Note 3 – COST OF REVENUES

Our cost of revenues includes the cost of raw materials and other direct costs associated with the production of our products and services. For sales made through the Company’s sales-agent distribution network, commission costs related to the specific transaction are included in cost of revenues. Participation in certain Requests for Proposals (“RFPs”) requires the use of these agents, and the related commissions are therefore considered directly attributable to the associated sales. All other sales-related expenses, including costs incurred in connection with unsuccessful bids, are recorded within selling, general and administrative expenses. As a component of the cost of revenues, commission costs incurred in the three month period ended April 30, 2026, and 2025 were $179,074 and $390,384, respectively. Commission costs in the six month period ended April 30, 2026, and 2025 were $480,512 and $635,893, respectively.