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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2016

Schedule of Changes in Fair Value of Level 3 Liability

The changes in the fair value of the Level 3 liability are as follows (in US dollars):

	Series A Warrants
	March 31,
	2016			2015

Balance, Beginning of the period		321,695			2,057,618
Exchange of Series A Warrants pursuant to the “most favored nation” provision		-			(1,014,471	)
Change in fair value of Series A Warrants		(43,510	)		(65,770	)
Balance, End of period		278,185			977,377

Schedule of Warrant Inputs

The key inputs used in the fair value calculations were as follows:

	March 31,
	2016		2015
Dividend yield (%)		-		-
Expected volatility (%) (*)		62.16		105.14
Risk free interest rate (%)		1.08		0.89
Expected term of options (years) (**)		3.20		2.95
Exercise price (US dollars)		5.80		5.80
Share price (US dollars) (***)		2.38		2.31
Fair value (US dollars)		0.71		1.06

(*)

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).