10-Q: Cannabis Suisse Reports Q2 Net Income Amid Zero Revenue

Cannabis Suisse Corp. reported a net income of $36,299 for the six months ended November 30, 2025, despite generating no revenue, while facing significant going concern doubts and material weaknesses in internal controls.

Summary

• Cannabis Suisse Corp. reported a net income of $36,299 for the six months ended November 30, 2025, a significant improvement from a net loss of $530,024 in the prior year, primarily due to the absence of a large debt settlement loss.
• The company generated no rental income for the three and six months ended November 30, 2025, following the termination of its only sublease on February 28, 2025.
• Operating expenses decreased to $159,515 for the six months ended November 30, 2025, from $167,436 in the prior year, mainly due to lower professional fees.
• The company continues to operate with a substantial accumulated deficit of $3,020,747 as of November 30, 2025, and a working capital deficit of $316,580.
• Cash in escrow decreased slightly to $2,625 as of November 30, 2025, from $2,850 as of May 31, 2025.
• The company's operations are entirely focused on real estate, with no involvement in the cannabis industry, despite its name.

Sentiment

Score: 2

Explanation: The company faces severe financial distress with zero revenue, a significant accumulated deficit, and a going concern warning. While net income was positive, it was due to the absence of a prior-year one-time loss, not operational improvement. Major internal control weaknesses and heavy reliance on related party funding indicate high risk and instability.

Positives

• Reported a net income of $36,299 for the six months ended November 30, 2025, compared to a net loss of $530,024 in the same period last year.
• Operating expenses decreased to $159,515 for the six months ended November 30, 2025, from $167,436 in the prior year.

Negatives

• Generated no revenue for the three and six months ended November 30, 2025, due to the termination of its only sublease.
• Has an accumulated deficit of $3,020,747 as of November 30, 2025.
• Maintains a working capital deficit of $316,580 as of November 30, 2025.
• Cash balance is critically low at $2,625 as of November 30, 2025.
• Disclosure controls and procedures were deemed not effective as of November 30, 2025.
• Identified material weaknesses in internal control over financial reporting, including an inadequate control environment, lack of appropriate internal controls, and insufficient information technology controls.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to limited revenues and significant accumulated deficit.
• Heavy dependence on additional investment capital and related party funding to cover operating expenses and continue operations.
• Material weaknesses in internal control over financial reporting increase the risk of material misstatements in financial statements not being prevented or detected.
• Lack of an adequate control environment and proper corporate governance, including no formal approval for related party transactions and a Board of Directors not independent of management.
• Absence of formal accounting policies and procedures, insufficient internal controls, and limited accounting resources with GAAP/SEC experience.
• Lack of formal procedures for data backup and off-site storage, posing a risk of data loss.

Future Outlook

Management anticipates that the company will be dependent on additional investment capital to fund operating expenses in the near future. The company intends 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 of achieving financial viability.

Management Comments

• "The Company has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time."
• "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."
• "We have no involvement in any aspect of the cannabis industry."

Industry Context

Cannabis Suisse Corp., despite its name, explicitly states it has no involvement in the cannabis industry and has focused solely on real estate operations since June 2022. The company's current state of zero revenue and heavy reliance on related-party funding for its real estate ventures suggests it is not actively competing or participating in broader real estate market trends. Its financial health is primarily driven by internal financing and cost management rather than market-driven revenue generation.

Comparison to Industry Standards

• The company's zero revenue generation for the current period is significantly below industry standards for operational real estate companies, which typically generate consistent rental or sales income.
• The substantial accumulated deficit of over $3 million and a working capital deficit indicate severe financial distress, far from the healthy liquidity and profitability seen in established real estate firms.
• The heavy reliance on related party funding for operational expenses and the explicit 'going concern' warning are red flags that would typically deter institutional investors in the real estate sector, which values stable cash flows and independent financing.
• The identified material weaknesses in internal controls and corporate governance are far below the standards expected of publicly traded companies, particularly those in the real estate sector where transparency and robust financial management are crucial for investor confidence.

Corporate Governance

Related Party Transactions

• The president, CEO, and sole director advanced $32,000 to the company during the six months ended November 30, 2025.
• Balances due to related parties were $51,400 as of November 30, 2025, up from $19,400 as of May 31, 2025.
• The company has convertible notes payable with related parties, including $85,000 to Scott McAlister (CEO), $135,000 to the CEO, $187,852 to 10 N Newnan, LLC (CEO-owned), $101,760 to 1268 Church Street, LLC (CEO-owned), and $186,089 to Scott McAlister (CEO).
• The company leases four properties from companies owned by the CEO (10 N Newnan LLC, 2600 Blanding Blvd., LLC, 1268 Church Street LLC, 2600 Blanding Blvd LLC).
• Leases were prepaid with convertible notes issued to CEO-owned entities, with significant premiums recognized.
• Accrued interest to related parties was $90,625 as of November 30, 2025.
• Subsequent to the reporting period, the CEO paid $7,500 to OTC Markets, $4,250 to the company's auditors, and advanced an additional $3,200 to the company on its behalf.

Stakeholder Impact

• **Shareholders:** Face significant dilution risk from convertible notes, potential loss of investment due to going concern issues, and lack of transparency/oversight due to weak corporate governance and internal controls. The Series A Preferred Stock held by the CEO carries 10 votes per common share, concentrating voting power.
• **Creditors:** Exposed to high risk given the company's limited cash, working capital deficit, and reliance on related party funding, which may not be sustainable.
• **Management/CEO:** Continues to provide critical financial support and holds significant control through preferred stock and related party debt, indicating a high level of personal involvement and risk.
• **Employees:** (Not explicitly mentioned, but implied) Potential job insecurity due to the company's unstable financial condition and going concern warning.

Next Steps

• Management intends to position the company to raise additional funds through capital markets.
• The company will continue to rely on related party funding in the near future.
• The company is evaluating the impact of ASU 2024-03 on its disclosures, with amendments effective for fiscal years beginning after December 15, 2026.

Key Dates

Recommendation

The company presents an extremely high-risk investment profile. It has zero revenue, a substantial accumulated deficit, and a clear 'going concern' warning, indicating severe financial instability. The reported net income is misleading, stemming from the absence of a prior-year one-time loss rather than operational success. Furthermore, the filing details significant material weaknesses in internal controls and corporate governance, including a lack of independent oversight and formal procedures, which undermine financial reliability and investor trust. The heavy reliance on related-party funding for survival, coupled with extensive related-party transactions, raises concerns about potential conflicts of interest and sustainability. Given these fundamental deficiencies and the absence of a viable business model, a strong sell recommendation is warranted.

Keywords

Real Estate, SEC Filing, Form 10-Q, Quarterly Report, Going Concern, Internal Controls, Related Party Transactions, Financial Performance, Cannabis Suisse Corp.