| Equity | NOTE 5 - EQUITY:
a. On March 14, 2017 , the Company closed a public offering of 1,069,822 shares of Series C Convertible Preferred Stock, Series B warrants to purchase up to 4,279,288 shares of common stock and Series C warrants to purchase up to 4,279,288 shares of common stock (the “March 2017 Offering”). Each share of Series C Convertible Preferred Stock and the accompanying warrants were sold at a price of $6.40. Each share of Series C Convertible Preferred Stock is convertible into 4 shares of common stock reflecting a conversion price equal to $1.60 per share. The Company received gross proceeds
of approximately $6.8 million from the offering, before deducting placement agent fees payable by the Company equal to 8.0% of
the gross proceeds of the offering and a solicitation fee equal to 3.0% of the proceeds from the exercise of the Series C Warrants
and offering expenses payable by the Company. The holders of Series C
Convertible Preferred Stock may elect to convert at any time. The Series C Convertible Preferred Stock has certain
anti-dilution provisions which provisions require the lowering of the applicable conversion price, as then in effect, to the
purchase price of equity or equity-linked securities issued in subsequent offerings. The Series B warrants are exercisable
immediately and have a term of exercise of five years from the date of issuance and have an exercise price of $2.00 per share of
common stock. The Series C warrants were exercisable
immediately and had a term of exercise of six months from the date of issuance and had an exercise price of $1.60 per share of
common stock. As of September 30, 2017 all Series C warrants were expired and none were exercised prior to their expiration. For accounting purposes, the
Company analyzed the classification of the Series C Convertible Preferred Stock, including whether the embedded conversion options
should be bifurcated. As the Series C Convertible Preferred Stock is not redeemable, and the host contract was determined to be
akin to equity, the entire instrument was classified as equity. The Company has also concluded
that the warrants accompanying Series C Convertible Preferred Stock are classified as equity, since the warrants bear a fixed conversion
ratio and all other criteria for equity classification have been met. During the 9 month period ended
September 30, 2017, 326,609 shares of Series C Convertible Preferred Stock were converted into 1,306,436 shares of common stock. Pursuant to the terms of the
public offering of Series B Convertible Preferred Stock and accompanying warrants closed in July 2016, that provided the holders
of the Series B Convertible Preferred Stock with certain anti-dilution provisions, which provisions require the lowering of the
applicable conversion price, as then in effect, to the purchase price of equity or equity-linked securities issued in subsequent
offerings, upon closing of the March 2017 offering, the conversion price of the Series B Convertible Preferred Stock was adjusted
to $1.60 per share of common stock, and each share of Series B Convertible Preferred Stock became convertible into 20.625 shares
of common stock. The holders of Series B Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per
share of 15% per annum of the stated value for five years, payable in cash or common stock, at our discretion. As a result of such
adjustment, the Company was required to issue to the holders of the Series B Convertible Preferred Stock an aggregate of 9,063,314
additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and the payment of the dividends
thereunder in common stock, based on 311,521 shares of Series B Convertible Preferred Stock outstanding as of March 8, 2017. The issuance of additional
common stock at a price lower than $1.60 will entitle holders of Series B Convertible Preferred Stock and holders of Series C
Convertible Preferred Stock to receive additional shares upon conversion and with respect to the Series B Convertible
Preferred Stock additional shares or cash due to their dividend entitlement as described above. During the 9 month period ended
September 30, 2017, 130,529 shares of Series B Convertible Preferred Stock were converted into 4,711,281 shares of common stock.
b. As of September 30, 2017 the Company has authorized 155,000,000 shares of capital stock, par value $0.0001 per share, of which 150,000,000 are shares of common stock and 3,328,000 are shares of “blank check” preferred stock. |
