NOTE 10 – ALLOCATION OF FAIR VALUE IN PRIVATE PLACEMENT

Unit Offering

During the period from October 30, 2025, to May 8, 2026, the Company proposed a private placement offering investors to purchase shares and warrants issued together as a unit; however, each warrant is detachable and separately exercisable to purchase one share of Common Stock. The average price was $0.051 per unit, less a broker (Member FINRA / SIPC) fee consisting of 8% cash commission and 8% bonus shares. The Company raised a total of $1,032,240 (after $89,760 cash commission) and issued 22,770,002 shares of Common Stock (after 1,686,667 bonus shares), as well as 21,083,335 5-year warrants exercisable to buy Common Stock at $0.12 per share. The net received by the Company was $0.047 per unit.

In the six months ended on June 30, 2026, the company raised net cash proceeds of $314,640 (after payment of $27,360 in commission) the fair value of the Common Stock was determined based on the quoted market price of $0.031 per unit on the issuance date. The fair value of the warrants was estimated using the Black-Scholes option-pricing model, resulting in a fair value of $0.016 per warrant, which differs from allocated purchase price.

In accordance with ASC 505-10-30-6 (Relative Fair Value Allocation), the total proceeds were allocated to the Common Stock and the warrants based on their relative fair values on the date of issuance.

The allocation was calculated as follows:

 SCHEDULE OF ALLOCATION OF FAIR VALUE IN PRIVATE PLACEMENT

The allocated value per share is $0.031 ($190,867 ÷ 6,156,001 shares), and the allocated value per warrant is $0.022 ($123,773 ÷ 5,700,001 warrants), or a 48.58% discount to market.

When a company issues two or more equity instruments (e.g., Common Stock and warrants) in a single transaction for a lump-sum amount, the proceeds must be allocated to each instrument based on their relative fair values on the issuance date. No gain or loss is recognized on the initial recognition.

Warrant Terms

The warrants have an exercise price of $0.12 per share, are exercisable immediately, and expire between 10/25/2030 and 5/08/2031. Each warrant entitles the holder to purchase one share of Common Stock. As of June 30, 2026, 21,083,335 warrants were issued in connection with this offering.

In accordance with ASC 505-10-50-3, the following information is disclosed regarding the warrants in the first six months of 2026:

Fair Value Measurement (ASC 820)

The fair value of the warrants was estimated using the Black-Scholes option-pricing model in accordance with ASC 820-10-35-2 (Fair Value Measurement Framework). The following significant inputs were used in the valuation:

 SCHEDULE OF SIGNIFICANT INPUTS OF FAIR VALUE MEASUREMENT

The fair value measurement of the warrants is classified within Level 3 of the fair value hierarchy established by ASC 820-10-35-37 through ASC 820-10-35-54A, as the valuation inputs include unobservable inputs (expected volatility) that are significant to the overall measurement.

Warrant Activity

A summary of warrant activity for the quarter ended June 30, 2026 is as follows:

 SUMMARY OF WARRANT ACTIVITY