Stockholders' Equity | Note 2. Stockholders’ Equity. On January 8, 2015, the Board of Directors and the majority consenting stockholders of the Company executed a Joint Written Consent in accordance with the provisions of Section 242 of the Delaware General Corporation Law, to increase the authorized capital stock of the Company from 100,000,000 shares of common stock to 490,000,000 shares of common stock (the “Joint Written Consent”). All other provisions of the Company’s capital stock remained unchanged. Also, on that same date, the Company’s Board of Directors and majority consenting stockholders authorized a reverse split of common stock at the ratio of 1:4. The effective date of the reverse split was March 20, 2015, the date that FINRA approved implementation of the reverse recapitalization. Except as otherwise noted, all share, option and warrant numbers have been restated to give retroactive effect to this reverse split. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred at the beginning of the earliest period presented. January 1, 2012 The number of ordinary shares outstanding has been retroactively restated for the equivalent number of shares received by the accounting acquirer as a result of the reverse recapitalization as if these ordinary shares had been outstanding as of the beginning of the earliest period presented Recent Issuances of Common Stock Between January 15, 2015 and March 15, 2015, the Company sold a total of 2,052,000 units for cash consideration of $780,000 at a price of $0.40 (the “Units”), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger Between April 1, 2015 and June 29, 2015, the Company sold a total of 1,012,500 units for cash consideration of $405,000 at a price of $0.40 (the “Units”), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger. On July 21, 2015 the Company sold a total of 140,000 units for cash consideration of $15,000 at price of $0.107 (the “Units”), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. These units were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger. Between July 1, 2015 and September 30, 2015 the Company sold a total of 862,500 units for cash consideration of $345,000 at price of $0.40 (the “Units”), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. Of these units $65,000 were issued as stock payable and the cash from sale of units was not received for the sale of stock pre-reverse merger and $280,000 cash was received subsequent to Closing of the reverse merger. On July 31, 2015 and July 30, 2015 the Company issued 517,900 shares to one service provider, for financial and marketing consultant, and a total of 100,000 shares to two service providers, respectively, for services valued at a total value of $617,900, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com. On July 16, 2015 five Emerald debt holders in amount of $87,910 converted their debt into 274,719 units at a conversion price of $0.32 per unit, each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The Loss on Settlement of Debt recorded is $678,027. On July 14, 2015 the Company issued Emerald’s CEO and founder, Lior Wayn, 5,474,545 shares as per the share purchase agreement valued at $877,380, valued on the date of grant for the price of common stock. On July 16, 2015 consultants were issued 2,500,000 Class B Warrants exercisable for a two-year period to acquire one (1) share of Common Stock at a price of $0.40 per share; The fair value of these warrants is $2,199,507. The warrants were valued using the Black-Scholes model with volatility of 182% and discount rate of 0.67%. The Class B warrants are fully vested and were accordingly included in expenses as stock based compensation. On July 16, 2015 consultants were issued 2,536,247 Class C Warrants exercisable for a 90 day period, commencing 90 days after the effective date of this Registration Statementat an exercise price of $0.40 to acquire one (1) share of Common Stock and one (1) Class A Warrant at an exercise price of $0.80. The fair value of these warrants is $3,143,581. The warrants were valued using the Black-Scholes model with volatility of 182% and discount rate of 0.67%. The Class C warrants are fully vested and were accordingly included in expenses as stock based compensation. On November 17, 2015, the Company sold 250,000 units for cash consideration of $100,000 at price of $0.40 (the “Units”), each unit comprised of one share of common stock and one Class A warrant exercisable at $0.80 per share with a term 24 month. The relative fair value of the stock with embedded warrants was $41,304 for the common stock and $58,696 for the class A warrants. The warrants were valued using the Black-Scholes model with volatility of 149% and a discount rate of 0.50%. Between November 5, 2015 and November 16, 2015 the Company issued 268,084 shares to three service providers and for services valued at a total value of $268,084, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com. On January 26, 2016 and March 17, 2016, the Company issued 125,000 common shares to one service provider and 50,000 common shares to two service providers, respectively, for services valued at a total value of $251,250, arrived at using the stock price on date of grant of $1.75 and $0.65, respectively, per Nasdaq.com. On February 18, 2016, the Company issued 1,195,000 shares to three acting directors, for services valued at a total value of $1,194,403, arrived at using the stock price on date of grant of $1.00 per Nasdaq.com. On January 26, 2016, consultants that were previously issued 2,500,000 Class B Warrants exercisable for a two-year period to acquire one (1) share of Common Stock at a price of $0.40 per share, exercised the warrants on a cashless basis resulting in 1,928,572 shares issued with no additional related expense booked. On March 24, 2016, a convertible note payable and warrants where was issued to GoldMed Ltd for a consideration of $75,000 The warrants and the beneficial conversion feature were valued at $75,000, which resulted in a $75,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The discount is amortized in finance expense over the term of the note. On April 11, 2016, a convertible note payable and warrants was issued to Maz Partner. The warrants and the e beneficial conversion feature were valued at $80,000, which resulted in a $80,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The discount is amortized in finance expense over the term of the note. On May 5, 2016, the Company issued 150,000 shares to one service provider for services valued at a total value of $105,000, arrived at using the stock price on date of grant of $0.7, per Nasdaq.com. On May 10, 2016, the Company issued 41,667 shares to one service provider for services valued at a total value of $29,584, arrived at using the stock price on date of grant of $0.71, per Nasdaq.com. On May 18, 2016, the Company issued 150,000 shares to one service provider for services valued at a total value of $102,000, arrived at using the stock price on date of grant of $0.68, per Nasdaq.com. On June 28, 2016, the Company issued 175,000 shares to three service providers for services valued at a total value of $122,500, arrived at using the stock price on date of grant of $0.7, per Nasdaq.com. On June 30, 2016, the Company issued 333,333 shares to one service provider for services valued at a total value of $226,666, arrived at using the stock price on date of grant of $0.68, per Nasdaq.com. On June 6, 2016, a convertible note payable and warrants was issued to Alpha Capital. The warrants and the beneficial conversion feature were valued at $440,000, which resulted in a $440,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The discount is amortized in finance expense over the term of the note. On June 30, 2016, a convertible note payable and warrants was issued to Ilan Malka. The warrants and the embedded beneficial conversion feature were valued at $40,000, which resulted in a $40,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The discount is amortized in finance expense over the term of the note. On July 7, 2016, a convertible note payable and warrants was issued to Firstfire Global Opportunities Fund LTC. The warrants and the beneficial conversion feature were valued at $100,000, which resulted in a $100,000 discount recorded as a reduction of debt and an increase to additional paid in capital. The discount is amortized in finance expense over the term of the note. On July 1, 2016, the Company issued 300,000 shares to one service provider for service valued at a total value of $213,000 arrived at using the stock price on date of grant of $0.71, per Nasdaq.com. On July 1, 2016, the Company issued 6,767 shares to one service provider for service valued at a total value of $3,587 arrived at using the stock price on date of grant of $0.53, per Nasdaq.com. On August 4, 2016, the Company issued 31,250 shares to one service provider for service valued at a total value of $15,313, arrived at using the stock price on date of grant of $0.49, per Nasdaq.com. On November 10, 2016, the Company issued 119,000 units to Guy Shalom in total amount of $47,600. Each unit consist 119,000 warrants exercisable for a two-year period in exercise price of $0.8 and 119,000 common shares. The following table summarizes information of outstanding warrants as of December 31, 2016: Warrants Warrant Term Exercise Price Exercisable Investors - Class A Warrants (1) 5,918,719 2 years $ 0.80 5,918,719 Investors - Class B Warrants (2) 1,350,000 2 years $ 0.40 1,350,000 Investors - Class C Warrants (3) 5,072,492 (3 ) $ (3 ) 5,536,246 Alimi Ahmed - Class E Warrants (4) 900,000 (4 ) $ 0.0001 900,000 The Class A Warrants were issued in connection with a private placement in reliance upon Regulation S, pursuant to which the Registrant sold a total of 5,918,719 units at a price of $0.40 per unit (the “Units”), each Unit comprised of one Share and one Class A Warrant exercisable at $0.80 per share with a term 24 months. While all of the Class A Warrants are exercisable within 60 days, in fact, none of these warrants will be exercised for the foreseeable future, based upon the exercise price of $0.80 per Share. (2) The Class B Warrants were issued to consultants for bona fide services to the Company and are exercise, on a cashless basis at a price of $0.40 per Share for a period of two years. (3) The Class C Unit Warrants were issued to consultants for bona fide services to the Company, and each Unit is exercisable at a price of $0.40 to purchase one Share of Common Stock and one Class A Warrant which, in turn, is exercisable to purchase one additional Share at a price of $0.80. The Class C Unit Warrants expire ninety (90) days after the effective date of this Registration Statement. (4) A total of 2,700,000 Class E Warrants were issued by the Registrant to Lior Wayn pursuant to the terms of the Share Exchange Agreement and were exercisable in three equal tranches of 900,000 Shares each (the “Tranches”) at an exercise price of $0.0001 per Share, subject to and within 45 days of the Registrant achieving the milestones defined in the Share Exchange Agreement On December 16, 2016, the Company filed a Form 8-K reporting the termination of Lior Way’s employment agreements with the Company and Emerald Ltd., and his removal as an executive officer and director. After the year-ended December 31, 2016, Mr. Wayn transferred, sold and assigned his 5,212,878 shares of the Company’s common stock and 900,000 Class E Warrants that were fully-vested to an entity controlled by Mr. Alimi Ahmed, then a member of the Company’s Board of Directors. This transaction was reported in the Company’s Form 8-K filed with the SEC on January 27, 2017. Effective as of December 31, 2016, the remaining 1,800,000 Class E Warrants that had been issued to Mr. Wayn Warrants were canceled. Sale of Unregistered Securities During the last two years, the Registrant issued the following restricted shares which were not registered under the Act On June 18, 2015 and July 21, 2015, after the Company ceased to be a shell company, the Company issued and sold unregistered securities, as set forth in the table below, in private offering of a total of 2,925,000 units at a price of $0.40. Each Unit consisted of one Share and one Class A Warrant exercisable to purchase one additional Share of Common Stock at a price of $0.80 (the “Units”). The sales were made without registration under the Act in reliance upon the exemptions provided in Section 4(2) of the Act and Reg S. Name of Subscriber Bases for Issuance Date of Issuance Price Per Unit Shares Issued Short Trade Ltd (1) Subscription Agreement 06/18/2015 $ 0.40 625,000 Prop Trade Ltd (2) Subscription Agreement 06/18/2015 $ 0.40 375,000 Dr. Ben Zion Weiner Subscription Agreement 06/18/2015 $ 0.40 125,000 RP Holdings (1992) Ltd. (3) Subscription Agreement 06/18/2015 $ 0.40 125,000 Dr. Tank Siak Khim Subscription Agreement 06/18/2015 $ 0.40 250,000 Yoel Yogev Subscription Agreement 06/18/2015 $ 0.40 200,000 Universal Link Ltd (4) Subscription Agreement 06/18/2015 $ 0.40 175,000 Avigdor Hakmon Subscription Agreement 06/18/2015 $ 0.40 62,500 Dr. Shmuel Pasternak Subscription Agreement 06/18/2015 $ 0.40 62,500 Liat Sidi Subscription Agreement 07/21/2015 $ 0.40 25,000 Tzvi Aharonson Subscription Agreement 07/21/2015 $ 0.40 137,500 Estory Giloz Ran Subscription Agreement 07/21/2015 $ 0.40 312,500 Malca Maimon Subscription Agreement 07/21/2015 $ 0.40 87,500 Ohad Cohen Subscription Agreement 07/21/2015 $ 0.40 150,000 Nissim Simhon Subscription Agreement 07/21/2015 $ 0.40 50,000 NE Solution Ltd (5) Subscription Agreement 07/21/2015 $ 0.40 162,500 Total $ 1,169,961 2,925,000 (1) Short Trade Ltd is controlled by Mr. Shlomo Noyman, a resident of Israel. (2) Prop Trade Ltd is controlled by Mr. Andrew Philip Dings, a resident of Singapore. (3) RP Holdings (1992) Ltd. is controlled by Mr. Rubin Zimerman, a resident of Israel. (4) Universal Link Ltd is controlled by Mr. Ahmad Alimi, a resident of Israel. (5) NE Solution Ltd is controlled by Mr. Lee Yang Tong, a resident of Singapore. In July 2015, the persons listed in the table below, each a lender to Emerald on or before November 2014, converted their debt owed by Emerald into Units, each consisting of one restricted Share and one Class A Warrant, at a conversion price of $0.32. Each of the lenders was a resident of Israel and the issuance was without registration under the Act in reliance upon the exemptions provided in Section 4(2) of the Act and Reg S. Name of Note Holder Bases of Issuance Debt Converted Shares Issued David Masasa Conversion of Debt $ 8,788 27,463 Liron Carmel Conversion of Debt $ 19,521 61,003 Yoseph Cohen Conversion of Debt $ 15,632 48,850 Tzvi Aharonson Conversion of Debt $ 43,969 137,403 Total $ 87,910 274,719 On July 21, 2015, the Registrant issued 140,000 restricted Shares to Shira Brand Shiffer, a resident of Israel, at a price of $0.107 per Share, with no warrants attached. The issuance to Shira Brand Shiffer, without registration under the Act, was made in reliance upon Section 4(2) of the Act and Reg S. On July 16, 2015, the Registrant issued 517,900 restricted shares of Common Stock to Meyda Consulting Ltd, an entity organized under the laws of Israel controlled by Eliyahu Kirstein, a resident of Israel. The issuance of these shares was in consideration for services and was made without registration under the Act in reliance upon the exemptions provided in Section 4(2) of the Act and Reg S. On July 16, 2015, the Registrant issued Class B Warrants and Class C Unit Warrants to the following entities for bona fide services to the Registrant. The issuances of these Warrants were in consideration for services and was made without registration under the Act in reliance upon the exemptions provided in Section 4(2) of the Act and Reg S. Basis of Issuance Class B Warrant Issued Class C Unit Warrants Issued Total Warrants Issued Yaad Consulting Ltd. (1) Services 625,000 $ 634,063 1,259,063 LA Pure Capital Ltd. (2) Services 375,000 $ 380,467 755,467 Amir Uziel Economic Consultant Ltd. (3) Services 625,000 $ 634,061 1,259,061 Capitalink Ltd. (4) Services 625,000 $ 634,061 1,259,061 (1) The control person of Yaad Consulting Ltd is Itschak Shrem, a resident of Israel. During November 2015, the Registrant issued and sold unregistered Shares as set forth on the table below: Name of Issuee Date of Issuance Number of Shares Consideration Bases for Issuance Shirat Hahayim 11/17/2015 250,000 $0.40 per share Subscription Agreement (1) Lyons Capital LLC. (2) 11/05/2015 250,000 Valued at $1.00 per share Services David Treves 11/16/2015 12,334 Valued at $1.00 per share Services Pnina Rosenblum 11/09/2015 5,750 Valued at $1.00 per share Services Total Shares Issued 518,084 (1) The issuance was pursuant to a Unit Subscription Agreement each consisting of 1 Share and 1 Class A Warrant exercisable for a period of 24 months to purchase 1 additional Share at $0.80. The issuance and sale of Shares to Shirat Hahayim and Pnina Rosenbluem, residents of the State of Israel, and David Treves, resident of Australia, without registration under the Act, was made in reliance upon the exemptions provided in Section 4(2) of the Act and and Regulation S promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Act. The issuance of Shares to Lyons Capital LLC, without registration under the Act, was in reliance upon Section 4(2) and Regulation D promulgated by the SEC under the Act. During 2016, the Registrant issued and sold common Shares as set forth on the table below: Name of Issuee Date of Issuance Number of Shares Consideration Bases for Issuance Yair Fudim 02/18/2016 482,000 Valued at $0.9995 per share Services Estery Giloz Ran 02/18/2016 482,000 Valued at $0.9995 per share Services Baruch Kfir 02/18/2016 231,000 Valued at $0.9995 per share Services Legend Securities Inc 03/17/2016 50,000 Valued at $0.65per share Services JFS Investments PR LLC 01/26/2016 125,000 Valued at $1.75 per share Services Garden state securities Inc 05/04/2016 150,000 Valued at $0.70 per share Services JFS Investments PR LLC 05/10/2016 41,667 Valued at $0.71 per share Services Kodiak Capital Group LLc 05/18/2016 150,000 Valued at $0.68 per share Services Alpha Capital Anstalt 06/26/2016 125,000 Valued at $0.70 per share Services Legend Securities Inc 06/28/2016 50,000 Valued at $0.70 per share Services JFS Investments PR LLC 06/30/2016 333,333 Valued at $0.68 per share Services VAR Growth Corporation 07/01/2016 300,000 Valued at $0.71 per share Services David Treves 07/27/2016 6,767 Valued at $0.53 per share Services Firstfire Global Opportunities Fund LLC 08/04/2016 31,250 Valued at $0.49 per share Services Guy Shalom 10/11/2016 119,000 $0.40 per share Investment Total Shares Issued 2,677,017 During 2016, the Registrant issued Class A Warrants and Class B Unit Warrants to the following entities for bona fide services to the Registrant. The issuances of these Warrants were in consideration for convertible note payable and was made without registration under the Act in reliance upon the exemptions provided in Section 4(2) of the Act and Reg S. Name of Subscriber Bases for Issuance Date of Issuance Price Per Unit Class A Warrant Issued Class B Warrant Issued Ilan Malca Subscription Agreement 05/24/2016 $ 0.40 100,000 - Alpha Capital Anstalt Subscription Agreement 05/30/2016 $ 0.40 1,000,000 1,000,000 Maz Partners LP Subscription Agreement 03/31/2016 $ 0.40 200,000 - Chi Squared Capital Inc Subscription Agreement 05/30/2016 $ 0.40 100,000 100,000 Firstfire Global Opportunities Fund LLC Subscription Agreement 07/07/2016 $ 0.40 250,000 250,000 Guy Shalom Investment Agreement 10/11/2016 $ 0.40 119,000 - Total Warrants Issued 1,769,000 1,350,000 Recent Option Grants On October 1, 2015, the Company’s board of directors approved a grant of 592,000 options to certain of its employees and consultants. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.01-$0.4 per share. As of December 31,2016, 561,280 options were fully vested and 30,720 options were canceled. As a result, the Company recognized share-based payment net expenses in 2016 and 2015 in the amount of $141,436 and $398,575 respectively. On February 11, 2016, the Company’s board of directors approved a grant of 70,533 options to certain of its employees. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.01-$0.4 per share. As of December 31,2016, 47,133 options were fully vested and 31,500 options were canceled. As a result, the Company recognized share-based payment expenses in 2016 in the amount of $21,798. On February 18, 2016, the Company’s board of directors approved a grant of 1,466,700 options to certain of its employees and consultants. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.01- $0.4 per share. As of December 31,2016, all the options were fully vested. As a result, the Company recognized share-based payment expenses in 2016 in the amount of $1,389,614. On May 5, 2016, the Company’s board of directors approved a grant of 93,750 options to certain of consultants. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.001 per share. As of December 31, 2016, all the options were fully vested. As a result, the Company recognized share-based payment expenses in 2016 in the amount of $61,455. On October 1, 2016, the Company’s board of directors approved a grant of 2,514,500 options to certain of its executive, director and consultants. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.001- $0.4 per share. As of December 31, 2016, 1,111,500 options were fully vested and $450,000 thousands were canceled. As a result, the Company recognized share-based payment expenses in 2016 in the amount of $396,222. On November 3, 2016, the Company’s board of directors approved a grant of 339,000 options to certain of its employees. Each option is exercisable to purchase a share of common stock at an exercise price equal to $0.2-$0.4 per share. As of December 31,2016, 139,000 options were fully vested. As a result, the Company recognized share-based payment expenses in 2016 in the amount of $40,747. A summary of the Company’s activity related to options to employees, executives and directors and related information is as follows: For the year ended December 31, 2016 For the year ended December 31, 2015 Amount of options Weighted average exercise price Aggregate intrinsic value Amount of options Weighted average exercise price Aggregate intrinsic value $ $ $ $ Outstanding at beginning of year 561,280 0.0666 - - - Granted 5,440,483 0.1336 592,000 0.06 Exercised (697,086 ) - - - Cancelled (550,000 ) (0.3956 ) (30,720 ) Outstanding at the end of year 4,193,397 0.11 1,006,415 561,280 0.06 527,603 Vested and expected-to-vest at end of period 3,288,062 0.11 789,134 561,280 0.06 527,603 The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company’s common shares on December 31, 2016 and December 31, 2015 respectively and the exercise price, multiplied by the number of in-the-money stock options on those dates) that would have been received by the stock option holders had all stock option holders exercised their stock options on those dates. The stock options outstanding as of December 31, 2016, and December 31, 2015, have been separated into exercise prices, as follows: Exercise price Stock options outstanding as of December 31, Weighted average remaining contractual life – years as of December 31, Stock options exercisable as of December 31, 2016 2015 2016 2015 2016 2015 0.4 1,208,600 78,720 9.25 8.75 1,208,600 78,720 - 0.2 1,870,000 - 9 1,870,000 - (*) 1,114,797 482,560 9.25 8.75 1,114,797 482,560 4,193,397 561,280 9.25 8.75 4,193,397 561,280 (*) Less than 1% Compensation expense recorded by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 for the year ended December 31, 2016 and 2015 was $2,028,805 and $397,547, respectively. The fair value of the stock options is estimated at the date of grant using Black-Scholes options pricing model with the following weighted-average assumptions: Years ended December 31, 2016 2015 Expected volatility 157 % 70.0 % Risk-free interest 0.69 % 1.0 % Dividend yield 0 % 0 % Expected life of up to (years) 6.0 6.0 |