NOTE 13: ACCRUED COMPENSATION

Accrued compensation consists of the following at:

At June 30, 2026, accrued compensation was $89,158, consisting of $23,333 attributable to officers and $65,825 attributable to staff.

The employees and the consultant who received common stock in the fiscal 2026 equitization were not executive officers or directors of the Company. The related gain remains in earnings.

Settlement of Accrued Compensation and Other Obligations Through Issuance of Common Stock

During fiscal 2026, as part of the Company's efforts to reduce its outstanding debt and accrued obligations, the Company issued an aggregate of 40,000,000 shares of its common stock to certain consultants and employees and to Mark B. Lucky, the Company’s Chief Financial Officer and director, in settlement of accrued salaries, compensation and other amounts due totaling $2,834,819. The shares were issued at a then-prevailing fair value of $0.0033 per share, resulting in an aggregate fair value of $132,000.

The accounting treatment of the transactions differed based on the capacity in which the recipients held their claims against the Company. The amounts attributable to consultants and employees were accounted for as the settlement of previously accrued obligations, with the difference between the carrying amount of the obligations settled and the fair value of the common stock issued recognized as a gain on the settlement of such obligations. In contrast, the amount attributable to Mr. Lucky was accounted for as a capital transaction in accordance with the principles of ASC 470-50-40-2, which provides that extinguishment transactions between related parties may, in substance, be capital transactions. Accordingly, the excess of the carrying amount of the obligations settled over the fair value of the common stock issued to Mr. Lucky was treated as a capital contribution and credited to additional paid-in capital ("APIC"), rather than recognized as a gain in the Company's statement of operations.

The following table summarizes these transactions:

The Company determined the fair value of the common stock issued based on the then-prevailing market price of its common stock. The aggregate $1,248,079 gain recognized in connection with the settlement of obligations owed to consultants and employees is reflected in the Company's results of operations for fiscal 2026. The $1,454,740 excess related to the settlement of obligations owed to Mr. Lucky was recorded as a capital contribution and included in APIC, consistent with the related party capital transaction guidance in ASC 470-50-40-2.