NOTE 9 - RELATED-PARTY LEASES AND SUBLEASE ARRANGEMENTS

Lease of Premises at 10 N Newnan Street

In February 2023, the Company entered into a lease with 10 N Newnan LLC, an entity controlled by the Company’s CEO, for office space located at 10 N Newnan Street, Jacksonville, Florida 32202. The lease commenced on February 1, 2023 and had an initial term of 36 months.

In February 2024, the lease was extended for an additional two years through January 31, 2028. At the modification dates, the Company remeasured the ROU asset and lease liability to $297,229 using a 12% discount rate.

Following the extension, the landlord agreed to a discount in exchange for prepayment of the remaining lease obligation. In February 2024, the Company prepaid the lease by issuing a convertible promissory note. See note 8. The Company recorded prepaid rental interest of $78,476 in connection with the transaction.

As of August 31, 2026 and May 31, 2026, the ROU asset associated with this lease was $121,809 and $141,246, respectively, and prepaid rental interest was $11,254 and $15,298, respectively. Lease expense related to this property was $23,482 during the three months ended August 31, 2026, of which $21,931, was allocated to cost of sales for the portion of the property that was subleased.

Lease of Premises at 2652 Blanding Boulevard

In February 2023, the Company entered into a lease with 2600 Blanding Blvd., LLC, an entity controlled by the Company’s CEO, for the property located at 2652 Blanding Boulevard, Jacksonville, Florida 32202. The lease expired on January 31, 2026 and the related ROU asset was fully amortized. No monthly lease payments were made under the arrangement. As of August 31, 2026 and May 31, 2026, the Company had unpaid rent of $107,000 relating to the expired lease, which remained classified as an operating lease liability in default. No lease expense related to this property was recognized during the three months ended August 31, 2026.

Lease of Premises at 1268 Church Street

In January 2024, the Company entered into a lease with 1268 Church Street LLC, an entity controlled by the Company’s CEO, for the property located at 1268 Church Street, Jacksonville, Florida. 32202. The lease commenced on January 1, 2024 and had an initial term of 37 months.

At the lease commencement date, the Company recognized an ROU asset and lease liability of $104,472 using a discount rate of 12%. In February 2024, the lease was extended through December 31, 2028. At the modification date, the Company remeasured the ROU asset and lease liability at $148,735 using a 12% discount rate.

Following the extension, the landlord agreed to a discount in exchange for prepayment of the remaining lease obligation. The Company prepaid the lease by issuing a convertible promissory note. See note 8.  The Company also recorded prepaid rental interest of $48,001 in connections with the transaction.

As of August 31, 2026 and May 31, 2026, the ROU asset was $82,481 and $90,031, respectively, and prepaid rental interest was $12,495 and $15,121, respectively. Lease expense was $10,176 during the three months ended August 31, 2026.

Lease of Premises at 2502 Blanding Boulevard

In February 2024, the Company entered into a lease with 2600 Blanding Blvd., LLC, an entity controlled by the Company’s CEO, for the property located at 2502 Blanding Boulevard, Jacksonville, Florida 32210. The lease commenced on February 1, 2024 and has a term of 60 months through January 31, 2029.

At the lease commencement date, the Company recognized an ROU asset and lease liability of $176,213 using a discount rate of 12%. Also, in February 2024, the landlord agreed to a discount in exchange for prepayment of the remaining lease obligation, and the Company prepaid the lease by issuing a convertible promissory note. See Note 8. The Company also recorded prepaid rental interest of $58,973 in connection with the transaction.

As of August 31, 2026 and May 31, 2026, the ROU asset was $98,252 and $106,890, respectively, and prepaid rental interest was $15,421 and $18,542, respectively. Lease expense was approximately $11,759 during the three months ended August 31, 2026.

Sublease for Premises at 10 N Newnan Street

Effective March 1, 2026, the Company entered into a sublease agreement with RLSH, LLC, (an entity controlled by the Company’s CEO) for 2,900 square feet located on the front portion of the first floor of the Company’s leased property at 10 N Newnan Street, Jacksonville Florida. The 2,900 square feet subleased represents 93.4% of the 3,105 square feet covered by the primary lease.

The sublease provides for annual base rent of $84,000, payable in monthly installments of $7,000, plus additional costs and expenses incurred in connection with subleasing the premises. The sublease does not require a security deposit. The sublease is subordinate to the primary lease and will terminate if the primary lease is terminated before the scheduled expiration of the sublease. The sublease agreement provided for an initial term through August 31, 2026. Subsequent to August 31, 2026, the space is being leased on month-to-month basis to the same related party for the same $7,000 monthly installment.

The Company recognized related-party rental income of $21,000 and cost of rental revenue of $21,931 during the three months ended August 31, 2026.

Lease Expense

Total lease expense for the three months ended August 31, 2026 was $45,417, of which $21,931 was included in cost of rental revenue and $23,486 was included in general and administrative expenses. Total lease expense for the three months ended August 31, 2025 was $60,130 and was included in general and administrative expenses.

Balance-Sheet Presentation

The Company’s weighted average remaining lease term is 2.0 years and the weighted average discount rate is 12%. The following table summarizes the presentation of operating leases in the Company’s balance sheets.

As of August 31, 2026 and May 31, 2026, the Company had $107,000 of operating lease liabilities related to the expired 2652 Blanding Boulevard lease. The Company had no other outstanding operating lease liabilities associated with its active leases because the remaining contractual payments for those leases had previously been prepaid through the issuance of convertible promissory notes. The related ROU assets continue to be amortized over the remaining contractual lease terms.