Note 16 - The Financing and Warrant Liabilities

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Warrants Disclosure [Text Block]

16. The Financing and warrant liabilities

The Company consummated registered direct offerings and issued the Company’s common stock and common stock purchase warrants to certain institutional investors, and common stock purchase warrants to its placement agent, in February 2021 (the “2021 Financing”) and December 2020 (the “2020 Financing”). Warrants issued to the investors and placement agent in the 2020 Financing were referred to as the “2020 Investors Warrants” and the “2020 Placement Agent Warrants”, respectively. The warrants issued in the 2021 Financing and the 2020 (Collectively, the “Financings”) were referred to collectively as the “Warrants”. As of December 31, 2024, the warrants issued in the 2021 and 2020 Financing have expired.

The respective initial exercise price of the Warrants is subject to anti-dilution provisions that require adjustment of the number of shares of common stock that may be acquired upon exercise of the warrant, or to the exercise price of such shares, or both, to reflect stock dividends and splits, subsequent rights offerings, pro-rata distributions, and certain fundamental transactions. The Warrants also contain “full ratchet” price protection in the event of subsequent issuances below the applicable exercise price (the “Down round feature”).

The Warrants may not be exercised if it would result in the holder beneficially owning more than 4.99% of the Company’s outstanding common shares (the “Beneficial Ownership Limitation”). The holder of the warrants, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the Company’s outstanding common shares. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.

Accounting for securities issued in the Financings

The Company determined that the Company’s common stock issued in the Financings should be classified as permanent equity as there was no redemption provision at the option of the holders that is not within the control of the Company on or after an agreed upon date.

The Company analyzed the Warrants issued in the Financings in accordance with ASC Topic 815 “Derivatives and Hedging”. In accordance with ASC Topic 815, the Company determined that the Warrants should not be considered index to its own stock, 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). As a result, the Warrants do not meet the scope exception of ASC Topic 815, therefore, should be accounted for as derivative liabilities and measure at fair value with changes in fair value be recorded in earnings in each reporting period.

For the year ended December 31, 2024, the Company did not recognize any change in fair value of warrant liabilities. For year ended December 31, 2023, the Company recorded a gain of approximately US$0.19 million from change in fair value of warrant liabilities.

Warrants issued and outstanding on December 31, 2024 and their movements during the two years 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, 2023		250,088			1.36	$	60.44		250,088			1.36	$	60.44
Issued/Vested		-							-
Exercised		-							-
Expired		(101,545	)			$	40.60		(101,545	)			$	40.60
Balance, December 31, 2023		148,543			0.63	$	74.00		148,543			0.63	$	74.00
Issued/Vested		-							-
Exercised		-
Expired		(148,543	)			$	74.00		(148,543	)			$	74.00
Balance, December 31, 2024		-							-

* Except where otherwise specified, the numbers of common stock and common stock purchase warrant, the purchase prices of the common stock, the exercise prices of the common stock purchase warrant discussed in this note have been retroactively restated for effect of the 1-for-5 and 1-for-4 reverse stock split on January 18, 2023 and September 30, 2024, respectively. See Note 4(l).