Item 1.01Item 1.01 - Entry into Material Agreement
Item 1.01 Entry into a Material Definitive
Agreement.
On September 24, 2026, a subsidiary of Zone Frontier
Inc., a Nevada corporation (the “Company” or “ZONE”), entered into a Ground Lease Agreement (the “Ground Lease”)
with GKC Operating, LLC, a Texas limited liability company (the “Landlord”), covering approximately 4,077 acres of land in
Potter County, Texas. The Ground Lease secures the land, water, and development rights for the Company’s West Texas data center
campus, which is being developed in partnership with HST Technologies, Inc., the AI infrastructure platform provider. The key terms of
the Ground Lease are summarized below.
Premises. The Ground Lease covers approximately 4,077 acres, of which the Company
may designate between 200 and 800 acres for data center facilities and related infrastructure (the “Data Center Site Area”)
and at least 1,800 acres for solar generation, battery storage, and supporting infrastructure (the “Solar Site Area”). The
remaining acreage is available for any lawful use, including power generation and related infrastructure, and, the Company believes, natural
gas-fired generation to supplement solar and battery storage and support expansion of the campus over time. The property surrounds the
existing Potter County 345 kV substation of Southwestern Public Service Company (an Xcel Energy company) in the Southwest Power Pool region.
Term. The Ground Lease has an initial term
of 30 years from the rent commencement date, with two 10-year extension options.
Rent. Base rent for the Data Center Site Area is $6,000 per acre per year,
and base rent for the Solar Site Area is $1,000 per acre per year. Base rent for each site area begins only upon the start of construction
on that area. The Ground Lease does not require the Company to begin construction by any particular date, and the decision whether and
when to begin construction on each site area rests solely with the Company, allowing the Company to secure tenants and financing before
rent begins. If construction has not begun on a site area within 48 months after the effective date, the Landlord’s remedy is to
terminate the Ground Lease and the purchase option as to that site area. Rent is subject to annual escalation based on a five-year rolling
average increase in the Consumer Price Index. The Ground Lease is structured as an absolute triple net lease.
Revenue Share. The Company will pay the
Landlord a revenue share equal to 0.5% of data center revenue, which will be eliminated in its entirety upon the exercise of the purchase
option described below.
Purchase Option. The Ground Lease grants the Company an option to purchase the Data
Center Site Area at a price of $100,000 per acre if exercised before the commercial operation date of on-site power generation, or $135,000
per acre if exercised on or after that date. The Company is not required to purchase any other portion of the property. Upon purchase,
the Ground Lease terminates as to the purchased acreage, rent and the revenue share abate as to that acreage, and the Ground Lease continues
as to the remaining acreage. The Company may also, on 30 days’ notice and subject to the minimum and maximum site area acreage requirements,
release any parcel or part of a parcel it doesn’t need, ending its obligations as to the released acreage.
Water Supply. The Ground Lease includes
a long-term water supply agreement, co-terminous with the lease term (including extensions), drawing on the water rights appurtenant to
the property.
Earnest Deposit. Under the Ground
Lease, the Company, upon recording of the Memorandum of the Lease in Potter County, will deposit with the title company $250,000
into an interest-bearing escrow account. The deposit will be credited against the purchase price if the purchase option is
exercised. It is fully refundable if the Company terminates before the end of the inspection period, except that 20% becomes
non-refundable if the Company extends the inspection period.
Conditions Precedent. The commencement of the Ground Lease is subject to conditions precedent
for the Company’s benefit, which only the Company may waive. These include receipt of acceptable title, utility commitments for
at least 200 MW of firm service, water supply commitments, an interconnection agreement, required governmental approvals, and the Company’s
satisfactory completion of diligence. The Company controls a one-year inspection period, which it may extend by one additional year. During
that period it may conduct feasibility, physical and environmental studies on the property. Before the inspection period ends, the Company
may terminate the Ground Lease in its sole and absolute discretion and receive a refund of its deposit, subject to the partial non-refundability
described above. If construction has not commenced on a site area within 48 months of the effective date, the Landlord may terminate the
Ground Lease and the purchase option with respect to that site area.
Guaranty. The Company has guaranteed its subsidiary’s obligations under
the Ground Lease. The guaranty covers only obligations the subsidiary actually owes under the Ground Lease. Those obligations are substantially
limited unless and until the conditions precedent are satisfied or waived by the Company and construction begins. In particular, the Ground
Lease does not commence until the conditions precedent are satisfied or waived by the Company, and no base rent accrues on a site area
until the Company begins construction there. Before the end of the inspection period, the Company may terminate the Ground Lease in its
sole discretion. The Company may also release any unneeded acreage on 30 days’ notice.
The foregoing description of the Ground Lease does not purport to be
complete and is qualified in its entirety by reference to the full text of such agreement. A copy of the Ground Lease will not be filed
as an exhibit to this Current Report on Form 8-K, but will instead be filed as exhibits to the Company’s Quarterly Report on Form
10-Q for the fiscal quarter in which such agreement was entered into, and will be incorporated herein by reference upon such filing.
Item 8.01Item 8.01 - Other Events
Item 8.01 Other Events.
On September 29, 2026, the Company issued a press
release announcing the execution of the Ground Lease. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to,
statements regarding the anticipated benefits, timing, and development of the Company’s West Texas data center campus, anticipated
capital commitments and construction timelines, the Company’s ability to secure tenants and obtain power, grid interconnection,
water, and other utility inputs on acceptable terms and timelines, the Company’s exercise of any purchase or extension options under
the Ground Lease, and the expected financial and operational results of the project. Forward-looking statements are based on current expectations
and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or
implied. Factors that could cause actual results to differ include, among others: the Company’s ability to secure tenants for the
Texas data center campus; the Company’s ability to obtain sufficient power, grid interconnection, water, permits, and other approvals
on acceptable terms and timelines; the adequacy, availability, and enforceability of the water rights appurtenant to the property; the
Company’s ability to satisfy its obligations under the Ground Lease and related agreements; risks related to the Company’s
ability to exercise the purchase option or extension options, including satisfaction of applicable conditions; construction, development,
and permitting risks; market conditions for data center capacity; tenant demand and credit risk; utility and interconnection delays; changes
in laws, regulations, or government policies; and other factors described in the Company’s filings with the Securities and Exchange
Commission. The Company undertakes no obligation to update or revise any forward-looking statements, except as required by law.
Item 9.01. Financial Statements and
Exhibits.
(d) Exhibits.
Exhibit Description
No.
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99.1 Press Release, dated September 29, 2026
104 Cover
Page Interactive Data File (embedded within the Inline XBRL document).