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Shares Issued for Equity Financing and Stock Compensation

12 Months Ended

Dec. 31, 2019

Shares Issued For Equity Financing [Abstract]

SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION

14. SHARES ISSUED FOR EQUITY FINANCING AND STOCK COMPENSATION

Registered Director Offering and Private Placement in October 2018

On October 29, 2018, CREG entered into Securities Purchase Agreements with certain purchasers (the "Purchasers"), pursuant to which the Company offered to the Purchasers, in a registered direct offering, 1,985,082 shares (pre-reverse stock split) 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 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 of 7% 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 of 7% of the Company's Shares sold to the Purchasers in the offerings, or 138,956 shares (pre-reverse stock split) of Common Stock, on substantially the same terms as the Warrants, with an 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, CREG 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 (pre-reverse stock split) of the Company's common stock, par value $0.001 per share, at $10.13 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, 2,359,272 shares (pre-reverse stock split) of common stock. The Shares were sold to the Purchasers at a negotiated purchase price of $0.80 per share, for gross proceeds to the Company of $1,887,417, before deducting $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 (pre-reverse stock split). The Warrants are exercisable beginning on the six month anniversary of the date of issuance at an 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 cash fee of 7% of the gross proceeds received by the Company from the offerings (or $132,119), up to $75,000 for certain expenses, $10,000 for clearing expenses and warrants to purchase the Company's 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.

On November 22, 2019, the Company entered into an Exchange Agreement (the "First Exchange Agreement") with certain investors who had been party to that certain Securities Purchase Agreement dated October 29, 2018. Pursuant to the First Exchange Agreement, the Company and the October Investors agreed to exchange the outstanding warrant issued by the Company to the October Investors pursuant to the October Securities Purchase Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of October Warrant Stock for 0.5 shares of common stock, according to the terms and conditions of the First Exchange Agreement.

On November 22, 2019, the Company entered into a Second Exchange Agreement (the "Second Exchange Agreement") with certain investors who had been party to that certain Securities Purchase Agreement dated April 15, 2019 by and among the Company and such investors. Pursuant to the Second Exchange Agreement, the Company and the April Investors agreed to exchange the outstanding warrant issued by the Company to the April Investors pursuant to the April Securities Purchase Agreement into shares of common stock of the Company, with an exchange ratio of 1 share of April Warrant Stock for 0.6 shares of common stock, according to the terms and conditions of the Second Exchange Agreement.

The Company let the warrant holders exercised the 375,454 warrants (post-reverse stock split) into 205,421 common shares (post-reverse stock split) of the Company at a cashless exercise method. The fair value of these shares was the additional cost to the Company for the issuance of the shares under securities purchase agreements previously entered (described above). However, since the warrants were initially equity classified as they met the qualifications for equity classification under ASC 815-40, accordingly, the modification upon exercise of these warrants had no impact to the Company's financial statements.

Following is a summary of the warrant activity (post-reverse stock split) for the year ended December 31, 2019 and 2018:

		Number of Warrants				Average Exercise Price (post-reverse stock split price)				Weighted Average Remaining Contractual Term in Years
Granted			212,404			$	14.1				5.47
Exercised			-				-				-
Forfeited			-				-				-
Expired			-				-				-
Outstanding at December 31, 2018			212,404			$	14.1				5.29
Exercisable at December 31, 2018			212,404			$	14.1				5.29
Granted			193,460			$	9.5				5.25
Exchanged			(375,454	)			-				-
Forfeited			-				-				-
Expired			-				-				-
Outstanding at December 31, 2019			30,411			$	14.0				4.21
Exercisable at December 31, 2019			30,411			$	14.0				4.21

Shares Issued for Stock Compensation

On October 10, 2019, the Company entered an investment banking engagement agreement with an investment banker firm to engage them as the exclusive lead underwriter for a registered securities offering. The Company shall pay to the investment banker an equity retainer fee of 15,000 shares (post-reverse stock split) of the restricted common stock of the Company (10,000 shares will be paid within 10 business days of signing the agreement, and remaining 5,000 shares will be paid upon completion of the offering). At closing of the offering, the Company will pay a 7% of the gross offering proceeds and warrants to purchase that number of shares of common stock or units of securities as shall equal 7% of the securities issued and sold by the Company at each closing of the offering.

On October 11, 2019, the Company entered a consulting agreement with a consulting company (whose managing director is also the Company's SEC counsel) to advise the Company on an acquisition project. The service term is six months or closing of the Company's acquisition. Within three business days after signing of this agreement, the Company agreed to issue 31,250 (post-reverse stock split) shares of the Company's unregistered and restricted common stock; with three business days after the investment made by institutional investors introduce by the consulting company, the Company agreed to issue 31,250 shares (post-reverse stock split) of the Company's unregistered and restricted common stock.

In October 2019, the Company issued 31,250 shares (post-reverse stock split) of its restricted common stock and 10,000 shares (post-reverse stock split) of its restricted common stock, respectively, for consulting services and investment banking services described above. The fair value of these shares was $148,625.