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Shares Issued for Equity Financing

12 Months Ended

Dec. 31, 2018

Shares Issued For Equity Financing

SHARES ISSUED FOR EQUITY FINANCING

16. SHARES ISSUED FOR EQUITY FINANCING

On October 29, 2018, China Recycling Energy Corporation entered into Securities Purchase Agreements with certain purchasers, pursuant to which the Company will offer to the Purchasers, in a registered direct offering, an aggregate of 1,985,082 shares of the Company’s common stock. The Shares will be sold to the Purchasers at $1.375 per share, for gross proceeds to the Company of approximately $2.75 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company.

In a concurrent private placement, the Company is also issuing to the each of the Purchasers a warrant (“Investor Warrants”) to purchase one (1) share of the Company’s Common Stock for each Share purchased under the Purchase Agreement, pursuant to that certain Common Stock Purchase Warrant, by and between the Company and each Purchaser, for a purchase price of $0.125 per Warrant and gross proceeds to the Company of approximately $250,000, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Warrants will be exercisable on the date of issuance at an initial exercise price of $1.3725 per share and will expire on the five and a half year anniversary of the date of issuance.

H.C. Wainwright & Co., LLC is acting as the Company’s exclusive placement agent in connection with the offerings under the Purchase Agreement and will receive a fee equal to 7.0% of the gross proceeds received by the Company from the offerings, up to $75,000 for certain expenses and warrants to purchase the Company’s Common Stock in an amount equal to 7% of the Company’s Shares sold to the Purchasers in the offerings, or 138,956 shares of Common Stock, on substantially the same terms as the Warrants, with an initial exercise price of $1.875 per share and expiration date of October 29, 2023 (the “Placement Agent Warrants”).

The warrants issued in this private placement are classified as equity instruments. The Company accounted for the warrants issued in the private placement based on the fair value method under ASC Topic 505, and the fair value of the warrants was calculated using the Black-Scholes model under the following assumptions: estimated life of 5.5 years for Investor Warrants and 5 years for Placement Agent Warrants, volatility of 98%, risk-free interest rate of 2.91% and dividend yield of 0%. The fair value of the warrants issued to investors at grant date was $2,499,238, and the fair value of the warrants issued to the placement agent at grant date was $161,027.

Following is a summary of the warrant activity for the year ended December 31, 2018:

		Number of Warrants				Average Exercise Price				Weighted Average Remaining Contractual Term in Years
Granted			2,124,038			$	1.41				5.47
Exercised			-				-				-
Forfeited			-				-				-
Expired			-				-				-
Outstanding at December 31, 2018			2,124,038			$	1.41				5.29
Exercisable at December 31, 2018			2,124,038			$	1.41				5.29