Target Group Inc 10-Q for FY2024 Q2

Target Group Inc. (CBDY)

10-Q 2024-08-08 For: 2024-06-30

Added on April 06, 2026

About this 10-Q

Target Group Inc filed this 10-Q on August 8, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

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

Revenue: $2.28M; up 199.7% from $758.98K a year earlier
Net income: $666.66K; down 30.8% from net income of $963.82K a year earlier
Diluted EPS: $0.00; down 31.3% from $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 June 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 June 30, 2024 (Unaudited) and December 31, 2023	F-1

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

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

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

Notes to Condensed Consolidated Interim Financial Statements (Unaudited)	F-8 - F-26


		June 30,	December 31,
		2024	2023
		$	$
		(unaudited)
ASSETS
Current assets
Cash		1,733,714	736,323
Restricted cash		8,402	8,696
Accounts receivable, net of allowance	Note 3	472,766	1,031,530
Inventory	Note 4	527,616	1,215,928
Prepaid asset		41,279	42,720
Other assets		—	55,268
Sales tax recoverable, net of allowance	Note 5	35,093	—
Other receivable	Note 9	3,653	3,781
Total current assets		2,822,523	3,094,246
Long term assets
Fixed assets	Note 6	4,810,856	5,430,260
Goodwill	Note 8	260,373	269,460
Operating lease right-of-use assets	Note 10	44,161	46,936
Total long term assets		5,115,390	5,746,656
Total assets		7,937,913	8,840,902

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities
Bank overdraft		506	506
Accounts payable and accrued liabilities		2,712,083	2,945,568
Deferred revenue	Note 1	41,644	43,098
Sales tax payable	Note 5	—	48,581
Payable to related parties, net	Note 9	10,316,351	11,415,557
Operating lease liability - Current portion	Note 10	134,811	127,478
Convertible promissory notes, net	Note 11	480	480
Derivative liability	Note 11	16,170	8,021
Total current liabilities		13,222,045	14,589,289

Long term liabilities
Operating lease liability - Non-current portion	Note 10	1,111,772	1,223,955
Warrant liability	Note 12	647	355
Total long term liabilities		1,112,419	1,224,310
Total liabilities		14,334,464	15,813,599

Stockholders’ deficiency
Preferred stock	Note 12	100	100
Common stock	Note 12	61,703	61,703
Shares to be issued	Note 12	175,439	175,439
Additional paid-in capital		24,985,697	24,985,697
Accumulated deficit		(30,633,852)	(31,107,348)
Accumulated comprehensive loss		(985,638)	(1,088,288)
Total stockholders’ deficiency		(6,396,551)	(6,972,697)
Total liabilities and stockholders’ deficiency		7,937,913	8,840,902
Contingencies and commitments	Note 14	—	—


		For the	For the	For the	For the
		three months ended	three months ended	six months ended	six months ended
		June 30, 2024	June 30, 2023	June 30, 2024	June 30, 2023
		$	$	$	$

REVENUE		2,275,011	758,984	4,194,942	758,984
COST OF GOOD SOLD		(806,184)	(369,261)	(1,915,948)	(369,261)
Gross profit		1,468,827	389,723	2,278,994	389,723
OPERATING EXPENSES
Advisory and consultancy fee		67,971	15,883	142,514	16,106
Management services fee		90,173	77,191	187,534	155,515
Salaries and wages		—	(53,083)	—	(53,083)
Legal and professional fees		40,426	145,987	118,085	203,927
Depreciation expense		203,691	229,568	439,662	442,254
Operating lease expense	Note 10	55,138	28,400	109,610	17,310
Office and general		110,325	56,502	261,917	59,131
Travel expenses		(53)	—	7,362	—
Total operating expenses		567,671	500,448	1,266,684	841,160

OTHER EXPENSES (INCOME)
Change in fair value of derivative and warrant liability		8,189	4,301	8,441	1,326
Gain on settlement		(36,808)	(1,428,185)	(36,808)	(1,428,185)
Interest and bank charges		273,060	369,092	622,386	722,698
Exchange (income) loss		(22,314)	48,519	(71,545)	50,794
Other income	Note 7	—	(12,507)	—	(16,782)
(Recovery) Allowance of sales tax recoverable		244	—	(8,220)	—
Share of income from joint venture	Note 7	—	(68,115)	—	(24,152)
Debt issuance cost	Note 9	12,121	12,354	24,560	24,757
Total other expense (income)		234,492	(1,074,541)	538,814	(669,544)

Net income before income taxes		666,664	963,816	473,496	218,107
Income taxes		—	—	—	—
Net income		666,664	963,816	473,496	218,107

Foreign currency translation adjustment		9,423	(222,962)	102,650	(224,981)
Comprehensive income (loss)		676,087	740,854	576,146	(6,874)

Earnings per share - basic and diluted		0.0011	0.0016	0.0008	0.0004
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 March 31, 2024	1,000,000	100	617,025,999	61,703	1,641,520	175,439	—	24,985,697	(31,300,516)	(995,061)	(7,072,638)

Net income	—	—	—	—	—	—	—	—	666,664	—	666,664

Foreign currency translation	—	—	—	—	—	—	—	—	—	9,423	9,423

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)


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		June 30, 2024
		$
Finished goods		271,386
WIP (Flowers and plants)		256,230
		527,616


	Furniture &	Machinery &		Leasehold
	fixture	Equipment	Software	improvements	Total
	$	$	$	$	$
Cost	1,404,987	769,550	48,447	6,671,215	8,894,199
Accumulated depreciation	(657,295)	(757,233)	(43,617)	(2,625,198)	(4,083,343)
	747,692	12,317	4,830	4,046,017	4,810,856


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	$	2,387,314
2025		5,227,385
Total		7,614,699
Current portion		(7,614,699)
Non-current portion	$	—


	Interest rate		Maximum loan		Outstanding loan
			CAD	USD	CAD	USD
Tranche 1	16.00	%	1,043,593	762,449	1,043,593	762,449
Tranche 2	43.26	%	1,592,787	1,163,690	1,592,787	1,163,690
Tranche 3	43.26	%	150,000	109,590	150,000	109,590
Tranche 4	43.26	%	—	—	—	—
Tranche 5	43.26	%	100,000	73,060	—	—
Total			2,886,380	2,108,789	2,786,380	2,035,729


2024	$	159,656
2025		322,505
2026		325,730
2027		328,987
Thereafter		780,861
Total lease payments		1,917,739
Less imputed interest		(671,156)
Present value of lease liabilities		1,246,583
Current portion		(134,811)
Non-current portion	$	1,111,772


	Derivative	Conversions /			Derivative
	liability as at	Redemption			liability as at
	December 31,	during the	Change due to	Fair value	June 30,
	2023	period	Issuances	adjustment	2024
	$	$	$	$	$
Note D	841	—	—	781	1,622
Note F	5,268	—	—	5,404	10,672
Note G	1,912	—	—	1,964	3,876
	8,021	—	—	8,149	16,170


	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 9 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
	ended	ended
	June 30, 2024	March 31, 2024
Forfeiture rate	0%	0%
Stock price	$0.003 to $0.005	$0.002 to $0.003
Exercise price	$0.350	$0.350
Volatility	461%	433%
Risk free interest rate	4.72% to 4.81%	4.39% to 4.55%
Expected life (years)	2	2
Expected dividend rate	0%	0%
Fair value of warrants	$173	$134


			Remaining	Remaining
			contractual life	contractual life
	Warrants	Warrants	term as at	term as at
	outstanding as at	outstanding as at	June 30,	December 31,
	June 30,	December 31,	2024	2023
	2024	2023	(years)	(years)
Serious Seeds	450,009	400,008	0.01 to 2.18	0.02 to 1.93
CLI	10,000,000	10,000,000	1.37	1.62
Total	10,450,009	10,400,008


Warrant liability as at December 31, 2023		354
Warrant liability for new issuance		307
Change in fair value		(14)
Warrant liability as at June 30, 2024		647


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

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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	TARGET GROUP INC.

Dated: August 8, 2024	By:	/s/ Anthony Zarcone
		Chief Executive Officer, and Director

Dated: August 8, 2024	By:	/s/ Barry Alan Katzman
		Director

Dated: August 8, 2024	By:	/s/ Saul Niddam
		Director


Dated: August 8, 2024	/s/ Anthony Zarcone
	Chief Executive Officer

Dated: August 8, 2024	/s/ Anthony Zarcone
	Principal Financial Officer