NOTE

– STOCK BASED COMPENSATION

Adoption of Equity Compensation Plan

November 29, 2017,

the Board adopted the

2017

Equity Compensation Plan (the “Plan”) providing for the granting of options to purchase shares of common stock, restricted stock awards and other stock-based awards to directors, officers, employees, advisors and consultants. The Company reserved

20,000,000

shares of common stock for issuance under the Plan. The Plan is intended to provide equity incentives to persons retained by our Company.

Employment Agreements

November 30, 2017,

employment agreements were entered into with

four

key members of management:

•

Under the Employment Agreement with Bahige (Bill) Chaaban, President of the Company, Mr. Chaaban will receive compensation in the form of a base annual salary of

$31,200

and a grant of

8,750,000

shares of restricted stock of the Company, of which

7,400,000

vested immediately and the remaining vesting ratably each month over the next

months.

•

Under the Employment Agreement with Joseph Byrne, Chief Executive Officer of the Company, Mr. Byrne will receive compensation in the form of a base annual salary of

$31,200

and a grant of

1,250,000

shares of restricted stock of the Company, of which

325,000

vested immediately and the remaining vesting ratably each month over the next

months.

•

Under the Employment Agreement with Richard Boswell, Senior Executive Vice President and Chief Financial Officer of the Company, Mr. Boswell will receive compensation in the form of a base annual salary of

$31,200

and a grant of

4,500,000

shares of restricted stock of the Company, of which

4,140,000

vested immediately and the remaining vesting ratably each month over the next

months.

•

Under the Employment Agreement with Brian Payne, Vice President of the Company, Mr. Payne will receive compensation in the form of a base annual salary of

$31,200

and a grant of

750,000

shares of restricted stock of the Company, of which

300,000

vested immediately and the remaining vesting ratably each month over the next

months.

Equity Compensation Grants

November 30, 2017,

the Company granted a

one

-time equity award (“Equity Award”) of

20,000

restricted shares of the Company’s common stock pursuant to a Restricted Stock Agreement, to each of the following executives and directors of the Company: Bahige “Bill” Chaaban, Chairman of the Board and President of the Company; Joseph Byrne, Chief Executive Officer and Director; Richard Boswell, Senior Executive Vice President, Chief Financial Officer and Director; Brian Payne, Vice President and Director; Donald Strilchuck, Director; Harold Aubrey de Lavenu, Director; Alex Tarrabain, Director; and Ameen Ferris, Director. The Equity Awards vested immediately.

In addition, as part of this

one

-time equity award, Donald Strilchuck, Director, received an additional

1,000,000

restricted shares of the Company's common stock for security consulting services, of which

550,000

vested immediately and the remaining vesting ratably each month over the next

months. Other individuals received a total of

1,870,000

restricted shares of the Company's common stock for consulting services performed, of which

1,330,000

vested immediately and the remaining vesting ratably each month over the next

months. The expense related to the restricted stock awarded to non-employees for services rendered was recognized on the grant date.

Restricted Stock Awards

The grant-date fair value of the restricted shares noted in the employment agreements and equity compensation grants sections above was

$11,333,600.

The grant-date fair value is calculated utilizing an enterprise valuation model as of the date the awards are granted. During

2017,

14,317,500

of these shares vested, with the remaining restricted stock units of

3,962,500

shares vesting pro-rata over the requisite service period, which is generally

three

years from the grant-date. During the

three

-months ended

March 31, 2018,

an additional

337,500

of these shares vested. Non-vested restricted stock awards participate in dividends and recipients are entitled to vote these restricted shares during the vesting period.

Compensation expense recognized in connection with the restricted stock awards was

$167,400

for the

three

-months ended

March 31, 2018.

Restricted stock award activity for the

three

-months ended

March 31, 2018

is as follows:

	Number of Shares			Weighted- Average Grant Date Fair Value per Share		Weighted- Average Remaining Contractual Term (Years)
Non-vested at December 31, 2017		3,962,500		$	0.62		2.92
Granted		-			-
Vested		(337,500	)	$	0.62
Forfeited		-			-
Non-vested at March 31, 2018		3,625,000		$	0.62		2.75

The fair value of the restricted stock grants was based on the valuation of a

third

-party specialist. Unrecognized compensation expense related to restricted stock amounted to approximately

$1,801,100

as of

March 31, 2018.

This expense will be recognized over the vesting period of the respective awards.