NOTE H – WARRANTS

The Company has common stock purchase warrants outstanding at June 30, 2025 to purchase 2,358,797 shares of common stock, all of which are exercisable until various dates through October 11, 2026. The warrants are exercisable at the following amounts and rates: 2,000,000 are exercisable on a cash or cashless basis at an exercise price of $1.00 per share, 92,500 are exercisable on a cash or cashless basis at an exercise price of $5.00 per share, 64,606 are exercisable for cash at an exercise price of $5.00 per share, 10,267 are exercisable for cash at an exercise price of the greater of (i) $5.00 per share or (ii) 85% of the 10-day moving average of the Company’s public trading price if the Company’s securities are trading on the NASDAQ Capital Markets, 106,424 are exercisable for cash at an exercise price of the greater of (i) $5.00 per share or (ii) 85% of the average closing price of our common stock, as quoted on the public securities trading market on which our common stock is then traded with the highest volume, for ten (10) consecutive trading days immediately prior to the date of exercise, and 85,000 are exercisable for cash at exercise price of the greater of (i) one dollar ($1.00) or (ii) eighty-five percent (85%) of the 10-day moving average of the Company’s public trading price as quoted on the OTC Markets or equivalent or higher public securities trading market on which the Company’s common stock is then traded with the highest volume.

To calculate the fair value of stock warrants at the date of grant, we use the Black-Scholes option pricing model. The volatility used is based on historical volatilities of selected peer group companies. Management estimated the fair value of the underlying common stock by utilizing the discounted cash flow method and the prior transaction method approaches and determined a fair value of $5.00 before July 30, 2024 and at trading value after being listed on July 30, 2024. Management estimates the average volatility considering current and future expected market conditions. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Each issuance is individually valued according to this procedure as of the date of issue with maturity dates through October 11, 2026, volatility estimates between 27.27% to 37.58% and risk-free rates 3.99% to 5.54% in the period.

In January 2024, the Company extended the expiration date of 2,000,000 common stock purchase warrants owned by the President of the Company, to December 31, 2025. Due to the modification of the warrants, the difference between the fair value of the modified warrants and the fair value of the warrants immediately before the modification was recorded as a warrant expense, which was only applicable to service warrants. The total incremental increase in the warrants was $47,262

During the first quarter of 2024, the Company issued 65,956 2023 Warrants along with 65,956 shares of common stock upon the conversion of $309,515 of 2023 Notes and $20,264 of accrued interest. The total value of the 2023 Warrants was $69,818 and was recorded in additional paid in capital.

In January 2024, the Company issued a total of 52,409 shares of the Company’s common stock upon the cashless exercise of 94,607 common stock purchase warrants by Mr. Stuart. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $262,045.

In January 2024, the Company issued a total of 28,738 shares of the Company’s common stock upon the cashless exercise of 51,875 common stock purchase warrants by Eagle Rock Investments, L.L.C., a limited liability company of which a majority of the outstanding equity is owned by Christopher Stuart, a director of the Company (“ERI”). Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $143,690.

In January 2024, the Company issued a total of 119,943 shares of the Company’s common stock upon the cashless exercise of 179,272 common stock purchase warrants by thirteen investors. Subsequently, the Company determined the fair value utilized to determine the number of shares issued was not indicative of recent common stock transactions. Accordingly, the Company recorded additional compensation expense of $368,465.

In January 2024, the Company issued a total of 59,504 shares of the Company’s common stock upon the exercise of 5,731 Warrants, 41,200 2023 Warrants and, 12,573 other common stock purchase warrants by a total of six investors at an exercise price of $5.00 per share for total proceeds of $297,520.

In January 2024, the Company extended the expiration date of 85,784 common stock purchase warrants owned by Mr. Stuart and 71,233 common stock purchase warrants owned by ERI from January 31, 2024 to December 31, 2024.

In May 2024, the Company issued 800 shares of the Company’s common stock upon the exercise of 800 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $4,000.

In May 2024, the Company made an offer to existing warrant holders who obtained their warrants upon the conversion of their 9.5% convertible promissory notes pursuant to which such warrant holders who agreed, on or before May 31, 2024, to exercise at least 50% of their warrants on or before June 30, 2024 would receive (i) an extension of the expiration date of the balance of such warrants to December 31, 2025; (ii) removal of the following language related to the exercise price of the warrants “provided, that ten (10) days after the common stock of the Company commences trading on a public securities trading market, the amount per Share shall thereafter be the greater of (i) $5.00 or (ii) 85% of the average closing price of the Company’s common stock, as quoted on the public securities trading market on which the Company’s common stock is then traded with the highest volume, for ten (10) consecutive trading days immediately prior to the date of exercise;” and (iii) payment of the legal expense to remove the 144 legend, after the applicable holding period, for both the shares issuable upon the exercise of such warrants and the shares issued upon the conversion of their 9.5% convertible promissory notes. Pursuant to this offer, in May 2024, the Company issued a total of 71,723 shares of the Company’s common stock upon the exercise of 35,306 2023 Warrants and 35,617 other common stock purchase warrants by a total of eight investors, including ERI, at an exercise price of $5.00 per share for total proceeds of $354,615 and extended the expiration date to December 31, 2025 and adjusted the exercise price to $5.00 per share of 35,306 2023 Warrants and 35,616 other common stock purchase warrants. The fair value of the modifications to the warrants was $50,553 and has been recorded as additional paid-in-capital, net of equity issuance costs of the same amount which resulted in a net effect of zero.

In July 2024, the Company issued 25,000 common stock purchase warrants to the director of operations of the Company at an exercise price of $5.00 per share exercisable on a cash or cashless basis until December 31, 2025 and 25,000 common stock purchase warrants to a service provider of the Company at an exercise price of $5.00 per share exercisable on a cash or cashless basis at any time until December 31, 2025. The total value of these warrants was $41,888 and was recorded as stock compensation and additional paid in capital.

In July 2024, the Company issued 2,560 shares of the Company’s common stock upon the exercise of 2,560 2023 Warrants by one investor at an exercise price of $5.00 per share for total proceeds of $12,800.

In August 2024, the Company issued a total of 5,005 2024 Warrants along with 5,005 shares of common stock upon the conversion of $25,000 of 2024 Notes and $26 of accrued interest. The total value of the 2024 Warrants was $25,021 and was recorded as additional paid in capital.

In December 2024, the Company extended the expiration date of 123,924 common stock purchase warrants owned by Mr. Stuart from December 31, 2024 to December 31, 2025 in consideration for allowing the Company to extend the maturity date of the $625,000 Note, as amended, by nine additional six month periods instead of seven additional six month periods. 

In March 2025, the Company issued a total of 5,262 2024 Warrants, 25,000 2025 Warrants, and 30,262 shares of the Company’s common stock to one investor upon the conversion of $25,000 of 2024 Notes along with $1,308 of accrued interest and $25,000 of 2025 Notes. The value of the warrants was $35,781 and was recorded as additional paid in capital.

In April 2025, the Company issued a total of 20,000 2025 Warrants and 20,000 shares of the Company’s common stock to two investors upon the conversion of $20,000 of 2025 Notes. The value of the warrants was $4,626 and was recorded as additional paid in capital.

In June 2025, the Company issued a total of 40,000 2025 Warrants and 40,000 shares of the Company’s common stock to two investors upon the conversion of $40,000 of 2025 Notes. The value of the warrants was $11,003 and was recorded as additional paid in capital.

The following is a summary of activity and outstanding common stock warrants:

As of June 30, 2025, the outstanding and exercisable warrants have a weighted average remaining term of 0.5 years and have an estimated $549,184 aggregate intrinsic value. The intrinsic value is calculated by taking the difference between the exercise price and the fair market value of the stock at June 30, 2025 multiplied by the number of warrants.