Note 5 – Right-of-Use Assets and Lease Liabilities

The Company leases real property from unrelated parties under leases that are classified as operating leases. The right-of-use assets for operating leases are included in the right-of-use assets section of the balance sheet, with the corresponding lease liability listed in the liabilities section. Lease expense is recognized on a straight-line basis over the lease term. Renewals and terminations are included in the calculation of right-of-use assets and lease liabilities when they are considered reasonably sure to be exercised. When the implicit rate is unknown, the incremental borrowing rate, based on the commencement date, is used in determining the present value of lease payments. During the Fiscal Year 2025, the company reduced its total office area lease and signed a one-year lease from an unrelated party. A lease term of 12 months or less qualifies as a short-term lease, and an exemption was elected.

The following amounts relate to right-of-use assets and lease liabilities presented in the balance sheets:

The Company reimburses related parties for an office space operating lease under a month-to-month arrangement, payable at the discretion of management. See Note 10.

The Company’s total operating lease expense was $65,301 and $86,730 during the years ended May 31, 2025, and May 31, 2024, respectively. See Note 10 for additional lease information.