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Note 17 - Warrant Liabilities | 6 Months Ended
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Jun. 30, 2019
Notes to Financial Statements |
Warrants Disclosure [Text Block] |
17. | Warrant liabilities
On January 17, 2018, the Company consummated a registered direct offering of 2,150,001 shares of the Company’s common stock to certain institutional investors at a purchase price of $5.15 per share (“the Financing”). As part of the transaction, the Company also issued to the investors and the placement agent warrants for the purchase of up to 645,000 and 129,000 shares of the Company’s common stock at an exercise price of $6.60 per share, respectively. The Company accounted for the warrants issuing in the Financing as derivative liabilities, as the strike price of the warrants is dominated in a currency (U.S. dollar) other than the functional currency of the Company (Renminbi or Yuan) and is not considered index to the Company’s own stock. As a result, these warrants were remeasured at fair value with changes in fair value be recorded in earnings in each reporting period. Fair value of the warrants The Company used Binomial model to determine the fair value of the Warrants based on the assumptions summarized as below:
|  | Investors warrants |  | Placement agent warrants
|  | December 31, 2018 |  | March 31, 2019 |  | June 30, 2019 |  | December 31, 2018 |  | March 31, 2019 |  | June 30, 2019
Stock price |  | $ | 1.34 |  |  | $ | 1.95 |  |  | $ | 1.35 |  |  | $ | 1.34 |  |  | $ | 1.95 |  |  | $ | 1.35 |
Years to maturity |  |  | 1.55 |  |  |  | 1.30 |  |  |  | 1.10 |  |  |  | 2.05 |  |  |  | 1.80 |  |  |  | 1.55 |
Risk-free interest rate |  |  | 2.50 | % |  |  | 2.27 | % |  |  | 1.73 | % |  |  | 2.50 | % |  |  | 2.27 | % |  |  | 1.73 | %
Dividend yield |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expected volatility |  |  | 199 | % |  |  | 216 | % |  |  | 90 | % |  |  | 176 | % |  |  | 187 | % |  |  | 202 | %
Exercise Price |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |
Fair value of the warrant |  | $ | 0.78 |  |  | $ | 1.23 |  |  | $ | 0.05 |  |  | $ | 0.80 |  |  | $ | 1.26 |  |  | $ | 0.80 |
|  | Investors warrants |  | Placement agent warrants
|  | January 17, 2018 |  | March 31, 2018 |  | June 30, 2018 |  | January 17, 2018 |  | March 31, 2018 |  | June 30, 2018
Stock price |  | $ | 3.98 |  |  | $ | 1.67 |  |  | $ | 2.52 |  |  | $ | 3.98 |  |  | $ | 1.67 |  |  | $ | 2.52 |
Years to maturity |  |  | 2.50 |  |  |  | 2.30 |  |  |  | 2.10 |  |  |  | 3.00 |  |  |  | 2.80 |  |  |  | 2.55 |
Risk-free interest rate |  |  | 2.22 | % |  |  | 2.35 | % |  |  | 2.53 | % |  |  | 2.39 | % |  |  | 2.50 | % |  |  | 2.56 | %
Dividend yield |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expected volatility |  |  | 158 | % |  |  | 164 | % |  |  | 174 | % |  |  | 147 | % |  |  | 152 | % |  |  | 159 | %
Exercise Price |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |  |  | $ | 6.60 |
Fair value of the warrant |  | $ | 2.93 |  |  | $ | 1.03 |  |  | $ | 1.71 |  |  | $ | 2.99 |  |  | $ | 1.06 |  |  | $ | 1.74 |
Changes in fair value of warrant liabilities Six and Three Months Ended June 30, 2019 ( Unaudited)
|  | As of |  | As of |  | As of |  | Change in Fair Value (gain)/loss
|  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018 |  | Six Months Ended June 30, 2019 |  | Three Months Ended June 30, 2019
Fair value of the Warrants: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor warrants |  |  | 32 |  |  |  | 793 |  |  |  | 503 |  |  |  | (471 | ) |  |  | (761 | )
Placement agent warrants |  |  | 103 |  |  |  | 163 |  |  |  | 103 |  |  |  | - |  |  |  | (60 | )
Warrant liabilities |  |  | 135 |  |  |  | 956 |  |  |  | 606 |  |  |  | (471 | ) |  |  | (821 | )
Six and Three Months Ended June 30, 2018 ( Unaudited)
|  | As of |  | As of |  | As of |  | Change in Fair Value (gain)/loss
|  | June 30, 2018 |  | March 31, 2018 |  | January 17, 2018 |  | Six Months Ended June 30, 2018 |  | Three Months Ended June 30, 2018
Fair value of the Warrants: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor warrants |  |  | 1,103 |  |  |  | 664 |  |  |  | 1,890 |  |  |  | (787 | ) |  |  | 439 |
Placement agent warrants |  |  | 224 |  |  |  | 137 |  |  |  | 385 |  |  |  | (161 | ) |  |  | 87 |
Warrant liabilities |  |  | 1,327 |  |  |  | 801 |  |  |  | 2,275 |  |  |  | (948 | ) |  |  | 526 |
Warrants issued and outstanding as of June 30, 2019 and their movements during the six months then ended are as follows:
|  | Warrant Outstanding |  | Warrant Exercisable
|  | Number of underlying shares |  | Weighted Average Remaining Contractual Life (Years) |  | Weighted Average Exercise Price |  | Number of underlying shares |  | Weighted Average Remaining Contractual Life (Years) |  | Weighted Average Exercise Price
Balance, January 1, 2019 |  |  | 774,000 |  |  |  | 1.63 |  |  | $ | 6.60 |  |  |  | 774,000 |  |  |  | 1.63 |  |  | $ | 6.60 |
Granted/Vested |  |  | - |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |
Forfeited |  |  | - |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | - |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |
Balance, June 30, 2019 (Unaudited) |  |  | 774,000 |  |  |  | 1.13 |  |  | $ | 6.60 |  |  |  | 774,000 |  |  |  | 1.13 |  |  | $ | 6.60 |

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