NOTE 3 – FAIR VALUE MEASUREMENT

ASC Topic 820, “Fair Value Measurements and Disclosures”, establishes a hierarchy for inputs used in measuring fair value for financial assets and liabilities that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

● Level 1: Quoted prices available in active markets for identical assets or liabilities;

● Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; and

● Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models.

The financial assets and liabilities are classified in the Consolidated Balance Sheets based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

As disclosed in Note 7, the two tranches of 2023 Series Convertible Notes Payable - Stock Settled Derivative/Warrant Liability required identification and quantification of fair value. Similarly, the tranches of 2024 Series Senior Secured Convertible Notes – Stock Settled Derivative/Warrant Liability and the tranches of 2025 Series Senior Secured Convertible Notes – Stock Settled Derivative/Warrant Liability required identification and quantification of fair value. The derivative liabilities described below only relate to (i) the warrants included with the two tranches of the 2023 Series Convertible Notes Payable – Stock Settled debt, (ii) the warrants included with 2024 Series Senior Secured Convertible Note – Stock Settled debt and (iii) the warrants included with 2025 Series Senior Secured Convertible Note – Stock Settled debt. The estimated fair values as of the issuance date of these three tranches of notes are presented in Note 7.

As of October 31, 2025, the estimated fair values of the Company’s financial liabilities are presented in the following table:

 SCHEDULE OF FAIR VALUE ON FINANCIAL LIABILITIES

The following table presents a roll-forward of the fair value of the derivative liabilities associated with the Company’s warrants included with its 2025 Series Senior Secured Convertible Notes, its 2024 Series Senior Secured Convertible Notes Payable and its 2023 Series Convertible Notes Payable, categorized as Level 3:

 SCHEDULE OF FAIR VALUE DERIVATIVE LIABILITIES ON RECURRING BASIS

During the three and nine months ended July 31, 2026 and 2025, the unrealized gain on the Derivative Warrant Liability associated with the two tranches of 2023 Series Convertible Notes Payable – Stock Settled was $1,002 and $26,731, and $2,097 and $1,631, respectively. On May 15, 2026, all of the 2023 notes, totaling $1,717,600, were converted to Series A-1 Preferred Stock. As a result, $30,833 of Derivative Warrant Liability was recognized and reclassified to Additional Paid-in Capital.

During the three and nine months ended July 31, 2026 and 2025, the unrealized gain on the Derivative Warrant Liability associated with the 2024 Series Senior Secured convertible notes payable – stock settled was $0 and $6,207, and $2,537 and $14,476, respectively. On February 24, 2026, $468,750 of these notes were converted to Series A-1 Preferred Stock. As a result, $47,269 of Derivative Warrant Liability was recognized and reclassified to Additional Paid-in Capital.

During the three and nine months ended July 31, 2026 and 2025, the unrealized gain on the Derivative Warrant Liability associated with the 2025 Series Senior Secured convertible notes payable – stock settled was $54,119 and $750,233, and $46,532 and $40,156, respectively. On May 15, 2026, all of these notes, totaling $8,187,500, were converted to Series A-1 Preferred Stock. As a result, $4,697,914 of Derivative Warrant Liability was recognized and reclassified to Additional Paid-in Capital.

The fair value of the warrants granted in connection with the 2023 Series Convertible Notes Payable, the 2024 Series Senior Secured Convertible Notes Payable - Stock Settled and the 2025 Series Senior Secured Convertible Notes Payable – Stock Settled during the periods presented was estimated using the Black-Scholes option-pricing model with the following assumptions at July 31, 2026 and October 31, 2025:

 SCHEDULE OF FAIR VALUE DERIVATIVE LIABILITIES ON WARRANTS GRANTED

Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, and Convertible Notes Payable. The carrying values of cash, accounts receivable and accounts payable are representative of their fair values due to their short-term maturities. The carrying amount of the Company’s Convertible Notes Payable approximates fair value as they bear interest over the term of the loans.