TAO Synergies Inc. Stock Compensation Disclosure

Note 7 – Stock Based Compensation:

2020 Equity Incentive Plan

Upon completion of the Spin-Off, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective on December 7, 2020. The total number of securities available for grant under the 2020 Plan was 10,000 shares of Common Stock, subject to adjustment. On April 7, 2021, the Company held a special meeting of stockholders (“Special Meeting”). At the Special Meeting, the Company’s stockholders approved an amendment to the Company’s 2020 Plan to increase the total number of shares of Common Stock from 10,000 to an aggregate of 25,000 shares of Common Stock. On October 11, 2022, the Company held its annual meeting of stockholders at which the Company’s stockholders approved an amendment to the Company’s 2020 Plan to increase the total number of shares of Common Stock authorized for issuance from 25,000 to an aggregate of 55,000 shares. On December 20, 2023, the Company held its annual meeting of stockholders at which time the Company’s stockholders approved an amendment to the Company’s 2020 Plan was amended to increase the total number of shares of Common Stock authorized for issuance from 55,000 to an aggregate of 4,175,000 shares.

The Compensation Committee of the Company’s board of directors (the “Committee”) will administer the 2020 Plan and have full power to grant stock options and Common Stock, construe and interpret the 2020 Plan, establish rules and regulations, and perform all other acts, including the delegation of administrative responsibilities, as it believes reasonable and proper. The Committee, in its absolute discretion, may award Common Stock to employees, consultants, and directors of the Company, and such other persons as the Committee may select, and permit holders of options to exercise such options prior to full vesting.

Stock and Option Grants

The following is a summary of stock option activity under the stock option plans for the year ended December 31, 2024:

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The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $3.02 for the Company’s common shares on December 31, 2024 and the closing stock price of $6.80 for the Company’s common shares on December 31, 2023.

As of December 31, 2024, the Company had unrecognized stock option expense of approximately $4,000 and have a remaining weighted average period for recognition of 0.27 years.

On March 29, 2023, the Company, pursuant to its 2020 Plan, granted stock options to four Board members to purchase an aggregate of 3,200 shares of common stock. The stock options have an exercise price of $21.75 per share and an expiration date of ten years and vest on the one-year anniversary from the date of the grant. The Company used the Black Scholes valuation method to determine the fair value of the options assuming the following: implied volatility of 123.92%, a risk-free interest rate of 3.66% and have a fair value of $59,763. The options are being expensed over the one-year vesting period from date of issuance.

On April 8, 2024, the Company, pursuant to its 2020 Plan, granted stock options to four Board members to purchase an aggregate of 3,200 shares of common stock. The stock options have an exercise price of $5.39 per share and an expiration date of ten years and vest on the one-year anniversary from the date of the grant. The Company used the Black Scholes valuation method to determine the fair value of the options assuming the following: implied volatility of 124.35%, a risk-free interest rate of 4.43% and have a fair value of $59,763. The options are being expensed over the one-year vesting period from date of issuance.

Director’s Compensation Policy

On March 29, 2023, the Company adopted an amended and restated non-employee director compensation policy (the “Director Compensation Policy”). The Director Compensation Policy provides for the annual automatic grant of nonqualified stock options to purchase up to 800 shares of Common Stock to each of the Company’s non-employee directors. Such grants shall occur annually on the fifth business day after the filing of our Annual Report on Form 10-K, if available under the Plan, and shall vest on the one-year anniversary from the date of grant, subject to the director’s continued service on the Board of Directors on the vesting date. Each newly appointed or elected director will also receive 20,000 options, and such options shall vest 50% on the grant date, 25% on the first anniversary of the grant date and 25% on the second anniversary of the grant date, subject to the director’s continued service on the Board of Directors on each vesting date.

The Company recorded total expense of $25,407 and $1,009,325 relating to all outstanding stock options for the year ended December 31, 2024 and 2023, respectively.

Restricted Stock Issuances

On January 8, 2024, the Company issued 14,641 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $100,000, expensed upon issuance. On March 7, 2024, the Company issued 981 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. On June 7, 2024, the Company issued 1,079 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. On September 10, 2024, the Company issued 1,304 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. On December 9, 2024, the Company issued 1,552 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,500, expensed upon issuance. On January 9, 2025, the Company issued 30,995 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $100,000, expensed upon issuance. On March 14, 2025, the Company issued 1,655 shares of restricted stock to a consultant that was engaged to provide investor relations services with a total fair market value on date of issuance of $4,502, expensed upon issuance.

Stock Compensation Expense

Total stock-based compensation for the year ended December 31, 2024 was $25,407, of which $0 was classified as research and development expense and $25,407 was classified as general and administrative expense. Total stock-based compensation for the year ended December 31, 2023 was $1,009,325, of which $149,589 was classified as research and development expense and $859,736 was classified as general and administrative expense.

The Company currently estimates, beginning at the closing date of the November 2022 private placement on November 21, 2022, implied volatility factor for all options and warrants based upon a blend of the Parent Company’s and Company historical volatility. Up until November 21, 2022, the Company computed implied volatility based upon a blend of the Parent Company’s and Company historical volatility along with the volatility of selected comparable publicly traded companies as, at that time, the Company lacks sufficient historical stock trading activity. It incorporated the historical volatility of the Parent company as the Parent company’s historical volatility provides a good estimation of the Company’s volatility since its operations were identical to the Company’s prior to the spin-out.