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Warrants
 6 Months Ended
Jun. 30, 2021
Warrants Disclosure [Abstract]  
Warrants
  21. Warrants

 

On December 8, 2020, the Company entered in a securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering, an aggregate of 9,489,800 shares of its common stock at a price of $5.18 per share, for aggregate gross proceeds to the Company of approximately $49 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. As part of the transaction, the institutional investors also received warrants (“Investor Warrants”) for the purchase of up to 3,795,920 shares of the Company’s common stock at an exercise price of $6.46 per share exercisable for 36 months from the date of issuance. In addition, the placement agent for this transaction also received warrants (“Placement Agent Warrants”) for the purchase of up to 379,592 shares of the Company’s common stock at an exercise price of $6.475 per share exercisable for 36 months after 6 months from the issuance.

 

On February 8, 2021, the Company entered into another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering, an aggregate of 8,939,976 shares of common stock of the Company at a per share purchase price of $7.83. In addition, the Company issued to the investors (i) in a concurrent private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering, the Series B warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.83 and exercisable for 90 days from the date of issuance; and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992 shares of common stock, at a per share exercise price of $7.67 and exercisable for 45 months from the date of issuance. The Company received gross proceeds of approximately $70 million from the registered direct offering and the concurrent private placement, before deducting fees to the placement agent and other estimated offering expenses of $5.0 million payable by the Company. In addition, the placement agent for this transaction also received warrants (“Placement Agent Warrants”) for the purchase of up to 446,999 shares of the Company’s common stock at an exercise price of $9.204 per share exercisable for 36 months after 6 months from the issuance.

 

On May 10, 2021, the Company entered into that Amendment No. 1 to the Series B Warrant (the “Series B Warrant Amendment”) with each of the holders of the Company’s outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August 31, 2021.

 

The Company has performed a thorough reassessment of the terms of its warrants with reference to the provisions of ASC Topic 815-40-15-7I, regarding its exposure to changes in currency exchange rates. This reassessment has led to the management’s conclusion that the Company’s warrants issued to the investors should not be considered indexed to the Company’s own stock because the warrants are denominated in U.S. dollar, which is different from the Company’s functional currency, Renminbi. Warrants are remeasured at fair value with changes in fair value recorded in earnings in each reporting period.

 

There was a total of 15,797,479 warrants issued and outstanding as of June 30, 2021.

 

The fair value of the outstanding warrants was calculated using Binomial Model based on backward induction with the following assumptions:

 

Warrants issued in the 2020 Financing

 

Warrants holder  Investor
Warrants		   Placement
Agent
Warrants		 
Appraisal Date (Inception Date)  December 10,
2020		   December 10,
2020		 
Market price per share (USD/share)  $5.36   $5.36 
Exercise price (USD/price)   6.46    6.475 
Risk free rate   0.2%   0.2%
Dividend yield   0.0%   0.0%
Expected term/ Contractual life (years)   3.0 years    3.5 years 
Expected volatility   211.5%   211.5%

 

Appraisal Date  December 31,
2020		   December 31,
2020		 
Market price per share (USD/share)  $        5.06   $       5.06 
Exercise price (USD/price)   6.46    6.475 
Risk free rate   0.2%   0.2%
Dividend yield   0.0%   0.0%
Expected term/ Contractual life (years)   2.9 years    3.4 years 
Expected volatility   187.6%   187.6%

 

Appraisal Date  June 30,
2021		   June 30,
2021		 
Market price per share (USD/share)  $

4.71

   $4.71 
Exercise price (USD/price)   

6.46

    

6.475

 
Risk free rate   0.3%   0.5%
Dividend yield   0.0%   0.0%
Expected term/ Contractual life (years)   

2.44 years

    

2.94 years

 
Expected volatility   132.3%   

130.1

%

 

Warrants issued in the 2021 Financing

 

Warrants holder  Investor Warrants   Placement
Agent
Warrants		 
Appraisal Date (Inception Date)  Series A1
February 10,
2021		   Series A2
February 10,
2021		   Series B February 10,
2021		   February 10,
2021		 
Market price per share (USD/share)  $7.36   $7.36   $7.36   $7.36 
Exercise price (USD/price)   7.67    7.67    7.83    9.204 
Risk free rate   0.2%   0.3%   0.0%   0.2%
Dividend yield   0.0%   0.0%   0.0%   0.0%
Expected term/ Contractual life (years)   3.5 years    3.8 years    0.3 years    3.5 years 
Expected volatility   121.8%   119.5%   214.5%   121.8%

 

Warrants holder  Investor Warrants   Placement Agent Warrants 
Appraisal Date  Series A1
June 30,
2021		   Series A2
June 30,
2021		   Series B
June 30,
2021		   June 30,
2021		 
Market price per share (USD/share)  $4.71    4.71    4.71    4.71 
Exercise price (USD/price)   7.67    7.67    7.83    9.204 
Risk free rate   0.5%   0.5%   0.0%   0.5%
Dividend yield   0.0%   0.0%   0.0%   0.0%
Expected term/ Contractual life (years)   3.11 years    3.36 years    0.17 years    3.11 years 
Expected volatility   127.1%   123.3%   57.5%   127.1%

 

The following is a reconciliation of the beginning and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs:

 

   December 31, 2020   June 30,
2021		 
Balance at the beginning of period  $
-
   $17,783,000 
Warrants issued to institution investors   17,980,000    47,519,000 
Warrants issued to placement agent   1,875,000    2,346,000 
Warrants redeemed   
-
    
-
 
Fair value change of warrants included in earnings   (2,072,000)   (34,176,000)
   $17,783,000   $33,472,000 

 

The following is a summary of the warrant activity:

 

    Number of
Warrants		     Average
Exercise Price		     Weighted
Average
Remaining
Contractual
Term in
Years		  
                   
Outstanding at January 1, 2021     4,175,512     $ 6.46       3.0  
Exercisable at January 1, 2021     3,795,920     $ 6.46       2.9  
Granted     11,621,967       7.79       2.3  
Exercised / surrendered    
-
      
-
          
Expired    
-
      
-
          
Outstanding at June 30, 2021     15,797,479        7.44        2.15   
Exercisable at June 30, 2021     15,350,480        7.39        2.12