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. An incentive stock options (“ISOs”) can 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 April 30, 2025, there are 152,594 shares remaining available under this 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. The 2022 Equity Plan is administered by the Compensation Committee of the Board and has 2,750,000 shares authorized under this plan. 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. An incentive stock options (“ISOs”) can 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 April 30, 2025, there are 1,595,040 shares remaining available under this plan.

Stock Options

The fair value of the Employee Options at the date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:

The Company’s computation of expected volatility for the year ended April 30, 2025 is based on the Company’s historical basis volatility and on selected guideline companies historical weekly basis volatility for the year ended April 30, 2024. For stock option grants issued during the years ended April 30, 2025 and 2024, the Company used a calculated volatility for each grant. The Company lacks adequate information about the exercise behavior now and has determined the expected term assumption under the simplified method provided for under ASC 718, which averages the contractual term of the Company’s stock options of ten years with the average vesting term of six months. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the U.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life.

A summary of the Company’s stock option activity and related information for the years ended April 30, 2025 and 2024 is shown below:

The Company recorded $478,637 and $674,693 of stock-based compensation related to the issuance of options to certain officers and directors in exchange for services during the years ended April 30, 2025 and 2024, respectively. At April 30, 2025, there remained $236,055 unrecognized compensation expense related to unvested granted to director and are scheduled to vest in April 2026.

The aggregate intrinsic value of vested outstanding options as of April 30, 2025 was $0.

Warrants

Pursuant to the Private Placement (as defined below), the Company issued investors Warrants (as defined below) to purchase 8,750,000 shares of Common Stock, with an exercise price of $4.00 per share (subject to adjustment), for a period of five years from the date of issuance. For more information on the Private Placement, see “Note 11 – Preferred Stock”.

The 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 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 Warrants issued during the years ended April 30, 2025 and 2024. The fair value of the Warrants of approximately $14,127,000, respectively, was estimated at the date of issuance using the fair value of our common stock of $2.74 on the issuance date and was based on the following weighted average assumptions: dividend yield 0%; expected term of 5.0 years; equity volatility of 80.0%; and a risk-free interest rate of 3.37%.

Transaction costs incurred attributable to the issuance of the Warrants of approximately $913,640 were immediately expensed and were included in general and administrative expense in the accompanying Consolidated Statements of Operations during the year ended April 30, 2024.

During the years ended April 30, 2025 and 2024, the Company recorded gains of approximately $10,446,000 and $3,343,000, respectively, related to the change in fair value of the warrant liability which is recorded in other income (expense) on the Consolidated Statements of Operations. The fair value of the Warrants of $338,000 and $10,784,000 were estimated at April 30, 2025 and 2024, respectively, utilizing the Black-Scholes-Merton Model using the fair value of our common stock of $1.24 and $2.12, respectively, and the following weighted average assumptions: dividend yield 0%; remaining term of 3.03 and 4.03 years, respectively; equity volatility of 40.0% and 95.0%; and a risk-free interest rate of 3.52 % and 4.79%, respectively.

A summary of the Company’s warrant activity and related information for the years ended April 30, 2025 and 2024, are shown below: