Note 2 - Liquidity, Financial Condition and Management's Plans

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Liquidity, Financial Condition and Management's Plans [Text Block]

NOTE

2:

LIQUIDITY, FINANCIAL CONDITION AND MANAGEMENT’S PLANS

The Company incurred a net loss of

$1,122

for the year ended

December

31,

2016

and had an accumulated deficit of

$12,158

at

December

31,

2016

from having incurred losses since its inception. The Company had

$1,963

of working capital at

December

31,

2016

and used approximately

$358

of cash in its operating activities during the year ended

December

31,

2016.

The Company has financed its operations principally through issuances of convertible debt, a promissory note and equity securities.

On

September

5,

2016,

the Company entered into a rescission agreement with Telkoor Telecom Ltd., a related party entity, pursuant to which the Company sold back its investment of

1,136,666

shares of common stock of Telkoor at its carrying value of

$90.

(See Note

7).

On

October

21,

2016,

the Company issued a

12%

convertible secured note in the principal amount of

$530

to an existing stockholder of the Company for a net proceeds of

$488

(See Note

10).

On

November

15,

2016,

the Company sold

901,666

units for aggregate proceeds of

$541,

each unit consisted of a share of common stock and a warrant to purchase

one

share of common stock (See Note

10).

On

December

29,

2016,

the Company entered into an agreement with MCKEA Holdings, LLC (“MCKEA”), a related party, for a demand promissory note in the amount of

$250

bearing interest at the rate of

6%

per annum (See Note

9).

During the

fourth

quarter of

2016,

the Company invested

$950

in Avalanche International Corporation (“AVLP”), a related party entity, through convertible notes with an aggregate face value of

$997,

additionally, the Company acquired shares of common stock of AVLP for approximately

$84

(see Note

7).

In

February

2017,

the Company issued demand promissory notes and warrants to purchase

333,333

shares of common stock at $

0.70

per share for aggregate proceeds of

$400.

Further in

February

2017,

the holders of

$400

in demand promissory notes agreed to extinguish their

$400

of debt by purchasing

666,667

shares of common stock of the Company at

$0.60

per share (See Note

16).

On

March

9,

2017,

the Company entered into a preferred stock purchase agreement with Philou Ventures LLC (“Philou”), a related party entity, pursuant to which Philou agreed to invest up to

$5,000,000

in the Company through the purchase of Series B Preferred Stock over a term of

36

months (See Note

13).

On

March

24,

2017,

Philou purchased

25,000

shares of Series B Preferred Stock pursuant to the preferred stock purchase agreement in consideration of cancellation of Company debt of

$250

due to MCKEA.

On

March

15,

2017,

Company entered into a subscription agreement with

one

investor for the sale of

500,000

shares of common stock at

$0.60

per share for the aggregate purchase price of

$300.

In

March

2017,

the Company was awarded a

3

-year,

$50

million purchase order by MTIX Ltd. (“MTIX") to manufacture, install and service the Multiplex Laser Surface Enhancement (‘MLSE) plasma-laser system (See Note

14).

On

March

28,

2017,

the Company issued

$270

in demand promissory notes to several investors, then on

April

5,

2017,

the Company canceled these promissory notes by issuing

360,000

shares of common stock at

$0.75

per share, in addition, the Company also issued warrants to purchase

180,000

shares of common stock at

$0.90

per share to these investors (See Note

16).

The Company expects to continue to incur losses for the foreseeable future and needs raise additional capital to continue its business development initiatives and to support its working capital requirements. Management believes that the MLSE purchase order of

$50

million will be a source of revenue and generating cash flows. Management believes that the Company has access to capital resources through potential public or private issuance of debt or equity securities. If the Company is unable to raise additional capital, it

may

be required to curtail operations and take additional measures to reduce costs

, including reducing its workforce, eliminating outside consultants and reducing legal fees

in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations.

Based on the above, management believes that the Company has sufficient capital resources to sustain operations through at least

April

10,

2018

.