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Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Stockholders' Equity

NOTE 8 – STOCKHOLDERS’ EQUITY

 

In June 2018, the Company completed an underwritten public offering of 535,559 shares of the Company’s common stock at a price of $6.00 per share. The net proceeds to the Company from the offering were $2,765,705, after deducting underwriting commissions and offering expenses payable by the Company of $447,649. In addition, warrants issued to the placement agent with a fair value of $508,589 were issued and recorded as an offering cost.

 

On July 20, 2018, the Company issued 38,524 shares of the Company’s common stock valued at $7.50 per share, or a total of $288,930, to acquire 39.26% of the equity interests of KSPH (see Note 5). The shares were valued based on a contemporaneous sale of the Company’s common stock. The Company also issued 578 shares of the Company’s common stock valued at $7.50 per share, or a total of $4,335, as a commission to Network 1 Financial Securities, Inc., the Company’s financial advisor.

 

V1 Group

 

On July 18, 2018, the Company sold 906,666 shares of the Company’s common stock in a private placement to V1 Group Limited (“V1 Group”), a public company listed on the Hong Kong Stock Exchange, for total proceeds of $6,800,000. The transaction was structured as a capital stock subscription.

 

The Company used the proceeds of the private offering to make an investment to a private company for $6,000,000. The investment was structured as a note receivable to the private company to be collected in two years. The private company invested the $6,000,000 and purchased 94,350,000 shares of V1 Group common stock from existing V1 Group shareholders.

 

The Company determined that the economic substance of the two transactions was a capital transaction with the Company issuing 906,666 shares of its common stock for $6,800,000, comprised of $800,000 cash and $6,000,000 due from a note receivable to be collected in two years. As the Company cannot determine the collectability of the note receivable, the funds will be recognized as a capital contribution when collected.

 

The Company determined the fair value of the 906,666 shares issued to V1 Group was $6 per share based on the Company’s contemporaneous public offering price, or $5,440,000. The Company received a net proceeds of $800,000 from V1 Group’s investment. The difference of $4,640,000 was recorded as an expense of the transaction.