Note 12 – Long-Term Debt

On November 24, 2025 the Company drew a note from a lender with a face amount of $5,000,000. The note bears interest at 18% per annum, payable monthly in advance, has a five-year term and matures in November 2030. Principal amortizes at $833,333 per month beginning with payment 55; scheduled principal maturities are $nil in each of the fiscal years ending May 31, 2027 through 2030 and $5,000,000 in the fiscal year ending May 31, 2031. Amortization of $6,738 of debt discount and issuance costs was recognized in interest expense for the three months ended August 31, 2026, leaving $112,302 unamortized at that date. Interest of $236,389 was paid in cash during the quarter and $(66,806) of interest prepaid at closing remains netted within convertible notes – interest payable.

The note is secured by a security interest in substantially all of the present and future assets of Karbon-X Corp., including a collection account into which specified receipts are deposited, and is supported by a limited-recourse personal guarantee from the Company’s Chief Executive Officer (Note 21). The loan agreement restricts the Company from granting other liens on its assets, subject to permitted exceptions. See Note 13 for the assets pledged as collateral.