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Warrants
 6 Months Ended
Jun. 30, 2020
Warrants and Rights Note Disclosure [Abstract]  
WARRANTS
13. WARRANTS

 

On April 28, 2016, the Company signed Share Purchase Agreement ("SPA") with HLI. In this SPA, HLI received warrants to acquire from the Company 1,000,000 Class B common shares at exercise price of $2.20 per share and exercisable by HLI at any time.

 

There was a total of 1,000,000 warrants to purchase Class B common shares issued and outstanding as of June 30, 2020 and December 31, 2019.

 

The fair value of the outstanding warrants was calculated using the Black Scholes Model with the following assumptions:

 

   June 30,
2020		   December 31,
2019		 
Market price per share (USD/share)  $0.69   $0.39 
Exercise price (USD/share)   2.20    2.20 
Risk free rate   0.35%   1.81%
Dividend yield   0%   0%
Expected term/Contractual life (years)   5.8    6.3 
Expected volatility   334.28%   279.93%

 

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:

 

   Six months ended
June 30,		 
   2020   2019 
         
Beginning balance  $389,630   $1,129,246 
Fair value change of the issued warrants included in earnings   300,304    99,821 
Ending balance  $689,934   $1,229,067 

 

The following is a summary of the warrants activity:

 

   Number   Weighted
Average
Exercise Price		   Weighted Average
Remaining
Contractual Life
(Years)		 
Outstanding as of January 1, 2020   1,000,000   $2.20                   
Granted   -           
Forfeited   -           
Exercised   -           
Redeemed   -           
Outstanding as of June 30, 2020   1,000,000   $2.20      

 

From February to March 2020, the Company consummated three registered direct offerings of 10,990,000 Class A Common Shares and concurrent private placements of warrants to purchase up to 10,990,000 Class A Common Shares with three investors.

 

As of the date hereof, there are outstanding warrants to purchase an aggregate of 10,990,000 Class A common shares, exercisable for five and one-half years since the respective date of issuance and subject to full ratchet anti-dilution protection. The table below shows the exercise price, floor price, issuance date and expiration date for these warrants.

 

Amount of Underlying Class A Common Shares   2,590,000    3,500,000    4,900,000 
Exercise price  $0.6239   $0.70   $0.70 
Floor Price   N/A   $0.1701   $0.18 
Expiration Date   August 14, 2025    August 25, 2025    September 2, 2025 
Issuance Date   February 14, 2020    February 25, 2020    March 2, 2020 

 

In accordance with ASC 815-40, the Company accounted for the Warrants as equity instruments.