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Shares Issued for Equity Financing

6 Months Ended

Jun. 30, 2019

Shares Issued For Equity Financing [Abstract]

SHARES ISSUED FOR EQUITY FINANCING

16. SHARES ISSUED FOR EQUITY FINANCING

Registered Director Offering and 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 offered to the Purchasers, in a registered direct offering, an aggregate of 1,985,082 shares of the Company's common stock. The Shares were 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 also issued 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 are 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 was the Company's exclusive placement agent in connection with the offerings under the Purchase Agreement and received a fee equal to 7.0% of the gross proceeds ($208,433) received by the Company from the offerings 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.

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 was required to 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. The Company filed the registration statement on May 24, 2019, and was declared effective on June 4, 2019.

Registered Direct Offering and Private Placement in April 2019

On April 15, 2019, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain purchasers (the "Purchasers"), pursuant to which the Company offered to the Purchasers, in a registered direct offering, an aggregate of 2,359,272 shares of common stock. The Shares were sold to the Purchasers at a negotiated purchase price of $0.80 per share, for aggregate gross proceeds to the Company of $1,887,417, before deducting a total of $200,000 in placement agent fees and other estimated offering expenses payable by the Company.

In a concurrent private placement, the Company also issued to the each of the Purchasers a warrant to purchase 0.75 of a share of the Company's Common Stock for each share purchased under the Purchase Agreement, or 1,769,454 warrants in the aggregate. The Warrants are exercisable beginning on the six month anniversary of the date of issuance at an initial exercise price of $0.9365 per share, and expire on the five and one-half year anniversary of the date of issuance.

H.C. Wainwright & Co., LLC acted as the Company's exclusive placement agent in connection with the offerings under the Purchase Agreement and received an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from the offerings (or $132,119), an aggregate of up to $75,000 for certain expenses, $10,000 for clearing expenses and warrants to purchase our Common Stock in an amount equal to 7% of our Shares sold to the Purchasers in the offerings, or 165,149 shares of Common Stock, on substantially the same terms as the Warrants, except that the Placement Agent Warrants have an initial exercise price of $1.00 per share, are exercisable commencing on the later of (i) six months of the issuance date or (ii) the date on which the Company increases the number of its authorized shares, and expire on April 15, 2024.

The warrants issued in this private placement were 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 100%, risk-free interest rate of 2.41% and dividend yield of 0%. The FV of the warrants issued to investors at grant date was $855,246, and the FV of the warrants issued to the placement agent at grant date was $75,901.

Following is a summary of the warrant activity for the six months ended June 30, 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
Granted			1.934,603			$	0.95				5.25
Exercised			-				-				-
Forfeited			-				-				-
Expired			-				-				-
Outstanding at June 30, 2019			4,058,641			$	1.19				5.01
Exercisable at June 30, 2019			4,058,641			$	1.19				5.01

On July 8, 2019, the Company filed a Certificate of Amendment with the State of Nevada to (i) increase the total number of authorized shares of common stock, par value $0.001 per share, from 20,000,000 shares to 100,000,000 shares and (ii) authorize the issuance of up to 60,000,000 shares of blank check preferred stock, par value $0.001 per share, which were approved at the Company's annual stockholders meeting held on July 2, 2019.