summary judgment was fully briefed as of March 15, 2019.

Krainz v. FORM Holdings Corp. et al.

On March 20, 2019, a second suit was commenced in the United States District Court for the Southern District of New York against FORM Holdings Corp., seven of its directors and former directors, as well as a managing director of Mistral Equity Partners. The individual plaintiff, Roman Kainz, who was a shareholder of XpresSpa Holdings, LLC at the time of its merger with FORM Holdings Corp, alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false statements concerning,

inter alia

, the merger and the independence of FORM Holdings Corp.’s board of directors, violated Section 12(2) of the Securities Act of 1933, breached the Merger Agreement by making false and misleading statements concerning the merger, and fraudulently induced Plaintiff into signing the joinder agreement related to the Merger. This suit seeks rescission of the transaction, damages, equitable and injunctive relief, fees and costs, and various other relief.

Route1

On May 23, 2018, Route1 and Group Mobile filed a Statement of Claim against the Company in the Ontario (Canada) Superior Court of Justice seeking monetary damages based on indemnity claims made by Route1 and Group Mobile pursuant to the Group Mobile Purchase Agreement, including an offset against funds payable to the Company by Route1 and Group Mobile pursuant to the Group Mobile Purchase Agreement. On August 13, 2018, the Company filed its Defense and Counterclaim, seeking the payment of such funds payable to the Company by Route1 and Group Mobile pursuant to the Group Mobile Purchase Agreement.

Rodger Jenkins v. XpresSpa Group, Inc.

In March 2019, Rodger Jenkins filed a lawsuit against the Company in the United States District Court for the Southern District of New York. The lawsuit alleges breach of contract of the stock purchase agreement related to the Company’s acquisition of Excalibur Integrated Systems, Inc. and seeks specific performance, compensatory damages and other fees, expenses and costs.

Intellectual Property

The Company is engaged in litigation related to certain of the intellectual property that it owns, for which no liability is recorded, as the Company does not expect a material negative outcome.

In addition to those matters specifically set forth herein, the Company and its subsidiaries are 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 the Company’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 adversely affect the Company’s business, financial condition, results of operations and cash flows.

In the event that an action is brought against the Company or one of its subsidiaries, the Company will investigate the allegation and vigorously defend itself.

Leases

The Company is obligated under multiple lease agreements for its XpresSpa retail concessions. The lease agreements for the retail concessions have terms which expire at varying dates through December 31, 2028 and primarily require payment of rent as a percentage of sales and a minimum annual guarantee (“MAG”) rent payment. The MAG rent under the terms of the agreements range from $3 to $320 per year and are adjusted on each anniversary date.

XpresSpa is contingently liable to a surety company under certain general indemnity agreements required by various airports relating to its lease agreements. XpresSpa agrees to indemnify the surety for any payments made on contracts of suretyship, guaranty, or indemnity. The Company believes that all contingent liabilities will be satisfied by its performance under the specified lease agreements.

The Company’s corporate headquarters are located in New York, NY and its lease will expire in October 2019.

Rent expense from continuing operations for operating leases for years ended December 31, 2018 and 2017 were $8,405 and $7,996, respectively.

As of December 31, 2018, future minimum commitments under noncancelable lease agreements are as follows:

Years ending December 31,	Amount
2019	$	3,563
2020		2,848
2021		2,188
2022		2,256
2023		1,538
Thereafter		2,642
Total	$	15,035

Subsequent Events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

Note 19. Subsequent Events

CEO Transition

Effective as of February 11, 2019, Douglas Satzman was appointed by the Company’s board of directors as the Chief Executive Officer of the Company and as a director of the Company.

Reverse Stock Split

The Company’s Common Stock began trading on the Nasdaq Capital Market on a post-reverse split basis at the open of business on February 25, 2019.

FLI Charge Amendment to Royalty Agreement and Termination of Warrant

In February 2019, the Company entered into an agreement to release FLI Charge’s obligation to pay any royalties on FLI Charge’s perpetual gross revenues with regard to conductive wireless charging, power, or accessories, and to cancel its warrants exercisable in FLI Charge in exchange for cash proceeds of $1,100, which were received in full on February 15, 2019.

Accounting and Reporting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of presentation and principles of consolidation

(a) Basis of presentation and principles of consolidation

Use of estimates

(b) Use of estimates

Translation into United States dollars

Cash and cash equivalents

(d) Cash and cash equivalents

$1,143,

Derivative instruments

(e) Derivative instruments

Contracts in an Entity’s Own Equity”

to determine if such instruments are indexed to the Company’s own stock and qualify for classification in equity.

Accounts receivable

(f) Accounts receivable

Inventory

(g) Inventory

Intangible assets

(h) Intangible assets

reflected in general and administrative expense in the consolidated statements of operations

and comprehensive loss.

Property and equipment

(i) Property and equipment

Goodwill

(j) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Topic 350, Intangibles – Goodwill and Other

. The Company evaluates goodwill impairment at the reporting unit level and performs its annual goodwill impairment test on December 31. The Company has adopted

ASU No. 2017-14, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

As of December 31, 2018, the Company’s goodwill was fully impaired. See

“Note 6. Intangible Assets and Goodwill”

for further details on the assessment and conclusion on the goodwill impairment recorded during the year ended December 31, 2018.

Restricted cash and other assets

(k) Restricted cash and other assets

Revenue recognition

(l) Revenue recognition

Gift cards and customer rewards program

(m) Gift cards and customer rewards program

Segment reporting

(n) Segment reporting

Rent expense

(o) Rent expense

Pre-opening costs

(p) Pre-opening costs

Cost of Sales

(q) 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.

Stock-based compensation

(r) Stock-based compensation

Income taxes

(s) Income taxes

Noncontrolling interests

(t) Noncontrolling interests

Net loss per common share

(u) Net loss per common share

Commitments and contingencies

(v) Commitments and contingencies

Reclassification

(w) Reclassification

Fair value measurements

(x) Fair value measurements

The Company measures fair value in accordance with FASB ASC 820-10,

Fair Value Measurements and Disclosures

Level 1

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

Level 2

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

Level 3

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

Recently issued accounting pronouncements