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. Incentive stock options (“ISOs”) may 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 July 31, 2026, there are 154,929 shares remaining available under the 2021 Equity 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 available under this plan, as amended. 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. Incentive stock options (“ISOs”) may 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 July 31, 2026, there are 4,970,040 shares remaining available under the 2022 Equity Plan.

Stock Options

A summary of the Company’s stock option activity and related information for the three months ended July 31, 2026, are shown below:

The Company recorded $0 and $60,492 of stock-based compensation expense related to the issuance of Employee Options to certain officers and directors in exchange for services during the three months ended July 31, 2026 and 2025, respectively. As of July 31, 2026, there remained $0 of unrecognized compensation expense related to unvested Employee Options granted to officers and directors.

The aggregate intrinsic value of vested outstanding options as of July 31, 2026 was $0.

Warrants

Series B Warrant

On May 10, 2023, the Company entered into a Securities Purchase Agreement (the “Private Placement Agreement”) with certain accredited investors (the “Series B Investors”), pursuant to which it agreed to sell to the Series B Investors warrants to acquire up to an aggregate of 8,750,000 shares of Common Stock, collectively, the (“Series B Warrants”), with an exercise price of $4.00 per share (subject to adjustment), for a period of five years from the date of issuance. In connection with the Series C Private Placement (as defined herein), in August 2025, the exercise price of the Series B Preferred 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. As of July 31, 2026, the number of shares of Common Stock issuable upon exercise of the Series B Warrants was 35,680,161.

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 three months ended July 31, 2026, the Company recorded a gain of approximately $3,378,000, related to the change in fair value of the warrant liability which is recorded in other income on the unaudited condensed consolidated statements of operations. The fair value of the Series B Warrants of $4,205,000 was estimated at July 31, 2026, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.58 and the following weighted average assumptions: dividend yield 0%; remaining term of 1.78 years; equity volatility of 65.0%; and a risk-free interest rate of 4.15%.

Settlement Warrants

In connection with the Settlement Agreement, as defined on Note 8 – 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 July 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. See Note 8 – Commitments and Contingencies – Legal Proceedings.

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 three months ended July 31, 2026.

During the three months ended July 31, 2026, the Company recorded a gain of $249,000, 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 unaudited condensed consolidated statements of operations. The fair value of the Settlement Warrants of $472,000 was estimated at July 31, 2026 utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.58 and was based on the following weighted average assumptions: expected dividend yield of 0%; expected term of 3.90 years; equity volatility of 53.0%; and a risk-free interest rate of 4.4%.

Series C Warrant

On August 17, 2025, the Company entered into a Securities Purchase Agreement (the “Series C Private Placement Agreement”) with certain accredited investors (the “Series C Investors”), pursuant to which it agreed to sell in a private placement to the Series C Investors warrants to acquire up to an aggregate of 7,000,000 shares of Common Stock, collectively, the (“Series C Warrant”), 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 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 Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings.

During the three months ended July 31, 2026, the Company recorded a gain of approximately $594,000, related to the change in fair value of the warrant liability associated with the Series C Warrants which is recorded in other income on the unaudited condensed consolidated statements of operations. The fair value of the Series C Warrants of $1,170,000 was estimated at July 31, 2026, utilizing the Black-Scholes-Merton Model using the fair value of the Company’s common stock of $0.58 and the following weighted average assumptions: dividend yield 0%; remaining term of 4.05 years; equity volatility of 52.0%; and a risk-free interest rate of 4.30%.

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 condensed consolidated balance sheets as of July 31, 2026 pursuant to ASC 480-10-S99-3A.

As of July 31, 2026, the fair value of the Series C Placement Agent Warrants was $417,000.

A summary of the Company’s warrant activity and related information for the three months ended July 31, 2026, is shown below: