NOTE I – OPERATING LEASE COMMITMENTS

The Company leases its office and warehouse space through 2030 from a corporation that is partly owned by officers/shareholders of the Company (“Related Company”). Annual minimum rental payments to the Related Company approximated $194,000 for the six months ended May 31, 2025, and increase at the rate of two per cent per annum throughout the lease term.

Pursuant to the lease, rent expense charged to operations differs from rent paid because of scheduled rent increases. Accordingly, the Company has recorded deferred rent. Rent expense is calculated by allocating to rental payments, including those attributable to scheduled rent increases, on a straight line basis, over the lease term.

The Company has a lease to rent office space and a warehouse in Hong Kong through June 2025. Annual minimum rental payments for this space are approximately $73,580.

The Company has a lease to rent additional warehouse space in Hong Kong through November 30, 2025. Annual minimum rental payments for this space are approximately $76,170.

The Company’s future minimum rental commitments at May 31, 2025 are as follows:

Twelve Months Ended May 31,

Net rental expense for the six months ended May 31, 2025 and May 31, 2024 were $219,035 and $234,522 respectively, of which $143,126 and $141,112 respectively, was paid to the Related Company.

The remaining weighted average lease term is 4.50 years at May 31, 2025. The weighted average discount rate is 5.25 % at May 31, 2025.