Derivative liabilities

3 Months Ended

Sep. 30, 2021

Derivative Liabilities

Derivative liabilities

22. Derivative liabilities

The derivative liability is derived from the conversion features in note 22 and stock warrant in note 24. All were valued using the weighted-average Binomial option pricing model using the assumptions detailed below. As of September 30, 2021 and June 30, 2021, the derivative liability was $1,315,913 and $2,217,361, respectively. The Company recorded $325,234 loss and $1,087,485 gain from changes in derivative liability during the periods ended September 30, 2021 and June 30, 2021, respectively. The Binomial model with the following assumption inputs:

	June 30, 2021
Annual Dividend Yield	—
Expected Life (Years)	0.50-3.00
Risk-Free Interest Rate	0.01-0.46	%
Expected Volatility	89-236	%

	September 30, 2021
Annual Dividend Yield	—
Expected Life (Years)	0.50-3.00
Risk-Free Interest Rate	0.05-0.53	%
Expected Volatility	127-234	%

Fair value of the derivative is summarized as below:

Beginning Balance, June 30, 2021	$	2,217,361
Additions	$	—
Mark to Market	$	(325,234	)
Cancellation of Derivative Liabilities Due to Cash Repayment	$	—
Reclassification to APIC Due to Conversions	$	(576,214	)
Ending Balance, September 30, 2021		1,315,913

Sugarmade, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2021