Note 3 – COST OF REVENUES

Cost of revenues includes raw materials, direct labor, subcontractor costs, commissions directly attributable to specific sales transactions, and other direct costs associated with the production and delivery of the Company’s products and services.

For sales made through the Company’s sales-agent distribution network, commission costs related to specific transactions are included in cost of revenues. Participation in certain Requests for Proposals (“RFPs”) and customer procurement processes requires the use of such agents. Accordingly, commissions paid on these transactions are considered directly attributable to the related revenues and are included in cost of revenues. All other sales-related expenses, including costs incurred in connection with unsuccessful bids and business development activities, are recorded within selling, general and administrative expenses.

Commission costs included in cost of revenues for the three months ended July 31, 2026 and 2025 were $69,799 and $146,921, respectively. Commission costs included in cost of revenues for the nine months ended July 31, 2026 and 2025 were $550,311 and $782,814, respectively.