Target Group Inc 10-Q for FY2024 Q3

Target Group Inc. (CBDY)

10-Q 2024-11-07 For: 2024-09-30

Added on April 06, 2026

About this 10-Q

Target Group Inc filed this 10-Q on November 7, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $541.11K; down 48.3% from $1.05M a year earlier
Net loss: $528.95K; compared with a net loss of $356.81K a year earlier
Diluted EPS: -$0.00; compared with -$0.00 a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Delaware	46-3621499
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

20 Hempstead Drive Hamilton, Ontario, Canada	L8W 2E7
(Address of principal executive officers)	(Zip Code)

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

Title of each class		Trading symbol		Name of each exchange on which registered
N/A		N/A		N/A


PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Interim Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12

Item 4.	Controls and Procedures	12

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	13

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13

Item 3.	Defaults Upon Senior Securities	13

Item 4.	Mine Safety Disclosures	13

Item 5.	Other Information	13

Item 6.	Exhibits	14

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	F-1

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	F-2

Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	F-3

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)	F-7

Notes to Condensed Consolidated Interim Financial Statements (Unaudited)	F-8 - F-27


		September 30,	December 31,
		2024	2023
		$	$
		(unaudited)
ASSETS
Current assets
Cash		1,284,480	736,323
Restricted cash		8,520	8,696
Accounts receivable, net of allowance	Note 3	46,229	1,031,530
Inventory	Note 4	1,010,292	1,215,928
Prepaid asset		41,855	42,720
Convertible note receivable	Note 5	103,712	—
Interest receivable	Note 5	8,864	—
Other assets		—	55,268
Sales tax recoverable, net of allowance	Note 6	84,205	—
Other receivable	Note 10	3,704	3,781
Total current assets		2,591,861	3,094,246
Long term assets
Fixed assets	Note 7	4,686,306	5,430,260
Goodwill	Note 9	264,008	269,460
Operating lease right-of-use assets	Note 11	42,858	46,936
Total long term assets		4,993,172	5,746,656
Total assets		7,585,033	8,840,902

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities
Bank overdraft		506	506
Accounts payable and accrued liabilities		2,836,129	2,945,568
Deferred revenue	Note 1	42,226	43,098
Sales tax payable	Note 6	—	48,581
Payable to related parties, net	Note 10	10,461,829	11,415,557
Operating lease liability - Current portion	Note 11	142,943	127,478
Convertible promissory notes, net	Note 12	480	480
Derivative liability	Note 12	7,974	8,021
Total current liabilities		13,492,087	14,589,289

Long term liabilities
Operating lease liability - Non-current portion	Note 11	1,089,193	1,223,955
Warrant liability	Note 13	414	355
Total long term liabilities		1,089,607	1,224,310
Total liabilities		14,581,694	15,813,599

Stockholders’ deficiency
Preferred stock	Note 13	100	100
Common stock	Note 13	61,703	61,703
Shares to be issued	Note 13	175,439	175,439
Additional paid-in capital		24,985,697	24,985,697
Accumulated deficit		(31,162,802)	(31,107,348)
Accumulated comprehensive loss		(1,056,798)	(1,088,288)
Total stockholders’ deficiency		(6,996,661)	(6,972,697)
Total liabilities and stockholders’ deficiency		7,585,033	8,840,902
Contingencies and commitments	Note 15	—	—


		For the	For the	For the	For the
		three months ended	three months ended	nine months ended	nine months ended
		September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
		$	$	$	$

REVENUE		541,113	1,046,227	4,736,055	1,805,211
COST OF GOOD SOLD		(173,006)	(454,241)	(2,088,954)	(823,502)
Gross profit		368,107	591,986	2,647,101	981,709
OPERATING EXPENSES
Advisory and consultancy fee		40,730	31,779	183,244	47,885
Management services fee		75,831	78,352	263,365	233,867
Salaries and wages		—	—	—	(53,083)
Legal and professional fees		32,067	27,799	150,152	231,726
Depreciation expense		206,628	237,789	646,290	680,043
Operating lease expense	Note 11	56,286	119,729	165,896	137,039
Office and general		194,356	153,041	456,273	212,172
Travel expenses		(10)	—	7,352
Total operating expenses		605,888	648,489	1,872,572	1,489,649

OTHER EXPENSES (INCOME)
Change in fair value of derivative and warrant liability		(8,427)	8,988	14	10,314
Gain on settlement		50	—	(36,758)	(1,428,185)
Interest and bank charges		268,186	337,675	890,572	1,060,373
Exchange (income) loss		31,194	(50,995)	(40,351)	(201)
Interest income		(8,796)	—	(8,796)	—
Other income	Note 8	—	—	—	(16,782)
(Recovery) Allowance of sales tax recoverable		(3,338)	(7,868)	(11,558)	(7,868)
Share of income from joint venture	Note 8	—	—	—	(24,152)
Debt issuance cost	Note 10	12,300	12,509	36,860	37,266
Total other expense (income)		291,169	300,309	829,983	(369,235)

Net loss before income taxes		(528,950)	(356,812)	(55,454)	(138,705)
Income taxes		—	—	—	—
Net loss		(528,950)	(356,812)	(55,454)	(138,705)

Foreign currency translation adjustment		(71,160)	67,911	31,490	(157,070)
Comprehensive loss		(600,110)	(288,901)	(23,964)	(295,775)

Earnings per share – basic and diluted		(0.0009)	(0.0006)	(0.0001)	(0.0002)
Weighted average shares – basic and diluted		617,025,999	617,025,999	617,025,999	617,025,999


							Stock	Additional		Accumulated
	Preferred stock		Common stock		Shares to be issued		subscription	paid-in	Accumulated	comprehensive
	Shares	Amount	Shares	Amount	Shares	Amount	receivable	capital	deficit	loss	Total
	#	$	#	$	#	$	$	$	$	$	$
As at June 30, 2024	1,000,000	100	617,025,999	61,703	1,641,520	175,439	—	24,985,697	(30,633,852)	(985,638)	(6,396,551)

Net loss	—	—	—	—	—	—	—	—	(528,950)	—	(528,950)

Foreign currency translation	—	—	—	—	—	—	—	—	—	(71,160)	(71,160)

As at September 30, 2024	1,000,000	100	617,025,999	61,703	1,641,520	175,439	—	24,985,697	(31,162,802)	(1,056,798)	(6,996,661)


Furniture & office equipment	Straight-line	7 years
Machinery & equipment	Straight-line	3-5 years
Software	Straight-line	3 years
Leasehold improvements	Straight-line	Lease period


		As at
Product		September 30, 2024
		$
Finished goods		540,053
WIP (Flowers and plants)		470,239
		1,010,292


	Furniture &	Machinery &		Leasehold
	fixture	Equipment	Software	improvements	Total
	$	$	$	$	$
Cost	1,426,648	770,293	51,894	6,798,968	9,047,803
Accumulated depreciation	(714,737)	(760,502)	(44,257)	(2,842,001)	(4,361,497)
	711,911	9,791	7,637	3,956,967	4,686,306


Period ended	January 1 to April 27, 2023
	CAD	USD
Sales	1,068,799	791,285
Cost of goods sold	620,344	459,271
Gross profit	448,455	332,014
Operation expenses	383,358	283,819
Net income	65,097	48,195

Eligible recoverable expenses	1,437,054	1,060,833
Recoverable amount	1,437,054	1,060,833
Income on equity	32,549	24,098


		USD

Investment in JV		1,023,608
Receivable from JV		698,645
Payable to JV		(129,185)
		1,593,068

Cash received from Thrive		776,382
Net amount		816,686

Assets acquired:
Accounts receivable		163,244
Inventory		1,690,368
Fixed asset		534,816
		2,388,428

Net gain as per reconciliation		1,571,742


		$
Number of Common Stock		25,500,000
Market price on the date of issuance		0.067
Fair value of Common Stock		1,695,750


		$
Number of warrants		25,000,000
Fair value price per warrant		0.065
Fair value of warrant		1,623,092

Fair value of Common Stock		1,695,750
Fair value of warrant		1,623,092
Purchase consideration		3,318,842


2024	$	929,988
2025		6,791,020
Total		7,721,008
Current portion		(7,721,008)
Non-current portion	$	—


	Interest rate		Maximum loan		Outstanding loan
			CAD	USD	CAD	USD
Tranche 1	16.00	%	1,043,593	773,094	1,043,593	773,094
Tranche 2	43.26	%	1,592,787	1,179,937	1,592,787	1,179,937
Tranche 3	43.26	%	150,000	111,120	150,000	111,120
Tranche 4	43.26	%	—	—	—	—
Tranche 5	43.26	%	100,000	74,080	—	—
Total			2,886,380	2,138,231	2,786,380	2,064,151


2024	$	80,942
2025		327,007
2026		330,277
2027		333,580
Thereafter		791,764
Total lease payments		1,863,570
Less imputed interest		(631,434)
Present value of lease liabilities		1,232,136
Current portion		(142,943)
Non-current portion	$	1,089,193


	Derivative	Conversions /			Derivative
	liability as at	Redemption			liability as at
	December 31,	during the	Change due to	Fair value	September 30,
	2023	period	Issuances	adjustment	2024
	$	$	$	$	$
Note D	841	—	—	17	858
Note F	5,268	—	—	(48)	5,220
Note G	1,912	—	—	(16)	1,896
	8,021	—	—	(47)	7,974


	Shares	Amount		Description
				80,000 shares of common stock to be issued as compensation to advisers and consultants. These were recorded at fair value of $52,000, based on the market price of the Company’s stock on the date of issue.
Services	115,000	$	73,000	35,000 to be issued as settlement of the amount due for website development services amounting to $247,306. The fair value of the shares on the date of settlement was $21,000, resulting in a gain on settlement amounting to $226,306 during the year ended December 31, 2017.
Private placements	346,296	$	18,787	Consideration for private placements with the fair value based on cash proceeds received. Proper allocation between common stock and additional paid-in capital of the amount received will be completed in the period when the shares are issued.
Settlement of loans of CannaKorp	930,240	$	80,838	Refer to Note 10 for details.
Agreement with Serious Seeds	249,984		2,814	As consideration for intellectual property rights granted by Smit. The fair value is based on the market price of the Company’s stock on the date of issue as per the agreement.
	1,641,520	$	175,439


	During quarter	During quarter	During quarter
	ended	ended	ended
	September 30, 2024	June 30, 2024	March 31, 2024
Forfeiture rate	0%	0%	0%
Stock price	$0.002 to $0.003	$0.003 to $0.005	$0.002 to $0.003
Exercise price	$0.350	$0.350	$0.350
Volatility	476%	461%	433%
Risk free interest rate	3.66% to 4.60%	4.72% to 4.81%	4.39% to 4.55%
Expected life (years)	2	2	2
Expected dividend rate	0%	0%	0%
Fair value of warrants	$119	$173	$134


			Remaining	Remaining
			contractual life	contractual life
	Warrants	Warrants	term as at	term as at
	outstanding as at	outstanding as at	September 30,	December 31,
	September 30,	December 31,	2024	2023
	2024	2023	(years)	(years)
Serious Seeds	400,008	400,008	0.01 to 1.93	0.02 to 1.93
CLI	10,000,000	10,000,000	0.87	1.62
Total	10,400,008	10,400,008


Warrant liability as at December 31, 2023		355
Warrant liability for new issuance		426
Change in fair value		(367)
Warrant liability as at September 30, 2024		414


1st year:		2.00% of gross sales
2nd year:		2.25% of gross sales
3rd year:		2.50% of gross sales
4th year:		2.75% of gross sales
5th and following years:		3.00% of gross sales


		Incorporated by Reference
Exhibit No.	Description	Form	Exhibit	Filing Date
2.1	Asset Acquisition Agreement	8-K	2.1	12/11/14

2.1.1	Agreement and Plan of Share Exchange dated June 27, 2018 with Visava Inc.	8-K	2.1	07/03/18

2.1.2	Agreement and Plan of Share Exchange dated January 25, 2019 with CannaKorp Inc. and David Manly, as Stockholder Representative	8-K	2.1	01/29/19

3(i)(a)	Articles of Incorporation	10-12G	3.1	09/30/13

3(i)(a)	Amended Articles of Incorporation	10-K	3(i)(a)	03/18/22

3(i)(a)	Certificate of Amendment	8-K	3(i)	10/20/16

3(i)(a)	Certificate of Amendment	8-K	3(i)	04/12/17

3(i)(a)	Certificate of Amendment	8-K	3(i)	07/03/17

3(i)(a)	Certificate of Amendment	8-K	3(i)	11/01/17

3(i)(a)	Certificate of Amendment	8-K	3(i)	09/25/18

3.2	Bylaws	10-12G	3.2	09/30/13

4.1	Description of Capital Stock	10-K	4.1	04/14/20

10.1	Form of Securities Purchase Agreement-Blackbridge Capital Growth Fund, LLC	10-K	10.1	03/31/17

10.2	Form of Convertible Promissory Note	10-K	10.2	03/31/17

10.3	Form of Convertible Promissory Note	10-K	10.3	03/31/17

10.4	Form of Convertible Promissory Note	10-K	10.4	03/31/17

10.5	Form of Securities Purchase Agreement-Crown Bridge Partners, LLC	10-K	10.5	03/31/17

10.6	Form of Convertible Promissory Note	10-K	10.6	03/31/17

10.10	Securities Purchase Agreement-Power Up Lending Group Ltd.	10-K	10.10	03/28/18

10.11	Convertible Promissory Note-Power-Up Lending Group Ltd.	10-K	10.11	03/28/18

10.12	Securities Purchase Agreement-Power Up Lending Group Ltd.	10-K	10.12	03/28/18

10.13	Convertible Promissory Note-Power-Up Lending Group Ltd.	10-K	10.13	03/28/18

10.14	Securities Purchase Agreement-Power Up Lending Group Ltd. dated December 24, 2018	10-K	10.14	04/01/19


10.15	Convertible Promissory Note-Power-Up Lending Group Ltd. dated December 24, 2018	10-K	10.15	04/01/19

10.16	Distribution, Collaboration and Licensing Agreement dated December 6, 2018 between Target Group Inc, Canary Rx Inc., Serious Seeds B.V. and Simon Smit	10-K	10.16	04/01/19

10.17	Licensed Producer/Licensed Processor Sales Agency Agreement dated December 13, 2018 with Cannavolve Inc.	10-K	10.17	04/01/19

10.18	Exclusive License Agreement dated August 8, 2019 with cGreen Inc.	8-K	2.1	08/13/19

10.19	Purchase, Licensing and Purchase Agreement dated September 17, 2019 between CannaKorp, Inc. and Nabis Arizona LLC	8-K	10.1	09/19/19

10.20	Loan Agreement dated December 20, 2019 with Jerry Zarcone	10-K	10.20	04/14/20

10.21	First Amending Agreement dated March 11, 2020 with Jerry Zarcone	10-Q	10.21	06/05/20

10.22	Second Amending Agreement dated April 30, 2020 with Jerry Zarcone	10-Q	10.22	08/10/20

10.23	Third Amending Agreement dated May 15, 2020 with Jerry Zarcone	10-Q	10.23	08/10/20

10.24	Promissory Note Between Target Group Inc. and Frank Zarcone	10-Q	10.24	08/10/20

10.25	Joint Venture Agreement between Canary Rx Inc. and 9258159 Canada, Inc. dated May 14, 2020	10-Q	10.25	08/10/20

10.26	Debt Purchase and Assignment Agreement dated June 15, 2020	8-K	10.1(i)	08/18/20

10.27	Amendment dated August 14, 2020 to Debt Purchase and Assignment Agreement	8-K	10.1(ii)	08/18/20

10.29	Fourth Amending Agreement dated June 12, 2021	10-Q	10.29	11/7/22

10.30	Fifth Amending Agreement dated February 16, 2022	10-Q	10.30	11/7/22

10.31	Sixth Amending Agreement dated October 18, 2022	10-Q	10.31	11/7/22

10.32	Seventh Amending Agreement dated February 16, 2023	10-Q	10.32	5/8/23

10.33	Eighth Amending Agreement dated March 28, 2023	10-Q	10.33	5/8/23

10.34	Seventh Amending Agreement dated February 16, 2023 (corrected)	10-Q	10.34	8/9/23

10.35	Ninth Amending Agreement dated November 7, 2023	10-Q	10.35	11/08/23

10.36	Tenth Amending Agreement dated August 16, 2024

31.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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Exhibit 104		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

	TARGET GROUP INC.

Dated: November 7, 2024	By:	/s/ Anthony Zarcone
		Chief Executive Officer, and Director

Dated: November 7, 2024	By:	/s/ Barry Alan Katzman
		Director

Dated: November 7, 2024	By:	/s/ Saul Niddam
		Director


JERRY ZARCONE

	(hereinafter referred to as “Jerry”)

		- and –

TARGET GROUP INC.

	(hereinafter referred to as “TGI”)

		- and –

CANARY RX INC.

	(hereinafter referred to as “Canary”)

		- and –

VISAVA INC.

	(hereinafter referred to as “Visava”)

		- and –

CANNAKORP INC.

	(hereinafter referred to as “Cannakorp”, which together with Visava and Canary shall be collectively referred to as the “Subsidiaries”)


SIGNED IN THE PRESENCE OF	)
	)
	)
	)
Witness	)	JERRY ZARCONE


		TARGET GROUP INC.
		Per:


		Name:	Saul Niddam
		Position:	Director


		Name:	Frank Monte
		Position:	Director


		Name:	Anthony Zarcone
		Position:	Director


		Name:	Barry Katzman
		Position:	Director
		We have authority to bind the Corporation

		CANARY RX INC.
		Per:


		Name:	Anthony Zarcone
		Position:	President& CEO
		I have authority to bind the Corporation

		VISAVA INC.
		Per:


		Name:	Anthony Zarcone
		Position:	President & CEO
		I have authority to bind the Corporation


Dated: November 7, 2024	/s/ Anthony Zarcone
	Chief Executive Officer


Dated: November 7, 2024	/s/ Anthony Zarcone
	Principal Financial Officer