NOTE 4 – STOCK-BASED COMPENSATION EXPENSE

In 2008, the Company adopted the Houston American Energy Corp. 2008 Equity Incentive Plan (the “2008 Plan”). The terms of the 2008 Plan, as amended in 2012 and 2013, allow for the issuance of up to 480,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan”). The terms of the 2017 Plan, allow for the issuance of up to 400,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

In 2021, the Company adopted the Houston American Energy 2021 Equity Incentive Plan (the “2021 Plan” and, together with the 2008 Plan and the 2017 Plan, the “Plans”). The terms of the 2021 Plan allow for the issuance of up to 500,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

Persons eligible to participate in the Plans are key employees, consultants and directors of the Company.

The Company periodically grants options to employees, directors and consultants under the Plans and is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period.

Stock Option Activity

In November 2024, the Company agreed to issue to its CEO a number of options equal to $15,000 divided by the closing price of our stock on the 15^th day of each month. The strike price of each option is equal to the grant price. The options have a ten10-year life and are exercisable at $0.70 per share for the January, February, and March 2025 issuances, vest 20% on the date of grant and 80% ten months from the date of grant. The grant date fair value of these stock options was $13,604 in January 2025, $13,486 in February 2025, and $13,241 in March 2025, based on the Black-Scholes Option Pricing model based on the following assumptions: market value of common stock on grant dates – $1.63, $1.41, and $1.07, respectively; risk free interest rate based on the applicable US Treasury bill rate – 0%; dividend yield – 0%; volatility factor based on the trading history of the Company – 92%; weighted average expected life in years – 10; and expected forfeiture rate – 0%. The Company also issued 15,000 options to a board member as compensation. The options have a ten10-year life and are exercisable at $1.63 per share for the January issuance, vest 20% on the date of grant and 80% ten months from the date of grant. The grant date fair value of these stock options was $22,174 in January 2025, based on the Black-Scholes Option Pricing model based on the following assumptions: market value of common stock on grant dates – $1.63; risk free interest rate based on the applicable US Treasury bill rate – 0%; dividend yield – 0%; volatility factor based on the trading history of the Company – 92%; weighted average expected life in years – 10; and expected forfeiture rate – 0%.

A summary of stock option activity and related information for the three months ended March 31, 2025 is presented below:

SCHEDULE OF STOCK OPTION ACTIVITY

During the three months ended March 31, 2025, the Company recognized $14,057 of stock-based compensation expense attributable to the amortization of stock options. As of March 31, 2025, there is $84,980 of unrecognized stock-based compensation expense related to non-vested stock options.

As of March 31, 2025, there were 24,969 shares of common stock available for issuance pursuant to future stock or option grants under the Plans.

Stock-Based Compensation Expense

The following table reflects total stock-based compensation recorded by the Company for the three months ended March 31, 2025 and 2024:

SCHEDULE OF STOCK-BASED COMPENSATION