NOTE 11 – CAPITAL STOCK

Series C Preferred Shares

During December 2024, Skycrest requested that it be allowed to transfer the 50 shares of Series C Preferred Shares of the Company it holds to Ian T. Bothwell, the Company’s Interim Chief Executive Officer and Chief Financial Officer (“Transfer”). In December 2024, the Board of Directors of the Company approved the Transfer and the Transfer was completed.

Common Stock

On November 7, 2023, the Company filed a certificate of amendment to its Articles of Incorporation to affect a reverse split of our issued and outstanding common stock on a one-for-two-hundred basis. The reverse stock split was effective with FINRA on November 28, 2023 (the “Reverse Split”). The par value of the Company’s common stock was unchanged at $0.001 per share after the Reverse Split. All share and per share amounts have been retroactively adjusted to reflect the split as if it occurred at the earliest period presented.

2021 Plan

In September 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, and Performance Shares (an “Award”) to any person who is an employee or director of, or consultant to the Company. The maximum aggregate number of shares that may be issued pursuant to all Awards was 1,250,000 shares. On June 6, 2023, the Company’s board of directors and stockholders holding a majority of the Company’s voting power, approved an increase in the number of shares of the Company’s common stock reserved for issuance under the Company’s 2021 Plan from 1,250,000 shares to 2,500,000 shares.

The 2021 Plan is administered by (a) the board of the directors of the Company; or (b) a committee designated by the board, which Committee shall be constituted in such a manner as to satisfy the applicable laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such committee shall continue to serve in its designated capacity until otherwise directed by the board. The board of directors may at any time amend, suspend, or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by applicable laws.

As of July 31, 2025, a total of 1,620,482 Awards (net of 1,218,647 Awards redeposited for future issuance) that have been awarded under the 2021 Plan remain issued and outstanding.

Sale Of Common Stock

On July 25, 2025, ZEO entered into a subscription agreement with a single accredited investor (the “Investor”). Pursuant to which the Investor agreed to purchase 250,000 shares of our common stock (the “Shares”) in a private transaction for an aggregate purchase price of $1,000,000 (the “Purchase Price”). The Shares will be issued and sold and the Purchase Price paid in ten (10) equal monthly installments commencing on August 1, 2025 and ending on May 1, 2026. The August 1, 2025 and September 1, 2025 installment payments were made in accordance with the subscription agreement and the Company issued the investor 25,000 and 25,000 Shares, respectively.

Restricted Stock Awards

Effective February 1, 2025, in connection with an agreement with an independent sales representative (“Representative”), the Company agreed to grant the Representative 40,000 shares of the Company’s common stock which shall vest quarterly over a 2-year period beginning with the first month subsequent to the monthly period that the Representative has generated a cumulative amount of sales for the Company in excess of $500,000 (“Sales Milestone”). Upon a termination of the Agreement for cause or the failure of the Representative to achieve the Sales Milestone during the 1^st year of the Agreement, all unvested shares as of such time shall be forfeited (except in the case of a sale of the Company). In addition, the Representative will be entitled to receive commissions on sales of the Company’s products to customers introduced by the Representative in the form of cash and common stock of the Company based on sales milestones. The agreement may be terminated by the Company at any time upon 30 days written notice for failure of Representative to meet sales targets, to be solely determined by the Company. The fair value of the shares as of the date of grant was $104,000. The Company will amortize $104,000 of stock-based compensation expense over the vesting term of the agreement beginning once the Representative has achieved the minimum Sales Milestone. As Consultant has not met Sales Milestone, there was no expense recognized during the period.

On May 8, 2025, the Company entered into an agreement with a non-affiliated consultant (the “Consultant”) to advise the Company on strategic communication investor relation programs (“Consulting Agreement”). In connection with the Consultant Agreement, the Company granted the Consultant 100,000 shares of common stock (“Shares”) and warrants to purchase an additional 500,000 shares of common stock (the “Warrants”). 50,000 of the Shares vested upon execution of the Consulting Agreement and the remaining 50% will vest on the six-month anniversary of the Consulting Agreement. The fair value of the Shares as of the date of grant was $286,000. The Company will amortize the $286,000 of stock-based compensation expense over the term of the Consulting Agreement. The Company amortized $48,000 of expense for the three-months and nine months ended July 31, 2025. The Warrants vest in five equal tranches of 100,000 shares, at various exercise prices ranging between $3.50 - $10.00 per share, and are exercisable on the terms provided in the Consulting Agreement. Once vested, the Warrants are exercisable for a period of ninety (90) days from the date they become exercisable. The Company valued the warrants on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 4.00%, (2) term of 3 years, (3) expected stock volatility of 143%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants granted was $1,428,000. The Company will amortize $1,428,000 of stock-based compensation based on the vesting of the Warrants.

Effective May 23, 2025, in connection with an agreement with a second consultant (“Second Consultant”), the Company agreed to grant the Second Consultant 40,000 shares of the Company’s common stock which shall vest quarterly over a 2-year period commencing on the date that sales obtained by the Company from customers introduced by Second Consultant exceed $400,000 (“Milestone”) and provided that the Milestone is achieved by December 31, 2025. Upon termination of the agreement for any reason, any unvested stock shall be forfeited. In addition, the Second Consultant will be entitled to receive commissions on sales of the Company’s products to customers introduced by the Representative in the form of cash and common stock of the Company based on sales milestones. The agreement may be terminated by the Company at any time by either party upon 30 days written notice. The fair value of the shares as of the date of grant was $82,000. The Company will amortize $82,000 of stock-based compensation prorata over the vesting period once the Consultant has achieved minimum Sales Milestone.

On June 25, 2025, in connection with the Acquisition (see Note 13), the Company issued 30,000 restricted shares of the Company’s common stock valued at $58,000.

A summary of unvested restricted stock activity for the nine months ended July 31, 2025 are presented below:

The Company recorded a total of $22,000 and $75,000 of stock-based compensation expense based on the grant date fair value of these shares during the three months and nine months ended July 31, 2025, respectively.

There was approximately $554,000 of unamortized compensation associated with unvested stock grants outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.