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EX-23.1 - CONSENT - Voltari Corpvltc20151231ex231.htm
EX-31.1 - 302 CERTIFICATION - CFO - Voltari Corpvltc20151231ex311.htm
EX-32.1 - 906 CERTIFICATION - CFO - Voltari Corpvltc20151231ex321.htm
EX-31.2 - 302 CERTIFICATION - CAO - Voltari Corpvltc20151231ex312.htm
EX-32.2 - 906 CERTIFICATION - CAO - Voltari Corpvltc20151231ex322.htm
EX-21.1 - SUBSIDIARIES - Voltari Corpvltc20151231ex211.htm
EX-10.25 - EXHIBIT 10.25 - Voltari Corpvltc20151231ex1025.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015 OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                 
Commission file number: 333-186564
 
Voltari Corporation
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
Delaware
 
90-0933943
(State of Incorporation)
 
(IRS Employer Identification No.)
601 W. 26th Street, Suite 415
New York, NY 10001
(212) 388-5500
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $0.001 per share
 
NASDAQ
Securities registered pursuant to Section 12(g) of the Act:
13% Redeemable Series J Preferred Stock, par value $0.001 per share
Warrants, ten to purchase one share of Common Stock at $6.50 per Common Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  o    No  x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o    No  x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
 
 
 
 
 
 
o Large Accelerated Filer
  
o Accelerated Filer
  
o Non-accelerated Filer
(do not check if a smaller
reporting company)
 
x Smaller Reporting
Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    No  x
At June 30, 2015, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant (based upon the closing sale price of such shares on NASDAQ on June 30, 2015) was approximately $24.2 million. Shares of Registrant’s common stock held by each executive officer and director and by each entity or person that, to the Registrant’s knowledge, owned 5% or more of Registrant’s outstanding common stock as of June 30, 2015 have been excluded because such persons may be deemed to be affiliates of the Registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock as of March 11, 2016:
 
 
 
 
Title of Class
 
Number of Shares
Common Stock, $0.001 par value
 
8,994,814

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders to be filed within 120 days of the close of the fiscal year ended December 31, 2015 are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this Annual Report Form 10-K.


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Special Note Regarding Forward-Looking Statements
Some of the statements contained in this Annual Report on Form 10-K contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 12E of the Securities Exchange Act of 1934, as amended, regarding our plans, objectives, expectations and intentions. Such statements include, without limitation, any statements regarding our transformation plan, our exit from the mobile marketing and advertising business and our entry into the real estate investment business, any statements regarding our ability to generate profits, any statements regarding various estimates we have made in preparing our financial statements, statements that refer to projections of our future operating performance, statements regarding any pro forma financial information we present, the sufficiency of our capital resources to meet our cash needs, the exit from or disposition of certain of our businesses, and the potential costs associated therewith, and the anticipated growth and trends in our businesses. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.

Risks and uncertainties that could adversely affect our business and prospects include without limitation:
any financial or other information included herein (including any pro forma financial information) based upon or otherwise incorporating judgments or estimates based upon future performance or events;
our ability to raise additional capital or generate the cash necessary to continue and expand our operations or to fund the liquidation preference on, or redeem, our Series J preferred stock if required to do so;
our ability to protect and make use of our substantial net operating loss carryforwards;
our ability to implement our transformation plan;
our ability to compete in the highly competitive real estate investment industry;
the impact of government regulation, legal requirements or industry standards relating to commercial real estate;
our limited experience acquiring and managing commercial real properties;
our ability to execute real estate acquisitions;
risks generally associated with the commercial real estate investment business;
our ability to meet the criteria required to remain listed on NASDAQ;
the ongoing benefits and risks related to our relationship with Mr. Carl C. Icahn, our principal beneficial stockholder and principal lender, through certain of his affiliates; and
the impact and costs and expenses of any litigation we may be subject to now or in the future.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date of this report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of this Annual Report on Form 10-K, as well as the risks and uncertainties discussed elsewhere in this Annual Report on Form 10-K. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.



TABLE OF CONTENTS
 

 
 
Page
 
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
 
 
 
 
 
 
 
 
Item 9.
Item 9A.
Item 9B.
 
 
 
 
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
Item 15.
 
 
 
 
 
 
 
 


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PART I
Item 1.
Business.
Overview
Business Overview

Voltari Corporation ("Voltari" or the "Company"), a Delaware corporation, is in the business of acquiring, financing and leasing commercial real properties. As of the date of this Annual Report on Form 10-K, we own one commercial real property in Long Branch, New Jersey, which we lease to JPMorgan Chase Bank, N.A. (“Chase”) pursuant to a triple net lease (the “Long Branch Lease”). All of our revenue is derived from the rental income we receive under the Long Branch Lease. We intend to acquire additional properties primarily in the Northeast United States. Future acquisitions are intended to be initially financed through borrowings available under our $10 million Revolving Note (as defined herein) with Koala (as defined herein). The Company intends to lease such properties pursuant to “double net” or “triple net” leases. The Company intends to explore additional strategic opportunities from time to time, which may include opportunities with respect to its intellectual property, investments in various industries or acquisitions.

The Company had previously been engaged in the business of providing mobile marketing and advertising solutions to brands, marketers and advertising agencies. In August 2015, we began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business.

Voltari was incorporated, under the name “Mobile Systems Corp.,” on December 14, 2012, as a wholly-owned subsidiary of Motricity, Inc. (“Motricity”), and changed its name to “Voltari Corporation” on January 16, 2013. On April 9, 2013, pursuant to the consummation of the Reorganization (as defined below) Motricity became a wholly-owned subsidiary of Voltari. Motricity was incorporated on March 17, 2004 under the name “Power By Hand, Inc.,” and on October 29, 2004 changed its name to Motricity, Inc. On June 23, 2010, Motricity completed its offering of 6,000,000 shares of common stock in an initial public offering (our “IPO”).

Reorganization Transaction—On April 9, 2013, Motricity and Voltari consummated a transaction intended to protect the long-term value of Motricity’s net operating loss carryforwards ("NOLs"), referred to herein as the “Reorganization,” pursuant to an agreement and plan of reorganization by and among Motricity, Voltari and Voltari Merger Sub, Inc. The agreement and plan of reorganization and the transactions contemplated thereby were approved and adopted by Motricity’s stockholders on April 9, 2013. Upon completion of the Reorganization, Motricity became our wholly-owned subsidiary, and we replaced Motricity as the publicly held corporation. Further, our common stock was deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to rule 12g-3(a) promulgated thereunder. For purposes of Rule 12g-3(a), we are the successor issuer to Motricity. As of April 10, 2013, shares of our common stock commenced trading on NASDAQ under the symbol “VLTC.”

On April 23, 2013, the Company effected a one-for-ten reverse stock split of the outstanding shares of our common stock after the Reorganization. The exercise price and the number of common shares issuable under our share-based compensation plans and upon exercise of our outstanding warrants to purchase common stock, as well as the issued and outstanding share capital, have been correspondingly adjusted to reflect the reverse stock split.

Rights offering—On February 27, 2015, we commenced a rights offering of up to an aggregate of 4,300,000 shares of our common stock. Under the terms of the rights offering, we distributed to stockholders of record at the close of business on February 13, 2015 transferable subscription rights to purchase 0.9027 shares of common stock for every share of common stock owned on the record date.

The rights offering was fully subscribed and closed on March 30, 2015. We received approximately $4.6 million in net proceeds from the rights offering. Following the completion of the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the owner of approximately 52.3% of our common stock. Entities affiliated with Mr. Carl C. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Carl C. Icahn and such affiliated entities.


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Series J Preferred Stock—The March 30, 2015 acquisition of common stock by entities affiliated with Mr. Carl C. Icahn in the rights offering resulted in a change of control of the Company, which triggered a redemption event pursuant to the terms of the Company's 13% Redeemable Series J Preferred Stock, par value $0.001 per share (the "Series J preferred stock"), and as a result each holder of shares of Series J preferred stock had the right to require the Company to redeem all or a portion of such holder’s shares of Series J preferred stock. Entities affiliated with Mr. Carl C. Icahn waived their option to redeem Series J preferred stock in connection with the change in control resulting from the completion of the rights offering on March 30, 2015. On April 13, 2015 we redeemed 29,316 shares of Series J preferred stock for approximately $1.0 million in cash from holders not affiliated with Mr. Carl C. Icahn. Following the April 13, 2015 redemption of Series J preferred stock, entities affiliated with Mr. Carl C. Icahn became the owner of approximately 97.9% of our Series J preferred stock.

As of December 31, 2015 entities affiliated with Mr. Carl C. Icahn owned approximately 97.9% of our Series J preferred stock and approximately 52.7% of our common stock.
Certificate of Amendment to Certificate of Incorporation—On September 16, 2015, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to the Company's Amended and Restated Certificate of Incorporation, as amended, to reduce the number of shares of capital stock authorized to be issued by the Company from 975 million (consisting of 625 million shares of common stock and 350 million shares of preferred stock), to 30 million, consisting of 25 million shares of common stock and 5 million shares of preferred stock.

Transformation Plan—Prior to July 1, 2013, most of our revenue was derived from providing hosting services to wireless carriers. Starting in 2012, we began our exit from most of our international carrier business and, on June 30, 2013, concluded our U.S. carrier business. On October 31, 2013, we completed the sale of our Gen5 business. On May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the UK.

In connection with our efforts to realign our strategic path, we shifted our focus to the mobile marketing and advertising business and continued to reduce our cost structure. We implemented various cost reduction measures, including reductions in our workforce and a restructuring of our facilities and data centers. Further, in January of 2015, we significantly reduced the size of our engineering staff and terminated operations at our Seattle Data Center as part of our ongoing efforts to reduce our operating expenses, particularly the cost of research and development and the delivery of advertising.

Beginning in late May 2015, the Board undertook a review of the Company’s prospects, cost-cutting efforts and strategic alternatives. As part of its review, the Board considered alternative businesses the Company could enter into that would preserve the Company’s assets and maximize shareholder value. Based on its assessment of the Company’s prospects and cost structure including, among other factors, the Company’s performance during the three and six month periods ended June 30, 2015, recent forecasts provided by management, input from an independent consultant, and potential strategic alternatives available to the Company, the Board concluded that our cost-cutting efforts had not kept pace with our declining revenue, that our forecasted cash burn and revenue potential were unsatisfactory and that effecting the transformation plan by exiting the mobile marketing and advertising business and entering into the real estate investment business was in the best interests of the Company’s stockholders. Accordingly, in August 2015, we committed to and began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business and entered into the business of acquiring, financing and leasing commercial real estate properties. The Company intends to lease such properties pursuant to so-called “double net” or “triple net” leases. The Company has significantly reduced its workforce in connection with its transformation plan. The Board believes that, if successfully implemented, the Company can significantly decrease its operating costs and cash burn and, over time, generate profits from the transformation plan.

Real Estate Investment

The Company is in the business of acquiring, financing and leasing commercial real properties. The Company intends to lease such properties pursuant to so-called “double net” or “triple net” leases. We intend to acquire properties primarily in the Northeast United States. Future acquisitions are intended to be initially financed through borrowings available under our $10 million Revolving Note with Koala. See Note 9 - Revolving Note to our consolidated financial statements for more information.

As of the date of this Annual Report on Form 10-K, we have completed one real estate acquisition. Until and unless we acquire additional properties, the rental payments from Chase as the lessee of the Long Branch property will represent the sole source of our revenues. The termination of the Long Branch Lease or our failure to maintain the lease on favorable terms could have a material adverse effect on our business and financial condition. See Part I, Item 1A - Risk Factors.

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Properties

As of the date of this Annual Report on Form 10-K, we own one commercial real property in Long Branch, New Jersey, which we lease to Chase pursuant to a triple net lease. All of our revenue is derived from the rental income we receive under the Long Branch Lease. The property is located at 160 Brighton Avenue, City of Long Branch, New Jersey and has a retail bank branch building situated thereon. The original term of the Long Branch Lease expires in June 2020 (with two, five-year renewal options). Pursuant to the Long Branch Lease, Chase is responsible for the payment of basic rent as well as the payment of real estate taxes, maintenance costs, utilities, tenant's insurance and other property related costs. The average annual rental income for the property over the remaining term of the original lease is expected to be approximately $203,000.

Competition

The commercial real estate industry is highly competitive, and we will face competition from many other entities engaged in real estate investment activities, including individuals, corporations, REITs, investment companies, private equity and hedge fund investors, and other investors, some of whom are significantly larger and have greater resources and lower costs of capital. See Part I, Item 1A - Risk Factors.
Financing Arrangements

On August 7, 2015, we (as borrower) and Koala Holdings LP (as lender), an affiliate of Mr. Carl C. Icahn, the Company’s controlling stockholder ("Koala"), entered into a $10 million Revolving Note (the "Revolving Note"). The Company sought and received the Revolving Note to, in part, allay potential concerns regarding the Company’s ability to invest in and execute its transformation plan while retaining cash levels sufficient to fund its ongoing operations. There are no limitations on the use of proceeds under the Revolving Note. The Company currently intends to use this funding to facilitate the acquisition of additional commercial real estate properties as it executes its transformation plan, as well as for operating expenses and working capital purposes.

Pursuant to the Revolving Note, Koala made available to the Company a revolving loan facility of up to $10,000,000 in aggregate principal amount. Borrowings available under the Revolving Note will bear interest at a rate equal to the greater of the LIBOR rate plus 350 basis points, per annum, and 3.75%, per annum. The Revolving Note also includes a fee of 0.25%, per annum, on undrawn amounts and matures on the earliest of (i) December 31, 2017, (ii) the date on which any financing transaction, whether debt or equity, is consummated by the Company (or its successors and assigns) with net proceeds in an amount equal to or greater than $10 million, and (iii) at the Company’s option, a date selected by the Company that is earlier than December 31, 2017.

If an event of default exists, the Revolving Note will bear interest at a default rate equal to the greater of the LIBOR rate plus 450 basis points, per annum, and 4.75%, per annum. Subject to the terms and conditions of the Revolving Note, the Company may repay all or any portion of the amounts outstanding under the Revolving Note at any time without premium or penalty, and any amounts so repaid will, until the maturity date, be available for re-borrowing. As collateral for the Revolving Note, the Company has pledged and granted to Koala a lien on the Company’s limited liability company interest in Voltari Real Estate Holding LLC.

Our Board formed a special committee of independent directors (the “Special Committee”) to negotiate the structure and terms of the Revolving Note. The Special Committee consisted of James L. Nelson and Jay A. Firestone. In connection with its negotiation of the structure and terms of the Revolving Note, the Special Committee retained and received advice from its own legal counsel as well as an independent financial advisor. The Special Committee received an opinion from its independent financial advisor that the financial terms of the Revolving Note are fair, from a financial point of view, to us. The Special Committee approved the terms and conditions of, and our entry into, the Revolving Note.

Research and Development
Research and development expenses the for the years ended December 31, 2015 and 2014 were $0.2 million and $2.6 million, respectively and all of which were related to our discontinued mobile marketing and advertising business. We do not anticipate material research and development activities as part of our ongoing business of acquiring, financing and leasing commercial real properties.


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Governmental Regulation

Our investments may be subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. See Part I, Item 1A - Risk Factors.

Environmental

As an owner of commercial real estate, we will be subject to various environmental laws of federal, state and local governments. We cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties that may be acquired directly or indirectly in the future. We intend to hire third parties to conduct Phase I and when advisable, additional, environmental reviews of the real properties that we propose to purchase. See Part I, Item 1A - Risk Factors.

Intellectual property

We are the owner of trademarks registered with the United States Patent and Trademark office and internationally, including Voltari and V-Connect.

Employees
As of December 31, 2015, we had a total of 6 employees, including 4 full-time employees. None of our employees is represented by a labor union or is covered by a collective bargaining agreement.

Available Information
We maintain a website at www.voltari.com. The information on or available through our website is not, and should not be considered, a part of this report. You may access our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, as well as other reports relating to us that are filed with or furnished to the Securities and Exchange Commission (the "SEC") free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. In addition, you may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site, www.sec.gov, that contains reports, proxy and information statements, and other information that we file electronically with the SEC.

Item 1A.
Risk Factors.
The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. See "Special Statement Regarding Forward-Looking Statements" appearing at the beginning of this report. Our actual results could differ materially from those contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed below as well as those discussed elsewhere in this Annual Report on Form 10-K. Additional risks and uncertainties that management is not aware of or that are currently deemed immaterial may also adversely affect our business operations. If any of the following risks materialize, our business, financial condition or operating results could be materially adversely affected. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
The market price of our common stock is highly volatile and may not relate to our operating performance, financial results or prospects. In addition, features of our Series J preferred stock may make it difficult for holders of our common stock to realize value on their investment.
The market price for our common stock is highly volatile. For example, for the year ended December 31, 2015, the closing sales price of our common stock (which trades on the NASDAQ Capital Market under the symbol “VLTC”) has fluctuated from a low of $0.66 per share to a high of $16.18 per share. As of March 11, 2016 the closing sales price of our common stock was $4.47 per share.

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Broad market and industry factors may adversely affect the market price of our common stock regardless of our actual operating performance, financial results or prospects. The stock market in general has in the past and may in the future experience extreme price and volume fluctuations that have often been unrelated or disproportionate to individual companies’ operating performance. The price of our common stock could fluctuate widely based on a variety of additional factors, including actual or anticipated changes in our financial condition and operating results; media speculation regarding the intentions of our controlling stockholder; announcements by us of capital commitments or significant changes in our business strategy; transactions in our securities by us or our security holders, including acquisitions or dispositions by our controlling stockholder, directors or officers; and other factors affecting us and our industry, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations.
The current market price of our common stock may not be indicative of future market prices or intrinsic value, and we may not be able to sustain or increase the value of an investment in our common stock or warrants to acquire our common stock. Investors in our securities may experience a decrease, which could be substantial, in the value of their securities, including decreases unrelated to our operating performance, financial results or prospects. Investors in our securities could lose part or all of their investment.
Other factors may adversely affect the market price, and intrinsic value, of our common stock and warrants to acquire our common stock, including features of our Series J preferred stock. Our common stock is ranked junior to our Series J preferred stock with respect to cash dividends and amounts payable in the event of our dissolution, liquidation or winding up. This means that, unless full cumulative dividends have been paid or set aside for payment on all outstanding Series J preferred stock for all accrued dividends, no cash dividends may be declared or paid on our common stock. As of December 31, 2015, holders of our Series J preferred stock were owed $15.0 million in dividends. Also, in the event of our voluntary or involuntary liquidation, dissolution or winding up, no distribution of our assets may be made to holders of our common stock until we have paid to our Series J preferred stockholders the liquidation preference relating to such preferred stock, including in each case any accrued and unpaid dividends. As of December 31, 2015, the total liquidation preference on the outstanding shares of our Series J preferred stock, including accrued and unpaid dividends as of such date, was $44.3 million. In the event of our voluntary or involuntary liquidation, dissolution or winding up, our asset value would inure to the benefit of holders of our Series J preferred stock, up to the value of the Series J preferred stock liquidation preference plus any accrued and unpaid dividends thereon, before holders of our common stock would realize any return from our asset value.
The value of common stock, and warrants to acquire our common stock, may also be adversely affected if, and to the extent that, our Series J preferred stock becomes redeemable. The holders of our Series J preferred stock may require us to redeem their shares of Series J preferred stock at a redemption price equal to 100% of the liquidation preference per share in effect at such time plus accrued and unpaid dividends through the next dividend payment date after the redemption date, in connection with a redemption event. A redemption event occurs if (i) we undergo a change in control, which includes a person becoming a beneficial owner of securities representing at least 50% of the voting power of our company, a sale of all or substantially all of our assets, and certain business combinations and mergers which cause a change in 20% or more of the voting power of our company, or (ii) we experience an ownership change (within the meaning of Section 382 of the Internal Revenue Code), which results in a substantial limitation on our ability to use our net operating losses and related tax benefits. The Company believes that, if a redemption event were to occur, limited, if any, funds would be available for such redemption under the terms of the Series J preferred stock and applicable Delaware law.  As a result, in the event that a redemption event were to occur, the Company currently expects that it would be precluded, under the terms of the Series J preferred stock and applicable Delaware law, from making any material redemptions.
As of December 31, 2015, our Series J preferred stock has an aggregate redemption value of approximately $44.3 million, including paid in-kind dividends of $13.6 million and accrued dividends of $1.4 million. Dividends declared or accrued on the Series J preferred stock reduce the amount of net earnings, if any, that may be available to common stockholders.
In addition, our ability to pay dividends on our common stock is currently limited by the terms of our Series J preferred stock and may be further restricted by the terms of any future debt or preferred securities. Accordingly, your only opportunity to achieve a return on your investment in our common stock may be if the market price of our common stock appreciates and you sell your shares at a profit. The market price for our common stock may never exceed, and may fall below, the price that you paid for such common stock.
We are implementing a transformation plan, which may not be successful.

8


We are implementing a transformation plan pursuant to which, among other things, we have exited our mobile marketing and advertising business and have entered into the business of acquiring, leasing and financing commercial real properties. In connection with this transformation plan, on September 17, 2015 we acquired our first commercial real property, located in Long Branch, New Jersey. Our ability to generate revenues and become profitable will be dependent in large part on our ability to acquire, lease and finance additional commercial real properties. There can be no assurance that we will be able to do so or that we will ever achieve profitability. Our failure to successfully execute our transformation plan would adversely affect our financial condition, results of operations and stockholders’ equity. In addition, we could incur costs or become subject to liabilities to a greater degree than anticipated in connection with our exit from the mobile marketing and advertising business and our entry into the business of acquiring, leasing and financing commercial real properties. For example, we may incur unanticipated costs and/or become subject to litigation from customers, vendors or other third parties in connection with our exit from the mobile marketing and advertising business, which could materially adversely affect our financial condition, results of operations and stockholders’ equity.
We have limited operating experience in the commercial real estate business, which makes it difficult to predict the long-term success of our new business model. In addition, because of our new business plan, our historical performance is not a meaningful indicator of future results.
We have a history of net operating losses and may continue to suffer losses in the future.
For the years ended December 31, 2010, 2011, 2012, 2013, 2014 and 2015, we had net losses of approximately $7.0 million, $195.4 million, $34.2 million, $10.3 million, $29.3 million and $6.6 million, respectively. If we cannot become profitable, our financial condition will deteriorate further, and we may be unable to achieve our business objectives.
We have limited experience acquiring commercial real properties.
Our experience in acquiring, leasing and financing commercial real properties is limited. As a result, we may encounter unforeseen difficulties in our efforts to identify essential assets, assess and underwrite the risk levels associated with such assets, negotiate favorable terms with property owners, negotiate favorable terms with lessees, and comply with applicable laws and regulations.
If we are unable to correctly predict rental rates, cancellation rates, demand, consolidation trends and growth trends, a material adverse impact on our results of operations could result. If we are unable to effectively expand, our growth rate may be adversely impacted.
We intend to pursue acquisitions of additional properties and may be unsuccessful in this pursuit, and any acquisitions that we do consummate may fail to meet our expectations.
We intend to pursue acquisitions of additional properties to grow our business in connection with our transformation plan. Accordingly, from time to time, we may engage in discussions that may result in one or more transactions. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transaction, we may devote a significant amount of management and other resources to such a transaction, which could negatively impact our operations. We may incur significant costs in connection with seeking acquisitions regardless of whether any transaction is completed.
As of the date of this report, we have completed one real estate acquisition in connection with the execution of our transformation plan. Until and unless we acquire additional properties, the rental payments by the lessee of the Long Branch property will represent the sole source of our revenues. The termination of the Long Branch Lease or our failure to maintain the lease on favorable terms could have a material adverse effect on our business and financial condition.
The real estate industry is highly competitive, and we will face competition from many other entities engaged in real estate investment activities, including individuals, corporations, REITs, investment companies, private equity and hedge fund investors, and other investors, some of whom are significantly larger and have greater resources and lower costs of capital. This competition will make it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment objectives. If we cannot identify and purchase a sufficient quantity of properties at favorable prices or if we are unable to finance acquisition opportunities on commercially favorable terms, our business, financial condition or results of operations could be materially adversely affected.

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Investments in, and acquisitions of, properties we might seek to acquire entail risks associated with real estate investments generally, including, but not limited to, the following risks and as noted elsewhere in this report:
we may be unable to acquire a desired property because of competition;
even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price;
even if we enter into agreements for the acquisition of properties, these agreements are subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction;
we may incur significant costs and divert management attention in connection with evaluation and negotiation of potential acquisitions, including ones that we are subsequently unable to complete;
we may acquire properties that are not initially accretive to our results upon acquisition, and we may not successfully lease those properties to meet our expectations;
we may be unable to finance the acquisition on favorable terms in the time period we desire, or at all; even if we are able to finance the acquisition, our cash flow may be insufficient to meet our required principal and interest payments;
we may spend more than budgeted to make necessary improvements or renovations to acquired properties;
we may be unable to quickly and efficiently integrate new acquisitions, particularly the acquisition of portfolios of properties, into our existing operations;
market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and
we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities.

In the event that we consummate an acquisition in the future, there is no assurance that we would fully realize the potential benefits of such a transaction. Further, acquisitions of properties we might seek to acquire entail risks associated with real estate investments generally, including that the investment's performance will fail to meet expectations.
Our ongoing leadership transition could have a material adverse impact on our business, operating results or financial condition.
Our ongoing leadership transition could have a material adverse impact on our business, operating results or financial condition. On March 26, 2013, Nathan Fong notified us that he would resign from his positions as our Chief Financial Officer and Chief Operating Officer, effective April 12, 2013. On August 14, 2013, John Breeman commenced serving as our Chief Financial Officer. On December 20, 2013, Richard Stalzer resigned as our Chief Executive Officer. Following the receipt of Mr. Stalzer's resignation, Richard Sadowsky, who had, since November 15, 2012 been serving as our Chief Administrative Officer as well as our General Counsel, was appointed as our Acting Chief Executive Officer. In connection with his appointment, Mr. Sadowsky relinquished his titles as our Chief Administrative Officer and General Counsel. On May 11, 2015, Richard Sadowsky resigned from his position as our Acting Chief Executive Officer and from all other positions he held, effective immediately. In addition, effective May 11, 2015, Aaron Epstein was appointed as our President. John Breeman, in addition to his role as our Chief Financial Officer, now serves as our acting principal executive officer and principal financial officer. On September 24, 2015, each of Messrs. Andrew Roberto, James Nelson and Hunter Gary notified us of his resignation from our Board of Directors and each committee of the Board on which he served, effective September 25, 2015. On September 24, 2015, Peter Shea was appointed to the Board, effective September 25, 2015. Mr. Shea was also appointed to serve as Chairperson of the Board, Chairperson of the Compensation and Governance and Nominating Committees and as a member of our Audit Committee. On September 28, 2015, the Board appointed Kenneth Goldmann as Chief Administrative and Accounting Officer of the Company, effective as of October 5, 2015.
The uncertainty inherent in our ongoing leadership transition can be difficult to manage, may cause concerns from third parties with whom we do business, and may increase the likelihood of turnover of other key officers and employees. In addition, our current management team lacks significant experience in the commercial real estate business, and we may need to hire personnel with relevant experience to help us execute our transformation plan. We cannot assure that we will be able to do so, and our failure to do so could materially harm our results of operations.
We will be dependent on our tenants to make payments to us under our leases, and an event that materially and adversely affects our tenants’ business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.

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Pursuant to our transformation plan, to the extent we generate revenues, we will generate substantially all of our revenues from payments made by our tenants. Additionally, to the extent we are able to enter into triple net leases, we will depend on our tenants to pay all insurance, taxes, utilities, and maintenance and repair expenses related to the applicable property, subject to limited carveouts, and to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with its business. There can be no assurance that our tenants will have sufficient assets, income and access to financing to enable them to satisfy their payment obligations under the applicable leases. The failure of a tenant to satisfy its other obligations under the lease, such as the payment of insurance, taxes and utilities, could materially and adversely affect the condition of our properties. For these reasons, if a tenant were to experience a material and adverse effect on its business, financial position or results of operations, our business, financial position or results of operations could also be materially and adversely affected.
Due to our dependence on rental payments from our tenants as our primary source of revenues, we may be limited in our ability to enforce our rights under, or to terminate, the applicable leases. Failure by a tenant to comply with the terms of a lease could require us to find another lessee for the property. There is no assurance that we would be able to lease a property to another lessee on substantially equivalent or better terms, or at all, successfully reposition the property for other uses or sell the property on terms that are favorable to us.
The historical information included in this Annual Report on Form 10-K may not be a reliable indicator of future results.
Our historical financial data included in this Annual Report on Form 10-K may not reflect what our business, financial position or results of operations will be in the future, even after taking into account that our historical mobile marketing and advertising business is reported herein as discontinued operations. The historical financial statements included in this Annual Report on Form 10-K are not necessarily indicative of how we will conduct our business as we continue our efforts to implement our transformation plan. Significant changes have and will continue to occur in our cost structure, financing and business operations as a result of our transformation plan.
Our operating results may be affected by economic and regulatory changes that have an adverse impact on the commercial real estate market in general, and we can provide no assurance that we will be profitable or that we will realize growth in the value of our commercial real estate properties.
Our operating results are subject to risks generally incident to the ownership of real estate, including:
changes in general economic or local conditions;
changes in supply of or demand for competing properties in an area;
changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive;
changes in tax, real estate, environmental and zoning laws; and
periods of high interest rates and tight money supply.
These and other risks may prevent us from realizing growth or maintaining the value of our real estate properties or from becoming profitable.
Our operations may face adverse effects from tenant bankruptcies or insolvencies.
The bankruptcy or insolvency of any of our tenants may adversely affect the income produced by our properties. If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord. If a tenant files for bankruptcy, we cannot evict the tenant solely because of such bankruptcy. A court, however, may authorize a tenant to reject or terminate its lease with us. We may also incur additional vacancy and other re-tenanting expense.
Mr. Carl C. Icahn indirectly owns a majority of our common stock and Series J preferred stock, our certificate of incorporation waives the corporate opportunity doctrine as it relates to funds affiliated with him and he may have interests that diverge from those of other stockholders, and one of his affiliates is our principal lender.
Following the completion, and as a result of, the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, our largest stockholder, became the beneficial owner of, and had voting control over, approximately 52.3% of our common stock.

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This amount increased to 52.7% following the forfeiture by our Board of Directors on August 20, 2015, of 73,525 shares of restricted common stock, in the aggregate. Entities affiliated with Mr. Carl C. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Carl C. Icahn and such entities. Further, he holds 97.9% of our Series J preferred stock, which has limited voting rights. Mr. Carl C. Icahn is able to control and exert substantial influence over us, including the election of our directors and controlling most matters requiring board or stockholder approval, including business strategies, mergers, business combinations, acquisitions or dispositions of significant assets, issuances of common stock, incurrence of debt or other financing and the payment of dividends. The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third party from seeking to acquire a majority of our outstanding common stock, which could adversely affect the market price of our stock. Mr. Carl C. Icahn owns, controls and has an interest in many companies, some of which may compete directly or indirectly with us. As a result, his interests may not always be consistent with our interests or the interests of our other stockholders.
In our certificate of incorporation, we renounce and provide for a waiver of the corporate opportunity doctrine as it relates to the funds affiliated with Koala Holding LP, an affiliate of Mr. Carl C. Icahn, Technology Crossover Ventures, and any person or entity affiliated with these investors. As a result, Mr. Carl C. Icahn and entities controlled by him will have no fiduciary duty to present corporate opportunities to us. These exempted persons are in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. They may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are directed by the exempted persons to themselves or their other affiliates instead of to us. As a result, corporate opportunities that may benefit us may not be available to us. To the extent that conflicts of interest may arise between us, Mr. Carl C. Icahn and his affiliates, those conflicts may be resolved in a manner adverse to us or our other shareholders.
On August 7, 2015, we (as borrower) and Koala (as lender), an affiliate of Mr. Carl C. Icahn, entered into a $10 million Revolving Note. Pursuant to the Revolving Note, Koala made available to us a revolving loan facility of up to $10,000,000 in aggregate principal amount. Borrowings under the Revolving Note will bear interest at a rate equal to the greater of the LIBOR rate plus 350 basis points, per annum, and 3.75%, per annum. The Revolving Note also includes a fee of 0.25%, per annum, on undrawn amounts and matures on the earliest of (i) December 31, 2017, (ii) the date on which any financing transaction, whether debt or equity, is consummated by us (or our successors and assigns) with net proceeds in an amount equal to or greater than $10 million, and (iii) at our option, a date selected by us that is earlier than December 31, 2017. Subject to the terms and conditions of the Revolving Note, we may repay all or any portion of the amounts outstanding under the Revolving Note at any time without premium or penalty, and any amounts so repaid will, until the maturity date, be available for re-borrowing. As collateral for the Revolving Note, we have pledged and granted to Koala a lien on our limited liability company interest in Voltari Real Estate Holding LLC.
We may have future capital needs and may not be able to obtain additional financing on acceptable terms.
We may incur indebtedness in the future to refinance our existing indebtedness or to finance newly acquired properties or for other purposes. Demands on our cash resources from debt service will reduce funds available to us to make capital expenditures and acquisitions or carry out other aspects of our business strategy. Our indebtedness may also limit our ability to adjust rapidly to changing market conditions, make us more vulnerable to general adverse economic and industry conditions and create competitive disadvantages for us compared to other companies with relatively lower debt levels. Increased future debt service obligations may limit our operational flexibility, including our ability to acquire properties, finance or refinance our properties or sell properties as needed.
Moreover, our ability to obtain additional financing and satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to then- prevailing general economic, real estate and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control. A prolonged worsening of credit market conditions would have a material adverse effect on our ability to obtain financing on favorable terms, if at all.
We may be unable to obtain additional financing or financing on favorable terms or our operating cash flow may be insufficient to satisfy our financial obligations under any indebtedness outstanding from time to time. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to enhance our properties or develop new properties, complete

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acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to secure funds for future tenant improvements or capital needs, which could adversely impact the returns we generate on our properties.
When tenants do not renew their leases or otherwise vacate their space, in order to attract replacement tenants, we may be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated space. In addition, we will likely be responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops, even if our leases with tenants may require tenants to pay routine property maintenance costs. We may use cash flow from operations, borrowings, property sales or future debt or equity offerings in order to improve or maintain our properties or for any other reason. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, all of which could have a material adverse effect on the value of our investments.
Rising expenses could reduce cash flow and funds available for future acquisitions.
Any properties that we may buy will be subject to operating risks common to real estate in general, any or all of which may negatively affect us. If any property is not fully occupied or if rents are being paid in an amount that is insufficient to cover operating expenses, we could be required to expend funds with respect to that property for operating expenses. Any of our properties could be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses. Leases may not be negotiated on a double or triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net-lease basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs which could adversely affect our cash flows and funds available for future acquisitions.
Costs of complying with governmental laws and regulations, including those relating to environmental matters, may adversely affect our operations and cash position.
All real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater and storm water discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated in soils or groundwater. Environmental laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. This liability could be substantial. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings.
Some of these laws and regulations are amended from time to time and may require compliance with new or more stringent standards in the future. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenants’ operations, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, contamination from others in the soils or groundwater on adjoining properties, or activities of unrelated third parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance. Any material expenditures, fines, or damages we must pay could materially adversely affect our results from operations and may reduce the value of an investment in our shares. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims may materially adversely affect our business, assets or results of operations.
Environmental compliance costs and liabilities associated with real estate properties owned by us may materially and adversely affect us.

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Our properties may be subject to known and unknown environmental liabilities under various federal, state and local laws and regulations relating to human health and the environment. Certain of these laws and regulations may impose joint and several liability on certain statutory classes of persons, including owners or operators, and past owners and operators for the costs of investigation or remediation of contaminated properties. These laws and regulations apply to past and present business operations on the properties, and the use, storage, handling and recycling or disposal of hazardous substances or wastes. We may face liability regardless of our knowledge of the contamination, the timing of the contamination, the cause of the contamination or the party responsible for the contamination of the property.
We may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of any of our properties on which there is contamination, or from which there has been a release or threatened release of a regulated material as well as other affected properties, regardless of whether we knew of or caused the release.
As the owner or operator of real property, we may also incur liability based on various building conditions. The presence of significant asbestos, mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation to contain or remove the asbestos, mold or other airborne contaminants or increase ventilation and/or expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury occurs.
In addition to these costs, which could exceed the property’s value, we could be liable for certain other costs, including governmental fines, and injuries to persons, property or natural resources. Further, some environmental laws create a lien on the contaminated site in favor of the government for damages and the costs the government incurs in connection with such contamination. Any such costs or liens could have a material adverse effect on our business or financial condition.
Although we intend to require our tenants to undertake to indemnify us for certain environmental liabilities, including environmental liabilities they cause, the amount of such liabilities could exceed the financial ability of the tenant to indemnify us. The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell or lease the real estate or to borrow using the real estate as collateral.
We may obtain only limited warranties when we purchase a property and would have only limited recourse if our due diligence did not identify any issues that lower the value of our property, which could adversely affect our financial condition.
The seller of a property often sells such property in its “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property.
Our costs associated with complying with the Americans with Disabilities Act may affect our operating results.
Our properties are and will be subject to the Americans with Disabilities Act of 1990 (the “ADA”). Under the ADA, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The ADA has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services, including restaurants and retail stores, be made accessible and available to people with disabilities. The ADA’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, or, in some cases, an award of damages. There is no assurance that we will be able to acquire properties or allocate the burden on the seller or other third party, such as a tenant, to ensure compliance with the ADA. If we cannot, our funds used for ADA compliance may affect our results from operations. The fluctuation in market conditions makes judging the future performance of these assets difficult. There is a risk that we may not purchase real estate assets at absolute discounted rates and that these assets may continue to decline in value.
Properties that we may own and may acquire face competition that may decrease the amount of rent that we may charge our tenants.
Properties that we may own and may acquire face competition for tenants. The number of competitive properties could have a material effect on our ability to rent space at our properties and the amount of rents charged. We could be adversely affected if additional competitive properties are built in locations competitive with our properties, causing increased competition for

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customer traffic and creditworthy tenants. This could result in decreased cash flow from tenants and may require us to make capital improvements to properties that we would not have otherwise made, thus affecting our income, financial condition and results of operations.
We may be unable to renew leases or re-lease space as leases expire.
If tenants do not renew their leases upon expiration, we may be unable to re-lease the vacated space. Even if the tenants do re-lease the lease or we are able to re-lease to a new tenant, the terms and conditions of the new lease may not be as favorable as the terms and conditions of the expired lease. One or more of our properties may incur a vacancy either by the continued default of a tenant under its lease or the expiration of one of our leases. In addition, the resale value of a property could be diminished because the market value of a particular property will depend principally upon the value of the cash flow generated from the property which in the case of vacancies, will be reduced.
Changes in building and/or zoning laws may require us to renovate or reconstruct a property in connection with the continued use of the property or the commencement of a new use of the property or prevent us from fully restoring a property in the event of a substantial casualty loss and/or require us to meet additional or more stringent construction requirements.
Due to changes, among other things, in applicable building and zoning laws, ordinances and codes that may affect certain of our properties that have come into effect after the initial construction of the properties, certain properties may not comply fully with current building and/or zoning laws, including electrical, fire, health and safety codes and regulations, use, lot coverage, parking and setback requirements, but may qualify as permitted non-conforming uses. Such changes may require updating various existing physical conditions of buildings in connection with our recapture, renovation, and/or redevelopment of properties. In addition, such changes may limit our or our tenant’s ability to restore the premises of a property to its previous condition in the event of a substantial casualty loss with respect to the property or the ability to refurbish, expand or renovate such property to remain compliant, or increase the cost of construction in order to comply with changes in building or zoning codes and regulations. If we are unable to restore a property to its prior use after a substantial casualty loss or are required to comply with more stringent building or zoning codes and regulations, we may be unable to re-lease the space at a comparable effective rent or sell the property at an acceptable price, which may materially and adversely affect us.
We may be subject to unanticipated liabilities as a result of our real properties.
We may be involved in disputes and other matters with property owners, tenants, their respective employees and agents, and other unrelated parties, such as tort claims related to hazardous conditions, foreclosure actions and access disputes. We cannot assure you that we will not become subject to material litigation or other liabilities. If these liabilities are not adequately covered by insurance, they could have a material adverse impact on our results from operations.
We intend to enter into leases that will generally make our tenants contractually responsible for payment of taxes, maintenance, insurance and other similar expenditures associated with our tenants' use of a property. If our tenants fail to pay these expenses as required, or if we are otherwise required to pay such expenses, it could result in a material adverse impact on our results of operations.
Under triple net lease arrangements, tenant lease agreements typically make tenants contractually responsible for payment of taxes, maintenance, insurance and other similar expenditures associated with tenants' infrastructure assets. If our tenants fail to pay these expenses as required, it could result in a diminution in the value of the infrastructure asset associated with our real property interest and have a material adverse impact on our results of operations. Further, if a tenant fails to pay real property taxes, any lien resulting from such unpaid taxes would be senior to our real property interest in the applicable site. Failure to pay such real property taxes could result in our real property interest being impaired or extinguished, or we may be forced to incur costs and pay the real property tax liability to avoid impairment of our assets. We may enter into leases or acquire properties already subject to lease that are not triple net lease arrangements, including double net lease arrangements, in which case we may be primarily responsible for certain expenses, such as insurance, taxes, maintenance or other expenditures. Such obligations could have a material adverse impact on our results from operations, as could any material increase in such amounts over what we anticipate paying.
We or our tenants may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expenses.

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Leases that we enter into are expected to require that the tenant maintain comprehensive insurance and hazard insurance or self-insure its insurance obligations. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, that may be uninsurable or not economically insurable. Insurance coverage may not be sufficient to pay the full current market value or current replacement cost of a loss. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it infeasible to use insurance proceeds to replace the property after such property has been damaged or destroyed. Under such circumstances, the insurance proceeds received might not be adequate to restore the economic position with respect to such property.
If the Long Branch property or any other property we acquire experiences a loss that is uninsured or that exceeds policy coverage limits, we could lose the capital invested in the damaged property as well as the anticipated future cash flows from the property. In addition, even if damage to our properties is covered by insurance, a disruption of business caused by a casualty event may result in loss of revenue for our tenants or us. Any business interruption insurance may not fully compensate them or us for such loss of revenue. If one of our tenants experiences such a loss, it may be unable to satisfy its payment obligations to us under its lease with us.
Our ability to fully control the maintenance of our net-leased properties may be limited.
The tenants or managers of net-leased properties are generally responsible for maintenance and other day-to-day management of the properties. If a property is not adequately maintained in accordance with the terms of the applicable lease, we may incur expenses for deferred maintenance expenditures or other liabilities once the property becomes free of the lease. While we expect our leases will generally provide for recourse against the tenant in these instances, a bankrupt or financially-troubled tenant may be more likely to defer maintenance and it may be more difficult to enforce remedies against such a tenant. In addition, to the extent tenants are unable to conduct their operation of the property on a financially-successful basis, their ability to pay rent may be adversely affected. Although we endeavor to monitor, on an ongoing basis, compliance by tenants with their lease obligations and other factors that could affect the financial performance of our properties, such monitoring may not in all circumstances ascertain or forestall deterioration either in the condition of a property or the financial circumstances of a tenant.
Real estate investments are relatively illiquid, and therefore we may not be able to dispose of properties when appropriate or on favorable terms.
Investments in real properties are relatively illiquid. We may not be able to quickly alter our portfolio or generate capital by selling properties. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. If we need or desire to sell a property or properties, we cannot predict whether we will be able to do so at a price or on the terms and conditions acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Further, we may be required to invest monies to correct defects or to make improvements before a property can be sold. We can make no assurance that we will have funds available to correct these defects or to make these improvements. Moreover, in acquiring a property, we may agree to restrictions that prohibit the sale of that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These provisions would restrict our ability to sell a property.
Any material weaknesses in our internal controls over financial reporting or failure to maintain proper and effective internal controls could impair our ability to produce accurate and timely financial statements and investors' views of us could be harmed. The execution of our transformation plan may make it more challenging for us to maintain effective controls.
Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can manage our business and produce accurate financial statements on a timely basis is a costly and time-consuming effort. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. We are required to comply with Section 404(a) of the Sarbanes-Oxley Act of 2002, which requires annual management assessment of the effectiveness of our internal control over financial reporting. Our compliance with Section 404 has required and will continue to require that we incur additional expense and expend management time on compliance-related issues. We expect to reduce staffing in connection with the execution of our transformation plan. As a result, our maintenance of sufficient controls will be dependent on a smaller group of individuals than in the past. If we fail to maintain proper controls, our business could be adversely affected, our ability to predict our cash needs,

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and the market's confidence in our financial statements could decline, and the market price of our common stock could be adversely affected.
We may not be able to realize value from our NOLs.
As of December 31, 2015, we had federal and state NOLs of $491.0 million and $39.0 million, respectively, that begin to expire in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes. If we had an “ownership change” as defined in section 382 ("Section 382") of the Internal Revenue Code of 1986, as amended (“the Code”), our NOLs generated prior to the ownership change would be subject to annual limitations, which could reduce, eliminate, or defer the utilization of these losses. Generally, an ownership change occurs if one or more stockholders, each of whom owns 5% or more in value of a corporation’s stock, increase their aggregate percentage ownership by 50 percentage points or more as compared to the lowest percentage of stock owned by such stockholders at any time during the preceding three year period. Based upon a review of past changes in our ownership, we do not believe that we have experienced an ownership change (as defined under Section 382) that would result in any limitation on our future ability to use these NOLs. There can be no assurance however that the Internal Revenue Service or some other taxing authority will not disagree with our position and contend that we have already experienced such an ownership change, which would severely limit our ability to use our NOLs to offset future taxable income.

On April 9, 2013, our stockholders approved a holding company reorganization in which each share of what was then Motricity common stock was exchanged for one share of our common stock. Shares of our common stock are subject to transfer restrictions contained in our certificate of incorporation. In general, the transfer restrictions prohibit transfers having the effect of increasing without our consent the ownership of our common stock by (i) any person from less than 5% to 5% or more or (ii) any person owning or deemed to own 5% of more of our common stock.

While we expect that the transfer restrictions will help guard against an ownership change occurring under Section 382 of the Code and the related rules, because we may use our common stock as consideration to make acquisitions and because we may sell additional shares of our common stock in the future to raise capital for our business, we cannot guarantee that an ownership change will not occur in the future. Further, the exercise of our common stock warrants or transfer of those common stock warrants could result in an ownership change under Section 382 of the Code. Unlike if we issued common stock as consideration in an acquisition or to raise additional capital, the exercise or transfer of the common stock warrants and, therefore, any resulting ownership shift, are out of our control.
We may not be able to make use of the existing tax benefits of the NOLs because we may not generate taxable income.
The use of the NOLs is subject to uncertainty because it is dependent upon the amount of taxable income generated by us and our consolidated subsidiaries. Through December 31, 2015 we have not generated taxable income on an annual basis, and there can be no assurance that we will have sufficient taxable income in future years to use the NOLs before they begin expiring at varying dates starting in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes.

Future legislation may impede our ability to realize the tax benefits of the NOLs.
It is possible that legislation or regulations will be adopted that would limit our ability to use the tax benefits associated with the NOLs.
 
The IRS could challenge the amount of the NOLs or claim that we experienced an ownership change, which could reduce the amount of NOLs that we can use.
As of the date of this Annual Report on Form 10-K, the amount of the NOLs has not been audited or otherwise validated by the IRS. The IRS could challenge the amount of the NOLs, which could result in an increase in our future income tax liability. The Company has been notified that its U.S. federal tax return for the year ended December 31, 2013 is currently under examination by the Internal Revenue Service.  This examination is in its early stages and no adjustments have been proposed as of the date of this filing.
In addition, calculating whether an ownership change has occurred is subject to uncertainty, both because of the complexity and ambiguity of Section 382 and because of limitations on a publicly traded company's knowledge as to the ownership of, and transactions in, its securities. Therefore, we cannot assure you that a governmental authority will not claim that we experienced an ownership change and attempt to reduce or eliminate the benefit of the NOLs even if we are successful in implementing the protective measures subjecting our stock to transfer restrictions.


17


Lawsuits have been filed against us and certain of our current and former directors and officers, which could divert management's attention and adversely affect our business, results of operations and cash flows.
Lawsuits have been filed against us and certain of our current and former directors and officers in the U.S. District Court, Western District of Washington at Seattle, alleging various violations of federal securities laws and of state law, including breaches of fiduciary duties and unjust enrichment, relating to alleged false and misleading statements and omissions made by us in our registration statement for our initial public offering, subsequent reports filed with the SEC and other press releases and public statements. Although some of these cases have been dismissed, the others are at an early stage and we are not able to predict the probability of the outcome or estimate of loss, if any, related to these matters. These types of litigation often are expensive and divert management's attention and resources. As a result, any of those claims, whether or not ultimately successful, could adversely affect our business, results of operations and cash flows.

As a result of the implementation of measures designed to protect the use of our NOLs by restricting transfers of our common stock to the extent such transfers would affect the percentage of stock that is treated as owned by a five-percent stockholder, your ability to transfer your shares of common stock and your opportunity to receive a premium on our stock may be limited.
On April 9, 2013, our stockholders approved a holding company reorganization in which each share of what was then Motricity common stock was exchanged for one share of Voltari common stock. As a result of this transaction, shares of our common stock are subject to transfer restrictions contained in our certificate of incorporation. In general, the transfer restrictions prohibit transfers without our consent having the effect of increasing the ownership of our common stock by (i) any person from less than 5% to 5% or more or (ii) any person owning or deemed to own 5% of more of our common stock. Consequently, your ability to transfer your shares of common stock may be limited.

Even if our board of directors consented to a significant stock acquisition, a potential buyer might be deterred from acquiring our common stock while we still have significant tax losses being carried forward, because such an acquisition might trigger an ownership change and severely impair our ability to use our NOLs against future income. Thus, this potential tax situation could have the effect of delaying, deferring or preventing a change in control and, therefore, could affect adversely our shareholders' ability to realize a premium over the then prevailing market price for our common stock in connection with a change in control. The transfer restrictions that apply to shares of our common stock, although designed as a protective measure to avoid an ownership change, may have the effect of impeding or discouraging a merger, tender offer or proxy contest, even if such a transaction may be favorable to the interests of some or all of our shareholders. This effect might prevent our stockholders from realizing an opportunity to sell all or a portion of their common stock at a premium to the prevailing market price. In addition, the transfer restrictions may delay the assumption of control by a holder of a large block of our common stock and the removal of incumbent directors and management, even if such removal may be beneficial to some or all of our stockholders.

Our common stock is ranked junior to our Series J preferred stock with respect to cash dividends and amounts payable in the event of our dissolution, liquidation or winding up.
With respect to the payment of cash dividends and amounts payable in the event our liquidation, dissolution or winding up, our common stock is ranked junior to our Series J preferred stock. This means that, unless full cumulative dividends have been paid or set aside for payment on all outstanding Series J preferred stock for all accrued dividends, no cash dividends may be declared or paid on our common stock. Likewise, in the event of our voluntary or involuntary liquidation, dissolution or winding up, no distribution of our assets may be made to holders of our common stock until we have paid to our Series J preferred stockholders the liquidation preference relating to such preferred stock, plus in each case any accrued and unpaid dividends. In the event of our voluntary or involuntary liquidation, dissolution or winding up, our asset value would first inure to the benefit of holders of our Series J preferred stock, up to the value of the Series J preferred stock liquidation preference plus any accrued and unpaid dividends thereon, before holders of our common stock would realize any benefits from such increase.
We have not paid or declared common stock cash dividends in the past, and do not plan to pay or declare common stock cash dividends in the future, and, as a result, your only opportunity to achieve a return on an investment in our common stock is if the price of our common stock appreciates.
We have never declared or paid any dividends on our common stock other than the distribution of subscription rights in the rights offerings that closed in October 2012 and March 2015. We do not expect to declare or pay dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used in the operation and growth of our business and the payment of dividends on our Series J preferred stock. Any determination to pay dividends on our common

18


stock in the future will be at the discretion of our board of directors. In addition, our ability to pay dividends on our common stock is currently limited by the terms of our Series J preferred stock and may be further restricted by the terms of any future debt or preferred securities. Accordingly, your only opportunity to achieve a return on your investment in our common stock may be if the market price of our common stock appreciates and you sell your shares at a profit. The market price for our common stock may never exceed, and may fall below, the price that you paid for such common stock.
We currently have fewer than 300 stockholders of record and, therefore, are eligible to terminate the registration of our common stock under the Exchange Act and, correspondingly, delist our shares from NASDAQ.
As a public company with fewer than 300 stockholders of record, we currently register our shares of common stock under the Exchange Act, on a voluntary basis. Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated 90 days after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. Accordingly we are eligible to deregister our common stock under the Exchange Act. Upon the effectiveness of the termination of registration under Section 12, we would not be required to comply with certain disclosure requirements under the Exchange Act, including, but not limited to, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities. Even if we were to deregister, however, Section 15(d) of the Exchange Act would require us to continue to file annual, quarterly and current reports until no earlier than when we file our next annual report on Form 10-K. At such time, you may not have access to current information about our Company.
We are required by the terms of the common stock warrants to use our reasonable best efforts to maintain an effective registration statement covering the issuance of the shares of common stock underlying the common stock warrants at the time that our warrant holders exercise their warrants. The exercise of our common stock warrants may also be limited by state securities laws. We cannot guarantee that a registration statement will be effective, in which case our warrant holders may not be able to exercise their common stock warrants.
Holders of our common stock warrants will be able to exercise the common stock warrants only if a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), relating to the shares of our common stock underlying the warrants is then effective. We have a contractual obligation to use our reasonable best efforts to maintain a current registration statement covering the shares of common stock underlying the warrants to the extent registration at the time of exercise is required by federal securities laws, and we intend to, but may not be able to, comply with our undertaking. Our common stock warrants expire if they are not exercised in connection with certain corporate transactions, but if a registration statement covering the shares underlying the common stock warrants is not effective at the time of such transaction, you will not be able to exercise your warrants and they will expire without your being able to exercise them. Therefore, the value of the warrants may be greatly reduced if a registration statement covering the shares of common stock issuable upon the exercise of the warrants is not kept current.

If you do not exercise your common stock warrants, they will terminate and have no further rights or value.
Our common stock warrants provide that they terminate if they are not exercised on or before October 11, 2017 or in connection with a capital reorganization, reclassification of our securities, consolidation or merger of our company resulting in a change of 50% of the voting power of the company, a sale of substantially all of our assets or a similar transaction requiring stockholder approval shall be effected. If you do not exercise your common stock warrants in connection with such a transaction, the warrants will terminate and be of no further value. There can be no assurance that any such transaction would provide value for the common stock received upon the exercise of the common stock warrants at or in excess of the exercise price of such warrants.

We are a “controlled company” under applicable NASDAQ Marketplace Rules and, therefore, we qualify for exemptions from certain of NASDAQ corporate governance requirements.
Following the completion, and as a result of, the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the beneficial owner of, and has voting control over, approximately 52.3% of our common stock. As a result, we are considered a “controlled company” under the NASDAQ Marketplace Rules. Under these rules, we may elect not to comply with certain NASDAQ Marketplace Rules regarding corporate governance, including requirements that a majority of our board of directors consist of independent directors, that our governance and nominating committee be composed entirely of independent directors and that our compensation committee be composed entirely of independent directors. We do not currently utilize the "controlled company" exemptions available under NASDAQ Marketplace Rules, but we may elect to do so in the future.

19




Item 1B.
Unresolved Staff Comments.
None.

Item 2.
Properties.

As of December 31, 2015, our real estate portfolio consisted of investment in property located at 160 Brighton Ave., Long Branch, NJ. The property is subject to a triple net lease with JPMorgan Chase Bank, N.A. ("Chase"), the original term of which expires in June, 2020 (with two, five-year renewal options), pursuant to which Chase is responsible for the payment of basic rent as well as the payment of real estate taxes, maintenance costs, utilities, tenant's insurance and other property related costs. The average annual rental income for the property over the remaining term of the original lease is expected to be approximately $203,000.
Our corporate headquarters is located in New York, New York and comprises approximately 8,000 square feet of space leased through November 30, 2018.
Item 3.
Legal Proceedings
Putative Securities Class Action. We previously announced that Joe Callan filed a putative securities class action complaint in the U.S. District Court, Western District of Washington at Seattle on behalf of all persons who purchased or otherwise acquired common stock of Motricity between June 18, 2010 and August 9, 2011 or in Motricity’s initial public offering. Motricity, which was our predecessor registrant, is now our wholly-owned subsidiary and has changed its name to Voltari Operating Corp. The defendants in the case were Motricity, certain of our current and former directors and officers, including Ryan K. Wuerch, James R. Smith, Jr., Allyn P. Hebner, James N. Ryan, Jeffrey A. Bowden, Hunter C. Gary, Brett Icahn, Lady Barbara Judge CBE, Suzanne H. King, Brian V. Turner; and the underwriters in Motricity’s initial public offering, including J.P. Morgan Securities, Inc., Goldman, Sachs & Co., Deutsche Bank Securities Inc., RBC Capital Markets Corporation, Robert W. Baird & Co Incorporated, Needham & Company, LLC and Pacific Crest Securities LLC. The complaint alleged violations under Sections 11 and 15 of the Securities Act and Section 20(a) of the Exchange Act, by all defendants and under Section 10(b) of the Exchange Act by Motricity and those of our former and current officers who are named as defendants. The complaint sought, inter alia, damages, including interest and plaintiff’s costs and rescission. A second putative securities class action complaint was filed by Mark Couch in October 2011 in the same court, also related to alleged violations under Sections 11 and 15 of the Securities Act, and Sections 10(b) and 20(a) of the Exchange Act. On November 7, 2011, the class actions were consolidated, and lead plaintiffs were appointed pursuant to the Private Securities Litigation Reform Act. On December 16, 2011, plaintiffs filed a consolidated complaint which added a claim under Section 12 of the Securities Act to its allegations of violations of the securities laws and extended the putative class period from August 9, 2011 to November 14, 2011. The plaintiffs filed an amended complaint on May 11, 2012 and a second amended complaint on July 11, 2012. On August 1, 2012, we filed a motion to dismiss the second amended complaint, which was granted on January 17, 2013. A third amended complaint was filed on April 17, 2013. On May 30, 2013, we filed a motion to dismiss the third amended complaint, which was granted by the Court on October 1, 2013. On October 31, 2013, the plaintiffs filed a notice of appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit. On April 25, 2014, the plaintiffs filed their opening appellate brief and on July 24, 2014 we filed our answering brief. Oral arguments on the appeal have been scheduled for April 8, 2016.
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.
Item 4.
Mine Safety Disclosure
None.


20


PART II


Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock currently trades on NASDAQ under the symbol “VLTC.”

Total shares of common stock outstanding as of March 11, 2016 were 8,994,814, and we had 154 stockholders of record. The number of stockholders of record does not reflect beneficial owners whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

The following table sets forth the high and low sales prices of our common stock per share, as reported by NASDAQ, for each of the periods presented. As of March 11, 2016, the closing sales price of our common stock was $4.47 per share.

 
 
High
 
Low
Fiscal Year Ending December 31, 2015
 
 
 
 
Fourth Quarter
 
$
8.60

 
$
3.37

Third Quarter
 
$
13.65

 
$
4.51

Second Quarter
 
$
21.75

 
$
2.18

First Quarter
 
$
1.57

 
$
0.63

Fiscal Year Ending December 31, 2014
 
 
 
 
Fourth Quarter
 
$
1.69

 
$
0.65

Third Quarter
 
$
2.35

 
$
1.45

Second Quarter
 
$
3.67

 
$
1.60

First Quarter
 
$
4.43

 
$
3.25



Unregistered Sales of Equity Securities
In the fiscal year ended December 31, 2015, we did not issue any unregistered securities.

Dividend Policy
We are not required to pay any dividends and have not declared or paid any dividends on our common stock other than the distribution of subscription rights in our rights offerings that closed on October 11, 2012 and March 30, 2015. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future dividends will be at the discretion of our board of directors and will depend upon our operating results, strategic plans, capital requirements, financial condition, provisions of any of our borrowing arrangements, applicable law and other factors our board of directors considers relevant.

Item 6.
Selected Financial Data.
We are not required to provide selected financial data disclosures because we are a smaller reporting company.

21



Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The following discussion should be read in conjunction with our consolidated financial statements included elsewhere herein. Unless otherwise noted, all dollar amounts in tables are in thousands.
This annual report on Form 10-K, including this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are based on management's current expectations, estimates, forecasts, and projections about our business and operations. Our actual results may differ materially and adversely from those currently anticipated and expressed in any such forward-looking statements, including as a result of the factors we describe under “Risk Factors” and elsewhere in this annual report. See “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this report and “Risk Factors” set forth in Part I - Item 1A of this report.

Business Overview
Transformation Plan—In August 2015, we committed to and began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business and entered into the business of acquiring, financing and leasing commercial real estate properties. The Company intends to lease such properties pursuant to so-called “double net” or “triple net” leases. The Company has significantly reduced its workforce in connection with its transformation plan. We intend to acquire properties primarily in the Northeast United States. Future acquisitions are intended to be initially financed through borrowings available under our $10 million Revolving Note (as defined herein) with Koala (as defined herein).
Real Property Acquisitions—In connection with the execution of our transformation plan, on September 17, 2015, we acquired a real estate parcel in Long Branch, New Jersey. The property is subject to a triple net lease with JPMorgan Chase Bank, N.A. ("Chase"), the original term of which expires in June, 2020 (with two, five-year renewal options), pursuant to which Chase is responsible for the payment of basic rent as well as the payment of real estate taxes, maintenance costs, utilities, tenant's insurance and other property related costs. The purchase price was approximately $3.63 million and average annual rental income for the property over the remaining term of the original lease is approximately $203,000.
As previously disclosed, on December 3, 2015 we entered into a purchase and sale agreement with Flanders Holding LLC, a Texas limited liability company (the “Seller”) to acquire all of the Seller’s right, title and interest in a real estate parcel located in Flanders, New York for approximately $2.8 million. The Purchase Agreement was amended on January 11, 2016, February 10, 2016 and March 10, 2016 to extend the period in which we are required to complete our due diligence of the property.

The property is subject to a lease with 7-Eleven, Inc. (“7-Eleven”), the original term (the “Original Term”) of which expires in December 2029 (with four, five-year renewal options (the “Renewal Term,” and together with the Original Term, the “Term”)). During the Term, 7-Eleven is responsible for the payment of basic rent, as well as the payment of, subject to certain exceptions, real estate taxes, utilities, tenant’s insurance and other property related costs. The landlord is responsible for certain maintenance and repair costs. The average annual rental income for the property over the remaining Original Term is approximately $161,000.

The Purchase Agreement contains customary representations, warranties and covenants by the parties and the closing of the purchase is subject to customary conditions precedent, including a due diligence period which has not concluded. The Company makes no assurances that the conditions will be satisfied or that the purchase will be consummated in a timely manner, if at all.

Cost Reductions and Material Charges—In connection with the implementation of our transformation plan, we could incur total costs ranging from $0.4 million to $1.2 million. Included in this estimate are severance and other workforce reduction costs of approximately $0.3 million and costs associated with our exit from the mobile marketing and advertising business, consisting primarily of lease termination and other costs ranging from approximately $0.1 million to $0.9 million in connection with exiting our office space in New York, Chicago and Los Angeles, as well as potential non-cash impairment charges of $0.2 million, relating primarily to our leasehold improvements and furniture and fixtures in our New York office. Restructuring costs related to our exit from the mobile marketing and advertising business of approximately $0.1 million have been incurred during the year ended December 31, 2015 and are included in net loss from discontinued operations.



22



Results of Operations
In August, 2015 we began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business. On May 30, 2014, we completed the sale of our messaging business in the U.S. and Canada. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the UK. As a result, these businesses are reported as discontinued operations in the consolidated financial statements for the requisite periods presented in this Annual Report on Form 10-K. See discussion of net loss from discontinued operations below and Note 5 - Discontinued Operations to our consolidated financial statements for more information.

Our continuing operations for years ended December 31, 2015 and 2014 consist of revenues and expense related to commercial real estate operations which commenced in August 2015, as well as general and administrative costs, depreciation and amortization which are not directly attributable to discontinued operations. Continuing operations includes all personnel and facilities costs related to executive management, finance and accounting, human resources and other general corporate staff as well as all legal and other professional fees, insurance and other costs not directly attributable to the mobile marketing and advertising business or our other discontinued operations.

Total revenues
 
Year Ended
 
 
 
December 31,
 
 
 
2015
 
2014
 
$ Change
 
(Dollars in thousands)
Total revenues
$
49

 
$

  
$
49


Commercial real estate operations commenced in August 2015. Revenue from continuing operations for the year ended December 31, 2015 consists of our pro rata share of rental income from property acquired on September 17, 2015.

Operating expenses
 
Year ended
 
 
 
December 31,
 
 
 
2015
 
2014
 
$ Change
 
(Dollars in thousands)
General and administrative
4,790

 
5,800

  
$
(1,010
)
Depreciation and amortization
194

 
201

  
(7
)
Acquisition transaction and integration costs
84

 

  
84

Total operating expenses
$
5,068

 
$
6,001

  
$
(933
)
 
General and administrative, excluding depreciation
For the year ended December 31, 2015, general and administrative expense, excluding depreciation, decreased $1.0 million compared to the year ended December 31, 2014, due to:
$0.7 million decrease in personnel costs, resulting from January 2015 staff reductions, as well as staff reductions in connection with executing our transformation plan in August 2015;
$0.1 million decrease in professional fees, primarily from reduced use of contractors in 2015; and
$0.1 million decrease in taxes, insurance and other costs, in connection with executing our transformation plan in August 2015.
Depreciation and amortization
Depreciation and amortization expense for the years ended December 31, 2015 and 2014 relates primarily to general office computer equipment, furniture, computer software and leasehold improvements related to the New York City office and not

23


directly related to the mobile advertising and marketing business.
Depreciation and amortization related to real estate acquired on September 17, 2015 was not significant for the year ended December 31, 2015. Total depreciation and amortization for the year ended December 31, 2015 approximated total depreciation and amortization for the year ended December 31, 2014.
Acquisition transaction and integration costs
For the year ended December 31, 2015, acquisition transaction and integration costs includes cost related to the acquisition of real estate properties, such as inspection, appraisal, legal, title insurance and other fees.

Other expense, net  
 
Year ended
 
 
 
December 31,
 
 
 
2015
 
2014
 
$ Change
 
(Dollars in thousands)
Interest expense and Revolving Note fees
(10
)
 

 
(10
)
Total other income (expense), net
$
(10
)
 
$

  
$
(10
)
 
For the year ended December 31, 2015, interest expense consists of the undrawn amount fee related to our Revolving Note with Koala. See Note 9 - Revolving Note to our consolidated financial statements for more information.

Provision (benefit) for income taxes
No provision for income taxes was recorded in 2015 or 2014. Due to our history of operating losses, we have accumulated substantial net operating losses, which constitute the majority of our deferred tax assets. Because of our history of operating losses, we maintain full valuation allowances against our deferred tax assets and consequently are not recognizing any tax benefit related to our current pre-tax losses. If we achieve sustained profitability, subject to certain provisions of the U.S. federal tax laws that may limit our use of our accumulated losses, we will continue to evaluate whether we should record a valuation allowance, based on a more likely than not standard, which would result in immediate recognition of a tax benefit and we would begin recording income tax provisions based on our earnings and applicable statutory tax rates going forward. Due to our large net operating loss carryforwards, we do not expect to pay U.S. federal income taxes in the next several years.

Net Loss from discontinued operations
 
Year ended
 
 
 
December 31,
 
 
 
2015
 
2014
 
$ Change
 
(Dollars in thousands)
Net loss from discontinued operations
$
(1,593
)
 
$
(23,279
)
 
$
21,686


Results of operations for our mobile marketing and advertising business, which terminated in August 2015, are included in discontinued operations for all periods presented. Results from discontinued operations for the year ended December 31, 2015 also reflect residual charges related to operations discontinued in 2014 and prior years. Net loss from discontinued operations for the year ended December 31, 2014 also includes operating losses related to the U.S. and Canadian messaging businesses and UK carrier business. See Note 5 - Discontinued Operations to our consolidated financial statements for more information.

For the year ended December 31, 2015, the net loss from discontinued operations decreased $21.7 million compared to the year ended December 31, 2014. This decrease was primarily due to:

$8.4 million impairment charge in the fourth quarter of 2014;
$8.4 million decrease related to product development and network operations, which were substantially curtailed in the first quarter of 2015, resulting in lower expense;

24


$6.2 million decrease in direct third party expenses resulting from our exit from the mobile marketing and advertising business;
$3.7 million decrease in sales and marketing expense, resulting from lower 2015 marketing expenses, 2015 staff turnover, as well as staff reductions in connection with executing our transformation plan in August 2015;
$3.8 million decrease in depreciation and amortization expense following asset impairment and disposal of assets related to curtailment of data center operations in the first quarter of 2015;
$0.3 million reduction in general and administrative, other income and expense, primarily related to restructuring in the first quarter of 2015 and executing our transformation plan in August 2015
Favorable impact of a $1.1 million non-recurring 2014 charges relating to recognition of accumulated currency translation adjustments related to effective liquidation of UK and Canadian subsidiaries and international taxes;
State excise tax refund and gain from equipment sales of $0.6 million recognized in 2015; partially offset by:
$10.8 million lower revenue in 2015, resulting from our exit from the mobile marketing and advertising business.

Net loss
 
Year ended
 
 
 
December 31,
 
 
 
2015
 
2014
 
$ Change
 
(Dollars in thousands)
Net loss
$
(6,622
)
 
$
(29,280
)
 
$
22,658

For the year ended December 31, 2015, our net loss was $6.6 million, compared to net loss of $29.3 million for the year ended December 31, 2014. The $22.7 million decrease in net loss is primarily due to:
decreased loss from discontinued operations of $21.7 million; and
decreased loss from continuing operations of $0.9 million.

Liquidity and Capital Resources
General
Our principal needs for liquidity have been to fund operating losses, working capital requirements, capital expenditures, debt service, restructuring expenses, international activity, acquisitions and integration. Our principal sources of liquidity as of December 31, 2015 consisted of cash and cash equivalents of $1.2 million.

On August 7, 2015, we (as borrower) and Koala Holding LP (as lender), an affiliate of Mr. Carl C. Icahn, our controlling stockholder (“Koala”), entered into a revolving note (the “Revolving Note”). Pursuant to the Revolving Note, Koala made available to us a revolving loan facility of up to $10 million in aggregate principal amount. Borrowings under the Revolving Note will bear interest at a rate equal to the greater of the LIBOR rate plus 350 basis points, per annum, and 3.75%, per annum. The Revolving Note also includes a fee of 0.25%, per annum, on undrawn amounts and matures on the earliest of (i) December 31, 2017, (ii) the date on which any financing transaction, whether debt or equity, is consummated by us (or our successors and assigns) with net proceeds in an amount equal to or greater than $10 million, and (iii) at our option, a date selected by us that is earlier than December 31, 2017. Subject to the terms and conditions of the Revolving Note, we may repay all or any portion of the amounts outstanding under the Revolving Note at any time without premium or penalty, and any amounts so repaid will, until the maturity date, be available for re-borrowing. As collateral for the Revolving Note, we have pledged and granted to Koala a lien on our limited liability company interest in Voltari Real Estate Holding LLC. The full $10 million is available for borrowings under the Revolving Note at December 31, 2015 and as of the date of this Annual Report on Form 10-K. To the extent we are unable to replace or refinance the Revolving Note prior to its maturity, we may not have sufficient capital resources to repay any amounts borrowed thereunder. There can be no assurance that we will be able to replace or refinance the Revolving Note on commercially reasonable terms, if at all.

25


In August, 2015, we began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business and entered into the business of acquiring, financing and leasing commercial real properties. We expect that the acquisition of commercial real properties, the cost of operations and working capital requirements will be our principal need for liquidity in the future. Our cash flows may be affected by many factors including the economic environment, competitive conditions in the commercial real estate industry and the success of our transformation plan. We believe we will have adequate resources to fund our operations, capital expenditures and working capital needs for the next 12 months using borrowings available under the Revolving Note and our cash and cash equivalents on hand. We currently intend to leverage real properties that we may acquire, but cannot assure that we will be able to do so on commercially reasonable terms, if at all.

Our liquidity may be adversely affected if, and to the extent that, our remaining Series J preferred stock becomes redeemable. The Company believes that, if a redemption event were to occur, limited, if any, funds would be available for such redemption under the terms of the Series J preferred stock and applicable Delaware law.  As a result, in the event that a redemption event were to occur, the Company currently expects that it would be precluded, under the terms of the Series J preferred stock and applicable Delaware law, from making any material redemptions.

Our ability to achieve our business and cash flow plans is based on a number of assumptions which involve significant judgments and estimates of future performance, borrowing capacity and credit and equity finance availability, which cannot at all times be assured. Accordingly, we cannot assure that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements. If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall, such as modifying our business plan, pursuing additional financing to the extent available, pursuing and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce costs. We cannot assure that any of these actions would be successful, sufficient or available on favorable terms. Any inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could have a material adverse impact on our business and financial position.
  
Our ability to obtain any additional financing depends upon many factors, including our then existing level of indebtedness (if any) and restrictions in any debt facilities we may establish in the future, historical business performance, financial projections, prospects and creditworthiness and external economic conditions and general liquidity in the credit and capital markets. Any financing (or subsequent refinancing) could also be extended only at costs and require us to satisfy restrictive covenants, which could further limit or restrict our business and results of operations, or be dilutive to our stockholders.

Cash Flows
As of December 31, 2015 and 2014, we had cash and cash equivalents of $1.2 million and $6.3 million, respectively. The decrease of $5.1 million primarily reflects $6.0 million of cash used in operating activities, $3.3 million of cash used in investing activities, net and cash provided by financing activities of $4.3 million.

Net Cash Used in Operating Activities
For the year ended December 31, 2015, net cash of $6.0 million was used in operating activities. Operating activities from continuing operations used $5.0 million of cash, approximating our net loss from continuing operations of $5.0 million. The $0.3 million use of cash due to the change in our operating assets and liabilities was primarily driven by an increase in prepaid expenses and other current assets, resulting from annual insurance premiums paid in the fourth quarter of 2015. Operating activities from discontinued operations used $1.0 million of cash during the year ended December 31, 2015.

Net Cash Used in Investing Activities
For the year ended December 31, 2015, net cash of $3.3 million was used in investing activities, resulting from $3.6 million of cash used to acquire real estate investment property in Long Branch, NJ, offset by proceeds from the sale of computer and office equipment of approximately $0.3 million.

Net Cash Provided by (Used in) Financing Activities
For the year ended December 31, 2015, net cash of $4.3 million provided by financing activities consisted primarily of $5.3 million of net proceeds from our rights offering which was completed on March 30, 2015, partially offset by the $1.0 million redemption of Series J preferred stock. See Note 11 - Rights Offering to our consolidated financial statements for more information.

26



The March 30, 2015 acquisition of common stock by entities affiliated with Mr. Carl C. Icahn resulted in a change of control of the Company and as a result each holder of shares of Series J preferred stock had the right to require the Company to redeem all or a portion of such holder’s shares of Series J preferred stock. On April 13, 2015 we redeemed 29,316 shares of Series J preferred stock for $1.0 million in cash from holders not affiliated with Mr. Carl C. Icahn. See Note 12 - Redeemable Preferred Stock to our consolidated financial statements for more information.

Off-Balance Sheet Arrangements
As of December 31, 2015, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity and capital resources that are material to investors. Prior to the implementation of our transformation plan, we entered into contracts with mobile marketing and advertising customers which provided that we would indemnify such customers against certain intellectual property claims as well as other contractual matters. Until the expiration of such contractual indemnification provisions, we may indemnify our previous customers against certain copyright and patent infringement claims that may arise from them having used our software technology.

Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions and in certain cases the difference may be material.

The following critical accounting policies are those accounting policies that, in our view, are most important in the portrayal of our financial condition and results of operations. Our critical accounting policies and estimates include those involved in allocating cost of real estate investments, valuation of long-lived and intangible assets, provision for income taxes, and accounting for our redeemable preferred stock. In addition, critical accounting policies and estimates which pertain primarily to discontinued operations include recognition of revenue, software development costs and valuation of goodwill. Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Form 10-K provides additional information about these critical accounting policies, as well as our other significant accounting policies.

Real Estate Investments

Cost of acquiring real estate investments is allocated to tangible and intangible assets. The fair value of the tangible assets of an acquired property with an in-place operating lease will be determined by valuing the property as if it were vacant, and the “as-if-vacant” value will then be allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases will be determined by considering current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases will be recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company's estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease, including any below-market fixed-rate renewal options for below-market leases. We determine these fair values primarily by relying upon third-party appraisals conducted by independent appraisal firms.


27


Valuation of long-lived and intangible assets
We periodically evaluate events or changes in circumstances that indicate the carrying amount of our long-lived and intangible assets may not be recoverable or that the useful lives of the assets may no longer be appropriate. Factors which could trigger an impairment review or a change in the remaining useful life of our long-lived and intangible assets include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, based on an income and/or cost approach, and an impairment charge is recorded for the excess of carrying value over fair value. Any impairment losses relating to long-lived and intangible assets are recognized in the consolidated financial statements. For additional information, see Note 6 - Impairment Charges to our consolidated financial statements included elsewhere in this Form 10-K.

The process of assessing potential impairment of our long-lived and intangible assets is highly subjective and requires significant judgment. An estimate of future undiscounted cash flow can be affected by many assumptions, requiring that management make significant judgments in arriving at these estimates. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use to estimate future cash flows are consistent with our internal planning. Significant future changes in these estimates or their related assumptions could result in additional impairment charges related to individual assets or groups of these assets.

Provision (benefit) for income taxes
We are subject to federal and various state income taxes in the U.S., and to a lesser extent, income-based taxes in various foreign jurisdictions, including, but not limited to Canada. In 2012, we effected a restructuring of our workforce and other cost savings initiatives. As a part of this process we commenced the exit from our operations in India, the Asia Pacific region, France and the Netherlands. Deferred tax assets, related valuation allowances, current tax liabilities and deferred tax liabilities are determined separately by tax jurisdiction. In making these determinations, we calculate tax assets, related valuation allowances, current tax liabilities and deferred tax liabilities, and we assess temporary differences resulting from differing treatment of items for tax and accounting purposes. We recognize only tax positions that are “more likely than not” to be sustained based solely on their technical merits. Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgment that is subject to audit by tax authorities in the ordinary course of business.

At December 31, 2015, our gross deferred tax assets consisted primarily of domestic net operating losses and book to tax differences in tangible and intangible assets, as well as research and development credit carryforwards. As of December 31, 2015, we had U.S. federal and state net operating loss carryforwards of approximately $491.0 million and $39.0 million, respectively, which begin to expire at varying dates starting in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes. Because of our history of generating operating losses, we maintain full valuation allowances against these deferred tax assets and consequently do not recognize tax benefits for our current operating losses. If we determine it is more likely than not that all or a portion of the deferred tax assets will be realized, we will eliminate or reduce the corresponding valuation allowances which would result in immediate recognition of an associated tax benefit. Going forward, we will reassess the need for any remaining valuation allowances or the necessity to recognize additional valuation allowances. In the event we do eliminate all or a portion of the valuation allowances in the future, we will begin recording income tax provisions based on our earnings and applicable statutory tax rates from that time forward.

Redeemable preferred stock and common stock warrants
In October 2012, we issued 1,199,643 shares of Series J preferred stock and (after giving effect to the one-for-ten reverse stock split) warrants to purchase 1,014,982 shares of our common stock. Net proceeds from the rights offering of $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined with the assistance of a third party valuation specialist. Our Series J preferred stock contains certain redemption features which are outside of our control. Accordingly, our Series J preferred stock is classified as mezzanine equity and reported as Redeemable preferred stock on our consolidated balance sheet, net of issuance costs, at December 31, 2015. The difference between the carrying value of the Series J preferred stock and its liquidation value is being accreted over an anticipated redemption period of five years using the effective interest method. Holders of the Series J preferred stock are entitled

28


to an annual dividend of 13%, which is payable in-cash or in-kind, at the discretion of the Company, on a quarterly basis. Dividends declared on the Series J preferred stock and accretion associated with the Series J preferred stock reduce the amount of net earnings that are available to common stockholders and are presented as separate amounts on the consolidated statements of operations. The common stock warrants are recorded as Additional paid-in capital on our consolidated balance sheet at December 31, 2015.

Critical Accounting Policies and Estimates - Discontinued Operations

The following Critical Accounting Policies and Estimates pertain primarily to results of discontinued operations.

Revenue recognition

Our advertising revenues are derived principally from the sale of online advertisements. Advertising revenues on contracts are recognized as “impressions” (i.e., the number of times that an advertisement appears in web pages) are delivered, or as “clicks” (which are generated each time users on our websites click through our text-based advertisements to an advertiser's designated website) are provided to advertisers.

Our UK carrier customer contracts, also reflected in revenue from discontinued operations, primarily consist of a fixed monthly managed service fee to host the software platform solution. Certain arrangements also include minimum monthly fee provisions, monthly fees for providing additional managed services required by the customer and/or service level requirements related to the hosted solutions which often entail financial penalties for non-compliance. We account for the managed services revenue on a monthly basis as earned. Our UK carrier contract does not include the right to self-host.

Software development costs
Effective January 1, 2013, we began capitalizing certain software development costs associated with our Voltari-Connect platform and other software system projects, which include the costs to develop new software products or significant enhancements to existing software products, which are developed or obtained for internal use. Costs associated with preliminary project stage activities, training, maintenance and all post-implementation stage activities are expensed as incurred. We capitalize software development costs when application development begins, it is probable that the project will be completed and the software will be used as intended. These capitalized costs are included within Property and equipment, net, on our condensed consolidated balance sheets and amortized on a straight-line basis over the estimated useful life of the related asset, which is generally three years.

During the fourth quarter of 2014, previously capitalized internally developed software was taken out of service and the related costs are included in impairment charges.

Valuation of goodwill
We test for potential impairment annually, in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. Testing for impairment of goodwill involves estimating the fair value of the associated reporting unit and comparing it to its carrying value. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the carrying value of the goodwill in the reporting unit to its implied fair value. If the implied fair value of goodwill is less than the carrying amount of that goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. Any impairment losses relating to goodwill are recognized in the consolidated financial statements. For additional information, see Note 6 - Impairment Charges to our consolidated financial statements included elsewhere in this Form 10-K.

The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment. An estimate of fair value can be affected by many assumptions, requiring that management make significant judgments in arriving at these estimates, including the expected operational performance of our businesses in the future, market conditions and other factors. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use to estimate future cash flows are consistent with our internal planning.

Recent Accounting Pronouncements

29



Recently Adopted Accounting Pronouncements
In April 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-08, which amends FASB ASC Topic 205, Presentation of Financial Statements and FASB ASC Topic 360, Property, Plant, and Equipment. This standard amends the definition of a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance became effective on a prospective basis for annual periods beginning on or after December 15, 2014, and interim periods within those years. The Company adopted this standard beginning January 1, 2015.

Recent Accounting Pronouncements
In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2015-02 on our consolidated financial statements.
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to evaluate for each reporting period whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosure in certain circumstances. The new standard is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company expects to adopt this standard for our annual period ending December 31, 2016 and is currently evaluating the impact of the adoption of the new standard on our consolidated financial statements.
In May 2014, the FASB issued, and in August 2015 updated, ASU No. 2014-09, Revenue from Contracts with Customers. The guidance in this ASU supersedes nearly all existing revenue recognition guidance under U.S. GAAP and creates a single, principle-based revenue recognition framework that is codified in a new FASB ASC Topic 606. The core principle of this guidance is for the recognition of revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new revenue standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the transition method that will be elected and the potential effects of the adoption of the new standard on our consolidated financial statements.

Item 7A.
Qualitative and Quantitative Disclosures about Market Risk.
We are not required to provide qualitative and quantitative disclosures about market risk because we are a smaller reporting company.


30


Item 8.
Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Voltari Corporation
We have audited the accompanying consolidated balance sheets of Voltari Corporation (a Delaware corporation) and subsidiaries (collectively, the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficits, and cash flows for each of the two years in the period ended December 31, 2015. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Voltari Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Grant Thornton LLP

New York, NY
March 16, 2016



31


Voltari Corporation
Consolidated Balance Sheets
(in thousands, except share data)
 
 
December 31,
2015
 
December 31,
2014
Assets
 
 
 
Real estate investments, net
$
3,592

 
$

Cash and cash equivalents
1,180

 
6,256

Accounts receivable, net of allowance for doubtful accounts of $12 and $109 at December 31, 2015 and 2014, respectively
32

 
3,494

Prepaid expenses
856

 
1,533

Property and equipment, net
252

 
667

Other assets
92

 
380

Total assets
$
6,004

 
$
12,330

 
 
 
 
Liabilities, redeemable preferred stock and stockholders’ deficit
 
 
 
Accounts payable and accrued expenses
$
683

 
$
3,386

Accrued compensation
93

 
721

Deferred rent income
17

 

Revolving note
10

 

Deferred rent expense
29

 
29

Other liabilities
1,541

 
1,451

Total liabilities
2,373

 
5,587

 
 
 
 
Commitments and contingencies


 


 
 
 
 
Redeemable preferred stock, $0.001 par value; 1,170,327 and 1,199,643 shares issued and outstanding at December 31, 2015 and 2014, respectively. Redemption value: $44,292 and $39,950 at December 31, 2015 and 2014, respectively.
41,305

 
36,380

 
 
 
 
Stockholders’ deficit
 
 
 
Common stock, $0.001 par value; 25,000,000 and 625,000,000 shares authorized at December 31, 2015 and 2014, respectively; 8,994,814 and 4,763,358 shares issued and outstanding at December 31, 2015 and 2014, respectively
9

 
5

Additional paid-in capital
562,204

 
563,643

Accumulated deficit
(599,938
)
 
(593,316
)
Accumulated other comprehensive income
51

 
31

Total stockholders’ deficit
(37,674
)
 
(29,637
)
Total liabilities, redeemable preferred stock and stockholders’ deficit
$
6,004

 
$
12,330


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

32


Voltari Corporation
Consolidated Statements of Operations
(in thousands, except share data and per share amounts)
 
Year Ended December 31,
 
2015

2014
 
 
 
 
Revenue
$
49

 
$

 
 
 
 
Operating expenses
 
 
 
General and administrative
4,790

 
5,800

Depreciation and amortization
194

 
201

Acquisition and transaction related
84

 

Total operating expenses
5,068

 
6,001

Operating loss
(5,019
)
 
(6,001
)
Interest expense and Revolving Note fees
(10
)
 

Loss from continuing operations before income taxes
(5,029
)
 
(6,001
)
Benefit for income taxes

 

Net loss from continuing operations
(5,029
)
 
(6,001
)
Net loss from discontinued operations, net of taxes
(1,593
)
 
(23,279
)
Net loss
$
(6,622
)
 
$
(29,280
)
Accretion of redeemable preferred stock
(720
)
 
(611
)
Series J redeemable preferred stock dividends
(5,355
)
 
(4,797
)
Net loss attributable to common stockholders
$
(12,697
)
 
$
(34,688
)
 
 
 
 
Net loss per share attributable to common stockholders - basic and diluted:
 
 
 
Continuing operations
$
(1.40
)
 
$
(2.44
)
Discontinued operations
(0.20
)
 
(4.99
)
Total net loss per share attributable to common stockholders
$
(1.60
)
 
$
(7.43
)
 
 
 
 
Weighted-average common shares outstanding – basic and diluted
7,956,291

 
4,668,844


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

33


Voltari Corporation
Consolidated Statements of Comprehensive Loss
(in thousands)


 
Year Ended December 31,
 
2015

2014
Net loss
$
(6,622
)
 
$
(29,280
)
Other comprehensive income:
 
 
 
Reclassification adjustment for realization of cumulative translation adjustment included in Net loss from discontinued operations

 
759

Foreign currency translation adjustment
20

 
(123
)
Other comprehensive income
20

 
636

Comprehensive loss
$
(6,602
)
 
$
(28,644
)
The accompanying notes are an integral part of these consolidated financial statements.


34


Voltari Corporation
Consolidated Statements of Changes in Stockholders’ Deficit
(in thousands, except share data)


 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive Income (Loss)
 
 
 
Shares
 
Amount
 
 
 
 
Total
Balance as of December 31, 2013
4,698,108

 
$
5

 
$
568,714

 
$
(564,036
)
 
$
(605
)
 
4,078

Net loss

 

 

 
(29,280
)
 

 
(29,280
)
Other comprehensive income

 

 

 

 
636

 
636

Redeemable preferred stock dividends

 

 
(4,797
)
 

 

 
(4,797
)
Accretion of redeemable preferred stock

 

 
(611
)
 

 

 
(611
)
Restricted stock activity
65,250

 

 
(15
)
 

 

 
(15
)
Stock-based compensation expense

 

 
352

 

 

 
352

Balance as of December 31, 2014
4,763,358

 
5

 
563,643

 
(593,316
)
 
31

 
(29,637
)
Net loss

 

 

 
(6,622
)
 

 
(6,622
)
Sale of common stock, net of offering costs
4,300,000

 
4

 
4,551

 

 

 
4,555

Other comprehensive income

 

 

 

 
20

 
20

Redeemable preferred stock dividends

 

 
(5,355
)
 

 

 
(5,355
)
Accretion of redeemable preferred stock

 

 
(720
)
 

 

 
(720
)
Restricted stock forfeiture
(73,525
)
 

 

 

 

 

Common stock options and warrants exercised
4,981

 

 
22

 

 

 
22

Stock-based compensation expense

 

 
63

 

 

 
63

Balance as of December 31, 2015
8,994,814

 
$
9

 
$
562,204

 
$
(599,938
)
 
$
51

 
$
(37,674
)

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

35


Voltari Corporation
Consolidated Statements of Cash Flows
(in thousands)
 
 
Year Ended December 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net loss
$
(6,622
)
 
$
(29,280
)
Loss from discontinued operations
1,593

 
23,279

Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
194

 
201

Stock-based compensation expense
92

 
240

Non-cash interest expense
10

 

Other non-cash adjustments
10

 

Changes in operating assets and liabilities:
 
 
Prepaid expenses and other current assets
(366
)
 
(466
)
Accounts payable and accrued expenses
76

 
(178
)
Net cash used in operating activities - continuing operations
(5,013
)
 
(6,204
)
Net cash used in operating activities - discontinued operations
(1,034
)
 
(10,232
)
Net cash used in operating activities
(6,047
)
 
(16,436
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(3,629
)
 

Net cash used in investing activities - continuing operations
(3,629
)
 

Net cash provided by (used in) investing activities - discontinued operations
280

 
(2,019
)
Net cash used in investing activities
(3,349
)
 
(2,019
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from sale of common stock
5,755

 

Rights offering costs
(465
)
 
(521
)
Cash paid for tax withholdings on restricted stock

 
(15
)
Proceeds from exercise of common stock options
22

 

Redemption of Series J preferred stock
(1,012
)
 

Net cash provided by (used in) financing activities - continuing operations
4,300

 
(536
)
Effect of exchange rate changes on cash and cash equivalents
20

 
(123
)
Net decrease in cash and cash equivalents
(5,076
)
 
(19,114
)
Cash and cash equivalents at beginning of period
6,256

 
24,515

Cash reclassified to assets held for sale at beginning of period

 
855

Cash and cash equivalents at end of period
$
1,180

 
$
6,256

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

36

Voltari Corporation
Notes to Consolidated Financial Statements






1. Organization

Voltari Corporation (“Voltari” or the “Company”), a Delaware corporation, was incorporated in December, 2012 as a wholly-owned subsidiary of Motricity, Inc. (“Motricity”). Through a reorganization, Motricity became a wholly-owned subsidiary of Voltari in April, 2013. As of December 31, 2015 entities affiliated with Mr. Carl C. Icahn own approximately 97.9% of our Series J preferred stock and approximately 52.7% of our common stock.

The Company is in the business of acquiring, financing and leasing commercial real properties. The Company had previously been engaged in the business of providing mobile marketing and advertising solutions to brands, marketers and advertising agencies. In August 2015, we began implementing a transformation plan pursuant to which, among other things, we exited our mobile marketing and advertising business. We own one commercial real property in Long Branch, New Jersey, which we lease to JPMorgan Chase Bank, N.A. ("Chase") pursuant to a triple net lease. All of our revenue is derived from the rental income we receive under the Long Branch Lease.

2. Summary of Significant Accounting Policies

Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

Reclassifications
In August, 2015 we began implementing a transformation plan pursuant to which, among other things, we exited from our mobile marketing and advertising business. On May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. Further, on September 1, 2014, we completed the sale of our wireless carrier business in the United Kingdom ("UK"). As a result, these businesses are reported as discontinued operations in the consolidated financial statements for all periods presented. See Note 4 - Discontinued Operations for further information.

Use of Estimates
The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates include those involved in allocated cost of real estate investments, valuation of long-lived and intangible assets, provision for income taxes, and accounting for our redeemable preferred stock. In addition, significant estimates which pertain primarily to discontinued operations include recognition of revenue, software development costs and valuation of goodwill. Actual results could differ from those estimates.

Real Estate Investments
Investments in real estate are recorded at cost. Improvements and replacements will be capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. The fair value of the tangible assets of an acquired property with an in-place operating lease will be determined by valuing the property as if it were vacant, and the “as-if-vacant” value will then be allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases will be determined by considering current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases will be recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company's estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease, including any below-market fixed-rate renewal options for below-market leases.

Depreciation will be computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests. Capitalized above-market lease values will be amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values will be amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods. The value of in-place

37

Voltari Corporation
Notes to Consolidated Financial Statements





leases, exclusive of the value of above-market and below-market in-place leases, will be amortized to expense over the remaining periods of the respective leases.

Revenue Recognition
The Company’s revenues are derived primarily from rental income, include rents due in accordance with the lease terms, reported on a straight-line basis over the initial term of the lease.

Advertising revenues, related to discontinued operations, are derived principally from the sale of online advertisements. Advertising revenues on contracts are recognized as “impressions” (i.e., the number of times that an advertisement appears in web pages) are delivered, or as “clicks” (which are generated each time users on our websites click through our advertisements to an advertiser's designated website) are provided to advertisers.

Cash and Cash Equivalents
We consider all highly liquid investments with remaining maturities of three months or less at the date of purchase to be cash and cash equivalents. Other assets includes restricted short-term investments of $0.1 million and $0.2 million at December 31, 2015 and 2014, respectively, comprised of cash set aside to secure certain leases.

Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the consolidated balance sheet. Accounts receivable consist of amounts billed and currently due from customers and revenues earned but not yet billed. We evaluate the collectibility of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures which incorporate historical write-offs and current economic conditions. Although, in circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded to reduce the related accounts receivable to an amount we believe is collectible. Delinquent accounts are written off when they are determined to be uncollectible.

Long-Lived Assets
Long-lived assets include assets such as property and equipment and intangible assets, other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable from the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Indicators of impairment include significant under-performance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected net undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. See Note 6 - Impairment Charges for more information.

Property and equipment are recorded at historical cost less accumulated depreciation, unless impaired. Depreciation is charged to operations over the estimated useful lives of the assets using the straight-line method or a variable method reflecting the pattern in which the economic benefits are anticipated to be utilized. Upon retirement or sale, the historical cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Expenditures for repairs and maintenance are charged to expense as incurred.

All costs related to the development of internal-use software other than those incurred during the application development stage are expensed, including costs for minor upgrades and enhancements when there is no reasonable cost-effective way to separate these costs from maintenance activities. Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software, which is generally three years.

Identifiable intangible assets are recorded at cost or, when acquired as part of a business acquisition, estimated fair value. The recorded amount is amortized to expense over the estimated useful life of the asset using the straight-line method or a variable method reflecting the pattern in which the economic benefits are anticipated to be realized. At each balance sheet date, the unamortized costs for all intangible assets are reviewed by management and reduced to net realizable value when necessary.

38

Voltari Corporation
Notes to Consolidated Financial Statements





  
Goodwill
Goodwill represents the excess of the purchase price of an acquired enterprise or assets over the fair value of the identifiable net assets acquired. We test goodwill for impairment in the fourth quarter of each year, and whenever events or changes in circumstances arise during the year that indicate the carrying amount of goodwill may not be recoverable. In evaluating whether an impairment of goodwill exists, we first compare the estimated fair value of a reporting unit to its carrying value, including goodwill. If the estimated fair value is lower than the carrying value, then a more detailed assessment is performed comparing the carrying value of the goodwill in the reporting unit to its implied fair value. If the implied fair value of goodwill is less than the carrying amount of that goodwill, then an impairment charge is recognized to reduce the carrying value of goodwill by the difference. See Note 6 - Impairment Charges for more information.

Comprehensive Loss
Comprehensive loss includes net loss as currently reported under U.S. GAAP and other comprehensive income. Other comprehensive loss considers the effects of additional economic events, such as foreign currency translation adjustments, that are not required to be recorded in determining net loss, but rather are reported as a separate component of stockholders’ deficit. Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.

Advertising Costs
The costs of advertising are either expensed as incurred or fully expensed the first time the advertising takes place. Advertising expenses, included in discontinued operations, totaled $0.1 million for each of the years ended December 31, 2015 and 2014, respectively.

Software Development Costs
Our software development expenses consist primarily of salaries and fees paid to outside vendors. Costs incurred in connection with research activities are charged to operating expenses as incurred and are included within discontinued operations in the consolidated statements of operations. Research and development expenses for the years ended December 31, 2015 and 2014 were $0.2 million and $2.6 million, respectively.

Effective January 1, 2013, we began capitalizing certain software development costs associated with our Voltari-Connect platform and other software system projects, which include the costs to develop new software products or significant enhancements to existing software products, which are developed or obtained for internal use. Costs associated with preliminary project stage activities, training, maintenance and all post-implementation stage activities are expensed as incurred. We capitalize software development costs when application development begins, it is probable that the project will be completed and the software will be used as intended. In the fourth quarter of 2014 we recognized an impairment charge, included in discontinued operations, of $3.8 million relating to capitalized software development costs. See Note 6 - Impairment Charges for more information.

Stock-Based Compensation
We measure and recognize stock-based compensation expense using a fair value-based method for all share-based awards made to employees and nonemployee directors, including grants of stock options and other stock-based awards. We estimate the fair value of share-based awards, including stock options, using the Black-Scholes option-pricing model for awards with service-based conditions and the Monte Carlo Simulation pricing model for option awards with market-based conditions. The application of this standard requires significant judgment and the use of estimates, particularly with regards to assumptions such as stock price volatility, expected option lives and risk-free interest rate, all of which are utilized to value equity-based compensation. We recognize stock compensation expense, net of estimated forfeitures, using a straight line method over the requisite service period of the individual grants, which generally equals the vesting period.

Income Taxes
We utilize the balance sheet method of accounting for income taxes. Accordingly, we are required to estimate our income taxes in each of the jurisdictions in which we operate as part of the process of preparing our consolidated financial statements. This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. Due to the evolving nature and complexity of tax rules combined with the number of

39

Voltari Corporation
Notes to Consolidated Financial Statements





jurisdictions in which we operate, it is possible that our estimates of our tax liability could change in the future, which may result in additional tax liabilities and adversely affect our results of operations, financial condition and cash flows.

We follow the authoritative accounting guidance prescribing a threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance defines the level of assurance that a tax position must meet in order to be recognized in the financial statements and also provides for de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. The guidance utilizes a two-step approach for evaluating uncertain tax positions. Step one, recognition, requires a company to determine if the weight of available evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. If a tax position is not considered “more likely than not” to be sustained, no benefits of the position are recognized. Step two, measurement, is based on the largest amount of benefit which is more likely than not to be realized on effective settlement.

Net Loss Per Share Attributable to Common Stockholders
Basic and diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Our net loss attributable to common stockholders was not allocated to preferred stock using the two-class method, as the preferred stock does not have a contractual obligation to share in the net loss attributable to common stockholders.

Our potentially dilutive shares, which include outstanding common stock options, restricted stock, redeemable preferred stock and common stock warrants, have not been included in the computation of diluted net loss per share attributable to common stockholders for all periods presented, as the results would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. See Note 15 - Commons Stock and Net Loss Per Share Attributable to Common Stockholders.

Operating Segment
Effective August, 2015, we currently operate and manage our business from continuing operations as a single segment, that of acquiring, financing and leasing commercial real estate properties. For the year ended December 31, 2015 one U.S. customer comprised all revenue from continuing operations.

Fair Value of Financial Instruments
As of December 31, 2015 and 2014, we had cash and cash equivalents of $1.2 million and $6.3 million, respectively. The carrying amount of certain financial instruments, including accounts receivable, accounts payable and accrued expenses, approximates fair value due to their short maturities. There were no transfers between levels in the fair value hierarchy during the years ended December 31, 2015 or 2014.

Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, to the extent balances exceed limits that are insured by the Federal Deposit Insurance Corporation, and accounts receivable.

Foreign Currency - Discontinued Operations
The functional currencies of our international subsidiaries are the local currencies. We translate the financial statements of our international subsidiaries to U.S. dollars using end-of-period exchange rates for assets and liabilities and average currency exchange rates for revenues and expenses. Translation adjustments resulting from this process are included in Other comprehensive income and are reflected as a separate component of stockholders’ equity. Realized and unrealized transaction gains and losses are included in Other income (expense), net in the period in which they occur, except on intercompany balances considered to be long-term, and have not been significant for any periods presented. Transaction gains and losses on intercompany balances considered to be long-term are recorded in Other comprehensive income.

Recent Accounting Pronouncements
In April 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-08, which amends FASB ASC Topic 205, Presentation of Financial Statements and FASB ASC Topic 360, Property, Plant, and Equipment. This standard amends the

40

Voltari Corporation
Notes to Consolidated Financial Statements





definition of a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance became effective on a prospective basis for annual periods beginning on or after December 15, 2014, and interim periods within those years. The Company adopted this standard beginning January 1, 2015.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2015-02 to have an impact on our consolidated financial statements.
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to evaluate for each reporting period whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosure in certain circumstances. The new standard is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company expects to adopt this standard for our annual period ending December 31, 2016 and does not expect the adoption of the new standard to have an impact on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The guidance in this ASU supersedes nearly all existing revenue recognition guidance under U.S. GAAP and creates a single, principle-based revenue recognition framework that is codified in a new FASB ASC Topic 606. The core principle of this guidance is for the recognition of revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new revenue standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new standard allows for either full retrospective or modified retrospective adoption. The Company is currently evaluating the transition method that will be elected and the potential effects of the adoption of the new standard on our consolidated financial statements.
3. Real Estate Investments
On September 17, 2015, we, through our wholly owned subsidiary, Voltari Real Estate Holding LLC ("Buyer"), completed the acquisition of a real estate parcel in Long Branch, New Jersey from 160 Brighton Acquisition, LLC (“Seller”) pursuant to the terms of an Agreement for Sale and Purchase, dated August 7, 2015, between Buyer and Seller, for a purchase price of approximately $3.63 million.

The property is subject to a triple net lease with Chase, the original term of which expires in June, 2020 (with two, five-year renewal options), pursuant to which Chase is responsible for the payment of basic rent as well as the payment of real estate taxes, maintenance costs, utilities, tenant's insurance and other property related costs. Average annual rental income for the property over the remaining term of the original lease is approximately $203,000. Acquisition-related costs totaled $0.1 million and have been recognized as expense for the year ended December 31, 2015. Estimated annual lease intangible amortization expense is approximately $0.1 million for each of the years ending December 31, 2016 through December 31, 2020.


41


Information related to major categories of Real estate investments, net, is as follows (dollars in thousands):
 
Useful life
 
As of
 
 
December 31, 2015
Land
 
 
$
1,454

Building, fixtures and improvements
10 - 40 yrs.
 
1,780

      Total tangible assets
 
 
3,234

      Total acquired intangibles - in-place leases
57 mos.
 
395

Total Real estate investments
 
 
3,629

Less: accumulated depreciation and amortization
 
 
(37
)
Real estate investments, net
 
 
$
3,592


The following table presents future minimum base rental receipts due to us over the next five years (in thousands):

Year Ending December 31,
 
2016
$
203

2017
203

2018
203

2019
203

2020
102

Total
$
914


4. Property and Equipment, net

Information related to our major categories of our property and equipment, net, is as follows (dollars in thousands):
 
Useful Life
 
As of December 31,
 
(in years)
 
2015
 
2014
Capitalized software
3
 
$
331

 
$
51,682

Computer software and equipment
3-5
 
111

 
19,532

Leasehold improvements
4-10
 
214

 
5,569

Equipment, furniture and fixtures
7
 
129

 
763

Total property and equipment
 
 
785

 
77,546

Less: Accumulated depreciation and amortization
 
 
(533
)
 
(41,849
)
Less: Accumulated impairments
 
 

 
(35,030
)
Property and equipment, net
 
 
$
252

 
$
667


There was no capitalized interest associated with property and equipment for the years ended December 31, 2015 and 2014.

We determined our property and equipment, including capitalized software, was impaired in the fourth quarter of 2014, primarily due to planned termination of our Seattle datacenter operations and changes in the use of those assets, consistent with efforts to reduce operating costs. The impairment charge associated with property and equipment for the year ended December 31, 2014, included in discontinued operations, was $3.9 million, including $3.8 million related to capitalized software. We capitalized $2.3 million of software development costs in 2014. See Note 6 - Impairment Charges for more information.




42


5. Discontinued Operations

In August, 2015 we began implementing a transformation plan pursuant to which, among other things, we exited from our mobile marketing and advertising business. On May 30, 2014, we completed the sale of our U.S. and Canadian messaging business. On September 1, 2014, we completed the sale of our UK carrier business. The operations related to the mobile marketing and advertising business, the U.S. and Canadian messaging business as well as our UK carrier business are reported as discontinued operations in the consolidated financial statements for all periods presented.
Discontinued operations on the consolidated statement of operations are as follows (in thousands):

 
Year Ended December 31, 2015
 
Mobile Marketing & Advertising
 
U.S. Messaging & Other
 
Total
Revenue
$
3,035

 
$

 
$
3,035

Operating expenses
4,523

 
137

 
4,660

Depreciation and amortization
150

 

 
150

Operating loss
$
(1,638
)
 
$
(137
)
 
$
(1,775
)
Gain on sale of equipment
182

 

 
182

Other income (expense)
1

 
(1
)
 

Pre-tax loss
(1,455
)
 
(138
)
 
(1,593
)
Provision for income taxes


 


 

Net loss from discontinued operations
$
(1,455
)
 
$
(138
)
 
$
(1,593
)


 
Year Ended December 31, 2014
 
Mobile Marketing & Advertising
 
U.S. Messaging & Other
 
Canadian Messaging & Gen5
 
UK Carrier
 
Total
Revenue
$
12,240

 
$
372

 
$
451

 
$
793

 
$
13,856

Operating expenses
21,970

 
758

 
504

 
567

 
23,799

Depreciation and amortization
3,965

 

 
34

 

 
3,999

Impairment charges
8,406

 

 

 

 
8,406

Operating income (loss)
$
(22,101
)
 
$
(386
)
 
$
(87
)
 
$
226

 
$
(22,348
)
Gain on sale

 
74

 
21

 
163

 
258

Other income (expense)
16

 
(74
)
 
1

 
4

 
(53
)
Loss on realization of cumulative translation adjustment reclassified out of Accumulated Other Comprehensive Loss

 

 
(229
)
 
(530
)
 
(759
)
Pre-tax loss
(22,085
)
 
(386
)
 
(294
)
 
(137
)
 
(22,902
)
Provision for income taxes

 
377

 

 

 
377

Net loss from discontinued operations
$
(22,085
)
 
$
(763
)
 
$
(294
)
 
$
(137
)
 
$
(23,279
)

As of December 31, 2014, we had substantially liquidated all assets and liabilities associated with our subsidiaries in Canada and the UK.

43



6. Impairment Charges

As a result of termination of our Seattle datacenter operations in the first quarter of 2015 and planned changes in the use of assets consistent with efforts to reduce operating costs, we determined our property and equipment, including capitalized software, as well as intangible assets, were impaired in the fourth quarter of 2014. Certain capitalized software and other long-lived assets classified as property and equipment, net, are no longer used in our operations and carrying value of those assets exceeds the expected net sales proceeds. We have consequently recognized impairment charges of $2.0 million related to intangible assets and $3.9 million in 2014, including $3.8 million related to capitalized software costs.
As a result of continuing operating losses, a sustained decline in our stock price, a discounted cash flow analysis and market value analysis, we determined there was not sufficient value to support the carrying value of the Company's goodwill. Consequently, we recorded a $2.4 million goodwill impairment charge in the fourth quarter of 2014.

The following table outlines our impairment charges for 2014, which are included in discontinued operations:
Goodwill
$
2,416

Intangible assets
2,041

Property and equipment
3,949

 Total impairment charges
$
8,406


7. Restructuring

On August 6, 2015, we committed to and began implementing a transformation plan pursuant to which, among other things, we exited the mobile marketing and advertising business and entered into the business of acquiring, financing and leasing commercial real estate properties.
In connection with the implementation of our transformation plan, we could incur total costs ranging from $0.4 million to $1.2 million. Included in this estimate are severance and other workforce reduction costs of approximately $0.3 million and costs associated with our exit from the mobile marketing and advertising business, consisting primarily of lease termination and other costs ranging from approximately $0.1 million to $0.9 million in connection with exiting our office space in New York, Chicago and Los Angeles, as well as potential non-cash impairment charges of $0.2 million, relating primarily to our leasehold improvements and furniture and fixtures in our New York office. Restructuring costs related to our exit from the mobile marketing and advertising business of approximately $0.1 million have been incurred during the year ended December 31, 2015 and are included in net loss from discontinued operations.

8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (dollars in thousands):

 
As of December 31,
 
2015
 
2014
Accounts payable
$
209

 
$
1,663

Accrued third-party costs

 
1,159

Accrued taxes, not related to income
367

 
526

Other accrued expenses
107

 
38

 
$
683

 
$
3,386




44

Voltari Corporation
Notes to Consolidated Financial Statements





9. Revolving Note

On August 7, 2015, we (as borrower) and Koala Holding LP (as lender), an affiliate of Carl C. Icahn, our controlling stockholder (“Koala”), entered into a revolving note (the “Revolving Note”). Pursuant to the Revolving Note, Koala made available to us a revolving loan facility of up to $10 million in aggregate principal amount. Borrowings under the Revolving Note will bear interest at a rate equal to the greater of the LIBOR rate plus 350 basis points, per annum, and 3.75%, per annum. The Revolving Note also includes a fee of 0.25%, per annum, on undrawn amounts. Principal, interest and the undrawn amount fee become due on the earliest of (i) December 31, 2017, (ii) the date on which any financing transaction, whether debt or equity, is consummated by us (or our successors and assigns) with net proceeds in an amount equal to or greater than $10 million, and (iii) at our option, a date selected by us that is earlier than December 31, 2017. Subject to the terms and conditions of the Revolving Note, we may repay all or any portion of the amounts outstanding under the Revolving Note at any time without premium or penalty, and any amounts so repaid will, until the maturity date, be available for re-borrowing. As collateral for the Revolving Note, we have pledged and granted to Koala a lien on our limited liability company interest in Voltari Real Estate Holding LLC. Only the undrawn amounts fee was outstanding under terms of the Revolving Note at December 31, 2015.
10. Commitments and Contingencies

Operating Leases
We lease office space under various non-cancellable operating lease agreements. Rent expense for non-cancellable operating leases with scheduled rent increases and landlord incentives is recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date.
Estimated future minimum net rentals payable under these agreements at December 31, 2015 are as follows (in thousands):
Year Ending December 31,
 
2016
$
302

2017
286

2018
266

Total
$
854

The table was prepared assuming the maximum commitments currently outstanding, but such commitments could decrease based on termination negotiations. Minimum net rentals payable under non-cancellable operating lease agreements are presented net of tenant allowances, if any.

Rental expense under operating lease agreements included in continuing operations for each of the years ended December 31, 2015 and 2014 was $0.3 million.

Real Property Acquisition
On December 3, 2015 we entered into a purchase and sale agreement with Flanders Holding LLC, a Texas limited liability company (the “Seller”) to acquire all of the Seller’s right, title and interest in a real estate parcel located in Flanders, New York for approximately $2.8 million.

The property is subject to a lease with 7-Eleven, Inc. (“7-Eleven”), the original term (the “Original Term”) of which expires in December 2029 (with four, five-year renewal options (the “Renewal Term,” and together with the Original Term, the “Term”)). During the Term, 7-Eleven is responsible for the payment of basic rent, as well as the payment of, subject to certain exceptions, real estate taxes, utilities, tenant’s insurance and other property related costs. The landlord is responsible for certain maintenance and repair costs. The average annual rental income for the property over the remaining Original Term is approximately $161,000.

The Purchase Agreement contains customary representations, warranties and covenants by the parties and the closing of the purchase is subject to customary conditions precedent, including a due diligence period which has not concluded. The Company makes no assurances that the conditions will be satisfied or that the purchase will be consummated in a timely manner, if at all.

Other Contractual Arrangements

45

Voltari Corporation
Notes to Consolidated Financial Statements





We have entered into several agreements with various vendors who provide additional operational support and services to the Company. The arrangements are primarily of a duration of twelve months or less or cancellable with short-term notice. We have no material contractual arrangements beyond 2016.

Litigation
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows. See Note 18 - Legal Proceedings for details regarding outstanding litigation.

11. Rights Offering

On February 27, 2015, we commenced a rights offering of up to an aggregate of 4,300,000 shares of our common stock. Under the terms of the rights offering, we distributed to stockholders of record at the close of business on February 13, 2015 transferable subscription rights to purchase 0.9027 shares of common stock for every share of common stock owned on such date.

The rights offering was fully subscribed and closed on March 30, 2015. We received approximately $4.6 million in net proceeds from the rights offering, including approximately 96% from entities affiliated with Mr. Carl C. Icahn. Prepaid expenses and other current assets at December 31, 2014 included costs related to the rights offering of $0.7 million, which have been charged against the proceeds of the offering in 2015.

Following the completion of the rights offering on March 30, 2015, entities affiliated with Mr. Carl C. Icahn, the Company’s largest stockholder, became the owner of approximately 52.3% of our common stock. Entities affiliated with Mr. Carl C. Icahn also own warrants to purchase an additional 9.7% of our common stock, which warrants are currently unexercisable by Mr. Carl C. Icahn and such affiliated entities.

12. Redeemable Preferred Stock

Upon successful completion of our rights offering in October 2012, we issued 1,199,643 shares of Series J preferred stock and warrants to acquire 1,014,982 common shares in exchange for approximately $30 million in cash proceeds. Net proceeds from the rights offering of approximately $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined by management with the assistance of a third party valuation specialist. The portion of the net proceeds from the rights offering attributable to the Series J preferred stock was determined to be approximately $26.4 million and is included in Redeemable preferred stock on our consolidated balance sheets at December 31, 2015 and 2014.

Our Series J preferred stock contains certain redemption features and is classified as mezzanine equity at December 31, 2015 and 2014 since the shares are (i) redeemable at the option of the holder upon the occurrence of certain events and (ii) have conditions for redemption which are not solely within our control. Our Series J preferred stock is redeemable at the option of the holder if the Company undergoes a change in control, which includes a person becoming a beneficial owner of securities representing at least 50% of the voting power of our company, a sale of substantially all of our assets, and certain business combinations and mergers which cause a change in 20% or more of the voting power of our company, and if we experience an ownership change (within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended), which results in a substantial limitation on our ability to use our net operating losses and related tax benefits. In the event that a redemption event were to occur, currently the Company would be precluded, under the terms of the Series J preferred stock and applicable Delaware law, from making any material redemptions.
 
The difference between the carrying value of the Series J preferred stock and its liquidation value is being accreted over an anticipated redemption period of 5 years using the effective interest method. The shares of Series J preferred stock have limited voting rights and are not convertible into shares of our common stock or any other series or class of our capital stock.

Holders of the Series J preferred stock are entitled to an annual dividend of 13%, which is payable in-cash or in-kind at our discretion, on a quarterly basis. To date, we have elected to pay all quarterly dividend payments on our Series J preferred stock, in the cumulative amount of $13.6 million, in-kind rather than in-cash. Accordingly, we have increased the carrying value of our

46

Voltari Corporation
Notes to Consolidated Financial Statements





redeemable preferred stock for the amount of the paid-in-kind dividend payments made on each January 1, April 1, July 1, and October 1 since issuance. Dividends on the Series J preferred stock and the accretion increase the amount of net loss that is attributable to common stockholders and are presented as separate amounts on the consolidated statements of operations.

Our Series J preferred stock has a preference upon dissolution, liquidation or winding up of the Company in respect of assets available for distribution to stockholders. The liquidation preference of the Series J preferred stock is initially $25 per share. If the dividend on the Series J preferred stock is paid in-kind, which has been the case to date, the liquidation preference is adjusted and increased quarterly (i) until October 11, 2017, by an amount equal to 3.5% of the liquidation preference per share, as in effect at such time and (ii) thereafter by an amount equal to 3.5% of the liquidation preference per share, as in effect at such time. The quarterly accretion will continue until the shares are redeemed, or until the Company's affairs are liquidated, dissolved or wound-up.

As of December 31, 2015, our Series J preferred stock has an aggregate redemption value of approximately $44.3 million, including paid-in-kind dividends of $13.6 million and accrued dividends of $1.4 million which are included within Other liabilities on our consolidated balance sheet. We recorded accretion associated with our Series J preferred stock of $0.7 million and $0.6 million for the years ended December 31, 2015 and 2014, respectively.

In connection with the closing of our rights offering on March 30, 2015 (See Note 11 - Rights Offering), entities affiliated with Mr. Carl C. Icahn, our largest shareholder, became the owner of approximately 52.3% of our common stock, which resulted in a change of control of the Company. This constituted a redemption event pursuant to the terms and conditions of the Series J preferred stock, and as a result each holder of shares of Series J preferred stock had the right to require the Company to redeem all or a portion of such holder’s shares of Series J preferred stock. Entities affiliated with Mr. Carl C. Icahn waived their option to redeem Series J preferred stock in connection with the change in control resulting from the completion of the rights offering that closed on March 30, 2015. On April 13, 2015 we redeemed 29,316 shares of Series J preferred stock for approximately $1.0 million in cash from holders not affiliated with Mr. Carl C. Icahn. Following the April 13, 2015 redemption of Series J preferred stock, entities affiliated with Mr. Carl C. Icahn became the owner of approximately 97.9% of our Series J preferred stock.


13. Stock Options, Restricted Stock and Warrants

Overview
Pursuant to the 2010 Long-Term Incentive Plan (“2010 LTIP”), we may grant equity awards up to an aggregate of 636,562 shares under the 2010 LTIP. Awards granted under the 2010 LTIP may include incentive stock options or nonqualified stock options, stock appreciation rights, restricted stock and other stock-based or cash-based awards. Option terms may not exceed 10 years and the exercise price cannot be less than 100% of the estimated fair market value per share of our common stock on the grant date. The maximum number of shares subject to any performance award granted to any participant during any fiscal year shall be 26,666 shares. The maximum cash payment made under a performance award granted to any participant with respect to any fiscal year shall be $5.4 million.

Stock Options
Stock-based compensation expense associated with stock options was less than $0.1 million for each of the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, there was less than $0.1 million of total unrecognized stock-based compensation costs, net of estimated forfeitures, related to unvested options that are expected to be recognized over a weighted-average period of 0.8 years.

The following table summarizes all stock option activity for the year ended December 31, 2015:

47


Stock Options
Shares
 
Weighted-Average Exercise Price Per Share
 
Remaining Average Contractual Term (Years)
 
Aggregate Intrinsic Value
Outstanding, December 31, 2014
250,139

 
$
6.39

 
4.38
 
$

Exercised
(4,957
)
 
$
4.44

 
 
 
 
Forfeited
(204,032
)
 
$
6.10

 
 
 
 
Outstanding, December 31, 2015
41,150

 
$
7.85

 
7.81
 
$

 
 
 
 
 
 
 
 
Exercisable at December 31, 2015
5,681

 
$
32.19

 
6.83
 
$

Vested and expected to vest at December 31, 2015
11,525

 
$
17.80

 
7.49
 
$


Stock option awards will vest based upon a combination of employee service and the achievement of certain specified market conditions as follows: (i) twenty-five percent (25%) of the shares subject to the option will vest in four (4) equal tranches on each anniversary of the vesting commencement date (i.e., 6.25%); and (ii) the remaining seventy-five percent (75%) of the shares subject to the option will vest on the third (3rd) anniversary of the applicable vesting commencement date, subject to the achievement of 90-day period common stock fair value targets ranging from $7.00 to $14.00 per share.

In determining the compensation cost of stock options awards, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model for awards with service-based conditions and the Monte Carlo Simulation pricing model for awards with market-based conditions. No options were granted in 2015. For options granted in 2014, we estimated the expected term of 6 years based on the historical exercise behavior of our employees. We calculated expected volatility for stock options of 58% using historical volatility for a peer group of companies together with the closing prices of our publicly-traded stock. The risk-free interest rate of 1.9%for the expected terms of the stock options is based on the U.S. Treasury constant maturities in effect at the time of grant. We have not paid and do not expect to pay dividends on our common stock. Consequently, we use an expected dividend yield of zero.

Restricted Stock Awards
Stock-based compensation expense associated with restricted stock awards was $0.1 million and $0.3 million for the years ended December 31, 2015 and 2014, respectively.

The following table summarizes all restricted stock award activity for the year ended December 31, 2015:
Restricted Stock Awards
Shares
 
Weighted Average Grant Date Fair Value
Unvested at December 31, 2014
73,525

 
$
1.70

Forfeited
(73,525
)
 
$
1.70

Unvested at December 31, 2015

 
$

 
 
 
 

In August 2014, we granted a total of 73,525 restricted stock awards to our non-employee directors in connection with their service to the Company. On August 20, 2015, each member of the Board of Directors of the Company elected to forfeit 14,705 shares of restricted common stock of the Company (in aggregate 73,525 shares), constituting all of the shares awarded to each such director in August 2014 in connection with service as a director of the Company.

Warrants

We issued warrants to purchase common shares in connection with the closing of our 2012 rights offering. Ten (10) warrants must be exercised to purchase one (1) share of common stock, at a price of $6.50 per common share. As of December 31, 2015, there are 10,149,584 warrants outstanding, and the aggregate number of shares of common stock that may be purchased upon exercise of the outstanding warrants is 1,014,958 shares of common stock at an exercise price of $6.50 per whole share. The warrants expire October 11, 2017.


48


Net proceeds from the 2012 rights offering of approximately $27.8 million were allocated between Series J preferred stock and common stock warrants based on their estimated relative fair market values at the date of issuance as determined with the assistance of a third party valuation specialist. The portion of the net proceeds from the rights offering attributable to the common stock warrants was determined to be approximately $1.3 million and is recorded in Additional paid-in capital on our consolidated balance sheets at December 31, 2015 and 2014.

14. Income Taxes

Substantially all pre-tax loss from continuing operations is derived from the U.S. No tax expense was recorded for the years ended December 31, 2015 and 2014. We maintain a full valuation allowance against our net deferred tax assets, which precludes us from recognizing a tax benefit for our current operating losses. Our historical lack of profitability is a key factor in concluding that there is insufficient evidence to support the realizability of our deferred tax assets.

Significant components of our deferred tax assets and liabilities consist of the following as of December 31 (in thousands):
 
Year Ended December 31,
 
2015
 
2014
Domestic net operating loss carryforwards
$
169,278

 
$
142,820

Amortization of intangible assets

 
23,785

Foreign net operating loss carryforwards
8,680

 
9,120

Research and development credits
5,436

 
5,436

Other
2,775

 
5,806

Deferred tax assets
186,169

 
186,967

Valuation allowance
(186,169
)
 
(186,967
)
Net deferred tax assets
$

 
$


As of December 31, 2015, the Company provided a full valuation allowance against its gross deferred tax assets because realization of these benefits could not be reasonably assured. The $0.8 million decrease in the valuation allowance for the period December 31, 2014 to December 31, 2015 was related to net operating losses generated during the current year, as well as the write off of state tax attributes.

We have research and development credit carryforwards of $5.4 million at December 31, 2015, that will begin to expire in 2021.

As of December 31, 2015, the Company had federal and state net operating loss carryforwards of $491.0 million and $39.0 million, respectively. These net operating loss carryforwards begin to expire in 2019 for U.S. federal income tax purposes and in the current year for state income tax purposes. The ultimate availability of the federal and state net operating loss carryforwards to offset future income may be subject to limitation under the rules regarding changes in stock ownership as determined by the Internal Revenue Code.

The Company has determined that there are no unrecognized tax benefits as of December 31, 2015 and 2014. Historically, the Company has not incurred interest or penalties associated with unrecognized tax benefits and no interest or penalties were recognized during the years ended December 31, 2015 or 2014. The Company has adopted a policy whereby amounts related to interest and penalties associated with unrecognized tax benefits are classified as income tax expense when incurred.

Taxes computed at the statutory federal income tax rate of 34% are reconciled to the income tax provision as follows:

49


 
Year Ended December 31,
 
2015
 
2014
United States federal tax at statutory rate
34.0
 %
 
34.0
 %
Change in valuation allowance
9.0

 
(79.6
)
Foreign entity liquidation

 
43.6

State taxes (net of federal tax benefit)
(47.2
)
 
2.0

Other
4.2

 

Effective rate
 %
 
 %

We did not make any income tax payments related to our continuing operations in 2015 or 2014. The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, due to the generation of net operating losses, all tax years for which the Company filed a tax return remain open. The Company has been notified that its U.S. federal tax return for the year ended December 31, 2013 is currently under examination by the Internal Revenue Service.  This examination is in its early stages and no adjustments have been proposed as of the date of this filing.

The Company discontinued operations in India in 2012. In 2016 the Company received notification of an income tax assessment from the Assistant Commissioner of Income Tax in New Delhi, India, asserting under-reported transfer pricing income by the Company's subsidiary, Motricity India Pvt. Ltd., for the fiscal year ended March 31, 2012. The assessment, if sustained, could result in tax, penalties and interest totaling approximately $0.4 million. Review and any revision of the assessment by the Assistant Commissioner of Income Tax of has not been concluded. The Company intends to vigorously pursue rejection or reduction of the assessment. The outcome of this matter cannot be reasonably estimated and no amount has been recorded in the financial statements as of December 31, 2015.

15. Common Stock and Net Loss Per Share Attributable to Common Stockholders
Effective September 16, 2015, the Company filed a certificate of amendment to the Amended and Restated Certificate of Incorporation of Voltari Corporation in order to reduce the number of shares of capital stock the Company is authorized to issue from 975 million, consisting of 625 million shares of common stock and 350 million shares of preferred stock, each with a par value of $0.001 per share, to 30 million, consisting of 25 million shares of common stock and 5 million shares of preferred stock, each with a par value of $0.001 per share.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the period indicated (dollars in thousands):
 
Year Ended December 31,
 
2015
 
2014
Net loss attributable to common stockholders
$
(12,697
)
 
$
(34,688
)
Weighted-average common shares outstanding - basic and diluted
7,956,291

 
4,668,844

Net loss per share attributable to common stockholders - basic and diluted
$
(1.60
)
 
$
(7.43
)

Basic and diluted net loss per share attributable to common stockholders has been computed based on net loss and the weighted-average number of common shares outstanding during the applicable period. We have excluded warrants and options to purchase common stock, when the potentially issuable shares covered by these securities are antidilutive. The following table presents the

50


outstanding antidilutive securities excluded from the calculation of net loss per share attributable to common stockholders:
 
Year Ended December 31,
 
2015
 
2014
Common stock issuable upon exercise of warrants
1,014,958

 
1,014,982

Options to purchase common stock
41,150

 
250,139

Restricted stock

 
73,525

Total securities excluded from net loss per share attributable to common stockholders
1,056,108

 
1,338,646


16. Defined Contribution Plan

We maintained a defined contribution plan (“401(k) Savings Plan”) for eligible employees, which was suspended in January 2016. The 401(k) Savings Plan assets are held in trust and invested as directed by the plan participants, and shares of our common stock are not an eligible investment election. We have provided a match on a specified portion of eligible employees’ contributions as approved by our board of directors. Historically, we have made matching contributions equal to 50% of the portion of contributions that do not exceed 6% of eligible pay. Our matching contributions included in continuing operations totaled less than $0.1 million in 2015 and 2014, respectively.

17. Related Party Transactions

On July 18, 2014, an entity affiliated with Carl C. Icahn, Koala Holding LP, the record holder of 977,136 shares, or approximately 81.45%, of our issued and outstanding Series J preferred stock, executed and delivered a written consent approving an amendment to Exhibit A to our Amended and Restated Certificate of Incorporation, which we refer to as the Amendment, which sets forth the rights, privileges and restrictions granted to and imposed on the Series J preferred stock. Pursuant to the Amendment, the Company may declare and distribute dividends on its securities that rank junior to the Series J preferred stock, consisting solely of warrants or other rights to acquire newly issued shares of our common stock against the payment of a cash purchase price to the Company, without declaring or setting apart for payment dividends on the Series J preferred stock.

Insight Portfolio Group LLC, owned by a number of other entities with which Mr. Carl C. Icahn has a relationship, was formed in order to maximize the potential buying power of participating companies in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. The Company was a member of the buying group in 2015 and 2014 and pays a fee of $50,000 per year for the services of Insight Portfolio Group.


18. Legal Proceedings

Putative Securities Class Action. We previously announced that Joe Callan filed a putative securities class action complaint in the U.S. District Court, Western District of Washington at Seattle on behalf of all persons who purchased or otherwise acquired common stock of Motricity between June 18, 2010 and August 9, 2011 or in Motricity’s initial public offering. Motricity, which was our predecessor registrant, is now our wholly-owned subsidiary and has changed its name to Voltari Operating Corp. The defendants in the case were Motricity, certain of our current and former directors and officers, including Ryan K. Wuerch, James R. Smith, Jr., Allyn P. Hebner, James N. Ryan, Jeffrey A. Bowden, Hunter C. Gary, Brett Icahn, Lady Barbara Judge CBE, Suzanne H. King, Brian V. Turner; and the underwriters in Motricity’s initial public offering, including J.P. Morgan Securities, Inc., Goldman, Sachs & Co., Deutsche Bank Securities Inc., RBC Capital Markets Corporation, Robert W. Baird & Co Incorporated, Needham & Company, LLC and Pacific Crest Securities LLC. The complaint alleged violations under Sections 11 and 15 of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by all defendants and under Section 10(b) of the Exchange Act by Motricity and those of our former and current officers who are named as defendants. The complaint sought, inter alia, damages, including interest and plaintiff’s costs and rescission. A second putative securities class action complaint was filed by Mark Couch in October 2011 in the same court, also related to alleged violations under Sections 11 and 15 of the Securities Act, and Sections 10(b) and 20(a) of the Exchange Act. On November 7, 2011, the class actions were consolidated, and lead plaintiffs were appointed pursuant to the Private Securities Litigation Reform Act. On December 16, 2011, plaintiffs filed a consolidated complaint which added a claim under Section 12 of the Securities Act to its allegations of violations of the securities laws and extended the putative class period

51

Voltari Corporation
Notes to Consolidated Financial Statements





from August 9, 2011 to November 14, 2011. The plaintiffs filed an amended complaint on May 11, 2012 and a second amended complaint on July 11, 2012. On August 1, 2012, we filed a motion to dismiss the second amended complaint, which was granted on January 17, 2013. A third amended complaint was filed on April 17, 2013. On May 30, 2013, we filed a motion to dismiss the third amended complaint, which was granted by the Court on October 1, 2013. On October 31, 2013, the plaintiffs filed a notice of appeal of the dismissal to the United States Court of Appeals for the Ninth Circuit. On April 25, 2014, the plaintiffs filed their opening appellate brief and on July 24, 2014 we filed our answering brief. Oral arguments on the appeal have been scheduled for April 8, 2016.
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

52


SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
 
Year Ended December 31,
(in thousands)
2015
 
2014
Tax Valuation Allowance:
 
 
 
Beginning balance
$
186,967

 
$
164,791

Charged (reversed) to net loss
(798
)
 
22,176

Ending balance
$
186,169

 
$
186,967

 
 
 
 
Allowance for Doubtful Accounts:
 
 
 
Beginning balance
$
109

 
$
75

Charged (reversed) to costs and expenses
(56
)
 
73

Write-offs
(41
)
 
(39
)
Ending Balance
$
12

 
$
109


53




Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
Our management evaluated, with the participation of our Chief Financial Officer (our acting Principal Executive Officer and our Principal Financial Officer) and Chief Accounting and Administrative Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report on Form 10-K. Based on this evaluation, our Chief Financial Officer and Chief Accounting and Administrative Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Financial Officer and Chief Accounting and Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2015, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework (2013).

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2015.

Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.
Other Information.

On March 10, 2016, the Company, through its wholly owned subsidiary, Voltari Real Estate Holding, LLC, a Delaware limited liability company (the Purchaser), entered into an amendment (the "Third Amendment") to that certain purchase and sale agreement (the Purchase Agreement), dated as of December 3, 2015, by and between the Purchaser and Flanders Holding, LLC, a Texas limited liability company (the Seller), to extend the Contingency Period (as such term is defined in the Purchase

54


Agreement) to June 10, 2016 or five business days after the Purchaser accepts the environmental conditions at the Premises (as such term is defined in the Purchase Agreement) as is or with an agreed upon clean-up, which cleanup shall be at the expense of the Seller, whichever is earlier.


55


PART III

Item 10.
Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Item 11.
Executive Compensation.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Item 13.
Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.

Item 14.
Principal Accountant Fees and Services.

The information required by this Item is incorporated by reference to our Proxy Statement for the 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.



56


PART IV

Item 15.
Exhibits and Financial Statement Schedules.
(a) The following documents are filed as part of this report:
1. Financial Statements
The following consolidated financial statements are submitted in Part II, Item 8 of this annual report:

2. Financial Statement Schedules
All other financial statement schedules have been omitted because the required information is either included in the financial statements or the notes thereto or is not applicable.

3. Exhibits
The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this report.

57




SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
 
VOLTARI CORPORATION
 
 
 
 
Date:
March 16, 2016
By:
/s/     John Breeman    
 
 
 
John Breeman
 
 
 
Chief Financial Officer (Acting Principal Executive Officer and Principal Financial Officer)
 
 
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicted have signed this report below.

 
 
 
 
 
Signature
  
Title
 
Date
 
 
 
 
 
 
 
 
 
/s/     John Breeman    
 
Chief Financial Officer (Acting Principal Executive Officer and Principal Financial Officer)
 
March 16, 2016
John Breeman
  
 
 
 
 
 
/s/     Kenneth Goldmann
 
Chief Administrative and Accounting Officer
 
March 16, 2016
Kenneth Goldmann
  
 
 
 
 
 
/s/ Peter Shea
 
Chairman of the Board
 
March 16, 2016
Peter Shea
  
 
 
 
 
 
 
/s/ Jaffrey A. Firestone
 
Director
 
March 16, 2016
Jaffrey A. Firestone
  
 
 
 
 
 
 
/s/ Kevin Lewis
 
Director
 
March 16, 2016
Kevin Lewis
  
 
 
 
 
 
 
 

58



EXHIBIT INDEX

 
 
 
 
Incorporated by Reference
Exhibit Number
 
Exhibit Description
 
Form
 
Filing Date
 
Filed by
2.2
 
Agreement and Plan of Reorganization, dated as of February 8, 2013, by and among Motricity, Inc., Voltari Merger Sub, Inc., and Voltari Corporation
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
3.1
 
Amended and Restated Certificate of Incorporation of Voltari Corporation
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
3.2
 
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Voltari Corporation
 
8-K
 
4/23/2013
 
Voltari
 
 
 
 
 
 
 
 
 
3.3
 
Certificate of Amendment of Certificate of Incorporation of Voltari Corporation
 
8-K
 
9/16/2015
 
Voltari
 
 
 
 
 
 
 
 
 
3.4
 
Amended and Restated Bylaws of Voltari Corporation
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
4.1
 
Specimen Stock Certificate for Voltari Corporation Common Stock
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
4.2
 
Specimen Stock Certificate for Voltari Series J Preferred Stock
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
4.3
 
Form of Warrant for Voltari Corporation
 
S-4
 
2/11/2013
 
Voltari
 
 
 
 
 
 
 
 
 
4.4
 
Warrant Agreement by and between Motricity, Inc. and American Stock Transfer & Trust Company, dated October 11, 2012
 
8-K
 
10/12/2012
 
Motricity
 
 
 
 
 
 
 
 
 
10.1
 
Amended and Restated 2004 Stock Incentive Plan of Motricity, Inc., as amended through August 4, 2005#
 
S-1/A
 
1/22/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.2
 
Form of Stock Option Agreement under 2004 Plan#
 
S-1/A
 
4/26/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.3
 
Form of Restricted Stock Grant Agreement under 2004 Plan#
 
S-1/A
 
4/26/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.4
 
Form of Motricity, Inc. Indemnification Agreement#
 
S-1/A
 
1/22/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.5
 
Form of Stock Option Agreement under the 2010 Long-Term Incentive Plan#
 
S-1/A
 
6/2/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.6
 
Certificate of Amendment to the 2004 Stock Incentive Plan of Motricity, Inc.#
 
S-1/A
 
6/2/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.7
 
Form of Restricted Stock Agreement under the 2010 Long-Term Incentive Plan#
 
10-Q
 
8/6/2010
 
Motricity
 
 
 
 
 
 
 
 
 
10.8
 
Motricity, Inc. 2010 Long-Term Incentive Plan, as amended#
 
8-K
 
11/2/2011
 
Motricity
 
 
 
 
 
 
 
 
 
10.9
 
Motricity, Inc. Amended and Restated 2011 Corporate Incentive Plan‡#
 
8-K
 
5/31/2012
 
Motricity
 
 
 
 
 
 
 
 
 
10.10
 
2012 Form of Named Executive Officer Option Agreement under the 2012 Long-Term Incentive Plan#
 
8-K
 
5/31/2012
 
Motricity
 
 
 
 
 
 
 
 
 
10.11
 
Offer Letter by and between Voltari Corporation and John Breeman, dated August 14, 2013#
 
8-K
 
8/21/2013
 
Voltari
 
 
 
 
 
 
 
 
 
10.12
 
2013-2014 Corporate Incentive Plan‡
 
8-K
 
3/31/2014
 
Voltari
 
 
 
 
 
 
 
 
 
10.13
 
Amended and Restated 2013 - 14 Corporate Incentive Plan
 
8-K
 
5/27/2014
 
Voltari
 
 
 
 
 
 
 
 
 

59


10.14
 
Waiver Letter, dated as of March 30, 2015, from High River Limited Partnership and Koala Holdings LP.
 
8-K
 
3/30/2015
 
Voltari
 
 
 
 
 
 
 
 
 
10.15
 
Offer Letter by and between Voltari Corporation and Aaron Epstein, dated May 11, 2015
 
10-Q
 
5/14/2015
 
Voltari
 
 
 
 
 
 
 
 
 
10.16
 
Separation Agreement and Release by and between Voltari Corporation and Richard Sadowsky, dated May 11, 2015
 
10-Q
 
5/14/2015
 
Voltari
 
 
 
 
 
 
 
 
 
10.17
 
Revolving Note with Koala LP (as lender) dated August 7, 2015
 
10-Q
 
8/7/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.18
 
Agreement for Sale and Purchase with 160 Brighton Acquisition LLC dated August 7, 2015
 
10-Q
 
8/7/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.19
 
Ground Lease with JPMorgan Chase Bank, N.A., together with Bill of Sale and General Assignment to 160 Brighton Acquisition LLC, dated March 2, 2006
 
10-Q
 
8/7/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.20
 
Offer Letter by and between Voltari Corporation and Kenneth Goldmann, dated September 28, 2015.
 
8-K
 
9/30/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.21
 
Non-Disclosure and Intellectual Property Protection Agreement by and between Voltari Corporation and Kenneth Goldmann, dated September 28, 2015.
 
8-K
 
9/30/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.22
 
Purchase and Sale Agreement, dated as of December 3, 2015, by and between Flanders Holding, LLC and Voltari Real Estate Holding, LLC.
 
8-K
 
12/9/15
 
Voltari
 
 
 
 
 
 
 
 
 
10.23
 
First Amendment to Purchase and Sale Agreement, dated as of January 11, 2016, by and between Flanders Holding, LLC and Voltari Real Estate Holding, LLC.
 
8-K
 
2/19/16
 
Voltari
 
 
 
 
 
 
 
 
 
10.24
 
Second Amendment to Purchase and Sale Agreement, dated as of February 10, 2016, by and between Flanders Holding, LLC and Voltari Real Estate Holding, LLC.
 
8-K
 
2/19/16
 
Voltari
 
 
 
 
 
 
 
 
 
10.25
 
Third Amendment to Purchase and Sale Agreement, dated as of March 10, 2016, by and between Flanders Holding, LLC and Voltari Real Estate Holding, LLC.*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21.1
 
Subsidiaries of Voltari Corporation*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23.1
 
Consent of Independent Registered Public Accounting Firm*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.1
 
Certification pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.2
 
Certification pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Administrative and Accounting Officer*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.1
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32.2
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Administrative and Accounting Officer**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.INS
 
XBRL Instance Document*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

60


101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document*
 
 
 
 
 
 

 
*
Filed herewith.
 
 
 
**
Furnished herewith.
 
 
 
Confidential treatment was granted for certain provisions of this Exhibit pursuant to Exchange Act Rule 24b-2. These provisions have been omitted from the filing and submitted separately to the Securities and Exchange Commission.
 
 
 
#
Indicates a management contract or compensatory plan or arrangement.
 
 
 
(1)
If not filed herewith, filed as an exhibit to the document referred to above by either Motricity, Inc. (CIK# 0001336691) or Voltari Corporation (CIK# 0001568319), as indicated.


61