Note 12 - Option Liabilities

12 Months Ended

Dec. 31, 2018

Call Option [Member]

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

1

2

.

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, of which the Investor was contractually obligated to effect following the satisfaction of certain conditions by the Company. 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

$2,613

for the year ended

December 31, 2016.

LIQUIDMETAL TECHNOLOGIES, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

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 as a loss on contract modification during the year ended

December 31, 2016.

On

October 26, 2016,

the Investor fully exercised these options through the purchase of

300,000,000

shares of the Company’s common stock.