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 six months ended April 30, 2026 is presented below:

During the six months ended April 30, 2026, under its Incentive Plan, the Board approved the granting of options to certain employees to purchase 7,790 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 $20,000 at the date of grant.

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

Options totaling 85,877 that were previously issued to employees that are no longer employed by the Company as of April 30, 2026, were forfeited.

During the three months ended April 30, 2026 and 2025, the Company amortized $9,000 and $265,000, respectively, of stock compensation costs associated with options vesting during the period.

During the six months ended April 30, 2026 and 2025, the Company amortized $194,000 and $514,000, respectively, of stock compensation costs associated with options vesting during the period.

There was approximately $57,000 of unamortized compensation associated with options outstanding as of April 30, 2026 that will be amortized over their respective remaining service periods.

Warrants:

A summary of the Company’s warrant activity for the six months ended April 30, 2025 is presented below:

As described in Note 11, from November 2025 to April 2026, the Company sold 7.4 Units to fifteen investors for an aggregate purchase price of $1,850,000 in a private transaction. Each Unit consists of (i) 62,500 shares of common stock and (ii) warrants to purchase 62,500 shares of common stock of the Company at an exercise price of $4.00 until November 30, 2030. The warrants may be exercised on a cashless basis. In connection with the sale of the Units, the Company issued 462,500 shares of common stock and 462,500 warrants to purchase shares of common stock.

During the three months ended April 30, 2026 and 2025, the Company amortized $0 and $810,000, respectively, of stock compensation costs associated with warrants vesting during the period.

During the six months ended April 30, 2026 and 2025, the Company amortized $215,000 and $1,620,000, respectively, of stock compensation costs associated with warrants vesting during the period.

Included in the table above is approximately $1,122,000 of unamortized compensation associated with 500,000 warrants outstanding as of April 30, 2026. 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 fair value of the warrants was determined to be $1,122,000. The Company will begin to amortize the $1,122,000 fair value when management estimates the vesting conditions are probable of being achieved.

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