Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2
of the Exchange Act (Check one):
Indicate by check mark whether the
registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or
Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
The aggregate market value of the registrant's
common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such
calculation is an affiliate), computed by reference to the closing sale price of such shares on The NASDAQ Stock Market LLC on
June 30, 2016 was $28,369,000.
As of May 1, 2017, 19,459,027 shares of
the registrant's common stock are outstanding.
This Amendment No. 1 on Form 10-K/A
(this “Form 10-K/A”) amends the Annual Report on Form 10-K of FORM Holdings Corp. (“FORM” or the “Company”)
for the fiscal year ended December 31, 2016, as originally filed with the Securities and Exchange Commission (the “SEC”)
on March 30, 2017 (the “Original Filing”). This Form 10-K/A amends the Original Filing to include the information
required by Part III of the Original Filing because the Company has not and will not file a definitive proxy statement within 120
days after the end of its 2016 fiscal year. In addition, this Form 10-K/A amends Item 15 of Part IV of the Original Filing
to include new certifications by our principal executive officer and principal financial officer under Section 302 of the
Sarbanes-Oxley Act of 2002, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Except for the foregoing, we have not modified
or updated disclosures presented in the Original Filing in this Form 10-K/A. Accordingly, this Form 10-K/A does not modify or update
the disclosures in the Original Filing to reflect subsequent events, results or developments or facts that have become known to
us after the date of the Original Filing. Information not affected by this amendment remains unchanged and reflects the disclosures
made at the time the Original Filing was filed. Therefore, this Form 10-K/A should be read in conjunction with any documents incorporated
by reference therein and our filings made with the SEC subsequent to the Original Filing.
This Form 10-K/A contains “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s
expectations and are subject to certain factors, risks and uncertainties that may cause actual results, outcome of events, timing
and performance to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements
should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the Risk Factors
in Item 1A of our Original Filing and in our periodic reports on Form 10-Q and Form 8-K. We are not under any obligation,
and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
All references in this Form 10-K/A to “we,”
“us” and “our” refer to FORM Holdings Corp., a Delaware corporation, and its consolidated subsidiaries
unless the context requires otherwise.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
Directors and Executive Officers
Our Board of Directors currently
consists of seven (7) members. Prior to each annual meeting of stockholders, the Board of Directors considers the recommendations
of the Nominating and Corporate Governance Committee and votes to nominate individuals for election or re-election for a term of
one year or until their successors are duly elected and qualify or until their earlier death, resignation, or removal. Election
takes place at our annual meeting of stockholders.
Set forth below are the names of our directors
and executive officers, their ages (as of the filing date of this Form 10-K/A), their position(s) with the Company, if any, their
principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of
other public companies in which such persons hold or have held directorships during the past five years. Our executive officers
are appointed by, and serve at the discretion of, our Board of Directors. There are no family relationships among any of the directors
or executive officers. Additionally, information about the specific experience, qualifications, attributes or skills that led
to our Board of Directors’ conclusion that each person listed below should serve as a director is set forth below:
Name
|
|
Age
|
|
Position(s) with the Company
|
Andrew D. Perlman
|
|
39
|
|
Chief Executive Officer and Director
|
Anastasia Nyrkovskaya
|
|
40
|
|
Chief Financial Officer
|
Clifford Weinstein
|
|
35
|
|
Executive Vice President and President of FLI Charge
|
Jason Charkow
|
|
41
|
|
Senior Vice President of Legal and Business Affairs
|
Edward Jankowski
|
|
63
|
|
Senior Vice President and Chief Executive Officer of XpresSpa
|
John Engelman*
|
|
61
|
|
Director
|
Donald E. Stout*
(1)(2)(3)
|
|
70
|
|
Director
|
Salvatore Giardina*
(2)
|
|
54
|
|
Director
|
Bruce T. Bernstein*
(1)(2)(3)
|
|
53
|
|
Director
|
Richard K. Abbe*
|
|
46
|
|
Director
|
Andrew R. Heyer*
|
|
59
|
|
Director
|
*
|
Independent director under the rules of The NASDAQ Stock Market.
|
(1)
|
Current member of Compensation Committee.
|
(2)
|
Current member of Audit Committee.
|
(3)
|
Current member of Nominating and Corporate Governance Committee.
|
Andrew D. Perlman
has
served as our Chief Executive Officer since March 2012, as our President from April 2010 to July 2012 and as a member of our Board
of Directors since September 2009. From February 2009 to March 2010, Mr. Perlman served as Vice President of Global Digital Business
Development at EMI Music Group (“EMI”), where he was responsible for leading distribution deals with digital partners
for EMI’s music and video content. From May 2007 to February 2009, Mr. Perlman was the General Manager of our operations
in the United States and also served as our Senior Vice President Content & Community, in which he led its content and social
community partnerships. From June 2005 to May 2007, Mr. Perlman was Senior Vice President of Digital Media at Classic Media, Inc.
(“Classic Media”), a global media company with a portfolio of kids, family and pop-culture entertainment brands. In
his position with Classic Media, Mr. Perlman led the company’s partnerships across video gaming, online and mobile distribution.
From June 2001 to May 2005, Mr. Perlman served as General Manager for the Rights Group, LLC and its predecessors, a mobile content,
marketing and mobile fan club company, where he oversaw mobile marketing campaigns for major international brands and certain major
performing artists. Mr. Perlman currently serves on the Board of Directors of Neurotrope, Inc. Mr. Perlman holds a Bachelor of
Arts (“B.A.”) in Business Administration from the School of Business and Public Management at The George Washington
University.
We believe Mr. Perlman’s prior experience
in licensing and deal structuring qualifies him to serve on our Board of Directors. His additional experience and insights gained
over the past six years with us are a significant contribution to the company and the Board of Directors.
Anastasia Nyrkovskaya
joined
us in May 2013 as our Chief Financial Officer. Ms. Nyrkovskaya oversees all aspects of the finance and accounting functions, including:
SEC and internal financial reporting, budgeting and forecasting, mergers and acquisitions and business integrations, tax planning
and reporting, human resources, and operational matters. Prior to joining us, from 2006, Ms. Nyrkovskaya served as Vice President
and Assistant Global Controller and Vice President, Corporate Finance and Business Development at NBCUniversal Media, LLC (“NBCUniversal
Media”). She was responsible for technical accounting areas, policies and internal controls. She also structured merger and
acquisition transactions, partnerships, joint ventures and dispositions, as well as debt activities and restructurings. From 1998
to 2006, Ms. Nyrkovskaya served in the Audit and Assurance practice at KPMG LLP. Ms. Nyrkovskaya is a Certified Public Accountant
and received an advanced degree in economics and business administration from Moscow State University of Publishing and Printing
Arts.
Clifford Weinstein
has
served as our Executive Vice President since March 2012 and as President of FLI Charge since late 2015. Mr. Weinstein is primarily
responsible for the FLI Charge operating segment. From 2003 to 2012, Mr. Weinstein was a partner and Senior Vice President of Institutional
Sales at Maxim Group, an investment banking, securities and wealth management firm. Mr. Weinstein received his B.A. from Fordham
University.
Jason Charkow
has served
as our Senior Vice President, Legal and Business Affairs, since June 2016 and is responsible for overseeing all of our and our
subsidiaries’ legal affairs and supporting our business activities. Mr. Charkow joined us in February 2012 as our Senior
Intellectual Property Counsel and, in June 2014, became the Director of Legal and Intellectual Property, assuming responsibility
for oversight of our world-wide intellectual property litigation and management of our intellectual property assets. Prior to joining
us, Mr. Charkow was an attorney at Winston & Strawn and Jones Day where he focused on intellectual property litigation, prosecution
and counseling. Mr. Charkow has litigated complex patent infringement matters involving a range of telecommunications, computer
and electronic technologies. Mr. Charkow earned a Juris Doctor from Hofstra University and holds a bachelor’s degree
in mechanical engineering from Binghamton University.
Edward Jankowski
has
served as our Senior Vice President since December 2016 and as XpresSpa’s Chief Executive Officer since June 2016. From
2012 to 2016, Mr. Jankowski was the Vice President and General Manager of Luxury Retail at Luxottica, where he oversaw the Ilori
and Optical Shop of Aspen and Persol retail stores. From 2007 to 2012, Mr. Jankowski was Senior Vice President and General Manager
for Godiva Chocolatier, responsible for the $400 million North America multi-channel business, consisting of 240 retail stores,
plus wholesale, direct, and interactive business. From 2001 to 2007, Mr. Jankowski was the Chief Operating Officer of Safilo Group’s
Solstice sunglasses stores, where he opened 120 stores, oversaw store operations, merchandising, finance, planning/distribution,
marketing and communications, loss prevention, real estate, visual and store design/development/construction. From 1999 to 2001,
Mr. Jankowski was the President of Airport Shops Division of World Duty Free Americas, a division of B.A.A., where he was a member
of the Senior Executive Committee, with responsibility for the $120 million Airport Division. From 1993 to 1999, Mr. Jankowski
served as the Vice President/Director of Stores for Liz Claiborne, where he was a member of the Retail Executive Committee and
led execution of business strategies, sales results and store profit. Prior to his position at Liz Claiborne, Mr. Jankowski held
leadership positions at Casual Corner, Atherton Industries, Woman’s World, and Ganto’s. Mr. Jankowski began his career
in 1975 as an Executive Trainee for R.H. Macy’s. Mr. Jankowski currently serves on the Board of Directors of the Accessories
Council, FIT Accessories Advisory and the Elizabeth Carter Beach Association. Mr. Jankowski received his B.Sc. in management and
commerce marketing from Rider University.
John Engelman
has been
our director since December 2010. Mr. Engelman also serves as an independent director of Hemisphere Media Group, Inc., a publically
traded Hispanic media company that owns and operates television stations and cable networks in the United States, Puerto Rico
and Latin America. Mr. Engelman was a co-founder of Classic Media, Inc. (“Classic Media”), a global media company
specializing in family and children’s entertainment where he served as co-chief executive officer until 2012. During that
time, he launched television and consumer products driven brands based on iconic entertainment properties such as Lassie, Casper
the Friendly Ghost, Frosty the Snowman and Bullwinkle and Rocky. Mr. Engelman developed monetization strategies and oversaw the
roll up of intellectual property assets from diverse rights holders. In August 2012, Classic Media was acquired by DreamWorks
Animation SKG where Mr. Engelman currently co-heads the DreamWorks Classics division. In August 2016, DreamWorks was subsequently
acquired by NBCUniversal, a division of Comcast Corporation. From 2007 to 2009, Mr. Engelman was co-chief executive officer of
Boomerang Media, Inc. (“Boomerang Media”), an acquisition company controlled by GTCR Golder Rauner. From 1997 to 2001,
he was an operating partner with Pegasus Capital Advisors and a managing director of Brener International Group, LLC. From 1991
to 1996, Mr. Engelman was President of Broadway Video, Inc., a producer of live television and motion pictures. He began his career
as a partner at the Los Angeles law firm of Irell & Manella. Mr. Engelman has a J.D. from Harvard Law School and a B.A. in
Government from Harvard College.
We believe Mr. Engelman’s experience
in the media and entertainment industries qualifies him to serve on our Board of Directors. His experience gained both as an executive
at Classic Media and Boomerang Media are contributions to us and the Board of Directors.
Donald E. Stout
has
been our director since July 19, 2012 and was a director of Innovate/Protect from November 7, 2011 through the consummation of
the merger with us. In a career spanning over forty years, Mr. Stout has been involved in virtually all facets of intellectual
property law. Mr. Stout is a partner at a law firm Fitch, Even, Tabin & Flannery LLP since 2015 and he had been a senior partner
at the law firm of Antonelli, Terry, Stout & Kraus, LLP from 1982 to 2015. As an attorney in private practice, Mr. Stout has
focused on litigation, licensing and representation of clients before the United States Patent and Trademark Office (“USPTO”)
in diverse technological areas. From 1971 to 1972, Mr. Stout worked as a law clerk for two members of the USPTO Board of Appeals
and, from 1968 to 1972. Mr. Stout was an assistant examiner at the USPTO, where he focused on patent applications covering radio
and television technologies. Mr. Stout has written and prosecuted hundreds of patent applications in diverse technologies, rendered
opinions on patent infringement and validity, and has testified as an expert witness regarding obtaining and prosecuting patents.
Mr. Stout is also the co-founder of NTP Inc., which licensed Research in Motion (RIM), the maker of the Blackberry handheld devices,
for $612.5 million to settle a patent infringement action. Mr. Stout also previously served on the Board of Directors of Tessera
Technologies, Inc. (TSRA). Mr. Stout is a member of the bars of the District of Columbia and Virginia, and is admitted to practice
before the Supreme Court of the United States, the Court of Appeals for the Federal Circuit and the USPTO. Mr. Stout holds a Bachelor’s
degree in Electrical Engineering, with distinction, from Pennsylvania State University, and a J.D., with honors, from The George
Washington University.
We believe Mr. Stout’s experience
in intellectual property law qualifies him to serve on our Board of Directors.
Salvatore Giardina
joined
our Board of Directors on May 23, 2016. Mr. Giardina has served as Chief Financial Officer of Pragma Securities LLC and its holding
company, Pragma Weeden Holdings LLC, since 2009. From 2006 through 2008, Mr. Giardina served as S.V.P. and Chief Financial Officer
of G-Trade Services LLC and ConvergEx Global Markets LLC. From 2002 through 2006, Mr. Giardina served as Vice President and Chief
Financial Officer of Ladenburg Thalmann Financial Services Inc., the publicly-traded holding company of Ladenburg Thalmann &
Co., Inc., where Mr. Giardina served as its Executive Vice President and Chief Financial Officer from 1998 through 2006 and as
its Controller from 1990 through 1998. From 1983 through 1990, Mr. Giardina was an auditor with the national public accounting
firm of Laventhol & Horwath. Mr. Giardina served as a director of National Holdings Corporation from 2012 through 2016 and
as Chairman of its Audit Committee from 2013 through 2016. Mr. Giardina is a certified public accountant and is Series 24 and Series
27 registered.
We believe Mr. Giardina’s extensive
financial expertise and his practical and management experience qualifies him to serve on our Board of Directors and as a member
and the chairperson of the audit committee of our Board of Directors.
Bruce T. Bernstein
joined
our Board of Directors on February 8, 2016. Mr. Bernstein has over thirty years of experience in the securities industry, primarily
as senior portfolio manager for two alternative finance funds as well as in trading and structuring of arbitrage strategies. Mr.
Bernstein has served as President of Rockmore Capital, LLC since 2006, the manager of a direct investment and lending fund with
peak assets under management of $140 million. Previously, he served as Co-President of Omicron Capital, LP, an investment firm
based in New York, which he joined in 2001. Omicron Capital focused on direct investing and lending to public small cap companies
and had peak assets under management of $260 million. Prior to joining Omicron Capital, Mr. Bernstein was with Fortis Investments
Inc., where he was Senior Vice President in the bank’s Global Securities Arbitrage business unit, specializing in equity
structured products and equity arbitrage and then President in charge of the bank’s proprietary investment business in the
United States. Prior to Fortis, Mr. Bernstein was Director in the Equity Derivatives Group at Nomura Securities International specializing
in cross-border tax arbitrage, domestic equity arbitrage and structured equity swaps. Mr. Bernstein started his career at Kidder
Peabody, where he rose to the level of Assistant Treasurer. Mr. Bernstein also serves as a member of the Board of Directors of
Neurotrope, Inc. Mr. Bernstein is also a member of the board of Summit Digital Health, a laser based blood glucose monitor distributor,
based in New Jersey. Mr. Bernstein holds a B.B.A. from City University of New York (Baruch).
We believe Mr. Bernstein’s extensive
experience in the securities industry qualifies him to serve on our Board of Directors.
Richard K. Abbe
joined
our Board of Directors on March 9, 2016. Mr. Abbe is the Co-founder and is a Principal and Managing Partner of Iroquois Capital
Management, LLC, the Investment Advisor to Iroquois Capital LP and Iroquois Capital (offshore) Ltd. Mr. Abbe has served as Co-Chief
Investment Officer of Iroquois Capital since its inception in 2003. Previously, Mr. Abbe co-founded and served as Co-Chief Investment
Officer of Vertical Ventures, LLC, a merchant bank. Prior to that, he was employed by Lehman Brothers and served as Senior Managing
Director at Gruntal & Company, LLC, where he also served on the firm’s Board of Directors. Mr. Abbe also previously served
as Founding Partner at Hampshire Securities. He currently serves on the investment committee of Hobart and William Smith Colleges
endowment Fund.
We believe Mr. Abbe’s extensive experience
in the securities industry qualifies him to serve on our Board of Directors.
Andrew R. Heyer
joined
our Board of Directors on December 23, 2016. Mr. Heyer is the Chief Executive Officer and founder of Mistral Capital Management,
LLC, a private equity fund manager. Prior to founding Mistral, he served as a Founding Managing Partner of Trimaran Capital Partners,
L.L.C. Mr. Heyer was formerly a Vice Chairman of CIBC World Markets Corp. and co-head of CIBC Argosy Merchant Banking Funds. Prior
to joining CIBC World Markets Corp. in 1995, Mr. Heyer was a founder and Managing Director of The Argosy Group L.P. Before Argosy,
Mr. Heyer was a Managing Director at Drexel Burnham Lambert Incorporated and previous to that, he worked at Shearman/American Express.
Mr. Heyer serves as a director of Jamba, Inc. and The Hain Celestial Group, both of which are publicly traded companies. He also
serves on the boards of Mistral’s portfolio companies. Mr. Heyer also serves as a member of the Executive Committee and Board
of Trustees of the University of Pennsylvania and the University of Pennsylvania Health System.
We believe Mr. Heyer’s extensive
experience in the securities industry qualifies him to serve on our Board of Directors.
Committees of the Board of Directors and Meetings
Meeting Attendance
. During
the fiscal year ended December 31, 2016 there were 23 meetings of our Board of Directors, and the various committees of the Board
of Directors met a total of 10 times. No director attended fewer than 75% of the total number of meetings of the Board of Directors
and of committees of the Board of Directors on which he served during fiscal 2016. The Board of Directors has adopted a policy
under which each member of the Board of Directors is strongly encouraged but not required to attend each annual meeting of our
stockholders.
Audit Committee
. Our
Audit Committee met five times during fiscal 2016. This committee currently has three (3) members, Salvatore Giardina (Chairman),
Bruce T. Bernstein and Donald E. Stout. Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s
written charter and include the authority to retain and terminate the services of our independent registered public accounting
firm. In addition, the Audit Committee reviews our annual and quarterly financial statements, considers matters relating to accounting
policy and internal controls and reviews the scope of annual audits. All members of the Audit Committee satisfy the current independence
standards promulgated by the SEC and The NASDAQ Stock Market (“NASDAQ”), as such standards apply specifically to members
of audit committees. The Board of Directors has determined that both Messrs. Giardina and Bernstein are “audit committee
financial experts,” as defined by the SEC in Item 407 of Regulation S-K.
A copy of the Audit Committee’s
written charter is publicly available through the “Investors — Corporate Governance” section of our
website at
www.formholdings.com/corp_governance
.
Compensation Committee
. Our
Compensation Committee met two times during fiscal 2016. This committee currently has two (2) members, Bruce T. Bernstein (Chairman)
and Donald E. Stout.
Our Compensation Committee’s
role and responsibilities are set forth in the Compensation Committee’s written charter and includes reviewing, approving
and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities
of the Board of Directors are carried out and that such policies, practices and procedures contribute to our success. Our Compensation
Committee also administers our 2012 Employee, Director and Consultant Equity Incentive Plan (the “2012 Plan”) and
our 2006 Stock Option Plan (the “2006 Plan”). The Compensation Committee is responsible for the determination of the
compensation of our Chief Executive Officer, and shall conduct its decision making process with respect to that issue without
the Chief Executive Officer present, and establishment and reviewing general compensation policies with the objective of attracting
and retaining superior talent, rewarding individual performance and achieving our financial goals. The Compensation Committee
has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities.
During fiscal year 2016, based on the recommendation of management, the Compensation Committee did not engage third party compensation
consultants.
Both members of the Compensation Committee
qualify as independent under the definition promulgated by NASDAQ. A copy of the Compensation Committee’s written charter
is publicly available through the “Investors — Corporate Governance” section of our website at
www.formholdings.com/corp_governance
.
Nominating and Corporate Governance
Committee
. Our Nominating and Corporate Governance Committee met four times during fiscal year 2016 and currently
has two (2) members, Bruce T. Bernstein and Donald E. Stout. The Nominating Committee’s role and responsibilities are set
forth in the Nominating Committee’s written charter and is authorized to:
|
·
|
identify and nominate members of the Board
of Directors;
|
|
·
|
oversee the evaluation of the Board of
Directors and management;
|
|
·
|
develop and recommend corporate governance
guidelines to the Board of Directors;
|
|
·
|
evaluate the performance of the members
of the Board of Directors; and
|
|
·
|
make recommendations to the Board of Directors
as to the structure, composition and functioning of the Board of Directors and its committees.
|
We have no formal policy regarding
board diversity. Our Nominating and Corporate Governance Committee and Board of Directors may therefore consider a broad range
of factors relating to the qualifications and background of nominees, which may include diversity, which is not only limited to
race, gender or national origin. Our Nominating and Corporate Governance Committee’s and Board of Directors’ priority
in selecting board members is identification of persons who will further the interests of our stockholders through his or her established
record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members and
professional and personal experiences and expertise relevant to our growth strategy.
Both members of the Nominating
and Corporate Governance Committee qualify as independent under the definition promulgated by NASDAQ. In addition, under our current
corporate governance policies, the Nominating and Corporate Governance Committee may consider candidates recommended by stockholders
as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all
potential candidates, the Nominating and Corporate Governance Committee may consider all factors it deems relevant, such as a candidate’s
personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry
in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on
the Board of Directors, and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders
will be considered on the same basis as candidates from other sources.
A copy of the Nominating and Governance
Committee’s written charter is publicly available through the “Investors — Corporate Governance”
section of our website at
www.formholdings.com/corp_governance
.
Board Leadership Structure and Role in Risk Oversight
Mr. Perlman currently serves
as our Chief Executive Officer and leads all meetings of the Board of Directors. If the Board of Directors convenes for a special
meeting, the non-management directors will meet in executive session if circumstances warrant. We do not currently have a chairman
or lead independent director and believe that this current board structure is the appropriate structure.
The Board of Directors oversees
our business and considers the risks associated with our business strategy and decisions. The Board of Directors currently implements
its risk oversight function as a whole. The committees also provide risk oversight and report any material risks to the Board of
Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), requires our directors, executive officers and beneficial owners of more than
10% of our common stock to file with the SEC initial reports of ownership and reports of changes in the ownership of our common
stock and other equity securities. Such persons are required to furnish us copies of all Section 16(a) filings.
Based solely upon a review
of the copies of the forms furnished to us, we believe that our officers, directors and beneficial owners of more than 10% of
our common stock complied with all applicable filing requirements during the fiscal year ended December 31, 2016, with the
exception of a Form 3 which was not filed on a timely basis with respect to one transaction on behalf of Edward Jankowski, a Form
3 which was not filed on a timely basis with respect to one transaction on behalf of Andrew Heyer and a Form 4 which was not filed
on a timely basis with respect to one transaction on behalf of Salvatore Giardina.
Code of Conduct and Ethics
We have adopted a code of ethics that applies
to all of its employees. The text of the code of conduct and ethics is posted on the “Investors — Corporate
Governance” section of our website at
www.formholdings.com/corp_governance
, and will be made available to stockholders
without charge, upon request, in writing to the Corporate Secretary at 780 Third Avenue, 12
th
Floor, New York,
New York 10017. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply
to our directors, principal executive and financial officers will be included in a Current Report on Form 8-K within four business
days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments
or waivers is then permitted by the rules of The NASDAQ Stock Market.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the
total compensation paid during the fiscal years ended December 31, 2016 and 2015 to (1) our Chief Executive Officer, (2) our President
of FLI Charge and Executive Vice President, and (3) our Chief Financial Officer and Treasurer who are all of our named executive
officers as of December 31, 2016.
Name and principal position
|
|
Year
|
|
Salary
($)
|
|
|
Option
awards
($)
(1)
|
|
|
Total
($)
|
|
Andrew D. Perlman
|
|
2016
|
|
|
431,667
|
|
|
|
1,235,440
|
|
|
|
1,667,107
|
|
|
|
2015
|
|
|
415,000
|
|
|
|
—
|
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cliff Weinstein
|
|
2016
|
|
|
366,667
|
|
|
|
1,235,440
|
|
|
|
1,602,107
|
|
|
|
2015
|
|
|
325,000
|
|
|
|
—
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anastasia Nyrkovskaya
|
|
2016
|
|
|
333,333
|
|
|
|
540,505
|
|
|
|
873,838
|
|
|
|
2015
|
|
|
317,197
|
|
|
|
—
|
|
|
|
317,197
|
|
|
(1)
|
Amounts
represent the aggregate grant date fair value in accordance with FASB ASC
Topic 718
. For the assumptions made in the
valuation of our equity awards see Notes 2 and 11 to our consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2016.
|
Narrative Disclosure to Summary Compensation
Table
Andrew D. Perlman
On February 13, 2013, we entered into an
employment agreement with Mr. Perlman, which had a term of three (3) years. Under the terms of that employment agreement, from
January 1, 2015, Mr. Perlman received a base salary of $415,000 and was eligible to participate in any annual bonus or other incentive
compensation program that we may have adopted from time to time for our executive officers.
On October 13, 2015, we entered into an
amendment to the existing employment agreement with Mr. Perlman, pursuant to which, the employment period under the employment
agreement was extended to December 31, 2017, and Mr. Perlman remained eligible to receive an annual performance bonus according
to corporate and personal goals as established by the Compensation Committee in its sole discretion.
On January 20, 2017, we entered into a
new employment agreement with Mr. Perlman that superseded his prior employment agreement. Under the terms of this new employment
agreement, Mr. Perlman’s annual base salary is $450,000, retroactive to January 1, 2017.
The employment agreement is for a term
of three (3) years, provided that the employment agreement shall extend in two (2) month increments for up to one (1) year thereafter
for each month that the negotiations are not concluded prior to sixth months before the end of the term.
The employment agreement provides that
Mr. Perlman will be eligible to participate in any annual bonus and other incentive compensation program that we may adopt from
time to time for our executive officers and if Mr. Perlman has earned any bonus or non-equity based incentive compensation which
remains unpaid upon termination of employment for any reason, whether by Mr. Perlman or us other than for cause, then Mr. Perlman
shall be entitled to receive a pro- rata portion of such incentive compensation at the time it is paid.
In the event the employment
agreement is terminated for (i) Good Reason by Mr. Perlman, or (ii) by us without Cause, Mr. Perlman shall be entitled to receive
an amount of base salary (at the rate of base salary in effect immediately prior to such termination) equal to the lesser of (x)
one times the base salary and (y) two times the base salary payable for the number of full months remaining in the employment
period, and COBRA continuation coverage paid in full by us for up to a maximum of twelve months following the date of termination.
“Cause” as used in Mr. Perlman’s employment agreement means: (a) the willful and continued failure of Mr. Perlman
to perform substantially his duties and responsibilities for us (other than any such failure resulting from his death or disability)
after a written demand by the Board of Directors for substantial performance is delivered to Mr. Perlman by us, which specifically
identifies the manner in which the Board of Directors believes that Mr. Perlman has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured by Mr. Perlman within thirty days of his receipt of such written
demand; (b) the conviction of, or plea of guilty or nolo contendere to a felony, (c) an intentional breach of his non-compete
obligations, (d) an intentional breach of the non-disclosure and non-solicitation agreement; or (e) a unanimous good faith finding
by the Board of Directors that Mr. Perlman has engaged in fraud, dishonesty, gross negligence or misconduct which, if curable,
has not been cured within thirty days after his receipt of a written notice from the Board of Directors stating with reasonable
specificity the basis of such finding. “Good Reason” as used Mr. Perlman’s employment agreement means (a) the
assignment, without Mr. Perlman’s consent, to Mr. Perlman of duties that result in a substantial diminution of the duties
that he assumed; provided, however, the failure of Mr. Perlman to be reelected to the Board of Directors shall not be deemed to
be a diminution of duties; (b) the assignment, without Mr. Perlman’s consent, of a title that is subordinate to the title
Chief Executive Officer; (c) a reduction in Mr. Perlman’s base salary; (d) our requirement that Mr. Perlman regularly report
to work in a location that is more than fifty miles from our current New York office, without Mr. Perlman’s consent; (e)
a change in reporting relationship, provided however, that Good Reason does not include a change in the reporting relationship
whereby Mr. Perlman will report to the Board of Directors of an acquiring company after a change of control (as that term is defined
in our 2012 Employee, Director and Consultant Equity Incentive Plan); or (f) a material breach by us of Mr. Perlman’s employment
agreement.
In addition, unless Mr. Perlman is terminated
for cause, all applicable equity awards held by him as of the date of termination of employment that would have vested in the one-year
period immediately following such termination will vest during the following year, provided that Mr. Perlman makes himself reasonably
available and cooperates with reasonable requests from us involving facts or events relating to us that Mr. Perlman may have knowledge
of. In the event the employment agreement is terminated for good reason by Mr. Perlman, or by us without cause, and Mr. Perlman
provides us with a release of claims, he shall be entitled to receive a cash severance payment in the amount of one times his then
current base salary and one year of COBRA continuation coverage.
Cliff Weinstein
On February 13, 2013, we entered
into an employment agreement with Mr. Weinstein. Under the terms of the employment agreement, from January 1, 2015 through the
remainder of the term of the employment agreement, Mr. Weinstein received a base salary of $325,000 and was eligible to participate
in any annual bonus or other incentive compensation program that we may adopt from time to time for our executive officers.
On October 13, 2015, we entered into an
amendment to the existing employment agreement with Mr. Weinstein, pursuant to which, the employment period under the employment
agreement was extended to December 31, 2017. In addition, as per the amendment, Mr. Weinstein remained eligible to receive an
annual performance bonus according to corporate and personal goals as established by the Compensation Committee in its sole discretion.
On January 20, 2017, we entered
into a second amendment to the employment agreement with Mr. Weinstein. The amendment provides that so long as Mr. Weinstein is
employed on the date of a change of control of FLI Charge, he will be entitled to 5% of the amount equal to the total amount of
cash and the fair market value of all non-cash consideration paid or payable to us or our stockholders in connection with the change
of control of FLI Charge or in an initial public offering, net of expenses, the acquisition cost to us and any additional capital
contributions made prior to the change of control.
In the event the employment agreement
is terminated for (i) Good Reason by Mr. Weinstein, or (ii) by us without Cause, Mr. Weinstein shall be entitled to receive an
amount of base salary (at the rate of base salary in effect immediately prior to such termination) equal to the lesser of (x)
one times the base salary and (y) two times the base salary payable for the number of full months remaining in the employment
period, and COBRA continuation coverage paid in full by us for up to a maximum of twelve months following the date of termination.
“Cause” as used in Mr. Weinstein’s employment agreement means: (a) the willful and continued failure of Mr.
Weinstein to perform substantially his duties and responsibilities for us (other than any such failure resulting from his death
or disability) after a written demand by the Board of Directors for substantial performance is delivered to Mr. Weinstein by us,
which specifically identifies the manner in which the Board of Directors believes that Mr. Weinstein has not substantially performed
his duties and responsibilities, which willful and continued failure is not cured by Mr. Weinstein within thirty days of his receipt
of such written demand; (b) the conviction of, or plea of guilty or nolo contendere to a felony, (c) an intentional breach of
his non-compete obligations, (d) an intentional breach of the non-disclosure and non-solicitation agreement; or (e) a unanimous
good faith finding by the Board of Directors that Mr. Weinstein has engaged in fraud, dishonesty, gross negligence or misconduct
which, if curable, has not been cured within thirty days after his receipt of a written notice from the Board of Directors stating
with reasonable specificity the basis of such finding. “Good Reason” as used Mr. Weinstein’s employment agreement
means (a) the assignment, without Mr. Weinstein’s consent, to Mr. Weinstein of duties that result in a substantial diminution
of the duties that he assumed; provided, however, the failure of Mr. Weinstein to be reelected to the Board of Directors shall
not be deemed to be a diminution of duties; (b) the assignment, without Mr. Weinstein’s consent, of a title that is subordinate
to the title of Executive Vice President; (c) a reduction in Mr. Weinstein’s base salary; (d) our requirement that Mr. Weinstein
regularly report to work in a location that is more than fifty miles from our current New York office, without Mr. Weinstein’s
consent; (e) a change in reporting relationship, provided however, that Good Reason does not include a change in the reporting
relationship whereby Mr. Weinstein will report to the Chief Executive Officer of an acquiring company after a change of control
(as that term is defined in our 2012 Employee, Director and Consultant Equity Incentive Plan); or (f) a material breach by us
of Mr. Weinstein’s employment agreement.
Anastasia Nyrkovskaya
On December 19, 2014, we entered into an
employment agreement with Ms. Nyrkovskaya. Under the terms of her employment agreement, Ms. Nyrkovskaya’s annual base salary
was $315,000.
On October 13, 2015, we entered
into an amendment to the existing employment agreement with Ms. Nyrkovskaya, pursuant to which, the employment period under the
employment agreement was extended to December 31, 2017. In addition, the annual base salary of Ms. Nyrkovskaya was increased from
$315,000 to $325,000 and Ms. Nyrkovskaya remained eligible to receive an annual performance bonus according to corporate and personal
goals, as shall be established by the Compensation Committee in its sole discretion.
On January 20, 2017, we entered into an
employment agreement with Ms. Nyrkovskaya that superseded her prior employment agreement. Under the terms of this new employment
agreement, Ms. Nyrkovskaya will be entitled to receive a base salary of $375,000 from January 1, 2017.
The employment agreement is for a term
of three (3) years, provided that the employment agreement shall extend in two (2) month increments for up to one (1) year thereafter
for each month that the negotiations are not concluded prior to sixth months before the end of the term.
The employment agreement provides that
Ms. Nyrkovskaya will be eligible to participate in any annual bonus and other incentive compensation program that we may adopt
from time to time for our executive officers and if Ms. Nyrkovskaya has earned any bonus or non-equity based incentive compensation
which remains unpaid upon termination of employment for any reason, whether by Ms. Nyrkovskaya or us other than for cause, then
Ms. Nyrkovskaya shall be entitled to receive a pro- rata portion of such incentive compensation at the time it is paid.
In the event the employment agreement is
terminated for (i) Good Reason by Ms. Nyrkovskaya, or (ii) by us without Cause, Ms. Nyrkovskaya shall be entitled to receive an
amount of base salary at the rate of base salary in effect immediately prior to such termination equal to twelve months of base
salary, and COBRA continuation coverage paid in full by us for up to a maximum of twelve months following the date of termination.
In case the agreement is terminated by Ms. Nyrkovskaya without Good Reason, she shall provide us with a written notice, at least
ninety calendar days prior to such termination. "Cause" as used in Ms. Nyrkovskaya’s employment agreement means:
(a) the willful and continued failure of Ms. Nyrkovskaya to perform substantially her duties and responsibilities for us (other
than any such failure resulting from her death or disability) after a written demand by the chief executive officer for substantial
performance is delivered to Ms. Nyrkovskaya by us, which specifically identifies the manner in which the chief executive officer
believes that Ms. Nyrkovskaya has not substantially performed her duties and responsibilities, which willful and continued failure
is not cured by Ms. Nyrkovskaya within thirty days of her receipt of such written demand; (b) the conviction of, or plea of guilty
or nolo contendere to a felony, (c) breach of her non-compete obligations, (d) breach of the non-disclosure and non-solicitation
agreement; or (e) a good faith finding by the chief executive officer that Ms. Nyrkovskaya has engaged in fraud, intentional dishonesty,
or gross negligence. "Good Reason" as used Ms. Nyrkovskaya’s employment agreement means (a) the assignment, without
Ms. Nyrkovskaya’s consent, to Ms. Nyrkovskaya of duties that result in a substantial diminution of the duties that she assumed;
(b) the assignment, without Ms. Nyrkovskaya’s consent, of a title that is subordinate to the title Chief Financial Officer;
(c) a reduction in Ms. Nyrkovskaya’s base salary; (d) our requirement that Ms. Nyrkovskaya regularly report to work in a
location that is more than fifty miles from our current New York office, without Ms. Nyrkovskaya’s consent; (e) a material
breach by us of the agreement during its term. Ms. Nyrkovskaya’s employment agreement also includes a covenant not to compete
with us or solicit any material commercial relationships of ours for a period of one year after Ms. Nyrkovskaya is actually no
longer employed by us
.
In addition, unless Ms. Nyrkovskaya is
terminated for cause, all applicable equity awards held by her as of the date of termination of employment that would have vested
in the one-year period immediately following such termination will vest during the following year, provided that Ms. Nyrkovskaya
makes herself reasonably available and cooperates with reasonable requests from us involving facts or events relating to us that
Ms. Nyrkovskaya may have knowledge of. In the event the employment agreement is terminated for good reason by Ms. Nyrkovskaya,
or by us without cause, and Ms. Nyrkovskaya provides us with a release of claims, she shall be entitled to receive a cash severance
payment in the amount of one times her then current base salary and one year of COBRA continuation coverage.
Outstanding Equity Awards at 2016 Fiscal Year End
The following table sets forth
information regarding grants of stock options and unvested stock awards outstanding on the last day of the fiscal year ended December
31, 2016, to each of our named executive officers.
|
|
Options Awards
|
Name
|
|
Number of securities
underlying
unexercised options
(#) exercisable
|
|
|
Number of securities
underlying
unexercised options
(#) un-exercisable
|
|
|
Option exercise price ($)
|
|
|
Option
expiration date
|
Andrew D. Perlman
|
|
|
9,000
|
|
|
|
—
|
|
|
|
55.00
|
|
|
January 31, 2017
|
Andrew D. Perlman
|
|
|
32,816
|
|
|
|
—
|
|
|
|
16.50
|
|
|
March 13, 2018
|
Andrew D. Perlman
|
|
|
127,500
|
|
|
|
—
|
|
|
|
37.20
|
|
|
July 26, 2022
|
Andrew D. Perlman
|
|
|
62,500
|
|
|
|
—
|
|
|
|
31.80
|
|
|
February 11, 2023
|
Andrew D. Perlman
(1)
|
|
|
200,000
|
|
|
|
600,000
|
|
|
|
1.55
|
|
|
April 4, 2026
|
Cliff Weinstein
|
|
|
15,250
|
|
|
|
—
|
|
|
|
16.50
|
|
|
March 13, 2018
|
Cliff Weinstein
|
|
|
75,000
|
|
|
|
—
|
|
|
|
37.20
|
|
|
July 26, 2022
|
Cliff Weinstein
|
|
|
42,500
|
|
|
|
—
|
|
|
|
31.80
|
|
|
February 11, 2023
|
Cliff Weinstein
(1)
|
|
|
200,000
|
|
|
|
600,000
|
|
|
|
1.55
|
|
|
April 4, 2026
|
Anastasia Nyrkovskaya
|
|
|
30,000
|
|
|
|
—
|
|
|
|
28.50
|
|
|
May 6, 2023
|
Anastasia Nyrkovskaya
|
|
|
30,000
|
|
|
|
—
|
|
|
|
41.00
|
|
|
February 20, 2024
|
Anastasia Nyrkovskaya
(1)
|
|
|
87,500
|
|
|
|
262,500
|
|
|
|
1.55
|
|
|
April 4, 2026
|
(*)
|
The market value is determined by multiplying the number of shares by $2.13, the closing price of our common stock on NASDAQ on December 31, 2016, the last day of our fiscal year.
|
|
|
(1)
|
Vests in twelve equal quarterly increments (8.33% per quarter) over the three years, subject to the participant's continuous service on the relevant vesting date.
|
Pension Benefits
We do not have any qualified or non-qualified defined benefit
plans.
Nonqualified Deferred Compensation
We do not have any nonqualified defined contribution plans or
other deferred compensation plans.
Potential Payments upon Termination
or Change-In-Control
The following summarizes the potential
payments to each of our named executive officers as of December 31, 2016 upon termination or change-in-control. The discussion
assumes that such event occurred on December 30, 2016, the last business day of our fiscal year, at which time the closing price
of our common stock as listed on NASDAQ was $2.13 per share. For a further discussion of these provisions see the “Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” above.
Andrew D. Perlman
In the event Mr. Perlman’s
employment was terminated for (i) Good Reason by Mr. Perlman, or (ii) by us without Cause on December 31, 2016, Mr. Perlman would
have received severance in the amount of one year of base salary, and COBRA payments totaling approximately $40,775. In addition,
in the event a change-in-control had occurred on December 31, 2016, Mr. Perlman would have received severance in the amount of
one year of base salary, or $435,000, and Mr. Perlman would have been entitled to receive 75% acceleration of certain unvested
options, which had an intrinsic value of $348,000 as of December 31, 2016.
Cliff Weinstein
In the event Mr. Weinstein’s
employment was terminated for (i) Good Reason by Mr. Weinstein, or (ii) by us without Cause on December 31, 2016, Mr. Weinstein
would have received severance in the amount of one year of base salary, or $375,000, and COBRA payments totaling approximately
$40,775. In addition, upon a change-in-control, Mr. Weinstein would have been entitled to receive 75% acceleration of certain unvested
options, which had an intrinsic value of $348,000 as of December 31, 2016.
Anastasia Nyrkovskaya
In the event Ms. Nyrkovskaya’s
employment was terminated for (i) Good Reason by Ms. Nyrkovskaya, or (ii) by us without Cause on December 31, 2016, Ms. Nyrkovskaya
would have received severance in the amount of one year of base salary, or $325,000, and COBRA payments totaling approximately
$40,775. In addition, upon a change-in-control, Ms. Nyrkovskaya would have been entitled to receive 75% acceleration of certain
unvested options, which had an intrinsic value of $152,250 as of December 31, 2016.
Director Compensation
The following table sets forth
the compensation of persons who served as non-employee members of our Board of Directors during the fiscal year ended December
31, 2016. Directors who are employed by us are not compensated for their service on our Board of Directors.
Name
|
|
Fees Earned or Paid in Cash
($)
|
|
|
Option Awards
($)
(1)
|
|
|
Total
($)
|
|
John Engelman
(2)
|
|
|
50,000
|
|
|
|
40,814
|
|
|
|
90,814
|
|
Donald E. Stout
(3)
|
|
|
50,000
|
|
|
|
40,814
|
|
|
|
90,814
|
|
Salvatore Giardina
(4)
|
|
|
18,407
|
|
|
|
54,177
|
|
|
|
72,584
|
|
Bruce T. Bernstein
(5)
|
|
|
44,780
|
|
|
|
48,976
|
|
|
|
93,756
|
|
Richard K. Abbe
(6)
|
|
|
40,659
|
|
|
|
40,814
|
|
|
|
81,473
|
|
Andrew R. Heyer
(7)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Ashley C. Keller
(8)
|
|
|
3,654
|
|
|
|
—
|
|
|
|
3,654
|
|
Noel J. Spiegel
(9)
|
|
|
6,774
|
|
|
|
—
|
|
|
|
6,774
|
|
H. Van Sinclair
(10)
|
|
|
6,868
|
|
|
|
—
|
|
|
|
6,868
|
|
|
(1)
|
Amounts
represent the aggregate grant date fair value in accordance with FASB ASC
Topic 718
. See Notes 2 and 11 of the consolidated
financial statements disclosed in the Form 10-K for the year ended December 31, 2016, for the assumptions made in the valuation
of the equity awards.
|
|
(2)
|
As
of December 31, 2016, Mr. Engelman held 115,250 fully vested options.
|
|
(3)
|
As of December 31, 2016, Mr. Stout held 96,618 fully
vested options.
|
|
(4)
|
Mr.
Giardina joined our Board of Directors in May 2016. As of December 31, 2016, Mr. Giardina held 45,000 fully vested options.
|
|
(5)
|
Mr.
Bernstein joined our Board of Directors in February 2016. As of December 31, 2016, Mr. Bernstein held 60,000 fully vested options.
|
(6)
|
Mr. Abbe joined our Board of Directors in March 2016. As of December 31, 2016, Mr. Abbe held 50,000 fully vested options.
|
|
|
(7)
|
Mr. Heyer joined our Board of Directors in December 2016. As of December 31, 2016, Mr. Heyer did not hold any fully vested options.
|
|
|
(8)
|
Mr. Keller resigned from our Board of Directors in February 2016. As of December 31, 2016, Mr. Keller did not hold any fully vested options.
|
|
|
(9)
|
Mr. Spiegel resigned from our Board of Directors in March 2016. As of December 31, 2016, Mr. Spiegel did not hold any fully vested options.
|
|
|
(10)
|
Mr. Sinclair resigned from our Board of Directors in March 2016. As of December 31, 2016, Mr. Sinclair did not hold any fully vested options.
|
On February 8, 2016, Mr. Ashley
C. Keller resigned from his position as a member of the Board of Directors and as a member of all committees of the Board of Directors
on which he served. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors appointed
Mr. Bruce T. Bernstein as a member of the Board of Directors, effective immediately, to fill the vacancy created by the resignation
of Mr. Keller from the Board of Directors and to hold office until his successor is duly elected and qualified.
On March 11, 2016,
Mr. Noel J. Spiegel resigned from his position as a member of the Board of Directors and as a member of all committees of the
Board of Directors on which he served. On March 12, 2016, Mr. H. Van Sinclair resigned from his position as a member of the
Board of Directors and as a member of all committees of the Board of Directors on which he served.
On March 9, 2016, upon the recommendation
of the Nominating and Corporate Governance Committee, the Board of Directors appointed Mr. Richard K. Abbe as a member of the Board
of Directors, effective immediately. On May 19, 2016, upon the recommendation of the Nominating and Corporate Governance Committee,
the Board of Directors appointed Salvatore Giardina as a member of the Board of Directors, effective immediately.
On December 23, 2016, upon the
recommendation of the Nominating and Corporate Governance Committee, the Board of Directors appointed Mr. Andrew R. Heyer as a
member of the Board of Directors, effective immediately.
We reimburse each member of our
Board of Directors for reasonable travel and other out-of-pocket expenses in connection with attending meetings of the Board of
Directors.
On April 4, 2016, we granted options to purchase shares of our common stock to each of our non-employee directors and we agreed
to pay each of our non-employee directors an annual cash retainer of $50,000 payable quarterly in arrears for services in 2016.
Messrs. Engelman, Stout, and Abbe were each granted options to purchase 50,000 shares of our common stock and Mr. Bernstein was
granted options to purchase 60,000 shares of our common stock at an exercise price of $1.55 per share, which vested evenly over
four quarters, with the first vesting date on April 4, 2016 and then vesting at the end of each fiscal quarter.
Following his appointment to
the Board of Directors on May 19, 2016, Mr. Giardina was granted options to purchase 60,000 shares of our common stock at an exercise
price of $1.72 on that same date, which vested evenly over four quarters, with the first vesting date on June 30, 2016 and then
vesting at the end of each fiscal quarter.
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table provides
certain aggregate information, as of December 31, 2016, with respect to all of our equity compensation plans then in effect:
Plan Category
|
|
(a)
No. of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
(b)
Weighted-average exercise price of outstanding options, warrants and rights ($)
|
|
|
(c)
No. of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in
column (a))
|
|
Total equity compensation plans approved by
security holders
(1),(2)
|
|
|
3,674,983
|
|
|
$
|
7.60
|
|
|
|
3,115,843
|
|
Equity compensation plans not approved by
security holders
(3)
|
|
|
4,118
|
|
|
$
|
9.94
|
|
|
|
—
|
|
|
(1)
|
These
plans consist of the 2012 Plan, as amended on November 23, 2016, and the 2006 Plan. Under the amended 2012 Plan, a maximum of
7,100,000 shares of common stock may be awarded. The 2012 Plan was originally approved by our stockholders on July 19, 2012, following
the merger with Innovate/Protect, replacing our then existing 2006 Plan.
|
|
(2)
|
The
numbers of securities to be issued upon exercise of outstanding equities are 3,586,167 and 88,816 for the 2012 Plan and the 2006
Plan, respectively. The weighted-average exercise prices of outstanding options are $7.25 and $21.65 for the 2012 Plan and the
2006 Plan, respectively.
|
|
(3)
|
This
plan consists of Innovate/Protect’s 2011 Equity Incentive Plan assumed by us in connection with the merger, which provided
for incentive stock options, nonqualified stock options, stock appreciation rights, restricted stocks, restricted stock units,
stock bonus awards and performance compensation awards to be issued to directors, officers, managers, employees, consultants and
advisors of Innovate/Protect and its affiliates, as defined in the plan
(after giving
effect to the one-for-ten reverse stock split).
As of the merger, no further issuances can be made under this plan
and any forfeitures cannot be reused.
|
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth certain
information with respect to the beneficial ownership of our common stock as of April 30, 2017 for (a) each stockholder known by
us to own beneficially more than 5% of our common stock (b) our named executive officers, (c) each of our directors, and (d) all
of our current directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of
the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired
by an individual or group within 60 days of April 30, 2017 pursuant to the exercise of options or warrants, and vesting of RSUs
to be outstanding for the purpose of computing the percentage ownership of such individual or group. However, such shares of common
stock are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment
power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by
these stockholders. Percentage of ownership is based on 19,459,027 shares of common stock outstanding on April 30, 2017.
Name and Address of Beneficial Owner
(1)
|
|
Amount and Nature
of Beneficial
Ownership
|
|
|
Percent of Class
|
|
Five percent or more beneficial owners:
|
|
|
|
|
|
|
|
|
Mistral Spa Holdings, LLC
(2)
650 Fifth Avenue, Floor 31
New York, NY 10019
|
|
|
5,701,637
|
|
|
|
25.0
|
%
|
Directors and named executive officers:
|
|
|
|
|
|
|
|
|
Andrew D. Perlman
(3)
|
|
|
730,640
|
|
|
|
1.8
|
%
|
Anastasia Nyrkovskaya
(4)
|
|
|
249,100
|
|
|
|
*
|
|
Clifford Weinstein
(5)
|
|
|
405,001
|
|
|
|
1.0
|
%
|
Edward Jankowski
(6)
|
|
|
41,667
|
|
|
|
*
|
|
Jason Charkow
(7)
|
|
|
118,750
|
|
|
|
*
|
|
John Engelman
(8)
|
|
|
171,908
|
|
|
|
*
|
|
Donald E. Stout
(9)
|
|
|
242,352
|
|
|
|
1.1
|
%
|
Salvatore Giardina
(10)
|
|
|
102,500
|
|
|
|
*
|
|
Bruce T. Bernstein
(11)
|
|
|
925,074
|
|
|
|
4.6
|
%
|
Richard K. Abbe
(12)
|
|
|
611,975
|
|
|
|
2.9
|
%
|
Andrew R. Heyer
(2)(13)
|
|
|
5,701,637
|
|
|
|
25.0
|
%
|
All current directors and officers as a group (11 individuals)
(14)
:
|
|
|
9,300,605
|
|
|
|
32.3
|
%
|
*
|
Less than 1%.
|
|
|
(1)
|
Unless otherwise indicated, the business address of the individuals is c/o FORM Holdings Corp., 780 Third Avenue, 12
th
Floor, New York, NY 10017.
|
|
|
(2)
|
Includes (a) 2,338,690 shares
of common stock, (b) warrants to purchase 1,588,116 shares of common stock at the exercise price of $3.00 per share, and (c) 289,555
shares of preferred stock (which are initially convertible at $6.00 per share into 1,737,332 shares of common stock).
|
Mistral Spa Holdings, LLC (“MSH”), a Delaware limited liability company, is an investment entity
indirectly controlled by Mr. Heyer through Mistral Equity Partners, LP (“MEP”), Mistral Equity Partners QP, LP (“MEP
QP”) and MEP Co-Invest, LLC (“MEP Co-Invest”). Mistral Equity GP, LLC (“MEP GP” and, together with
MEP, MEP QP, and MEP Co-Invest, the “Mistral Fund Entities”) is the general partner of MEP and MEP QP. By reason of
the provisions of Rule 16a-1 of the Exchange Act, the Mistral Fund Entities may be deemed to be beneficial owners of certain of
the securities that are deemed to be beneficially owned by MSH, and Mr. Heyer may be deemed to be the beneficial owner of any
securities that may be deemed to be beneficially owned by MSH and/or the Mistral Fund Entities. Mr. Heyer may be deemed to have
an indirect pecuniary interest (within the meaning of Rule 16a-1 of the Exchange Act) in an indeterminate portion of the securities
reported as beneficially owned by MSH, and MEP GP may be deemed to have an indirect pecuniary interest in an indeterminate portion
of the securities reported as beneficially owned by MEP and MEP QP. Mr. Heyer’s business address is c/o Mistral Capital
Management, LLC, 650 Fifth Avenue, 31st Floor, New York, NY 10019.
(3)
|
Includes options to purchase 606,149 shares of our common stock and warrants to purchase 4,000 shares of our common stock exercisable within 60 days of April 30, 2017.
|
(4)
|
Includes options to purchase 247,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(5)
|
Includes options to purchase 333,333 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(6)
|
Includes options to purchase 41,667 shares of our common stock exercisable within 60 days of April 30, 2017.
|
(7)
|
Includes options to purchase 118,750 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(8)
|
Includes options to purchase 149,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
(9)
|
Includes options to purchase 120,000 shares of our common stock and warrants to purchase 30,220 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(10)
|
Includes options to purchase 102,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(11)
|
Includes options to purchase 102,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(12)
|
Includes options to purchase 87,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(13)
|
Includes options to purchase 37,500 shares of our common stock exercisable within 60 days of April 30, 2017.
|
|
|
(14)
|
See footnotes (2) through (13).
|
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related
Person Transactions Approval Policy
All related party transactions must be
approved by our Audit Committee or a majority of our independent directors who do not have an interest in the transaction and
who will have access, at our expense, to our independent legal counsel.
Transactions
with Related Persons
During the year ended December
31, 2016, we entered into the following related party transactions:
We engaged various parties to perform
valuations, legal, financial and tax due diligence associated with the XpresSpa acquisition and other merger and acquisition projects.
Among the service providers, we engaged RedRidge Lender Services LLC (“RedRidge”) to perform financial due diligence regarding
the acquisition of XpresSpa. Andrew Perlman, our Chief Executive Officer, and certain members of his family own a minority equity
position in RedRidge, which may be considered a related party. The audit committee of our Board of Directors reviewed and approved
the engagement of RedRidge. The fee for the XpresSpa engagement was $101
,000
and the fees for other engagements were $60,000 all of which were incurred during the year ended December 31, 2016 and are reflected
in the general and administrative expense in the consolidated statements of operations and comprehensive loss.
XpresSpa entered in a credit agreement
and secured promissory note (“Debt”) with Rockmore Investment Master Fund Ltd. (“Rockmore”) on April 22,
2015 that was amended on August 8, 2016. The principal amount of the debt is $6,500,000. Rockmore is an investment entity controlled
by our board member, Bruce T. Bernstein. We believe the terms of the Debt were reflective of market rates as of the time of issuance.
In addition, we paid $212,000 to Bruce T. Bernstein in March 2017 for the legal costs incurred in conjunction with the acquisition
of XpresSpa and Amiral legal proceedings prior to the completion of the acquisition, as he was indemnified by XpresSpa. These
costs are included in the accounts payable, accrued expenses and other current liabilities in the consolidated balance
sheet as of December 31, 2016.
Additionally, On July 1, 2016, we repaid
in full the amended Senior Secured Convertible Notes (“Notes”), which we entered into in 2015, including a fee for
early repayment, in the amount of $2,011,000. The Notes were held by the investors, which included entities controlled by our
board member, Richard Abbe, who joined our Board of Directors in March 2016.
Director
Independence and Committee Qualifications
Our Board of Directors has reviewed
the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based upon this review,
we believe that Messrs. Engelman, Stout, Giardina, Bernstein, Heyer and Abbe qualify as independent directors in accordance with
the standards set by NASDAQ, as well as Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (“the
Exchange Act”). Accordingly, our Board of Directors is comprised of a majority of independent directors as required by NASDAQ
rules. The Board has also determined that each member of the Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee meets the independence requirements applicable to each such committee member prescribed by
NASDAQ and the SEC. The Board has further determined that Messrs. Giardina and Bernstein are “audit committee financial
experts” as defined in the rules of the SEC.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
CohnReznick LLP was selected by our Audit
Committee as our independent registered public accounting firm for the fiscal year ended December 31, 2016. This selection was
ratified by our stockholders at the 2016 annual meeting held on November 28, 2016. In deciding to select CohnReznick
LLP, the Audit Committee carefully considered the qualifications of CohnReznick LLP, including its reputation for integrity, quality,
and competence in the fields of accounting and auditing. Further, the Audit Committee reviewed auditor independence issues and
existing commercial relationships with CohnReznick LLP. The Audit Committee concluded that independence of CohnReznick LLP was
not impaired for the fiscal
years ended December 31,
2016 and 2015. Prior to July 2015, KPMG LLP served as our independent registered public accounting firm. For the fiscal years
ended December 31, 2016 and 2015, we incurred the following fees for the services of CohnReznick LLP and KPMG LLP.
|
|
2016
|
|
|
2015
|
|
Total
(1)
:
|
|
$
|
383,250
|
|
|
|
392,500
|
|
|
(1)
|
This category includes fees associated with the annual audits of our financial statements, quarterly reviews of our financial statements, and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
The audit fees incurred in 2015 were comprised of $248,250 incurred by CohnReznick LLP from the time of appointment in July 2015 and $144,250 incurred by KPMG LLP.
|
Pre-Approval of Audit and
Non-Audit Services
Consistent with SEC policies and guidelines
regarding audit independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services
provided by our independent registered public accounting firm on a case-by-case basis. Our Audit Committee has established a policy
regarding approval of all audit and permissible non-audit services provided by our independent registered public accounting firm.
Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved all of the services
provided by our independent registered public accounting firms in 2016 and 2015.