NOTE 12 – STOCK OPTIONS AND WARRANTS

The Company has issued option securities under its Incentive Plan and warrants entitling the holder to purchase shares of its common stock at specified prices and for specified exercise periods.

Options

A summary of the Company’s option activity for the nine months ended July 31, 2025 is presented below:

During the nine months ended July 31, 2025, under its Incentive Plan, the Board approved the granting of options to certain employees to purchase 11,341 shares of its common stock. The options vest annually over 3 years, expire five years from the date of grant and had an aggregate fair value of $39,000 at the date of grant.

The Company valued the options using a Black-Scholes option pricing model with the following assumptions:

During the nine months ended July 31, 2025, the Board approved the granting of options to purchase 65,000 shares of its common stock to Dr. Everts, Chief Science and Technology Officer of the Company and Mr. Ron Borsheim, Chief Sales Officer of the Company in accordance with their employment agreements. The options are exercisable until the fifth anniversary date of the date of issuance and had an aggregate fair value of $177,125. The options vest over a five-year periods. The Company valued the options using a Black-Scholes option pricing model with the following assumptions:

On May 8, 2025, under its Incentive Plan, the Board approved the granting of options to certain employees, officers and directors to purchase 165,000 shares of its common stock. 153,000 of the options vest immediately and 12,000 of the options vest over a 4-month period, expire five years from the date of grant and had an aggregate fair value of $472,000 at the date of grant. The Company valued the options using a Black-Scholes option pricing model with the following assumptions:

Options totaling 7,147 that were previously issued to certain employees that were no longer employed by the Company as of July 31, 2025, were forfeited.

During the three months ended July 31, 2025 and 2024, the Company amortized $722,000 and $173,000, respectively, of stock compensation costs associated with options vesting during the period.

During the nine months ended July 31, 2025 and 2024, the Company amortized $1,236,000 and $692,000, respectively, of stock compensation costs associated with options vesting during the period.

There was approximately $670,000 of unamortized compensation associated with options outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.

Warrants

A summary of the Company’s warrant activity for the nine months ended July 31, 2025 is presented below:

In connection with the Consulting Agreement discussed in Note 11, the Company granted the Consultant warrants to purchase 500,000 shares of its common stock (the “Warrants”). The Warrants vest in five equal tranches of 100,000 shares, at various exercise prices ranging between $3.50 - $10.00 per share, and are exercisable based upon meeting certain conditions provided in the Consulting Agreement. Once vested, the Warrants are exercisable for a period of ninety (90) days from the date they become exercisable. The Company valued the warrants on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 4.00%, (2) term of 3 years, (3) expected stock volatility of 143%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants granted was $1,428,000. The Company will begin to amortize the $1,428,000 when management estimates the vesting the conditions are probable of being achieved.

On May 8, 2025, the Company awarded warrants to purchase 55,000 shares of our common stock to Greyt Ventures, LLC, a principal shareholder of the Company in consideration of consulting services rendered to the Company. The warrants are fully vested as of the award date and are exercisable for a period of five (5) years from the award date at an exercise price of $2.86 per share. The Company valued the options using a Black-Scholes option pricing model with the following assumptions:

On July 25, 2025, the Company received notice from a holder of warrants to exercise 21,277 warrants to purchase 21,277 shares of common stock of the Company for a total exercise price of $50,000 ($2.35 per share). The proceeds were received, and the shares were issued on July 30, 2025.

During the three months ended July 31, 2025 and 2024, the Company amortized $958,000 and $586,000, respectively, of stock compensation costs associated with warrants vesting during the period.

During the nine months ended July 31, 2025 and 2024, the Company amortized $2,578,000 and $1,640,000, respectively, of stock compensation costs associated with warrants vesting during the period.

There was approximately $1,678,000 of unamortized compensation associated with warrants outstanding as of July 31, 2025 that will be amortized over their respective remaining service periods.

All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations.