NOTE 11 – ALLOCATION OF FAIR VALUE IN PRIVATE PLACEMENT

Unit Offering

During the period 10/30/2025 and 12/26/2025, the Company completed a private placement offering of 16,614,001 shares of common stock (after issuance of 1,230,667, or 8%, commission* shares, 8%) and 15,383,334 warrants for aggregate cash proceeds of $717,600 (after payment of $62,400, or 8%, in commission*). The shares and warrants were issued together as a unit; however, each warrant is detachable and separately exercisable to purchase one share of common stock. 92% of the units were sold at $0.05, pre-commission, and the remainder at $0.06.

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 fair value of the common stock was determined based on the quoted market price of $0.08223 per share 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 $0.061 per warrant.

The allocation was calculated as follows:

SCHEDULE OF ALLOCATION OF FAIR VALUE IN PRIVATE PLACEMENT 

The allocated value per share is $0.0256 ($425,370 ÷ 16,614,001 shares), and the allocated value per warrant is $0.019 ($292,230 ÷ 15,383,334 warrants), or a 68.87% 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 proceeds 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 10/29/2030 and 12/25/2030. Each warrant entitles the holder to purchase one share of common stock. As of 12/31/2025, 15,383,334 warrants were outstanding.

In accordance with ASC 505-10-50-3, the following information is disclosed regarding the warrants:

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  

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 year ended 12/31/2025 is as follows:

SUMMARY OF WARRANT ACTIVITY