| 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 June 30, 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 Plan, 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 six months ended June 30, 2026:
| |
● |
Issuances of Shares
for Accrued Salaries Settlement from Shares Issuable – On February 5, 2026, the Company issued 1,046,836 common stock
shares to its employees from shares issuable from December 31, 2025. |
| |
|
|
| |
● |
Issuances of Shares
for Employee Bonus from Shares Issuable – On February 5, 2026, the Company issued 250,000 common stock shares to its
employee from shares issuable from December 31, 2025. |
| |
|
|
| |
● |
Issuances of Shares
for Consulting Services from Shares Issuable – On February 10, 2026 and January 22, 2026, the Company issued a total
of 216,310 common stock shares to consultants from shares issuable from December 31, 2025. |
The
Company had the following common stock issuable during the six months ended June 30, 2026:
| |
● |
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 six months ended June 30, 2026. |
| |
|
|
| |
● |
Common Shares Issuable
for Consulting Services – The Company recorded common share issuable for consulting services of 375,62 common stock
shares to consultants and recorded stock compensation expense of $383,039 during the six months ended June 30, 2026. |
| |
|
|
| |
● |
Common Shares Issuable
for Board Compensation – The Company recorded common share issuable for board compensation of 203,496 common stock
shares to board members and recorded stock compensation expense of $240,000 during the six months ended June 30, 2026. |
The
Company had the following common stock issuances during the six months ended June 30, 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 six months ended June 30, 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 Conversion of Vendor Debt – The Company issued 739,002 common stock shares to settle vendor debt valued at $739,002
during three months ended June 30, 2025. |
| |
|
|
| |
● |
Issuances of Shares
to Consultants for Services – On June 12, 2025, the Company entered into a consulting agreement with a consultant whereby
the Company will issue 600,000, restricted shares as a consulting fee of the Company’s common stock to the consultant to be
delivered over 12 months as follows: 200,000 shares to be delivered to the Company’s transfer agent in the Consultant’s
name upon signing the contract. 400,000 restricted, Company, common shares to be delivered over 12 months as follows: Earned and
vested monthly starting at the end of month 4 through 11 in 44,444 equal share increments. In month twelve, 44,448 shares shall be
earned and vested. The Company expensed common shares pro-ratably over the service period and recorded stock compensation expense
of $136,183 for shares vested and issued of 222,220 shares for the six months ended June 30, 2025 and $20,070 for shares vested and
issuable of 44,448 as of June 30, 2025 and for the six months ended June 30, 2025. The Company issued 133,332 shares from shares
issuable from December 31, 2024 during the six months ended June 30, 2025. |
| |
● |
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. As a result, the
Company recorded a loss on debt settlement of $589,989 based on fair value during the six months ended June 30, 2025. |
| |
● |
Common 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 six months ended
June 30, 2025. |
|