10-K: Cannabis Suisse Corp. Faces Going Concern, Deepening Losses

Cannabis Suisse Corp. faces significant financial challenges with a substantial net loss and a going concern opinion, despite exiting the cannabis industry.

Summary

• Reported a net loss of $456,142 for the fiscal year ended May 31, 2025, a decrease from $1,186,613 in the prior year.
• Revenue from renting decreased to $22,500 in FY2025 from $30,000 in FY2024, primarily due to the termination of a sublease in February 2025.
• Operating expenses increased to $288,445 in FY2025 from $256,870 in FY2024, driven by higher rental expenses from additional leases.
• Cash on hand was $2,850 as of May 31, 2025, down from $28,562 in the previous year.
• The company has a working capital deficit of $218,679 as of May 31, 2025.
• An independent auditor issued a going concern opinion, indicating substantial doubt about the company's ability to continue operations for the next twelve months without additional capital.
• The company has no employees, and its sole officer (CEO/CFO) works on a part-time consultant basis.
• Operations are limited to subleasing a portion of a commercial building, leased from a company controlled by the CEO.
• The CEO holds a majority of the voting stock and convertible notes that could convert into 125,157,612 common shares.
• Material weaknesses in internal control over financial reporting were identified, including an inadequate control environment, lack of formal accounting policies, and insufficient IT controls.

Sentiment

Score: 1

Explanation: The company faces severe financial distress, evidenced by recurring losses, a critical cash shortage, a worsening working capital deficit, and a going concern opinion. Operational limitations, heavy reliance on related-party funding, and significant internal control weaknesses further compound the negative outlook. The potential for massive dilution from convertible notes held by the CEO adds to the risk for existing shareholders.

Positives

• Net loss decreased to $456,142 in FY2025 from $1,186,613 in FY2024.
• Gross profit improved to $432 in FY2025 from a gross loss of $67 in FY2024.
• Other expenses significantly decreased to $(168,129) in FY2025 from $(929,676) in FY2024, largely due to a lower loss on settlement of debt.

Negatives

• Issued a going concern opinion by independent auditors, indicating substantial doubt about the company's ability to continue as an ongoing enterprise.
• Cash balance is critically low at $2,850 as of May 31, 2025.
• Working capital deficit worsened to $218,679 as of May 31, 2025, from $184,547 in the prior year.
• Revenue decreased by 25% to $22,500 in FY2025 due to the termination of a sublease.
• Operating expenses increased by 12.3% to $288,445 in FY2025.
• The company has no employees and limited management, relying on a part-time CEO/CFO.
• Significant related party transactions, including leases and convertible notes with the CEO or his controlled entities, raise corporate governance concerns.
• The CEO holds a majority of voting stock and convertible notes, giving him control over company affairs.
• The company's stock is a "penny stock," making it difficult for investors to dispose of securities and for the company to raise capital.
• Management concluded that internal control over financial reporting was not effective as of May 31, 2025, due to material weaknesses.

Risks

• Limited Operations: Current business consists solely of subleasing a portion of a building leased from a CEO-controlled company, with no assurance of sufficient revenue to cover costs.
• Lack of Operating Funds-Going Concern: No bank account, reliance on CEO's escrow account and limited revenue, leading to substantial doubt about the company's ability to continue as an ongoing enterprise.
• Limited Management: No employees, with the CEO also serving as CFO on a part-time basis, adversely affecting business development and growth.
• Voting Control by One Stockholder: The sole Director and CEO holds a majority of voting stock, controlling key business decisions and potentially diluting other shareholders through convertible notes.
• Penny Stock Considerations: Securities are subject to penny stock rules, limiting broker-dealer participation, increasing price volatility, and making it difficult to dispose of securities or obtain future capital.
• Cybersecurity Risk: While currently deemed low due to limited operations, reliance on third-party service providers for professional services could expose the company to indirect risks.
• Related Party Dependence: Heavy reliance on the CEO and his affiliated entities for leases, funding, and debt arrangements creates potential conflicts of interest and financial dependence.

Future Outlook

Management anticipates that the company will be dependent on additional investment capital to fund operating expenses for the near future. The company intends to position itself to raise additional funds through capital markets and will rely on related party funding in the interim. There are no assurances of success in these endeavors or becoming financially viable.

Management Comments

• We currently do not have any employees. Our sole officer serves as a consultant to the Company on a part-time basis.
• We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.
• Any forward-looking statements represent managements best judgment as to what may occur in the future.
• Our sources for cash at this time are investments by others, loans and advances from our CEO who is our sole director, and very limited revenue from renting. We must raise cash to implement our plan and stay in business.
• Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses.
• The Company intends to position itself so that it will be able to raise additional funds through the capital markets and will rely on related party funding in the meantime.
• In light of managements efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
• Management has concluded that the Company did not maintain effective internal control over financial reporting as of May 31, 2025.

Industry Context

The company has completely exited the cannabis industry since June 2022 and now operates solely in commercial real estate rental, a significant shift from its original namesake. Its current operations are extremely limited, consisting of subleasing a single property, which places it far outside typical industry trends for either the cannabis or diversified real estate sectors. The reliance on related-party transactions and lack of independent operations suggest a highly niche and internally-focused business model, rather than one competing broadly in the market.

Comparison to Industry Standards

• The company's limited operations and heavy reliance on related-party transactions make direct comparisons to established real estate or former cannabis industry benchmarks difficult.
• Its lack of employees, minimal revenue, and persistent going concern warning are significantly below the operational and financial health standards of publicly traded companies in any industry.
• The identified material weaknesses in internal controls and corporate governance fall short of best practices for public companies, regardless of size or industry.

Management Changes

Corporate Governance

Related Party Transactions

• Leases four real estate properties from companies controlled by the CEO.
• CEO advanced $34,400 to the company and received $15,000 in repayments during FY2025.
• In June 2024, the company issued a $186,089 convertible note to CEO Scott McAlister to pay off $69,550 in unpaid rent, $83,159 in advances, and $33,380 in unpaid interest owed to him or his affiliated entities.
• CEO advanced $76,500 and received $22,500 in repayments during FY2024.
• Convertible note of $85,000 from Alain Parrik assigned to Okie LLC, then to Scott McAlister, due on demand with 0% interest.
• Convertible promissory note of $135,000 issued to the CEO for advanced funds, with a 12% interest rate and $0.04 conversion price.
• Convertible promissory note of $187,852 issued to 10 N Newnan, LLC (CEO-owned) for prepayment of a lease, with a 10% interest rate and $0.005 conversion price.
• Convertible promissory note of $101,760 issued to 1268 Church Street, LLC (CEO-owned) for prepayment of a lease, with a 10% interest rate and $0.005 conversion price.
• Convertible promissory note of $117,593 issued to 2600 Blanding Blvd., LLC (CEO-owned) for prepayment of a lease, converted to 23,976,000 common shares in May 2024.
• CEO paid $20,000 for 2,000,000 shares of common stock in September 2023.
• 5,000,000 shares of Series A Preferred Stock issued to the CEO in July 2024, replacing previously deficiently issued preferred stock.

Stakeholder Impact

• Shareholders: Face significant dilution risk from convertible notes held by the CEO (125,157,612 potential shares). Existing common stock holders have limited voting power due to CEO's majority control. The penny stock status and lack of liquidity make it difficult to trade. The going concern warning indicates a high risk of capital loss.
• Creditors: The company's precarious financial position and reliance on CEO funding pose risks to any non-related party creditors. Related-party creditors (CEO/affiliated entities) have significant control and preferential terms through convertible notes.
• Employees: Currently none, so no direct impact.
• Customers (Sublessees): The termination of the primary sublease indicates instability in the company's revenue generation from its limited operations.

Next Steps

• Raise additional capital through investments or loans.
• Implement a plan to sustainably increase business operations.
• Address material weaknesses in internal control over financial reporting.
• Improve corporate governance, including establishing independent oversight and formal policies.

Key Dates

Recommendation

The company presents an extremely high-risk profile with a clear 'going concern' warning from its auditors, indicating substantial doubt about its ability to continue operations. It has minimal cash, a worsening working capital deficit, and relies heavily on related-party funding, which introduces significant conflicts of interest and governance issues. Revenue is declining, and operating expenses are increasing, leading to persistent net losses. The CEO's majority control, coupled with convertible notes that could lead to massive dilution, further undermines minority shareholder value. Material weaknesses in internal controls highlight severe operational and financial reporting deficiencies. Given these fundamental and systemic issues, the stock is highly speculative and carries an exceptionally high risk of capital loss.

Keywords

Real Estate Rental, Commercial Property, SEC Filing, 10-K, Going Concern, Financial Performance, Net Loss, Working Capital Deficit, Related Party Transactions, Corporate Governance, Penny Stock, Internal Controls, Scott McAlister, Jacksonville FL, Convertible Notes