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.

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 (through

November 13, 2019);

Richard Boswell, Senior Executive Vice President, Chief Financial Officer (through

May 20, 2019)

and Director; Brian Payne, Vice President and Director; Donald Strilchuck, Director; Harold Aubrey de Lavenu, Director; Alex Tarrabain, Chief Financial Officer (effective

May 21, 2019)

and 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.

June 7, 2018,

the Company elected Dr. Usamakh Saadikh to serve as a director of the Company. As compensation for his role as a Director, the company granted a

one

-time equity award of

20,000

shares of the Company’s common stock. This award vested immediately.

June 19, 2018,

the Company entered into an agreement with a law firm for the payment of its services under which the Company issued

125,000

shares of its common stock. This award vested immediately. The expense related to the restricted stock awarded to non-employees for services rendered was recognized on the grant date.

December 31, 2018,

the Company issued

12,120

shares of its common stock to individuals for the payment of their services. These awards vested immediately. The expense related to the stock awarded to non-employees for services rendered was recognized on the grant date.

October 1, 2019,

the Company entered into an agreement with a communications and branding firm for the payment of its services under which the Company issued

50,000

shares of its common stock. This award vested immediately. The expense related to the restricted stock awarded to non-employees for services rendered of

$36,000

was recognized on the grant date.

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 until

November 2020.

●

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 until

November 2020.

Effective

November 13, 2019,

Mr. Byrne resigned and left the Company, at which point additional vesting and salary accruals ceased. As of

April 2, 2020,

the accrued salaries owed to Joe Byrne, which amounted to

$58,500

as of

March 31, 2020,

were settled through keeping his previously issued

337,500

restricted shares that had

not

vested.

●

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 until

November 2020.

●

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 until

November 2020.

May 16, 2019,

the Board appointed Alex Tarrabain,

one

of the members of the Company’s Board to serve as the Company’s Chief Financial Officer and as

one

of the Vice Presidents of the Company effective

May 21, 2019 (

the “Effective Date”). Richard Boswell, who served as the Company’s Chief Financial Officer since

July 2017,

resigned from his position as the Company’s Chief Financial Officer as of the Effective Date, and will continue to serve in his position as the Company’s Senior Executive Vice President going forward focusing on the Company’s strategic activities and will also continue to serve as a member of the Company’s Board.

In conjunction with the above, on

May 16, 2019,

an employment agreement was entered into with Mr. Tarrabain:

●

Under the Employment Agreement with Alex Tarrabain, Chief Financial Officer and as

one

of the Vice Presidents of the Company, Mr. Tarrabain 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

350,000

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

months until

May 2022.

Restricted Stock Awards

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

$12,734,241

as of both

March 31, 2020

and

December 31, 2019.

restricted shares were awarded during the

three

-month periods ended

March 31, 2020

2019.

The grant-date fair value is calculated utilizing an enterprise valuation model as of the date the awards are granted. With the exception of immediately vesting portions of awards, shares typically vest pro-rata over the requisite service period, which is generally

three

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

During both of the

three

-month periods ended

March 31, 2020

and

2019,

337,500

of these shares vested. The fair value of the restricted stock which vested amounted to

$238,500

and

$209,250

for the

three

-months ended

March 31, 2020

and

2019,

respectively.

Compensation expense recognized in connection with the restricted stock awards was

$196,650

and

$167,400

for the

three

-months ended

March 31, 2020

and

2019,

respectively.

Non-vested restricted stock award activity for the

three

-months ended

March 31, 2020

and

2019

are as follows:

	Number of Shares			Weighted- Average Grant Date Fair Value per Share		Weighted- Average Remaining Contractual Term (Years)
Non-vested at January 1, 2019		2,612,500		$	0.62		2.00
Granted		-			-		-
Vested		(337,500	)		0.62		-
Forfeited		-			-		-
Non-vested at March 31, 2019		2,275,000		$	0.62		1.75

Non-vested at January 1, 2020		2,025,000		$	0.76		1.54
Granted		-			-		-
Vested		(337,500	)		0.71		-
Forfeited		-			-		-
Non-vested at March 31, 2020		1,687,500		$	0.77		1.33

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

$978,900

as of

March 31, 2020.

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

As of

March 31, 2020,

unrecognized compensation expense totaled

$978,900,

which will be recognized on a straight-line basis over the vesting period or requisite service period through

May 2022.