Annual Report for Fiscal Year Ending 05-31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Background

Since June 2022, the Company has focused its business activities on real estate operations and has had no involvement in any aspect of the cannabis industry.

In February 2023, the Company leased two properties from entities controlled by its Chief Executive Officer. The Company subleased a portion of one of these properties to a third party for monthly rent of $2,500, or $30,000 annually. Effective March 2024, the sublease continued on a month-to-month basis at the same monthly rental rate. The sublease was terminated on February 28, 2025.

In February 2024, the Company leased two additional properties from entities controlled by its Chief Executive Officer for future expansion. Effective March 1, 2026, the Company began a new sublease arrangement with an entity controlled by the Chief Executive Officer and recognized rental income of $21,000 during the year ended May 31, 2026.

The following discussion should be read in conjunction with the Company's audited financial statements and the related notes appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that reflect management's plans, estimates and beliefs. Actual results could differ materially from those discussed in the forward-looking statements.

The Company's audited financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America.

Results of Operations for the years ended May 31, 2026 and 2025

Revenue and Cost of Rental Revenue

For the year ended May 31, 2026, the Company generated rental revenue from related parties of $21,000 and incurred cost of rental revenue of $21,931, resulting in a gross loss of $931.

For the year ended May 31, 2025, the Company generated rental revenue of $22,500 and incurred cost of rental revenue of $22,068, resulting in gross profit of $432.

Rental revenue decreased by $1,500, or approximately 7%, for the year ended May 31, 2026 compared with the prior year. The decrease was primarily attributable to the termination of the Company's prior sublease on February 28, 2025. During the year ended May 31, 2026, the Company recognized rental revenue for March, April and May 2026 under a new sublease arrangement with an entity controlled by the CEO, compared with nine months of rental revenue during the year ended May 31, 2025.

Cost of rental revenue decreased by $137, or approximately 1%. For the new sublease, cost of rental revenue was allocated based on the percentage of the primary leased premises that was subleased. The sublease covers approximately 2,900 square feet of the 3,105 square feet under the primary lease, or approximately 93.4%.

Operating Expenses

Total operating expenses for the year ended May 31, 2026, were $266,888, compared with $288,445 for the year ended May 31, 2025.

Operating expenses for the year ended May 31, 2026, consisted of professional fees of $51,970, depreciation expense of $4,244, and general and administrative expenses of $210,674.

Operating expenses for the year ended May 31, 2025 consisted of professional fees of $55,547, depreciation expense of $4,244, and general and administrative expenses of $228,654.

Total operating expenses decreased by $21,557, or approximately 7%, for the year ended May 31, 2026 compared with the prior year. The decrease was primarily attributable to a reduction in general and administrative expenses of $17,980 mainly related to a decrease in rent expense due to one of the Company's leases expiring in January of 2026

and a reduction in professional fees of $3,577 due to the Company incurring less accounting fees in the current year. Depreciation expense remained unchanged at $4,244 for both years.

Other Income (Expense)

Total other income was $390,558 for the year ended May 31, 2026, compared with total other expense of $168,129 for the year ended May 31, 2025.

For the year ended May 31, 2026, other income consisted of amortization of debt premium of $455,214, partially offset by interest expense of $64,656. The Company did not recognize any gain or loss on settlement of debt during the year ended May 31, 2026.

For the year ended May 31, 2025, other expense consisted of interest expense of $63,208 and a loss on settlement of debt of $551,677, partially offset by amortization of debt premium of $446,756.

The improvement in other income of $558,687 was primarily attributable to the absence of a loss on settlement of debt during the year ended May 31, 2026. Amortization of debt premium increased by $8,458, while interest expense increased by $1,448.

Net Income (Loss)

The Company reported net income of $122,739 for the year ended May 31, 2026, compared with a net loss of $456,142 for the year ended May 31, 2025.

The improvement of $578,881 was primarily due to the change from other expense in the prior year to other income in the current year, principally because no loss on settlement of debt was recognized during the year ended May 31, 2026.

Liquidity and Capital Resources and Cash Requirements

As of May 31, 2026, the Company had cash of $476, compared with $2,850 as of May 31, 2025. The Company had a working capital deficit of $512,212 as of May 31, 2026, compared with $218,679 as of May 31, 2025. The increase in the working capital deficit was primarily attributable to the reclassification of the $135,000 related-party convertible note from long-term to current liabilities, additional advances from related parties, increases in accrued interest and the continued use of the Company's current assets to fund operations. As of May 31, 2026, current liabilities included $107,000 of operating lease liabilities in default related to the expired 2652 Blanding Boulevard lease.

During the year ended May 31, 2026, the Company used $40,324 of cash in operating activities due to its net income of $122,739, plus depreciation and noncash lease expense and changes in operating assets and liabilities of $175,805, a decrease in prepaid expenses of $51,280, an increase in accounts payable and accrued interest payable to related parties of $410 and $64,656, respectively, offset by noncash amortization of debt premium of $455,214.

During the year ended May 31, 2025, the Company used $45,112 of cash in operating activities due to its net loss of $456,142plus its amortization of debt premium of $446,756; offset by depreciation expense of $4,244, lease cost, net of repayments of $176,285, loss on settlement of debt of $551,677, decrease in prepaid expenses of $63,900, and an increase in accounts payable and accrued interest payable to related parties of $3,472 and $58,208, respectively.

The Company had no cash flows from investing activities during the years ended May 31, 2026 and 2025.

During the year ended May 31, 2026, the Company generated $37,950 of cash from financing activities, which came from advances from related parties of $58,950, offset by repayments of related party advances of $21,000.

During the year ended May 31, 2025, the Company generated $19,400 of cash from financing activities, which came from advances from related parties of $34,400, offset by repayments of related party advances of $15,000.

As a result of these activities, cash decreased by $2,374 during the year ended May 31, 2026, from $2,850 as of May 31, 2025, to $476 as of May 31, 2026.

The Company has generated limited revenue, has a significant working capital deficit and has not established a stable source of revenue sufficient to fund its ongoing operating expenses and obligations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company expects to remain dependent on additional investment capital, borrowings and advances from its Chief Executive Officer and other related parties to fund its operations for the foreseeable future. Management intends to seek additional financing through the capital markets and other available sources and to continue relying on related-party funding in the interim. There can be no assurance that the Company will be able to obtain sufficient financing, increase its revenue or achieve sustained profitable operations. Failure to obtain additional funding could adversely affect the Company's ability to continue its operations.

Off-Balance Sheet Arrangements

As of May 31, 2026, the Company did not have any off-balance sheet arrangements, as defined by applicable SEC rules, that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Leases

The Company follows the accounting for leases under Accounting Standards Codification ("ASC") 842 Lease Accounting and determines if an arrangement is a lease or contains a lease at inception. Operating leases result in operating lease right-of-use ("ROU") assets and operating lease liabilities (short term and long term) being recorded on the Company's balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowings over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Rent Revenue Recognition

The Company recognizes rent revenue from the lease of its sub-leased properties in accordance with ASC 842, Leases. The sub-lease is categorized as an operating lease according to ASC criteria for the lease definitions. Rent revenue is recognized on a straight-line basis over the lease term, reflecting the pattern of the economic benefits derived from the lease.

The Company's leases generally have fixed rental payments over the lease term, with occasional escalations based on predetermined factors. Rent revenue is recognized monthly as the lessor fulfills its obligations under the lease agreement.

Any lease incentives or concessions provided to lessees, such as rent-free periods or tenant improvement allowances, are recognized as a reduction of rent revenue over the lease term.

For the years ended May 31, 2026, and 2025, the Company recognized rental income of $21,000 (from a related party) and $22,500 (from a third-party), respectively.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires public business entities to provide additional disclosures in the notes to the financial statements regarding certain expenses included in relevant expense captions. These disclosures include, among other items, purchases of inventory, employee compensation, depreciation, intangible asset amortization, selling expenses and a qualitative description of amounts not separately disaggregated.

In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the interim effective date for entities with non-calendar fiscal year-ends.

The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively to reporting periods after the effective date or retrospectively to any or all prior periods presented.

The Company is currently evaluating the effect that adopting these amendments will have on its financial statement disclosures. The amendments relate to disclosure requirements and are not expected to affect the Company's financial position, results of operations, or cash flows.

For the Company's May 31 fiscal year-end, mandatory adoption would first apply to the fiscal year beginning June 1, 2027, which is the year ending May 31, 2028. The related interim requirements would first apply during the fiscal year beginning June 1, 2028. This conclusion follows from the clarified effective-date guidance for non-calendar-year entities.