XML 34 R22.htm IDEA: XBRL DOCUMENT

Shares Issued for Equity Financing

3 Months Ended

Mar. 31, 2019

Shares Issued For Equity Financing [Abstract]

SHARES ISSUED FOR EQUITY FINANCING

16. SHARES ISSUED FOR EQUITY FINANCING

Private Placement in October 2018

On October 29, 2018, China Recycling Energy Corporation entered into Securities Purchase Agreements with certain purchasers (the "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 FV 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 FV of the warrants issued to investors at grant date was $2,499,238, and the FV of the warrants issued to the placement agent at grant date was $161,027.

Following is a summary of the warrant activity for the three months ended March 31, 2019:

		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
Outstanding at March 31, 2019			2,124,038			$	1.41				5.04
Exercisable at March 31, 2019			2,124,038			$	1.41				5.04

Private Placement in February 2019

On February 13, 2019, China Recycling Energy Corporation entered into a Securities Purchase Agreement (the "Agreement") with Great Essential Investment, Ltd. a company incorporated in the British Virgin Islands (the "Purchaser"), pursuant to which the Company sold to the Purchaser in a private placement 1,600,000 shares of the Company's common stock, par value $0.001 per share, at $1.013 per share for $1,620,800. The Company shall file a registration statement for the registration of the Shares for their resale by the Purchaser within 100 days from the effective date of this Agreement. The Private Placement was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.