Note 10 – Equity Compensation to Officers and Board of Directors

As part of employment agreements with its former CEO and its CFO, these officers were to receive a fully vested stock grants equal to aggregate of 10% and 1.5% of the fully diluted shares of common stock of the Company (calculated with the inclusion of the current stock holdings of Mr. Cataldo) upon conversion of options, warrants and Convertible Notes in association with a national markets qualified financing as consideration for entering into the Agreement (with such stock to vest and be delivered within 30 days after the national markets qualified financing). In addition, the Company also granted similar equity compensation to members of the Company’s Board of Directors wherein these directors were to receive stock grants equal to 1% and 1.25%, as applicable, of the fully diluted shares of common stock of the Company, of which, 1/3^rd was vested when issued following the qualified financing , and of which 1/3^rd will vest on each of the  first and second anniversaries of the date on which the director was elected to the Company’s Board of Directors.

On February 16, 2021, the Company completed its equity offering and listed its shares of common stock on the Nasdaq Capital Markets (see Note 7). As a result of this offering, 3,197,662 shares of fully vested common stock with a fair value of $11,701,000 were granted and issued to these officers.  In addition, the Company also granted 1,181,745 shares of common stock to members of the Company’s Board of Directors with a fair value of $6,920,000, of which, 393,915 shares of common stock are fully vested upon grant while the remaining 787,830 shares of common stock will vest over two years. During the period ended September 30, 2021, the Company recognized stock compensation expense of $3,748,000 to account for the 640,112 shares of common stock granted to the Board of Directors that vested.

Pursuant to current accounting guidelines, as the grant of the common stock is subject to milestone or performance condition, the Company measured the fair value of the common stock on the respective date of the agreement, and then such award was recorded as compensation expense as the milestone or performance condition is met and in accordance with its vesting term of the grant.

As of September 30, 2021, there are 541,633 unvested shares of common stock with a fair value of $3,172,000 that will be recognized as compensation in future periods.