Derivative liabilities

9 Months Ended

Mar. 31, 2022

Derivative Liabilities

Derivative liabilities

20. Derivative liabilities

The derivative liability is derived from the conversion features in note 19 and stock warrant in note 21 All were valued using the weighted-average Binomial option pricing model using the assumptions detailed below. As of March 31, 2022 and June 30, 2021, the derivative liability was $5,425,741 and $2,217,361, respectively. The Company recorded $2,853,569 loss and $506,559 gain from changes in derivative liability during the nine months ended March 31, 2022 and 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	%

	March 31, 2022
Annual Dividend Yield	—
Expected Life (Years)	0.50-3.00
Risk-Free Interest Rate	0.74-2.45	%
Expected Volatility	103-164	%

Fair value of the derivative is summarized as below:

Beginning Balance, June 30, 2021	$	2,217,361
Additions	$	1,568,862
Mark to Market	$	2,853,589
Cancellation of Derivative Liabilities Due to Cash Repayment	$	—
Reclassification to APIC Due to Conversions	$	(1,214,071	)
Ending Balance, March 31, 2022		5,425,741

Sugarmade, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2022