17.	Warrant liabilities

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