NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
NOTE 1 ORGANIZATION AND NATURE OF BUSINESS
Cannabis Suisse Corp. (Company) was incorporated in the State of Nevada on February 26, 2016 to start business operations concerned with production of paper made from elephant dung for making various stationery products and subsequent selling thereof.
On February 20, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State which changed the Companys name from Geant Corp. to Cannabis Suisse Corp.
Following the acquisition of Cannabis Suisse LLC (see Note 4), the Company has been engaged in the business of production of OTC (over-the-counter) products - for example CBD oils, as well as retail branded cigarettes, and other health related supplements.
On March 1, 2020, the management of the Company decided to cease operations involving elephant dung-made paper based in Sri Lanka and discontinue using the premises located at Kiranthidiya road 114, Beruwala, Sri Lanka, 12070.
Due to the COVID-19 pandemic, starting April 2020, the Company has been engaged in selling of face masks and disinfectants in order to extend the number of available products and provide the customers with an opportunity to comply with the safety measures.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, (GAAP). The Companys year-end is May 31. The consolidated financial statements include the accounts of the Company and its wholly - owned subsidiary Cannabis Suisse LLC. All significant inter-company accounts and transactions have been eliminated in consolidation.
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.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $5 and $84,181 of cash and cash equivalents as of May 31, 2020 and 2019, respectively.
Accounts Receivable
The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. No allowance for doubtful accounts was recorded for the years ended March 31, 2020 and 2019.
Inventories
Inventories are stated at the lower of cost or market. The Company had $58,061 and $76,329 in inventory as of May 31, 2020 and 2019, respectively. The Company also determines a reserve for excess and obsolete inventory based on historical usage, and projecting the year in which inventory will be consumed into a finished product. The valuation of inventories requires management to make significant assumptions, including the assessment of market value by inventory category considering historical usage, future usage and market demand for their products, and qualitative judgments related to discontinued, slow moving and obsolete inventories. The Company had $5,937 and $0 in reserve for excess and obsolete inventory as of May 31, 2020 and 2019, respectively.
The Company had $9,408 and $0 of work in progress (WIP) inventory as of May 31, 2020 and 2019, respectively. Cannabis plants in the growth process are recognized as a WIP inventory.
16
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
The following table sets out a breakdown of the inventory by classes as of May 31, 2020 and 2019:
|
|
|
| |
|
|
May 31, 2020
|
|
May 31, 2019
|
Raw materials
|
$
|
26,768
|
$
|
76,329
|
Finished goods
|
|
27,821
|
|
-
|
Work in Process inventory
|
|
9,408
|
|
-
|
Reserve for inventory
|
|
(5,936)
|
|
-
|
Total Inventory
|
$
|
58,061
|
$
|
76,329
|
Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the assets estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:
Equipment, Furniture and fixtures
5-10 years
Office machines, IT equipment
5-10 years
Leasehold Improvements
2-5 years
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to the statement of income as incurred, whereas significant renewals and betterments are capitalized.
Depreciation, Amortization, and Capitalization
The Company records depreciation and amortization when appropriate using the straight-line balance method over the estimated useful life of the assets. The Company estimates that the useful life of its equipment is five years and industrial water filter is seven years. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property's useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.
Impairment
Goodwill. Goodwill is not subject to amortization and is reviewed at least annually in the fourth quarter of each year. The impairment test consists of comparing a reporting units fair value to its carrying value. A significant amount of judgment is involved in determining if an indicator of goodwill impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; and the testing for recoverability of a significant asset group. Companies have the option to evaluate goodwill impairment based upon qualitative factors similar to the indicators described above. If it is determined that the estimated fair value of the reporting unit is more likely than not less than the carrying amount, including goodwill, a quantitative assessment is required. Otherwise, no further analysis is necessary.
Impairment of Long-Lived Assets. The Company evaluates the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Our evaluation is based on an assessment of potential indicators of impairment, such as an adverse change in the business climate that could affect the value of an asset, current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of an asset, and a current expectation that, more likely than not, an asset will be disposed of before the end of its previously estimated useful life. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
During the year ended May 31, 2020, the Company recognized an impairment of intangibles in the amount of $37,912.
Fair Value of Financial Instruments
Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
17
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
These tiers include:
| |
Level 1:
|
defined as observable inputs such as quoted prices in active markets;
|
Level 2:
|
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
|
Level 3:
|
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
|
The carrying value of the Companys cash, other current assets, accounts payable, accrued expenses and loan from shareholder approximates its fair value due to their short-term maturity.
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Update (ASU) 2014-09, Revenue from contracts with customers (Topic 606). Revenue is recognized when a customer obtains control of promised goods of services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the considerations that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probably that the entity will collect the consideration it is entitled in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards Board (FASB) ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Companys performance obligations are transferred to customers at a point in time, typically upon delivery.
Sales Concentration
A significant portion of the Companys revenue has been derived from three customers. For the year ended May 31, 2020 and 2019, the three largest customers accounted for 82% and 0%, respectively, of the Company's total revenue.
Cost of Goods Sold
Cost of goods sold includes direct costs of selling items, direct labor cost, rent expense and electricity.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated 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. As most of the leases do not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing 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. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
18
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Adjustments have been made to the Consolidated Statements of Cash Flows for fiscal year ended May 31, 2019, where advances due to related parties of $3,622 was reclassified as a long-term loan. These changes in classification do not affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.
Basic Income (Loss) Per Share
The Company computes income (loss) per share in accordance with ASC 260 Earnings per Share. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of May 31, 2020 and 2019, there were no potentially dilutive debt or equity instruments issued or outstanding.
Foreign Currency Translation
Assets and liabilities of the Companys Swiss subsidiary are translated from Swiss francs to United States dollars at exchange rates in effect at the balance sheet date. Income and expenses are translated at average exchange rates during the year. The translation adjustments for the reporting period are included in the Companys consolidated statements of operations and comprehensive loss, and the cumulative effect of these adjustments are reported in the Companys consolidated balance sheets as accumulated other comprehensive loss within Stockholders Equity.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02 (Topic 842) Leases. Under this new guidance, lessees (including lessees under leases classified as finance leases, which are to be classified based on criteria similar to that applicable to capital leases under current guidance, and leases classified as operating leases) will recognize a right-to-use asset and a lease liability on the balance sheet, initially measured as the present value of lease payments under the lease. Under current guidance, operating leases are not recognized on the balance sheet. However, the new guidance permits companies to make an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise). If this election is made, lease payments under short term leases will be recognized on a straight-line basis over the lease term. The Company adopted the new guidance effective June 1, 2019, using a modified retrospective method, under which it will record an immaterial cumulative adjustment to retained earnings rather than retrospectively adjusting prior periods. The Company also elected to adopt the policy not to apply the recognition provisions to short term leases.
With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the year ended May 31, 2020, that are of significance or potential significance to the Company
NOTE 3 GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. However, the Company had limited revenues and recurring losses as of May 31, 2020. 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. Therefore, there is substantial doubt about the Companys ability to continue as a going concern.
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. 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.
NOTE 4 - BUSINESS COMBINATION
On May 31, 2019, the President of the Company, Suneetha Nandana Silva Sudusinghe, on behalf of the Company, entered into a Stock Transfer Agreement with Cecillia Merige Jensen whereby the Company acquired through merger all of the issued and outstanding capital stock of Cannabis Suisse LLC, a Wyoming limited liability company (Subsidiary). In exchange, Ms. Jensen received 10,000,000 shares of common stock of the Company from Mr. Sudusinghe. Mr. Sudusinghes share ownership in the Company was reduced from 17,400,000 to 7,400,000 shares.
19
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
The Subsidiary owns all of the capital stock of Grow Factory GmbH, a limited liability company incorporated in Zurich, Switzerland on March 13, 2017. Its registered office space is located in Dietikon, Switzerland. Grow Factory is a fully licensed cannabis cultivation and distribution company in Switzerland for recreational tobacco products and medical CBD oils and commenced its operations in March 2018.
|
| |
Assets acquired:
|
|
|
Cash and Cash Equivalents
|
$
|
70,854
|
Accounts Receivable
|
|
2,528
|
Inventory
|
|
75,000
|
VAT Tax Receivable
|
|
368
|
Prepaid Expenses
|
|
10,467
|
Property and Equipment
|
|
85,050
|
Total identifiable assets acquired
|
|
244,267
|
Liabilities assumed:
|
|
|
Accounts Payable
|
|
(21,143)
|
Accrued Liabilities
|
|
(7,414)
|
Advances from Related Parties
|
|
(203,622)
|
Total identifiable liabilities assumed
|
|
(232,179)
|
Net identifiable assets acquired
|
|
12,088
|
Intangible Asset
|
|
37,912
|
Total purchase price allocation
|
$
|
50,000
|
The purchase price allocation was preliminary at May 31, 2019. During the year ended May 31, 2020, the Company completed a third-party valuation and finalized the assets acquired and liabilities assumed. The final amounts allocated to assets acquired and liabilities assumed resulted in a decrease in intangibles from May 31, 2019 in the amount of approximately $28,000.
Pro Forma Disclosures
The following unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited pro forma results of Grow Factory for the year ended May 31, 2019, respectively, as if this business combination had occurred as of June 1, 2018. The pro forma financial information set forth below reflects adjustments to the historical data of the Company to give effect to each of these acquisitions and the related equity issuances as if each had occurred on June 1, 2018. The pro forma information presented below does not purport to represent what the actual results of operations would have been for the periods indicated, nor does it purport to represent the Company's future results of operations.
The following table summarizes on an unaudited pro forma basis the Company's results of operations for the years ended May 31, 2019:
|
| |
|
2019
|
Net revenue
|
$
|
17,450
|
Net loss
|
|
(367,097)
|
Net loss per share - basic and diluted
|
$
|
(0.00)
|
Weighted average number of shares of common stock outstanding - basic and diluted
|
|
51,976,712
|
20
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
The calculations of pro forma net revenue and pro forma net loss give effect to the business combination for the period from June 1, 2018 until the respective closing dates for (i) the historical net revenue and net income (loss), as applicable, of the acquired businesses, and (ii) incremental depreciation and amortization for the business combination based on the fair value of property, equipment and identifiable intangible assets acquired and the related estimated useful lives.
NOTE 5 PROPERTY AND EQUIPMENT
|
|
|
| |
|
May 31, 2020
|
|
May 31, 2019
|
Equipment
|
$
|
70,998
|
$
|
58,778
|
Furniture and fixtures
|
|
42,684
|
|
31,881
|
Office machines, IT equipment
|
|
1,992
|
|
9,044
|
Leasehold improvements
|
|
8,354
|
|
8,354
|
Accumulated depreciation
|
|
(38,989)
|
|
(15,019)
|
Net property and equipment
|
$
|
85,039
|
$
|
93,038
|
For the years ended May 31, 2020 and 2019 the Company recognized depreciation expense in the amount of $20,071 and $5,503, respectively.
NOTE 6 COMMITMENTS AND CONTINGENCIES
On September 28, 2016, the Company entered into a rental agreement for office space beginning January 1, 2017 through January 1, 2018. The rental agreement was extended through March 1, 2020. The premises were used as a representative office for customers. For the years ended May 31, 2020 and 2019, $1,240 and $1,440 of rent expense was recorded, respectively.
On April 18, 2017, the Company signed a Rent office agreement, beginning on June 1, 2017 which will terminate on May 31, 2022. These premises will be used as a representative office for the customers of Grow Factory GmbH. The rent payment is $6,646 per month. For the year ended May 31, 2020, we have $82,186 of rent expense.
The Company implemented a new accounting policy according to the ASC 842, Leases, on June 1, 2019 on a modified retrospective basis and did not restate comparative periods. Under the new policy, the Company recognized approximately $146,243 lease liability as well as right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. Lease liabilities are measured at present value of the sum of remaining rental payments as of May 31, 2020, discounted at the incremental borrowing rate. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.
As of May 31, 2020 and 2019, the right-of use asset and lease liabilities are as follows:
|
|
|
|
|
| |
|
Year ended
|
|
|
May 31, 2020
|
|
May 31, 2019
|
|
|
|
|
|
|
Right-of-use asset operating leases
|
$
|
139,653
|
|
$
|
-
|
|
|
|
|
|
|
Lease Liabilities - Short-term
|
$
|
70,859
|
|
$
|
-
|
Lease Liabilities - Long-term
|
|
68,794
|
|
|
-
|
Total Lease Liabilities
|
$
|
139,653
|
|
$
|
-
|
21
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
Lease cost and other information
|
|
|
|
| |
|
Year ended
|
|
May 31, 2020
|
|
May 31, 2019
|
|
|
|
|
|
|
Operating lease cost
|
$
|
74,926
|
|
$
|
63,230
|
Weighted average remaining lease term - Operating leases (years)
|
|
2
|
|
|
-
|
Weighted average discount rate
|
|
3%
|
|
|
-
|
Required future principal payments under the Companys lease obligation are set forth below:
Year ending May 31
|
| |
2021
|
$
|
79,752
|
2022
|
|
79,752
|
Total
|
$
|
159,504
|
NOTE 7 - BANK INDEBTEDNESS
On March 26, 2020, due to COVID-19 the Company's Subsidiary, Cannabis Suisse LLC, entered into a loan agreement with a bank for CHF60,000. The loan carries an interest rate of 0.5% per year. The term of the loan is 5 years. The state acts as the guarantor for this loan. Accrued interest on this loan was $0 as of May 31, 2020.
NOTE 8 RELATED PARTY TRANSACTIONS
The Companys president has verbally agreed to provide interest free advances, due on demand, to the Company up to $100,000. As of May 31, 2020 and 2019, the Company has drawn $56,323 and $54,500, respectively, of advances. In addition, the Companys president has agreed to provide production space in Sri Lanka at no charge for the production of goods through December 2020. The Company has decided to discontinue using the mentioned office space since March 1, 2020.
The Company received $359,147 and $200,000 as advances from the Companys secretary, Cecillia Jensen,
as of May 31, 2020 and 2019, respectively. The advances are interest-free and due on demand.
The Company received $3,622 as a long-term loan as of May 31, 2020 and 2019. This loan is interest-free.
The Company's cash in the amount of $10,040 as of May 31, 2020, was held by the Company's Secretary. The balance is included in related party receivable on the consolidated balance sheets.
NOTE 9 COMMON STOCK
On January 23, 2019, the Company effected a forward split of the outstanding common stock on a one (1) for twenty (20) basis. All share figures have been retroactively restated to reflect the stock split.
On February 20, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State which increased the Companys authorized shares of common stock from 75,000,000 to 250,000,000.
Also, during the year ended May 31, 2019, the Company had 32,600,000 shares of common stock returned. On March 8, 2019, a total of 22,600,000 shares related to the cancellation of restricted shares were returned to reduce the directors percentage of shares. On May 31, 2019, 10,000,000 shares were returned to be issued for the acquisition of Cannabis Suisse LLC.
22
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
A total of 10,000,000 shares of restricted stock were issued in the name of Cecillia Merige Jensen in accordance with the material definitive agreement dated May 31, 2019. Suneetha Nandana Silva Sudusinghe, the President of the Company, on behalf of the Company entered into a Stock Transfer Agreement with Cecillia Merige Jensen. Following the terms of the Agreement, the Company acquired all the issued and outstanding capital stock of Cannabis Suisse LLC. In exchange, Ms. Jensen received 10,000,000 shares of common stock of the Company.
NOTE 10 REPORTABLE SEGMENTS
Reportable Segments
The Company follows segment reporting in accordance with ASC Topic 280, Segment Reporting. As a result of the business combination with Cannabis Suisse LLC in May 2019 as discussed in Note 4, the Company has changed its operating segments to consist of the Cannabis Suisse LLC segment and the Cannabis Suisse Corp segment. After the Cannabis Suisse LLC business combination, the Company's CEO began assessing performance and allocating resources based on the financial information of these two reporting segments.
The Cannabis Suisse Corp segment produces the paper made from elephant dung for making various stationery products and subsequent selling thereof. The Company ceased the mentioned operations on March 1, 2020. The Cannabis Suisse LLC segment is involved in cannabis cultivation and distribution in Switzerland of recreational tobacco products and medical CBD oils.
Net revenue by reporting segment for the years ended May 31, 2020 and 2019, is as follows:
|
|
|
| |
|
2020
|
|
2019
|
Cannabis Suisse Corp
|
$
|
1,066
|
$
|
7,530
|
Cannabis Suisse LLC
|
|
241,673
|
|
-
|
Total Revenue
|
$
|
242,739
|
$
|
7,530
|
Gross profit by reporting segment for the years ended May 31, 2020 and 2019, is as follows:
|
|
|
| |
|
2020
|
|
2019
|
Cannabis Suisse Corp
|
$
|
(263)
|
$
|
4,992
|
Cannabis Suisse LLC
|
|
(84,524)
|
|
-
|
Total Gross (Loss) Profit
|
$
|
(84,787)
|
$
|
4,992
|
Assets by reporting segment as of May 31, 2020 and 2019, is as follows:
|
|
|
| |
|
2020
|
|
2019
|
Cannabis Suisse Corp
|
$
|
7,069
|
$
|
24,441
|
Cannabis Suisse LLC
|
|
376,456
|
|
308,145
|
Total Assets
|
$
|
383,525
|
$
|
332,586
|
NOTE 11 INCOME TAXES
The Company adopted the provisions of uncertain tax positions as addressed in ASC 740-10-65-1. As a result of the implementation of ASC 740-10-65-1, the Company recognized no increase in the liability for unrecognized tax benefits.
23
CANNABIS SUISSE CORP.
(Formerly Geant Corp.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020 and 2019
The Company has no tax position at May 31, 2020 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company does not recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at May 31, 2020. The Companys utilization of any net operating loss carry forward may be unlikely as a result of its intended activities.
The valuation allowance at May 31, 2020 was $95,651. The net change in valuation allowance during the year ended May 31, 2020 was $81,737. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of May 31, 2020 and 2019. All tax years since inception remains open for examination only by taxing authorities of US Federal and state of Nevada.
The Company has a net operating loss carryforward for tax purposes totaling $455,482 at May 31, 2020, expiring through fiscal year 2036. There is a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership).
The components of the Companys deferred tax asset and reconciliation of income taxes computed at the new statutory rate of 21% to the income tax amount recorded as of May 31, 2020 and 2019 are as follows:
|
|
|
| |
|
|
May 31, 2020
|
|
May 31, 2019
|
Net operating loss carryforward
|
$
|
(455,482)
|
$
|
(66,254)
|
Effective tax rate
|
|
21 %
|
|
21 %
|
Deferred tax asset
|
|
95,651
|
|
13,914
|
Less: Valuation allowance
|
|
(95,651)
|
|
(13,914)
|
Net deferred asset
|
$
|
-
|
$
|
-
|
The change in the valuation allowance during the years ended May 31, 2020 and 2019 was $81,737 and $4,774, respectively.
|
|
|
| |
|
|
May 31, 2020
|
|
May 31, 2019
|
Federal income tax benefit attributed to:
|
|
|
|
|
Net operating loss from continuing operations
|
$
|
95,651
|
$
|
13,914
|
Valuation allowance
|
|
(95,651)
|
|
(13,914)
|
Net benefit
|
$
|
-
|
$
|
-
|
NOTE 12 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company did not have cash in excess of FDIC insured limit as of May 31, 2020 and 2019.
NOTE 13 SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855), Subsequent Events the Company has analyzed its operations subsequent to May 31, 2020 to the date these consolidated financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these consolidated financial statements.
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