Note 12 - Option Liabilities
 12 Months Ended
Dec. 31, 2016
Call Option [Member]  
Notes to Financial Statements  
Derivatives and Fair Value [Text Block]
12
.
Option Liabilities
 
As part of the
2016
Purchase Agreement, the Company granted the Investor the right to purchase shares of the Company’s common stock in the future at predetermined prices. These options allowed the Investor to purchase
200,000,000
shares of the Company’s common stock at a price of
$0.15
per share and
100,000,000
shares of the Company’s common stock at a price of
$0.25
per share. Given that the number of shares to be issued upon exercise of these options was in excess of the number of shares authorized for issuance, these options were originally required to be classified as liabilities under FASB ASC
815.
The
200,000,000
share option and the
100
,000,000
share option were initially valued at
$489
and
$22,
respectively. Following the filing of an amendment to the Company’s Certificate of Incorporation, which allowed for adequate authorized shares, these options were revalued as of
May
19,
2016
and reclassified to permanent shareholders’ equity. On
May
19,
2016,
the
200,000,000
share option and the
100
,000,000
share option were valued at
$2,931
and
$193,
respectively, under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of
0.25
years, (ii) volatility of
85%,
(iii) risk-free interest rate of
0.31%,
and (iv) dividend rate of
0.
The change in fair value for these options was a loss of
$2,442
and
$171,
respectively, for the year ended
December
31,
2016.
 
The following table summarizes the change in the Company’s option liabilities as of
December
31,
2016:
 
 
 
200M Share
 
 
100M Share
 
 
 
 
 
 
 
Call Option
 
 
Call Option
 
 
Total
 
                         
Beginning Balance - December 31, 2015
   $
-
    $
-
     
-
 
Original valuation
    
489
     
22
     
511
 
Change in value of option liabilities, loss
   
2,442
     
171
     
2,613
 
Reclassification to shareholders' equity
    
(2,931
 )    
(193
 )    
(3,124
 )
Ending Balance - December 31, 2016
    
-
     
-
     
-
 
 
On
August
11,
2016,
the Company and the Investor entered into an amendment to the
2016
Purchase Agreement. Under the amendment, the Company agreed to extend the deadline for the Investor’s purchase of
300,000,000
additional shares of Company common stock under the
2016
Purchase Agreement from the original deadline of
August
17,
2016
to a new deadline of
December
31,
2016.
Other than the extension of the deadline, the amendment did not materially modify the terms of the
2016
Purchase Agreement. As a result of this amendment the Company recorded an additional
$2,126
of expense to additional paid in capital. Such amount is reflected as a loss on contract modification within the consolidated statements of operations and comprehensive loss
. On
October
26,
2016,
the Investor fully exercised these options through the purchase of
300,000,000
shares of the Company’s common stock.