CONVERTIBLE NOTES PAYABLE

6 Months Ended

Nov. 30, 2021

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 8 – CONVERTIBLE NOTES PAYABLE

On December 1, 2020, Suneetha Nandana Silva Sudusinghe assigned SAPA Investments, LLC $10,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows SAPA Investments, LLC to convert the loan to common stock at a 70%-discount to the market price at the time of conversion after a period of lockup of 30 days.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

On December 4, 2020 Suneetha Nandana Silva Sudusinghe assigned SAPA Group, LLC $10,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows SAPA Group, LLC to convert the loan to common stock at a 70%-discount to the market price at the time of conversion after a period of lockup of 30 days.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

On December 7, 2020 Suneetha Nandana Silva Sudusinghe assigned GSS Group LLC $10,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows GSS Group LLC to convert the loan to common stock at a 70%-discount to the market price at the time of conversion after a period of lockup of 30 days.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

On December 10, 2020 Suneetha Nandana Silva Sudusinghe assigned Noi Tech LLC $10,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows Noi Tech LLC to convert the loan to common stock at a 70%-discount to the market price at the time of conversion after a period of lockup of 30 days.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

13

CANNABIS SUISSE CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On April 1, 2021 Suneetha Nandana Silva Sudusinghe assigned Serhii Cherniienko $60,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows Serhii Cherniienko to convert the loan to common stock at a fixed price of $0.01 per share. Beneficial conversion feature was $60,000 and debt discount was $19,672.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

On April 15, 2021 Suneetha Nandana Silva Sudusinghe assigned Noi Tech LLC $30,000 of his loan to Cannabis Suisse Corp. The Agreement contains a provision that allows Noi Tech LLC to convert the loan to common stock at a fixed price of $0.01 per share. Beneficial conversion feature was $30,000 and debt discount was $7,541.

The original loan to Cannabis Suisse Corp. from Mr. Sudusinghe was pursuant to Loan Agreement dated March 1, 2016 and Verbal Agreement dated April 2, 2019.

The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.

The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of November 30, 2021 and the amounts that were reflected in income related to derivatives for the period ended:

	November 30, 2021
The financings giving rise to derivative financial instruments	Indexed Shares		Fair Values
Embedded derivatives		433,674	$	5,315
Total		433,674	$	5,315

The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three and six months ended November 30, 2021:

The financings giving rise to derivative financial instruments and the gain (loss) effects:	For the Three Months Ended		For the Six Months Ended
	November 30, 2021		November 30, 2021
Embedded derivatives	$	1,395	$	1,841
Total	$	1,395	$	1,841

Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Monte Carlo Simulation Model valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Monte Carlo Simulation Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.

14

CANNABIS SUISSE CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Significant inputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:

	December 1, 2020
Quoted market price on valuation date	$0.0615
Effective contractual conversion rates	$0.044
Contractual term to maturity	0.25 years
Market volatility:
Volatility	299.09% - 479.35%
Risk-adjusted interest rate	0.13%

	December 4, 2020
Quoted market price on valuation date	$0.0722
Effective contractual conversion rates	$0.056
Contractual term to maturity	0.25 years
Market volatility:
Volatility	239.43% - 391.85%
Risk-adjusted interest rate	0.13%

	December 7, 2020
Quoted market price on valuation date	$0.06
Effective contractual conversion rates	$0.0455
Contractual term to maturity	0.25 years
Market volatility:
Volatility	281.02% - 381.87%
Risk-adjusted interest rate	0.12%

	December 10, 2020
Quoted market price on valuation date	$0.0551
Effective contractual conversion rates	$0.0419
Contractual term to maturity	0.25 years
Market volatility:
Volatility	196.85% - 382.99%
Risk-adjusted interest rate	0.12%

	November 30, 2021
Quoted market price on valuation date	$0.034
Effective contractual conversion rates	$0.0238
Contractual term to maturity	0.25 years
Market volatility:

Volatility	13.14% - 158.27%
Risk-adjusted interest rate	0.08%

15

CANNABIS SUISSE CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table reflects the issuances of embedded derivatives and changes in fair value inputs and assumptions related to the embedded derivatives as of November 30 and May 31, 2021.

	Period Ended		Period Ended
	November 30, 2021		May 31, 2021
Balances at beginning of period	$	25,228	$	-
Issuances:
Embedded derivatives		-		33,132
Conversions		(18,071)
Changes in fair value inputs and assumptions reflected in income		(1,841)		(7,904)
Balances at end of period	$	5,316	$	25,228