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Effective July 1, 2022, the Company granted 60,000 options as compensation to the newly filled position, VP Sales and 100,000 to the VP Finance. 25,600 and 20,000 options respectively vested immediately and the remaining options vest over one year, with a term of 5 years and exercisable at $3.00 per share. In January, 2024, the Board of Directors modified the exercise price to $0.0347 per share as part of the change described directly below.

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January 8, 2024, the Board of Directors granted 264,000 fully vested options to the Company’s CEO, with a term of 5 years and exercisable at $0.0347 per share (70% of the 30-day Volume Weighted Average Price prior to this date). These options are the first options granted to the CEO who forewent this compensation in the past to benefit the Company. The CEO is now aligned with the executive management compensation. At the same time, the Board of Directors modified 528,000 fully vested shares allocated to executives, directors and former management to reflect the same exercisable price of $0.0347 per share.

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For the period ended December 31, 2023, the Company recorded a stock option expense of $108,581. The Company used the Black-Scholes option-pricing model to determine the grant date fair value of stock-based awards under ASC 718. For the year ended December 31, 2024, the Company recorded stock option expense of $23,979.

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In connection with the repricing of certain stock options, the Company reassessed the fair value of the modified awards compared to the original awards. As a result of this reassessment, the Company recognized additional stock-based compensation expense of $21,770 for the year ended December 31, 2024.

The Company estimates the fair value of stock options using the Black-Scholes model. For grants classified as ‘plain vanilla,’ the expected term was calculated using the SEC’s Simplified Method [(vesting term + contractual term)/2] due to insufficient historical exercise data. This approach aligns with SAB Topic 14.D.2 and reflects the Company’s significant changes to share option grant terms in recent years, which rendered historical exercise patterns inapplicable.