Company: LIFD
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001096906-25-000346
Chunk: 493

Company: LFTD PARTNERS INC.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 10
Chunk 493
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 therefrom. Share-Based Compensation  At the closing of the acquisition of Lifted, 645,000 shares of unregistered common stock of the Company were designated as contingent deferred compensation (the “Deferred Contingent Stock”) to certain persons specified by NWarrender in a schedule delivered by him to the Company at the closing of the Merger (the “Deferred Contingent Stock Recipients”). Now that certain conditions and requirements have been met, starting on February 24, 2023, the Deferred Contingent stock has begun to be issued to certain Deferred Contingent Stock Recipients who have instructed the Company to issue to them their respective, earned Deferred Contingent Stock.   Due to the lack of marketability of the Company’s common stock, LFTD Partners hired a third-party valuation firm (the “Valuation Firm”) to calculate discount rates to apply to the value of the Deferred Contingent Stock for both financial reporting and tax purposes. The Valuation Firm used the Finnerty Protective Put Model to determine the discount rates to apply to the Deferred Contingent Stock in order to value it, for both financial reporting and tax reporting purposes. The Finnerty model is variant of the protective put method that estimates the discount based on the average price over the restriction period rather than based on the final price.  The Valuation Firm’s report indicated that, for financial reporting purposes, a 22% discount for lack of marketability should be used when valuing all 645,000 shares of Deferred Contingent Stock, as of February 24, 2023. Assumptions used in the model for financial reporting purposes include: that no dividends on common stock will be paid, that the expected volatility is based on the historical volatility of the trading of LIFD’s common stock, and that there is a 0.5 year term based on the six-month holding period due to Rule 144. As of February 24, 2023, total stock compensation expense of $2,138,175 related to the 645,000 shares of Deferred Contingent Stock was recognized.  The Valuation Firm’s report also indicated that, for tax reporting purposes, discounts ranging from 23% to 31% for lack of marketability and blockage should be used when valuing the 410,000 shares of Deferred Contingent Stock that were issued during the first quarter of 2023. In the Finnerty Protective Put model for each unique block of issued stock, the