Other Assets, Maintenance Agreement and Consideration Payable to a Customer |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Assets, Maintenance Agreement and Consideration Payable to a Customer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Assets, Maintenance Agreement and Consideration Payable to a Customer | Note 7 – Other Assets, Maintenance Agreement and Consideration Payable to a Customer
On January 8, 2026, the Company entered into a Maintenance Agreement with an institutional lender that also holds convertible notes of the Company (the “Lender”) to provide property maintenance and related services at a commercial facility in Corsicana, Texas through October 2035. As consideration for the Lender’s execution of the agreement, the Company issued the Lender a convertible promissory note with an original principal amount of $1,682,000 and received no cash proceeds (Note 11). The Company accounts for the $1,682,000 as consideration payable to a customer and a reduction of the transaction price under ASC 606-10-32-25 and 32-27, recognized as the related fees are earned.
Monthly fees earned under the agreement are applied against the outstanding balances of the Lender’s Master Note tranches rather than settled in cash. Fees earned during the three months ended August 31, 2026 were $36,859, representing three months of variable fees, and were offset in full by the release of the consideration payable to the customer, so that net revenue recognized under the agreement for the quarter was $nil. At August 31, 2026 the unamortized consideration payable to the customer was $1,583,710 (May 31, 2026: $1,620,569), of which $147,434 is presented within other current assets and $1,436,276 within other assets. Consideration under the agreement is entirely variable and is estimated using the expected value method, constrained to the amount for which a significant revenue reversal is not probable; the recoverability assessment described in Note 7 to the 2026 Form 10-K was updated at August 31, 2026 and no impairment was recognized.
Other assets consisted of the following:
The current portion of the consideration payable to a customer, $147,434, is presented within other current assets, which total $153,168 (May 31, 2026: $155,322). |
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