NOTE 6 – STOCK OPTIONS AND WARRANTS

2021 Equity Incentive Plan

Effective June 30, 2021, the Company implemented the 2021 Equity Incentive Plan (“2021 Equity Plan”) as approved by the Company’s stockholders. The 2021 Equity Plan is administered by the Compensation Committee of the Board and has 166,667 shares authorized under this plan. The 2021 Equity Plan can issue various types of awards, as follows: stock options, stock appreciation rights, restricted stock, restricted stock units, and cash or other stock-based awards. The 2021 Equity Plan is available to be issued to employees, directors, consultants, and other individuals who provide services to the Company. An incentive stock options (“ISOs”) can only be granted to employees and shall not exceed 10-years (5-years in the case of ISOs granted to any 10% shareholder). As of April 30, 2026, there are 154,596 shares remaining available under this plan.

2022 Equity Incentive Plan

Effective December 28, 2022, the Company implemented the 2022 Equity Incentive Plan (“2022 Equity Plan”) as approved by the Company’s stockholders. In October 2025, the Company held a special meeting of stockholders (the “2025 Special Meeting”). At the 2025 Special Meeting, the stockholders of the Company approved an amendment to the 2022 Equity Plan which, among other things, increased the number of shares of common stock available for grant under the 2022 Equity Plan by 2,250,000. In March 2026, at the Company’s annual stockholders meeting, the stockholders of the Company approved an amendment to the 2022 Equity Plan which, among other things, increased the number of shares of common stock available under the 2022 Equity Plan by 2,000,000. The 2022 Equity Plan is administered by the Compensation Committee of the Board and has 7,000,000 shares authorized under this plan. The 2022 Equity Plan can issue various types of awards, as follows: stock options, stock appreciation rights, restricted stock, restricted stock units, and cash or other stock-based awards. The 2022 Equity Plan is available to be issued to employees, directors, consultants, and other individuals who provide services to the Company. An incentive stock options (“ISOs”) can only be granted to employees and shall not exceed 10-years (5-years in the case of ISOs granted to any 10% shareholder). As of April 30, 2026, there are 4,970,040 shares remaining available under this plan.

Stock Options

The fair value of the Employee Options at the date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

The Company’s computation of expected volatility for the years ended April 30, 2026 and 2025 is based on the Company’s historical basis volatility. For stock option grants issued during the year ended April 30, 2025, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise behavior now and has determined the expected term assumption under the simplified method provided for under ASC 718, which averages the contractual term of the Company’s stock options of ten years with the average vesting term of six months. The dividend yield assumption of zero is based upon the fact that the Company has never paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the U.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life.

A summary of the Company’s stock option activity and related information for the years ended April 30, 2026 and 2025 is shown below:

The Company recorded $236,056 and $478,637 of stock-based compensation related to the issuance of options to certain officers and directors in exchange for services during the years ended April 30, 2026 and 2025, respectively. At April 30, 2026, there remained $0 unrecognized compensation expense related to unvested granted to directors.

The aggregate intrinsic value of vested outstanding options as of April 30, 2026 was $0.

Restrictive Stock Units

On December 11, 2025, the Company granted restricted stock units (the “RSUs”) to the Board of Directors. The directors were granted a total of 875,000 shares of the Company’s common stock valued at $892,500, recorded as stock-based compensation expense in G&A. The shares vested upon issuance and there were no RSUs unvested at April 30, 2026 and 2025. The RSUs were priced at $1.02 per share, the closing price on the grant date. The Company initiated a share buyback of 393,750 shares for $401,625 and given to the directors to assist with the income tax effect of granting of the RSUs. The result was the net shares provided to the directors totaled 481,250 shares.

Warrants

Series B Warrant

Pursuant to the Private Placement (as defined below), the Company issued investors Series B Warrants (as defined below) to purchase 8,750,000 shares of Common Stock, with an exercise price of $4.00 per share (subject to adjustment), for a period of five years from the date of issuance. For more information on the Private Placement, see “Note 12 – Preferred Stock”. In connection with the Series C Private Placement (as defined herein), in August 2025, the exercise price of the Series B Warrants was adjusted to $0.95 per share and the number of shares of Common Stock issuable upon exercise of the Series B Warrants was adjusted proportionally to 36,780,161 pursuant to the full ratchet anti-dilution provisions contained therein.

The Series B Warrants were determined to be subject to liability classification as they are considered to be indexed to the Company’s own stock but fail to meet the requirements for equity classification in accordance with ASC 815. As such, the Company recorded the Series B Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings. The Company utilized the Black-Scholes-Merton Model to calculate the value of the Series B Warrants issued on May 10, 2023.

During the year ended April 30, 2026, the Company received Series B exercise notices totaling 1,100,000 shares. The exercises resulted in the Company received cash in the amount of $1,046,760 and a reduction in the warrant liability of $599,135. Following the exercises the Company has 35,680,160 Series B Warrant shares remaining.

During years ended April 30, 2026 and 2025, the Company recorded a loss of approximately $7,844,100 and a gain of approximately $10,446,000, respectively, related to the change in fair value of the warrant liability which is recorded in other income on the consolidated statements of operations. The fair value of the Series B Warrants of $7,583,000 and $338,000 were estimated at April 30, 2026 and 2025, respectively, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.72 and $1.24, respectively, the exercise price of $0.95 and $4.00, respectively, the number of warrants outstanding of 35,680,160 and 8,750,000, respectively, and the following weighted average assumptions: dividend yield 0%; remaining term of 2.03 and 3.03 years, respectively; equity volatility of 65.0% and 40.0%; and a risk-free interest rate of 3.81% and 3.52%, respectively.

Settlement Warrants

In connection with the Settlement Agreement, as defined on Note 9 – Commitments and Contingencies, on May 16, 2025, the Company issued warrants (“First Warrant Issuance”) to purchase 343,183 shares of Common Stock with an exercise price of $4.00 per share and a term of five years from the issuance date. On October 29, 2025, the Company issued additional warrants (“Additional Warrants”, and collectively with the First Warrant Issuance, the “Settlement Warrants”) to purchase 313,067 shares of the Company’s common stock with an exercise price of $4.00 per share and a term of five years from the issuance date. In connection with the Series C Private Placement (as defined herein), in August 2025, the exercise price of the Settlement Warrants was adjusted to $0.95 per share and the number of shares of Common Stock issuable upon exercise Settlement Warrants was adjusted proportionally to 2,758,511 pursuant to the full ratchet anti-dilution provisions contained in their respective agreements.

The Settlement Warrants were determined to be subject to liability classification. As such, the Company recorded the Settlement Warrants as a liability upon issuance at their fair value with subsequent changes in fair value recognized in earnings.

The Company utilized the Black-Scholes-Merton Model to calculate the value of the Settlement Warrants issued during the year ended April 30, 2026.

The fair value of the First Warrant Issuance of approximately $199,000 was estimated at May 16, 2025 (the date of issuance) using the fair value of the Company’s common stock of $1.06 on the issuance date as well as the following input assumptions: expected dividend yield of 0%; expected term of 5.0 years; equity volatility of 97.0%; and a risk-free interest rate of 4.1%.

The fair value of the Additional Warrants of approximately $164,000 was estimated at July 29, 2025 (the date of issuance) using the fair value of the Company’s common stock of $1.02 on the issuance date as well as the following input assumptions: expected dividend yield of 0%; expected term of 5.0 years; equity volatility of 94.0%; and a risk-free interest rate of 3.9%.

During the year ended April 30, 2026, the Company recorded a gain on legal settlement of $106,000 which represents the difference between the estimated fair value of the Settlement Warrants recognized during the year ended April 30, 2025 totaling $469,000 and their issuance date fair values totaling $363,000. See Note 9 – Commitment and Contingencies – Legal Proceedings.

During the year ended April 30, 2026, the Company recorded a loss $358,000 related to the change in fair value of the warrant liability associated with the Settlement Warrants which is recorded in other income (expense) on the consolidated statements of operations. The fair value of the Settlement Warrants of $721,000 was estimated at April 30, 2026 utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.72 and was based on the following weighted average assumptions: expected dividend yield of 0%; expected term of 4.14 years; equity volatility of 51.0%; and a risk-free interest rate of 4.0%.

Series C Preferred Warrants

On August 17, 2025, the Company entered into a Securities Purchase Agreement (the “Series C Private Placement Agreement”) with certain accredited investors (the “Investors”), pursuant to which it agreed to sell in a private placement to the Investors warrants to acquire up to an aggregate of 7,000,000 shares of Common Stock, collectively, the (“Series C Preferred Warrants”), with an exercise price of $1.00 per share (subject to adjustment), for a period of five years from the date of issuance. The Series C Private Placement Agreement closed on August 19, 2025.

The Series C Preferred Warrants were determined to be subject to liability classification as they are considered to be indexed to the Company’s own stock but fail to meet the requirements for equity classification in accordance with ASC 815. As such, the Company recorded the Series C Preferred Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings. The fair value of the Series C Preferred Warrants of $5,220,000 was estimated at August 19, 2025, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $1.01 and the following weighted average assumptions: dividend yield of 0%; remaining term of 5.00 years; equity volatility of 95.0%; and a risk-free interest rate of 3.75%.

During the year ended April 30, 2026, the Company recorded a gain of $3,456,000 related to the change in fair value of the warrant liability associated with the Series C Preferred Warrants which is recorded in other income on the consolidated statements of operations. The fair value of the Series C Preferred Warrants of $1,764,000 was estimated at April 30, 2026, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.72 and the following weighted average assumptions: dividend yield 0%; remaining term of 4.30 years; equity volatility of 50.0%; and a risk-free interest rate of 3.90%.

Placement Agent Warrants

In connection with the Series C Private Placement Agreement, the Company also issued warrants to purchase up to an aggregate of 560,000 shares of the Common Stock as compensation to placement agents for services rendered (the “Series C Placement Agent Warrants”).

The Series C Placement Agent Warrants are classified as a contingently redeemable warrant in accordance with ASC 718, as it was determined that the warrants were not precluded from equity classification under that guidance, but could be settled in cash or other assets in the event that another person or entity becomes the beneficial owner of 50% of the outstanding shares of the Common Stock. The Series C Placement Agent Warrants were thus classified in temporary equity on the Company’s consolidated balance sheets as of August 19, 2025 pursuant to ASC 480-10-S99-3A.

The fair value of the Series C Placement Agent Warrants of $417,000 was estimated at August 19, 2025, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $1.01 and the following weighted average assumptions: dividend yield of 0%; remaining term of 5.00 years; equity volatility of 95.0%; and a risk-free interest rate of 3.75%. The fair value of the Series C Placement Agent Warrants was expensed as incurred and was recorded in Series C Preferred Stock and Series C Preferred Warrants issuance costs on the consolidated statement of operations for the year ended April 30, 2026.

A summary of the Company’s warrant activity and related information for the years ended April 30, 2026 and 2025, are shown below: