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ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS

12 Months Ended

Jun. 30, 2023

ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS

ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS

NOTE 17. ORDINARY SHARES PURCHASE WARRANTS ISSUED TO INVESTORS

In May and June 2020, the Company consummated two offerings. In connection with the offering, the Company issued to the investors warrants to purchase an aggregate of 911,112 (50,617 shares post 2024 Reverse Split) Class A Ordinary Shares at an exercise price of $2.25 ($40.50 post 2024 Reverse Split) per Class A Ordinary Share, which was amended to $1.25 ($22.50 post 2024 Reverse Split) per Class A Ordinary Share on the second offering on June 30, 2020. These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on May 26, 2020 and expire on November 25, 2025. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $1,689,389. Variables used in the option-pricing model include (1) risk-free interest rate at the date of grant (0.40%), (2) expected warrant life of 5.5 years, (3) expected volatility of 99.50%, and (4) expected dividend yield of 0. As of June 30, 2021, all warrants were exercised and all the underlying shares were issued.

In June 2020, the Company issued to the investors warrants to purchase an aggregate of 1,680,000 (93,333 shares post 2024 Reverse Split) Class A Ordinary Shares at an exercise price of $1.25 ($22.50 post 2024 Reverse Split) per Class A Ordinary Share. These warrants are exercisable at any time, and from time to time, in whole or in part, commencing on June 30, 2020 and expire on December 30, 2025. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $1,639,333. Variables used in the option-pricing model include (1) risk-free interest rate at the date of grant (0.35%), (2) expected warrant life of 5.5 years, (3) expected volatility of 104.26%, and (4) expected dividend yield of 0. As of June 30, 2021, all warrants were exercised.

In June 2021, the Company issued to some institutional investors warrants to purchase an aggregate of up to 8,814,102 (489,673 shares post 2024 Reverse Split) Class A Ordinary Shares. (the “Warrant 2021”) The warrants are subject to deemed-liquidation redemption features and are therefore classified as a liability in accordance with FASB ASC 480. Warrant liability is classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. The Company established the initial fair value of the warrants at $34,860,000. During the year ended June 30, 2023, the exercise price of warrants to purchase an aggregate of up to 7,950,769 (441,710 shares post 2024 Reverse Split) Class A Ordinary Shares was adjusted to $0.80 ($14.40 post 2024 Reverse Split), and the exercise price of the remaining warrants to purchase an aggregate of up to 863,333 (47,963 shares post 2024 Reverse Split) Class A Ordinary Shares remained at $6.24 ($112.32 post 2024 Reverse Split). As of June 30, 2022 and 2023, the fair value of the warrant liability of the Warrant 2021 was $2,490,000 and $1,930,000 (¥13,995,009). During the years ended June 30, 2022 and 2023, there was change in fair value of warrant liability in an aggregate amount of $27,030,000 and $560,000, respectively.

The key inputs into the Black-Scholes model were as follows at their measurement dates:

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​	​	​	​	​	​	​	​	​	​
​	​	June 30,				​	June 30,
Input		2023					2022
Number of warrants		47,963	​	$	441,710	​	$	489,673	​
Share price		0.34	​	$	0.34	​	$	0.66	​
Risk-free interest rate		4.41	%		4.41	%		3.00	%
Volatility		127	%		127	%		109	%
Exercise price		112.32	​		14.40	​		112.32	​
Warrant life		3.47 years	​		3.47 years	​		4.46 years	​

​

On March 15, 2023, the Company issued to some institutional investors warrants to purchase an aggregate of up to 10,002,500 (555,694 shares post 2024 Reverse Split) Class A Ordinary Shares. (the “Warrant 2023”) The warrants are subject to deemed-liquidation redemption features and are therefore classified as a liability in accordance with FASB ASC 480. Warrant liability is classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. The Company established the initial fair value of the warrants at $2,750,000. As of June 30, 2023, the fair value of the warrant liability of the Warrant 2023 was $2,430,000 (¥17,620,659). During the years ended June 30, 2023, there was change in fair value of warrant liability in an aggregate amount of $320,000, respectively.

The key inputs into the Black-Scholes model were as follows at their measurement dates:

​

​	​	​	​	​	​	​
​		​		​	March 15, 2023
​	​	June 30,	​	​	(Initial
Input	​	2023	​	​	measurement)
Number of warrants	​	555,694	​	$	555,694	​
Share price	​	0.34	​	$	0.37	​
Risk-free interest rate	​	3.59	%		3.58	%
Volatility	​	110	%		110	%
Exercise price	​	14.40	​	​	14.40	​
Warrant life	​	5.22 years	​		5.50 years	​

​

The following table presents information about the Company’s warrants that were measured at fair value on a recurring basis as of June 30, 2022 and 2023, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

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Quoted Prices In

Significant Other

Significant Other

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​

June 30,

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Active Markets

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Observable Inputs

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Unobservable Inputs

Description

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2022

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(Level 1)

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(Level 2)

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(Level 3)

Liabilities:

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Warrant liability

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$

2,490,000

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$

—

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$

—

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$

2,490,000

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Quoted Prices In

Significant Other

Significant Other

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June 30,

Active Markets

Observable Inputs

Unobservable Inputs

Description

2023

(Level 1)

(Level 2)

(Level 3)

Liabilities:

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​

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Warrant liability

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$

4,360,000

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$

—

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$

—

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$

4,360,000

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The following table summarizes the Company’s Warrants activities and status of Warrants as of June 30, 2023:

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​	​	​	​	​	​	​	​
​		​		Weighted			Average
​	​	​	​	Average		​	Remaining
​	​	​	​	Exercise Price		​	Period
Warrants		Warrants		Per Share			(Years)
Outstanding as of June 30, 2021		489,673	​	$	112.32		5.46
Issued		—	​	​	—
Forfeited		—	​	​	—
Exercised		—	​	​	—
Expired		—	​	​	—
Outstanding as of June 30, 2022		489,673	​	$	112.32		4.46
Issued		555,694	​	​	14.40		5.50
Forfeited		—	​	​	—
Exercised		—	​	​	—
Expired		—	​	​	—
Outstanding as of June 30 2023		1,045,367	​	$	18.90		4.40

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X

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-1

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X

- References

No definition available.

+ Details

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