ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING OUR ABILITY TO COMMERCIALIZE NEW PRODUCTS, HIRE AND RETAIN KEY PERSONNEL, AND SECURE SUFFICIENT FUNDING TO EXECUTE OUR GROWTH PLAN. IF OUR ASSUMPTIONS REGARDING PLANNED EXPENDITURES OR REVENUE GENERATION PROVE INACCURATE, WE MAY NEED TO ADJUST OUR STRATEGIC TIMELINE OR RESOURCE ALLOCATION,WHILE WE BELIEVE THESE PATENTS PROVIDE MEANINGFUL PROTECTION FOR CERTAIN ASPECTS OF OUR TECHNOLOGY, THERE IS NO GUARANTEE THAT THEY WILL PREVENT ALL COMPETITORS FROM DEVELOPING SIMILAR PRODUCTS, FAILURE TO COMPLY WITH THE FAMILY EDUCATIONAL RIGHTS AND PRIVACY ACT (“FERPA”) COULD LIMIT OR DELAY OUR ABILITY TO DEPLOY SAFESCHOOL™ IN CERTAIN JURISDICTIONS, IMPACT CUSTOMER ADOPTION, OR EXPOSE THE COMPANY TO REGULATORY RISK AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.
Overview
SafeSpace Global Corporation (collectively the “Company,” “we,” “our” or “us”) is a multimodal AI technology solutions company with a dedicated team focused on driving safety innovation across multiple industries. We are currently marketing products and solutions that utilize advanced AI tools to monitor and enhance resident safety, reduce the risk of injuries, and improve overall care efficiency.
In April 2025, we completed a strategic rebranding initiative, adopted our current corporate name SafeSpace Global Corporation, and transitioned to the trading symbol “SSGC” for our common stock. These changes reflect our expanded mission to deliver life-saving multimodal AI technology solutions across a wide range of environments beyond healthcare, including schools, transit systems, correctional facilities, and commercial infrastructure. With operations spanning the United States, Europe, Singapore, and India, our branding supports SafeSpace’s evolution into a technology-driven global enterprise dedicated to protecting lives wherever people live, learn, travel, or work. We believe that this transformation strengthens our market positioning and aligns our corporate identity with our broadened strategic vision.
We market the following products and solutions, including our initial product, SafeSpace® Fall Monitoring, which utilizes advanced AI monitoring tools to enhance resident safety in senior living, reduce the risk of injuries, and improve overall care efficiency. Additionally, we have expanded our services and offerings beyond senior living facilities, into schools and transportation where we’ve recently launched these innovative solutions:
SafeFace™ Access Control – An advanced solution that leverages facial recognition to automatically and instantly unlock doors for registered staff and visitors, integrating seamlessly with an existing maglock system for a completely keyless and no badge entry.
SafeFace™ Time Compliance – A platform that monitors staff movements, rounds, and care tasks in real time, delivering actionable insights to leadership. These insights enable more informed decision-making and help streamline daily operations.
SafeGuard™ Wander Protection – Strategically-placed facial recognition cameras that trigger alerts when an at-risk resident is seen outside a secured unit, reducing immediate jeopardy situations and litigation.
SafeTrace™ Rapid Investigations – An innovative investigation solution—simply select a face to instantly retrieve video clips of that individual across facilities, anytime. Local data storage ensures security and cost efficiency, saving countless hours in investigations.
SafeSchool™ – Designed to address growing concerns around school safety by proactively detecting weapons and identifying persons of concern through real-time AI-based monitoring. The SafeSchool™ multimodal AI solution is designed to help protect students during school hours while offering peace of mind to guardians. The SafeSchool™ product offers proactive protection that cameras on their own cannot provide. Our software proactively alerts when weapons are detected or persons of concern (i.e. predators or non-custodial parents) are sighted, offering immediate situational awareness to deter a tragedy. We are actively working with external advisors, school administrators, and legal counsel to ensure that SafeSchool™ is deployed in a FERPA-compliant manner. We view FERPA compliance as a priority and are committed to aligning the SafeSchool™ offering with applicable privacy laws.
Strategy
SafeSpace Global Corporation is executing a focused growth strategy led by a world-class team of executives with deep experience in scaling innovative companies. Our leadership team combines proven operational expertise with a mission-driven commitment to safety and impact. Our primary objective is to expand the adoption of our life-saving multimodal AI technology across both existing and emerging verticals. These include senior living, education, transportation, and corrections—with future expansion planned into commercial infrastructure and high-risk institutional settings. To support this growth, we have strengthened our development team with senior IT architects, AI specialists, and systems engineers who are accelerating product innovation and market deployment on a global scale. A key pillar of this strategy is our dedicated sales force, which brings both deep domain knowledge and a shared commitment to leveraging AI to save lives. This integrated team is actively driving customer engagement, market penetration, and adoption of our multimodal safety solutions across diverse environments.
Financial and Operating Results
As of the date of this filing, the Company has approximately $6,500,000 in cash and cash equivalents from recent private placements. Management believes this adequately supports the Company’s five-year strategic plan enabling strategic initiatives, such as acquisitions, investments in advanced AI technology, and the expansion of its technology development team. SafeSpace Global Corporation remains committed to driving innovation in healthcare technology, with a focus on solutions that enhance safety, efficiency, and patient outcomes across various care settings.
Highlighted achievements for the twelve months ending July 31, 2025 include:
On August 23, 2024, we appointed Micheal “Coach” Burt to our Board of Directors.
On October 1, 2024, we appointed Timothy R. Brady as Fractional Chief Financial Officer and on December 1, 2024, appointed him to full-time Chief Financial Officer.
On November 5, 2024, we announced the appointment of Caleb Dixon as Chief Customer Officer to focus on enhancing customer engagement and satisfaction. Mr. Dixon’s title was recently changed to Director of Customer Success.
On December 9, 2024, we announced the appointment of Theo Davies as Vice President of Sales Enablement & International Expansion and on April 17, 2025, we announced that Theo Davies was appointed as our new Chief Revenue Officer (CRO).
On December 18, 2024, we announced the engagement of Katie Piperata as a Senior Living Consultant for the Company’s Healthcare division.
On December 30, 2024, we announced the promotion of Dustin Hillis to President and Chief Strategy Officer.
On January 7, 2025, we announced that Justin Freishtat joined in a capital advisory role with Investor Relations.
On March 14, 2025, we appointed Anthony Chapman to our Board of Directors.
On April 10, 2025, we announced that Anand Ijju joined as our Chief Technology Officer (CTO).
On April 15, 2025, we announced that Sasidhar Valluru was appointed as our Director of Global Product Delivery.
On April 15, 2025, we appointed FKP Advisors LLC, as a non-independent member, to the Board of Directors. FKP Advisors LLC board seat will be on a rotational basis with Larry Kloess III serving in the first year, followed by Jim Fitzgerald in the second year, and Ben Pope in the third year.
On June 26, 2025, we announced a strategic test pilot program with the Kansas City Area Transportation Authority in preparation for the FIFA World Cup 2026.
On July 7, 2025, we announced the appointment of Katie Piperata as our new Vice President of Senior Living.
We received $10,764,700 in net proceeds from the sale of our common stock at an average price of $0.116 per share during the twleve months ending July 31, 2025.
Results of Operations
Revenues
We had no Contract revenue or Cost of contracts during the year ended July 31, 2025. During the year ended July 31, 2024, we recognized $322,000 in Contract revenue and $239,948 in Cost of contracts.
Operating Expenses
The table below presents a comparison of our operating expenses for the years ended July 31, 2025 and 2024:
For the Years Ended
July 31,
$ Change
%Change
Executive compensation
Salaries and wages
Bonuses and incentives
Contract labor
Professional fees
Insurance
Software development
Sales support
Travel and entertainment
Advertising and marketing
Rent expense
Office expense
Other
Total Selling, general & administrative
Stock-based compensation
Amortization
Impairment of intangibles
Total Operating Expenses
Officers’ Compensation - Officers’ compensation increased $319,119, or 89%, over the prior period primarily due to the addition of the President & Chief Strategy Officer, increased pay for the Chief Financial Officer and Chief Executive Officer compared to the previous period and the addition of our Chief Revenue Officer. Additionally, the Company’s officers accepted voluntary pay reductions in the prior comparable period.
Salaries and wages – Salaries and wages increased $166,882 over the prior period and is attributable to the addition of new finance, accounting and administrative personnel.
Bonuses and incentives – Bonuses and incentives increased $145,395 over the prior period and is attributable to bonuses and incentive payments for the addition of new officers and personal.
Contract labor – Contract labor increased $216,596 over the prior period and is attributable to the addition of new finance, accounting and administrative personnel.
Professional Fees - Professional fees increased $479,960, or 743% over the same period in the prior year primarily due to increased legal, accounting, and IT support fees and the addition of a grant writing consultant.
Insurance – Insurance expense increased $75,332 over the prior period and is attributable to no insurance expenses in the prior comparable period, due to the addition of health, dental and business insurance.
Software Development – Software development expenses increased $116,522, or 286% over the same period in the prior year due to an increase in the use of independent contractors and consultants for specific development projects.
Sales support – Sales support expense increased $64,006 over the prior period and is attributable to no sales support expenses during the prior comparable period.
Travel and entertainment – Travel and entertainment expense increased $245,231, or 954% over the same period in the prior year. The increase is primarily due to increased business travel.
Advertising and Marketing - Advertising and marketing costs increased $234,394, or 2,363% over the same period in the prior year due to increased promotional activities.
Rent expense – Rent expense increased $77,006 over the same period in the prior year due to no rent expense in the prior year.
Office expense - Office expense increased $80,257, or 1,138% primarily due to increases in office expense activity over the same period in the prior year.
Other - Other expenses increased $19,246, or 232% over the same period in the prior year primarily due to limited activity over the same period in the prior year.
Stock-based Compensation - Stock-based compensation expense increased $1,388,568, or 744% from the same period in the prior year. The increase results from the amortization of the grant date fair value of new restricted stock awards.
Amortization - Amortization expenses increased $200,036, or 90% over the same period in the prior year, primarily due to a reduction in the estimated useful life from three years to two years of software development costs.
Impairment of Intangibles - Impairment of intangibles decreased $94,545, or 67% over the same period in the prior year. The impairment expense relates to the abandonment of certain patent applications and the establishment of an impairment reserve on active patent applications.
Other Income (Expense)
The table below presents a comparison of our other income (expense) for the years ended July 31, 2025 and 2024:
For the Years Ended
July 31,
$ Change
%Change
Interest income
Interest expense
Extinguishment of liabilities
Gain on settlements
Total Other Income (Expense)
Interest income - Interest income increased $85,909 for fiscal 2025, resulting from interest earned from our outstanding cash balances. We had no interest income in fiscal 2024.
Interest Expense - Interest expense decreased $16,570, or 30%, over the prior year. Interest expense decreased due to the payoff of all outstanding debt.
Extinguishment of Liabilities – Extinguishment of liabilities decreased $166,258, or 59% compared to the prior year. In 2024 the company recorded an extinguishment of liabilities of $279,903 as management determined it was more likely than not that the Company would not be required to settle the obligations, which were recorded on the books of a non-operating subsidiary offset. In 2025, the company recorded income of $113,645 as holders exchanged 5% Convertible Promissory Notes plus accrued interest through the conversion date at a conversion price of $0.50 per share, the settlement of the Note Payable to Acorn Management Partners offset by a loss for the unamortized issuance costs from the extinguishment of the Platinum Note.
Gain on Settlements – In the prior year we recorded a gain on settlements of $56,250 upon the settlement amounts owed to a consultant that were expensed in a prior year. We had no gain on settlements in 2025.
Liquidity and Capital Resources
Working Capital
The following table summarizes our working capital for the fiscal year ended July 31, 2025 and fiscal year ended July 31, 2024:
July 31, 2025
July 31, 2024
Current assets
Current liabilities
Working capital surplus (deficiency)
Current assets for the period ending July 31, 2025 changed $7,417,850 as compared to the fiscal year ended July 31, 2024. The increase is primarily due to the receipt of $10,764,700 in net proceeds from the sale of our common stock at an average price of $0.116 per share for the period ending July 31, 2025.
Current liabilities for the period ending July 31, 2025 decreased $656,511 as compared to the fiscal year ended July 31, 2024. The decrease is primarily due to decreases in accounts payable and accrued expenses and a reduction in the Notes payable and Notes payable, related party.
Net Cash Used by Operating Activities
We currently do not have a revenue source and will continue to have negative cash flow from operations for the near future. The factors in determining operating cash flows are largely the same as those that affect net earnings, except for non-cash expenses such as depreciation and amortization, stock-based compensation, and impairment of intangibles, which affect earnings but do not affect operating cash flow. Net cash used by operating activities was $2,676,309 for the period ending July 31, 2025, as compared to net cash used by operating activities of $267,729 for the comparable prior period. The increase in cash used by operating activities is primarily attributable to an increase in operating costs and the payment of accounts payable and accrued expenses, related party items.
Net Cash Used by Investing Activities
Net cash used by investing activities for the development of software for our internal use was $175,747 for the period ending July 31, 2025. We did not incur net cash used in investing activities during the comparable prior period. management anticipates approximately $500,000 in capitalized software development costs during next fiscal year to support ongoing product innovation.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $10,222,884 for the period ending July 31, 2025, which represents a $9,780,004 increase over the same period in the prior year. The increase is primarily due to the receipt of $10,764,700 in net proceeds from the sale of our common stock at an average price of $0.116 per share offset by payments of amounts owed to related parties.
Critical Accounting Policies and Estimates
Our consolidated financial statements and related public financial information are based on the application of U.S. GAAP. U.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to U.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 1 of our consolidated financial statements.
We believe the following critical policies impact our more significant judgments and estimates used in preparation of our consolidated financial statements.
Business Combinations
We account for business combinations under the acquisition method of accounting. The acquisition method requires that the acquired assets and liabilities, including contingencies, be recorded at fair value determined on the acquisition date and that changes thereafter be reflected in income (loss). The estimation of fair values of the assets and liabilities assumed involves several estimates and assumptions that could differ materially from the actual amounts recorded. The results of the acquired businesses are included in our results from operations beginning from the day of acquisition.
Risk and Uncertainties
Factors that could affect our future operating results and cause actual results to vary materially from management’s expectation include, but are not limited to: our ability to maintain and secure adequate capital to fund our operations and fully develop our product(s); our ability to source strong opportunities with sufficient risk adjusted returns; acceptance of the terms and conditions of our licenses and/or the acceptance of our royalties and fees; the nature and extent of competition from other companies that may reduce market share and create pressure on pricing and investment return expectations; changes in the projects in which we plan to invest which result from factors beyond our control, including, but not limited to, a change in circumstances, capacity and economic impacts; changes in laws, regulations, accounting, taxation, and other requirements affecting our operations and business. Negative developments in these or other risk factors could have a significant adverse effect on our financial position, results of operations and cash flows.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We base our estimates on experience and various other assumptions that are believed to be reasonable under the circumstances. We evaluate our estimates and assumptions on a regular basis and actual results may differ from those estimates.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and borrowings. The fair value of current financial assets and current financial liabilities approximates their carrying value because of the short-term maturity of these financial instruments.
Intangible Assets
Intangible assets consist of patents, our website, and the costs of software developed for internal use. Certain payroll and stock-based compensation costs incurred are allocated to the intangible assets. We determine the amount of costs to be capitalized based on the time spent by employees or outside contractors on the projects. Intangible assets are amortized over their expected useful life on a straight-line basis. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. If the estimate of an intangible asset’s remaining life is changed, the remaining carrying value of the intangible asset is amortized prospectively over the revised remaining useful life.
Impairment of Long-Lived Assets
Long-lived assets such as property, equipment, and identifiable intangibles are reviewed for impairment at least annually or whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.
Derivative Liability
Options, warrants, convertible notes, or other contracts, if any, are evaluated to determine if those contracts, or embedded components of those contracts, qualify as derivatives to be separately accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging,” (paragraph 815-10-05-4 and Section 815-40-25). The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise, or cancellation and then the related fair value is reclassified to equity.
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated, and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
The Company adopted Section 815-40-15 of the FASB ASC (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two- step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.
We utilize a binomial option pricing model to compute the fair value of the derivative liability and to mark to market the fair value of the derivative at each balance sheet date. We record the change in the fair value of the derivative as other income or expense in the consolidated statements of operations.
Related Parties
The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Contract Liabilities
The Company receives payments from customers based upon contractual billing schedules. Contract liabilities include payments received in advance of performance under the contract. Contract assets include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Our contract assets and liabilities are reported on an individual contract basis at the end of each reporting period. Contract liabilities are classified as current or noncurrent based on the timing of when we expect to recognize revenue. The Company expects to recognize all outstanding contract liabilities over the next 12 months.
Contract Combination
The Company may execute more than one contract or agreement with a single customer. The Company evaluates whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements. The Company applied the revenue model to a portfolio of contracts with similar characteristics where we expected that the financial statements would not differ materially from applying it to the individual contracts within that portfolio.
Revenue Recognition
Revenue is recognized under ASC 606, “ Revenue from Contracts with Customers ” using the modified retrospective method. Under this method, the Company follows the five-step model provided by ASC Topic 606 in order to recognize revenue in the following manner: 1) Identify the contract; 2) Identify the performance obligations of the contract; 3) Determine the transaction price of the contract; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue. An entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company’s revenue recognition policies remained unchanged as a result of the adoption of ASC 606, and there were no significant changes in business processes or systems.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “ Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans, if any, in accordance with ASC 718.
Stock-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of stock-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the stock-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the consolidated statements of operations. Stock-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital.
The Company recognizes all forms of stock-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.
Capital Resources
We had no material commitments for capital expenditures as of July 31, 2025.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements as of July 31, 2025.
