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<div align="center"><table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 54pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 1</font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">–</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: bold 10pt times new roman">GENERAL</font></div>
</td>
</tr></table>
</div>
<div> </div>
<div>
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"><font style="display: inline; font-weight: bold">A.</font></font></div>
</td>
<td style="text-align: justify">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Integrity Applications, Inc. (the "Company") was incorporated on May 18, 2010 under the laws of the State of Delaware.  On July 15, 2010, Integrity Acquisition Corp. Ltd. (hereinafter: "Integrity Acquisition"), a wholly owned Israeli subsidiary of the Company, which was established on May 23, 2010, completed a merger with A.D. Integrity Applications Ltd. (hereinafter: "Integrity Israel"), an Israeli corporation that was previously held by the stockholders of the Company.  Pursuant to the merger, all equity holders of Integrity Israel received the same proportional ownership in the Company as they had in Integrity Israel prior to the merger. Following the merger, Integrity Israel remained a wholly-owned subsidiary of the Company.  As the merger transaction constituted a structural reorganization, the merger has been accounted for at historical cost in a manner similar to a pooling of interests.  Integrity Israel was incorporated in 2001 and commenced its operations in 2002.  Integrity Israel, a medical device company, focuses on the design, development and commercialization of non-invasive glucose monitoring devices for use by people with diabetes.</font></div>
</td>
</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">B.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Going concern uncertainty</font></div>
</td>
</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Since its incorporation, the Company did not conduct any material operations other than those carried out by Integrity Israel.  The development and commercialization of Integrity Israel's product is expected to require substantial expenditures.  Integrity Israel and the Company (collectively, the "Group") have not yet generated any material revenues from operations, and therefore they are dependent upon external sources for financing their operations. As of March 31, 2016, the Group has incurred accumulated deficit of $30,730,799, stockholders’ deficit of $8,223,404 and negative operating cash flows.  These factors raise substantial doubt about the Group’s ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.  During 2012, the Company raised a total amount of approximately $1.0 million (net of related expenses) from the issuance of Common Stock. During 2013, the Company raised funds in an approximate amount of $5.3 million (net of related cash expenses) from the issuance of units (the “Series A Units”) consisting of shares of the Company’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and detachable warrants to purchase shares of the Company’s Common Stock (the “Series A Warrants” or “Warrants with down round protection”).  During the period between August and December of 2014, the Company raised funds in an aggregate amount of approximately $7.3 million (net of related cash expenses) from the issuance of units (the “Series B Units”), each consisting of (a) one share of the Company’s newly designated Series B 5.5% Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), convertible into Common Stock at an initial conversion price of $5.80 per share, (b) a five year warrant to purchase, at an exercise price of $5.80 per share, up to such number of shares of Common Stock issuable upon conversion of such share of Series B Preferred Stock (each a “Series B-1 Warrant”) and (c) a five year warrant to purchase, at an exercise price of $10.00 per share, up to such number of shares of Common Stock issuable upon conversion of such share of Series B Preferred Stock (each a “Series B-2 Warrant” and, together with the Series B-1 Warrants, collectively, the “Series B Warrants”).  In April 2016, the Company raised funds in an aggregate amount of approximately $2.2 million (net of related cash expenses) through the issuance of Series C Units, as described in further detail in Note 3.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Until such time as the Group generates sufficient revenue to fund its operations (if ever), the Group plans to finance its operations through the sale of equity or equity-linked securities and/or debt securities and, to the extent available, short term and long term loans. There can be no assurance that the Group will succeed in obtaining the necessary financing to continue its operations as a going concern.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">C.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Risk factors</font></div>
</td>
</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">As described in Note 1A and Note 1B above, the Group has a limited operating history and faces a number of risks and uncertainties, including risks and uncertainties regarding continuation of the development process, demand and market acceptance of the Group's products, the effects of technological changes, competition and the development of products by competitors.  Additionally, other risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Group's future results and the availability of necessary financing. In addition, the Group expects to continue incurring significant operating costs and losses in connection with the development of its products and marketing efforts. The Group has not yet generated material revenues from its operations to fund its activities and therefore is dependent on the receipt of additional funding from its stockholders and/ or new investors in order to continue its operations.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div>
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">D.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Use of estimates in the preparation of financial statements</font></div>
</td>
</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to (i) the fair value estimate of the Warrants with down-round protection, and (ii) the going concern assumptions.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 54pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 2</font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">–</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: bold 10pt times new roman">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></div>
</td>
</tr></table>
</div>
<div> </div>
<div>
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">A.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Basis of presentation</font></div>
</td>
</tr></table>
</div>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Principles</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other interim period or for any future period.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Principles of Consolidation</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">B.</font></div>
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<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Warrants with down-round protection</font></div>
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</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Company has determined its derivative warrant liability with respect to the Series A Warrants <font style="display: inline; font-size: 10pt">and warrants issued to AGI as part of the Series A Unit offering completed in 2012 </font>to be a Level 3 fair value measurement and has used the Binomial pricing model to calculate its fair value. Because the warrants contain a down round protection feature, the probability that the exercise price of the warrants would decrease as the stock price decreased was incorporated into the valuation calculations.  The key inputs used in the fair value calculations were as follows:</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The changes in the fair value of the Level 3 liability are as follows (in US dollars):</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 88%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Series A Warrants</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, Beginning of the period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">321,695</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,057,618</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exchange of Series A Warrants pursuant to the “most favored nation” provision</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(1,014,471</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Change in fair value of Series A Warrants</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(43,510</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(65,770</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, End of period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">278,185</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">977,377</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The key inputs used in the fair value calculations were as follows:</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 88%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Dividend yield (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected volatility (%) (*)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">62.16</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">105.14</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Risk free interest rate (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.08</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.89</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected term of options (years) (**)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">3.20</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.95</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exercise price (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Share price (US dollars) (***)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.38</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.31</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Fair value (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.71</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.06</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 90.69pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(*)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the low trading volume of the Company’s Common Stock, the expected volatility was based on the historical volatility of the share price of other public companies that operate in the same industry sector as the Company.</font></div>
</td>
</tr></table>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 90.69pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(**)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the fact that the Company does not have sufficient historical exercise data, the expected term was determined based on the "simplified method" in accordance with Staff Accounting Bulletin No. 110.</font></div>
</td>
</tr></table>
</div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(***)</font></div>
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<div align="justify"><font style="display: inline; font: 10pt Times New Roman">The Common Stock price, per share reflects the Company’s management’s estimation of the fair value per share of Common Stock as of March 31, 2016 and 2015. In reaching its estimation for such periods, management considered, among other things, a valuation prepared by a third-party valuation firm following the issuance of the Series B Units and the Series C Units (See Note 3).</font></div>
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<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">C.</font></div>
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<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Recently issued accounting pronouncements</font></div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">1.</font></div>
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<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity”</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Effective January 1, 2016, the Group adopted Accounting Standard Update 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity ("ASU 2014-16").</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-16 clarify how U.S. GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. Furthermore, the amendments clarify that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. Rather, the nature of the host contract depends upon the economic characteristics and risks of the entire hybrid financial instrument. The amendments also clarify that, in evaluating the nature of a host contract, an entity should assess the substance of the relevant terms and features (i.e., the relative strength of the debt-like or equity-like terms and features given the facts and circumstances) when considering how to weigh those terms and features. The assessment of the substance of the relevant terms and features should incorporate a consideration of the characteristics of the terms and features themselves; the circumstances under which the hybrid financial instrument was issued or acquired; and the potential outcomes of the hybrid financial instrument, as well as the likelihood of those potential outcomes.</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-16 apply to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share.</font></div>
<div style="text-indent: 0pt; display: block"><br />
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The effects of initially adopting the amendments in ASU 2014-16 were required to be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective (However, retrospective application was permitted to all relevant prior periods).</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Management analyzed the economic characteristics and risks of the Series A Preferred Stock and the Series B Preferred Stock (including the embedded conversion feature of each) in accordance with the provisions of ASU 2014-16 and determined that such instruments are considered as more akin to equity than debt. Accordingly, it was determined that the economic characteristics and the risks of the embedded conversion option to Common Stock and those of the Preferred Stock themselves (the 'host contract') are clearly and closely related and accordingly, the embedded conversion feature was not required to be bifurcated. As a result of the above determination, ASU 2014-16 did not impact the classification of the Series A Preferred Stock or the Series B Preferred Stock.</font></div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">2.</font></div>
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<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2014-09, “Revenue from Contracts with Customers”</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In May 2014, the FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09").</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">An
entity should apply the amendments in ASU 2014-09 using one of the following two methods: 1. Retrospectively to each prior
reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the
cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the
latter transition method, it also should provide certain additional disclosures.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">During 2016, the FASB issued several ASU that focus on certain implementation issues of the new revenue recognition guidance including Narrow-Scope Improvements and Practical Expedients, Principal versus Agent Considerations and Identifying Performance Obligations and Licensing.</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">For a public entity, the amendments in ASU 2014-09 (including the amendments introduced through recent ASU's) are effective for annual reporting periods beginning after December 15, 2016, including interim periods within the first annual reporting period (the first quarter of fiscal year 2017 for the Company). Early application is not permitted.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: normal 10pt times new roman">The Company is in the process of assessing the impact, if any, of ASU 2014-09 (including <font style="display: inline; font-weight: normal">the amendments introduced through recent ASUs)</font> on its consolidated financial statements.</font></div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">3.</font></div>
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<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standards Update 2014-15, “Presentation of Financial Statements—Going Concern”</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In August 2014, the FASB issued Accounting Standards Update 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 ("ASU 2014-15").</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 36pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-15 provides guidance on management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable).</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-15 also provides guidance related to the required disclosures as a result of management’s evaluation. </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Due to the current state of the Company and the existing uncertainty regarding its ability to continue as a going concern, management does not believe that the provisions of ASU 2014-15 will have a significant effect on its evaluation of the Company’s ability to continue as a going concern. However, management is currently considering if additional disclosures will be required as a result of ASU 2014-15.</font></div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">4.</font></div>
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<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2015-11, “Simplifying the Measurement of Inventory”</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In July, 2015, The FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11").</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin).</font></div>
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</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within the first such annual reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period.</font></div>
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</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.</font></div>
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<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 3</font></div>
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<div align="justify"><font style="display: inline; font: bold 10pt times new roman">RECENT EVENTS</font></div>
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<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">A.</font></div>
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<td style="text-align: justify">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">During February 2016, the Company entered into an Advisory Agreement with Andrew Garrett, Inc., (“AGI”), pursuant to which the Company retained AGI on a non-exclusive basis to provide certain advisory services to the Company. As consideration for such services, the Company extended through December 31, 2019, the expiration date of 422,077 warrants issued to AGI and/or its designees in connection with Company’s common stock offering completed in 2010 and the Series A Unit offering completed in 2012. The Advisory Agreement had an initial term of six months, subject to automatic renewal for additional 30 day terms unless terminated by either party with 30 days written notice.  The abovementioned change in the terms of the warrants did not have a material effect on the Company’s results of its operations. In April 2016, the Company and AGI amended that Advisory Agreement to extend the term of the Advisory Agreement for an additional six months.  In consideration for such extension, the Company agreed to amend the 439,674 warrants issued to AGI and/or its designees in connection with the Series B Unit offering to include full-ratchet anti-dilution protection. As a result of the inclusion of anti-dilution protection, the Company expects that during the three month period ending June 30, 2016 it will classify approximately $600,000 representing the fair market value at the date of issuance of the 439,674 warrants issued to AGI out of stockholders deficit and present them as Warrants with down round protection within long-term liabilities.</font></div>
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<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">B.</font></div>
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<td style="text-align: justify">
<div style="text-align: justify; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">During April 2016, the Company raised funds in an aggregate amount of approximately $2.2 million (net of related cash expenses) from the issuance in two separate closings of 2,484 units (the “Series C Units”), each consisting of (a) one share of the Company’s newly designated Series C 5.5% Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), convertible into Common Stock at an initial conversion price of $4.50 per share, (b) a five year warrant to purchase, at an exercise price of $4.50 per share, up to such number of shares of Common Stock issuable upon conversion of such share of Series C Preferred Stock (each a “Series C-1 Warrant”) and (c) a five year warrant to purchase, at an exercise price of $7.75 per share, up to such number of shares of Common Stock issuable upon conversion of such share of Series C Preferred Stock (each a “Series C-2 Warrant” and, together with the Series C-1 Warrants, collectively, the “Series C Warrants”). As of May 16, 2016, the shares of Preferred Stock comprising the Series C Units are convertible into an aggregate of 552,010 shares of Common Stock, and the Series C Warrants comprising the Series C Units are exercisable for an aggregate of 1,104,020 shares of Common Stock, in each case subject to adjustment as described below.</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Pursuant to a placement agent agreement (the “Placement Agent Agreement”) with AGI, at the initial closing of the sale of the Series C Units the Company paid AGI, as a commission, an amount equal to 6% of the aggregate sales price of the Series C Units, plus 4% of the aggregate sales price as a management fee plus a non-accountable expense allowance equal to 3% of the aggregate sales price of the Series C Units. At the second closing of the sale of the Series C Units, the Company paid AGI, as a commission, an amount equal to 10% of the aggregate sales price of the Series C Units, plus a non-accountable expense allowance equal to 3% of the aggregate sales price of the Series C Units. In addition, pursuant to the Placement Agent Agreement, the Company is required to issue to AGI: (a) 5 year warrants to purchase up to 110,403 shares of Common Stock at an exercise price of $4.50 per share and (b) 5 year warrants to purchase up to 55,201 shares of Common Stock at an exercise price of $7.75 per share. The terms of such warrants will be substantially similar to the Series C Warrants except that the warrants issued to AGI will also be exercisable on a cashless basis and will include full ratchet anti-dilution protection.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to certain ownership limitations described below, the Series C Preferred Stock is convertible at the option of the holder at any time and from time to time into shares of Common Stock at a conversion price of $4.50 per share (calculated by dividing the stated value per share of Preferred Stock, which is initially $1,000, by the conversion price per share). The conversion price of the Series C Preferred Stock is subject to adjustment for certain issuances of Common Stock or other securities of the Company at an effective price per share that is lower than the conversion price then in effect, as well as for stock splits, stock dividends, combinations of shares, similar recapitalization transactions and certain pro-rata distributions to common stockholders. In addition, the holders of Preferred Stock will be entitled to receive any securities or rights to acquire securities or property granted or issued by the Company pro rata to the holders of Common Stock to the same extent as if such holders had converted all of their shares of Series C Preferred Stock prior to such distribution. In the event of a fundamental transaction, such as a merger, consolidation, sale of substantially all assets and similar reorganizations or recapitalizations of the Company, the holders of Series C Preferred Stock will be entitled to receive, upon conversion of their shares of Series C Preferred Stock, any securities or other consideration received by the holders of the Common Stock pursuant to the fundamental transaction.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Holders of Series C Preferred Stock are entitled to receive cumulative dividends at a rate of 5.5% per annum, based on the stated value per share of Series C Preferred Stock. Dividends on the Series C Preferred Stock are payable quarterly on March 31, June 30, September 30 and December 31 of each year, beginning on June 30, 2016, and on each conversion date (with respect to the shares of Preferred Stock being converted). For so long as required under the terms of the Certificate of Designations for the Company’s outstanding Series A Preferred Stock or Series B Preferred Stock, dividends will be payable only in shares of Common Stock. Thereafter, dividends on the Series C Preferred Stock will be payable, at the option of the Company, in cash and/or, if certain conditions are satisfied, shares of Common Stock or a combination of both. Shares of Common Stock issued as payment of dividends will be valued at the lower of (a) the then current conversion price of the Series C Preferred Stock or (b) the average of the volume weighted average price for the Common Stock on the principal trading market therefor for the 10 trading days immediately prior to the applicable dividend payment date. The Company will incur a late fee of 9% per annum, payable in cash, on dividends that are not paid within three trading days of the applicable dividend payment date.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to any limitations under the terms of the Certificate of Designations for the Company’s outstanding Series A Preferred Stock or Series B Preferred Stock, the Company may become obligated to redeem the Series C Preferred Stock in cash upon the occurrence of certain triggering events, including, among others, a material breach by the Company of certain contractual obligations to the holders of the Series C Preferred Stock, the occurrence of a change in control of the Company, the occurrence of certain insolvency events relating to the Company, or the failure of the Common Stock to continue to be listed or quoted for trading on one or more specified United States securities exchanges or a regulated quotation service. In addition, upon the occurrence of certain triggering events, each holder of Series C Preferred Stock will have the option to require the Company to redeem such holder’s shares of Preferred Stock for a redemption price payable in shares of Common Stock or receive an increased dividend rate of 9% on all of such holder’s outstanding Series C Preferred Stock.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to certain conditions contained in the Certificate of Designations, Preferences and Rights relating to the Series C Preferred Stock (the “Certificate of Designations”), the Company will have the option to force the conversion of the Series C Preferred Stock (in whole or in part) if (a) the volume weighted average price for the Common Stock on its principal trading market exceeds $7.00 for each of any 20 trading days during any 30 consecutive trading day period and the average daily dollar trading value for the Common Stock during such 30 day period exceeds $50,000 or (b) the Company receives approval to list the Common Stock on a national securities exchange.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to certain exceptions contained in the Certificate of Designations, if the Company fails to timely deliver certificates for shares of Common Stock issuable upon conversion of the Series C Preferred Stock (the “Conversion Shares”) and, as a result, the holder is required by its brokerage firm to purchase shares of Common Stock to deliver in satisfaction of a sale by such holder of the Conversion Shares (a “Buy-In”), the Company will be required to: (a) pay the converting holder in cash an amount equal to the amount, if any, by which such holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds the product of (i) the aggregate number of Conversion Shares due to the holder, multiplied by (ii) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions); and (b) at the option of such holder, either reissue (if surrendered) the shares of Series C Preferred Stock equal to the number of shares of Series C Preferred Stock submitted for conversion (in which case, such conversion will be deemed rescinded) or deliver to such holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements. In addition, the Company will be required to pay partial liquidated damages of $10 for each $1,000 of stated value of any shares of Series C Preferred Stock which have been converted by a holder and in respect of which the Company fails to deliver Conversion Shares by the fifth trading day following the applicable conversion date and the Company will continue to pay such partial liquidated damages for each trading day after such eighth trading day until such certificates are delivered or the holder rescinds such conversion.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">As long as at least 35% of the originally issued shares of Series C Preferred Stock are outstanding, without the written consent of the holders of a majority in stated value of the outstanding Series C Preferred Stock, the Company will not be permitted to, among other things, incur indebtedness or liens not permitted under the Certificate of Designations; repay, repurchase, pay dividends on or otherwise make distributions in respect of any shares of Common Stock or other securities junior to the Series C Preferred Stock; enter into certain transactions with affiliates of the Company; or enter into any agreement with respect to the foregoing.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to the beneficial ownership limitation described below, holders of Series C Preferred Stock will vote together with the holders of Common Stock and Series A Preferred Stock and Series B Preferred Stock on an as-converted basis. Holders will not be permitted to convert their Series C Preferred Stock if such conversion would cause such holder to beneficially own more than 4.99% of the outstanding Common Stock (subject to increase to 9.99%, at the option of the holder, upon no less than 61 days prior written notice to the Company) (the “Beneficial Ownership Limitation”). In addition, no holder may vote any shares of Series C Preferred Stock (on an as-converted to Common Stock basis) in excess of the Beneficial Ownership Limitation.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Subject to certain limitations, so long as any Purchaser holds any shares of Series C Preferred Stock, if (a) the Company sells any shares of Common Stock or other securities convertible into, or rights to acquire, Common Stock and (b) a Purchaser then holding Series C Preferred Stock, Warrants, Conversion Shares or Warrant Shares (defined below) reasonably believes that any of the terms and conditions appurtenant to such issuance or sale are more favorable to the purchaser in such subsequent sale of securities than are the terms and conditions granted to such Purchaser after taking into account all of the terms and conditions of the terms granted to the Purchasers under the Purchase Agreement and the terms granted in such subsequent issuance or sale, including all of the components of the Series C Units and of the securities or units involved in such subsequent issuance or sale, then the Purchaser will be permitted to require the Company to amend the terms of this transaction (only with respect to such Purchaser) so as to match the terms of the subsequent issuance (including, for the avoidance of doubt, any terms and provisions that are or may be less favorable to such Purchaser).</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Series C Warrants have a five-year term commencing on their respective issuance dates. Until the end of the applicable term, each Series C Warrant will be exercisable at any time and from time to time at an exercise price of $4.50 per share (with respect to the Series C-1 Warrants) or $7.75 per share (with respect to the Series C-2 Warrants). The Series C Warrants contain adjustment provisions substantially similar to those to the adjustment provisions of the Series C Preferred Stock as described above, except that the Series C Warrants do not include dilution protection for issuances of securities at an effective price per share lower than the conversion price of such Series C Warrants. In addition, the Series C Warrants provide for protection for a Buy-In on substantially the same terms as described above with respect to the Series C Preferred Stock. No holder may exercise its Series C Warrants in excess of the Beneficial Ownership Limitation.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">As a result of the initial issuance and sale of the Series C Units, pursuant to the terms of the Series A Warrants, on April 8, 2016, the exercise price per share of the Series A Warrants decreased from $5.80 per share to $4.50 per share and the number of shares of Common Stock issuable upon exercise of each of the Series A Warrants, in the aggregate, increased such that the aggregate exercise price payable thereunder, after taking into account the decrease in the exercise price, will be equal to the aggregate exercise price prior to such adjustment. Also as a result of the initial issuance and sale of the Series C Units, pursuant to the terms of the certificates of designations for the Series A Preferred Stock and Series B Preferred Stock, on April 8, 2016, the conversion price per share of Series A Preferred Stock and Series B Preferred Stock decreased to $4.50 per share.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Company is in the process of evaluating the impact, of the issuance of the Series C Units on its financial statements.</font></div>
<div style="text-indent: 0pt; display: block"></div>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 54pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 4</font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">–</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: bold 10pt times new roman">INVENTORIES</font></div>
</td>
</tr></table>
</div>
<div> </div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">December 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Raw materials</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">205,324</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">205,645</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Work in process</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">536,208</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">551,111</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Finished products</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">58,782</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">59,467</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">800,314</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">816,223</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div align="center"><table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman"><tr style="vertical-align: top"><td style="width: 54pt"><div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 5</font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">–</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: bold 10pt times new roman">FINANCING (INCOME) EXPENSES, NET</font></div>
</td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Israeli CPI linkage difference on principal of loans from stockholders</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(1,464</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(3,680</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exchange rate differences</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">4,915</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(52,603</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Change in fair value of Warrants with down round protection</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(43,510</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(65,770</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Interest expenses on credit from banks and other</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,426</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,590</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss on partial extinguishment of Series A Preferred Stock and Series A Warrants</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">773,297</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">(37,633</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">653,834</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"></div>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 54pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">NOTE 6</font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">–</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: bold 10pt times new roman">LOSS PER SHARE</font></div>
</td>
</tr></table>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 72pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 72pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In periods of net loss, basic loss per share is computed by dividing net loss for the period after consideration of the effect of dividend on preferred stock by the weighted average number of shares outstanding during the period.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 72pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The loss and the weighted average number of shares used in computing basic and diluted loss per share for the three month periods ended March 31, 2016 and 2015 are as follows:</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss for the period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1,226,764</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1,534,531</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Cash dividend on Series A Preferred Stock</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">4,700</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">20,514</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Stock dividend on Series B Preferred Stock</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">122,820</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">83,237</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss for the period attributable to common stockholders</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">1,354,284</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">1,638,282</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Number of shares</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Number of shares:</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Weighted average number of shares used in the computation of basic and diluted earnings per share</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">5,690,097</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">5,323,459</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Total weighted average number of common shares related to outstanding convertible preferred stock, options and warrants excluded from the calculations of diluted loss per share (*)</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">9,462,671</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">9,195,295</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 68.05pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 27pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">  (*)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">All outstanding convertible Preferred Stock, stock options and warrants have been excluded from the calculation of the diluted net loss per share for all the reported periods, because the effect of the common shares issuable as a result of the exercise or conversion of these instruments was anti-dilutive.</font></div></td></tr></table></div>
<div><div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">B.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Warrants with down-round protection</font></div>
</td>
</tr></table>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Company has determined its derivative warrant liability with respect to the Series A Warrants <font style="display: inline; font-size: 10pt">and warrants issued to AGI as part of the Series A Unit offering completed in 2012 </font>to be a Level 3 fair value measurement and has used the Binomial pricing model to calculate its fair value. Because the warrants contain a down round protection feature, the probability that the exercise price of the warrants would decrease as the stock price decreased was incorporated into the valuation calculations.  The key inputs used in the fair value calculations were as follows:</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The changes in the fair value of the Level 3 liability are as follows (in US dollars):</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 88%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Series A Warrants</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, Beginning of the period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">321,695</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,057,618</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exchange of Series A Warrants pursuant to the “most favored nation” provision</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(1,014,471</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Change in fair value of Series A Warrants</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(43,510</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(65,770</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, End of period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">278,185</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">977,377</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The key inputs used in the fair value calculations were as follows:</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 88%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Dividend yield (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected volatility (%) (*)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">62.16</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">105.14</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Risk free interest rate (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.08</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.89</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected term of options (years) (**)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">3.20</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.95</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exercise price (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Share price (US dollars) (***)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.38</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.31</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Fair value (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.71</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.06</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
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</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div>
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</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(*)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the low trading volume of the Company’s Common Stock, the expected volatility was based on the historical volatility of the share price of other public companies that operate in the same industry sector as the Company.</font></div>
</td>
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</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
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</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(**)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the fact that the Company does not have sufficient historical exercise data, the expected term was determined based on the "simplified method" in accordance with Staff Accounting Bulletin No. 110.</font></div>
</td>
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</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
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</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(***)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">The Common Stock price, per share reflects the Company’s management’s estimation of the fair value per share of Common Stock as of March 31, 2016 and 2015. In reaching its estimation for such periods, management considered, among other things, a valuation prepared by a third-party valuation firm following the issuance of the Series B Units and the Series C Units (See Note 3).</font></div></td></tr></table></div>
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<div style="text-align: left; text-indent: 0pt; margin-left: 0pt; margin-right: 0pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
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<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">C.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Recently issued accounting pronouncements</font></div>
</td>
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</div>
<div> </div>
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</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">1.</font></div>
</td>
<td>
<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2014-16, “Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity”</font></div>
</td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Effective January 1, 2016, the Group adopted Accounting Standard Update 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity ("ASU 2014-16").</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-16 clarify how U.S. GAAP should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. Furthermore, the amendments clarify that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. Rather, the nature of the host contract depends upon the economic characteristics and risks of the entire hybrid financial instrument. The amendments also clarify that, in evaluating the nature of a host contract, an entity should assess the substance of the relevant terms and features (i.e., the relative strength of the debt-like or equity-like terms and features given the facts and circumstances) when considering how to weigh those terms and features. The assessment of the substance of the relevant terms and features should incorporate a consideration of the characteristics of the terms and features themselves; the circumstances under which the hybrid financial instrument was issued or acquired; and the potential outcomes of the hybrid financial instrument, as well as the likelihood of those potential outcomes.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-16 apply to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The effects of initially adopting the amendments in ASU 2014-16 were required to be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the fiscal year for which the amendments are effective (However, retrospective application was permitted to all relevant prior periods).</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Management analyzed the economic characteristics and risks of the Series A Preferred Stock and the Series B Preferred Stock (including the embedded conversion feature of each) in accordance with the provisions of ASU 2014-16 and determined that such instruments are considered as more akin to equity than debt. Accordingly, it was determined that the economic characteristics and the risks of the embedded conversion option to Common Stock and those of the Preferred Stock themselves (the 'host contract') are clearly and closely related and accordingly, the embedded conversion feature was not required to be bifurcated. As a result of the above determination, ASU 2014-16 did not impact the classification of the Series A Preferred Stock or the Series B Preferred Stock.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
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<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
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<td style="width: 90pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">2.</font></div>
</td>
<td>
<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2014-09, “Revenue from Contracts with Customers”</font></div>
</td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In May 2014, the FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09").</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">An
entity should apply the amendments in ASU 2014-09 using one of the following two methods: 1. Retrospectively to each prior
reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the
cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the
latter transition method, it also should provide certain additional disclosures.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">During 2016, the FASB issued several ASU that focus on certain implementation issues of the new revenue recognition guidance including Narrow-Scope Improvements and Practical Expedients, Principal versus Agent Considerations and Identifying Performance Obligations and Licensing.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">For a public entity, the amendments in ASU 2014-09 (including the amendments introduced through recent ASU's) are effective for annual reporting periods beginning after December 15, 2016, including interim periods within the first annual reporting period (the first quarter of fiscal year 2017 for the Company). Early application is not permitted.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: normal 10pt times new roman">The Company is in the process of assessing the impact, if any, of ASU 2014-09 (including <font style="display: inline; font-weight: normal">the amendments introduced through recent ASUs)</font> on its consolidated financial statements.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
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<td style="width: 90pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">3.</font></div>
</td>
<td>
<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standards Update 2014-15, “Presentation of Financial Statements—Going Concern”</font></div>
</td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In August 2014, the FASB issued Accounting Standards Update 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 ("ASU 2014-15").</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 36pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-15 provides guidance on management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable).</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2014-15 also provides guidance related to the required disclosures as a result of management’s evaluation. </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The amendments in ASU 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">Due to the current state of the Company and the existing uncertainty regarding its ability to continue as a going concern, management does not believe that the provisions of ASU 2014-15 will have a significant effect on its evaluation of the Company’s ability to continue as a going concern. However, management is currently considering if additional disclosures will be required as a result of ASU 2014-15.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
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<td style="width: 90pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 18pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">4.</font></div>
</td>
<td>
<div align="left"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Standard Update 2015-11, “Simplifying the Measurement of Inventory”</font></div>
</td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">In July, 2015, The FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11").</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin).</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within the first such annual reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period.</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 108pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The changes in the fair value of the Level 3 liability are as follows (in US dollars):</font></div>
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</div>
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<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Series A Warrants</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, Beginning of the period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">321,695</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,057,618</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exchange of Series A Warrants pursuant to the “most favored nation” provision</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(1,014,471</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Change in fair value of Series A Warrants</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(43,510</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">(65,770</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Balance, End of period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">278,185</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">977,377</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The key inputs used in the fair value calculations were as follows:</font></div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 88%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Dividend yield (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected volatility (%) (*)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">62.16</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">105.14</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Risk free interest rate (%)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.08</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.89</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Expected term of options (years) (**)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">3.20</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.95</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exercise price (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">5.80</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Share price (US dollars) (***)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.38</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2.31</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Fair value (US dollars)</font></div>
</td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">0.71</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="text-align: right; vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1.06</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 90.69pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(*)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the low trading volume of the Company’s Common Stock, the expected volatility was based on the historical volatility of the share price of other public companies that operate in the same industry sector as the Company.</font></div>
</td>
</tr></table>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 90.69pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(**)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">Due to the fact that the Company does not have sufficient historical exercise data, the expected term was determined based on the "simplified method" in accordance with Staff Accounting Bulletin No. 110.</font></div>
</td>
</tr></table>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" style="font: 10pt times new roman; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 90pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 36pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">(***)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">The Common Stock price, per share reflects the Company’s management’s estimation of the fair value per share of Common Stock as of March 31, 2016 and 2015. In reaching its estimation for such periods, management considered, among other things, a valuation prepared by a third-party valuation firm following the issuance of the Series B Units and the Series C Units (See Note 3).</font></div></td></tr></table></div>
<div align="right"><table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman"><tr><td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"></font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">March 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">December 31,</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Raw materials</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">205,324</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">205,645</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Work in process</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">536,208</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">551,111</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Finished products</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">58,782</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">59,467</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">800,314</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">816,223</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div style="text-indent: 0pt; display: block"><br />
</div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Israeli CPI linkage difference on principal of loans from stockholders</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(1,464</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(3,680</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Exchange rate differences</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">4,915</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(52,603</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Change in fair value of Warrants with down round protection</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(43,510</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">(65,770</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman">)</font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Interest expenses on credit from banks and other</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,426</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">2,590</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss on partial extinguishment of Series A Preferred Stock and Series A Warrants</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">-</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">773,297</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">(37,633</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman">)</font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">653,834</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 72pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The loss and the weighted average number of shares used in computing basic and diluted loss per share for the three month periods ended March 31, 2016 and 2015 are as follows:</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">US dollars</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss for the period</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1,226,764</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">1,534,531</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Cash dividend on Series A Preferred Stock</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">4,700</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman">20,514</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Stock dividend on Series B Preferred Stock</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">122,820</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 2px solid; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 2px solid; text-align: right"><font style="display: inline; font: 10pt times new roman">83,237</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Loss for the period attributable to common stockholders</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">1,354,284</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">1,638,282</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div align="right">
<table cellpadding="0" cellspacing="0" style="width: 90%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Number of shares</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Three month period</font></div>
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">ended March 31,</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%; padding-bottom: 2px"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2016</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%; border-bottom: black 2px solid">
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">2015</font></div>
</div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 2px"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr>
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
<td colspan="6" style="vertical-align: bottom; width: 22%">
<div align="center" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">(unaudited)</font></div>
</td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: bold 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt times new roman">Number of shares:</font></div>
</td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td colspan="2" style="vertical-align: bottom; width: 10%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Weighted average number of shares used in the computation of basic and diluted earnings per share</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">5,690,097</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">5,323,459</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: #cceeff">
<td style="vertical-align: bottom; width: 76%"><font style="display: inline; font: 10pt times new roman">  </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr><tr style="background-color: white">
<td style="vertical-align: bottom; width: 76%; padding-bottom: 4px">
<div align="justify" style="text-indent: -18pt; display: block; margin-left: 18pt; margin-right: 0pt"><font style="display: inline; font: 10pt times new roman">Total weighted average number of common shares related to outstanding convertible preferred stock, options and warrants excluded from the calculations of diluted loss per share (*)</font></div>
</td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">9,462,671</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 1%; border-bottom: black 4px double; text-align: left"><font style="display: inline; font: 10pt times new roman"> </font></td>
<td style="vertical-align: bottom; width: 9%; border-bottom: black 4px double; text-align: right"><font style="display: inline; font: 10pt times new roman">9,195,295</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; width: 1%; text-align: left; padding-bottom: 4px"><font style="display: inline; font: 10pt times new roman"> </font></td>
</tr></table>
</div>
<div style="text-indent: 0pt; display: block"> </div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 68.05pt">
<div><font style="display: inline; font: 10pt Times New Roman">  </font></div>
</td>
<td style="width: 27pt">
<div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">  (*)</font></div>
</td>
<td>
<div align="justify"><font style="display: inline; font: 10pt Times New Roman">All outstanding convertible Preferred Stock, stock options and warrants have been excluded from the calculation of the diluted net loss per share for all the reported periods, because the effect of the common shares issuable as a result of the exercise or conversion of these instruments was anti-dilutive.</font></div></td></tr></table></div>
4700
122820
0.09
0.09
422077
439674
600000
0.06
.10
0.04
0.03
0.03
2200000
<div><div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt">
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" style="width: 100%; font: 10pt times new roman; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="width: 72pt"> </td>
<td style="text-align: right; width: 18pt">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">A.</font></div>
</td>
<td style="text-align: left">
<div style="text-align: left; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Basis of presentation</font></div>
</td>
</tr></table>
</div>
</div>
</div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 99pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman"> </font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Accounting Principles</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.</font></div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt"> </div>
<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other interim period or for any future period.</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: bold 10pt Times New Roman">Principles of Consolidation</font></div>
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<div align="justify" style="text-indent: 0pt; display: block; margin-left: 90pt; margin-right: 0pt"><font style="display: inline; font: 10pt Times New Roman">The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation.</font></div>
Due to the low trading volume of the Company's Common Stock, the expected volatility was based on the historical volatility of the share price of other public companies that operate in the same industry sector as the Company.
Due to the fact that the Company does not have sufficient historical exercise data, the expected term was determined based on the "simplified method" in accordance with Staff Accounting Bulletin No. 110.
The Common Stock price, per share reflects the Company's management's estimation of the fair value per share of Common Stock as of March 31, 2016 and 2015. In reaching its estimation for such periods, management considered, among other things, a valuation prepared by a third-party valuation firm following the issuance of the Series B Units and the Series C Units (See Note 3).
All outstanding convertible Preferred Stock, stock options and warrants have been excluded from the calculation of the diluted net loss per share for all the reported periods, because the effect of the common shares issuable as a result of the exercise or conversion of these instruments was anti-dilutive.
During the three month period ended March 31, 2016, the Company accrued a cash dividend in the amount of $4,700, in the aggregate, to be paid to holders of its Series A Preferred Stock and a stock dividend in the amount of $122,820, in the aggregate, representing the fair value of the shares of Common Stock to be issued to owners of Series B Preferred Stock, in lieu of cash dividends. The Company will pay such dividends, plus interest at a rate of 9% per annum, on or prior to June 30, 2016.