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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023

or

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

For the transition period from                      to                    

Commission file number: 000-55066

TARGET GROUP INC.

(Exact name of registrant as specified in its charter)

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)

+1 905-541-3833

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Act:

None

Securities registered under Section 12(g) of the Act:

Common Stock, Par Value $0.0001

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

    

Trading symbol

    

Name of each exchange on which registered

N/A

N/A

N/A

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $4,627,695 as of June 30, 2023.

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 8, 2023, the registrant had 617,025,999 shares of Common Stock issued and outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS.

TARGET GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

INDEX

Condensed Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

F-1

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

F-2

Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

F-3

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)

F-7

Notes to Condensed Consolidated Interim Financial Statements (Unaudited)

F-8 - F-26

3

TARGET GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

    

September 30, 

    

December 31, 

2023

2022

$

$

(unaudited)

 

ASSETS

 

  

 

  

Current assets

 

  

 

  

Cash

 

445,416

 

223,843

Restricted cash

8,506

8,490

Accounts receivable, no allowance

 

128,244

 

2,068

Inventory

Note 3

 

1,892,739

 

Prepaid asset

 

41,787

 

41,714

Sales tax recoverable, net of allowance

Note 4

 

65,098

 

Receivable from joint venture

Note 6

630,180

Other receivable

Note 8

3,698

3,692

Total current assets

 

2,585,488

 

909,987

Long term assets

 

 

Fixed assets

Note 5

 

5,428,478

 

5,554,225

Investment in joint venture

Note 6

775,577

Goodwill

Note 7

263,580

263,117

Operating lease right-of-use assets

Note 9

 

49,578

 

62,728

Total long term assets

 

5,741,636

 

6,655,647

Total assets

 

8,327,124

 

7,565,634

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

 

  

 

  

Current liabilities

 

  

 

  

Bank overdraft

506

506

Accounts payable and accrued liabilities

 

2,671,621

 

2,296,935

Settlement payable

Note 1

Sales tax payable

Note 4

35,254

Payable to related parties, net

Note 8

5,595,160

4,468,535

Operating lease liability - Current portion

Note 9

 

119,151

 

110,586

Convertible promissory notes, net

Note 10

480

480

Derivative liability

Note 10

24,159

15,125

Total current liabilities

8,411,077

6,927,421

 

 

Long term liabilities

 

 

Payable to related parties, net - Non-current portion

Note 8

5,539,361

5,877,930

Operating lease liability - Non-current portion

Note 9

1,230,306

1,319,619

Warrant liability

Note 11

1,770

489

Total long term liabilities

 

6,771,437

 

7,198,038

Total liabilities

15,182,514

14,125,459

 

 

Stockholders’ deficiency

 

 

Preferred stock

Note 11

 

100

 

100

Common stock

Note 11

 

61,703

 

61,703

Shares to be issued

Note 11

 

175,392

 

175,182

Additional paid-in capital

 

24,985,697

 

24,985,697

Accumulated deficit

 

(30,922,383)

 

(30,783,678)

Accumulated comprehensive loss

(1,155,899)

(998,829)

Total stockholders’ deficiency

(6,855,390)

(6,559,825)

Total liabilities and stockholders’ deficiency

8,327,124

7,565,634

Contingencies and commitments

Note 13

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-1

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

    

For the

    

For the

    

For the

    

For the

three months ended

three months ended

nine months ended

nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

$

$

$

$

REVENUE

1,046,227

 

 

1,805,211

 

COST OF GOOD SOLD

(454,241)

 

 

(823,502)

 

Gross profit

591,986

981,709

OPERATING EXPENSES

 

 

 

Advisory and consultancy fee

31,779

 

246

 

47,885

 

18,939

Management services fee

78,352

 

19,399

 

233,867

 

102,915

Salaries and wages

 

 

(53,083)

 

9,775

Legal and professional fees

27,799

41,253

231,726

213,844

Depreciation expense

237,789

220,390

680,043

673,349

Operating lease expense

Note 9

119,729

(81,976)

137,039

(115,881)

Office and general

153,041

 

79,195

 

212,172

 

10,249

Total operating expenses

648,489

 

278,507

 

1,489,649

 

913,190

OTHER EXPENSES (INCOME)

 

 

 

Change in fair value of derivative and warrant liability

8,988

 

(2,040)

 

10,314

 

(18,852)

Gain on settlement

 

 

(1,428,185)

 

Interest and bank charges

337,675

 

269,106

 

1,060,373

 

830,167

Exchange income

(50,995)

 

(130,870)

 

(201)

 

(172,863)

Other income

Note 6

(49,346)

(16,782)

(747,122)

(Recovery) Allowance of sales tax recoverable

(7,868)

 

1,756

 

(7,868)

 

(503)

Share of income from joint venture

Note 6

 

(93,819)

 

(24,152)

 

(244,867)

Debt issuance cost

Note 8

12,509

 

12,855

 

37,266

 

39,098

Total other expense (income)

300,309

 

7,642

 

(369,235)

 

(314,942)

Net loss before income taxes

(356,812)

 

(286,149)

 

(138,705)

 

(598,248)

Income taxes

 

 

 

Net loss

(356,812)

 

(286,149)

 

(138,705)

 

(598,248)

Foreign currency translation adjustment

67,911

 

(15,319)

 

(157,070)

(32,664)

Comprehensive loss

(288,901)

 

(301,468)

 

(295,775)

 

(630,912)

Loss per share - basic

(0.0006)

 

(0.0005)

 

(0.0002)

 

(0.0010)

Weighted average shares - basic

617,025,999

 

617,025,999

 

617,025,999

 

617,025,999

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-2

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

    

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, 2023

 

1,000,000

100

617,025,999

61,703

1,610,272

175,293

 

 

24,985,697

 

(30,565,571)

 

(1,223,810)

 

(6,566,588)

Shares issued as consideration for consideration of the intellectual property rights [Note 11]

 

15,624

99

 

 

 

 

 

99

Net loss

 

 

 

 

(356,812)

 

 

(356,812)

Foreign currency translation

 

 

 

 

 

67,911

 

67,911

As at September 30, 2023

 

1,000,000

100

617,025,999

61,703

1,625,896

175,392

 

 

24,985,697

 

(30,922,383)

 

(1,155,899)

 

(6,855,390)

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-3

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

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, 2022

 

1,000,000

 

100

 

617,025,999

 

61,703

 

1,547,776

 

174,989

 

 

24,985,697

 

(26,575,713)

 

(1,128,065)

 

(2,481,289)

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Cancellation of shares [Note 11]

Shares issued as consideration for consideration of the intellectual property rights [Note 11]

15,624

120

120

Net income

 

 

 

 

 

 

 

 

 

(286,149)

 

 

(286,149)

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

(15,319)

(15,319)

As at September 30, 2022

 

1,000,000

 

100

 

617,025,999

 

61,703

 

1,563,400

 

175,109

 

 

24,985,697

 

(26,861,862)

 

(1,143,384)

 

(2,782,637)

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-4

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

    

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 December 31, 2022

 

1,000,000

100

617,025,999

61,703

1,579,024

175,182

 

 

24,985,697

 

(30,783,678)

 

(998,829)

(6,559,825)

Shares issued as consideration for consideration of the intellectual property rights [Note 11]

 

46,872

210

 

 

 

 

210

Net loss

 

 

 

 

(138,705)

 

(138,705)

Foreign currency translation

 

 

 

 

 

(157,070)

(157,070)

As at September 30, 2023

 

1,000,000

100

617,025,999

61,703

1,625,896

175,392

 

 

24,985,697

 

(30,922,383)

 

(1,155,899)

(6,855,390)

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-5

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

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 December 31, 2021

 

1,000,000

 

100

 

617,025,999

 

61,703

1,516,528

174,722

24,985,697

(26,263,614)

(1,110,720)

(2,152,112)

 

  

 

  

 

 

 

 

 

 

 

 

 

Shares issued as consideration for consideration of the intellectual property rights

 

46,872

387

387

Net income

(598,248)

(598,248)

Foreign currency translation

(32,664)

(32,664)

 

As at September 30, 2022

 

1,000,000

100

617,025,999

61,703

1,563,400

175,109

24,985,697

(26,861,862)

(1,143,384)

(2,782,637)

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-6

TARGET GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

    

For the

    

For the

nine months ended

nine months ended

September 30, 2023

September 30, 2022

$

$

OPERATING ACTIVITIES

 

  

 

  

 

  

 

  

Net loss for the period

 

(138,705)

 

(598,248)

 

 

Adjustment for non-cash items

 

 

Change in fair value of derivative and warrant liability

 

10,314

 

(18,852)

Gain on settlement

(1,428,185)

Shares and warrants issued/to be issued for services

 

821

 

408

Allowance (recovery) of sales tax recoverable

 

(7,868)

 

(503)

Depreciation expense

680,043

673,349

Operating lease expense

 

178,134

198,254

Investment (income) loss from joint venture

(24,152)

(244,867)

Debt issuance cost

37,266

39,098

 

 

Changes in operating assets and liabilities:

 

 

Change in accounts receivable

(126,802)

Change in inventory

(116,135)

Change in sales tax recoverable

(93,043)

33,629

Change in accounts payable and accrued liabilities

 

390,256

 

(901,898)

Change in operating lease liability, net

(241,224)

(250,575)

Net cash used in operating activities

 

(879,280)

 

(1,070,205)

 

 

INVESTING ACTIVITIES

 

 

Amounts invested on fixed assets

(5,363)

(318)

Net proceeds from joint venture

440,361

1,240,429

Net cash provided by investing activities

 

434,998

 

1,240,111

 

 

FINANCING ACTIVITIES

 

 

Proceeds from loans from related parties

668,940

77,980

Settlement of related party loan

(138,393)

Payment for settlement payable

 

 

(10,000)

Net cash provided (used) by financing activities

 

668,940

 

(70,413)

 

 

Net change in cash and restricted cash during the period

 

224,658

 

99,493

Effect of foreign currency translation

 

(3,069)

 

(15,549)

Cash and restricted cash, beginning of period

 

232,333

 

122,151

Cash and restricted cash, end of period

 

453,922

 

206,095

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

Shares issued on conversion of debt

 

 

Shares issued as consideration for services

 

120

 

120

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid for interest

 

874,518

 

2,102,799

Cash paid for taxes

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

F-7

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.     Organization, Nature of Business, Going Concern and Management Plans

Organization and Nature of Business

Target Group Inc. (“Target Group” or the  “Company”) was incorporated on July 2, 2013, under the laws of the state of Delaware,  to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. On July 3, 2018, the Company filed an amendment in its Certificate of Incorporation to change its name to Target Group Inc., and he Company  secured the OTC Bulletin Board symbol CBDY from the Financial Industry Regulatory Authority (FINRA).

Target Group is a diversified, vertically integrated, progressive company with a focus nationally and internationally . The Company wholly owns and operates Canary Rx Inc, a Canadian licensed producer (“Canary”), regulated under The Cannabis Act (Bill C-45). Canary, operates a 44,000 square foot facility located in Norfolk County, Ontario. The Company has an ongoing strategic partnership  with Dutch breeder, Serious Seeds B.V. (“Serious Seeds”), to cultivate exclusive, world-class proprietary genetics. The Company has structured multiple international production and distribution platforms and continues to expand its global footprint,  focused on building an iconic brand portfolio with cutting-edge intellectual property  in both the medical and recreational cannabis markets. Target Group is committed to building industry-leading companies that transform the perception of cannabis and responsibly elevate the overall patient and consumer experience.

The Company’s core business is  producing, manufacturing, distributing, and selling of cannabis products. As of the current year to date period end, Canary has produced and sold cannabis products of $1,805,211 (Period ended September 30, 2022: $nil).

Joint Venture Agreement Termination; Consolidation of JVCo with Canary

Effective May 14, 2020, Canary entered into a Joint Venture Agreement (“Joint Venture”) with 9258159 Canada Inc., a corporation organized under the laws of the Province of Ontario, Canada (referred to herein as “Thrive Cannabis”) and 2755757 Ontario Inc., a corporation organized under the laws of the Province of Ontario, Canada (referred to herein as “JVCo”). Canary and Thrive each held 50% of the voting equity interest in JVCo. The term of the Joint Venture was five (5) years from its effective date of May 14, 2020.

On April 27, 2023, Canary and Thrive Cannabis entered into a Release and Settlement Agreement (“Settlement Agreement”) in which Thrive Cannabis  transferred its shares in the capital of JVCo and rights of assets held by JVCo, paid Canary $1,051,000 to release Thrive Cannabis from any mortgages, charges, pledges, security interests, liens, encumbrances, writs of execution, actions, claims, demands and equities of any nature related to JVCo from their share of ownership of JVCo.

Following the completion of the Settlement Agreement, Canary’s equity interest in JVCo increased from 50% to 100%. Effective April 28, 2023, the Company started consolidating results of operations of the JVCo and eliminated any intercompany transactions and balances between the Company (Target and Canary) and JVCo.

During the term of the Joint Venture, the Company accounted for the transactoins using the equity method under ASC 323 Investments — Equity Method and Joint Ventures. As a consequence of the Settlement Agreement, as the JVCo becoming a wholly owned subsidiary of the company as of April 27, 2023, the Company now uses the acquisition method of accounting (using a step acquisition method) under ASC 805 Business Combination.

CL Investors Debt Purchase and Assignment Agreement

On June 15, 2020, the Company, its first–tier subsidiaries Visava Inc. (“Visava”) CannaKorp Inc. (“CannaKorp”), and the Company’s second-tier subsidiary, Canary  entered into a Debt Purchase and Assignment Agreement (“Debt Agreement”) with CL Investors Inc. , a corporation organized under the laws of the Province of Ontario, Canada (“CLI”). While June 15, 2023 was the preliminary date of the Debt Agreement, it was not finalized until the later date as indicated below. The CEO and director of the Company is a shareholder and the Secretary of CLI, and the brother of the CEO is the President and sole director of CLI therefore the below loan from CLI is classified under related party transactions.

Pursuant to the Debt Agreement, CLI purchased from the Company for the sum of $2,144,840 (CAD $2,900,000) a debt obligation owing from Canary to the Company in the principal balance of $7,839,760 (CAD $10,600,000 (“Canary Debt”)). Upon receipt of the

F-8

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

consideration, the Company loaned the full sum to Canary under terms of an unsecured, non-interest-bearing promissory note (“Note”), subject to a covenant by the Company not to take any collection action so long as the Canary Debt remains unpaid to CLI. As of September 30, 2023, $3,698 (CAD $5,000) is still outstanding from CLI which is presented as other receivable on the unaudited condensed consolidated interim balance sheet.

As a condition of the closing of the Debt Agreement, the terms of the Canary Debt were amended to provide for interest at 5% per annum with a maturity date of 60 months from the date of the Debt Agreement (“Term”). The Canary Debt was to be repaid according to the following schedule:

a)In the first year of the Term, Canary will pay CLI the greater of $835,748 (CAD 1,130,000) and fifty percent (50%) of the Net Revenue (hereinafter defined), provided that where the latter amount exceeds the former amount, Canary will, by the end of such first year, pay CLI no less than the former amount and Canary will, within thirty (30) days following the end of such first year, pay CLI the balance of such amount owing for such first year;
b)In the second year of the Term, Canary will pay CLI the greater of $1,553,160 (CAD 2,100,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2021, provided that where the latter amount exceeds the former amount, Canary will, within thirty (30) days following the end of such second year, pay CLI the balance of such amount owing for such second year;
c)In the third year of the Term, Canary will pay CLI the greater of $2,381,512 (CAD 3,220,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2022, provided that where the latter amount exceeds the former amount, Canary will, by the end of such third year, pay CLI no less than the former amount and Canary will, within thirty (30) days following the end of such third year, pay CLI the balance of such payments owing for such third year;
d)In the fourth year of the Term, Canary will pay CLI the greater of $2,277,968 (CAD 3,080,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2023, provided that where the latter amount exceeds the former amount, Canary will, within thirty (30) days following the end of such fourth year, pay CLI the balance of such amount owing for such fourth year; and
e)In the fifth year of the Term, Canary will pay CLI the balance owing under this Note, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2024, for an amount calculated by dividing twelve (12) into the sum of all amounts owing under this Note at the beginning of the fifth year of the Term on account of Principal and Interest, provided that where further amounts are owing under this Note at the end of such fifth year, Canary will pay CLI all such further amounts within five (5) days following the end of such fifth year.

For the purpose of the Note, “Net Revenue” means any and all revenue generated from Canary’s Licensed Facility (hereinafter defined) to which it is entitled to net of applicable taxes and third-party expenses.

The repayment of the Canary Debt, as amended, was guaranteed by the Company’s wholly-owned subsidiaries Vivasa and CannaKorp. and secured by (i) a general security interest in the assets of the Company, Canary, Visava and CannaKorp, respectively; and (ii) a pledge by the Company of all of the issued and outstanding common stock of Canary, Visava and CannaKorp, held by the Company. In addition to the foregoing guarantees, security interest and stock pledge, CLI was granted an option, in lieu of repayment of the amended Canary Debt, to demand, in its sole and absolute discretion the transfer, assignment and conveyance of 75% of the issued and outstanding capital stock of Visava and Canary. Furthermore, the President and sole director of CLI was granted an option to acquire the remaining 25% of the issued and outstanding capital stock of Visava and Canary.

Effective August 14, 2020, the Debt Agreement was amended (“Amendment”) to provide that CLI would purchase from Rubin Schindermann, a director of the Company, 500,000 shares of the Company’s Series A Preferred Stock in consideration of the payment by CLI to Rubin Schindermann of $73,960 (CAD $100,000) and the issuance to Schindermann of 10,000,000 shares of the Company’s common stock. In consideration of the foregoing, Mr. Schindermann resigned as a director of the Company and from any and all administrative and executive positions with the Company’s subsidiaries Visava, Canary and CannaKorp, respectively. In addition, the Company issued Common Stock Purchase Warrant for 10,000,000 shares of Target Group’s common stock to CLI as consideration for the Debt Agreement (“CLI Warrants”). Refer to Note 11 for additional details on the CLI Warrants. The combined impact of both

F-9

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

transactions resulted in debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis.

The transactions contemplated by the Debt Agreement and the Amendment closed on August 14, 2020.

cGreen, Inc. Exclusive License Agreement

Effective August 8, 2019, the Company entered into an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”). The License Agreement granted to the Company an exclusive license to manufacture and distribute the patent-pending THC antidote True Focus(TM) in the United States, Europe and the Caribbean. The term of the license was ten (10) years and four (4) months from the effective date of August 8, 2019. In consideration of the license, the Company would issue 10,000,000 shares of its common stock as follows: (i) 3,500,000 within ten (10) days of the effective date; (ii) 3,500,000 shares on January 10, 2020; and (iii) 3,000,000 shares not later than June 10, 2020. In addition, the Company would pay cGreen royalties of 7% of the net sales of the licensed products and 7% of all sublicensing revenues collected by the Company. The Company would pay cGreen an advance royalty of $300,000 within ten (10) days of the effective date; $300,000 on January 10, 2020; and $400,000 on or before June 10, 2020, and $500,000 on or before November 10, 2020. All advance royalty payments would be credited against the royalties owed by the Company through December 31, 2020. During the quarter ended December 31, 2019, the intangible asset was written off based on management’s review and evaluation of its recoverability.

During the quarter ended June 30, 2020, the Company was in arbitration with cGreen for the breaches of the terms of the License Agreement, however, through an early mediation, the parties reached a settlement of their claims and counterclaims on July 27, 2020 (“Effective Date”). As per the settlement agreement, the License Agreement was terminated, and the Company did not have to issue the 10 million shares nor pay the outstanding royalty payable in the amount of $1,191,860. As consideration, the Company paid $130,000 within 30 days of the Effective Date and started paying $100,000 in monthly installments of $10,000 commencing in April 2021 to cGreen resulting in a gain on settlement in the amount of $1,704,860.

As at September 30, 2023, there was no outstanding balance, the balance was paid in full and the claim was closed during the quarter ended March 31, 2022 (December 31, 2021: $10,000).

Going Concern

The Company has earned minimal revenue since inception to date and has sustained operating losses during the nine months ended September 30, 2023. The Company had a working capital deficit of $5,825,589 and an accumulated deficit of $30,922,383 as of September 30, 2023. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.

The unaudited accompanying condensed consolidated interim financial statements have been prepared assuming that the Company will continue as a going concern up to at least 12 months from the balance sheet date; however, the above condition raises substantial doubt about the Company’s ability to do so. The unaudited condensed consolidated interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations, sale of its equity or issuance of debt. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

2.     Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the SEC and are expressed in US dollars. Accordingly, the unaudited condensed consolidated interim financial statements do not include all information and footnotes required by US GAAP for complete annual financial statements. The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2023, or for any other interim period. The unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto as of and for the year ended December 31, 2022.

The unaudited condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries, Visava, Canary, CannaKorp, and JVCo. Significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of the unaudited condensed consolidated interim financial statements in conformity with US 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 of the unaudited condensed consolidated interim financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to accruals. Actual results could differ from those estimates.

Cash

The Company places its cash with high-quality banking institutions. The Company have cash balances in excess of the Federal Deposit Insurance Corporation (FDIC) limit as of September 30, 2023 where as cash balances were not in excess of FDIC limit as of September 30, 2022.

Cash and cash equivalents include cash on hand and deposits at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have cash equivalents as of September 30, 2023 and 2022.

Restricted cash represents deposits made to the Company’s bank as a requirement to use the bank’s credit card which is not available for immediate or general business use.

Fixed Assets

Fixed assets are reported at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of assets, commencing when the assets become available for productive use, based on the following estimated useful lives:

Depreciation is calculated using the following terms and methods:

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

An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period the asset is derecognized. The assets’ residual values, useful lives and methods of depreciation are reviewed at each reporting date, and adjusted prospectively, if appropriate.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the unaudited condensed consolidated interim financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the unaudited condensed consolidated interim financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The estimated fair value of cash and accounts payable and accrued liabilities approximate their carrying values due to the short-term maturity of these instruments. The derivative liabilities of the promissory convertible notes and warrant liabilities are valued Level 3, refer to Note 10 and 11 for further details.

Revenue recognition

The Company adopted ASC 606 effective January 1, 2019, using the modified retrospective method after electing to delay the adoption of the accounting standard as the Company qualified as an “emerging growth company”. Since the Company did not have any contracts as of the effective day, therefore, there was no material impact on the consolidated financial statements upon adoption of the new standard. Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our performance obligation generally consists of the promise to sell our finished products to our customers, wholesalers, distributors or retailers. Control of the finished products is transferred upon shipment to, or receipt at, our customers’ locations, as determined by the specific terms of the contract. Once control is transferred to the customer, we have completed our performance obligation, and revenue is recognized.

The Company generated revenue of $1,805,211 during the nine month ended September 30, 2023 whereas $nil in September 30, 2022.

The Company revenue was concentrated to eight customers. The revenue represents the sale of cannabis products. Since the customers have received the product and there are no further obligations as per the agreement, revenue was recognized.

Though its investment in JVCo and represented on the line item “Share of income from joint venture” on the unaudited condensed consolidated interim statement of operations, Canary generated revenue of $791,285 during the nine months ended September, 30 2023 (nine months ended September 30, 2022: $3,177,105). Revenue generated through JVCo lasted till April 27, 2023, refer to Note 6 for additional details.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Equity Method Investments

The Company uses the equity method of accounting for investments when the Company has the ability to significantly influence, but not control, the operations or financial activities of the investee. As part of this evaluation, the Company considers the participating and protective rights in the venture as well as its legal form. The Company records the equity method investments at cost and subsequently adjust their carrying amount each period for the Company’s share of the earnings or losses of the investee and other adjustments required by the equity method of accounting. Distributions received from the equity method investments are recorded as reductions in the carrying value of such investments and are classified on the unaudited condensed consolidated interim statements of cash flows pursuant to the cumulative earnings approach. Under this approach, distributions received are considered returns on investment and are classified as cash inflows from operating activities unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of investment, exceed the cumulative equity in earnings recognized from the investment. When such an excess occurs, the current period distributions up to this excess are considered returns of investment and are classified as cash inflows from investing activities.

The Company monitors equity method investments for impairment and records reductions in their carrying values if the carrying amount of an investment exceeds its fair value. An impairment charge is recorded when such impairment is deemed to be other than temporary. To determine whether an impairment is other than temporary, we consider our ability and intent to hold the investment until the carrying amount is fully recovered. Circumstances that indicate an impairment may have occurred include factors such as decreases in quoted market prices or declines in the operations of the investee. The evaluation of the investment for potential impairment requires us to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions. The Company has recorded no impairment losses related to our equity method investments during the nine months ended September 30, 2023, and 2022.

3.     Inventory

As of September 30, 2023, the inventory in the amount of $1,892,739 (2022: $nil) consists of work-in-progress and finished cannabis goods which is transferred from JVCo to Canary as a result of the Joint Venture Settlement Agreement, refer to Note 6 for additional detail.

4.     Sales Tax Recoverable and Payable

As of September 30, 2023, the Company had $72,927 of gross sales tax recoverable compared to December 31, 2022 there was $nil, while the Company had $nil of gross sales tax payable as of September 30, 2023.

Recoverable is due to the sales tax paid by the Company on expenses incurred during the year which are recoverable from the government while payable is due to the sales tax received (after deducting sales tax paid on expenses incurred by the Company) during the year which are payable from the government due to sales conducted through the Joint Venture.

The Company has recorded $7,829 (December 31, 2022: $nil) of allowance as of September 30, 2023.

5.     Fixed Assets

The Company’s subsidiary, Canary, initiated construction on its leased 44,000 square foot cannabis cultivation facility in September of 2017. Since then, extensive demolition and structural upgrades have been carried out at the site. On May 1, 2019, the Company completed the construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site Evidence Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility. On October 8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). Canary currently operates as a licensed producer/wholesaler of craft cannabis in Ontario and has since been granted its sales amendment from Health Canada to sell directly to provincial retail boards for consumer products.

Canary has recorded a depreciation expense of $641,183 during the nine months ended September 30, 2023 (September 30, 2022: $672,503) while CannaKorp has recorded a depreciation expense of $371 during the nine months ended September 30, 2023 (September 30, 2022: $846). JVCo recorded depreciation of $38,489.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Below is a breakdown of the consolidated fixed asset, category wise:

    

Furniture & 

    

Machinery &

    

    

Leasehold

    

fixture

Equipment

Software

improvements

 

Total

$

$

$

$

$

Cost

1,422,209

769,042

 

43,506

 

6,719,823

8,954,580

Accumulated depreciation

(520,407)

(749,715)

 

(43,506)

 

(2,212,474)

(3,526,102)

901,802

19,327

 

 

4,507,349

5,428,478

6.     Joint Venture

Historical information

Effective May 14, 2020, Canary entered into the Joint Venture explained in Note 1. Under the Joint Venture, JVCo was permitted to use the rooms, of Canary’s licensed cannabis cultivation facilities located in Simcoe, Ontario, Canada (“Licensed Site Portion”) to operate and manage the Licensed Site Portion for the cultivation and process of cannabis pursuant to Canary’s license issued by Health Canada. During the term of the Joint Venture, JVCo was responsible for the administration, operation and management of the Licensed Site Portion and all proceeds from the sale of the cannabis and related cannabis products cultivated therein will be payable to the JVCo.

Canary, Thrive Cannabis, and JVCo entered into a Unanimous Shareholder Agreement dated May 14, 2020, governing the management and administration of the business of JVCo.

During the period ended September 30, 2023, the Joint Venture partners, Canary and Thrive Cannabis entered into an agreement. Pursuant to this agreement the Company received a total of $1,579,800 (CAD 2,125,482) of which $1,020,667 (CAD 1,373,218) were reduced from investment in Joint Venture as these represented recovery of investment and $559,133 (CAD 752,264) were classified as other income representing recovery of interest expense charged on shareholder loan, which was primarily provided to support Joint Venture operations. Also refer to shareholder loan in Note 8.

As per the Joint Venture, Canary provided the JVCo with a Hard Cost Loan with the maximum amount of $887,520 (CAD 1,200,000). This loan bore an interest rate of 7% per annum, matured in 12 months from the effective date, and was secured against the personal property of the JVCo and Thrive had guaranteed one-half (1/2) of the outstanding balance of the loan. As of April 27, 2023, the loan advanced amounts to $247,766 (CAD 335,000) and interest income charged for the nine months ended in the amount of $13,032 (CAD 17,539) is included in other income on the unaudited condensed consolidated interim statement of operations and comprehensive loss and interest receivable in the amount of $55,263 (CAD 74,720) was included in receivable from joint venture on the unaudited condensed consolidated interim balance sheet. After April 27, 2023, as mentioned above and further discussed below, JVCo become a subsidiary of the company as result the above loan and interest receivable were eliminated upon consolidation.

The Company recorded JVCo’s results through April 27, 2023 using the equity method and below is the table which summarizes the activity of the period (through April 27, 2023):

Period ended

January 1 to April 27, 2023

Nine months ended September 30, 2022

    

CAD 

    

USD 

    

CAD 

    

USD 

Sales

 

1,068,799

 

791,285

 

4,074,256

 

3,177,105

Cost of goods sold

620,344

459,271

2,110,851

1,646,042

Gross profit

448,455

332,014

1,963,405

1,531,063

Operation expenses

383,358

283,819

1,335,381

1,041,330

Net income (loss)

65,097

48,195

628,024

489,733

Eligible recoverable expenses

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Recoverable amount

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Income (loss) on equity

 

32,549

 

24,098

 

314,012

 

244,867

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Termination of joint venture agreement during quarter ended June 30, 2023

On April 27, 2023, Canary and Thrive Cannabis entered into a Release and Settlement Agreement (“Settlement Agreement”) in which Thrive Cannabis has transferred its shares in the capital of JVCo and rights of assets held by JVCo.

Pursuant to the above Settlement Agreement, Thrive Cannabis paid Canary $1,051,000 to release Thrive Cannabis from any mortgages, charges, pledges, security interests, liens, encumbrances, writs of execution, actions, claims, demands and equities of any nature related to JVCo from their share of ownership of JVCo.

ring the term of the Joint Venture, the Company accounted for the transactoins using the equity method under ASC 323 Investments — Equity Method and Joint Ventures. As a consequence of the Settlement Agreement, as the JVCo becoming a wholly owned subsidiary of the company as of April 27, 2023, the Company now uses the acquisition method of accounting (using a step acquisition method) under ASC 805 Business Combination.

Consolidation of JVCo into Canary

Following the completion of the Settlement Agreement, Canary’s equity interest in JVCo increased from 50% to 100%. Effective April 28, 2023, the Company started consolidating result’s of operations of the JVCo and eliminated any intercompany transactions and balances between the Company (Target and Canary) and JVCo.

As a consequence of the above Settlement Agreement and after obtaining 100% shares of the JVCo, the Company acquired the following assets:

Fair value

    

$

Assets acquired:

Inventory

1,690,368

Fixed assets

534,816

2,225,184

As of April 27, 2023, the Company had a carrying value of the investment in Joint Venture and receivable from Joint Venture on the consolidated balance sheets amounting to $1,023,608 and $706,598, respectively. Pursuant to the above Settlement Agreement, the Company received $776,382 against these balances. Accordingly, the remaining balance of $953,824 was compared to the fair value of the net assets acquired and this resulted in net recognition of $1,428,185 as a non-operating gain reported in the Consolidated Statement of Operations as net gain from termination of the Joint Venture.

7.     Goodwill

Business Acquisition

ASC Topic 805, “Business Combinations” requires that all business combinations be accounted for using the acquisition method and that certain identifiable intangible assets acquired in a business combination be recognized as assets apart from goodwill. ASC Topic 350, “Intangibles-Goodwill and Other” (“ASC 350”) requires goodwill and other identifiable intangible assets with indefinite useful lives not be amortized, such as trade names, but instead tested at least annually for impairment (which the Company tests each year end, absent any impairment indicators) and be written down if impaired. ASC 350 requires that goodwill be allocated to its respective reporting unit and that identifiable intangible assets with finite lives be amortized over their useful lives.

Visava/Canary

On June 27, 2018, the Company entered into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with Visava, then a private Ontario, Canada corporation. Visava owns 100% of Canary.

Pursuant to the Agreement, the Company acquired 100% of the issued and outstanding shares of Visava in exchange for the issuance of 25,500,000 shares of the Company’s Common Stock and issued to the Visava shareholders, prorata Common Stock Purchase Warrants

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(“Visava Warrants”) purchasing an aggregate of 25,000,000 shares of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance date of the Visava Warrants. As a result of this transaction, Visava became a wholly-owned subsidiary of the Company and the former shareholders of Visava owned approximately 46.27% of the Company’s shares of Common Stock. The transaction was closed effective August 2, 2018. During the year ended, December 31, 2020, all of the Visava Warrants expired, none were exercised.

This acquisition was accounted for using the acquisition method of accounting. As of August 2, 2018, the fair value of the net liabilities was $275,353 and the purchase consideration was fair valued as $3,318,842, shown below, leading to a goodwill allocation of $3,594,195.

    

$

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

The fair value of these warrants was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

Forfeiture rate of 0%;
Stock price of $0.067 per share;
Exercise price of $0.10 per share
Volatility at 329%
Risk free interest rate of 2.66%;
Expected life of 2 years; and
Expected dividend rate of 0%

During the year ended December 31, 2022, the Company identified circumstances that would call for an evaluation of goodwill impairment and therefore impaired $3,315,749 reducing the goodwill related to the Canary to $263,117 (December 31, 2021: the Company has identified no circumstances which would call for further evaluation of goodwill impairment related to Canary).

During the year ended, December 31, 2022, all of the Visava Warrants expired, none were exercised.

Goodwill

The Company tests for impairment of goodwill at the reporting unit level. In assessing whether goodwill is impaired, the Company utilizes the two-step process as prescribed by ASC 350. The first step of this test compares the fair value of the reporting unit, determined based upon discounted estimated future cash flows, to the carrying amount, including goodwill. If the fair value exceeds the carrying amount, no further work is required and no impairment loss is recognized. If the carrying amount of the reporting unit exceeds the fair value, the goodwill of the reporting unit is potentially impaired and step two of the goodwill impairment test would need to be performed to measure the amount of an impairment loss, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of the goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss in the amount of the excess is recognized and charged to the statement of operations.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

8.     Related Party Transactions and Balances

During the nine months ended September 30, 2023, the Company expensed $233,867 (September 30, 2022: $102,915) in management service fee for services provided by the current key officers of the company.

The breakdown of the related party balance as of September 30, 2023 of $11,134,521 (December 31, 2022: $10,346,465) is below:

Debt purchase by CL Investors Inc.

On June 15, 2020, the Company and its subsidiaries, entered into a Debt Agreement with CLI explained in Note 1. The Canary Debt, Term, repayment schedule, security and options are set forth in Note 1.As of September 30, 2023, $3,698 (CAD $5,000) is still outstanding from CLI.

Interest expense charged for the nine months ended in the amount of $276,415 (CAD $372,026) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $510,688 (CAD 690,492) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated interim balance sheet.

The repayment schedule of the minimum principal payments is shown below:

2024

$

3,720,331

2025

3,988,170

Total

7,708,501

Current portion

(2,125,856)

Non-current portion

5,582,645

The Debt Agreement Amendment and CLI Warrants are explained in Note 1. Refer to Note 11 for additional details on the CLI Warrants. The combined impact of both transactions resulted in a debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis. As at September 30, 2023, the balance is $125,623 of which $67,098 is current while $58,525 is non-current.

Shareholder loan

One of the Company’s shareholders provided a loan to the Company. The loan is secured by all assets owned by the Company and its subsidiaries including leasehold improvements and matures on June 30, 2024 and therefore is presented as current. The loan was provided in five tranches and the latest amendment increased the maximum loan amount by $665,640 (CAD 900,000) while the rest of terms remained unchanged. The specific details of each tranche of the loan are shown below:

Interest rate

Maximum loan

Outstanding loan

    

    

CAD

    

USD

    

CAD

    

USD

Tranche 1

 

16.00

%

1,043,593

 

771,841

1,043,593

 

771,841

Tranche 2

 

43.26

%

1,592,787

 

1,178,025

1,592,787

 

1,178,025

Tranche 3

43.26

%

250,000

184,900

250,000

184,900

Tranche 4

43.26

%

500,000

369,800

500,000

369,800

Tranche 5

43.26

%

500,000

369,800

400,000

295,840

Total

 

3,886,380

2,874,366

3,786,380

2,800,406

Interest expense charged for the nine months ended September 30, 2023 in the amount of $740,286 (CAD $996,347) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $693,152 (CAD 937,199) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated interim balance sheet.

The Seventh Amending Agreement, dated February 16, 2023 (“Seventh Amendment”), previously filed as Exhibit 10.34, memorializes Tranche 4 of the subject shareholder loan, and is the subject of Form 8-K Report and subsequent Form 8-K/A Reports, dated February

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

22, March 13, and August 4, 2023, respectively.  The amount of the Advance in the Seventh Amendment was incorrectly reported on February 22 and March 13, 2023, and Exhibit 10.32 was also inaccurate with respect to the amount of the Advance.  The amount of the Advance is CDN$500,000.00 as reported on Form 8-K/A, dated August 4, 2023, and as reflected at Exhibit 10.34, filed herewith, and further, the amount of the Lender’s Fee was CDN$50,000.

Outstanding management service fee

The balance owing to key officers of the Company is $653,522 (December 31, 2022: $585,261).

Balances outstanding related to subsidiaries

During the year ended December 31, 2019, the Company settled with the loan holders provided to the Company’s subsidiary, CannaKorp. The total amount subject to settlement was $817,876 which includes accrued interest and accrued payroll. The company settled by paying $954,374 as consideration of cash, 920,240 shares (recorded in shares to be issued) and warrants of 920,240 shares with an exercise price of $0.15 per share. This resulted in a settlement loss of $136,498. These warrants expired during the year ended December 31, 2021. Of the total settlement amount, as of September 30, 2023 and December 31, 2022, $65,000 was outstanding to be paid. This amount includes late payment penalties of $25,000. During the year ended December 31, 2021, all of the warrants expired, none were exercised.

Balances outstanding related to directors

During the nine months ended September 30, 2023, the Company has purchased $nil of consulting services from GTA Angel Group which is owned by the Company’s CEO’s brother. The balance outstanding as of September 30, 2023 is $25,072 and is included in accounts payable and accrued liabilities.

The Company subleases its principal executive office premise from Norlandam Marketing Inc., a company owned by one of the directors. During the quarter ended March 31, 2021, the premises were subleased to a third party that makes rent payments directly to Norlandam Marketing Inc. The balance outstanding as of September 30, 2023 is $nil

9.    Operating Lease Right-Of-Use Assets and Lease Liability

The Company adopted ASC 842 as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at January 1, 2020, the effective date. The Company made an accounting policy election to exclude from balance sheet reporting those leases with initial terms of 12 months or less. The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components is recognized when the obligation is probable.

Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at the adoption date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

The Company does not own any real property. It currently leases two office/facility spaces. For accounting purposes, this lease is treated as an operating leases. Upon adoption of ASC 842, the Company recognized $1,670,174 (CAD $2,258,212) of right-to-use assets as operating leases and operating lease obligations. The right-to-use asset was reduced by $1,545,706 (CAD $2,089,921) due to recognition of the prior deferred rent liability which was eliminated upon adoption of ASC 842. Details of these leases are detailed below:

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

During the quarter ended March 31, 2021, the Company subleased its executive premises to a third party that makes rent payments directly to the landlord. However, if the sub-lessee cancels its sub-lease agreement with the landlord during the Company’s lease term with the landlord (ended on August 30, 2023), the Company will be responsible for making rent payments for the period from the date of cancellation by the sub-lessee to August 30, 2023. This sub-lease has matured and not been renewed.

The Company’s second-tier subsidiary, Canary, is a party to a 10-year lease agreement (initiated in July 2014) with respect to its facility to produce craft cannabis at scale. The lease agreement was amended effective January 1, 2020, where the amended 10-year term starts on May 1, 2020 and provides the Company with an option to extend for three (3) additional terms of ten (10) years. Additionally, effective January 1, 2020, the amended agreement increased the minimum rent to $25,886 (CAD $35,000) plus applicable taxes per month and on each anniversary date, commencing from January 1, 2021, the minimum rent will increase by 1.00%. Furthermore, only the current 10-year term has been factored into the calculation of the lease liability. Effective May 1, 2020, due to the implementation of the new lease, $746,458 (CAD $988,293) was forgiven by the landlord and one vendor.

These leases will expire between 2023 and 2030. The weighted average discount rate used for these leases was 16% (average borrowing rate of the Company). Maturities of lease liabilities were:

2023

    

$

80,011

2024

323,245

2025

326,477

2026

329,742

Thereafter

1,123,521

Total lease payments

2,182,996

Less imputed interest

(833,539)

Present value of lease liabilities

1,349,457

Current portion

(119,151)

Non-current portion

$

1,230,306

Below is the reconciliation of the net operating lease presented on the unaudited condensed consolidated interim statement of operations:

    

For the

    

For the

    

For the

    

For the

three months ended

three months ended

nine months ended

 

nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

 

September 30, 2022

$

$

$

$

Gross operating lease expense

58,375

65,215

178,134

198,254

Gross rent and utilities expenses

61,354

135,584

244,560

387,474

Recoverable expenses from JVCo related to rent and utilities

(282,775)

(285,655)

(701,609)

119,729

(81,976)

137,039

(115,881)

As explained in Note 6, the JVCo reimburses a certain percentage of gross expenses incurred by Canary which includes rent and utilities. Due to this unique circumstance and since operating lease expense are related to rent expenses, the Company has decided to group the operating lease expenses, all lease-related expenses and the recoverable amount from JVCo to show a net operating lease expense.

10.     Convertible Promissory Notes

Interest amounting to $10 was accrued for the nine months ended September 30, 2023 (September 30, 2022: $27).

Principal amount outstanding as of September 30, 2023 and December 31, 2022 was $480. At both reporting dates, the entire balance was current.

All notes maturing prior to the date of this report are outstanding.

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Derivative liability

During the nine months ended September 30, 2023, there were no conversion of principal balance of convertible promissory notes (September 30, 2022: $nil). The Company recorded and fair valued the derivative liability as follows:

    

Derivative

    

Conversions /

    

    

    

Derivative

liability as at

Redemption

liability as at

December 31, 

during the

Change due to

Fair value

September 30, 

2022

period

Issuances

adjustment

2023

$

$

$

$

$

Note D

 

1,446

 

 

 

867

 

2,313

Note F

 

10,034

 

 

 

5,991

 

16,025

Note G

 

3,645

 

 

 

2,176

 

5,821

 

15,125

 

 

 

9,034

 

24,159

Key assumptions used for the valuation of convertible notes

Derivative element of the convertible notes was fair valued using a multinomial lattice model. Following assumptions were used to fair value these notes as of September 30, 2023:

Projected annual volatility of 205% to 503%;
Risk free interest rate of 4.40% to 5.20%;
Stock price of $0.003 to 0.008;
Liquidity term of 0.25 to 0.50 years;
Dividend yield of 0%; and
Exercise price of $0.0012 to $0.0151.

11.    Stockholders’ Equity

Capitalization

Preferred Stock

Par value: $0.0001
Authorized: 20,000,000
Issued: 1,000,000 shares were outstanding as of September 30, 2023 and December 31, 2022

Common Stock

Par value: $0.0001
Authorized: 850,000,000
Issued: 617,025,999 shares are outstanding as at September 30, 2023 and December 31, 2022

As of September 30, 2023, convertible notes, warrants and preferred stock outstanding could be converted into 14,674,491 (December 31, 2022: 17,258,122), 10,400,008 (December 31, 2022: 53,950,001) and 100,000,000 (December 31, 2022: 100,000,000) shares of common stock, respectively.

Preferred Stock

Shares of preferred stock may be issued from time to time in one or more series as may be determined by the board of directors. The board of directors may fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders of the Company, except that no holder of preferred stock shall have pre-emptive rights. Any shares of preferred stock so issued would typically have priority over the common stock concerning dividend or liquidation rights. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock unless otherwise required by law.

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Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Series A Preferred Stock (“Series A Stock”)

Dividends shall be declared and set aside for any shares of Series A Stock in the same manner and amount as for the Common Stock. Series A Stock, as a class, shall have voting rights equal to a multiple of 2X the number of shares of Common Stock issued and outstanding that are entitled to vote on any matter requiring shareholder approval. The Series A Stockholders shall not vote as a separate class but shall vote together with the common stock on all matters, including any amendment to increase or decrease the authorized capital stock. Upon the voluntary or involuntary dissolution, liquidation or winding up of the corporation, the assets of the Company available for distribution to its shareholders shall be distributed to the holders of common stock and the holders of the Series A Stock ratable without any preference to the holders of the Series A Stock. Shares of Series A Stock can be converted at any time into fully paid and nonassessable shares of Common Stock at the rate of one hundred (100) shares of Common Stock for each one (1) share of Series A Stock.

Common Stock

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights.

Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to share ratable in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds legally available therefore.

Holders of common stock have no pre-emptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. The Company may issue additional shares of common stock which could dilute its current shareholder’s share value.

2023

During the quarter ended March 31, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $63, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended June 30, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by the President of Serious Seeds, Smit, to the Company’s subsidiary, Canary. These were recorded at a fair value of $48, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended September 30, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by the President of Serious Seeds, Simon Smit (“Smit”), to the Company’s subsidiary, Canary. These were recorded at a fair value of $99, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

2022

During the quarter ended March 31, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $153, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended June 30, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $114, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

F-21

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

During the quarter ended September 30, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $120, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued

During the quarter ended December 31, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $73, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

Shares to be issued include the following:

    

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 14 for details.

Agreement with Serious Seeds

 

234,360

2,767

 

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.

 

1,625,896

$

175,392

Warrants

The warrants (with an exercise price in United States Dollar) were re-classified as a liability as of December 31, 2019, and therefore have been revalued on each quarter end. The fair value of the warrants was measured on reporting dates using the Black-Scholes option pricing model using the following assumptions:

2023

As at

As at

As at

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

 

0%

Stock price

$0.008

$0.006

$0.003

Exercise price

$0.250 to $0.350

$0.250 to $0.300

$0.250 to $0.300

Volatility

365% to 422%

273% to 342%

244% to 305%

Risk free interest rate

5.46%

5.40%

4.64%

Expected life (years)

0.02 to 1.68

0.02 to 1.68

0.02 to 1.93

Expected dividend rate

0%

0%

0%

F-22

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

2022

    

As at

    

As at

    

As at

    

As at

December 31,

September 30,

June 30, 

March 31, 

2022

2022

2022

2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004

$0.005

$0.008

$0.009

Exercise price

$0.200 to $0.300

$0.200 to $0.300

$0.050 to $0.300

$0.023 to $0.250

Volatility

253% to 312%

214% to 279%

192% to 306%

192% to 306%

Risk free interest rate

4.73%

4.05%

2.92%

2.28%

Expected life (years)

0.02 to 1.93

0 to 1.94

0 to 1.94

0 to 1.93

Expected dividend rate

0%

0%

0%

0%

The fair value of the warrants issued during the year issued was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

2023

During quarter

During quarter

During quarter

ended

ended

ended

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

0%

Stock price

$0.004 to $0.009

$0.003 to $0.003

$0.003 to $0.005

Exercise price

$0.350

$0.350

$0.300

Volatility

399%

342%

305%

Risk free interest rate

4.78% to 5.01%

3.82% to 4.51%

4.24% to 4.89%

Expected life (years)

2

2

2

Expected dividend rate

0%

0%

0%

Fair value of warrants

$313

$138

$160

2022

During quarter

During quarter

During quarter

During quarter

ended

ended

ended

ended

    

December 31, 2022

    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004 to $0.006

$0.007 to $0.008

$0.005 to $0.010

$0.008 to $0.013

Exercise price

$0.300

$0.300

$0.300

$0.250

Volatility

279%

279%

299%

306%

Risk free interest rate

4.23% to 4.66%

2.97% to 3.50%

2.50% to 2.73%

0.88% to 1.50%

Expected life (years)

2

2

2

2

Expected dividend rate

0%

0%

0%

0%

Fair value of warrants

$176

$288

$306

$430

F-23

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Breakdown of warrants outstanding as of September 30, 2023 and December 31, 2022 are detailed below:

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,

 

2023

 

2022

    

2023

    

2022

    

(years)

    

(years)

Private placements

 

 

43,549,993

 

N/A

 

0.11 to 0.47

Serious Seeds

 

400,008

 

400,008

 

0.02 to 1.93

 

0.02 to 1.93

CLI

10,000,000

10,000,000

1.87

2.62

Total

 

10,400,008

 

53,950,001

 

  

 

  

During the nine months ended September 30, 2023, 43,699,996 warrants expired (related to private placements and Serious Seeds).

Movement of the warrant liability is detailed below:

Warrant liability as at December 31, 2022

489

Warrant liability for new issuance

611

Change in fair value

669

Warrant liability as at September 30, 2023

1,769

12.    Earnings (Loss) Per Share

FASB ASC 260, Earnings Per Share provides for calculations of “basic” and “diluted” earnings per share. Basic earnings per share include no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

13.     Contingencies and commitments

Contingencies

During the year ended December 31, 2019, a terminated employee of Canary has filed a lawsuit against the Company amounting to approximately $1,553,160 (CAD 2,100,000) in Ontario, Canada. Currently, the Company is defending its position and believes that the ultimate decision will be in favor of the Company. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no provision has been recognized.

A complaint for damages of $150,000 was lodged against CannaKorp by the former Chief Financial Officer of CannaKorp for outstanding professional fees. No claim has been registered. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $188,865 has been recorded in CannaKorp’s payable based on past accruals and outstanding invoices. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

A claim for damages of $1,377,731 (CAD $1,862,805) was lodged against Company and its directors by the former Chief Financial Officer of the Company for wrongful dismissal. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $10,867 has been recorded in Target’s payable based on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

During the year ended December 31, 2020, a claim for damages of $96,723 (CAD $130,778) was lodged against Canary by a vendor for breach of contract. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $102,176 (CAD $138,150) has been recorded

F-24

Table of Contents

TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

in the Canary’s payable based on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

As explained in Note 1, on July 27, 2020, the Company entered into a License Agreement with cGreen. As consideration, the Company paid $130,000 within 30 days of the Effective Date and paid $100,000 in monthly installments of $10,000 commenced in April 2021 to cGreen. During the quarter ended March 31, 2022, the outstanding balance was paid in full and the claim is closed.

Covid-19 Pandemic

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (“COVID-19”) outbreak as a global health emergency. This resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including the closure of certain non-essential businesses. Despite the WHO’s declaration, on or about May 5, 2023, of the end of the COVID-19 global pandemic, the lasting impacts of COVID-19 on the United States, Canada, and the broader global economy, including supply chain disruption, may have a significant continuing negative effect on the Company and may materially impact the Company in the future.

During the period and year ended September 30, 2023 and December 31, 2022, respectively, the pandemic and its lasting impacts did not have a material impact on the Company’s operations. As of September 30, 2023 and December 31, 2022, the Company did not observe any material impairment of its assets or a significant change in the fair value of assets due to the COVID-19 pandemic or its lasting impacts. The Company has taken, and will again, as necessary, continue to take, steps to minimize the potential impact of the pandemic and its lasting impacts, including safety measures with respect to personal protective equipment, the reduction in travel and the implementation of a virtual office including regular video conference meetings and participation in virtual customer meetings and other virtual events.

It is not possible to predict the lasting impacts that COVID-19 will have on the Company’s business, balance sheet and operating results in the future. In addition, it is possible that estimates in the Company’s Financial statements will change in the near term as a result of the lasting impacts of COVID-19, and the effect of any such changes could be material, which could result in, among other things, impairment of long-lived assets including goodwill. The Company is closely monitoring the lasting impacts of the pandemic on all aspects of its business.

Commitments

As per the Distribution, Collaboration and Licensing Agreement (“Serious Agreement”) entered with Serious Seeds, effective December 6, 2018, the Company would issue to Serious Seeds each month 5,208 shares of common stock, beginning on the thirteen (13th) months following the effective date of the Serious Agreement and continuing through the sixtieth (60th) month of the initial term. Furthermore, Serious Seeds would be issued warrants in each of the foregoing months to purchase 16,667 shares of Target common stock at varying exercise prices ranging from $0.20 to $0.35 per share. All of the warrants must be exercised on or before the two (2) year anniversary date of each of the warrant issuance dates. As of September 30, 2023, none of the above shares have been issued.

In consideration of the Company’s appointment as Serious’ exclusive distributor in Canada, the Company will pay Serious certain royalties as follows:

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

F-25

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TARGET GROUP INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

14.    Subsequent Events

The Company’s management has evaluated subsequent events up to November 8, 2023, the date the unaudited condensed consolidated interim financial statements were issued, pursuant to the requirements of ASC 855 and has the following subsequent events to report:

A Ninth Amending Agreement to the shareholder loan explained in Note 8, was executed on November 7, 2023, by and between Jerry Zarcone, the Company and its subsidiaries (“Ninth Amendment”), which extends the term of each of the First, Second, Third, Fourth, and Fifth Tranche, to a maturity date of June 30, 2024, or such earlier date as demanded by Mr. Zarcone.

F-26

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information and financial data discussed below is derived from the unaudited condensed consolidated interim financial statements of the Target Group Inc. (“we,” “us” or the “Company”) for the three and nine months ended September 30, 2023 and were prepared and presented in accordance with generally accepted accounting principles in the United States.

Forward Looking Statements

Some of the statements contained in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Quarterly Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements to differ materially from those contemplated by such forward-looking statements include without limitation:

Our ability to raise capital when needed and on acceptable terms and conditions;
Our ability to attract and retain management;
Our ability to enter into long-term supply agreements for the mineralized material;
General economic conditions; and
Other factors are discussed in Risk Factors.

All forward-looking statements made in connection with this Quarterly Report are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Overview

Target Group Inc. (“Target Group” or the “Company”) was incorporated in the State of Delaware on July 2, 2013, under our original name of River Run Acquisition Corporation. Effective May 13, 2014, the Company changed its name to Chess Supersite Corporation. On July 3, 2018, the Company filed an amendment in its Certificate of Incorporation to change its name to Target Group Inc.

Effective October 18, 2018, the Company’s  common stock became eligible for quotation on the OTCQB platform operated by OTC Markets Group Inc, under the symbol “CBDY”.

During the third quarter of 2023, the lasting impacts  of  (COVID-19) continued to have an  impact on the Canadian and global economy and customer purchasing behavior. However, these factors have not impacted the Company’s operations, or financial results for the quarter.

Business and Plan of Operations

Cannabis Business-Canada

The Company is engaged in the cultivation, processing and distribution of curated cannabis products for the  medical and adult-use recreational cannabis market in Canada and, where legalized by state legislation, in the United States. The Company sees a shift in the public’s perception of cannabis from a state of prohibition to a state of legalization. In October 2018, Canada became the first major industrialized nation to legalize adult-use cannabis at the national federal level. Cannabis is still heavily regulated, however, the medical use of cannabis is now permitted in up to 29 countries and many more countries have reformed, or are considering reforming, their cannabis uses laws to include the medical and/or recreational use of cannabis.

4

In the 2016 publication by Deloitte, Insights and Opportunities Recreational Marijuana, the project size of the Canadian adult-use market ranged from CDN$4.9 billion to CDN$8.7 billion annually. In the 2018 publication by Deloitte, A Society in Transition, an Industry Ready to Boom, the projected size of the Canadian adult-use market in 2019 ranged from CDN$1.8 billion to CDN$4.3 billion. The Canadian medical cannabis industry experienced substantial growth since 2014. Health Canada projects the Canadian cannabis market will reach CDN$1.3 billion in annual value by 2024.

To the Company is positioning itself with a core emphasis on wholesale and co-packaging services to accommodate all consumer-packaged goods required for the sophisticated cannabis market in Canada and internationally. This will integrate cannabinoid research, analytical testing, product development and manufacturing.

Target Group’s  product manufacturing will include, but will not be limited to the following:

Cannabis flower pods for vaporizer use
Cannabis extract pods for vaporizer use
Cannabis pre-rolls
K-Cup infused coffee and tea pods
Infused cannabis beverages
Infused cannabis edibles
Infused topical products and CBD wellness products.

As of the date of this report, the Company  and its subsidiaries do not have any operations, employees or corporate offices based in United States.

Agreements

Serious Seeds

Effective December 6, 2018, the Company and Canary entered into a Distribution, Collaboration and Licensing Agreement (“Serious Agreement”) with Serious Seeds, incorporated in the Netherlands, and Simon Smit, President of Serious Seeds. Under the Serious Agreement, Canary was appointed the exclusive distributor in Canada and all other legal markets globally of Serious’ proprietary cannabis seed strains and Serious’ cannabis cuttings, dried flowers, extracts and seeds. In addition, under the Serious Agreement, Canary and Serious will develop certain “Collaborative Products” defined as cannabis seed strains created collaboratively using Serious’ intellectual property. During the term of the Serious Agreement, Canary owns all of the intellectual property related to the Collaborative Products.

Under the Serious Agreement, Smit granted Canary an exclusive license in Canada and all legal markets globally to Serious’ intellectual property including the right to use the service mark of Serious Seeds and all of the names of Serious’ proprietary cannabis seed strains including but not limited to Chronic, AK-47, White Russian, Bubble Gum, Kali Mist, Warlock, Double Dutch, Biddy, Early, Motavation and Strawberry-AKeil.

The initial term of the Serious Agreement  five (5) years and will be automatically renewed for consecutive five (5) terms subject to rights of termination upon one hundred and eighty (180) days prior notice. In consideration of the intellectual property rights granted by Smit to Canary, the Company would issue to Smit 250,000 shares of the Company’s common stock on the effective date of the Serious Agreement. In addition, on the thirteenth (13) month following the effective date of the Serious Agreement of the initial term, the Company would issue to Smit 5,208 shares of common stock and warrants to purchase 200,000 shares of Target common stock at an exercise price of $0.15 per share. Thereafter, from the fourteenth (14) month following the effective date of the Serious Agreement and continuing through the sixtieth (60) month of the initial term, the Company would issue Smit 5,208 shares of common stock and warrants to purchase 16,667 shares of Target common stock, each month, at varying exercise prices ranging from $0.20 to $0.35 per share. All of the above warrants must be exercised on or before the two (2) year anniversary date of each of the warrant issuance dates. As of September 30, 2023, none of the above shares have been issued.

5

In consideration of Canary’s appointment as Serious’ exclusive distributor in Canada, Canary will pay Serious Seeds certain royalties as follows:

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

On October 8, 2019, Canary was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). These Standard Licenses enable Canary to produce approximately 3,600kg of dried cannabis flower per year. Canary has curated a bank of 3,500 seeds, comprised of more than 125 strains, including the entire Serious Seeds collection. The Company has the capacity to grow eight (8) different strains at a time, within the facility’s eight (8) separate indoor flower rooms.

Joint Venture Agreement

Historical information

Effective May 14, 2020, Canary entered into a Joint Venture explained in Note 1.

Under the Joint Venture, JVCo was permitted to use all eight (8) rooms, of Canary’s licensed cannabis cultivation facilities located in Simcoe, Ontario, Canada (“Licensed Site Portion”) to operate and manage the Licensed Site Portion for the cultivation and process of cannabis pursuant to Canary’s license issued by Health Canada. During the term of the Joint Venture, JVCo was responsible for the administration, operation and management of the Licensed Site Portion and all proceeds from the sale of the cannabis and related cannabis products cultivated therein will be payable to the JVCo.

Canary, Thrive Cannabis, and JVCo entered into a Unanimous Shareholder Agreement dated May 14, 2020 governing the management and administration of the business of JVCo.

As per the Joint Venture, Canary will provide the JVCo with a Hard Cost Loan with the maximum amount of $887,520 (CAD $1,200,000). This loan bears an interest rate of 7% per annum, matures in 12 months from the effective date, and is secured against the personal property of the JVCo and Thrive will guarantee one-half (1/2) of the outstanding balance of the loan. As of September 30, 2023, the loan advanced amounts to $247,766 (CAD $335,000) and interest income charged for the nine months ended in the amount of $13,032 (CAD $17,539) is included in other income on the unaudited condensed consolidated interim statement of operations and comprehensive loss and interest receivable in the amount of $55,263 (CAD $74,720) is included in receivable from the Joint Venture on the unaudited condensed consolidated interim balance sheet. After April 27, 2023, as mentioned below, JVCo became a subsidiary of the company as result the above loan and interest receiveable were eliminated upon consolidation.

The JVCo reimbursed Canary for certain expenses incurred by Canary for the cultivation and processing of cannabis products. Below is the table which summarizes the activity of the period:

Period ended

January 1 to April 27, 2023

Nine months ended September 30, 2022

    

CAD

    

USD

    

CAD

    

USD

Sales

 

1,068,799

 

791,285

 

4,074,256

 

3,177,105

Cost of goods sold

 

620,344

 

459,271

 

2,110,851

 

1,646,042

Gross profit

 

448,455

332,014

  

1,963,405

1,531,063

Operation expenses

383,358

283,819

1,335,381

1,041,330

Net income (loss)

65,097

48,195

628,024

489,733

Eligible recoverable expenses

1,437,054

1,060,833

3,743,923

2,731,566

Recoverable amount

1,437,054

1,060,833

3,743,923

2,731,566

Income (loss) on equity

32,549

24,098

314,012

244,867

6

During the three months ended September 30, 2023, canary revenue (though its investment in JVCo) was sold to none of the customers.

Termination of joint venture agreement during quarter ended June 30, 2023

On April 27, 2023, Canary and Thrive Cannabis entered into a Release and Settlement Agreement (“Settlement Agreement”) in which Thrive Cannabis has transferred its shares in the capital of JVCo and rights of assets held by JVCo.

Pursuant to the above Settlement Agreement, Thrive Cannabis paid Canary $1,051,000 to release Thrive Cannabis from any mortgages, charges, pledges, security interests, liens, encumbrances, writs of execution, actions, claims, demands and equities of any nature related to JVCo from their share of ownership of JVCo.

Following the completion of the Settlement Agreement, Canary’s equity interest in JVCo increased from 50% to 100%. Effective April 28, 2023, the Company started consolidating results of operations of the JVCo and eliminated any intercompany transactions and balances between the Company (Target and Canary) and JVCo.

During the term of the Joint Venture, the Company accounted for the transactoins using the equity method under ASC 323 Investments - Equity Method and Joint Ventures. As a consequence of the Settlement Agreement, as the JVCo becoming a wholly owned subsidiary of the company as of April 27, 2023, the Company now uses the acquisition method of accounting (using a step acquisition method) under ASC 805 Business Combination.

As a consequence of the above Settlement Agreement and after obtaining 100% shares of the JVCo, the Company acquired the following assets:

    

Fair value

 

$

Assets acquired:

  

Inventory

1,690,368

Fixed assets

534,816

2,225,184

As of April 27, 2023, the Company had a carrying value of the investment in Joint Venture and receivable from Joint Venture on the consolidated balance sheets amounting to $1,023,608 and $706,598, respectively. Pursuant to the above Settlement Agreement, the Company received $776,382 against these balances. Accordingly, the remaining balance of $953,824 was compared to the fair value of the net assets acquired and this resulted in net recognition of $1,428,185 as a non-operating gain reported in the Consolidated Statement of Operations as net gain from termination of Joint Venture.

CL Investors Debt Purchase and Assignment Agreement

On June 15, 2020, the Company and its subsidiaries entered into the Debt Agreement with CLI explained in Note 1.  The Canary Debt, Term, repayment schedule, security and options are set forth in Note 1.

As of September 30, 2023, $3,698 (CAD $5,000) is still outstanding from CLI which is presented as other receivable on the consolidated balance sheet.

The Debt Agreement Amendment and CLI Warrants are explained in Note 1.   Refer to Note 11 for additional details on the CLI Warrants. The combined impact of both transactions resulted in a debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis.

The transactions contemplated by the Debt Agreement and the Amendment closed on August 14, 2020.

Forward Looking Relating to Future Operations of the Company.

Currently, the Company and its senior management are is exploring several new, additional opportunities at its Simcoe, Ontario cultivation facility to expand the Company’s product offerings in other cannabis-related consumer packaged goods (“CPG”) product categories.

7

Employees

As of September 30, 2023,  the Company had 50 employees which include Anthony Zarcone, Chief Executive Officer.

The Company has contracted several independent contractors and consultants to provide a range of information technology and marketing services who do not receive cash compensation but receive shares of our common stock as compensation. This mitigates any need for full or part-time employees for these services.

Intellectual Property Protection

Company subsidiary CannaKorp, holds the following patents:

International Patent Application No. PCT/US20115/013778

Title: METHODS AND APPARATUS FOR PRODUCING HERBAL VAPO

Filing Date: January 30, 2015

Ref. No.: B1411.70000WO00

U.S. Provisional Application No.: 61/934.255

Title: CONTAINER POD AND DELIVERY SYSTEM

Filing Date: January 31, 2014

Ref. No.: B1411.70000US00

In addition, CannaKorp has proprietary rights to certain trade names, trademarks and service marks which include WISP PODTM; cPODTM; CANNACUPTM; and WISPTM. CannaKorp also has certain proprietary formulas and processes involving herbal formulas and flavors, proprietary herbal production processes and an herbal base developed to suspend active ingredients for optimal vaporization.

At present, CannaKorp has failed to meet its annuities payments as well as maintenance fees on the 2 referenced patents. Although there has been a lapse and these patents remain unmaintained, there remains the possibility of CannaKorp reinstating these patents if done so in a reasonable amount of time. At this time, management is determining the value maintaining these patents will provide the Company. Once management has completed their assessment, the Company will proceed accordingly and advance in that determined direction moving forward. Additionally, CannaKorp is actively seeking a joint venture partner and/ or a licensor to assist in both marketing and launching the Wisp Vaporizer and Wisp Pods in both the US and Canadian legal cannabis or hemp markets.

Results of Operations

The Company has not generated significant revenue to date and consequently, its operations are subject to all of the risks inherent in the establishment of a new business enterprise. Analysis on the performance of the Company is as follows:

Balance sheet – As of September 30, 2023 and December 31, 2022

Cash and Restricted Cash

On September 30, 2023, the Company had cash of $445,416 (excluding restricted cash of $8,506) compared to $223,843 (excluding restricted cash of $8,490) as of December 31, 2022. The increase is because target received $1 million due to the termination of the joint venture agreement.

The change in restricted cash is due to foreign exchange conversion of balances in Canadian Dollars into United States Dollar.

Prepaid asset

On September 30, 2023, the Company had prepaid expenses of $41,787 compared to $41,714 as of December 31, 2022. The balance represents the security deposit for the leased land for the facility to produce medical marijuana.

8

Sales tax recoverable and payable

On September 30, 2023 the gross sales tax recoverable is $72,927 compared to December 31, 2022 $nil while the gross sales tax payable as of September 30, 2023 is $nil.

Recoverable is due to the sales tax paid by the Company on expenses incurred during the year which are recoverable from the government while payable is due to the sales tax received (after deducting sales tax paid on expenses incurred by the Company) during the year which are payable from the government due to sales conducted by the Joint Venture.

Sales tax recoverable allowance on September 30, 2023 is $7,829 (December 31, 2022: $nil).

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of our subsidiaries at the date of acquisition.

Fixed assets

The Company initiated construction on its 44,000 square foot cannabis cultivation facility in September of 2017. On May 1, 2019, the Company completed the construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site Evidence Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility. On October 8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). On June 4, 2021, Canary received its Sales License amendment from Health Canada.

Accounts payable and accrued liabilities

Accounts payable amounting to $2,671,621 as of September 30, 2023, primarily represents consulting and construction services related to capital work in progress amounting to $148,980, interest on promissory notes and loans amounting to $1,243,804, and outstanding, accrued professional fees amounting to $903,083.

Accounts payable amounting to $2,296,935 as of December 31, 2022, primarily represents consulting and construction services related to fixed asset additions amounting to $154,811, interest on promissory notes and loans amounting to $739,130, outstanding and accrued professional fees amounting to $906,596.

Payable to related parties

As of September 30, 2023, the Company had $11,134,521 payable to related parties as compared to $10,346,465 as of December 31, 2022. The balance primarily represents loans provided by the Company’s shareholder and a related party, CLI, management services fee outstanding to the managers of the company, and outstanding amount of $65,000 to be paid to a former shareholder of CannaKorp as part of the settlement agreement.

For additional details, refer to Note 8 in the unaudited condensed consolidated interim financial statements.

Convertible promissory notes payable

Interest amounting to $10 was accrued for the nine months ended September 30, 2023 (September 30, 2022: $27).

The principal amount outstanding as of September 30, 2023 and December 31, 2022 was $480. At both reporting dates, the entire balance was current.

9

Statement of Operations – For the three months ended September 30, 2023 and 2022:

Revenue

The Company generated revenue of $1,046,227 during the quarter ended in 2023 while $nil in the comparable period of 2022. However, Canary generated revenues of $nil (through its investment in JVCo) during the quarter ended September 30, 2023 (quarter ended September 30, 2022: $1,085,716) and is represented as a share of income from joint venture on the unaudited condensed consolidated interim statement of operations. The Company revenue represents the sale of cannabis product and the revenue was concentrated to eight customers.

Expenses

The Company’s  expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, and depreciation expense. The increase in operating expenses during the current quarter ended compared to comparable prior quarter ended is due to significant increase in consulting fee, management fees and office and general expenses in the current period.

Expenses primarily represented consulting fees of $31,779 (2022: $246), management fees of $78,352 (2022: $19,399), legal and professional charges of $27,799 (2022: $41,253) comprising legal, review, accounting and Edgar agent fee, depreciation expense amounting to $237,789 (2022: $220,390) and office and general expenses of $153,041 (2022: $79,195).

Changes in other income and expenses were due to: (1) the revaluation of the warrant and convertible debt liabilities on each quarter-end which reduced significantly in magnitude since a significant number of warrants expired during the current period ended; (2) increase in the principal balance of higher interest rate bearing loans led to increased interest expense; and (3) and significant increase in exchange income during the quarter due to favorable exchange rate.

Other income and expenses comprised, change in fair value of derivative and warranty liability amounting to negative $8,988 (2022: positive $2,040), interest and bank charges amounting to $337,675 (2022: $269,106), exchange gain of $50,995 (2022: gain of $130,870) other income of $nil (2022: $49,346), and debt issuance cost of $12,509 (2022: $12,855).

Statement of Operations – For the nine months ended September 30, 2023 and 2022:

Revenue

The Company generated revenue of $1,805,211 during the nine months ended in 2023 while $nil in the comparable period of 2022. However, Canary generated revenues of $791,285 (through its investment in JVCo) during the nine months ended September 30, 2023 (nine months ended September 30, 2022: $3,177,105) and is represented as a share of income from joint venture on the unaudited condensed consolidated interim statement of operations. The company revenue represents the sale of cannabis product and the revenue was concentrated to eight customers.

Expenses

The Company’s  expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, and depreciation expense. The increase in operating expenses during the current quarter ended compared to comparable prior quarter ended is due to significant increase in consulting fee and management fees, office and general expenses, salaries and wages in the current period. Other than that, the expense level has remained similar on an overall level due to the management’s continuous efforts to control and reduce expenses.

Expenses primarily represented consulting fees of $47,885 (2022: $18,939), management fees of $233,867 (2022: $102,915), legal and professional charges of $231,726 (2022: $213,844) comprising legal, review, accounting and Edgar agent fee, depreciation expense amounting to $680,043 (2022: $673,349), and office and general expenses of $212,172 (2022: $10,249).

Changes in other income and expenses were due to: (1) the revaluation of the warrant and convertible debt liabilities on each quarter-end which reduced significantly in magnitude since a significant number of warrants expired during the current period ended; (2) increase

10

in the principal balance of higher interest rate bearing loans led to increased interest expense; and (3) and significant decrease in exchange income during the quarter due to unfavorable exchange rate.

Other income and expenses comprised, change in fair value of derivative and warranty liability amounting to negative $10,314 (2022: positive $18,852), interest and bank charges amounting to $1,060,373 (2022: $830,167), exchange gain of $201 (2022: gain of $172,863) other income of $16,782 (2022: 747,122), and debt issuance cost of $37,266 (2022: $39,098).

Liquidity and Capital Resources

As of September 30, 2023, the Company had a working capital deficit of $5,825,589 (December 31, 2022: $6,017,434). The Company is actively seeking various financing opportunities to meet the deficit capital requirements.

Target Group has relied on equity financing and related party debt financing for our operations. The proceeds may not be sufficient to effectively develop our business to the fullest extent to allow us to maximize our revenue potential, in which case, we will need additional capital.

The Company  will need capital to allow us to invest in development, and it anticipates that its future operations will generate positive cash flows provided that it is successful in obtaining additional financing in the foreseeable future.

Statement of Cash Flow – For the nine months ended September 30, 2023 and 2022:

Operating activities

Operating activities used cash of $879,280 compared to cash used of $1,070,205 for the corresponding period of the prior year. This is primarily due to the gain on debt settlement, change in accounts receivable and inventory.

Investing activities

Investing activities provided cash of $434,998 for the nine months ended September 30, 2023 compared to $1,240,111 cash provided in the corresponding period of the prior year. The current period cash utilization represents improvements to Canary’s facility to increase its efficiency and increase cannabis production.

Financing activities

Financing activities provided cash of $668,940 for the nine months ended September 30, 2023 compared to cash used in of $70,413 during the nine months of 2022. Cash was provided by a loan advance from a related party in the current period.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

All critical accounting policies are described in the Company’s Form 10-K for the year ended December 31, 2022.

Subsequent Events

The Company’s management has evaluated subsequent events up to November 8, 2023, the date the unaudited condensed consolidated interim financial statements were issued, pursuant to the requirements of ASC 855 and has the following subsequent events to report:

A ninth amending agreement is made on November 7, 2023 in which the term of each of the First Tranche, Second Tranche, Third Tranche, Fourth Tranche, and Fifth Tranche shall be extended and expiry, and all amounts owing and accruing thereunder shall be repaid on June 30, 2024 or such earlier date as Jerry makes demand thereon.

11

Description of Property

The Company does not own any properties at this time and do not have presently any agreements to acquire any properties.

The Company’s principal executive office is located at 20 Hempstead Drive, Hamilton, Ontario, Canada.

The Company’s subsidiary, Canary, leases a 44,000 square foot facility located in Norfolk County, Ontario to produce medical and recreational cannabis.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), we have carried out an evaluation, with the participation of our management, including the Company’s principal executive officer and principal financial officer of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2023 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in internal controls

No change in our system of internal control over financial reporting occurred during the nine months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

12

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During the year ended December 31, 2019, a terminated employee of Canary filed a lawsuit against the Company amounting to approximately $1,553,160 (CAD $2,100,000) in Ontario, Canada. Currently, the Company is defending its position and believes that the ultimate decision will be in favor of the Company.

A complaint for damages of $150,000 was filed against CannaKorp by the former Chief Financial Officer of CannaKorp for outstanding professional fees. No claim has been registered. The management is of the view that no material losses will arise in respect of the legal claim at the date of this report.

A claim for damages of $1,377,731 (CAD $1,862,805) was filed against Company and its directors by the former Chief Financial Officer of the Company for wrongful dismissal. The management is of the view that no material losses will arise in respect of the legal claim at the date of this report.

During the year ended December 31, 2020, a claim for damages of $96,723 (CAD $130,778) was filed against Canary by a vendor for breach of contract. The management is of the view that no material losses will arise in respect of the legal claim at the date of this report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

13

ITEM 6. EXHIBITS

Exhibits:

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

14

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

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

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

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.

101.INS

    

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*

Filed herewith.

15

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TARGET GROUP INC.

Dated: November 8, 2023

By:

/s/ Anthony Zarcone

Chief Executive Officer, and Director

Dated: November 8, 2023

By:

/s/ Barry Alan Katzman

Director

Dated: November 8, 2023

By:

/s/ Saul Niddam

Director

16

Exhibit 10.35

NINTH AMENDING AGREEMENT

THIS AGREEMENT made as of the         day of                , 2023

BETWEEN:

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”)

WHEREAS:

A.

Jerry and TGI entered into a Loan Agreement made as of the 20th day of December, 2019 (the “Loan Agreement”), which Loan Agreement has been amended and extended by various amending and extending agreements from time to time the most recent of is the Eighth Amending Agreement made as of the 28th day of March, 2023 (collectively, the “SAA”).

B.

All capitalized terms shall have the meanings ascribed to them in the SAA unless otherwise defined herein.

-1-


C.

The parties are desirous of further amending the Loan Agreement upon the terms and provisions of this Agreement.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the respective covenants and agreements hereinafter contained and the sum of One Dollar ($1.00) now paid by the parties hereto each to the other (the receipt and sufficiency of which is hereby acknowledged by each of the parties hereto), the parties hereto agree as follows:

1.

The parties hereby declare and confirm that the Recitals are true and accurate and form integral terms and provisions of this Agreement.

2.

The Loan be and same is hereby amended such the term of each of the First Tranche, Second Tranche, Third Tranche, Fourth Tranche, and Fifth Tranche shall be extended and expiry, and all amounts owing and accruing thereunder, shall be repaid on June 30, 2024 or such earlier date as Jerry makes demand thereon.

3.

TGI and the Subsidiaries shall execute, deliver, and, if applicable, register within a reasonable time following presentation thereof by Jerry or his counsel (but in no event more than five (5) business days following such presentation) and shall also promptly do or cause to be done all other acts and things, execute and deliver or cause to be executed and delivered all agreements and documents and provide any further assurances, undertakings and information in order to give full effect to this Agreement.

4.

Except as modified by this Agreement, the Loan Agreement shall be unamended and shall be and shall remain in full force and effect.  Also, to the extent that any term or provision of this Agreement conflicts with any term or provision of the Loan Agreement, the terms and provision of this Agreement shall prevail.

5.

This Agreement may be executed by the parties in separate counterparts each of which when so executed and delivered to each other shall be deemed to be and shall be read as a single agreement among the parties.

6.

This Agreement is governed by and is to be construed and interpreted in accordance with, the laws of the Province of Ontario and the laws of Canada applicable in that Province.

7.

This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no representations, warranties or other agreements between the parties in connection with the subject matter of this Agreement except as specifically set out in this Agreement.

[signatures intentionally on next page]

-2-


Each of the parties has executed and delivered this Agreement as of the date first above written.

SIGNED IN THE PRESENCE OF

)

)

)

)

Witness

)

JERRY ZARCONE

TARGET GROUP INC.

Per:

Name: Saul Niddam

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

-3-


CANNAKORP INC.

Per:

Name: Saul Niddam

Position: CEO

I have authority to bind the Corporation

-4-


Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

I, Anthony Zarcone, certify that:

1.I have reviewed this Form 10-Q of Target Group Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the unaudited condensed consolidated interim financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of unaudited condensed consolidated interim financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
d)Disclosed in this report is any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 8, 2023

/s/ Anthony Zarcone

Chief Executive Officer


Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

I, Anthony Zarcone, certify that:

1.I have reviewed this Form 10-Q of Target Group Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the unaudited condensed consolidated interim financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of unaudited condensed consolidated interim financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
d)Disclosed in this report is any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 8, 2023

/s/ Anthony Zarcone

Principal Financial Officer


Exhibit 32.1

CERTIFICATION PURSUANTTO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned officer of Target Group Inc. (the “Company”), hereby certify that:

The Report on Form 10-Q for the nine months ended September 30, 2023 of the Company fully complies, in all material respects, with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2023

By:

/s/ Anthony Zarcone

Chief Executive Officer

(Principal Executive Officer)

(Principal Financial Officer)


v3.23.3
DOCUMENT AND ENTITY INFORMATION - shares
9 Months Ended
Sep. 30, 2023
Nov. 08, 2023
Document and Entity Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Document Transition Report false  
Entity File Number 000-55066  
Entity Registrant Name TARGET GROUP INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 46-3621499  
Entity Address, Address Line One 20 Hempstead Drive  
Entity Address, Address Line Two Hamilton  
Entity Address, City or Town Ontario  
Entity Address, Country CA  
Entity Address, Postal Zip Code L8W 2E7  
City Area Code 1 905  
Local Phone Number 541-3833  
Title of 12(g) Security Common Stock, Par Value $0.0001  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Trading Symbol CBDY  
Entity Common Stock, Shares Outstanding   617,025,999
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Entity Central Index Key 0001586554  
Current Fiscal Year End Date --12-31  
Amendment Flag false  
v3.23.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current assets    
Cash $ 445,416 $ 223,843
Restricted cash 8,506 8,490
Accounts receivable, no allowance 128,244 2,068
Inventory 1,892,739  
Prepaid asset 41,787 41,714
Sales tax recoverable, net of allowance $ 65,098  
Receivable from joint venture   $ 630,180
Other Receivable, after Allowance for Credit Loss, Current, Related Party, Type [Extensible Enumeration] Related Party [Member] Related Party [Member]
Other receivable $ 3,698 $ 3,692
Other Receivable, after Allowance for Credit Loss, Related Party, Type [Extensible Enumeration] Related Party [Member] Related Party [Member]
Total current assets $ 2,585,488 $ 909,987
Long term assets    
Fixed assets 5,428,478 5,554,225
Investment in joint venture   775,577
Goodwill 263,580 263,117
Operating lease right-of-use assets 49,578 62,728
Total long term assets 5,741,636 6,655,647
Total assets 8,327,124 7,565,634
Current liabilities    
Bank overdraft 506 506
Accounts payable and accrued liabilities 2,671,621 2,296,935
Sales tax payable   35,254
Payable to related parties, net $ 5,595,160 $ 4,468,535
Accounts Payable, Current, Related Party, Type [Extensible Enumeration] Related Party [Member] Related Party [Member]
Operating lease liability - Current portion $ 119,151 $ 110,586
Convertible promissory notes, net 480 480
Derivative liability 24,159 15,125
Total current liabilities 8,411,077 6,927,421
Long term liabilities    
Payable to related parties, net - Non-current portion $ 5,539,361 $ 5,877,930
Accounts Payable, Noncurrent, Related Party, Type [Extensible Enumeration] Related Party [Member] Related Party [Member]
Operating lease liability - Non-current portion $ 1,230,306 $ 1,319,619
Warrant liability 1,770 489
Total long term liabilities 6,771,437 7,198,038
Total liabilities 15,182,514 14,125,459
Stockholders' deficiency    
Preferred stock 100 100
Common stock 61,703 61,703
Shares to be issued 175,392 175,182
Additional paid-in capital 24,985,697 24,985,697
Accumulated deficit (30,922,383) (30,783,678)
Accumulated comprehensive loss (1,155,899) (998,829)
Total stockholders' deficiency (6,855,390) (6,559,825)
Total liabilities and stockholders' deficiency 8,327,124 7,565,634
Contingencies and commitments
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)        
Revenue $ 1,046,227   $ 1,805,211 $ 0
COST OF GOOD SOLD (454,241)   (823,502)  
Gross profit 591,986   981,709  
OPERATING EXPENSES        
Advisory and consultancy fee 31,779 $ 246 47,885 18,939
Management services fee 78,352 19,399 233,867 102,915
Salaries and wages     (53,083) 9,775
Legal and professional fees 27,799 41,253 231,726 213,844
Depreciation expense 237,789 220,390 680,043 673,349
Operating lease expense 119,729 (81,976) 137,039 (115,881)
Office and general 153,041 79,195 212,172 10,249
Total operating expenses 648,489 278,507 1,489,649 913,190
OTHER EXPENSES (INCOME)        
Change in fair value of derivative and warrant liability 8,988 (2,040) 10,314 (18,852)
Gain on settlement     (1,428,185)  
Interest and bank charges $ 337,675 $ 269,106 $ 1,060,373 $ 830,167
Interest Expense, Related Party, Type [Extensible Enumeration] Related Party [Member] Related Party [Member] Related Party [Member] Related Party [Member]
Exchange income $ (50,995) $ (130,870) $ (201) $ (172,863)
Other income   (49,346) (16,782) (747,122)
(Recovery) Allowance of sales tax recoverable (7,868) 1,756 (7,868) (503)
Share of income from joint venture   (93,819) (24,152) (244,867)
Debt issuance cost 12,509 12,855 37,266 39,098
Total other expense (income) 300,309 7,642 (369,235) (314,942)
Net loss before income taxes (356,812) (286,149) (138,705) (598,248)
Net loss (356,812) (286,149) (138,705) (598,248)
Foreign currency translation adjustment 67,911 (15,319) (157,070) (32,664)
Comprehensive loss $ (288,901) $ (301,468) $ (295,775) $ (630,912)
Loss per share - basic $ (0.0006) $ (0.0005) $ (0.0002) $ (0.0010)
Weighted average shares - basic 617,025,999 617,025,999 617,025,999 617,025,999
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) - USD ($)
Preferred stock
Common stock
Shares to be issued
Additional Paid-in Capital
Accumulated deficit
Accumulated Comprehensive Income
Total
Beginning balance at Dec. 31, 2021 $ 100 $ 61,703 $ 174,722 $ 24,985,697 $ (26,263,614) $ (1,110,720) $ (2,152,112)
Beginning balance (in shares) at Dec. 31, 2021 1,000,000 617,025,999 1,516,528        
Shares issued as consideration for consideration of the intellectual property rights     $ 387       387
Shares issued as consideration for consideration of the intellectual property rights (in shares)     46,872        
Net income (loss)         (598,248)   (598,248)
Foreign currency translation           (32,664) (32,664)
Ending balance at Sep. 30, 2022 $ 100 $ 61,703 $ 175,109 24,985,697 (26,861,862) (1,143,384) (2,782,637)
Ending balance (in shares) at Sep. 30, 2022 1,000,000 617,025,999 1,563,400        
Beginning balance at Jun. 30, 2022 $ 100 $ 61,703 $ 174,989 24,985,697 (26,575,713) (1,128,065) (2,481,289)
Beginning balance (in shares) at Jun. 30, 2022 1,000,000 617,025,999 1,547,776        
Shares issued as consideration for consideration of the intellectual property rights     $ 120       120
Shares issued as consideration for consideration of the intellectual property rights (in shares)     15,624        
Net income (loss)         (286,149)   (286,149)
Foreign currency translation           (15,319) (15,319)
Ending balance at Sep. 30, 2022 $ 100 $ 61,703 $ 175,109 24,985,697 (26,861,862) (1,143,384) (2,782,637)
Ending balance (in shares) at Sep. 30, 2022 1,000,000 617,025,999 1,563,400        
Shares issued as consideration for consideration of the intellectual property rights     $ 73        
Shares issued as consideration for consideration of the intellectual property rights (in shares)     15,624        
Ending balance at Dec. 31, 2022 $ 100 $ 61,703 $ 175,182 24,985,697 (30,783,678) (998,829) (6,559,825)
Ending balance (in shares) at Dec. 31, 2022 1,000,000 617,025,999 1,579,024        
Shares issued as consideration for consideration of the intellectual property rights     $ 210       210
Shares issued as consideration for consideration of the intellectual property rights (in shares)     46,872        
Net income (loss)         (138,705)   (138,705)
Foreign currency translation           (157,070) (157,070)
Ending balance at Sep. 30, 2023 $ 100 $ 61,703 $ 175,392 24,985,697 (30,922,383) (1,155,899) (6,855,390)
Ending balance (in shares) at Sep. 30, 2023 1,000,000 617,025,999 1,625,896        
Beginning balance at Jun. 30, 2023 $ 100 $ 61,703 $ 175,293 24,985,697 (30,565,571) (1,223,810) (6,566,588)
Beginning balance (in shares) at Jun. 30, 2023 1,000,000 617,025,999 1,610,272        
Shares issued as consideration for consideration of the intellectual property rights     $ 99       99
Shares issued as consideration for consideration of the intellectual property rights (in shares)     15,624        
Net income (loss)         (356,812)   (356,812)
Foreign currency translation           67,911 67,911
Ending balance at Sep. 30, 2023 $ 100 $ 61,703 $ 175,392 $ 24,985,697 $ (30,922,383) $ (1,155,899) $ (6,855,390)
Ending balance (in shares) at Sep. 30, 2023 1,000,000 617,025,999 1,625,896        
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
OPERATING ACTIVITIES    
Net loss for the period $ (138,705) $ (598,248)
Adjustment for non-cash items    
Change in fair value of derivative and warrant liability 10,314 (18,852)
Gain on settlement (1,428,185)  
Shares and warrants issued/to be issued for services 821 408
Allowance (recovery) of sales tax recoverable (7,868) (503)
Depreciation expense 680,043 673,349
Operating lease expense 178,134 198,254
Investment (income) loss from joint venture (24,152) (244,867)
Debt issuance cost 37,266 39,098
Changes in operating assets and liabilities:    
Change in accounts receivable (126,802)  
Change in inventory (116,135)  
Change in sales tax recoverable (93,043) 33,629
Change in accounts payable and accrued liabilities 390,256 (901,898)
Change in operating lease liability, net (241,224) (250,575)
Net cash used in operating activities (879,280) (1,070,205)
INVESTING ACTIVITIES    
Amounts invested on fixed assets (5,363) (318)
Net proceeds from joint venture 440,361 1,240,429
Net cash provided by investing activities 434,998 1,240,111
FINANCING ACTIVITIES    
Proceeds from loans from related parties 668,940 77,980
Settlement of related party loan   (138,393)
Payment for settlement payable   (10,000)
Net cash provided (used) by financing activities 668,940 (70,413)
Net change in cash and restricted cash during the period 224,658 99,493
Effect of foreign currency translation (3,069) (15,549)
Cash and restricted cash, beginning of period 232,333 122,151
Cash and restricted cash, end of period 453,922 206,095
NON-CASH INVESTING AND FINANCING ACTIVITIES    
Shares issued as consideration for services 120 120
SUPPLEMENTARY CASH FLOW INFORMATION    
Cash paid for interest $ 874,518 $ 2,102,799
v3.23.3
Organization, Nature of Business, Going Concern and Management Plans
9 Months Ended
Sep. 30, 2023
Organization, Nature of Business, Going Concern and Management Plans  
Organization, Nature of Business, Going Concern and Management Plans

1.     Organization, Nature of Business, Going Concern and Management Plans

Organization and Nature of Business

Target Group Inc. (“Target Group” or the  “Company”) was incorporated on July 2, 2013, under the laws of the state of Delaware,  to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. On July 3, 2018, the Company filed an amendment in its Certificate of Incorporation to change its name to Target Group Inc., and he Company  secured the OTC Bulletin Board symbol CBDY from the Financial Industry Regulatory Authority (FINRA).

Target Group is a diversified, vertically integrated, progressive company with a focus nationally and internationally . The Company wholly owns and operates Canary Rx Inc, a Canadian licensed producer (“Canary”), regulated under The Cannabis Act (Bill C-45). Canary, operates a 44,000 square foot facility located in Norfolk County, Ontario. The Company has an ongoing strategic partnership  with Dutch breeder, Serious Seeds B.V. (“Serious Seeds”), to cultivate exclusive, world-class proprietary genetics. The Company has structured multiple international production and distribution platforms and continues to expand its global footprint,  focused on building an iconic brand portfolio with cutting-edge intellectual property  in both the medical and recreational cannabis markets. Target Group is committed to building industry-leading companies that transform the perception of cannabis and responsibly elevate the overall patient and consumer experience.

The Company’s core business is  producing, manufacturing, distributing, and selling of cannabis products. As of the current year to date period end, Canary has produced and sold cannabis products of $1,805,211 (Period ended September 30, 2022: $nil).

Joint Venture Agreement Termination; Consolidation of JVCo with Canary

Effective May 14, 2020, Canary entered into a Joint Venture Agreement (“Joint Venture”) with 9258159 Canada Inc., a corporation organized under the laws of the Province of Ontario, Canada (referred to herein as “Thrive Cannabis”) and 2755757 Ontario Inc., a corporation organized under the laws of the Province of Ontario, Canada (referred to herein as “JVCo”). Canary and Thrive each held 50% of the voting equity interest in JVCo. The term of the Joint Venture was five (5) years from its effective date of May 14, 2020.

On April 27, 2023, Canary and Thrive Cannabis entered into a Release and Settlement Agreement (“Settlement Agreement”) in which Thrive Cannabis  transferred its shares in the capital of JVCo and rights of assets held by JVCo, paid Canary $1,051,000 to release Thrive Cannabis from any mortgages, charges, pledges, security interests, liens, encumbrances, writs of execution, actions, claims, demands and equities of any nature related to JVCo from their share of ownership of JVCo.

Following the completion of the Settlement Agreement, Canary’s equity interest in JVCo increased from 50% to 100%. Effective April 28, 2023, the Company started consolidating results of operations of the JVCo and eliminated any intercompany transactions and balances between the Company (Target and Canary) and JVCo.

During the term of the Joint Venture, the Company accounted for the transactoins using the equity method under ASC 323 Investments — Equity Method and Joint Ventures. As a consequence of the Settlement Agreement, as the JVCo becoming a wholly owned subsidiary of the company as of April 27, 2023, the Company now uses the acquisition method of accounting (using a step acquisition method) under ASC 805 Business Combination.

CL Investors Debt Purchase and Assignment Agreement

On June 15, 2020, the Company, its first–tier subsidiaries Visava Inc. (“Visava”) CannaKorp Inc. (“CannaKorp”), and the Company’s second-tier subsidiary, Canary  entered into a Debt Purchase and Assignment Agreement (“Debt Agreement”) with CL Investors Inc. , a corporation organized under the laws of the Province of Ontario, Canada (“CLI”). While June 15, 2023 was the preliminary date of the Debt Agreement, it was not finalized until the later date as indicated below. The CEO and director of the Company is a shareholder and the Secretary of CLI, and the brother of the CEO is the President and sole director of CLI therefore the below loan from CLI is classified under related party transactions.

Pursuant to the Debt Agreement, CLI purchased from the Company for the sum of $2,144,840 (CAD $2,900,000) a debt obligation owing from Canary to the Company in the principal balance of $7,839,760 (CAD $10,600,000 (“Canary Debt”)). Upon receipt of the

consideration, the Company loaned the full sum to Canary under terms of an unsecured, non-interest-bearing promissory note (“Note”), subject to a covenant by the Company not to take any collection action so long as the Canary Debt remains unpaid to CLI. As of September 30, 2023, $3,698 (CAD $5,000) is still outstanding from CLI which is presented as other receivable on the unaudited condensed consolidated interim balance sheet.

As a condition of the closing of the Debt Agreement, the terms of the Canary Debt were amended to provide for interest at 5% per annum with a maturity date of 60 months from the date of the Debt Agreement (“Term”). The Canary Debt was to be repaid according to the following schedule:

a)In the first year of the Term, Canary will pay CLI the greater of $835,748 (CAD 1,130,000) and fifty percent (50%) of the Net Revenue (hereinafter defined), provided that where the latter amount exceeds the former amount, Canary will, by the end of such first year, pay CLI no less than the former amount and Canary will, within thirty (30) days following the end of such first year, pay CLI the balance of such amount owing for such first year;
b)In the second year of the Term, Canary will pay CLI the greater of $1,553,160 (CAD 2,100,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2021, provided that where the latter amount exceeds the former amount, Canary will, within thirty (30) days following the end of such second year, pay CLI the balance of such amount owing for such second year;
c)In the third year of the Term, Canary will pay CLI the greater of $2,381,512 (CAD 3,220,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2022, provided that where the latter amount exceeds the former amount, Canary will, by the end of such third year, pay CLI no less than the former amount and Canary will, within thirty (30) days following the end of such third year, pay CLI the balance of such payments owing for such third year;
d)In the fourth year of the Term, Canary will pay CLI the greater of $2,277,968 (CAD 3,080,000) and fifty percent (50%) of the Net Revenue, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2023, provided that where the latter amount exceeds the former amount, Canary will, within thirty (30) days following the end of such fourth year, pay CLI the balance of such amount owing for such fourth year; and
e)In the fifth year of the Term, Canary will pay CLI the balance owing under this Note, by way of twelve (12) consecutive monthly installments payable on the 14th day of each month commencing on August 14, 2024, for an amount calculated by dividing twelve (12) into the sum of all amounts owing under this Note at the beginning of the fifth year of the Term on account of Principal and Interest, provided that where further amounts are owing under this Note at the end of such fifth year, Canary will pay CLI all such further amounts within five (5) days following the end of such fifth year.

For the purpose of the Note, “Net Revenue” means any and all revenue generated from Canary’s Licensed Facility (hereinafter defined) to which it is entitled to net of applicable taxes and third-party expenses.

The repayment of the Canary Debt, as amended, was guaranteed by the Company’s wholly-owned subsidiaries Vivasa and CannaKorp. and secured by (i) a general security interest in the assets of the Company, Canary, Visava and CannaKorp, respectively; and (ii) a pledge by the Company of all of the issued and outstanding common stock of Canary, Visava and CannaKorp, held by the Company. In addition to the foregoing guarantees, security interest and stock pledge, CLI was granted an option, in lieu of repayment of the amended Canary Debt, to demand, in its sole and absolute discretion the transfer, assignment and conveyance of 75% of the issued and outstanding capital stock of Visava and Canary. Furthermore, the President and sole director of CLI was granted an option to acquire the remaining 25% of the issued and outstanding capital stock of Visava and Canary.

Effective August 14, 2020, the Debt Agreement was amended (“Amendment”) to provide that CLI would purchase from Rubin Schindermann, a director of the Company, 500,000 shares of the Company’s Series A Preferred Stock in consideration of the payment by CLI to Rubin Schindermann of $73,960 (CAD $100,000) and the issuance to Schindermann of 10,000,000 shares of the Company’s common stock. In consideration of the foregoing, Mr. Schindermann resigned as a director of the Company and from any and all administrative and executive positions with the Company’s subsidiaries Visava, Canary and CannaKorp, respectively. In addition, the Company issued Common Stock Purchase Warrant for 10,000,000 shares of Target Group’s common stock to CLI as consideration for the Debt Agreement (“CLI Warrants”). Refer to Note 11 for additional details on the CLI Warrants. The combined impact of both

transactions resulted in debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis.

The transactions contemplated by the Debt Agreement and the Amendment closed on August 14, 2020.

cGreen, Inc. Exclusive License Agreement

Effective August 8, 2019, the Company entered into an Exclusive License Agreement (“License Agreement”) with cGreen, Inc., a Delaware corporation (“cGreen”). The License Agreement granted to the Company an exclusive license to manufacture and distribute the patent-pending THC antidote True Focus(TM) in the United States, Europe and the Caribbean. The term of the license was ten (10) years and four (4) months from the effective date of August 8, 2019. In consideration of the license, the Company would issue 10,000,000 shares of its common stock as follows: (i) 3,500,000 within ten (10) days of the effective date; (ii) 3,500,000 shares on January 10, 2020; and (iii) 3,000,000 shares not later than June 10, 2020. In addition, the Company would pay cGreen royalties of 7% of the net sales of the licensed products and 7% of all sublicensing revenues collected by the Company. The Company would pay cGreen an advance royalty of $300,000 within ten (10) days of the effective date; $300,000 on January 10, 2020; and $400,000 on or before June 10, 2020, and $500,000 on or before November 10, 2020. All advance royalty payments would be credited against the royalties owed by the Company through December 31, 2020. During the quarter ended December 31, 2019, the intangible asset was written off based on management’s review and evaluation of its recoverability.

During the quarter ended June 30, 2020, the Company was in arbitration with cGreen for the breaches of the terms of the License Agreement, however, through an early mediation, the parties reached a settlement of their claims and counterclaims on July 27, 2020 (“Effective Date”). As per the settlement agreement, the License Agreement was terminated, and the Company did not have to issue the 10 million shares nor pay the outstanding royalty payable in the amount of $1,191,860. As consideration, the Company paid $130,000 within 30 days of the Effective Date and started paying $100,000 in monthly installments of $10,000 commencing in April 2021 to cGreen resulting in a gain on settlement in the amount of $1,704,860.

As at September 30, 2023, there was no outstanding balance, the balance was paid in full and the claim was closed during the quarter ended March 31, 2022 (December 31, 2021: $10,000).

Going Concern

The Company has earned minimal revenue since inception to date and has sustained operating losses during the nine months ended September 30, 2023. The Company had a working capital deficit of $5,825,589 and an accumulated deficit of $30,922,383 as of September 30, 2023. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.

The unaudited accompanying condensed consolidated interim financial statements have been prepared assuming that the Company will continue as a going concern up to at least 12 months from the balance sheet date; however, the above condition raises substantial doubt about the Company’s ability to do so. The unaudited condensed consolidated interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations, sale of its equity or issuance of debt. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.

v3.23.3
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2023
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2.     Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the SEC and are expressed in US dollars. Accordingly, the unaudited condensed consolidated interim financial statements do not include all information and footnotes required by US GAAP for complete annual financial statements. The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2023, or for any other interim period. The unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto as of and for the year ended December 31, 2022.

The unaudited condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries, Visava, Canary, CannaKorp, and JVCo. Significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of the unaudited condensed consolidated interim financial statements in conformity with US 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 of the unaudited condensed consolidated interim financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to accruals. Actual results could differ from those estimates.

Cash

The Company places its cash with high-quality banking institutions. The Company have cash balances in excess of the Federal Deposit Insurance Corporation (FDIC) limit as of September 30, 2023 where as cash balances were not in excess of FDIC limit as of September 30, 2022.

Cash and cash equivalents include cash on hand and deposits at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have cash equivalents as of September 30, 2023 and 2022.

Restricted cash represents deposits made to the Company’s bank as a requirement to use the bank’s credit card which is not available for immediate or general business use.

Fixed Assets

Fixed assets are reported at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of assets, commencing when the assets become available for productive use, based on the following estimated useful lives:

Depreciation is calculated using the following terms and methods:

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

An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period the asset is derecognized. The assets’ residual values, useful lives and methods of depreciation are reviewed at each reporting date, and adjusted prospectively, if appropriate.

Fair Value of Financial Instruments

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the unaudited condensed consolidated interim financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the unaudited condensed consolidated interim financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The estimated fair value of cash and accounts payable and accrued liabilities approximate their carrying values due to the short-term maturity of these instruments. The derivative liabilities of the promissory convertible notes and warrant liabilities are valued Level 3, refer to Note 10 and 11 for further details.

Revenue recognition

The Company adopted ASC 606 effective January 1, 2019, using the modified retrospective method after electing to delay the adoption of the accounting standard as the Company qualified as an “emerging growth company”. Since the Company did not have any contracts as of the effective day, therefore, there was no material impact on the consolidated financial statements upon adoption of the new standard. Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our performance obligation generally consists of the promise to sell our finished products to our customers, wholesalers, distributors or retailers. Control of the finished products is transferred upon shipment to, or receipt at, our customers’ locations, as determined by the specific terms of the contract. Once control is transferred to the customer, we have completed our performance obligation, and revenue is recognized.

The Company generated revenue of $1,805,211 during the nine month ended September 30, 2023 whereas $nil in September 30, 2022.

The Company revenue was concentrated to eight customers. The revenue represents the sale of cannabis products. Since the customers have received the product and there are no further obligations as per the agreement, revenue was recognized.

Though its investment in JVCo and represented on the line item “Share of income from joint venture” on the unaudited condensed consolidated interim statement of operations, Canary generated revenue of $791,285 during the nine months ended September, 30 2023 (nine months ended September 30, 2022: $3,177,105). Revenue generated through JVCo lasted till April 27, 2023, refer to Note 6 for additional details.

Equity Method Investments

The Company uses the equity method of accounting for investments when the Company has the ability to significantly influence, but not control, the operations or financial activities of the investee. As part of this evaluation, the Company considers the participating and protective rights in the venture as well as its legal form. The Company records the equity method investments at cost and subsequently adjust their carrying amount each period for the Company’s share of the earnings or losses of the investee and other adjustments required by the equity method of accounting. Distributions received from the equity method investments are recorded as reductions in the carrying value of such investments and are classified on the unaudited condensed consolidated interim statements of cash flows pursuant to the cumulative earnings approach. Under this approach, distributions received are considered returns on investment and are classified as cash inflows from operating activities unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of investment, exceed the cumulative equity in earnings recognized from the investment. When such an excess occurs, the current period distributions up to this excess are considered returns of investment and are classified as cash inflows from investing activities.

The Company monitors equity method investments for impairment and records reductions in their carrying values if the carrying amount of an investment exceeds its fair value. An impairment charge is recorded when such impairment is deemed to be other than temporary. To determine whether an impairment is other than temporary, we consider our ability and intent to hold the investment until the carrying amount is fully recovered. Circumstances that indicate an impairment may have occurred include factors such as decreases in quoted market prices or declines in the operations of the investee. The evaluation of the investment for potential impairment requires us to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions. The Company has recorded no impairment losses related to our equity method investments during the nine months ended September 30, 2023, and 2022.

v3.23.3
Inventory
9 Months Ended
Sep. 30, 2023
Inventory  
Inventory

3.     Inventory

As of September 30, 2023, the inventory in the amount of $1,892,739 (2022: $nil) consists of work-in-progress and finished cannabis goods which is transferred from JVCo to Canary as a result of the Joint Venture Settlement Agreement, refer to Note 6 for additional detail.

v3.23.3
Sales Tax Recoverable and Payable
9 Months Ended
Sep. 30, 2023
Sales Tax Recoverable and Payable  
Sales Tax Recoverable and Payable

4.     Sales Tax Recoverable and Payable

As of September 30, 2023, the Company had $72,927 of gross sales tax recoverable compared to December 31, 2022 there was $nil, while the Company had $nil of gross sales tax payable as of September 30, 2023.

Recoverable is due to the sales tax paid by the Company on expenses incurred during the year which are recoverable from the government while payable is due to the sales tax received (after deducting sales tax paid on expenses incurred by the Company) during the year which are payable from the government due to sales conducted through the Joint Venture.

The Company has recorded $7,829 (December 31, 2022: $nil) of allowance as of September 30, 2023.

v3.23.3
Fixed Assets
9 Months Ended
Sep. 30, 2023
Fixed Assets  
Fixed Assets

5.     Fixed Assets

The Company’s subsidiary, Canary, initiated construction on its leased 44,000 square foot cannabis cultivation facility in September of 2017. Since then, extensive demolition and structural upgrades have been carried out at the site. On May 1, 2019, the Company completed the construction of its 44,000 square foot cannabis cultivation facility and on May 14, 2019, the Company submitted a Site Evidence Package to Health Canada as part of the steps to obtain the license to cultivate cannabis at the Company’s facility. On October 8, 2019, the Company was granted licenses to cultivate, process and sell cannabis pursuant to the Cannabis Act (Bill C-45). Canary currently operates as a licensed producer/wholesaler of craft cannabis in Ontario and has since been granted its sales amendment from Health Canada to sell directly to provincial retail boards for consumer products.

Canary has recorded a depreciation expense of $641,183 during the nine months ended September 30, 2023 (September 30, 2022: $672,503) while CannaKorp has recorded a depreciation expense of $371 during the nine months ended September 30, 2023 (September 30, 2022: $846). JVCo recorded depreciation of $38,489.

Below is a breakdown of the consolidated fixed asset, category wise:

    

Furniture & 

    

Machinery &

    

    

Leasehold

    

fixture

Equipment

Software

improvements

 

Total

$

$

$

$

$

Cost

1,422,209

769,042

 

43,506

 

6,719,823

8,954,580

Accumulated depreciation

(520,407)

(749,715)

 

(43,506)

 

(2,212,474)

(3,526,102)

901,802

19,327

 

 

4,507,349

5,428,478

v3.23.3
Joint Venture
9 Months Ended
Sep. 30, 2023
Joint Venture  
Joint Venture

6.     Joint Venture

Historical information

Effective May 14, 2020, Canary entered into the Joint Venture explained in Note 1. Under the Joint Venture, JVCo was permitted to use the rooms, of Canary’s licensed cannabis cultivation facilities located in Simcoe, Ontario, Canada (“Licensed Site Portion”) to operate and manage the Licensed Site Portion for the cultivation and process of cannabis pursuant to Canary’s license issued by Health Canada. During the term of the Joint Venture, JVCo was responsible for the administration, operation and management of the Licensed Site Portion and all proceeds from the sale of the cannabis and related cannabis products cultivated therein will be payable to the JVCo.

Canary, Thrive Cannabis, and JVCo entered into a Unanimous Shareholder Agreement dated May 14, 2020, governing the management and administration of the business of JVCo.

During the period ended September 30, 2023, the Joint Venture partners, Canary and Thrive Cannabis entered into an agreement. Pursuant to this agreement the Company received a total of $1,579,800 (CAD 2,125,482) of which $1,020,667 (CAD 1,373,218) were reduced from investment in Joint Venture as these represented recovery of investment and $559,133 (CAD 752,264) were classified as other income representing recovery of interest expense charged on shareholder loan, which was primarily provided to support Joint Venture operations. Also refer to shareholder loan in Note 8.

As per the Joint Venture, Canary provided the JVCo with a Hard Cost Loan with the maximum amount of $887,520 (CAD 1,200,000). This loan bore an interest rate of 7% per annum, matured in 12 months from the effective date, and was secured against the personal property of the JVCo and Thrive had guaranteed one-half (1/2) of the outstanding balance of the loan. As of April 27, 2023, the loan advanced amounts to $247,766 (CAD 335,000) and interest income charged for the nine months ended in the amount of $13,032 (CAD 17,539) is included in other income on the unaudited condensed consolidated interim statement of operations and comprehensive loss and interest receivable in the amount of $55,263 (CAD 74,720) was included in receivable from joint venture on the unaudited condensed consolidated interim balance sheet. After April 27, 2023, as mentioned above and further discussed below, JVCo become a subsidiary of the company as result the above loan and interest receivable were eliminated upon consolidation.

The Company recorded JVCo’s results through April 27, 2023 using the equity method and below is the table which summarizes the activity of the period (through April 27, 2023):

Period ended

January 1 to April 27, 2023

Nine months ended September 30, 2022

    

CAD 

    

USD 

    

CAD 

    

USD 

Sales

 

1,068,799

 

791,285

 

4,074,256

 

3,177,105

Cost of goods sold

620,344

459,271

2,110,851

1,646,042

Gross profit

448,455

332,014

1,963,405

1,531,063

Operation expenses

383,358

283,819

1,335,381

1,041,330

Net income (loss)

65,097

48,195

628,024

489,733

Eligible recoverable expenses

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Recoverable amount

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Income (loss) on equity

 

32,549

 

24,098

 

314,012

 

244,867

Termination of joint venture agreement during quarter ended June 30, 2023

On April 27, 2023, Canary and Thrive Cannabis entered into a Release and Settlement Agreement (“Settlement Agreement”) in which Thrive Cannabis has transferred its shares in the capital of JVCo and rights of assets held by JVCo.

Pursuant to the above Settlement Agreement, Thrive Cannabis paid Canary $1,051,000 to release Thrive Cannabis from any mortgages, charges, pledges, security interests, liens, encumbrances, writs of execution, actions, claims, demands and equities of any nature related to JVCo from their share of ownership of JVCo.

ring the term of the Joint Venture, the Company accounted for the transactoins using the equity method under ASC 323 Investments — Equity Method and Joint Ventures. As a consequence of the Settlement Agreement, as the JVCo becoming a wholly owned subsidiary of the company as of April 27, 2023, the Company now uses the acquisition method of accounting (using a step acquisition method) under ASC 805 Business Combination.

Consolidation of JVCo into Canary

Following the completion of the Settlement Agreement, Canary’s equity interest in JVCo increased from 50% to 100%. Effective April 28, 2023, the Company started consolidating result’s of operations of the JVCo and eliminated any intercompany transactions and balances between the Company (Target and Canary) and JVCo.

As a consequence of the above Settlement Agreement and after obtaining 100% shares of the JVCo, the Company acquired the following assets:

Fair value

    

$

Assets acquired:

Inventory

1,690,368

Fixed assets

534,816

2,225,184

As of April 27, 2023, the Company had a carrying value of the investment in Joint Venture and receivable from Joint Venture on the consolidated balance sheets amounting to $1,023,608 and $706,598, respectively. Pursuant to the above Settlement Agreement, the Company received $776,382 against these balances. Accordingly, the remaining balance of $953,824 was compared to the fair value of the net assets acquired and this resulted in net recognition of $1,428,185 as a non-operating gain reported in the Consolidated Statement of Operations as net gain from termination of the Joint Venture.

v3.23.3
Goodwill
9 Months Ended
Sep. 30, 2023
Goodwill  
Goodwill

7.     Goodwill

Business Acquisition

ASC Topic 805, “Business Combinations” requires that all business combinations be accounted for using the acquisition method and that certain identifiable intangible assets acquired in a business combination be recognized as assets apart from goodwill. ASC Topic 350, “Intangibles-Goodwill and Other” (“ASC 350”) requires goodwill and other identifiable intangible assets with indefinite useful lives not be amortized, such as trade names, but instead tested at least annually for impairment (which the Company tests each year end, absent any impairment indicators) and be written down if impaired. ASC 350 requires that goodwill be allocated to its respective reporting unit and that identifiable intangible assets with finite lives be amortized over their useful lives.

Visava/Canary

On June 27, 2018, the Company entered into an Agreement and Plan of Share Exchange (“Exchange Agreement”) with Visava, then a private Ontario, Canada corporation. Visava owns 100% of Canary.

Pursuant to the Agreement, the Company acquired 100% of the issued and outstanding shares of Visava in exchange for the issuance of 25,500,000 shares of the Company’s Common Stock and issued to the Visava shareholders, prorata Common Stock Purchase Warrants

(“Visava Warrants”) purchasing an aggregate of 25,000,000 shares of the Company’s Common Stock at a price per share of $0.10 for a period of two years following the issuance date of the Visava Warrants. As a result of this transaction, Visava became a wholly-owned subsidiary of the Company and the former shareholders of Visava owned approximately 46.27% of the Company’s shares of Common Stock. The transaction was closed effective August 2, 2018. During the year ended, December 31, 2020, all of the Visava Warrants expired, none were exercised.

This acquisition was accounted for using the acquisition method of accounting. As of August 2, 2018, the fair value of the net liabilities was $275,353 and the purchase consideration was fair valued as $3,318,842, shown below, leading to a goodwill allocation of $3,594,195.

    

$

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

The fair value of these warrants was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

Forfeiture rate of 0%;
Stock price of $0.067 per share;
Exercise price of $0.10 per share
Volatility at 329%
Risk free interest rate of 2.66%;
Expected life of 2 years; and
Expected dividend rate of 0%

During the year ended December 31, 2022, the Company identified circumstances that would call for an evaluation of goodwill impairment and therefore impaired $3,315,749 reducing the goodwill related to the Canary to $263,117 (December 31, 2021: the Company has identified no circumstances which would call for further evaluation of goodwill impairment related to Canary).

During the year ended, December 31, 2022, all of the Visava Warrants expired, none were exercised.

Goodwill

The Company tests for impairment of goodwill at the reporting unit level. In assessing whether goodwill is impaired, the Company utilizes the two-step process as prescribed by ASC 350. The first step of this test compares the fair value of the reporting unit, determined based upon discounted estimated future cash flows, to the carrying amount, including goodwill. If the fair value exceeds the carrying amount, no further work is required and no impairment loss is recognized. If the carrying amount of the reporting unit exceeds the fair value, the goodwill of the reporting unit is potentially impaired and step two of the goodwill impairment test would need to be performed to measure the amount of an impairment loss, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of the goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss in the amount of the excess is recognized and charged to the statement of operations.

v3.23.3
Related Party Transactions and Balances
9 Months Ended
Sep. 30, 2023
Related Party Transactions and Balances  
Related Party Transactions and Balances

8.     Related Party Transactions and Balances

During the nine months ended September 30, 2023, the Company expensed $233,867 (September 30, 2022: $102,915) in management service fee for services provided by the current key officers of the company.

The breakdown of the related party balance as of September 30, 2023 of $11,134,521 (December 31, 2022: $10,346,465) is below:

Debt purchase by CL Investors Inc.

On June 15, 2020, the Company and its subsidiaries, entered into a Debt Agreement with CLI explained in Note 1. The Canary Debt, Term, repayment schedule, security and options are set forth in Note 1.As of September 30, 2023, $3,698 (CAD $5,000) is still outstanding from CLI.

Interest expense charged for the nine months ended in the amount of $276,415 (CAD $372,026) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $510,688 (CAD 690,492) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated interim balance sheet.

The repayment schedule of the minimum principal payments is shown below:

2024

$

3,720,331

2025

3,988,170

Total

7,708,501

Current portion

(2,125,856)

Non-current portion

5,582,645

The Debt Agreement Amendment and CLI Warrants are explained in Note 1. Refer to Note 11 for additional details on the CLI Warrants. The combined impact of both transactions resulted in a debt issuance cost of $251,518. This debt issuance cost will be amortized over the term of the debt on a straight-line basis. As at September 30, 2023, the balance is $125,623 of which $67,098 is current while $58,525 is non-current.

Shareholder loan

One of the Company’s shareholders provided a loan to the Company. The loan is secured by all assets owned by the Company and its subsidiaries including leasehold improvements and matures on June 30, 2024 and therefore is presented as current. The loan was provided in five tranches and the latest amendment increased the maximum loan amount by $665,640 (CAD 900,000) while the rest of terms remained unchanged. The specific details of each tranche of the loan are shown below:

Interest rate

Maximum loan

Outstanding loan

    

    

CAD

    

USD

    

CAD

    

USD

Tranche 1

 

16.00

%

1,043,593

 

771,841

1,043,593

 

771,841

Tranche 2

 

43.26

%

1,592,787

 

1,178,025

1,592,787

 

1,178,025

Tranche 3

43.26

%

250,000

184,900

250,000

184,900

Tranche 4

43.26

%

500,000

369,800

500,000

369,800

Tranche 5

43.26

%

500,000

369,800

400,000

295,840

Total

 

3,886,380

2,874,366

3,786,380

2,800,406

Interest expense charged for the nine months ended September 30, 2023 in the amount of $740,286 (CAD $996,347) is included in interest and bank charges on the unaudited condensed consolidated interim statement of operations and comprehensive loss and accrued interest in the amount of $693,152 (CAD 937,199) is included in accounts payable and accrued liabilities on the unaudited condensed consolidated interim balance sheet.

The Seventh Amending Agreement, dated February 16, 2023 (“Seventh Amendment”), previously filed as Exhibit 10.34, memorializes Tranche 4 of the subject shareholder loan, and is the subject of Form 8-K Report and subsequent Form 8-K/A Reports, dated February

22, March 13, and August 4, 2023, respectively.  The amount of the Advance in the Seventh Amendment was incorrectly reported on February 22 and March 13, 2023, and Exhibit 10.32 was also inaccurate with respect to the amount of the Advance.  The amount of the Advance is CDN$500,000.00 as reported on Form 8-K/A, dated August 4, 2023, and as reflected at Exhibit 10.34, filed herewith, and further, the amount of the Lender’s Fee was CDN$50,000.

Outstanding management service fee

The balance owing to key officers of the Company is $653,522 (December 31, 2022: $585,261).

Balances outstanding related to subsidiaries

During the year ended December 31, 2019, the Company settled with the loan holders provided to the Company’s subsidiary, CannaKorp. The total amount subject to settlement was $817,876 which includes accrued interest and accrued payroll. The company settled by paying $954,374 as consideration of cash, 920,240 shares (recorded in shares to be issued) and warrants of 920,240 shares with an exercise price of $0.15 per share. This resulted in a settlement loss of $136,498. These warrants expired during the year ended December 31, 2021. Of the total settlement amount, as of September 30, 2023 and December 31, 2022, $65,000 was outstanding to be paid. This amount includes late payment penalties of $25,000. During the year ended December 31, 2021, all of the warrants expired, none were exercised.

Balances outstanding related to directors

During the nine months ended September 30, 2023, the Company has purchased $nil of consulting services from GTA Angel Group which is owned by the Company’s CEO’s brother. The balance outstanding as of September 30, 2023 is $25,072 and is included in accounts payable and accrued liabilities.

The Company subleases its principal executive office premise from Norlandam Marketing Inc., a company owned by one of the directors. During the quarter ended March 31, 2021, the premises were subleased to a third party that makes rent payments directly to Norlandam Marketing Inc. The balance outstanding as of September 30, 2023 is $nil

v3.23.3
Operating Lease Right-Of-Use Assets and Lease Liability
9 Months Ended
Sep. 30, 2023
Operating Lease Right-Of-Use Assets and Lease Liability  
Operating Lease Right-Of-Use Assets and Lease Liability

9.    Operating Lease Right-Of-Use Assets and Lease Liability

The Company adopted ASC 842 as of January 1, 2019, using a modified retrospective approach and applying the standard’s transition provisions at January 1, 2020, the effective date. The Company made an accounting policy election to exclude from balance sheet reporting those leases with initial terms of 12 months or less. The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components is recognized when the obligation is probable.

Right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at the adoption date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

The Company does not own any real property. It currently leases two office/facility spaces. For accounting purposes, this lease is treated as an operating leases. Upon adoption of ASC 842, the Company recognized $1,670,174 (CAD $2,258,212) of right-to-use assets as operating leases and operating lease obligations. The right-to-use asset was reduced by $1,545,706 (CAD $2,089,921) due to recognition of the prior deferred rent liability which was eliminated upon adoption of ASC 842. Details of these leases are detailed below:

During the quarter ended March 31, 2021, the Company subleased its executive premises to a third party that makes rent payments directly to the landlord. However, if the sub-lessee cancels its sub-lease agreement with the landlord during the Company’s lease term with the landlord (ended on August 30, 2023), the Company will be responsible for making rent payments for the period from the date of cancellation by the sub-lessee to August 30, 2023. This sub-lease has matured and not been renewed.

The Company’s second-tier subsidiary, Canary, is a party to a 10-year lease agreement (initiated in July 2014) with respect to its facility to produce craft cannabis at scale. The lease agreement was amended effective January 1, 2020, where the amended 10-year term starts on May 1, 2020 and provides the Company with an option to extend for three (3) additional terms of ten (10) years. Additionally, effective January 1, 2020, the amended agreement increased the minimum rent to $25,886 (CAD $35,000) plus applicable taxes per month and on each anniversary date, commencing from January 1, 2021, the minimum rent will increase by 1.00%. Furthermore, only the current 10-year term has been factored into the calculation of the lease liability. Effective May 1, 2020, due to the implementation of the new lease, $746,458 (CAD $988,293) was forgiven by the landlord and one vendor.

These leases will expire between 2023 and 2030. The weighted average discount rate used for these leases was 16% (average borrowing rate of the Company). Maturities of lease liabilities were:

2023

    

$

80,011

2024

323,245

2025

326,477

2026

329,742

Thereafter

1,123,521

Total lease payments

2,182,996

Less imputed interest

(833,539)

Present value of lease liabilities

1,349,457

Current portion

(119,151)

Non-current portion

$

1,230,306

Below is the reconciliation of the net operating lease presented on the unaudited condensed consolidated interim statement of operations:

    

For the

    

For the

    

For the

    

For the

three months ended

three months ended

nine months ended

 

nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

 

September 30, 2022

$

$

$

$

Gross operating lease expense

58,375

65,215

178,134

198,254

Gross rent and utilities expenses

61,354

135,584

244,560

387,474

Recoverable expenses from JVCo related to rent and utilities

(282,775)

(285,655)

(701,609)

119,729

(81,976)

137,039

(115,881)

As explained in Note 6, the JVCo reimburses a certain percentage of gross expenses incurred by Canary which includes rent and utilities. Due to this unique circumstance and since operating lease expense are related to rent expenses, the Company has decided to group the operating lease expenses, all lease-related expenses and the recoverable amount from JVCo to show a net operating lease expense.

v3.23.3
Convertible Promissory Notes
9 Months Ended
Sep. 30, 2023
Convertible Promissory Notes  
Convertible Promissory Notes

10.     Convertible Promissory Notes

Interest amounting to $10 was accrued for the nine months ended September 30, 2023 (September 30, 2022: $27).

Principal amount outstanding as of September 30, 2023 and December 31, 2022 was $480. At both reporting dates, the entire balance was current.

All notes maturing prior to the date of this report are outstanding.

Derivative liability

During the nine months ended September 30, 2023, there were no conversion of principal balance of convertible promissory notes (September 30, 2022: $nil). The Company recorded and fair valued the derivative liability as follows:

    

Derivative

    

Conversions /

    

    

    

Derivative

liability as at

Redemption

liability as at

December 31, 

during the

Change due to

Fair value

September 30, 

2022

period

Issuances

adjustment

2023

$

$

$

$

$

Note D

 

1,446

 

 

 

867

 

2,313

Note F

 

10,034

 

 

 

5,991

 

16,025

Note G

 

3,645

 

 

 

2,176

 

5,821

 

15,125

 

 

 

9,034

 

24,159

Key assumptions used for the valuation of convertible notes

Derivative element of the convertible notes was fair valued using a multinomial lattice model. Following assumptions were used to fair value these notes as of September 30, 2023:

Projected annual volatility of 205% to 503%;
Risk free interest rate of 4.40% to 5.20%;
Stock price of $0.003 to 0.008;
Liquidity term of 0.25 to 0.50 years;
Dividend yield of 0%; and
Exercise price of $0.0012 to $0.0151.
v3.23.3
Stockholders' Equity
9 Months Ended
Sep. 30, 2023
Stockholders' Equity  
Stockholders' Equity

11.    Stockholders’ Equity

Capitalization

Preferred Stock

Par value: $0.0001
Authorized: 20,000,000
Issued: 1,000,000 shares were outstanding as of September 30, 2023 and December 31, 2022

Common Stock

Par value: $0.0001
Authorized: 850,000,000
Issued: 617,025,999 shares are outstanding as at September 30, 2023 and December 31, 2022

As of September 30, 2023, convertible notes, warrants and preferred stock outstanding could be converted into 14,674,491 (December 31, 2022: 17,258,122), 10,400,008 (December 31, 2022: 53,950,001) and 100,000,000 (December 31, 2022: 100,000,000) shares of common stock, respectively.

Preferred Stock

Shares of preferred stock may be issued from time to time in one or more series as may be determined by the board of directors. The board of directors may fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders of the Company, except that no holder of preferred stock shall have pre-emptive rights. Any shares of preferred stock so issued would typically have priority over the common stock concerning dividend or liquidation rights. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock unless otherwise required by law.

Series A Preferred Stock (“Series A Stock”)

Dividends shall be declared and set aside for any shares of Series A Stock in the same manner and amount as for the Common Stock. Series A Stock, as a class, shall have voting rights equal to a multiple of 2X the number of shares of Common Stock issued and outstanding that are entitled to vote on any matter requiring shareholder approval. The Series A Stockholders shall not vote as a separate class but shall vote together with the common stock on all matters, including any amendment to increase or decrease the authorized capital stock. Upon the voluntary or involuntary dissolution, liquidation or winding up of the corporation, the assets of the Company available for distribution to its shareholders shall be distributed to the holders of common stock and the holders of the Series A Stock ratable without any preference to the holders of the Series A Stock. Shares of Series A Stock can be converted at any time into fully paid and nonassessable shares of Common Stock at the rate of one hundred (100) shares of Common Stock for each one (1) share of Series A Stock.

Common Stock

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights.

Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to share ratable in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds legally available therefore.

Holders of common stock have no pre-emptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. The Company may issue additional shares of common stock which could dilute its current shareholder’s share value.

2023

During the quarter ended March 31, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $63, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended June 30, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by the President of Serious Seeds, Smit, to the Company’s subsidiary, Canary. These were recorded at a fair value of $48, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended September 30, 2023, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by the President of Serious Seeds, Simon Smit (“Smit”), to the Company’s subsidiary, Canary. These were recorded at a fair value of $99, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

2022

During the quarter ended March 31, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $153, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended June 30, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $114, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

During the quarter ended September 30, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $120, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued

During the quarter ended December 31, 2022, the Company issued 15,624 shares of common stock to be issued as consideration of the intellectual property rights granted by Smit to the Company’s subsidiary, Canary. These were recorded at a fair value of $73, based on the market price of the Company’s stock on the date of the agreement. These are currently recorded under shares to be issued and will be allocated between common stock and additional paid-in capital once the shares are issued.

Shares to be issued include the following:

    

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 14 for details.

Agreement with Serious Seeds

 

234,360

2,767

 

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.

 

1,625,896

$

175,392

Warrants

The warrants (with an exercise price in United States Dollar) were re-classified as a liability as of December 31, 2019, and therefore have been revalued on each quarter end. The fair value of the warrants was measured on reporting dates using the Black-Scholes option pricing model using the following assumptions:

2023

As at

As at

As at

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

 

0%

Stock price

$0.008

$0.006

$0.003

Exercise price

$0.250 to $0.350

$0.250 to $0.300

$0.250 to $0.300

Volatility

365% to 422%

273% to 342%

244% to 305%

Risk free interest rate

5.46%

5.40%

4.64%

Expected life (years)

0.02 to 1.68

0.02 to 1.68

0.02 to 1.93

Expected dividend rate

0%

0%

0%

2022

    

As at

    

As at

    

As at

    

As at

December 31,

September 30,

June 30, 

March 31, 

2022

2022

2022

2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004

$0.005

$0.008

$0.009

Exercise price

$0.200 to $0.300

$0.200 to $0.300

$0.050 to $0.300

$0.023 to $0.250

Volatility

253% to 312%

214% to 279%

192% to 306%

192% to 306%

Risk free interest rate

4.73%

4.05%

2.92%

2.28%

Expected life (years)

0.02 to 1.93

0 to 1.94

0 to 1.94

0 to 1.93

Expected dividend rate

0%

0%

0%

0%

The fair value of the warrants issued during the year issued was measured at the date of acquisition using the Black-Scholes option pricing model using the following assumptions:

2023

During quarter

During quarter

During quarter

ended

ended

ended

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

0%

Stock price

$0.004 to $0.009

$0.003 to $0.003

$0.003 to $0.005

Exercise price

$0.350

$0.350

$0.300

Volatility

399%

342%

305%

Risk free interest rate

4.78% to 5.01%

3.82% to 4.51%

4.24% to 4.89%

Expected life (years)

2

2

2

Expected dividend rate

0%

0%

0%

Fair value of warrants

$313

$138

$160

2022

During quarter

During quarter

During quarter

During quarter

ended

ended

ended

ended

    

December 31, 2022

    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004 to $0.006

$0.007 to $0.008

$0.005 to $0.010

$0.008 to $0.013

Exercise price

$0.300

$0.300

$0.300

$0.250

Volatility

279%

279%

299%

306%

Risk free interest rate

4.23% to 4.66%

2.97% to 3.50%

2.50% to 2.73%

0.88% to 1.50%

Expected life (years)

2

2

2

2

Expected dividend rate

0%

0%

0%

0%

Fair value of warrants

$176

$288

$306

$430

Breakdown of warrants outstanding as of September 30, 2023 and December 31, 2022 are detailed below:

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,

 

2023

 

2022

    

2023

    

2022

    

(years)

    

(years)

Private placements

 

 

43,549,993

 

N/A

 

0.11 to 0.47

Serious Seeds

 

400,008

 

400,008

 

0.02 to 1.93

 

0.02 to 1.93

CLI

10,000,000

10,000,000

1.87

2.62

Total

 

10,400,008

 

53,950,001

 

  

 

  

During the nine months ended September 30, 2023, 43,699,996 warrants expired (related to private placements and Serious Seeds).

Movement of the warrant liability is detailed below:

Warrant liability as at December 31, 2022

489

Warrant liability for new issuance

611

Change in fair value

669

Warrant liability as at September 30, 2023

1,769

v3.23.3
Earnings (Loss) Per Share
9 Months Ended
Sep. 30, 2023
Earnings (Loss) Per Share  
Earnings (Loss) Per Share

12.    Earnings (Loss) Per Share

FASB ASC 260, Earnings Per Share provides for calculations of “basic” and “diluted” earnings per share. Basic earnings per share include no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

v3.23.3
Contingencies and commitments
9 Months Ended
Sep. 30, 2023
Contingencies and commitments  
Contingencies and commitments

13.     Contingencies and commitments

Contingencies

During the year ended December 31, 2019, a terminated employee of Canary has filed a lawsuit against the Company amounting to approximately $1,553,160 (CAD 2,100,000) in Ontario, Canada. Currently, the Company is defending its position and believes that the ultimate decision will be in favor of the Company. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no provision has been recognized.

A complaint for damages of $150,000 was lodged against CannaKorp by the former Chief Financial Officer of CannaKorp for outstanding professional fees. No claim has been registered. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $188,865 has been recorded in CannaKorp’s payable based on past accruals and outstanding invoices. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

A claim for damages of $1,377,731 (CAD $1,862,805) was lodged against Company and its directors by the former Chief Financial Officer of the Company for wrongful dismissal. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $10,867 has been recorded in Target’s payable based on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

During the year ended December 31, 2020, a claim for damages of $96,723 (CAD $130,778) was lodged against Canary by a vendor for breach of contract. The management is of the view that no material losses will arise in respect of the legal claim at the date of these unaudited condensed consolidated interim financial statements. As of September 30, 2023, $102,176 (CAD $138,150) has been recorded

in the Canary’s payable based on past accruals. Due to the uncertainty of timing and the amount of estimated future cash flows, if any, relating to this claim, no further amount has been recognized.

As explained in Note 1, on July 27, 2020, the Company entered into a License Agreement with cGreen. As consideration, the Company paid $130,000 within 30 days of the Effective Date and paid $100,000 in monthly installments of $10,000 commenced in April 2021 to cGreen. During the quarter ended March 31, 2022, the outstanding balance was paid in full and the claim is closed.

Covid-19 Pandemic

On March 11, 2020, the World Health Organization declared the ongoing coronavirus (“COVID-19”) outbreak as a global health emergency. This resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including the closure of certain non-essential businesses. Despite the WHO’s declaration, on or about May 5, 2023, of the end of the COVID-19 global pandemic, the lasting impacts of COVID-19 on the United States, Canada, and the broader global economy, including supply chain disruption, may have a significant continuing negative effect on the Company and may materially impact the Company in the future.

During the period and year ended September 30, 2023 and December 31, 2022, respectively, the pandemic and its lasting impacts did not have a material impact on the Company’s operations. As of September 30, 2023 and December 31, 2022, the Company did not observe any material impairment of its assets or a significant change in the fair value of assets due to the COVID-19 pandemic or its lasting impacts. The Company has taken, and will again, as necessary, continue to take, steps to minimize the potential impact of the pandemic and its lasting impacts, including safety measures with respect to personal protective equipment, the reduction in travel and the implementation of a virtual office including regular video conference meetings and participation in virtual customer meetings and other virtual events.

It is not possible to predict the lasting impacts that COVID-19 will have on the Company’s business, balance sheet and operating results in the future. In addition, it is possible that estimates in the Company’s Financial statements will change in the near term as a result of the lasting impacts of COVID-19, and the effect of any such changes could be material, which could result in, among other things, impairment of long-lived assets including goodwill. The Company is closely monitoring the lasting impacts of the pandemic on all aspects of its business.

Commitments

As per the Distribution, Collaboration and Licensing Agreement (“Serious Agreement”) entered with Serious Seeds, effective December 6, 2018, the Company would issue to Serious Seeds each month 5,208 shares of common stock, beginning on the thirteen (13th) months following the effective date of the Serious Agreement and continuing through the sixtieth (60th) month of the initial term. Furthermore, Serious Seeds would be issued warrants in each of the foregoing months to purchase 16,667 shares of Target common stock at varying exercise prices ranging from $0.20 to $0.35 per share. All of the warrants must be exercised on or before the two (2) year anniversary date of each of the warrant issuance dates. As of September 30, 2023, none of the above shares have been issued.

In consideration of the Company’s appointment as Serious’ exclusive distributor in Canada, the Company will pay Serious certain royalties as follows:

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

v3.23.3
Subsequent Events
9 Months Ended
Sep. 30, 2023
Subsequent Events  
Subsequent Events

14.    Subsequent Events

The Company’s management has evaluated subsequent events up to November 8, 2023, the date the unaudited condensed consolidated interim financial statements were issued, pursuant to the requirements of ASC 855 and has the following subsequent events to report:

A Ninth Amending Agreement to the shareholder loan explained in Note 8, was executed on November 7, 2023, by and between Jerry Zarcone, the Company and its subsidiaries (“Ninth Amendment”), which extends the term of each of the First, Second, Third, Fourth, and Fifth Tranche, to a maturity date of June 30, 2024, or such earlier date as demanded by Mr. Zarcone.

v3.23.3
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2023
Summary of Significant Accounting Policies  
Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the SEC and are expressed in US dollars. Accordingly, the unaudited condensed consolidated interim financial statements do not include all information and footnotes required by US GAAP for complete annual financial statements. The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2023, or for any other interim period. The unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto as of and for the year ended December 31, 2022.

The unaudited condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries, Visava, Canary, CannaKorp, and JVCo. Significant intercompany accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of the unaudited condensed consolidated interim financial statements in conformity with US 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 of the unaudited condensed consolidated interim financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to accruals. Actual results could differ from those estimates.

Cash

Cash

The Company places its cash with high-quality banking institutions. The Company have cash balances in excess of the Federal Deposit Insurance Corporation (FDIC) limit as of September 30, 2023 where as cash balances were not in excess of FDIC limit as of September 30, 2022.

Cash and cash equivalents include cash on hand and deposits at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have cash equivalents as of September 30, 2023 and 2022.

Restricted cash represents deposits made to the Company’s bank as a requirement to use the bank’s credit card which is not available for immediate or general business use.

Fixed Assets

Fixed Assets

Fixed assets are reported at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of assets, commencing when the assets become available for productive use, based on the following estimated useful lives:

Depreciation is calculated using the following terms and methods:

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

An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from the derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the profit or loss in the period the asset is derecognized. The assets’ residual values, useful lives and methods of depreciation are reviewed at each reporting date, and adjusted prospectively, if appropriate.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the unaudited condensed consolidated interim financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the unaudited condensed consolidated interim financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

The estimated fair value of cash and accounts payable and accrued liabilities approximate their carrying values due to the short-term maturity of these instruments. The derivative liabilities of the promissory convertible notes and warrant liabilities are valued Level 3, refer to Note 10 and 11 for further details.

Revenue recognition

Revenue recognition

The Company adopted ASC 606 effective January 1, 2019, using the modified retrospective method after electing to delay the adoption of the accounting standard as the Company qualified as an “emerging growth company”. Since the Company did not have any contracts as of the effective day, therefore, there was no material impact on the consolidated financial statements upon adoption of the new standard. Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our performance obligation generally consists of the promise to sell our finished products to our customers, wholesalers, distributors or retailers. Control of the finished products is transferred upon shipment to, or receipt at, our customers’ locations, as determined by the specific terms of the contract. Once control is transferred to the customer, we have completed our performance obligation, and revenue is recognized.

The Company generated revenue of $1,805,211 during the nine month ended September 30, 2023 whereas $nil in September 30, 2022.

The Company revenue was concentrated to eight customers. The revenue represents the sale of cannabis products. Since the customers have received the product and there are no further obligations as per the agreement, revenue was recognized.

Though its investment in JVCo and represented on the line item “Share of income from joint venture” on the unaudited condensed consolidated interim statement of operations, Canary generated revenue of $791,285 during the nine months ended September, 30 2023 (nine months ended September 30, 2022: $3,177,105). Revenue generated through JVCo lasted till April 27, 2023, refer to Note 6 for additional details.

Equity Method Investments

Equity Method Investments

The Company uses the equity method of accounting for investments when the Company has the ability to significantly influence, but not control, the operations or financial activities of the investee. As part of this evaluation, the Company considers the participating and protective rights in the venture as well as its legal form. The Company records the equity method investments at cost and subsequently adjust their carrying amount each period for the Company’s share of the earnings or losses of the investee and other adjustments required by the equity method of accounting. Distributions received from the equity method investments are recorded as reductions in the carrying value of such investments and are classified on the unaudited condensed consolidated interim statements of cash flows pursuant to the cumulative earnings approach. Under this approach, distributions received are considered returns on investment and are classified as cash inflows from operating activities unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of investment, exceed the cumulative equity in earnings recognized from the investment. When such an excess occurs, the current period distributions up to this excess are considered returns of investment and are classified as cash inflows from investing activities.

The Company monitors equity method investments for impairment and records reductions in their carrying values if the carrying amount of an investment exceeds its fair value. An impairment charge is recorded when such impairment is deemed to be other than temporary. To determine whether an impairment is other than temporary, we consider our ability and intent to hold the investment until the carrying amount is fully recovered. Circumstances that indicate an impairment may have occurred include factors such as decreases in quoted market prices or declines in the operations of the investee. The evaluation of the investment for potential impairment requires us to exercise significant judgment and to make certain assumptions. The use of different judgments and assumptions could result in different conclusions. The Company has recorded no impairment losses related to our equity method investments during the nine months ended September 30, 2023, and 2022.

v3.23.3
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2023
Summary of Significant Accounting Policies  
Schedule of property, plant and equipment useful life

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

v3.23.3
Fixed Assets (Tables)
9 Months Ended
Sep. 30, 2023
Fixed Assets  
Schedule of fixed assets

    

Furniture & 

    

Machinery &

    

    

Leasehold

    

fixture

Equipment

Software

improvements

 

Total

$

$

$

$

$

Cost

1,422,209

769,042

 

43,506

 

6,719,823

8,954,580

Accumulated depreciation

(520,407)

(749,715)

 

(43,506)

 

(2,212,474)

(3,526,102)

901,802

19,327

 

 

4,507,349

5,428,478

v3.23.3
Joint Venture (Tables)
9 Months Ended
Sep. 30, 2023
Joint Venture  
Schedule of the activity of the period of JVCo

Period ended

January 1 to April 27, 2023

Nine months ended September 30, 2022

    

CAD 

    

USD 

    

CAD 

    

USD 

Sales

 

1,068,799

 

791,285

 

4,074,256

 

3,177,105

Cost of goods sold

620,344

459,271

2,110,851

1,646,042

Gross profit

448,455

332,014

1,963,405

1,531,063

Operation expenses

383,358

283,819

1,335,381

1,041,330

Net income (loss)

65,097

48,195

628,024

489,733

Eligible recoverable expenses

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Recoverable amount

 

1,437,054

 

1,060,833

 

3,743,923

 

2,731,566

Income (loss) on equity

 

32,549

 

24,098

 

314,012

 

244,867

Schedule of fair value of net assets

Fair value

    

$

Assets acquired:

Inventory

1,690,368

Fixed assets

534,816

2,225,184

v3.23.3
Goodwill (Tables)
9 Months Ended
Sep. 30, 2023
Goodwill  
Schedule of recognized identified assets acquired and liabilities assumed

    

$

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

v3.23.3
Related Party Transactions and Balances (Tables)
9 Months Ended
Sep. 30, 2023
Related Party Transactions and Balances  
Schedule of repayment of the minimum principal payments

2024

$

3,720,331

2025

3,988,170

Total

7,708,501

Current portion

(2,125,856)

Non-current portion

5,582,645

Schedule of each tranche of the shareholders loan

Interest rate

Maximum loan

Outstanding loan

    

    

CAD

    

USD

    

CAD

    

USD

Tranche 1

 

16.00

%

1,043,593

 

771,841

1,043,593

 

771,841

Tranche 2

 

43.26

%

1,592,787

 

1,178,025

1,592,787

 

1,178,025

Tranche 3

43.26

%

250,000

184,900

250,000

184,900

Tranche 4

43.26

%

500,000

369,800

500,000

369,800

Tranche 5

43.26

%

500,000

369,800

400,000

295,840

Total

 

3,886,380

2,874,366

3,786,380

2,800,406

v3.23.3
Operating Lease Right-Of-Use Assets and Lease Liability (Tables)
9 Months Ended
Sep. 30, 2023
Operating Lease Right-Of-Use Assets and Lease Liability  
Schedule of maturities of lease liabilities

2023

    

$

80,011

2024

323,245

2025

326,477

2026

329,742

Thereafter

1,123,521

Total lease payments

2,182,996

Less imputed interest

(833,539)

Present value of lease liabilities

1,349,457

Current portion

(119,151)

Non-current portion

$

1,230,306

Schedule of reconciliation of net operating lease

    

For the

    

For the

    

For the

    

For the

three months ended

three months ended

nine months ended

 

nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

 

September 30, 2022

$

$

$

$

Gross operating lease expense

58,375

65,215

178,134

198,254

Gross rent and utilities expenses

61,354

135,584

244,560

387,474

Recoverable expenses from JVCo related to rent and utilities

(282,775)

(285,655)

(701,609)

119,729

(81,976)

137,039

(115,881)

v3.23.3
Convertible Promissory Notes (Tables)
9 Months Ended
Sep. 30, 2023
Convertible Promissory Notes  
Schedule of fair value of the derivative liability

    

Derivative

    

Conversions /

    

    

    

Derivative

liability as at

Redemption

liability as at

December 31, 

during the

Change due to

Fair value

September 30, 

2022

period

Issuances

adjustment

2023

$

$

$

$

$

Note D

 

1,446

 

 

 

867

 

2,313

Note F

 

10,034

 

 

 

5,991

 

16,025

Note G

 

3,645

 

 

 

2,176

 

5,821

 

15,125

 

 

 

9,034

 

24,159

v3.23.3
Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2023
Stockholders' Equity  
Schedule of shares to be issued

    

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 14 for details.

Agreement with Serious Seeds

 

234,360

2,767

 

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.

 

1,625,896

$

175,392

Schedule of fair value of the warrants

2023

As at

As at

As at

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

 

0%

Stock price

$0.008

$0.006

$0.003

Exercise price

$0.250 to $0.350

$0.250 to $0.300

$0.250 to $0.300

Volatility

365% to 422%

273% to 342%

244% to 305%

Risk free interest rate

5.46%

5.40%

4.64%

Expected life (years)

0.02 to 1.68

0.02 to 1.68

0.02 to 1.93

Expected dividend rate

0%

0%

0%

2022

    

As at

    

As at

    

As at

    

As at

December 31,

September 30,

June 30, 

March 31, 

2022

2022

2022

2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004

$0.005

$0.008

$0.009

Exercise price

$0.200 to $0.300

$0.200 to $0.300

$0.050 to $0.300

$0.023 to $0.250

Volatility

253% to 312%

214% to 279%

192% to 306%

192% to 306%

Risk free interest rate

4.73%

4.05%

2.92%

2.28%

Expected life (years)

0.02 to 1.93

0 to 1.94

0 to 1.94

0 to 1.93

Expected dividend rate

0%

0%

0%

0%

2023

During quarter

During quarter

During quarter

ended

ended

ended

    

September 30, 2023

June 30, 2023

    

March 31, 2023

Forfeiture rate

0%

0%

0%

Stock price

$0.004 to $0.009

$0.003 to $0.003

$0.003 to $0.005

Exercise price

$0.350

$0.350

$0.300

Volatility

399%

342%

305%

Risk free interest rate

4.78% to 5.01%

3.82% to 4.51%

4.24% to 4.89%

Expected life (years)

2

2

2

Expected dividend rate

0%

0%

0%

Fair value of warrants

$313

$138

$160

2022

During quarter

During quarter

During quarter

During quarter

ended

ended

ended

ended

    

December 31, 2022

    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

Forfeiture rate

 

0%

0%

0%

0%

Stock price

$0.004 to $0.006

$0.007 to $0.008

$0.005 to $0.010

$0.008 to $0.013

Exercise price

$0.300

$0.300

$0.300

$0.250

Volatility

279%

279%

299%

306%

Risk free interest rate

4.23% to 4.66%

2.97% to 3.50%

2.50% to 2.73%

0.88% to 1.50%

Expected life (years)

2

2

2

2

Expected dividend rate

0%

0%

0%

0%

Fair value of warrants

$176

$288

$306

$430

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,

 

2023

 

2022

    

2023

    

2022

    

(years)

    

(years)

Private placements

 

 

43,549,993

 

N/A

 

0.11 to 0.47

Serious Seeds

 

400,008

 

400,008

 

0.02 to 1.93

 

0.02 to 1.93

CLI

10,000,000

10,000,000

1.87

2.62

Total

 

10,400,008

 

53,950,001

 

  

 

  

Schedule of movement of the warrant liability

Warrant liability as at December 31, 2022

489

Warrant liability for new issuance

611

Change in fair value

669

Warrant liability as at September 30, 2023

1,769

v3.23.3
Contingencies and commitments (Tables)
9 Months Ended
Sep. 30, 2023
Contingencies and commitments  
Schedule of royalties payable

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

v3.23.3
Organization, Nature of Business, Going Concern and Management Plans (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Aug. 14, 2020
USD ($)
shares
Aug. 14, 2020
CAD ($)
shares
Aug. 08, 2019
USD ($)
shares
Sep. 30, 2023
USD ($)
ft²
shares
Sep. 30, 2022
USD ($)
Jun. 30, 2020
USD ($)
shares
Sep. 30, 2023
USD ($)
ft²
shares
Sep. 30, 2023
CAD ($)
Sep. 30, 2022
USD ($)
Dec. 31, 2022
USD ($)
shares
Dec. 31, 2021
USD ($)
Sep. 30, 2023
CAD ($)
ft²
shares
Apr. 27, 2023
USD ($)
May 01, 2019
ft²
Sep. 30, 2017
ft²
Organization, Nature of Business, Going Concern and Management Plans                              
Area of land | ft²       44,000     44,000         44,000   44,000 44,000
Working capital deficit       $ 5,825,589     $ 5,825,589                
Accumulated deficit       $ 30,922,383     30,922,383     $ 30,783,678          
Revenue through investment in a joint venture             $ 791,285   $ 3,177,105            
Warrants exercised during the period | shares                   0          
Common stock, shares issued | shares       617,025,999     617,025,999     617,025,999   617,025,999      
Other receivable       $ 3,698     $ 3,698     $ 3,692          
Other receivable, after allowance for credit loss, related party, type [Extensible Enumeration]       Related Party [Member]     Related Party [Member]     Related Party [Member]   Related Party [Member]      
Debt issuance cost       $ 12,509 $ 12,855   $ 37,266   39,098            
Settlement liabilities, current and noncurrent             0       $ 10,000        
Release and settlement amount from thrive cannabis                         $ 776,382    
CLI                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt issued             2,144,840 $ 2,900,000              
Principal balance       7,839,760     7,839,760         $ 10,600,000      
Other receivable       $ 3,698     3,698         $ 5,000      
CLI | Amended agreement                              
Organization, Nature of Business, Going Concern and Management Plans                              
Shares and warrant issued for acquisition of subsidiary (in shares) | shares 10,000,000 10,000,000                          
Debt issuance cost $ 251,518                            
Rubin schneidermann | CLI | Amended agreement | Series A preferred stock                              
Organization, Nature of Business, Going Concern and Management Plans                              
Shares issued for prior private placements (in shares) | shares 10,000,000 10,000,000                          
Number of shares sold | shares 500,000 500,000                          
Consideration for the shares sold $ 73,960 $ 100,000                          
Canada Inc                              
Organization, Nature of Business, Going Concern and Management Plans                              
Revenue through investment in a joint venture             $ 1,805,211   $ 0            
Visava and Canary | CLI                              
Organization, Nature of Business, Going Concern and Management Plans                              
Percentage of issued and outstanding capital to be transferred in lieu of repayment of debt       75.00%     75.00%         75.00%      
Percentage of issued and outstanding capital, option granted to acquire       25.00%     25.00%         25.00%      
Canary                              
Organization, Nature of Business, Going Concern and Management Plans                              
Interest rate       5.00%     5.00%         5.00%      
Debt term             60 months 60 months              
Canary | CLI | First year of the term                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt instrument, maximum amount to be paid       $ 835,748     $ 835,748         $ 1,130,000      
Debt instrument, percentage of net revenue to be paid       50.00%     50.00%         50.00%      
Debt instrument, threshold period for payment of balance amount             30 days 30 days              
Canary | CLI | Second year of the term                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt instrument, maximum amount to be paid       $ 1,553,160     $ 1,553,160         $ 2,100,000      
Debt instrument, percentage of net revenue to be paid       50.00%     50.00%         50.00%      
Debt instrument, threshold period for consecutive monthly installments payable             12 months 12 months              
Debt instrument, threshold period for payment of balance amount             30 days 30 days              
Canary | CLI | Third year of the term                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt instrument, maximum amount to be paid       $ 2,381,512     $ 2,381,512         $ 3,220,000      
Debt instrument, percentage of net revenue to be paid       50.00%     50.00%         50.00%      
Debt instrument, threshold period for consecutive monthly installments payable             12 months 12 months              
Debt instrument, threshold period for payment of balance amount             30 days 30 days              
Canary | CLI | Fourth year of the term                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt instrument, maximum amount to be paid       $ 2,277,968     $ 2,277,968         $ 3,080,000      
Debt instrument, percentage of net revenue to be paid       50.00%     50.00%         50.00%      
Debt instrument, threshold period for consecutive monthly installments payable             12 months 12 months              
Debt instrument, threshold period for payment of balance amount             30 days 30 days              
Canary | CLI | Fifth year of the term                              
Organization, Nature of Business, Going Concern and Management Plans                              
Debt instrument, threshold period for consecutive monthly installments payable             12 months 12 months              
Debt instrument, threshold period for payment of balance amount by the end of the fifth year             5 days 5 days              
Maximum | Canary                              
Organization, Nature of Business, Going Concern and Management Plans                              
Equity interest in joint venture                         100.00%    
Minimum | Canary                              
Organization, Nature of Business, Going Concern and Management Plans                              
Equity interest in joint venture                         50.00%    
Cgreen Inc                              
Organization, Nature of Business, Going Concern and Management Plans                              
Percentage of royalties on all subleasing revenues     7.00%                        
Term of license     10 years                        
Stock issuable as consideration for agreement | shares     10,000,000                        
Percentage of royalties on net sales     7.00%                        
Shares not issued | shares           10,000,000                  
Outstanding royalty payable           $ 1,191,860                  
Settlement amount           $ 100,000                  
Settlement period           30 days                  
Monthly installment of settlement amount           $ 10,000                  
Gain on settlement           1,704,860                  
Cgreen Inc | Within ten (10) days of the effective date                              
Organization, Nature of Business, Going Concern and Management Plans                              
Shares issued for prior private placements (in shares) | shares     3,500,000                        
Advance royalties     $ 300,000                        
Cgreen Inc | On January 10, 2020                              
Organization, Nature of Business, Going Concern and Management Plans                              
Shares issued for prior private placements (in shares) | shares     3,500,000                        
Advance royalties     $ 300,000                        
Cgreen Inc | Not later than June 10, 2020                              
Organization, Nature of Business, Going Concern and Management Plans                              
Shares issued for prior private placements (in shares) | shares     3,000,000                        
Advance royalties     $ 400,000                        
Cgreen Inc | Not later than November 10, 2020                              
Organization, Nature of Business, Going Concern and Management Plans                              
Advance royalties     $ 500,000                        
Cgreen Inc | Within thirty (30) days of the effective date                              
Organization, Nature of Business, Going Concern and Management Plans                              
Settlement amount           $ 130,000                  
Canary                              
Organization, Nature of Business, Going Concern and Management Plans                              
Release and settlement amount from thrive cannabis                         $ 1,051,000    
v3.23.3
Summary of Significant Accounting Policies (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Summary of Significant Accounting Policies      
Cash     $ 0
Revenue through investment in a joint venture   $ 791,285 3,177,105
Revenue $ 1,046,227 1,805,211 0
Canada Inc      
Summary of Significant Accounting Policies      
Revenue through investment in a joint venture   $ 1,805,211 $ 0
Furniture & office equipment      
Fixed Assets and Capital Work In Progress      
Estimated useful life 7 years 7 years  
Machinery & equipment | Minimum      
Fixed Assets and Capital Work In Progress      
Estimated useful life 3 years 3 years  
Machinery & equipment | Maximum      
Fixed Assets and Capital Work In Progress      
Estimated useful life 5 years 5 years  
Software      
Fixed Assets and Capital Work In Progress      
Estimated useful life 3 years 3 years  
v3.23.3
Inventory (Details) - USD ($)
Sep. 30, 2023
Sep. 30, 2022
Inventory    
Inventory $ 1,892,739 $ 0
v3.23.3
Sales Tax Recoverable and Payable (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Sales Tax Recoverable and Payable    
Sales tax recoverable, gross $ 65,098  
Allowance on value added tax recoverable 7,829 $ 0
Gross sales tax payable   35,254
Gross Sales    
Sales Tax Recoverable and Payable    
Sales tax recoverable, gross 72,927 $ 0
Gross sales tax payable $ 0  
v3.23.3
Fixed Assets (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Fixed Assets    
Cost $ 8,954,580  
Accumulated depreciation (3,526,102)  
Fixed assets, net 5,428,478 $ 5,554,225
Furniture & fixture    
Fixed Assets    
Cost 1,422,209  
Accumulated depreciation (520,407)  
Fixed assets, net 901,802  
Machinery & Equipment    
Fixed Assets    
Cost 769,042  
Accumulated depreciation (749,715)  
Fixed assets, net 19,327  
Software    
Fixed Assets    
Cost 43,506  
Accumulated depreciation (43,506)  
Leasehold improvements    
Fixed Assets    
Cost 6,719,823  
Accumulated depreciation (2,212,474)  
Fixed assets, net $ 4,507,349  
v3.23.3
Fixed Assets - Additional Information (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
ft²
Sep. 30, 2022
USD ($)
Sep. 30, 2023
USD ($)
ft²
Sep. 30, 2022
USD ($)
May 01, 2019
ft²
Sep. 30, 2017
ft²
Fixed Assets            
Area of land | ft² 44,000   44,000   44,000 44,000
Depreciation expense $ 237,789 $ 220,390 $ 680,043 $ 673,349    
JVCo assets consolidated, depreciation $ 38,489   38,489      
Canary            
Fixed Assets            
Depreciation expense recorded     641,183 672,503    
CannaKorp Inc            
Fixed Assets            
Depreciation expense recorded     $ 371 $ 846    
v3.23.3
Joint Venture - Additional Information (Details)
9 Months Ended
Apr. 27, 2023
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2023
CAD ($)
Sep. 30, 2022
USD ($)
Sep. 30, 2023
CAD ($)
Apr. 28, 2023
Apr. 27, 2023
CAD ($)
Dec. 31, 2022
USD ($)
Joint Venture                
Recovery of investment   $ 440,361   $ 1,240,429        
Release and settlement amount from thrive cannabis $ 776,382              
Investment in joint venture 1,023,608             $ 775,577
Receivable from joint venture 706,598             $ 630,180
Remaining balance in joint venture 953,824              
Gain from termination of joint venture 1,428,185              
Canary                
Joint Venture                
Release and settlement amount from thrive cannabis 1,051,000              
Canary                
Joint Venture                
Term of the loan   12 months 12 months          
Loans advanced amounts $ 247,766           $ 335,000  
Maximum amount of loan   $ 887,520     $ 1,200,000      
Interest rate (as a percent)   7.00% 7.00%          
Interest income   $ 13,032 $ 17,539          
Interest receivable   $ 55,263     $ 74,720      
Equity interest in joint venture 50.00%         100.00% 50.00%  
Canada Inc                
Joint Venture                
Portion of outstanding balance of the loan guaranteed (as a percent)   50.00% 50.00%          
Canary and Thrive Cannabis                
Joint Venture                
Amount received from joint venture   $ 1,579,800 $ 2,125,482          
Recovery of investment   1,020,667 1,373,218          
Interest income   $ 559,133 $ 752,264          
v3.23.3
Joint Venture - Summarizes the activity of the period of JVCo (Details)
3 Months Ended 4 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
Sep. 30, 2022
USD ($)
Apr. 27, 2023
USD ($)
Apr. 27, 2023
CAD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2022
USD ($)
Sep. 30, 2022
CAD ($)
Apr. 27, 2023
CAD ($)
Sep. 30, 2022
CAD ($)
Joint Venture                  
Sales $ 1,046,227       $ 1,805,211 $ 0      
Cost of goods sold 454,241       823,502        
Gross profit 591,986       981,709        
Operation expenses 648,489 $ 278,507     1,489,649 913,190      
Net loss $ (356,812) (286,149)     $ (138,705) (598,248)      
Canary                  
Joint Venture                  
Sales     $ 791,285 $ 1,068,799   3,177,105 $ 4,074,256    
Cost of goods sold     459,271 620,344   1,646,042 2,110,851    
Gross profit     332,014 448,455   1,531,063 1,963,405    
Operation expenses     283,819 383,358   1,041,330 1,335,381    
Net loss     48,195 65,097   489,733 628,024    
Eligible recoverable expenses   2,731,566 1,060,833     2,731,566   $ 1,437,054 $ 3,743,923
Recoverable amount   $ 2,731,566 1,060,833     2,731,566   $ 1,437,054 $ 3,743,923
Income (loss) on equity     $ 24,098 $ 32,549   $ 244,867 $ 314,012    
v3.23.3
Joint Venture -Agreement and obtaining 100 percentage shares of the JVCo (Details)
Apr. 27, 2023
USD ($)
Joint Venture  
Inventory $ 1,690,368
Fixed assets 534,816
Assets acquired $ 2,225,184
v3.23.3
Goodwill - Purchase consideration (Details) - Visava Inc - USD ($)
Aug. 02, 2018
Jun. 27, 2018
Goodwill    
Number of Common stock   25,500,000
Purchase consideration $ 3,318,842  
Common stock    
Goodwill    
Number of Common stock 25,500,000  
Share price $ 0.067  
Fair value of Common Stock $ 1,695,750  
Warrant    
Goodwill    
Number of Common stock 25,000,000  
Share price $ 0.065  
Fair value of warrant $ 1,623,092  
v3.23.3
Goodwill - Additional Information (Details)
12 Months Ended
Aug. 02, 2018
USD ($)
$ / shares
Y
Jun. 27, 2018
$ / shares
shares
Dec. 31, 2022
USD ($)
shares
Dec. 31, 2021
USD ($)
shares
Sep. 30, 2023
USD ($)
shares
Dec. 31, 2019
$ / shares
Goodwill            
Goodwill     $ 263,117   $ 263,580  
Warrants exercised during the period | shares     0      
Warrants issued to purchase shares of common stock | shares     53,950,001   10,400,008  
Business acquisition equity interest issuable percentage   46.27%        
Forfeiture rate            
Goodwill            
Derivative liability, measurement input 0          
Stock price            
Goodwill            
Derivative liability, measurement input | $ / shares 0.067          
Exercise price            
Goodwill            
Derivative liability, measurement input | $ / shares 0.10          
Volatility            
Goodwill            
Derivative liability, measurement input 329          
Expected life            
Goodwill            
Derivative liability, measurement input | Y 2          
Expected dividend rate            
Goodwill            
Derivative liability, measurement input 0          
Visava Inc            
Goodwill            
Number of shares | shares   25,500,000        
Purchase consideration $ 3,318,842          
Fair value of net liabilities 275,353          
Goodwill 3,594,195          
Impairment of goodwill       $ 263,117    
Percentage of voting interests acquired   100.00%        
Visava Inc | Common Stock Purchase Warrants            
Goodwill            
Number of shares | shares   25,000,000        
Class of warrant or right, exercise price of warrants or rights | $ / shares   $ 0.10        
Visava Inc | Canary Rx Inc            
Goodwill            
Purchase consideration 3,318,842          
Fair value of net liabilities 275,353          
Goodwill $ 3,594,195          
Impairment of goodwill     $ 3,315,749      
CannaKorp Inc            
Goodwill            
Class of warrant or right, exercise price of warrants or rights | $ / shares           $ 0.15
Warrants exercised during the period | shares       0    
Visava Inc | Risk free interest rate            
Goodwill            
Fair value assumptions rate 2.66%          
Visava Inc | Canary Rx Inc            
Goodwill            
Percentage of voting interests acquired   100.00%        
v3.23.3
Related Party Transactions and Balances (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Feb. 16, 2023
CAD ($)
Sep. 30, 2023
USD ($)
shares
Sep. 30, 2022
USD ($)
Sep. 30, 2023
USD ($)
shares
Sep. 30, 2023
CAD ($)
Sep. 30, 2022
USD ($)
Dec. 31, 2022
USD ($)
shares
Dec. 31, 2021
shares
Dec. 31, 2019
USD ($)
$ / shares
shares
Sep. 30, 2023
CAD ($)
shares
Related Party Transactions and Balances                    
Other receivable   $ 3,698   $ 3,698     $ 3,692      
Debt outstanding amount   3,698   3,698     $ 3,692      
Interest expense   $ 337,675 $ 269,106 $ 1,060,373   $ 830,167        
Number of shares issued | shares   617,025,999   617,025,999     617,025,999     617,025,999
Debt issuance cost   $ 12,509 $ 12,855 $ 37,266   39,098        
Outstanding balance of debt issuance costs   125,623   125,623            
Debt issuance costs, current   67,098   67,098            
Debt issuance costs, non-current   58,525   58,525            
Interest expense on loan       740,286 $ 996,347          
Accrued interest expense   693,152   693,152           $ 937,199
Amount of advance in seventh amendment $ 500,000.00                  
Lender's fee $ 50,000                  
Warrants exercised during the period | shares             0      
CannaKorp Inc                    
Related Party Transactions and Balances                    
Total amount subject to loan settlement                 $ 817,876  
Payment of consideration in cash                 $ 954,374  
Shares issued for settlement | shares                 920,240  
Warrants issued for settlement | shares                 920,240  
Loss on loan settlement                 $ (136,498)  
Outstanding balance of loan   65,000   65,000     $ 65,000      
Warrants exercised during the period | shares               0    
Exercise prices | $ / shares                 $ 0.15  
Related party late payment penalties amount       25,000     25,000      
Interest and bank charges                    
Related Party Transactions and Balances                    
Interest expense       276,415 372,026          
Management Services                    
Related Party Transactions and Balances                    
Amounts due to related parties   11,134,521   11,134,521     10,346,465      
CLI                    
Related Party Transactions and Balances                    
Other receivable   3,698   3,698           5,000
Debt outstanding amount   3,698   3,698           5,000
Debt issuance cost   251,518                
Norlandam Marketing Inc.                    
Related Party Transactions and Balances                    
Outstanding balance of loan   0   0            
GTA Angel Group                    
Related Party Transactions and Balances                    
Amounts due to related parties   25,072   25,072            
Purchase goods, value       0            
CLI                    
Related Party Transactions and Balances                    
Other receivable   3,698   3,698           5,000
Debt issued       2,144,840 $ 2,900,000          
Principal balance   7,839,760   7,839,760           10,600,000
Debt outstanding amount   3,698   3,698           5,000
Shareholder advances [Note 15]   $ 510,688   $ 510,688           $ 690,492
CLI | Visava and Canary                    
Related Party Transactions and Balances                    
Percentage of issued and outstanding capital to be transferred in lieu of repayment of debt   75.00%   75.00%           75.00%
Percentage of issued and outstanding capital, option granted to acquire   25.00%   25.00%           25.00%
Former CEO, President, CFO and Other Current Key Officers                    
Related Party Transactions and Balances                    
Management service fee       $ 233,867   $ 102,915        
Outstanding management service fee   $ 653,522   $ 653,522     $ 585,261      
v3.23.3
Related Party Transactions and Balances - Repayment schedule of the minimum principal payments (Details)
Sep. 30, 2023
USD ($)
Related Party Transactions and Balances  
2024 $ 3,720,331
2025 3,988,170
Total 7,708,501
Current portion (2,125,856)
Non-current portion $ 5,582,645
v3.23.3
Related Party Transactions and Balances - Shareholder loan (Details)
Sep. 30, 2023
USD ($)
Sep. 30, 2023
CAD ($)
Related Party Transactions and Balances    
Amount of accrued interest converted into principal $ 665,640 $ 900,000
Maximum loan 2,874,366 3,886,380
Outstanding loan 2,800,406 3,786,380
Tranche 1    
Related Party Transactions and Balances    
Maximum loan 771,841 1,043,593
Outstanding loan $ 771,841 $ 1,043,593
Interest rate 16.00% 16.00%
Tranche 2    
Related Party Transactions and Balances    
Maximum loan $ 1,178,025 $ 1,592,787
Outstanding loan $ 1,178,025 $ 1,592,787
Interest rate 43.26% 43.26%
Tranche 3    
Related Party Transactions and Balances    
Maximum loan $ 184,900 $ 250,000
Outstanding loan $ 184,900 $ 250,000
Interest rate 43.26% 43.26%
Tranche 4    
Related Party Transactions and Balances    
Maximum loan $ 369,800 $ 500,000
Outstanding loan $ 369,800 $ 500,000
Interest rate 43.26% 43.26%
Tranche 5    
Related Party Transactions and Balances    
Maximum loan $ 369,800 $ 500,000
Outstanding loan $ 295,840 $ 400,000
Interest rate 43.26% 43.26%
v3.23.3
Operating Lease Right-Of-Use Assets and Lease Liability (Details)
9 Months Ended
Sep. 30, 2023
USD ($)
lease
Sep. 30, 2023
CAD ($)
lease
Sep. 30, 2023
CAD ($)
Dec. 31, 2022
USD ($)
Jan. 01, 2020
USD ($)
Jan. 01, 2020
CAD ($)
Operating Lease Right-Of-Use Assets and Lease Liability            
Number of operating lease facilities | lease 2 2        
Operating lease right-of-use assets | $ $ 49,578     $ 62,728    
Weighted average discount rate 16.00%   16.00%      
Canary Rx Inc            
Operating Lease Right-Of-Use Assets and Lease Liability            
Agreement increased the minimum rent including applicable taxes $ 25,886 $ 35,000        
Percentage of increase in minimum rent 1.00% 1.00%        
Term of contract 10 years   10 years      
Forgiveness amount due to implementation of new lease $ 746,458   $ 988,293      
ASU 2016-02            
Operating Lease Right-Of-Use Assets and Lease Liability            
Operating lease right-of-use assets         $ 1,670,174 $ 2,258,212
Reduction in right-to-use asset         $ 1,545,706 $ 2,089,921
v3.23.3
Operating Lease Right-Of-Use Assets and Lease Liability - Maturities (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Operating Lease Right-Of-Use Assets and Lease Liability    
2023 $ 80,011  
2024 323,245  
2025 326,477  
2026 329,742  
Thereafter 1,123,521  
Total lease payments 2,182,996  
Less imputed interest (833,539)  
Present value of lease liabilities 1,349,457  
Current portion (119,151) $ (110,586)
Non-current portion $ 1,230,306 $ 1,319,619
v3.23.3
Operating Lease Right-Of-Use Assets and Lease Liability - Reconciliation of net operating lease (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Operating Lease Right-Of-Use Assets and Lease Liability        
Gross operating lease expense $ 58,375 $ 65,215 $ 178,134 $ 198,254
Gross rent and utilities expenses 61,354 135,584 244,560 387,474
Recoverable expenses from JVCo related to rent and utilities   (282,775) (285,655) (701,609)
Net operating lease expense $ 119,729 $ (81,976) $ 137,039 $ (115,881)
v3.23.3
Convertible Promissory Notes - Recorded and fair valued derivative liability (Details)
9 Months Ended
Sep. 30, 2023
USD ($)
Convertible Promissory Notes  
Derivative liability, beginning of the period $ 15,125
Fair value adjustment 9,034
Derivative liability, end of the period 24,159
Note D  
Convertible Promissory Notes  
Derivative liability, beginning of the period 1,446
Fair value adjustment 867
Derivative liability, end of the period 2,313
Note F  
Convertible Promissory Notes  
Derivative liability, beginning of the period 10,034
Fair value adjustment 5,991
Derivative liability, end of the period 16,025
Note G  
Convertible Promissory Notes  
Derivative liability, beginning of the period 3,645
Fair value adjustment 2,176
Derivative liability, end of the period $ 5,821
v3.23.3
Convertible Promissory Notes - Additional information (Details)
9 Months Ended
Sep. 30, 2023
USD ($)
$ / shares
Y
Sep. 30, 2022
USD ($)
Dec. 31, 2022
USD ($)
Convertible Promissory Notes      
Interest amount | $ $ 10 $ 27  
Dividend yield      
Convertible Promissory Notes      
Derivative liability, measurement input 0    
Minimum | Volatility      
Convertible Promissory Notes      
Derivative liability, measurement input 2.05    
Minimum | Risk free interest rate      
Convertible Promissory Notes      
Derivative liability, measurement input 0.0440    
Minimum | Stock price      
Convertible Promissory Notes      
Derivative liability, measurement input 0.003    
Minimum | Liquidity term      
Convertible Promissory Notes      
Derivative liability, measurement input | Y 0.25    
Minimum | Exercise price      
Convertible Promissory Notes      
Derivative liability, measurement input 0.0012    
Maximum | Volatility      
Convertible Promissory Notes      
Derivative liability, measurement input 5.03    
Maximum | Risk free interest rate      
Convertible Promissory Notes      
Derivative liability, measurement input 0.0520    
Maximum | Stock price      
Convertible Promissory Notes      
Derivative liability, measurement input 0.008    
Maximum | Liquidity term      
Convertible Promissory Notes      
Derivative liability, measurement input | Y 0.50    
Maximum | Exercise price      
Convertible Promissory Notes      
Derivative liability, measurement input 0.0151    
Convertible promissory note      
Convertible Promissory Notes      
Principal amount outstanding | $ $ 480   $ 480
Principal balance of convertible promissory notes | $ $ 0 $ 0  
v3.23.3
Stockholders' Equity (Details) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Dec. 31, 2017
Dec. 31, 2021
Stockholders' Equity                        
Preferred stock, par value $ 0.0001     $ 0.0001       $ 0.0001   $ 0.0001    
Preferred stock, shares authorized 20,000,000     20,000,000       20,000,000   20,000,000    
Preferred Stock, Shares Issued 1,000,000     1,000,000       1,000,000   1,000,000    
Preferred stock, shares outstanding 1,000,000     1,000,000       1,000,000   1,000,000    
Common stock, par value $ 0.0001     $ 0.0001       $ 0.0001   $ 0.0001    
Common stock, shares authorized 850,000,000     850,000,000       850,000,000   850,000,000    
Common stock, shares issued 617,025,999     617,025,999       617,025,999   617,025,999    
Common stock, shares outstanding 617,025,999     617,025,999       617,025,999   617,025,999    
Conversion of stock, shares converted               100        
Shares issued as consideration for consideration of the intellectual property rights $ 99       $ 120     $ 210 $ 387      
Shares issued as consideration for advisory and other services (in shares)               115,000        
Shares issued as consideration for advisory and other services               $ 73,000        
Value of shares, outstanding $ (6,855,390) $ (6,566,588)   $ (6,559,825) $ (2,782,637) $ (2,481,289)   $ (6,855,390) $ (2,782,637) $ (6,559,825)   $ (2,152,112)
Advisory and consultancy services                        
Stockholders' Equity                        
Shares issued as consideration for advisory and other services (in shares)               80,000        
Shares issued as consideration for advisory and other services               $ 52,000        
Series A preferred stock                        
Stockholders' Equity                        
Conversion of stock, shares converted               1        
Website development services                        
Stockholders' Equity                        
Shares issued as consideration for advisory and other services (in shares)                     35,000  
Shares issued as consideration for advisory and other services                     $ 247,306  
Gain on settlement of website development service cost                     226,306  
Common stock                        
Stockholders' Equity                        
Shares, outstanding 617,025,999 617,025,999   617,025,999 617,025,999 617,025,999   617,025,999 617,025,999 617,025,999   617,025,999
Value of shares, outstanding $ 61,703 $ 61,703   $ 61,703 $ 61,703 $ 61,703   $ 61,703 $ 61,703 $ 61,703   $ 61,703
Common stock | Private placements                        
Stockholders' Equity                        
Shares issued as consideration for advisory and other services               $ 18,787        
Shares to be issued               346,296        
Common stock | Website development services                        
Stockholders' Equity                        
Shares issued as consideration for advisory and other services                     $ 21,000  
Warrant                        
Stockholders' Equity                        
Convertible notes, warrants and preferred stock into common shares               10,400,008   53,950,001    
Convertible notes                        
Stockholders' Equity                        
Convertible notes, warrants and preferred stock into common shares               14,674,491   17,258,122    
Preferred stock warrants                        
Stockholders' Equity                        
Convertible notes, warrants and preferred stock into common shares               100,000,000   100,000,000    
Shares to be issued                        
Stockholders' Equity                        
Shares issued as consideration for consideration of the intellectual property rights (in shares) 15,624 15,624 15,624 15,624 15,624 15,624 15,624 46,872 46,872      
Shares issued as consideration for consideration of the intellectual property rights $ 99 $ 48 $ 63 $ 73 $ 120 $ 114 $ 153 $ 210 $ 387      
Shares, outstanding 1,625,896 1,610,272   1,579,024 1,563,400 1,547,776   1,625,896 1,563,400 1,579,024   1,516,528
Value of shares, outstanding $ 175,392 $ 175,293   $ 175,182 $ 175,109 $ 174,989   $ 175,392 $ 175,109 $ 175,182   $ 174,722
Shares to be issued | Settlement of loans                        
Stockholders' Equity                        
Shares issued as consideration for advisory and other services               $ 80,838        
Shares issued on settlement of debt               930,240        
Serious seeds                        
Stockholders' Equity                        
Shares to issue as consideration for intangible assets (in shares)               234,360        
Shares to issue as consideration for intangible assets               $ 2,767        
v3.23.3
Stockholders' Equity - Warrants (Details) - USD ($)
3 Months Ended
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Stockholders' Equity                            
Forfeiture rate               0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exercise price $ 0.350 $ 0.350 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.250 $ 0.350 $ 0.350 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.250
Volatility               399.00% 342.00% 305.00% 279.00% 279.00% 299.00% 306.00%
Expected life (years)               2 years 2 years 2 years 2 years 2 years 2 years 2 years
Expected dividend rate               0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Fair value of warrants $ 313 $ 138 $ 160 $ 176 $ 288 $ 306 $ 430 $ 313 $ 138 $ 160 $ 176 $ 288 $ 306 $ 430
Minimum                            
Stockholders' Equity                            
Stock price $ 0.004 $ 0.003 $ 0.003 $ 0.004 $ 0.007 $ 0.005 $ 0.008 $ 0.004 $ 0.003 $ 0.003 $ 0.004 $ 0.007 $ 0.005 $ 0.008
Risk free interest rate               4.78% 3.82% 4.24% 4.23% 2.97% 2.50% 0.88%
Maximum                            
Stockholders' Equity                            
Stock price $ 0.009 $ 0.003 $ 0.005 $ 0.006 $ 0.008 $ 0.010 $ 0.013 $ 0.009 $ 0.003 $ 0.005 $ 0.006 $ 0.008 $ 0.010 $ 0.013
Risk free interest rate               5.01% 4.51% 4.89% 4.66% 3.50% 2.73% 1.50%
Warrant                            
Stockholders' Equity                            
Forfeiture rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%              
Stock price $ 0.008 $ 0.006 $ 0.003 $ 0.004 $ 0.005 $ 0.008 $ 0.009 $ 0.008 $ 0.006 $ 0.003 $ 0.004 $ 0.005 $ 0.008 $ 0.009
Risk free interest rate 5.46% 5.40% 4.64% 4.73% 4.05% 2.92% 2.28%              
Expected dividend rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%              
Warrant | Minimum                            
Stockholders' Equity                            
Exercise price $ 0.250 $ 0.250 $ 0.250 $ 0.200 $ 0.200 $ 0.050 $ 0.023 0.250 0.250 0.250 0.200 0.200 0.050 0.023
Volatility 365.00% 273.00% 244.00% 253.00% 214.00% 192.00% 192.00%              
Expected life (years) 7 days 7 days 7 days 7 days 0 years 0 years 0 years              
Warrant | Maximum                            
Stockholders' Equity                            
Exercise price $ 0.350 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.250 $ 0.350 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.300 $ 0.250
Volatility 422.00% 342.00% 305.00% 312.00% 279.00% 306.00% 306.00%              
Expected life (years) 1 year 8 months 4 days 1 year 8 months 4 days 1 year 11 months 4 days 1 year 11 months 4 days 1 year 11 months 8 days 1 year 11 months 8 days 1 year 11 months 4 days              
v3.23.3
Stockholders' Equity - Warrants outstanding (Details) - shares
9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Stockholders' Equity    
Warrants outstanding 10,400,008 53,950,001
Serious seeds    
Stockholders' Equity    
Warrants outstanding 400,008 400,008
Private placements    
Stockholders' Equity    
Warrants outstanding   43,549,993
Number of warrants expired 43,699,996  
Minimum | Serious seeds    
Stockholders' Equity    
Remaining contractual life term 7 days 7 days
Minimum | Private placements    
Stockholders' Equity    
Remaining contractual life term   1 month 9 days
Maximum | Serious seeds    
Stockholders' Equity    
Remaining contractual life term 1 year 11 months 4 days 1 year 11 months 4 days
Maximum | Private placements    
Stockholders' Equity    
Remaining contractual life term   5 months 19 days
CLI    
Stockholders' Equity    
Warrants outstanding 10,000,000 10,000,000
Remaining contractual life term 1 year 10 months 13 days 2 years 7 months 13 days
v3.23.3
Stockholders' Equity - Movement of the warrant liability (Details)
9 Months Ended
Sep. 30, 2023
USD ($)
Movement of the warrant liability  
Warrant liability, Beginning balance $ 489
Warrant liability for new issuance 611
Change in fair value 669
Warrant liability, Ending balance $ 1,769
v3.23.3
Contingencies and commitments (Details)
9 Months Ended 12 Months Ended
Jul. 27, 2020
USD ($)
Dec. 06, 2018
$ / shares
shares
Sep. 30, 2023
USD ($)
shares
Sep. 30, 2023
CAD ($)
Dec. 31, 2020
USD ($)
Dec. 31, 2020
CAD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2019
CAD ($)
Sep. 30, 2023
CAD ($)
shares
Dec. 31, 2022
shares
Loss Contingencies                    
Approximate lawsuit, amount     $ 1,377,731 $ 1,862,805            
Amount payable     $ 10,867              
Common stock, shares issued | shares     617,025,999           617,025,999 617,025,999
Warrants issued to purchase shares of common stock | shares     10,400,008           10,400,008 53,950,001
Canary case, one                    
Loss Contingencies                    
Approximate lawsuit, amount             $ 1,553,160 $ 2,100,000    
CannaKorp Inc                    
Loss Contingencies                    
Approximate lawsuit, amount     $ 150,000              
Amount payable     188,865              
Cgreen Inc                    
Loss Contingencies                    
Settlement amount $ 100,000                  
Monthly installment of settlement amount 10,000                  
Canary                    
Loss Contingencies                    
Approximate lawsuit, amount         $ 96,723 $ 130,778        
Amount payable     $ 102,176           $ 138,150  
Serious Seeds                    
Loss Contingencies                    
Common stock, shares issued | shares   5,208                
Serious Seeds | Common Stock Purchase Warrants                    
Loss Contingencies                    
Common stock, shares issued | shares     0           0  
Warrants issued to purchase shares of common stock | shares   16,667                
Warrants exercise period   2 years                
Serious Seeds | Minimum | Common Stock Purchase Warrants                    
Loss Contingencies                    
Exercise prices | $ / shares   $ 0.20                
Serious Seeds | Maximum | Common Stock Purchase Warrants                    
Loss Contingencies                    
Exercise prices | $ / shares   $ 0.35                
Within 30 days of the Effective Date | Cgreen Inc                    
Loss Contingencies                    
Settlement amount $ 130,000                  
Settlement period 30 days                  
1st year                    
Loss Contingencies                    
Percentage of royalties on gross sales     2.00% 2.00%            
2nd year                    
Loss Contingencies                    
Percentage of royalties on gross sales     2.25% 2.25%            
3rd year                    
Loss Contingencies                    
Percentage of royalties on gross sales     2.50% 2.50%            
4th year                    
Loss Contingencies                    
Percentage of royalties on gross sales     2.75% 2.75%            
5th and following years                    
Loss Contingencies                    
Percentage of royalties on gross sales     3.00% 3.00%            

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