Rent Revenue Recognition

The Company recognizes rent revenue from the lease of its sub-leased properties in accordance with ASC 842, Leases. The sub-lease is categorized as an operating lease according to ASC criteria for the lease definitions. Rent revenue is recognized on a straight-line basis over the lease term, reflecting the pattern of the economic benefits derived from the lease.

The Company’s leases generally have fixed rental payments over the lease term, with occasional escalations based on predetermined factors. Rent revenue is recognized monthly as the lessor fulfills its obligations under the lease agreement.

Any lease incentives or concessions provided to lessees, such as rent-free periods or tenant improvement allowances, are recognized as a reduction of rent revenue over the lease term.

The Company’s previous sublease arrangement with a third party was terminated on February 28, 2025. Effective March 1, 2026, the Company began a new sublease arrangement with a related party and recognized rental income for March, April and May 2026.

For the years ended May 31, 2026 and 2025, the Company recognized rental income of $21,000 and $22,500, respectively.