v3.26.1
STOCKHOLDERS’ EQUITY
 6 Months Ended
Apr. 30, 2026
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 8– STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

The Company has authorized 5,000,000 shares of $0.001 par value Preferred Stock, of which 250,000 were designated as Series A Convertible Preferred Shares. In May 2025, the Company designated 750,000 shares as Series A-1 Convertible Preferred Shares for a private placement of the A-1 stock for a maximum of $15 million. As of April 30, 2026 and October 31, 2025, 129,065 and 35,000 shares of Series A-1 Convertible Preferred Stock were issued and outstanding. During the three and six months ended April 30, 2026, dividends of $39,912 and $66,959 were recorded, respectively. As of April 30, 2026 and October 31, 2025, the accrued dividend on the outstanding preferred was $83,375 and $16,416, respectively.

 

 

The following is a summary of the rights and preferences of the Preferred A-1 Stock:

 

The holders of the Preferred A-1 Stock are entitled to a liquidation preference with respect to the Preferred A-1 Stock in the amount of $20 per share (“Stated Value”), subordinate to the stated value of any outstanding shares of preferred stock ranking senior to the Preferred A Stock, pari passu with the stated value of the series A-1 Preferred Stock, and senior to the rights of the holders of common stock.

 

The holders of the Preferred A-1 Stock are entitled to cumulative dividends at the annual rate of 8% based on the Stated Value per share, payable on the maturity date, which is five years from the date of issuance. Dividends are payable in the form of shares of common stock valued at $4.00 per share.

 

The Preferred A-1 Stock may be redeemed by the Company, in whole or in part, at any time or from time to time by notice to the holders. In the event of redemption, the Company shall be obligated to pay to each holder the Stated Value per share plus any accrued but unpaid dividends.

 

The Preferred A-1 Shares are convertible into common stock at $4.00 per share and may be converted at the discretion of the holder. The Preferred A-1 Stock shall automatically convert into the Company’s common stock if (a) (i) the common stock into which the Preferred A-1 Shares are convertible is registered with the SEC, (ii) there exists a public trading market for the common stock, and (iii) the trading price of the Company’s common stock has equaled or exceeded 200% of the conversion price as then in effect for ten or more consecutive trading days or (b) the Company effects a merger, consolidation or sale of assets and is not the surviving entity.

 

The holders of the Preferred A-1 Shares have the right to vote with the holders of the common stock on any matters presented to the stockholders at any regular or special meeting of the stockholders of the Company on an “as-converted” basis. The holders of the Series A-1 Stock are also entitled to vote as a class in the event the Company intends to create and/or issue shares of preferred stock that are senior to the Series A-1 Stock or if the Company attempts to amend its Articles of Incorporation to alter or amend the powers, privileges, rights, restrictions or conditions of the Series A-1 Stock.

 

The Company assessed the Series A-1 under ASC 480. The Company determined that the Series A-1 is outside the scope of ASC 480 as the redemption of Series A-1 shares are solely the right of the Company and the number of common shares to be issued at conversion were at a fixed monetary value. The Company then assessed the Series A-1 under ASC 815 to determine if the Series A-1 is more debt-like or more equity like. While the dividend rights and protective provisions make the Series A-1 more debt-like, the fact that the Company is in control of any redemption of the shares, that the Series A-1 contains certain mandatory conversion provisions and the holders have optional conversion rights, and the Series A-1 shares have voting rights on an as-converted basis make the Series more equity-like. We determined based on the above that the Series A-1 is more equity-like. Since the Series A-1 does not contain a put option and the Series A-1 shares are not redeemable upon an event outside of the Company’s control, we have recorded the Series A-1 shares as permanent equity.

 

Activity for the six months ended April 30, 2026 and the year ended October 31, 2025

 

During the three months ended April 30, 2026, the Company issued 5,000 shares of its Series A-1 Convertible Preferred Stock for proceeds of $100,000 as part of an ongoing private placement.

 

During the three months ended April 30, 2026, the Company issued 39,065 shares of its Series A-1 Convertible Preferred Stock for conversion of $468,750 of 2024 Series Senior Secured Convertible Notes as part of an ongoing private placement.

 

During the three months ended January 31, 2026, the Company issued 50,000 shares of its Series A-1 Convertible Preferred Stock for proceeds of $1 million as part of an ongoing private placement.

 

During the year ended October 31, 2025, the Company issued 35,000 shares of its Series A-1 Convertible Preferred Stock for proceeds of $700,000 as part of an ongoing private placement.

 

Common Stock

 

As of April 30, 2026, the Company had authorized 19,230,770 shares of $0.001 par value common stock. As of April 30, 2026 and October 31, 2025, 4,517,651, and 4,460,535 shares were issued and outstanding, respectively.

 

Effective January 5, 2026, an option holder exercised their right to complete a cashless exercise exchanging 84,615 options for 57,116 shares of common stock.

 

There were no grants of common shares or exercise of options during the year ended October 31, 2025.

 

 

Stock-Based Compensation

 

There were no grants of stock purchase options during the six months ended April 30, 2026 or 2025.

 

The table below presents option activity for the six months ended April 30, 2026 and the year ended October 31, 2025:

 

  

Number of

Shares

   Weighted Average Exercise Price per Share   Weighted Average Remaining Contractual Life (in years)  

Aggregate

intrinsic value

 
Balance at October 31, 2024   1,112,923   $10.84    5.64   $1,560,431 
Options exercised   -    -    -    - 
Options granted   -    -    -    - 
Options expired   -    -    -    - 
Options forfeited   -    -    -    - 
Balance at October 31, 2025   1,112,923    10.84    4.64    501,923 
Options exercised   (84,615)   1.30    -    - 
Options granted   -    -    -    - 
Options expired   -    -    -    - 
Options forfeited   -    -    -    - 
Balance at April 30, 2026   1,028,308   $10.84    4.32   $375,000 

 

Stock based compensation expense related to options for the three and six months ended April 30, 2026 and 2025 amounted to $240,621 and $532,251, and $322,734 and $730,968, respectively. As of April 30, 2026 and October 31, 2025, 977,923 and 1,058,692 options were exercisable, respectively. Unrecognized compensation expense related to outstanding options amounted to $260,652 and $792,903 as of April 30, 2026 and October 31, 2025, respectively.

 

Warrants

 

Activity for the six months ended April 30, 2026

 

During the six months ended April 30, 2026 the Company issued 28,846 warrants with an exercise price of $16.25 in connection with the conversion of 2024 Senior Secured Notes.

 

Activity for the year ended October 31, 2025

 

Effective November 16, 2024, the Company granted 180,000 pre-funded warrants with an exercise price of $0.001 to the majority holder of the 2024 Senior Secured Convertible Notes for a fair value of $990,000.

 

On January 27, 2025, the Company granted 96,000 pre-funded warrants with an exercise price of $0.001 to a consultant to the Company for consulting services provided for a fair value of $528,000.

 

A & B Warrants

 

A summary of the Company’s common stock underlying its outstanding A and B warrants as of April 30, 2026 and October 31, 2025 is as follows:

 

  

Underlying

Number of
Shares

   Average
Exercise
Price		   Weighted
Average
Life		 
Outstanding – October 31, 2024   261,650   $26.00    1.31 
Warrants A – Granted during the period   -    -    - 
Warrants B – Granted during the period   -    -    - 
Warrants A – Expired during the period   (78,846)   26.00    - 
Warrants B – Expired during the period   -    -    - 
Outstanding – October 31, 2025   182,804    26.00    0.70 
Warrants A – Granted during the period   -    -    - 
Warrants B – Granted during the period   -    -    - 
Warrants A – Expired during the period   -    -    - 
Warrants B – Expired during the period   (33,077)   -    - 
Pre-Funded Warrants – Exercised during the period   -    -    - 
Outstanding – April 30, 2026   149,727   $26.00    0.3 

 

 

Pre-Funded Warrants

 

A summary of the Company’s common stock underlying its outstanding pre-funded warrants as of April 30, 2026 and October 31, 2025 is as follows:

 

  

Underlying

Number of
Shares

   Average
Exercise
Price		   Weighted
Average
Life		 
Outstanding – October 31, 2024   1,107,500   $0.001    N/A 
Pre-Funded Warrants – Granted during the period   276,000    0.001    N/A 
Pre-Funded Warrants – Exercised during the period   -    -    - 
Pre-Funded Warrants – Expired during the period   -    -    - 
Outstanding – October 31, 2025   1,383,500    0.001    N/A 
Pre-Funded Warrants – Granted during the period   -    -    - 
Pre-Funded Warrants – Exercised during the period   -    -    - 
Pre-Funded Warrants – Expired during the period   -    -    - 
Outstanding – April 30, 2026   1,383,500   $0.001    N/A 

 

Other Warrants

 

A summary of the Company’s common stock underlying other warrants as of April 30, 2026 and October 31, 2025 is as follows:

 

  

Underlying

Number of
Shares

   Average
Exercise
Price		   Weighted
Average
Life		 
Outstanding – October 31, 2024   -   $-    N/A 
Warrants – Issued during the period   -    -    N/A 
Warrants – Exercised during the period   -    -    - 
Warrants – Expired during the period   -    -    - 
Outstanding – October 31, 2025   -    -    N/A 
Warrants – Issued during the period   28,846    -    16.25 
Warrants – Exercised during the period   -    -    - 
Warrants – Expired during the period   -    -    - 
Outstanding – April 30, 2026   28,846   $-    16.25