LEASES

9 Months Ended

Nov. 30, 2025

Note 5 – LEASES

We have both lessee and lessor arrangements. Our lessee arrangements include seven rental agreements where we have the exclusive use of dedicated office space in San Diego, California, Ogden, Utah, Seattle, Washington, a warehouse space in Joplin, Missouri and three leases for office and warehouse space locally in Tulsa, Oklahoma, all of which qualify as operating leases under ASC 842. Our lessor arrangements include one rental agreement for warehouse and office space in Tulsa, Oklahoma, and qualify as operating leases under ASC 842.

In connection with the sale of the Hilti Complex, the Company leased back a portion of the Complex for office and warehouse space. The term of the lease is 10 years, and the initial lease rate is $8.00 per square foot, with 2.5% annual escalations. The Company also has two five-year renewal and extension options with 2.5% increases annually in the base rental rate of the preceding year. The Lease also includes triple-net terms, where the Company and other tenants will be responsible for utilities, insurance, property taxes, and regular maintenance.

Operating Leases – Lessee

We recognize an operating lease liability on the balance sheets for each lease based on the present value of remaining minimum fixed rental payments (which includes payments under any renewal option that we are reasonably certain to exercise), using a discount rate that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term. Expected payments in the next twelve months are classified as current operating lease liabilities. Payments in excess of twelve months are classified as long-term operating lease liabilities. We also recognize an operating lease right-of-use asset on the balance sheets, valued at the lease liability and adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The operating lease liability and right-of-use assets are reduced over the term of the lease as payments are made and the assets are used.

	November 30, 2025			February 28, 2025
Operating lease assets:
Right-of-use assets	$	6,945,000		$	1,108,100

Operating lease liabilities:
Current lease liabilities	$	1,532,800		$	697,000
Long-term lease liabilities	$	5,412,200		$	411,100

Weighted-average remaining lease term (months)		109.6			18.4
Weighted-average discount rate		6.34	%		4.89	%

Minimum fixed rental payments are recognized on a straight-line basis over the life of the lease as costs and expenses in our statements of operations. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Fixed lease costs	$	288,800	$	224,600	$	630,200	$	604,100

Future minimum rental payments under operating leases with initial terms greater than one year as of November 30, 2025, are as follows:

Years ending February 28,
2026	$	388,200
2027		1,311,500
2028		884,500
2029		906,600
2030		929,200
Thereafter		5,718,900
Total future minimum rental payments		10,138,900
Less: imputed interest		(3,193,900	)
Total operating lease liabilities	$	6,945,000

The following table provides further information about our operating leases reported in our condensed financial statements:

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Operating cash outflows – operating leases	$	288,800	$	224,600	$	630,200	$	604,100

	November 30, 2025		November 30, 2024
NONCASH TRANSACTIONS
Lease assets obtained in exchange for new lease liabilities	$	6,338,900	$	282,800

The Company assesses its leases to determine whether it is reasonably certain that these renewal options will be exercised. In general, most of the office space outside of Tulsa, Oklahoma is associated with remote employees. Their continued employment determines the need for this space. Much of the warehouse space outside of the Hilti Complex is used to store non-current inventory. As the Company sells down excess inventory, less outside space will be needed, and any renewals will be for less space. The Company also considered the renewal options for the operating lease at the Hilti Complex and is not reasonably certain to exercise the renewal options. Accordingly, the renewal options are not included in the calculation of its right-of-use assets and lease liabilities, as the Company does not believe that it is reasonably certain that these renewal options will be exercised.

Operating Leases – Lessor

The Company subleases some office and warehouse space in one of its leased facilities.

Future minimum payments receivable under operating leases with terms greater than one year are estimated as follows:

Years ending February 28 (29),
2026	$	26,300
2027		52,700
Total	$	79,000

The cost of the leased space was approximately $0 and $16,333,900 as of November 30, 2025, and February 28, 2025, respectively. The accumulated depreciation associated with the leased assets was $0 and $3,906,700 as of November 30, 2025, and February 28, 2025, respectively. During the third quarter of fiscal 2024, the Company announced its plans to sell the Hilti Complex and reclassified the land and buildings from property, plant and equipment to assets held for sale and discontinued depreciating the property. The leased space was included in this reclassification. During the third quarter of fiscal 2026, the Company completed the sale and leaseback of the Hilti Complex.