9.STOCKHOLDERS’ EQUITY (DEFICIT) AND MEZZANINE EQUITY

Common stock

The Company has 300,000,000 shares of common stock authorized with a par value of $0.0001 per share. Prior to the de-SPAC transaction (Note 3) on February 24, 2026, the Company, being Eagle Energy at the time, had 350,000,000 shares of common stock authorized with a par value of $0.0001 per share.

Activities during the nine months ended August 31, 2026:

On February 24, 2026, the Company completed its de-SPAC transaction (Note 3), with each share of former nonredeemable Eagle Energy common stock converted to common stock of the Company on a 5.8349:1 basis, representing 18,888,289 shares of common stock. All disclosures in these unaudited condensed consolidated interim financial statements on number of shares have been accordingly converted on the same basis. The former shareholders of SVII received an aggregate of 5,930,033 shares of common stock in the Company as consideration for the de-SPAC transaction. The Company also issued 300,000 shares of common stock in respect of transaction costs. The Company recorded a net contribution from reverse recapitalization of $1,991,184 as a result of the de-SPAC transaction.

On February 24, 2026, upon the completion of the de-SPAC transaction (Note 3), 2,750,000 shares of common stock previously subject to redemption were no longer redeemable and reclassified to permanent equity. The Company reclassified $300,000 from redeemable common stock in mezzanine equity to permanent equity.

On February 24, 2026, the Company also issued 1,710,991 shares of common stock with a fair value of $11,959,827 as consideration for the acquisition of Oregon Energy (Note 4).

During the nine months ended August 31, 2026, the Company issued 104,168 shares of common stock upon vesting of RSUs.

Preferred stock

The Company has 3,500,000 shares of preferred stock authorized with a par value of $0.0001 per share. Prior to the de-SPAC transaction (Note 3) on February 24, 2026, the Company, being Eagle Energy at the time, had 50,000,000 shares of preferred stock authorized with a par value of $0.0001 per share.

Mezzanine equity

Redeemable common stock

In July 2025, the Company issued 2,750,000 common shares, with a par value of $0.0001 per share, to an investor pursuant to a Common Stock Purchase Agreement for total proceeds of $300,000. Prior to the closing of the de-SPAC transaction as contemplated by the BCA (Note 3), the shares were subject to automatic redemption if such transaction did not close. In accordance with the ASC 480-10-S99-3A, Classification and Measurement of Redeemable Securities, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Immediately upon the closing of the private placement, the Company recognized a charge against additional paid-in capital of $170 for share issuance costs incurred in this private placement. On February 24, 2026, upon the completion of the de-SPAC transaction (Note 3), these common shares are no longer redeemable. The face value of $300,000 is reclassified to permanent equity.

As of August 31, 2026, the amount of redeemable common stock reflected on the unaudited condensed consolidated interim balance sheets is reconciled in the following table:

​

​

Series A Cumulative Convertible Preferred Stock

On February 24, 2026, in connection with the de-SPAC transaction (Note 3), the Company, Eagle Energy, and SVII entered into an Amended and Restated Securities Purchase Agreement (the “PIPE Agreement”) with an accredited investor, pursuant to which the investor agreed to purchase 29,700 shares of Series A Cumulative Convertible Preferred Stock of the Company with an initial stated value of $1,000 per share for an aggregate price of $29,700,000. The shares of Series A Cumulative Convertible Preferred Stock have an initial stated value of $1,000 per share and are redeemable at the holder’s option beginning February 24, 2031. The Series A Cumulative Convertible Preferred Stock accrues dividends at an annual rate of 12% if paid in kind or 10% if paid in cash, the manner of which is at the election of the Company. Dividends are due semi-annually, on June 1 and December 1. The preferred stock carries the rights, preferences, and privileges as set forth in its certificate of designation, including the holder’s right to convert the preferred stock into common stock of the Company at any time, at an initial conversion price of $11.88 per share, representing an initial conversion ratio of 1-to-84.18, subject to adjustment. In addition, the investor received warrants to purchase an aggregate of 2,500,000 shares of common stock of the Company at an exercise price of $12.00 per share, which had a grant-date fair value of $4,174,276. The proceeds of the PIPE financing were first allocated to the liability-classified warrants (Note 8), with the residual allocated to the Series A Cumulative Convertible Preferred Stock.

The Series A Cumulative Convertible Preferred Stock is also redeemable at the option of the Company:

As of August 31, 2026, the amount of redeemable Series A Cumulative Convertible Preferred Stock reflected on the unaudited condensed consolidated interim balance sheets is reconciled in the following table:

​

​

For the three months ended August 31, 2026, mezzanine equity accretion and preferred stock dividend accruals recognized were $197,095 and $928,460, respectively.

As of August 31, 2026, the stated value of each share of Series A Cumulative Convertible Preferred Stock is approximately $1,031.56 per share, as a result of dividends paid-in-kind. The current conversion ratio into common stock is 1-to-86.83.

As of August 31, 2026, the Company accrued dividends of $772,230 which the Company may have an obligation to settle in cash, should holders of the Series A Cumulative Convertible Preferred Stock exercise the right to convert into common stock prior to a Semi-Annual Dividend Date.

The conversion price is subject to a price reset. If, on the twenty-first trading day following the date that is six months after the Effective Date of the Registration Statement (which became effective on April 24, 2026), the VWAP of the Company’s common stock for the 20 trading days preceding such date (the “Measurement Price”) is less than the conversion price then in effect (initially $11.88 per share), the conversion price will be reduced to the greater of the Measurement Price and $7.50.

Equity incentive plan

Upon the de-SPAC transaction (Note 3), the Company implemented a 2025 Equity Incentive Plan (“EIP”). The Company may grant stock-based awards under the EIP, including options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and other stock-based awards. The maximum number of shares the Company may issue pursuant to awards granted under the 2025 EIP is 4,437,008 shares, subject to an annual increase to be added on the first day of each fiscal year, commencing on January 1, 2027 and continuing until, and including, January 1, 2035, equal to the lesser of (i) 5% of the outstanding shares of all classes of common stock on such date or (ii) such lesser number of shares of common stock as determined by the board of directors. As of August 31, 2026, the remaining unused capacity under the 2025 EIP is 2,957,508 shares.

Stock options

As of August 31, 2026, the continuity of stock options is as follows:

​

​

As of August 31, 2026, the aggregate intrinsic values of outstanding options and exercisable options were $0 and $0, respectively.

On August 19, 2026, 4,687 stock options issued to a former director were accelerated to vest immediately. Stock-based compensation cost of $19,639 was recognized associated with the acceleration.

The fair value of the options was determined using the Black-Scholes option pricing model or the Monte Carlo model depending on characteristics of the terms of the options, and is recognized as stock-based compensation expense over the requisite service period. Monte Carlo model is selected where stock options issued are not “plain vanilla”, and expected life of the option is not readily determinable, for which a closed-form model such as Black-Scholes option pricing model is found to be inadequate. The Company issued 137,375 stock options with an at-the-money exercise price upon grant, having a contractual term of 5 years, and a requisite service period of 1 to 2 years; and 750,000 stock options with an out-of-the-money exercise price upon grant, having a contractual term of 5 years, and a requisite service period of 2 years. The Company determined that the stock options had an aggregate grant-date fair value of $5,696,173 during the nine months ended August 31, 2026.

The grant-date fair values of 137,375 stock options were calculated using the Black-Scholes option pricing model. The key inputs used were as follows:

​

​

The grant-date fair values of 750,000 stock options were calculated using the Monte Carlo model. The key inputs used were as follows:

​

​

During the three and nine months ended August 31, 2026, the Company recognized stock-based compensation relating to stock options of $702,691 and $3,011,559 (August 31, 2025 – $0 and $0), respectively, recognized in general and administrative expenses. As of August 31, 2026, future unrecognized stock-based compensation expense arising from the stock options amount to $2,684,614, which will be recognized over 1.68 years.

Restricted stock units (“RSUs”)

As of August 31, 2026, the continuity of RSUs is as follows:

​

​

On August 19, 2026, 14,062 RSUs issued to a former director were accelerated to vest immediately. Stock-based compensation cost of $87,071 was recognized associated with the acceleration.

During the three and nine months ended August 31, 2026, the Company recognized stock-based compensation relating to RSUs of $781,284 and $3,068,588 (August 31, 2025 - $0 and $0), respectively, recognized in general and administrative expenses. As of August 31, 2026, future unrecognized stock-based compensation expense arising from the RSUs amount to $2,441,856, which will be recognized over 1.68 years. 127,583 RSUs are vested but not yet settled.

Warrants

As of August 31, 2026, the continuity of share purchase warrants is as follows:

​

Activities during the nine months ended August 31, 2026:

On February 24, 2026, in connection with its reverse recapitalization (Note 3), the Company issued the following warrants:

The issuance of 2,422,133 warrants in settlement of loans owed by SVII to the SVII Sponsor has been accounted for as a capital transaction with a shareholder of the Company, in connection with the reverse recapitalization (Note 3).

On February 24, 2026, in connection with the PIPE financing, the Company issued warrants to an accredited investor to purchase an aggregate of 2,500,000 shares of the Company’s common stock at an exercise price of $12.00 per share. These warrants are classified as liabilities and had a fair value of $4,174,276 at issuance (Note 8).

Earnout shares

In connection with the de-SPAC transaction (Note 3), the Company has reserved an additional 1,500,000 shares of common stock (“Earnout Share Pool”) in the EIP to be granted to eligible shareholders of the Company. During the Earnout Period, if the Earnout Target is met, or if a change of control transaction occurs during the Earnout Period and the Earnout Target was not already met, the Company will grant 1,500,000 Earnout Shares to the eligible shareholders. The Company evaluated the Earnout Shares under ASC 815-40, and concluded the Earnout Shares meet the definition of an equity instrument, and accordingly will be accounted for as part of additional paid-in capital. No Earnout Share has been issued as of August 31, 2026.