NOTE 13 – Long-Term Debt

As part of the acquisition of FSA on April 9, 2025, the Company assumed an SBA loan originally issued to FSA on December 4, 2020, with an initial principal amount of $50,500, bearing interest at 3.75% per annum. On October 4, 2021, FSA received a modification to the loan, which increased the principal amount to $199,100. The loan requires monthly payments of principal and interest of $995 and matures on December 4, 2050.

In accordance with ASC 805 – Business Combinations, the assumed loan was recognized at its acquisition-date fair value of $98,920, which reflects a market-based effective interest rate of approximately 12.03% per annum over the remaining term of 299 months. The difference between the face value of the debt and the fair value at the acquisition date was included in the allocation of purchase consideration and is reflected in goodwill.

The loan is measured at amortized cost subsequent to the acquisition date, and interest expense is recognized using the effective interest method based on the fair value of the liability at the acquisition date. The following table summarizes the loan terms as of the acquisition date:

As of  August 31, 2026, the balance of the loan was $97,804.