| EQUITY BASED PAYMENTS |
NOTE
9 – EQUITY BASED PAYMENTS
The
Company accounts for equity-based payment accruals under authoritative guidance as set forth in the Topics of the ASC. The guidance requires
all equity-based payments to employees and non-employees, including grants of employee and non-employee stock options and warrants, to
be recognized in the consolidated financial statements based at their fair values.
Stock
Incentive Plans
The
Company has the following stock incentive plans:
Effective
January 15, 2020, the Company adopted its 2020 Stock Option and Award Plan (the “2020 Stock Incentive Plan”). A total of
2,222 shares of the Company’s common stock were reserved for the 2020 Stock Incentive Plan. As of March 31, 2025 and December 31, 2024, there were
no grants made under the 2020 Stock Incentive Plan. On May 4, 2023, the Company terminated the 2020 Stock Incentive Plan.
Effective
August 9, 2022, the Company adopted its 2022 Incentive and Non-statutory Stock Option Plan (the “2022 Stock Option Plan”).
Under the 2022 Stock Option Plan, the Board of Directors may grant options to purchase common stock to officers, employees, and other
persons who provide services to the Company. A total of 833,333 shares of the Company’s common stock is reserved for the 2022 Stock
Option Plan.
The
Company granted and issued the following stock options during the three months ended March 31, 2025:
| ○ | The
Company granted and issued 708,333 shares of common stock under the 2022 Stock Option Plan
to its employees during the three months ended March 31, 2025. Under the stock option grant,
these shares were fully vested at the time of issuance with no exercise price. The common
stock share trading price was $0.52 per share at the time of issuances and the Company recognized
$365,641 as stock compensation expense during the three months ended March 31, 2025. |
Effective
August 9, 2022, the Company adopted its 2022 Restricted Stock Plan (the “2022 Restricted Stock Plan”). Under the 2022 Restricted
Stock Plan, the Board of Directors may grant restricted stock to officers, directors, and key employees. A total of 833,333 shares of
common stock is reserved for the 2022 Restricted Stock Plan.
The
Company granted and issued the following restricted stock during the three months ended March 31, 2025:
| ○ | The
Company granted and issued 833,333 shares of common stock under the 2022 Restricted Stock
Plan to its employees during the three months ended March 31, 2025. Under the plan, these
shares were fully vested at the time of issuance with no exercise price. The common stock
share trading price was $0.52 per share at the time of issuances and the Company recognized
$430,166 as stock compensation expense during the three months ended March 31, 2025. |
Stock
Compensation - Others
At
time to time, the Company issues common stock to its Board of Directors, outside service providers or consultants.
The
Company had the following common stock issuances during the three months ended March 31, 2025:
| ● | Issuances
of Shares for Accrued Board of Directors Compensation Settlement – The Company
issued 1,945,000 common stock shares to its Board of Directors for prior year services of
which the Company had accrued $972,500 as accrued board compensation at December 31, 2024.
The accrued amount of $972,500 was settled with issuance of 1,945,000 common shares. |
| ● | Issuances
of Shares for Board of Directors Compensation – The Company issued 220,000
common stock shares to its Board of Directors for its services. The common stock share trading
price was $1.00 per share at the time of issuance and the Company recognized $220,000 as
stock compensation expense during the three months ended March 31, 2025. |
| ● | Issuances
of Shares to Consultants for Services – The Company issued 578,757 common stock
shares to consultants. Some of these consultants require entire year of 2025 services, therefore,
some of stock compensation expense of $403,518 was recorded as prepaid at March 31, 2025.
The prepaid amount was $58,073 at March 31, 2025 and is recorded as prepaid expenses in the
consolidated balance sheets. |
| ● | Issuances
of Shares for Accrued Salaries Settlement – The Company issued 1,340,598 common
stock shares to its employees for prior year accrued wages of $536,251. The accrued amount
of $536,251 was settled with issuance of 1,340,598 common shares. |
| ● | Common
Stock and Preferred D Shares Issuable from Additional Borrowings from Notes Payable to Shareholder
($500,000) – On March 21, 2025, the Company entered into a Loan Authorization
and Agreement for a loan of $500,000 from a shareholder, the proceeds of which were to be
used for working capital purposes. The loan has an interest rate of 12.5% per annum and is
due within 6 months from the date of the agreement. Furthermore, the Company is required
to issue 10,000 preferred C shares (issued on April 10, 2025) and 225,000 common stock shares
(issued on April 10, 2025) under the agreement. These shares were calculated at fair value
at the date of issuance and the Company recorded interest expense of $427,750. The $500,000
was converted to preferred stock C during the three months ended March 31, 2025. |
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