NOTE 7:—WARRANTS TO PURCHASE CONVERTIBLE PREFERRED SHARES

The table below summarizes the outstanding warrants as of December 31, 2014:

	Number of warrants outstanding		Fair value of warrants outstanding
Warrants to purchase Series A2 Preferred Shares(a)		28,691	$	210
Warrants to purchase Series D Preferred Shares(b)(c)		441,937		3,434
Warrants to purchase Series E Preferred Shares(d)		240,492		2,428

Total		711,120	$	6,072


(a)	On January 26, 2009, the Company signed share purchase agreements with certain investors pursuant to which warrants were granted to purchase 17,841 Series A2 Preferred Shares at an exercise price of NIS 0.001 per share. These warrants had an exercise term of seven years. In addition, during 2010-2012 warrants to purchase 10,850 Series Preferred A2 Shares were issued to such investors as the result of triggering an anti-dilution feature. Such warrants had an exercise price of NIS 0.001 per share and an exercise period which is the earliest of seven years after July 19, 2012, consummation of a qualified IPO as determined for such warrants or the automatic conversion of Preferred Shares into Ordinary Shares as defined in the AOA.
(b)	On July 19, 2012, the Company signed share purchase agreements with its existing and new investors pursuant to which warrants were granted to such investors and a warrant to a placement agent as a finder's fee, to purchase 424,824 and 9,781 shares, respectively, of Series D Preferred Shares at an exercise price of NIS 0.001 per share. These warrants have an exercise term of which is the earliest of seven years after July 19, 2012, consummation of a qualified IPO as determined for such warrants, the automatic conversion of Preferred Shares into Ordinary Shares as defined in the applicable AOA or a deemed liquidation event as determined in the AOA.
(c)	On February 20, 2013, Inc. signed an Agreement pursuant to which warrants were granted to the Bank to purchase 7,332 Series D Preferred Shares at an exercise price of $6.14 per share. The warrant had an exercise term which is the earliest of ten years after February 20, 2013, consummation of a qualified IPO as determined for such warrants or the automatic conversion of Preferred Shares into Ordinary Shares as defined in the AOA.
(d)	On February 17, 2014, the Company signed share purchase agreements with its existing and new investors pursuant to which warrants were granted to such investors to purchase 240,491 shares of Series E Preferred Shares at an exercise price of $0.001 per share.

These warrants were exercisable until the earliest of seven years after February 17, 2014, consummation of a qualified IPO as determined for such warrants or the automatic conversion of Preferred Shares into Ordinary Shares as defined in the AOA.

The exercise price and the number of shares to be issued upon exercise of the above warrants are subject to weighted average adjustments for dilution and therefore are classified as liability in accordance with ASC 815 and re-measured using the Monte Carlo Cliquent Model as described below.

In estimating the warrants' fair value, the Company used the following assumptions:

Investors and finder fee warrants:

		December 31, 2014
Risk-free interest rate(1)		0.28% - 1.83%
Expected volatility(2)		44.9% - 116.8%
Expected life (in years)(3)		1.08 - 6.13
Expected dividend yield(4)		0%
Fair value:
Per warrant		$7.32 - 10.10

Bank warrants:

	December 31, 2014
Risk-free interest rate(1)		2.05	%
Expected volatility(2)		107.5	%
Expected life (in years)(3)		8.15
Expected dividend yield(4)		0	%
Fair value:
Per warrant	$	7.69


(1)	Risk free interest rate based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.
(2)	Expected volatility was calculated based on actual historical share price movements of companies in the same industry over a term that is equivalent to the expected term of the option.
(3)	Expected life was based on the contractual term of the warrants.
(4)	Expected dividend yield was based on the fact that the Company has not paid dividends to its shareholders in the past and does not expect to pay dividends to its shareholders in the future.

Upon consummation of the Company's IPO, all but 10,191 warrants to purchase Convertible Preferred Shares were exercised into Ordinary Shares. The aforementioned 10,191 warrants have been converted into 10,191 warrants to purchase Ordinary Shares with standard anti-dilution protections provisions. As of December 31, 2015, such 10,191 warrants to purchase Ordinary Shares are still outstanding.

The changes in Level 3 liabilities associated with warrants to purchase Convertible Preferred Shares are measured at fair value on a recurring basis. The following tabular presentation reflects the components of liability associated with warrants as of December 31, 2015:

	Fair value of warrants to purchase Convertible Preferred Shares
Balance at January 1, 2014	$	1,300
Issuance of warrants to purchase Convertible Preferred Shares		1,845
Revaluation of warrants to purchase Convertible Preferred Shares(1)		2,927

Balance at December 31, 2014		6,072
Revaluation of warrants to purchase Convertible Preferred Shares(2)		(40	)
Classification to equity upon conversion of warrants(3)		(5,945	)
Classification to equity upon automatic conversion into warrants to purchase Ordinary Shares(4)		(87	)

Balance at December 31, 2015	$	—


(1)	The Company re-measured these warrants at fair value in the total amount of $6,072 as of December 31, 2014. Consequently, during the year ended December 31, 2014, the Company recorded $ 2,927 as financial expenses as a result of changes in the Company's warrants' value.
(2)	The Company re-measured these warrants at fair value in the total amount of $6,032 prior to the IPO in March, 2015. Consequently, during the year ended December 31, 2015, the Company recorded $40 as financial income as a result of changes in the Company's warrants' value.
(3)	As of December 31, 2014, there were 711,120 outstanding warrants exercisable into Convertible Preferred Shares. Prior to the IPO, all but 10,191 warrants were exercised into Ordinary Shares. Of the exercised warrants, 295,697 were exercised for cash, and 405,232 were exercised on a cashless basis, resulting in the net exercise of 401,746 warrants (and 3,486 warrants were cancelled). Upon the closing of the IPO, the 10,191 warrants outstanding were automatically converted into warrants to purchase Ordinary Shares.
(4)	Classification of 10,191 warrants to purchase Convertible Preferred Shares converted into 10,191 warrants to purchase Ordinary Shares.