Form Holdings Corp. (FH), the holding company and licensing company formerly known as Vringo Inc., said it is acquiring 100% of XpresSpa, the luxury airport spa business for more than $20.15 million million in common stock, preferred convertible stock and warrants and debt.
New York-base Form said XpresSpa equity holders will receive 2.5 million shares of common stock worth $5.25 million, and $23.75 million of newly issued convertible preferred stock. The preferred shares, which convert into common stock at $6 a share, are currently the equivalent of 3.95 million shares of common stock currently worth $8.29 million. They also are receiving five-year warrants to purchase 2.5 million shares of common stock at $3.
Shares of Form gained 11 cents or 5.5% to $2.10 in trading today. They've traded between $1.55 and $2.57 over the past year.
In addition, Form said XpresSpa’s $6.6 million of debt will remain outstanding following the closing of the transaction. The transaction structure maintains Form’s strong liquidity position and provides current XpresSpa equity holders an interest in the continued success of the business and Form’s portfolio of assets.
Mistral Equity Partners, the majority shareholder of XpresSpa, and other existing XpresSpa holders, will participate in a private placement into FORM Holdings common stock of $1.73 million, at $2.31 per share, which Form will then invest in XpresSpa.
Andrew Heyer, the CEO of Mistral is joining Form's board.
XpresSpa provides air travelers premium health and wellness services, as well as a branded line of exclusive luxury travel products and accessories at its 51 locations across 21 major airports. In 2016, XpresSpa expects more than $40 million of revenue and approximately 20% store level margin contribution. XpresSpa has approximately three times as many domestic stores as its closest competitor and is expected to open several new locations through the remainder of 2016 and early 2017. XpresSpa anticipates increasing its number of total spa locations from 51 to more than 100 in the next few years.
Form had $27.4 million of cash and cash equivalents and $500,000 of accounts receivable at the end of the quarter.
The company also said its second quarter operating loss widened to $10.7 million from $8.5 million, a year ago. Revenue totaled $11.4 million, compared with no revenue a year ago. The company’s licensing business posted revenue of $8.9 million from a license sold to an unnamed company.
The licensing agreement is the only licensing deal Form has recorded since changing its name from Vringo and changing its focus away from patent enforcement to product businesses including Group Mobile, a built to order supplier of rugged computers and mobile devices, and FliCharge a wire-free charging technology company.
The former Vringo acquired Group Mobile and FlI Charge in October 2016 for $6.33 million in preferred convertible stock.
The company said Group Mobile produced revenue of $2.5 million in the second quarter. Form said it was increasing its forecast for Group Mobile for the year to $12.5 million.
Form has said it expects Group Mobile to be able to achieve a revenue run rate of $50 million a year.
FliCharge raised $200,000 in pre-sales of its wire-free charging technology through an Indiegogo crowdfunding campaign. It is expected to produce $1 million a year in revenue.
Form CEO Andrew Perlman said the company was considering various strategic initiatives for its portfolio of patents including licensing deals and partnerships. The company on July 1 exercised the early repayment option ON $2.1 million in debt and removed a lien on its patent portfolio. The company also recently extended the employment contract of its chief IP officer David Cohen for a year.
—To reach the reporter responsible for this story, please contact Dan Lonkevich at 707 318-7899 or at firstname.lastname@example.org