v3.26.1
Derivative Financial Instruments
 3 Months Ended
Jan. 31, 2026
Derivative Financial Instruments [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS

 

Embedded derivatives

 

The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.

 

The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of January 31, 2026 and October 31, 2025 and the amounts that were reflected in operations related to derivatives for the period ended:

 

   January 31, 2026 
The financings giving rise to derivative financial instruments  Indexed
Shares		   Fair
Values		 
Embedded derivative liability   3,024,705   $228,759 
Warrant derivative liability   330,000    269,931 
Total   3,354,705   $498,690 

 

   October 31, 2025 
The financings giving rise to derivative financial instruments  Indexed
Shares		   Fair
Values		 
Embedded derivative liability   393,717   $39,543 
Total   393,717   $39,543 

 

The following table summarizes the effects on the Company’s loss associated with changes in the fair values of the derivative financial instruments by type of financing for the three months ended January 31, 2026 and 2025:

 

   For the Three months Ended 
   January 31,
2026		   January 31,
2025		 
Embedded derivative liability  $8,166   $
        -
 
Warrant derivative liability   (196,958)   
-
 
Total gain (loss)  $(188,792)  $
-
 

Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Lattice Model valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Lattice Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.

 

Significant range of inputs and results arising from the Lattice Model process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:

 

      Inception       Period Ended  
      Dates
Note		       January 31,
2026		  
Underlying price on valuation date   $ 0.31 - 1.03     $ 0.31 - 0.44  
Effective contractual conversion rates   $ 0.25 - 0.88     $ 0.25 - 0.39  
Contractual term to maturity     0.49 - 1.00 years       0.07 - 0.95 years  
Market volatility:                
Volatility     20.03 - 26.90 %     18.11 - 24.17 %
Risk-adjusted interest rate     3.53 - 4.06 %     3.48 - 3.75 %

 

The detachable warrants issued with the convertible notes require derivative liability classification due to agreements containing a fundamental transaction clause which could require net cash settlement in certain situations. The warrant fair value was calculated using the Black-Scholes option pricing model using the following inputs:

 

   Inception   Period Ended 
   Dates
Note		   January 31,
2026		 
Underlying price on valuation date  $0.60   $1.23 
Effective contractual conversion rates  $0.50   $0.50 
Contractual term to maturity   5.00 years    4.96 years 
Market volatility:          
Volatility   23.36%   23.30%
Risk-adjusted interest rate   3.72%   3.78%

 

The following table reflects the issuances of derivatives and changes in fair value inputs and assumptions related to the derivatives for the three months ended January 31, 2026.

 

   January 31,
2026		 
Balances at beginning of period  $39,543 
Issuances:     
Embedded derivatives   197,382 
Warrant derivatives   72,973 
Changes in fair value inputs and assumptions reflected in income   188,792 
Balances at end of period  $498,690