7. Lease Commitments

The Company rents its office under an operating lease which requires it to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The lease effective during the quarter was signed in June of 2018, effective October 1, 2018, expiring on March 31, 2024.  On February 15, 2024, a lease amendment was signed, effective April 1, 2024 for a 6-year period, expiring March 31, 2030, with an option to renew for a 5-year period.  The amendment continues to require the Company to pay base rent, real estate taxes, insurance and general repairs and maintenance.  The amendment includes a ten-month rent abatement over the lease term, specifically defined in the agreement, and tenant allowance in the amount of $158,940. The tenant allowance is to be applied evenly to the 62 months that were not abated. The renewal option has not been included in the measurement of the lease liability. 

Monthly rent expense is recognized on a straight-line basis over the term of the lease. At May 31, 2026 the weighted average remaining lease term was 46 months. The lease amendment is reflected in the balance of the Lease Liability on the balance sheet at the present value of the lease payments using an 8.50% discount rate. The discount rate was considered to be an estimate of the Company’s incremental borrowing rate.

Gross future minimum annual rental commitments as of May 31, 2026 are as follows:

* The obligation as presented, represents payments due between May 31, 2026 and the fiscal year end of November 30, 2026, which represents a partial year.