| EQUITY BASED PAYMENTS |
NOTE
12 – 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, 2026, and 2025, 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 Pla, which were issued to officers and directors in fiscal 2025 and there are no any shares outstanding under the 2022 Stock Option
Plan.
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, which were all issued to officers, directors, and employees
in fiscal year 2025. The 2020 Plan does not have any shares issued under it as of today’s date.
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, 2026:
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Issuances
of Shares for Accrued Salaries Settlement from Shares Issuable – The Company issued 1,046,836 common stock shares to
its employees from shares issuable from December 31, 2025 during the three months ended March 31, 2026. |
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Issuances
of Shares for Employee Bonus from Shares Issuable – The Company issued 250,000 common stock shares to its employee
from shares issuable from December 31, 2025 during the three months ended March 31, 2026. |
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Issuances
of Shares for Consulting Services from Shares Issuable – The Company issued 216,310 common stock shares to consultants
from shares issuable from December 31, 2025 during the three months ended March 31, 2026. |
The
Company had the following common stock issuable during the three months ended March 31, 2026:
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Common
Shares Issuable for Consulting Services – The Company recorded common share issuable for consulting services of 319,132
common stock shares to consultants and recorded stock compensation expense of $402,902 during the three months ended March 31, 2026. |
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. |
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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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