Note 16 – Investments and Securities Receivable

On October 24, 2024, Karbon-X Corp. entered into a Carbon Credit Purchase Agreement with DEVS with an aggregate value of $1,137,197, under which the Company received DEVS common shares subject to a price floor under which DEVS is required to issue additional shares if gross proceeds from the sale of those shares are below $1,137,197. The Carbon Credit Forward Purchase Agreement with DEVS dated October 28, 2024 was terminated by a Mutual Termination Agreement effective May 29, 2026 and executed on July 7, 2026, and the related securities receivable and deferred revenue were derecognized at May 31, 2026, as described in Note 16 to the 2026 Form 10-K.

On June 24, 2026 the Company and DEVS entered into a Share Cancellation Addendum under which the 17,495 shares held by the Company were cancelled and 4,641,621 shares were issued in settlement of the remaining securities receivable of $1,128,863 under the Carbon Credit Purchase Agreement. The exchange settled the securities receivable in shares with no change in the aggregate carrying value of the position at that date and is presented as a non-cash investing activity. Also on June 24, 2026 the common shares of DEVS were delisted from the Nasdaq Stock Market and are now quoted on the OTC market. Following the exchange the Company holds 4,641,621 DEVS shares and no securities receivable remains; the shares are held by a subsidiary whose functional currency is the Canadian dollar and are measured at fair value through net income under ASC 321 at the quoted closing price on the last trading day of the period, translated at the closing exchange rate.

At August 31, 2026 the shares were measured at USD $0.1530 per share, or $710,168 in aggregate, and an unrealized loss of $427,029 on the position was recognized in the condensed consolidated statement of operations within gain (loss) on investment, which amounted to $(422,410) for the quarter after translation at the average rate for the period. Because the price floor was settled by the June 24, 2026 share issuance, the Company no longer has a contractual entitlement to additional shares and the full change in the fair value of the shares is recognized in earnings.