Wetouch Technology Inc. Stock Compensation Disclosure
The Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period during which the consultants are required to provide services in exchange for the issued shares. The fair value of above award was estimated at the grant date using the Black-Scholes model for pricing the share compensation expenses.
On December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of shares and warrants to purchase shares of common stock to The Crone Law Group, P.C. or its designees for legal services that had been rendered. The five-year warrants are exercisable at one cent per share.
shares of common stock underlying such warrants were vested on December 22, 2020 and shares were issued upon exercise of these warrants on September 21, 2022 and warrant to purchase shares remained outstanding for The Crone law Group, P.C. or its designees for legal services. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. The fair value of the Black-Scholes model includes the following assumptions: expected life of years, expected dividend rate of %, volatility of % and an average interest rate of %.
On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of shares and warrants to purchase shares of common stock to a third party service provider for consulting services that had been rendered. These warrants have a five-year term and are exercisable at one cent per share.
The shares of common stock and warrants to purchase shares of commons stock
vested on January 1, 2021.
The fair value of the above warrants was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. The fair value of the Black-Scholes model includes the following assumptions: expected life of years, expected dividend rate of %, volatility of % and an average interest rate of %.
As of December 31, 2023, the Company had warrants outstanding to purchase 35,861 shares of common stock related to above mentioned services with i) weighted average exercise price of $; ii) weighted average remaining contractual life of years; and iii) aggregate intrinsic value of $ million.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.