NOTE 9 – RELATED PARTY TRANSACTIONS

Related Party transactions with the Company are as follows:

Deferred salaries and directors’ fees. The Company’s officers and directors have historically received less than their full salaries and fees, with the unpaid amounts accrued as deferred compensation. During 2024, the Board of Directors approved annual salaries, retroactive to August 1, 2023, of $525,000 for CEO Ben Slager and $325,000 for CFO Anthony Santelli, much of which continues to be accrued rather than paid on a consistent basis. As of June 30, 2026 and December 31, 2025, the aggregate liability for deferred wages and directors’ fees due to related parties was $2,859,070 and $2,525,135, respectively, and is reported as Deferred Wages and Directors’ Fees – Related Party in the accompanying condensed balance sheets. A board resolution passed on February 13, 2020 pledged the Company’s patents and pending patents to secure the back-pay claims of Mr. Slager, Mr. Santelli, and Director Charles Sills in order to support their continued involvement while they receive less than full salaries.

Interest on deferred amounts and related contingent bonuses. Effective April 1, 2024, the Board approved ceasing the accrual of interest on officer back pay and directors’ fees. In lieu of interest, the Company will pay an additional $25,000 to each director contingent upon the financing of the first commercial plant or a successful uplisting to the NYSE or Nasdaq. In addition, a performance bonus equal to 100% of the outstanding back-pay balance due to Mr. Slager and Mr. Santelli is payable contingent upon the financing of the first plant. These amounts become due automatically upon a change of control or a filing by the Company for protection under Chapter 11 or Chapter 7 of the U.S. Bankruptcy Code. Because payment of these amounts was not probable as of June 30, 2026, no liability has been recorded for them.

Notes and other financing. Short-term notes payable, convertible notes, and legacy liabilities issued to related parties are described in Note 6.

Anti-dilution compensation — restricted stock units. In June 2024, the Board approved partial anti-dilution compensation for CEO Ben Slager, CFO Anthony Santelli, and Director Chris Kneppers, payable in restricted stock units (and, for Mr. Kneppers, options) equal to 4%, 3%, and 3%, respectively, of the equity and warrants issued to investors on the next $50 million of equity raised, as consideration for deferring salary or lending funds to the Company. These units are issuable as the Company raises capital through the sale of its common stock. As of June 30, 2026, the amounts issuable were 419,440 RSUs to Mr. Slager, 314,580 RSUs to Mr. Santelli, and 314,580 RSUs and 314,580 options (five-year term) to Mr. Kneppers; none of these RSUs or options had been issued. Their fair value is $185,131, (of which $59,453 is expensed as research and development and $125,678 as general and administrative expenses), and was recognized during the six-month period ended June 30, 2026. In June 2026, the Board replaced the option portion of this arrangement with the anti-dilution option package described below, and no additional options will be issued under the prior arrangement; no compensation cost had been recognized for the replaced options.

Anti-dilution compensation — option package. On June 24, 2026, the Board approved an anti-dilution option package for officers Ben Slager and Anthony Santelli and managers Kevin Hissem and Eric Libra, intended to maintain their fully-diluted option positions at 10%, 7%, 4%, and 2.5%, respectively, and to retain these key members of management while they receive below-market salaries. To meet those percentages, 13,535,000, 6,205,000, 5,030,000, and 1,040,000 unvested options, respectively, were issued as of June 30, 2026, each with an exercise price of $0.115 and a ten-year term, vesting in equal quarterly installments over two years. Under the same action, the Company is committed to issue additional options upon each future equity raise or conversion to maintain these percentages through the next $50 million of equity raised, priced at the fair market value of the common stock on the applicable closing date. The Company also modified certain previously granted performance-based options to vest based on continued service. See Note 7 for the accounting for these option grants, the modification, and the future grant commitment.

Director introduction compensation. Effective August 28, 2024, each director who is not an officer is entitled to receive 3.5% in cash and 3.5% in warrants of the amount invested by any investor first introduced to the Company by that director. The warrants will be priced at the same price as any warrants offered in the related raise or, if there are none, at the closing market price on the date the funds are received, and will have a five-year term. No such cash or warrants had been earned as of June 30, 2026.

CTS production milestone bonus. On December 15, 2025, the Board approved a $500,000 bonus to Mr. Slager for achieving the milestone of producing over 500 pounds of sugar in an eight-hour day — an incentive originally offered on March 12, 2021 to upscale and commercialize the Company’s patented CTS system. This amount is accrued in Deferred Wages and Directors’ Fees – Related Party as of June 30, 2026 and December 31, 2025.