| Series A Convertible Preferred Stock and Stockholders' Equity (Deficit) | NOTE 5 - SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
A. Common Stock Holders of shares of The Company’s
common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The holders
of common stock do not have cumulative voting rights in the election of directors. Holders of shares of The Company’s common
stock are entitled to receive dividends when and if declared by The Company’s Board out of funds legally available therefor,
subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends
imposed by the terms of any outstanding preferred stock. Upon The Company’s dissolution or liquidation or the sale of all
or substantially all of its assets, after payment in full of all amounts required to be paid to creditors and to the holders of
preferred stock having liquidation preferences, if any, the holders of shares of The Company’s common stock will be entitled
to receive pro rata its remaining assets available for distribution. Holders of shares of The Company’s common stock do not
have preemptive, subscription, redemption or conversion rights and there are no redemption or sinking fund provisions applicable
to The Company’s common stock.
B. Series A Convertible Preferred Stock
1. The terms of the Series A Convertible Preferred Stock are governed by a Certificate of Designation (the “Series A Certificate of Designation”) filed by the Company with the Delaware Secretary of State on April 30, 2018. Pursuant to the Series A Certificate of Designation, the Company designated 500 shares out of the Company’s 20 million authorized shares of preferred stock as “Series A Convertible Preferred Stock”. As more fully described below, for the year ended December 31, 2018, the Company has issued a total of 500 shares of Series A Convertible Preferred Stock in connection with the Share Purchase Agreement. Following is a summary of the material terms of the Series A Convertible Preferred Stock:
● Dividends.
During the period commencing April 30, 2018 through December 31, 2018, the Company recorded an amount of $179 as dividend on Series A Convertible Preferred Stock. In 2018, the Company issued 801,230 shares of its common stock to the holder of series A Convertible Preferred Stock for payment of dividend amounted to $114. The remaining amount of the dividend for 2018 in the amount of $65 was paid by the Company by issuance of 832,368 shares of common stock to the holder of series A Convertible Preferred Stock on January 3, 2019 (see also Note 8C). This amount is included in the additional paid-in capital as number of shares to be issued is considered as fixed and determinable.
● Liquidation
● Voting Rights
● Conversion
Due to the Trigger Event as discussed below, the conversion price was adjusted to an amount equal to (A) 75% of the quotient determined by dividing (x) the sum of the 3 lowest Closing Prices of the Common Stock during the period beginning 10 Trading Days prior to such Triggering Event Conversion Date and ending 3 Trading Days after the shares of Common Stock are received into Holder’s brokerage account and fully cleared for trading, by (y) 3, minus (B) $0.01. Commencing December 11, 2018 through
December 31, 2018, the Purchaser converted an aggregate of 10 shares of Preferred Stock into an aggregate of 1,647,258 shares of
the Common Stock at the conversion prices in effect on the respective conversion dates. Commencing January 1, 2019 through
the date of the issuance of these consolidated financial statements, the Purchaser converted an aggregate of 50 additional shares
of Series A Convertible Preferred Stock into an aggregate of 24,871,345 shares of the Common Stock at the conversion prices in
effect on the respective conversion dates (see Note 8D). Redemption
● Certain mandatory redemption provisions provide that, beginning January 30, 2019 and continuing for every 30-days period thereafter (each a “Mandatory Redemption Date”), the Company is required to offer to redeem 1/12 th
● Upon the occurrence of an offering of debt or equity securities of the Company or any of its subsidiaries resulting gross cash proceeds of not less than $10,000, the Company is required to make an offer to the holders of shares of the Series A Convertible Preferred Stock to redeem 50% of the outstanding Series A Convertible Preferred Stock at either (i) 115% of the stated value of each Preferred Share ($10) plus any unpaid accrued dividends if redeemed on or prior to October 30, 2018 or (ii) 120% of the stated value of each Preferred Share ($10) plus any unpaid accrued dividends if redeemed after October 30, 2018 (the “Redemption Premium”).
● Upon sale of assets (other than product to be sold in the normal course of business) of the Company and its subsidiaries in an amount of proceeds in excess of $500, the Company is required to offer to redeem to 100% of the outstanding Series A Convertible Preferred Stock for the Redemption Premium, and may be redeemed in cash or, at the Company’s sole discretion in freely tradeable shares of the Company’s common stock if the Company is in full compliance with all of the equity conditions as defined in the Series A Certificate of Designation.
C. Securities Purchase Agreement
● The Company may also be required, at the option of holders of the Series A Convertible Preferred Stock to redeem any outstanding shares of Series A Convertible Preferred Stock upon a Change of Control or Bankruptcy Event. Each Preferred Stock shall be redeemed for an amount equal to Redemption Premium, and may be redeemed in cash or, at the Company’s sole discretion in freely tradeable shares of the Company’s common stock if the Company is in full compliance with all of the equity conditions as defined in the Series A Certificate of Designation.
● The Company may, at any time upon at least 15 trading days prior written notice to each holder, redeem all or portion of the outstanding Preferred Stock in cash in an amount equal to Redemption Premium. As of December 31, 2018, the Company
is not in compliance with the Equity Conditions and therefore the redemption of the Series A Convertible Preferred Stock can be
done at the request of the holder in cash of 1/12 per month after 270 days from the Initial Date (January 31, 2019). As of the
date of issuance of these financial statements, the Purchaser has not requested redemption in cash of any shares of Series A Convertible
Preferred Stock. On April 30, 2018 (the “Initial
Date”), the Company consummated a private placement transaction (the “April 2018 PIPE”) by entering into a Securities
Purchase Agreement (the “Agreement”) with a non-US-based institutional investor (the “Purchaser”), pursuant
to which, the Company sold and the Purchaser bought, (i) 500 shares of Preferred Stock designated as Series A Convertible Preferred
Stock (the “Preferred Stock”), which are convertible into shares of common stock at a conversion price of $0.20 per
share, subject to adjustment pursuant to the anti-dilution provisions of the Preferred Shares and (ii) Warrants (the “Warrants”)
representing the right to acquire 12,500,000 shares of common stock over a period of five years from the Initial Date at an exercise
price of $0.22 per share, which is subject to certain adjustments including anti-dilution provisions, for an aggregate purchase
price of $5,000. The Company engaged Newbridge Securities
Corporation, through LifeTech Capital (“Newbridge”), as exclusive placement agent for the aforesaid Agreement, pursuant
to which the Company was required to pay a cash fee to Newbridge and issued to them warrants to purchase 2,500,000 shares of common
stock (or 10% of the aggregate number of fully diluted shares of common stock that have been purchased by an Purchaser) over a
period of three years from the Initial Date at an exercise price of $0.20 per share, which is subject to certain adjustments including
anti-dilution provisions. In addition, the Company is also obligated to pay Newbridge a warrants solicitation fee equal to 4% of
the gross proceeds received by the Company upon cash exercise of any Warrants purchased by the Purchasers in connection with the
Agreement (since the Initial Date through December 31, 2018, no solicitation fee was earned). On November 27, 2018, the Tel Aviv
regional Prosecutor’s Service filed criminal charges against Dr. Yehuda Baruch, the Chief Medical and Regulatory Affairs
Officer of the Company, alleging that Dr. Baruch conducted an improper sexual relationship with a psychiatric patient. Dr. Baruch
denies all allegations. The Company together with its legal counsels believe that such criminal charges are not directed at, and
do not concern, the Company, any actions of Dr. Baruch in the Company or any other of the Company’s directors or officers.
The Company is evaluating its proposed response, if any, considering the allegations brought against Dr. Baruch. The aforesaid charges brought against
Dr. Baruch are considered a “trigger event” (the “Trigger Event”) under the Company's Certificate of Designation
governing the Company's Preferred Stock. Subject to certain beneficial ownership limitations of the Preferred Stock, at any time
during the period commencing on the date of the occurrence of a Trigger Event and ending on the date of the cure of such Trigger
Event, the Purchaser of the Preferred Stock may, at its option, by delivery of notice to the Company, specify a future date upon
which such holder shall require the Company to convert all, or any number of, Preferred Stock into shares of the Company’s
common stock at an adjusted conversion ratio as specified in the Certificate of Designation. Due to the aforesaid Trigger Event,
the conversion price was adjusted to an amount equal to (A) 75% of the quotient determined by dividing (x) the sum of the 3 lowest
Closing Prices of the Common Stock during the period beginning 10 Trading Days prior to such Triggering Event Conversion Date and
ending 3 Trading Days after the shares of Common Stock are received into Holder’s brokerage account and fully cleared for
trading, by (y) 3, minus (B) $0.01. The Warrants are considered a freestanding
instrument, as the Company believes they are legally detachable and separately exercisable. As defined in the Agreement, upon
certain changes in control events, the Purchaser may elect to receive cash equal to the Black-Scholes value of the outstanding
Warrants. Consequently, as of the Initial Date, the Warrants were accounted for and recognized as a non-current financial liability
on the consolidated balance sheet in total amount of $3,600 ($600 out of which related to warrants that were granted to Newbridge)
under ASC 815-40-25 and were measured at fair value. Subsequently, the Warrants are marked to market in each reporting period until
they are exercised or expired, as earlier, with changes in the fair value of the Warrants charged into the statement of comprehensive
loss. For the year ended December 31, 2018, the Company recorded income in total amount of $2,125, due to revaluation of Warrants
to purchase shares of Common Stock in the statement of comprehensive loss as separate line based on the change in the fair value
from the Initial Date through December 31, 2018. In estimating the fair value of
the Warrants on the Initial Date and December 31, 2018, the Company used the following assumptions: 12,500,000 Purchaser Warrants:
December 31, 2018 Initial Date
Risk-free interest rate (1) 2.49 % 2.79 %
Expected volatility (2) 214.5 % 246 %
Expected life (in years) (3) 4.33 5.00
Expected dividend yield (4) 0 % 0 %
Fair value per Warrant $ 0.10 $ 0.24 2,500,000 Placement agent Warrants:
December 31, 2018 Initial Date
Risk-free interest rate (1) 2.47 % 2.62 %
Expected volatility (2) 219.9 % 252.6 %
Expected life (in years) (3) 2.33 3.00
Expected dividend yield (4) 0 % 0 %
Fair value per Warrant $ 0.09 $ 0.24
1. Risk- free interest rate - based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.
2. Expected volatility - was calculated based on actual historical stock price movements of the Company over a term that is equivalent to the expected term of the warrants.
3. Expected life - the expected life was based on the expiration date of the warrants.
4. Expected dividend yield - was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. The changes in Level 3 liabilities
associated with the 2018 Private Placement warrants are measured at fair value on a recurring basis. The following tabular presentation
reflects the components of the liability associated with such warrants for year ended December 31, 2018:
Fair value of liability related to warrants
Balance at December 31, 2017 $ -
Recognition of liability related to Warrants to purchase Common Stock 3,600
Revaluation of liability related to Warrants to purchase Common Stock (2,125 )
Balance at December 31, 2018 $ 1,475 During the period commencing April
30, 2018 and through December 31, 2018, no Warrants of the Purchaser and Newbridge have been exercised. As of December 31, 2018,
there were 15,000,000 outstanding unexercised Warrants related to the 2018 Private Placement. In addition, at the Initial Date,
the Company identified several embedded features which may require separate accounting as derivatives under ASC 815-15. Nevertheless,
except specific embedded feature relating to contingent redemption feature in case of other than upon bankruptcy triggering event,
the Company determined that all remaining embedded features should not bifurcated from the host contract or the probability of
occurrence of such embedded features is low and therefore the fair value of such embedded features was determined to be immaterial.
In addition, the Company determined that the Trigger Event is considered as optional conversion feature upon triggering event that
should be estimated at fair value. Thus, the bifurcated embedded derivatives amounting to $1,028 and $8,129 were measured at fair
value on the Initial Date and December 31, 2018, respectively. The change in the fair value is resulted from revaluation of the
bifurcated embedded derivatives in total amount of $7,261 which was recognized under other expenses in the statement of comprehensive
loss in a separate line. In addition, upon a partial conversion of 10 share of Series A Convertible Preferred Stock into 1,647,255
shares of common stock, a relative portion of $160 was deducted. In estimating the fair value of
the bifurcated embedded derivative related to the contingent redemption feature of the Series A Convertible Preferred Stock at
the Initial Date and the bifurcated embedded derivative related to optional conversion feature upon trigger event at December 31,
2018, the Company used the following assumptions:
December 31, 2018 Initial Date
Risk-free interest rate (1) 2.62 % 2.13%-2.40 %
Expected volatility (2) 82.35 % 258.3 %
Expected life (in years) (3) 1.01 1.64
1. Risk- free interest rate - based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.
2. Expected volatility - was calculated based on actual historical stock price movements of the Company over a term that is equivalent to the expected term of the bifurcated embedded derivative.
3. Expected life - the expected life was based on the expiration date of the bifurcated embedded derivative. The changes in Level 3 liabilities
associated with the 2018 Private Placement bifurcated embedded derivatives are measured at fair value on a recurring basis. The
following tabular presentation reflects the components of such liability associated with such bifurcated embedded derivatives for
the year ended December 31, 2018:
Fair value of embedded derivative
Balance at December 31, 2017 $ -
Recognition of bifurcated embedded derivative 1,028
Revaluation of bifurcated embedded derivative 7,261
Partial conversion of shares of Series A Convertible Preferred Stock into shares of common stock (160 )
Balance at December 31, 2018 $ 8,129 The Company’s management is
measuring the fair value of the 2018 Private Placement warrants issued to the Purchaser and Newbridge and the bifurcated embedded
derivative related to Series A Convertible Preferred Stock by using the services of external independent appraiser. At the Initial Date, the effective
conversion price of the Preferred Stock is less than the fair value of the share of Common Stock at the commitment date. As a result,
a BCF amounting to approximately $4,028 was measured assuming full conversion according to ASC 470-20. However, according to ASC
470-20-30-8, there is a limitation to the amount of the proceeds allocated to the convertible preferred shares if the intrinsic
value of the BCF is greater than the proceeds allocated to the convertible instrument. That is, the amount of the discount assigned
to the BCF shall be limited to the amount of the proceeds allocated to the convertible preferred share. Consequently, at the Initial
Date, a BCF was recognized in total amount of $773. Under ASC 480-10-S99 “Distinguishing
Liabilities from Equity”, since the Preferred Stock have conditional redemption provisions which are outside of the control
of the Company and also contain a deemed liquidation preference, the Preferred Stock were classified as mezzanine financing at
the initial measurement date at the residual amount, which is the difference between the total proceeds received, the fair value
of the Warrants, the fair value of the embedded derivative related to the contingent redemption of Series A Convertible Preferred
Stock and after consideration with the amount related to the BCF. Subsequently, the Company accretes changes in the redemption
value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable,
if later) to the earliest redemption date of the instrument using an appropriate methodology. Changes in the redemption value are
considered as changes in accounting estimates. The below table outlines the change
in the mezzanine account during the year ended December 31, 2018 -
December 31, 2018
Opening balance, December 31, 2017 $ -
Gross proceeds from April 2018 PIPE transaction 5,000
Recognition of Warrants issued to Purchaser to purchase Common Stock (3,000 )
Recognition of bifurcated embedded derivative (1,028 )
Allocation of issuance costs to Preferred Stock (199 )
Recognition of BCF on Preferred Stock (773 )
Accretion of Preferred Stock to redemption value 2,268
Partial conversion of Preferred Stock into shares of common stock (42 )
Closing balance, December 31, 2018 $ 2,226 The total direct and incremental
issuance costs amounted to $1,022 (including the cash fee of $422 and Warrants fee of $600 related to Newbridge). Such amount was
allocated based on the same proportions of the allocation of the consideration received to the individual freestanding instruments
identified (i.e. detachable warrants, bifurcated embedded derivative related to the contingent redemption feature of the Series
A Convertible Preferred Stock and preferred stock). Issuance costs amounting to $823 were allocated to freestanding instruments
at fair value and immediately expensed as a separate line to the statement of comprehensive loss. Issuance costs amounting to $199
were allocated to Preferred Stock and deducted from mezzanine account. In addition, in connection with
the Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with
the Purchaser, pursuant to which, among other things, the Company is required to use its commercially reasonable best efforts to
(i) prepare and file with the SEC within 60 calendar days of the offering a registration statement covering the shares of Common
Stock underlying the Preferred Stock and Warrants and (ii) have the registration statement and any amendment thereto to be declared
effective by the SEC within 90 calendar days from the date of the initial filing of such registration statement. On June 14, 2018,
the Company filed a registration statement on Form S-1 which was declared effective by July 2, 2018.
D. Common Stock and Stock Warrants Issued for Cash
1. During the year ended December 31, 2017, the Company received $118 through a placement of 904,924 common stock units to four investors for the offering price of $0.13 per unit. Each unit consisted of one share of common stock and two (one “G” and one “H”) warrants to purchase one share of common stock. The 904,924 “G” warrants are exercisable at $0.25 and expire two years from the issuance date. The 904,924 “H” warrants are exercisable at $0.40 and expire 3 years from the issuance date. Such warrants were classified within stockholders’ equity.
2. During the year ended December 31, 2017, the Company received $100 through a placement of 588,237 common stock units to three investors for the offering price of $0.17 per unit. Each unit consisted of one share of common stock and one “H” warrant to purchase one share of common stock. The 588,237 “H” warrants are exercisable at $0.40 and expire 3 years from the issuance date. Such warrants were classified within stockholders’ equity.
3. During the year ended December 31, 2017, the Company received $130 through a placement of 520,000 common stock units to five investors for the offering price of $0.25 per unit. Each unit consisted of one share of common stock and one “I” warrant to purchase one share of common stock. The 520,000 “I” warrants are exercisable at $0.50 and expire 2 years from the issuance date. Such warrants were classified within stockholders’ equity.
4. During the year ended December 31, 2017, the Company received $884 through a placement of 1,767,250 common stock units to twenty investors for the offering price of $0.50 per unit. Each unit consisted of one share of common stock and one “K” warrant to purchase one share of common stock. The 1,767,250 “K” warrants are exercisable at $1.00 and expire 18 months from the issuance date. Such warrants were classified within stockholders’ equity.
5. During the year ended December 31, 2017, the Company received $436 through a placement of 623,227 common stock units to eleven investors for the offering price of $0.70 per unit. Each unit consisted of one share of common stock and one “L” warrant to purchase one share of common stock. The 623,227 “L” warrants are exercisable at $1.40 and expire 18 months from the issuance date. Such warrants were classified within stockholders’ equity.
E. Common stock subscriptions receivable During the years ended December
31, 2018 and 2017, the Company received a cash payment of $105 and $51, respectively, for common stock subscriptions receivable
from former employees.
F. Stock-Based Compensation
1. Grants to non-employees
A. On November 22, 2016, the Company entered into a Corporate Management Services Agreement with Sorelenco Limited (“Sorelenco”). In consideration for business and European market development services, the Company agreed to issue to the Sorelenco: (i) 1,442,308 restricted shares of the common stock, par value $0.0001 (the “Shares”); (ii) Class M Warrants exercisable for 12-months period to purchase 1,250,000 Shares at an exercise price $0.08; (iii) Class G Warrants exercisable for 24-months period to purchase 448,462 Shares at an exercise price $0.25; and (iv) Class H Warrants exercisable for 36-months period to purchase 448,462 Shares at an exercise price $0.40. The aggregate fair value of the restricted shares and warrants was $432. This transaction represents an initiation of business relations between the parties. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). Such amount is recognized as consulting expense over the term of the agreement. During the years ended December 31, 2018 and 2017, the Company recognized an amount of $144 and $144 as business development service expenses, respectively. As of December 31, 2018, the unrecognized related services receivable amounted to $121.
The exercise period of the Class M Warrants has been extended by 2-weeks in which Sorelenco exercised such warrants into 1,250,000 shares of common stock. Such extension has been accounted as a modification under ASC 718, pursuant to which the incremental fair value of $403 was recognized immediately as business development service expenses in the statements of comprehensive loss for the year ended December 31, 2017.
B. On November 28, 2016, the Company entered into a Consulting Agreement with Bear Creek Capital. In consideration for the services, the Company issued to Bear Creek 100,000 restricted shares of Common Stock. The aggregate fair value of the restricted shares was $10. This transaction represents initiation of business relations between the parties. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). Such amount is recognized over the term of the agreement. During the year ended December 31, 2017, the Company recognized an amount of $6 as investor and public relations service expenses. As of December 31, 2018, there are no services receivable.
C. On December 16, 2016, the Company entered into a Consulting Agreement with Jeff Smurlick, pursuant to which the Consultant shall provide the Company with services in the areas of investor relations and business development. In consideration for the services, the Company issued to the Consultant 200,000 Class G Warrants and 200,000 Class H Warrants identical to the Class G and Class H Warrants described above with a cashless exercise feature. The aggregate fair value of the warrants was $41. This transaction represents initiation of business relations between the parties. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). Such amount is recognized over the term of the agreement. As of December 31, 2018, there are no services receivable. During the year ended December 31, 2017, the Company recognized an amount of $40 as investor and public relations services expense.
During the year ended December 31, 2017, the aforesaid warrants were exercised on a cashless basis (see also Note 5G4).
D. In January 2017, the Company issued 300,000 fully vested shares of common stock and 400,000 warrants to Lyons Capital LLC. 200,000 “G” warrants with exercise price of $0.25 and 200,000 “H” warrants with exercise price of $0.40 and a cashless feature for the purchase of one share each of common stock to a consultant as payment for services. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). The shares were measured at the closing price as of the date of the agreement and the related expenses are recognized over the terms of the agreement. During the year ended December 31, 2018 and 2017, the Company recognized an amount of $16 and $185 as conferences and business development service expenses, respectively, resulting from the issuance of the shares. As of December 31, 2018, there are no services receivable.
The warrants were measured by using the Black-Scholes-Merton pricing model to estimate total fair value amounting to $154. The Black-Sholes-Merton pricing model assumptions that were used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.10%-0.11%; expected volatility of 282%, and warrant exercise period based upon the stated terms. Such amount is recognized over the term of the agreement. During the year ended December 31, 2018 and 2017, the Company recognized an amount of $5 and $149, as consulting expenses, respectively, resulting from the issuance of these warrants. As of December 31, 2018, there are no services receivable.
During the year ended December 31, 2017, the aforesaid warrants were exercised on a cashless exercise (see also Note 5G3).
E. Under the Bear Creek Corporate Advisory Consulting agreement executed in November of 2016, the Company became obligated to issue 100,000 additional shares to Bear Creek as of February 28, 2017. The shares were measured at $262 according to the closing price of the underlying shares at February 28, 2017. The shares were issued in April 2017.
F. On January 21, 2016, the Company entered into a 2-years Consulting Agreement with Global Corporation Strategies (“GCS”), pursuant to which the Company issued to GCS 5,134,375 restricted shares of Common Stock for investor and public relations services. The aggregate fair value of the restricted shares was $259. This transaction represents initiation of business relations between the parties. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). Such amount is recognized over the term of the agreement. During the years ended December 31, 2018 and 2017, the Company recognized an amount of $7 and $129 as investor and public relations services expense, respectively. As of December 31, 2018, there are no services receivable.
G. In 2017, the Company issued 350,000 “E” warrants that are exercisable at $0.25 and expire two years from the date of issuance to purchase one share each of the Company’s common stock to two former employees parties as payment for services. The aggregate fair value of the warrants was $133. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). Such amount is recognized over the term of the agreement. During the years ended December 31, 2018 and 2017, the Company recognized $4 and $129 as consulting expenses, respectively. As of December 31, 2018, there are no services receivable.
The Company used the Black-Scholes-Merton pricing model to estimate the fair value of these warrants. The Black-Sholes-Merton pricing model assumptions used are as follows: expected dividend yield of 0%; risk-free interest rate of 0.10%-0.11%; expected volatility of 282%, and warrant exercise period based upon the stated terms. Shares issued for services are measured at the closing price as of the agreement date.
H. In 2017, the Company issued 450,000 fully vested shares of common stock to Lyons Capital as payment for services. The fair value of these shares was measured at the closing price as of the date of the agreement and the related expenses is recognized over the terms of the agreement. The aggregate fair value of the shares was $329. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable” (see also Note 2L). During the years ended December 31, 2018 and 2017, the Company recognized an amount of $116 and $212 as business development expenses, respectively. As of December 31, 2018, there are no services receivable.
I. In 2017, the Company issued 416,127 fully vested shares of common stock to Jeff Smurlick as payment for services. The aggregate fair value of the shares was $370. As the equity instruments issued are fully vested and non-forfeitable, the fair value of the grant was recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “ |
