NOTE 9 – CONVERTIBLE NOTES PAYABLE

During the nine months ended July 31, 2026, the Company entered into five convertible note financing transactions. The CFI Capital note was issued and fully repaid during the quarter ended April 30, 2026. The Jefferson Street Capital and Lambda Ventures (April 9, 2026) notes were issued during the quarter ended April 30, 2026 and remained outstanding as of July 31, 2026. On May 5, 2026, the Company issued two additional convertible notes, to Monroe Street Capital Partners, LP and to Lambda Ventures, LLC, each of which remained outstanding as of July 31, 2026. The material terms of each transaction are described below.

CFI Capital LLC – Issued and Repaid During the Quarter Ended April 30, 2026

On March 12, 2026, the Company issued an 8% Convertible Redeemable Note to CFI Capital LLC with a face value of $150,000, an original issue discount of $12,000, and a purchase price of $138,000. On April 7, 2026, the Company repaid the note in full for $158,397, consisting of principal of $150,000, a prepayment premium of $7,500, and accrued interest of $897. The entire unamortized original issue discount of $12,000 was written off to interest expense at repayment. The CFI Capital note had a zero 0 balance as of July 31, 2026 and April 30, 2026. There was no CFI Capital activity during the three months ended July 31, 2026.

Jefferson Street Capital, LLC

On April 7, 2026, the Company entered into a Securities Purchase Agreement with Jefferson Street Capital, LLC, a New Jersey limited liability company (the "JSC Buyer"), pursuant to which the Company issued a Convertible Promissory Note in the principal amount of $96,250 (the "JSC Note") and a Common Stock Purchase Warrant to purchase up to 385,000 shares of Common Stock at an exercise price of $0.25 per share, in exchange for gross proceeds of $87,500. After deduction of $3,000 in legal fees and $2,250 in placement agent fees withheld at funding, net proceeds to the Company were approximately $82,250.

The JSC Note has a principal amount of $96,250, which includes an original issue discount of $8,750. The JSC Note bears a one-time interest charge of 8% on the principal amount $7,700, which is guaranteed and earned in full as of the issue date. The JSC Note matures on April 7, 2027. The JSC Note is convertible, at the option of the JSC Buyer, at a conversion price equal to 60% of the lowest traded price of the Common Stock on the principal trading market during the twenty (20) trading days prior to the applicable conversion date. The JSC Buyer’s right to convert is subject to a 4.99% beneficial ownership limitation. Upon an event of default, the JSC Note shall become immediately due and payable at 150% of outstanding principal and accrued interest, and default interest accrues at the lesser of 18% per annum or the maximum rate permitted by law. The JSC Warrant is exercisable commencing April 7, 2026 and expires April 7, 2031.

Lambda Ventures, LLC – Convertible Note Issued April 9, 2026

On April 9, 2026, the Company entered into a Securities Purchase Agreement with Lambda Ventures, LLC, a Nevada limited liability company (the "LV Buyer"), pursuant to which the Company issued a Convertible Promissory Note in the principal amount of $96,250 (the "LV April Note") and a Common Stock Purchase Warrant to purchase up to 385,000 shares of Common Stock at an exercise price of $0.25 per share, in exchange for gross proceeds of $87,500. After deduction of $3,000 in legal fees and $2,250 in placement agent fees withheld at funding, net proceeds to the Company were approximately $82,250.

The LV April Note has a principal amount of $96,250, which includes an original issue discount of $8,750. The LV April Note bears a one-time interest charge of 8% on the principal amount $7,700, which is guaranteed and earned in full as of the issue date. The LV April Note matures on April 9, 2027. The LV April Note is convertible, at the option of the LV Buyer, at a conversion price equal to 60% of the lowest traded price of the Common Stock on the principal trading market during the twenty (20) trading days prior to the applicable conversion date. The LV Buyer’s right to convert is subject to a 4.99% beneficial ownership limitation. Upon an event of default, all outstanding principal and accrued interest shall become immediately due and payable, and default interest accrues at the lesser of 18% per annum or the maximum rate permitted by law. The LV April Warrant is exercisable commencing April 9, 2026 and expires April 9, 2031.

Monroe Street Capital Partners, LP – Convertible Note Issued May 5, 2026

On May 5, 2026, the Company entered into a Securities Purchase Agreement with Monroe Street Capital Partners, LP, a Delaware limited partnership (the "MSC Buyer"), pursuant to which the Company issued a Convertible Promissory Note in the principal amount of $67,500 (the "MSC Note") and a Common Stock Purchase Warrant to purchase up to 385,000 shares of Common Stock at an exercise price of $0.25 per share, in exchange for gross proceeds of $62,500. The MSC Buyer withheld $3,000 from the proceeds at funding to cover legal fees and an additional $1,875 to cover placement agent fees payable to Craft Capital Management LLC (CRD# 171350), resulting in net proceeds to the Company of approximately $57,625.

The MSC Note has a principal amount of $67,500, which includes an original issue discount of $5,000. The MSC Note bears a one-time interest charge of 8% on the principal amount $5,400, which is guaranteed and earned in full as of the issue date. The MSC Note matures on May 5, 2027. The MSC Note is convertible, at the option of the MSC Buyer, at any time on or following the issue date, at a conversion price equal to 60% of the lowest traded price of the Common Stock on the principal trading market during the twenty (20) trading days prior to the applicable conversion date. The MSC Buyer is entitled to deduct $1,750 from the conversion amount in each notice of conversion, and the MSC Buyer’s right to convert is subject to a 4.99% beneficial ownership limitation. Upon an event of default, the MSC Note shall become immediately due and payable at 150% of outstanding principal and accrued interest, and default interest accrues at the lesser of 18% per annum or the maximum rate permitted by law. Events of default include, among others, failure to maintain a minimum market capitalization of $3,000,000 on any trading day, cross-default with other indebtedness, consummation of a Variable Rate Transaction, failure to maintain the required share reserve, and failure to comply with Exchange Act reporting requirements. The MSC Warrant is exercisable commencing May 5, 2026 and expires May 5, 2031. The Company irrevocably reserved 20,000,000 shares of Common Stock for issuance upon conversion of the MSC Note and exercise of the MSC Warrant.

Lambda Ventures, LLC – Convertible Note Issued May 5, 2026

Also on May 5, 2026, the Company entered into a separate Securities Purchase Agreement with Lambda Ventures, LLC, pursuant to which the Company issued a Convertible Promissory Note in the principal amount of $67,500 (the "LV May Note") and a Common Stock Purchase Warrant to purchase up to 385,000 shares of Common Stock at an exercise price of $0.25 per share, on substantially the same terms as the MSC Note, in exchange for gross proceeds of $62,500. The LV Buyer withheld $3,000 in legal fees, $1,875 in placement agent fees payable to Craft Capital Management LLC (CRD# 171350), and an additional $10,000 in lender legal counsel fees, resulting in net proceeds to the Company of approximately $47,625.

The LV May Note has a principal amount of $67,500, which includes an original issue discount of $5,000. The LV May Note bears a one-time interest charge of 8% on the principal amount $5,400, which is guaranteed and earned in full as of the issue date. The LV May Note matures on May 5, 2027. The LV May Note is convertible, at the option of the LV Buyer, at any time on or following the issue date, at a conversion price equal to 60% of the lowest traded price of the Common Stock on the principal trading market during the twenty (20) trading days prior to the applicable conversion date. The LV Buyer is entitled to deduct $1,750 from the conversion amount in each notice of conversion, and the LV Buyer’s right to convert is subject to a 4.99% beneficial ownership limitation. Upon an event of default, the LV May Note shall become immediately due and payable at 150% of outstanding principal and accrued interest, and default interest accrues at the lesser of 18% per annum or the maximum rate permitted by law. The LV May Warrant is exercisable commencing May 5, 2026 and expires May 5, 2031. The Company irrevocably reserved 20,000,000 shares of Common Stock for issuance upon conversion of the LV May Note and exercise of the LV May Warrant. Both May 5, 2026 notes were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D.

Convertible Notes Payable

The following table summarizes the carrying value of convertible notes payable outstanding as of July 31, 2026:

All four notes were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D.

Warrant Accounting – ASC 470-20 Allocation

Each convertible note was issued with a detachable Common Stock Purchase Warrant. The fair value of each warrant was determined using the Black-Scholes option pricing model at the grant date and credited to additional paid-in capital, with a corresponding debt discount amortized to interest expense over the note term. Each warrant satisfies the fixed-for-fixed criteria under ASC 815-40 (fixed exercise price of $0.25 and a fixed number of shares) and is classified as an equity instrument that is not remeasured after issuance.

Black-Scholes Assumptions

The following assumptions were used in the Black-Scholes valuation of each warrant tranche. July 31, 2026 fair values are presented for informational purposes only; as equity-classified instruments, the warrants are not remeasured through earnings.

Jefferson Street Capital Warrant

Lambda Ventures Warrant (April 9, 2026)

Monroe Street Capital Warrant

Lambda Ventures Warrant (May 5, 2026)

Risk-free rates reflect the 5-year Constant Maturity Treasury rate for each measurement date per the U.S. Department of the Treasury Daily Par Yield Curve (4.08% at May 5, 2026; 4.45% at July 31, 2026; issuance-date rates for the April notes as previously disclosed).

Loss on Issuance of Convertible Notes for the Three Months Ended July 31, 2026

At issuance of each May 5, 2026 note, the fair value of the bifurcated conversion-feature derivative was recorded as a debt discount only to the extent of the remaining carrying-value capacity of the note; the excess was recognized immediately as a day-one loss on issuance, consistent with the policy applied in the quarter ended April 30, 2026:

For the nine months ended July 31, 2026, total day-one losses on issuance of convertible notes were $243,811, comprising $100,582 recognized in the quarter ended April 30, 2026 (JSC Note $23,261 and LV April Note $77,321) and $143,229 recognized in the quarter ended July 31, 2026. These day-one losses, net of the $12,421 gain recognized upon the conversion of the Newlan Law Firm, PLLC convertible note during the quarter ended January 31, 2026, comprise the $231,390 net loss on fair value of convertible notes presented in the accompanying statements of operations for the nine months ended July 31, 2026.

Outstanding Warrants

The following table summarizes the common stock purchase warrants outstanding as of July 31, 2026:

As of July 31, 2026, there were 1,540,000 warrants outstanding, all with an exercise price of $0.25 per share. All warrants may be exercised on a cashless basis when the market price of the Common Stock exceeds the exercise price and no effective registration statement covers the resale of the warrant shares. All warrants are subject to a 4.99% beneficial ownership limitation.

Interest Expense on Convertible Notes – Three and Nine Months Ended July 31, 2026

The following summarizes non-cash interest expense recognized in connection with convertible notes payable during the three months ended July 31, 2026:

JSC Note: OID amortization $2,205; guaranteed interest $1,941; warrant discount amortization $9,127; derivative discount amortization $11,604; debt issue cost $1,323; total $26,201.

LV April Note: OID amortization $2,205; guaranteed interest $1,941; warrant discount amortization $11,490; derivative discount amortization $9,242; debt issue cost $1,323; total $26,201.

MSC Note: OID amortization $1,192; guaranteed interest $1,287; warrant discount amortization $9,591; derivative discount amortization $4,144; debt issue cost $1,162; total $17,376.

LV May Note: OID amortization $1,192; guaranteed interest $1,287; warrant discount amortization $9,591; derivative discount amortization $1,760; debt issue cost $3,546; total $17,376.

Total interest expense on convertible notes was $87,154 for the three months ended July 31, 2026 and $112,582 for the nine months ended July 31, 2026 (including $12,897 related to the CFI Capital note repaid in April 2026, of which $12,000 was the write-off of unamortized original issue discount upon extinguishment). Together with $6,932 of interest accrued on related-party notes payable (Note 8), total interest expense per the accompanying statements of operations was $94,086 for the three months ended July 31, 2026; the nine-month total of $140,651 comprises the $112,582 of convertible note interest, $20,569 of interest on related-party notes payable and the $7,500 prepayment premium on the CFI Capital note.

Embedded Conversion Features – ASC 815 Analysis

Each of the JSC Note, LV April Note, MSC Note and LV May Note contains a variable conversion feature providing for conversion at 60% of the lowest traded price of the Company’s Common Stock during the 20 trading days prior to conversion. The Company evaluated each embedded conversion feature under ASC 815, Derivatives and Hedging. Because the conversion price of each note is indexed to a variable market price rather than fixed, and because each note may be settled in a variable number of shares, the embedded conversion features fail the fixed-for-fixed test and do not qualify for the equity scope exception under ASC 815-40-15. Accordingly, the Company bifurcated each conversion feature from its host debt instrument and recorded it as a derivative liability at fair value in accordance with ASC 815-15, remeasured at each reporting date with changes in fair value recognized in earnings. The fair value of each derivative liability is measured using the intrinsic value method at each measurement date: Fair Value = (Total Face Obligation ÷ Conversion Price) × max(Stock Price − Conversion Price, 0), where the conversion price equals 60% of the lowest traded price of the Common Stock during the 20 trading days preceding the measurement date. The measurement for each note is set out below.

Revision of Previously Reported Interim Amounts

In connection with the preparation of these financial statements, the Company determined that the derivative liabilities at April 30, 2026 had been measured using the lowest closing price of the Common Stock during the applicable look-back period rather than the lowest traded price required by the contractual conversion terms. The April 30, 2026 measurements have been revised to a conversion price of $0.0486 (60% × the $0.0810 lowest traded price), which increased the derivative liabilities at that date from $192,500, as previously reported, to $236,989 and increased the loss on change in fair value of derivative liabilities and the net loss for the three months ended April 30, 2026 by $44,489, to a revised net loss of $445,314 for that quarter. The revision has no effect on the amounts reported for the nine months ended July 31, 2026, on the July 31, 2026 balance sheet, or on cash flows for any period. The Company has evaluated the revision under SEC Staff Accounting Bulletin No. 99 and concluded that it is not material to the previously issued interim financial statements.

JSC Note

Because the conversion price of the Note is variable and indexed to future market prices rather than being fixed, the embedded conversion feature was bifurcated from the host debt and recorded as a derivative liability at fair value. At April 30, 2026, as revised (see below), the conversion price was $0.0486 (60% × the $0.0810 20-trading-day low traded price), yielding an intrinsic value of $0.0554 per share and approximately 2,138,889 shares issuable upon full conversion, resulting in a derivative liability of $118,494. At July 31, 2026, the conversion price was $0.0396 (60% × $0.0660 20-trading-day low traded price), and the closing stock price was $0.0900, yielding an intrinsic value of $0.0504 per share and approximately 2,625,000 shares issuable upon full conversion, resulting in a derivative liability of $132,300.

LV April Note

The embedded conversion feature of the LV April Note was likewise bifurcated and recorded as a derivative liability at fair value. At April 30, 2026, as revised (see below), the conversion price was $0.0486 (60% × the $0.0810 20-trading-day low traded price), yielding an intrinsic value of $0.0554 per share and approximately 2,138,889 shares issuable upon full conversion, resulting in a derivative liability of $118,494. At July 31, 2026, the conversion price was $0.0396 (60% × $0.0660), and the closing stock price was $0.0900, yielding an intrinsic value of $0.0504 per share and approximately 2,625,000 shares issuable upon full conversion, resulting in a derivative liability of $132,300.

MSC Note

Because the conversion price of the MSC Note is variable and indexed to future market prices rather than being fixed, the embedded conversion feature was bifurcated from the host debt and recorded as a derivative liability at fair value at issuance. At May 5, 2026 (issuance), the estimated conversion price was $0.0486 (60% × $0.0810 20-trading-day low traded price), and the closing stock price was $0.1046, yielding an intrinsic value of $0.0560 per share and approximately 1,500,000 shares issuable upon full conversion, resulting in a derivative liability of $84,000. At July 31, 2026, the conversion price was $0.0396 (60% × $0.0660), and the closing stock price was $0.0900, yielding an intrinsic value of $0.0504 per share and approximately 1,840,909 shares issuable upon full conversion, resulting in a derivative liability of $92,782.

LV May Note

The embedded conversion feature of the LV May Note was likewise bifurcated and recorded as a derivative liability at fair value at issuance. At May 5, 2026 (issuance), the estimated conversion price was $0.0486 (60% × $0.0810), and the closing stock price was $0.1046, yielding an intrinsic value of $0.0560 per share and approximately 1,500,000 shares issuable upon full conversion, resulting in a derivative liability of $84,000. At July 31, 2026, the conversion price was $0.0396 (60% × $0.0660), and the closing stock price was $0.0900, yielding an intrinsic value of $0.0504 per share and approximately 1,840,909 shares issuable upon full conversion, resulting in a derivative liability of $92,782.

Summary — Derivative Liabilities

The following table presents the roll-forward of the combined derivative liability for the three months ended July 31, 2026:

The loss on change in fair value of derivative liabilities of $45,175 for the three months ended July 31, 2026 ($98,878 for the nine months ended July 31, 2026) was principally attributable to the decline in the 20-trading-day low traded price used to determine the conversion price, from $0.0810 at April 30, 2026 to $0.0660 at July 31, 2026, which decreased the conversion price to $0.0396 and correspondingly increased both the number of shares issuable upon conversion and the intrinsic value of the conversion features, together with the initial recognition of the conversion features embedded in the notes issued May 5, 2026.

Fair Value Measurements – Level 3

The derivative liabilities are measured at fair value on a recurring basis and are classified within Level 3 of the fair value hierarchy because the intrinsic-value measurement relies on a Company-specific valuation model with significant unobservable inputs. Significant inputs at July 31, 2026 included the 20-trading-day low traded price ($0.0660), the resulting conversion price ($0.0396), the closing stock price ($0.0900), and the total face obligations of the notes ($353,700 in the aggregate). An increase (decrease) in the 20-trading-day low traded price would decrease (increase) the number of shares issuable upon conversion and generally decrease (increase) the fair value of the derivative liabilities, while an increase (decrease) in the stock price relative to the conversion price would increase (decrease) the intrinsic value per share. The equity-classified warrants are measured at fair value only at the grant date using the Black-Scholes model (Level 3 inputs, including expected volatility of 257.85%–308.67% derived from 180 trading days of historical prices) and are not remeasured.