NOTE 14 – SHARE-BASED COMPENSATION LIABILITY TO RELATED PARTIES

On June 10, 2026, the Board granted stock options to purchase an aggregate of 1,875,000 shares of common stock under the 2021 Plan to Ian Bothwell, the Company’s Chief Executive Officer (625,000 shares), Dr. George Shapiro, the Company’s Chief Medical Officer (625,000 shares) and Greyt Ventures LLC, a principal shareholder of the Company (625,000 shares) (the “Incentive Options”). The Incentive Options have an exercise price of $1.67 per share, are exercisable on a cashless basis through June 10, 2036, and vest in full upon the first to occur of (a) the Company achieving a market capitalization of at least $125 million for 30 consecutive trading days (a market condition), (b) the completion of a specified licensing transaction (a performance condition), or (c) the Company being selected as a 2026 X-Prize finalist (a performance condition). The X-Prize condition subsequently expired without achievement. The Incentive Options contain an antidilution provision that applies upon issuances of common stock or common-equivalent securities equal to 10% or more of the Company’s then-outstanding common stock (a “qualifying issuance”), under which the exercise price may be reduced to the issuance price, if lower, and/or the number of shares issuable upon exercise may be increased pursuant to a contractual formula.

Because the antidilution provision indexes the Incentive Options to a factor in addition to the Company’s share price that is not a market, performance, or service condition, the Incentive Options are classified as liabilities and are remeasured at fair value at the end of each reporting period until settlement. Fair value is estimated using a Monte Carlo simulation model that incorporates the market condition and the expected effect of the antidilution provision. The grant-date fair value was $2.0603 per option ($3,863,100 in the aggregate), and the fair value at June 30, 2026 was $2.0279 per option ($3,802,000 in the aggregate). The market-condition derived service period established at the grant date was approximately 0.92 years and remained the basis for compensation-cost recognition as of June 30, 2026.

During the transition period ended June 30, 2026, the Company recognized $227,000 of stock-based compensation expense related to the Incentive Options, with a corresponding share-based compensation liability. Based on the fair value at June 30, 2026, approximately $3,575,000 of compensation cost remained unrecognized. The amount of compensation cost ultimately recognized is subject to change based on subsequent fair-value remeasurements and the applicable requisite service period. No qualifying issuance triggering the antidilution provision occurred through June 30, 2026.

The grant-date fair value of the Incentive Options was determined using a Monte Carlo simulation model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 232.97%; (iii) risk-free interest rate of 4.55%; (iv) contractual term of 10 years; and (v) management’s expectations regarding the circumstances, size, pricing, and structure of a potential qualifying issuance. The fair value of the Incentive Options at June 30, 2026 was determined using a Monte Carlo simulation model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 231.97%; (iii) risk-free interest rate of 4.44%; (iv) remaining contractual term of 9.95 years; and (v) management’s expectations regarding the circumstances, size, pricing, and structure of a potential qualifying issuance.

The following table provides a roll-forward of the share-based compensation liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended June 30, 2026 as follows: