Stock Based Compensation

6 Months Ended

Dec. 31, 2021

Stock Based Compensation

Note 12. Stock Based Compensation

Note 12. Stock Based Compensation

The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares. The options are exercisable for a period of up to 10 years from the date of the grant.

The following table reflects the continuity of stock options for the six months ended December 31, 2021:

A summary of stock option activity is as follows:

			Weighted		Average
			Average		Remaining		Aggregated
	Options		Exercise		Contractual		Intrinsic
	Outstanding		Price		Life (Years)		Value
Outstanding at June 30, 2021		2,088,333	$	1.55		7.49	$	9,689,865
Granted		1,900,000		4.18		10		-
Options outstanding at December 31, 2021		3,988,333	$	2.79		8.21	$	4,897,610
Options exercisable at December 31, 2021 (vested)		2,038,829		2.10		7.74		3,992,496

Stock-based compensation expense attributable to stock options was $677,455 and $134,125 for the three months ended December 31, 2021 and 2020, respectively.  Stock-based compensation expense attributable to stock options was $1,270,553 and $227,318 for the six months ended December 31, 2021 and 2020, respectively.  As of December 31, 2021, there was $3,943,664 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was approximately 2 years.

The value of each grant is estimated at the grant date using the Black-Scholes option model with the following assumptions for options granted during the six months ended December 31, 2021:

	December 31, 2021
Dividend rate		-
Risk free interest rate		0.69	%
Expected term		5
Expected volatility		69	%
Grant date stock price	$	4.18

The basis for the above assumptions are as follows: the dividend rate is based upon the Company’s history of dividends; the risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Company’s historical pattern of options granted and the period of time they are expected to be outstanding; and expected volatility was calculated based upon historical trends in Charlotte’s Web Holdings, Inc. (CWBHF) stock prices for periods prior to the date the Company’s trading information was available. Management selected Charlotte’s Web Holdings, Inc. for it length of time as a publicly trading company and the similarities of the business and industry.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on historical experience of forfeitures, the Company estimated forfeitures at 0% for each of the six months ended December 31, 2021, and 2020, respectively.