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STOCK OPTIONS AND WARRANTS
 9 Months Ended
Sep. 30, 2025
Share-Based Payment Arrangement [Abstract]  
STOCK OPTIONS AND WARRANTS

NOTE 8 - STOCK OPTIONS AND WARRANTS

 

2021 Equity Incentive Plan

 

In July 2021, our Board and shareholders authorized the 2021 Equity Incentive Plan (the “2021 Plan”), covering 180,000 shares of common stock. In January 2022, the number of shares authorized under the 2021 Plan was automatically increased to 228,530 shares pursuant to an escalation provision in the plan. The purpose of the 2021 Plan is to advance the interests of the Company and our related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2021 Plan is administered by our Board or by the Compensation Committee. The following awards may be granted under the 2021 Plan:

 

  ·  incentive stock options (“ISOs”)
     
  ·  non-qualified options (“NSOs”)
     
  ·  awards of our restricted common stock
     
  ·  stock appreciation rights (“SARs”)
     
  ·  restricted stock units (“RSUs”) 

 

Any option granted under the 2021 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2021 Plan are determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

 

The 2021 Plan is accounted for in accordance with ASC 718, Compensation - Stock Compensation. Under this guidance, the Company recognizes compensation expense for stock options, restricted stock, RSUs, and other equity-based awards based on the grant-date fair value of the awards. That expense is recognized over the vesting period of each award.

 

2024 Equity Incentive Plan

 

On July 11, 2024, our Board and Majority Shareholders approved and ratified the 2024 Equity Incentive Plan (the “2024 Plan”), covering a minimum of 2,000,000 shares of common stock and up to 2,500,000 of common stock, if all shares of shares of common stock issuable by the Company in the 2024 Exempt Offering, as described herein, are issued on or about the Effective Date.  The purpose of the 2024 Plan is to advance the interests of the Company and our related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2024 Plan is administered by our Board or by the Compensation Committee. The following awards may be granted under the 2024 Plan:

 

  ·  incentive stock options (“ISOs”)
     
  ·  non-qualified options (“NSOs”)
     
  ·  awards of our restricted common stock
     
  ·  stock appreciation rights (“SARs”)
     
  ·  restricted stock units (“RSUs”) 

 

Any option granted under the 2024 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2024 Plan are determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

 

The 2024 Plan is accounted for in accordance with ASC 718, Compensation - Stock Compensation. Under this guidance, the Company recognizes compensation expense for stock options, restricted stock, RSUs, and other equity-based awards based on the grant-date fair value of the awards. That expense is recognized over the vesting period of each award.

 

Stock Options

 

The Company recognizes compensation expense for stock options based on the grant-date fair value, estimated using the Black-Scholes option pricing model. Compensation expense is recognized on a straight-line basis over the vesting period of the respective awards. The fair value of each option grant is estimated on the date of grant using assumptions for expected volatility, expected term, risk-free interest rate, and expected dividend yield that reflect market conditions and the Company’s historical experience at the time of grant.

 

There were no stock options granted during the three and nine months ended September 30, 2025.

 

During the three months ended September 30, 2025, and 2024, we recorded $10,853 and $27,954 of compensation expense, respectively, related to stock options.

 

During the nine months ended September 30, 2025, and 2024, we recorded $32,926 and $100,168 of compensation expense, respectively, related to stock options.

 

A summary of the status of the Company’s stock options as of September 30, 2025, and changes during the period are presented below:

                
  

Options

Outstanding

  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Life (In

Years)

  

Aggregate

Intrinsic

Value

 
Outstanding at December 31, 2024   13,937   $27.81    1.86   $– 
Granted   –    –    –    – 
Exercised   –    –    –    – 
Expired or cancelled   (617)   29.73    1.13    – 
Outstanding at March 31, 2025   13,320   $27.72    1.63   $– 
Granted   –    –    –    – 
Exercised   –    –    –    – 
Expired or cancelled   (1,413)   22.64    3.13    – 
Outstanding at June 30, 2025   11,907    28.69    1.33    – 
Granted   –    –    –    – 
Exercised   –    –    –    – 
Expired or cancelled   (947)   34.33    2.64    – 
Outstanding at September 30, 2025   10,960   $26.04    1.18   $– 
Exercisable at September 30, 2025   9,453   $28.39    1.14   $– 

 

As of September 30, 2025, there was approximately $21,809 of total unrecognized compensation cost related to non-vested stock options which vest over time and is expected to be recognized over a period of three years, as follows: 2025, $6,211; 2026, $13,930; 2027, $1,318; and thereafter $351. The intrinsic value of options outstanding is $0 at September 30, 2025, and the intrinsic value of options exercisable is $0 at September 30, 2025.

 

Warrants

 

Warrants issued by the Company are evaluated under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, to determine classification as equity or liability. The Company’s outstanding warrants do not meet the equity classification criteria and are therefore recorded as liabilities. These warrants are initially measured at fair value on the grant date and remeasured to fair value at each reporting date, with changes in fair value recognized in earnings.

 

The fair value of the warrants was determined by an independent valuation firm using the Black-Scholes option pricing model. In developing the valuation, the independent firm considered multiple valuation approaches and concluded that an option-pricing methodology was most appropriate given the going-concern nature of the Company. Key assumptions used in the valuation included expected volatility, expected term, risk-free interest rate, and expected dividend yield, which were determined based on market data and the Company’s historical information.

 

2024 Warrant Grants

 

Warrants issued for intangible purchase

 

On March 28, 2024, the Company and GOLQ entered into an Amendment to Technology License and Commercialization Agreement (the “Amendment”). Under the Amendment, the Company and GOLQ agreed to and added Section 3.3 to further detail technical assistance from GOLQ to the Company. In addition, Section 5.1 was amended such that the royalty was lowered from eight percent (8%) to five percent (5%) for which the Company granted to GOLQ a warrant to purchase two hundred ninety-two thousand (292,000) shares of Company Common Stock (the “Warrant”) for a price equal to $0.01 per share (the “Exercise Price”). The Warrant may be exercised at any time commencing upon the date that is six (6) months from the Effective Date and terminating at 5:00 P.M. EST, on the three (3) year anniversary of the Effective Date, unless the closing sale price for the common stock of the Company has closed at or above $5.00 for ten consecutive trading days. Further, the Amendment contains a blocker provision that limits shares issuable under the Warrant such that the shares beneficially owned by GOLQ does not exceed 9.99% of the total number of issued and outstanding shares of the Company’s Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). These GOLQ Warrants were valued at $480,358 and together with the common shares issued to GOLQ, discussed in Note 7, were treated as consideration for the licenses purchased from GOLQ.

 

Warrants exercised

 

On February 9, 2024, the 8/30/2022 noteholders entered into an agreement with the new noteholders (Note 6) whereas the assignees will purchase 108,912 Warrants from the previous holders.

 

On February 12, 2024, the noteholders elected to exercise such warrants and paid the exercise price thereof through the cancellation of debt. The Parties agreed that the Exercise Price of the Warrants shall be paid by and through reduction and cancellation of aggregate amounts due under the notes previously assigned to them on February 9, 2024. A total of $302,175 of exercise proceeds were received, and 108,912 common shares issued in conjunction with the exercise.

 

On February 9, 2024, Calvary Fund I L.P entered into an agreement with the new noteholder (Note 6) whereas the assignees will purchase 104,274 Warrants from Calvary.

 

On February 12, 2024, the noteholders elected to exercise such warrants and paid the exercise price thereof through the cancellation of debt. The Parties agree that the Exercise Price of the Warrants shall be paid by and through reduction and cancellation of aggregate amounts due under the notes previously assigned to them on February 9, 2024. A total of $289,882 of exercise proceeds were received, and 104,274 common shares issued in conjunction with the exercise.

 

Warrant activity for the three and nine months ended September 30, 2025, is as follows:

        
       Weighted 
       Average 
       Exercise 
   Warrants   Price per 
   Outstanding   Share 
Outstanding at December 31, 2024   342,828   $5.08 
Issued   –    – 
Exercised   –    – 
Expired or cancelled   –    – 
Outstanding at March 31, 2025   342,828   $5.08 
Issued   –    – 
Exercised   –    – 
Expired or cancelled   –    – 
Outstanding at June 30, 2025   342,828   $5.08 
Issued   –    – 
Exercised   –    – 
Expired or cancelled   –    – 
Outstanding at September 30, 2025   342,828   $5.08 

 

All warrants are exercisable at September 30, 2025. The weighted average remaining life of the warrants is 0.74 years at September 30, 2025.