Annual report pursuant to Section 13 and 15(d)

Warrant liability

v3.7.0.1
Warrant liability
12 Months Ended
Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
20.
Warrant liability
 
In April 2014, the Company and certain institutional investors entered into a securities purchase agreement, pursuant to which the Company sold 1,000,000 shares of common stock and warrants to purchase 500,000 shares of common stock in a registered direct offering at a price of $5.05 per fixed combination for aggregate proceeds of $5.05 million.
 
The warrants have an initial exercise price of $6.33 per share and are exercisable until April 17, 2017. The exercise price of the warrants, and in some cases the number of shares issuable upon exercise of the warrants, will be subject to appropriate adjustment in relation to certain events. In addition, if the Company issues shares in the future at a price below $6.33 per share, the exercise price of the warrants will be reduced to such lower price. No adjustment will be made to the number of shares purchasable in such event.
 
The warrants were classified as a liability. The fair value of the warrants liability is re-measured at each reporting period. As of December 31, 2016 and 2015 the fair value of warrant liability was $259 and $140,549, respectively. For the years ended December 31, 2016 and 2015, the Company recognized a gain of $140,290 and $927,125, respectively, on the change in the fair value of the warrant liability.
 
The fair value of the warrants as of December 31, 2016 and 2015 were calculated using the Black-Scholes pricing model with the following assumptions:
 
 
 
For the years ended December 31,
 
 
 
2016
 
2015
 
Expected volatility
 
 
56.79
%
 
79.85
%
Risk-free interest rate
 
 
0.53
%
 
0.56
%
Expected term (in years)
 
 
0.30
 
 
1.30
 
Dividend rate
 
 
-
 
 
-
 
 
The movement of the warrant for the years ended December 31, 2016 and 2015 is as following:
 
 
 
 
 
Weighted
 
Remaining
 
 
 
 
 
Average Exercise
 
Contractual Term
 
 
 
Warrants
 
Price
 
in Years
 
 
 
 
 
$
 
 
 
Outstanding, January 1, 2015
 
 
500,001
 
 
6.33
 
 
2.3
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
-
 
 
-
 
 
-
 
Outstanding, December 31, 2015
 
 
500,001
 
 
6.33
 
 
1.3
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, January 1, 2016
 
 
500,001
 
 
6.33
 
 
1.3
 
 
 
 
 
 
 
 
 
 
 
 
Granted
 
 
-
 
 
-
 
 
-
 
Outstanding, December 31, 2016
 
 
500,001
 
 
6.33
 
 
0.3
 
 
The Company revalued the warrants utilizing a binomial model as of December 31, 2016 and 2015 with no material difference in the value.