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Warrants | 9 Months Ended
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Sep. 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 9,092,499 warrants issued and outstanding as of September 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 |  | September 30, 2021 |  |  | September 30, 2021 |
Market price per share (USD/share) |  | $ | 2.33 |  |  | $ | 2.33 |
Exercise price (USD/price) |  |  | 6.46 |  |  |  | 6.475 |
Risk free rate |  |  | 0.3 | % |  |  | 0.4 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Expected term/ Contractual life (years) |  |  | 2.2 years |  |  |  | 2.7 years |
Expected volatility |  |  | 133.5 | % |  |  | 127.4 | %
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 September 30, 2021 |  |  | September 30, 2021 |
Market price per share (USD/share) |  |  | 2.33 |  |  |  | 2.33 |
Exercise price (USD/price) |  |  | 7.67 |  |  |  | 9.204 |
Risk free rate |  |  | 0.5 | % |  |  | 0.5 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Expected term/ Contractual life (years) |  |  | 2.9 years |  |  |  | 2.9 years |
Expected volatility |  |  | 126.9 | % |  |  | 126.9 | %
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, |  |  | September 30, |
|  | 2020 |  |  | 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 | ) |  |  | (57,174,000 | )
|  | $ | 17,783,000 |  |  | $ | 10,474,000 |
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 |  |  | 6,704,980 |  |  |  | 7.78 |  |  |  | - |
Outstanding at September 30, 2021 |  |  | 9,092,499 |  |  |  | 7.19 |  |  |  | 2.58 |
Exercisable at September 30, 2021 |  |  | 9,092,499 |  |  |  | 7.19 |  |  |  | 2.58 |

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