CBDY 10-K & 10-Q changes, risk factors and insider trading
Target Group Inc. · OTC · Medicinal Chemicals & Botanical Products · CIK 1586554 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Rescheduling Uncertainty”
New heading “Hemp More Narrowly Defined”
New heading “The Canadian cannabis market is subject to an evolving and complex regulatory framework that may adversely affect our business, results of operations, and financial condition.”
New heading “Industry Consolidation and Counterparty Risk”
Removed heading “The effects of the legalization of recreational cannabis in Canada are unknown at this time.”
Largest changes
“The Government of Canada approved the Cannabis Act (Bill C-45) which went into effect on October 17, 2018. The Cannabis Act allows for regulated and restricted access to cannabis for recreational adult use in Canada. Under the Cannabis Act, there are significant restrictions on the marketing, branding, product formats and distribution channels allowed under the law. Additional restrictions may be imposed at the provincial level. …”see in full comparison
“The Canadian adult-use cannabis market is highly competitive and may, at times, experience excess production relative to consumer demand. If licensed producers cultivate or manufacture more cannabis than the market can absorb, and we are unable to redirect that supply to export or other permissible channels, the available supply of cannabis may exceed demand. Any such imbalance could result in lower market prices, increased price competition, inventory write-downs, higher storage or disposal costs, and reduced margins. …”see in full comparison
“In recent years, a number of companies across the Canadian cannabis supply chain have sought creditor protection or other insolvency relief under the Companies’ Creditors Arrangement Act (R.S.C. 1985, c. C-36) (“CCAA”) or the Bankruptcy and Insolvency Act (R.S.C. 1985, c. B-3) (“BIA”). This trend reflects persistent structural challenges in the industry, including oversupply, wholesale price compression, elevated excise duty burdens, limited access to capital, and a timeline to profitability that has exceeded the expectations of many market participants.”see in full comparison
“Additionally, we are subject to the risk that our Canadian licenses may not be renewed on acceptable terms, that Health Canada may impose additional conditions on our licenses, or that regulatory enforcement actions may result in fines, penalties, suspension, or revocation of our licenses. Compliance with the evolving Canadian regulatory framework requires significant ongoing investment in regulatory affairs, quality assurance, and operational processes, and any failure to maintain compliance could have a material adverse effect on our business, financial condition, and results of operations.”see in full comparison
“The Canadian cannabis market is subject to an evolving and complex regulatory framework that may adversely affect our business, results of operations, and financial condition.”see in full comparison
Full comparison: every changed paragraph (25)
In addition to all other information set out in this Report, including our consolidated financial statements and the related notes included elsewhere in this Report, our business is subject to a number of risks that are uniquely applicable to the cannabis business generally and specifically in the cannabis business in Canada. Other risks and uncertainties that we do not presently consider material, or of which we are not presently aware, may become important factors that affect our future financial condition and results of operations. Some of these risks include but are not limited to the developing situation globally surrounding COVID-19 and its impacts on the overall global economy. If any of the risks discussed below actually occur, our business, financial condition, results of operations and prospects could be materially affected.
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.
Our proposed business is dependent on state laws pertaining to the marijuana industryindustry, which are uncertain and subject to change
Our business depends on the continued legalization and regulation of marijuana at the state level through legislation, rulemaking and voter-approved ballot measures. The marijuana industry is subject to evolving laws, regulations and enforcement priorities, and there can be no assurance that current state-law protections and regulatory regimes will remain in place. Any repeal, amendment, delay in implementation, adverse regulatory development or change in enforcement priorities could restrict or eliminate our ability to conduct business in one or more jurisdictions, reduce demand for our products, increase compliance costs and materially adversely affect our business, financial condition and results of operations.
Continued development of the marijuana industry is dependent upon continued legislative authorization and/or voter-approved referenda at the state level. Any number of factors could slow or halt progress in this area. In addition, progress for the industry, while encouraging, is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative process, any one of which could slow or halt the use of marijuana, which could negatively impact our business.
Rescheduling Uncertainty
On May 21, 2024, DOJ published a proposed rule to reschedule marijuana from Schedule I to Schedule III. On December 18, 2025, President Trump signed an Executive Order directing the U.S. Department of Justice (“DOJ”) to expedite the rescheduling of cannabis from Schedule I to Schedule III under the CSA. The rescheduling process, which requires formal rulemaking under the Administrative Procedure Act (“APA”), is expected to include a public comment period and may be subject to legal challenge. There can be no assurance as to the timing or outcome of the rulemaking.
If finalized, rescheduling to Schedule III would not constitute federal legalization of cannabis, nor would it resolve the fundamental conflict between federal and state cannabis laws. The continued classification of cannabis as a controlled substance—even under Schedule III—means that cannabis operations in the United States remain subject to federal enforcement risk.
Rescheduling could lower barriers to entry for well-capitalized institutional competitors in both the United States and in Canada, including pharmaceutical and consumer-goods companies that have historically been unable or unwilling to participate in the cannabis industry due to its Schedule I status. Increased competition from such entrants could adversely affect our market share, pricing, and profitability in Canada, or in any future operations in the United States.
Hemp More Narrowly Defined
Impactful to licensees in the United States, on November 12, 2025, President Trump signed H.R. 5371, the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026, into law. Section 781, effective 365 days after enactment, amends Section 297A of the Agricultural Marketing Act of 1946 and narrows the federal definition of “hemp.” As amended, “hemp” is defined using a total tetrahydrocannabinols standard, including tetrahydrocannabinolic acid (“THCA”), rather than the prior delta-9 THC-only standard. In addition, the amended law excludes certain intermediate and final hemp-derived cannabinoid products from the definition of hemp, including final hemp-derived cannabinoid products containing more than 0.4 milligrams combined total per container of total tetrahydrocannabinols (including THCA) and other cannabinoids that have similar effects, or are marketed to have similar effects, as tetrahydrocannabinol, as determined by the Secretary of Health and Human Services.
The Canadian cannabis market is subject to an evolving and complex regulatory framework that may adversely affect our business, results of operations, and financial condition.
The Cannabis Act (S.C. 2018, c. 16) has governed the legal production, distribution, and sale of cannabis for recreational adult use in Canada since October 17, 2018, and was amended effective October 17, 2019 to permit the sale of cannabis edibles, extracts, and topicals. Since legalization, the Canadian cannabis industry has experienced significant market maturation, including persistent oversupply conditions, sustained wholesale and retail price compression, consolidation among licensed producers, and ongoing competition from the illicit market, which continues to capture a material share of total cannabis sales in Canada.
The Cannabis Act imposes significant restrictions on the marketing, branding, packaging, product formats, potency, and distribution channels for cannabis products. Health Canada administers the federal regulatory framework and retains broad authority to modify the conditions of cultivation, processing, and sale licenses, impose additional compliance requirements, or amend the regulations under the Cannabis Act. Licensees are subject to ongoing inspection, audit, and compliance monitoring by Health Canada, which has enhanced its inspection capacity and enforcement focus as the industry has matured. Individual provinces and territories maintain separate regulatory frameworks governing retail distribution, pricing, and market access, resulting in a fragmented national market with varying competitive dynamics across jurisdictions. The Government of Canada has completed the legislative review required under the Cannabis Act, and any resulting amendments to the Cannabis Act, its regulations, or other applicable laws and policies could adversely affect our business.
The Canadian federal excise duty framework, which imposes the greater of a flat-rate duty or an ad valorem duty on cannabis products, has been a persistent source of margin pressure for licensed producers. Industry participants have advocated for reform of the excise duty structure, and the federal government has announced plans to explore a transition to a single national excise stamp to reduce administrative burden. However, no excise duty relief has been enacted for cannabis products.
Additionally, we are subject to the risk that our Canadian licenses may not be renewed on acceptable terms, that Health Canada may impose additional conditions on our licenses, or that regulatory enforcement actions may result in fines, penalties, suspension, or revocation of our licenses. Compliance with the evolving Canadian regulatory framework requires significant ongoing investment in regulatory affairs, quality assurance, and operational processes, and any failure to maintain compliance could have a material adverse effect on our business, financial condition, and results of operations.
The effects of the legalization of recreational cannabis in Canada are unknown at this time.
The Government of Canada approved the Cannabis Act (Bill C-45) which went into effect on October 17, 2018. The Cannabis Act allows for regulated and restricted access to cannabis for recreational adult use in Canada. Under the Cannabis Act, there are significant restrictions on the marketing, branding, product formats and distribution channels allowed under the law. Additional restrictions may be imposed at the provincial level. Any failure by us to comply with the applicable regulatory requirements at the federal and provincial level could require changes to our proposed operations; result in regulatory or agency proceedings or investigations, increase compliance costs, fines, penalties or restrictions on our operations or revocation of our licenses and other permits.
The recreational adult-use cannabis market in Canada may becomeexperience oversupplied following the implementationperiods of theoversupply, Cannabiswhich Act.could adversely affect pricing, sales and profitability
The Canadian adult-use cannabis market is highly competitive and may, at times, experience excess production relative to consumer demand. If licensed producers cultivate or manufacture more cannabis than the market can absorb, and we are unable to redirect that supply to export or other permissible channels, the available supply of cannabis may exceed demand. Any such imbalance could result in lower market prices, increased price competition, inventory write-downs, higher storage or disposal costs, and reduced margins. In addition, our ability to export excess inventory is limited by applicable laws and regulations in Canada and in foreign jurisdictions, and there can be no assurance that export opportunities will be available on commercially reasonable terms, or at all. If oversupply occurs and persists, our revenues, results of operations and ability to achieve or maintain profitability could be materially adversely affected.
As a result, in the surge of demand for cannabis as a result of the implementation of the Cannabis Act, we and other cannabis producers in Canada may produce more cannabis that is needed to satisfy the market and we may not be able to export that oversupply into other markets where cannabis use is fully legal under all federal, state and provincial laws thus the available supply of cannabis could exceed demand, resulting in a decline in the market price for cannabis. If this were to occur, there is no assurance that we would be able to generate sufficient revenue to result in profitability.
Industry Consolidation and Counterparty Risk
In recent years, a number of companies across the Canadian cannabis supply chain have sought creditor protection or other insolvency relief under the Companies’ Creditors Arrangement Act (R.S.C. 1985, c. C-36) (“CCAA”) or the Bankruptcy and Insolvency Act (R.S.C. 1985, c. B-3) (“BIA”). This trend reflects persistent structural challenges in the industry, including oversupply, wholesale price compression, elevated excise duty burdens, limited access to capital, and a timeline to profitability that has exceeded the expectations of many market participants.
We are exposed to counterparty credit risk through our third-party relationships in the industry, some or all of which may be experiencing financial distress or may file for creditor protection. In the event that a material customer, distribution partner, or supplier becomes insolvent, we may experience losses on accounts receivable, disruption to our supply chain or distribution channels, or inability to recover prepayments or deposits. In addition, continued industry consolidation and court-supervised sale processes may enable existing or new competitors to acquire assets, licenses, or production capacity on attractive terms, which could increase competitive pressure in our markets.
There can be no assurance that market conditions will not deteriorate further or that the failure of one or more significant counterparties will not have a material adverse effect on our business, results of operations, and financial condition.
Management's Discussion & Analysis (MD&A)
Largest changes
“We believe that the assumptions and estimates associated with revenue recognition, income taxes, goodwill impairment/valuation, inventory valuation, current expected credit loss (CECL) model for accounts receivable, to have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see Note 4, “Summary of Significant Accounting Policies,” to our consolidated financial statements included herein.”see in full comparison
Other income and expenses comprised, change in fair value of derivative and warranty liability amounting tosee in full comparisonpositivenegative$374$140 (20232024: positive$7,238$374), gain on settlement of debt amounting to$36,511$nil (20232024:LossGain on settlement of debt$1,571,742$36,511), interest and bank charges amounting to$1,153,574,$1,044,219, (20232024:$1,410,974$1,153,574), exchangegain of $172,564 (2023:loss of$51,811)$98,569other(2024: income of$nil (2023: $16,782$172,564), interest income in the amount of$30,821$34,062 (20232024:$nil$30,821), impairment of goodwill in the amount of $nil (20232024: $nil), recovery of sales tax recoverable $653 (2024: $6,089), andsharedebtofissuanceincomecostfrom joint venture of $nil$29,744 (20232024:$24,15248,997).
“Inventory is stated at the lower of cost or net realizable value in accordance with US GAAP. The determination of inventory cost involves significant estimates, primarily related to the cost per gram used to value inventory at the end of the reporting period. Small changes in these underlying assumptions can materially affect the unit cost and, consequently, the total inventory balance reported in the financial statements.”see in full comparison
Expenses for the year ended December 31,see in full comparison20242025 primarily represented consulting fees of$256,206$171,237 (20232024:$147,787$256,206), management fees of$476,994$405,316 (20232024:$312,969$476,994), legal and professional charges of$218,801$202,010 (20232024:$212,427$218,801) comprising legal, review, accounting and Edgar agent fee, travel expenses of$7,302$nil (20232024:$706$7,302), operating lease expenses of$217,422$193,947 (20232024:$190,185$217,422) office and general of$515,570$418,618 (20232024:$410,576$515,570) and depreciation expense amounting to$916,213$898,403 (20232024:$811,649$916,213).
The Company generated revenue ofsee in full comparison$6,591,625$3,881,003 during the current year and$3,720,169$6,591,625 in the comparable year ended in2023. However, Canary generated revenues of $nil (though its investment in JVCo) during the current year ended (2023: $791,285) and is represented as a share of income from joint venture on the audited consolidated statement of operations.2024. The revenue represents the sale of cannabis product, and the entire revenue was sold to seventeen customers (20232024:twenty oneseventeen).
“Accounts payable amounting to $2,637,973 as of December 31, 2025, primarily represents consulting and construction services related to fixed asset additions amounting to $100,794, interest on promissory notes and loans amounting to $1,203,273, outstanding and accrued professional fees amounting to $940,235.”see in full comparison
Full comparison: every changed paragraph (19)
As of December 31, 2024,2025, the Company generated revenue of $6,591,625$3,881,003 and had incomeloss of $160,504.$1,359,682. As of December 31, 2024,2025, the Company had a working capital deficit of $9,994,548$11,052,097 and an accumulated deficit of $30,946,844.$32,306,526.
Inventory is stated at the lower of cost or net realizable value in accordance with US GAAP. The determination of inventory cost involves significant estimates, primarily related to the cost per gram used to value inventory at the end of the reporting period. Small changes in these underlying assumptions can materially affect the unit cost and, consequently, the total inventory balance reported in the financial statements.
We believe that the assumptions and estimates associated with revenue recognition, income taxes, goodwill impairment/valuation, inventory valuation, current expected credit loss (CECL) model for accounts receivable, to have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see Note 4, “Summary of Significant Accounting Policies,” to our consolidated financial statements included herein.
On December 31, 2024,2025, we had cash of $100,410 (excluding restricted cash of $8,390) compared to $1,869,767 (excluding restricted cash of $7,992) compared to $736,323 (excluding restricted cash of $8,696) as of December 31, 2023.2024. The increasedecrease is due to increasedecrease in additionrevenue loanand providedthe bysettlement aof related party.loans.
The company recorded a bad debt expense of $2,630$nil for the year ended December 31, 20242025 (December 31, 20232024: $53,812$2,630).
Inventory
As of December 31, 2024,2025, the inventory in the amount of $882,279$1,669,053 (20232024: $1,215,928$882,279) consists of WIP and finished cannabis goods which is transferred from JVCo to Canary as a result of the Joint Venture Settlement Agreement, refer to Note 13 for additional details.goods.
As of December 31, 2024,2025, the Company had $59,469$67,256 of gross sales tax recoverable compared to $nil$59,469 as of December 31, 20232024 while the Company had $nil of gross sales tax payable as of December 31, 20242025 compared to $48,581$nil as of December 31,2023.31, 2024.
Sales tax recoverable allowance on December 31, 20242025 is $5,795$6,750 (December 31, 20232024: $nil$5,795).
The Company had initiated construction on its leased 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 had 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 amounting to $2,637,973 as of December 31, 2025, primarily represents consulting and construction services related to fixed asset additions amounting to $100,794, interest on promissory notes and loans amounting to $1,203,273, outstanding and accrued professional fees amounting to $940,235.
Accounts payable amounting to $2,945,568 as of December 31, 2023, primarily represents consulting and construction services related to fixed asset additions amounting to $126,059, interest on promissory notes and loans amounting to $1,628,007, outstanding and accrued professional fees amounting to $945,615.
The Company generated revenue of $6,591,625$3,881,003 during the current year and $3,720,169$6,591,625 in the comparable year ended in 2023. However, Canary generated revenues of $nil (though its investment in JVCo) during the current year ended (2023: $791,285) and is represented as a share of income from joint venture on the audited consolidated statement of operations.2024. The revenue represents the sale of cannabis product, and the entire revenue was sold to seventeen customers (20232024: twenty oneseventeen).
Our expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, and depreciation expense. The increasedecrease in operating expenses for the year ended December 31, 20242025 compared to 20232024 is due to increasedecrease in consulting expenses, management fees, office and generalgeneral, depreciation expense and depreciationoperating and amortizationlease expense.
Expenses for the year ended December 31, 20242025 primarily represented consulting fees of $256,206$171,237 (20232024: $147,787$256,206), management fees of $476,994$405,316 (20232024: $312,969$476,994), legal and professional charges of $218,801$202,010 (20232024: $212,427$218,801) comprising legal, review, accounting and Edgar agent fee, travel expenses of $7,302$nil (20232024: $706$7,302), operating lease expenses of $217,422$193,947 (20232024: $190,185$217,422) office and general of $515,570$418,618 (20232024: $410,576$515,570) and depreciation expense amounting to $916,213$898,403 (20232024: $811,649$916,213).
Other income and expenses comprised, change in fair value of derivative and warranty liability amounting to positivenegative $374$140 (20232024: positive $7,238$374), gain on settlement of debt amounting to $36,511$nil (20232024: LossGain on settlement of debt $1,571,742$36,511), interest and bank charges amounting to $1,153,574,$1,044,219, (20232024: $1,410,974$1,153,574), exchange gain of $172,564 (2023: loss of $51,811)$98,569 other(2024: income of $nil (2023: $16,782$172,564), interest income in the amount of $30,821$34,062 (20232024: $nil$30,821), impairment of goodwill in the amount of $nil (20232024: $nil), recovery of sales tax recoverable $653 (2024: $6,089), and sharedebt ofissuance incomecost from joint venture of $nil$29,744 (20232024: $24,15248,997).
The Company anticipated that its future operations will generate positive cash flows starting in 2024 and it has generated $2,162,684 cash from operations for the year ended December 31, 2024.2026.
Operating activities providedused cash of $2,162,684$842,425 compared to the cash usedprovided of $589,612$2,162,684 during the prior year. This is due to managementschange efficientin useaccounts ofreceivable, cashaccounts payable and theaccrued companyliabilities hasand started to generate revenues.inventory.
Investing activities usedprovided cash of $178,978$81,379 compared to cash providedused of $416,932$178,978 during the prior year. This was because the company have not received anythe proceeds back from jointconvertible venture as it was terminated.note.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
New heading “Statement of Operations – For the six months ended June 30, 2026 and 2025:”
Largest changes
“Statement of Operations – For the six months ended June 30, 2026 and 2025:”see in full comparison
“Our expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, and depreciation expense. The decrease in operating expenses during the current quarter ended compared to comparable prior quarter ended is due to decrease in consulting fee, management service fees, operating lease expense and legal and professional fees in the current period.”see in full comparison
“Changes in other income and expenses were due to: (1) the revaluation of the warrant and convertible debt liabilities on each quarter-end which increased in magnitude because none of the warrants expired during the current period ended; (2) increase in the principal balance led to increased interest expense; and (3) and significant increase in exchange gain during the quarter due to favorable exchange rate.”see in full comparison
“Expenses primarily represented consulting fees of $78,067 (2025: $109,753), management fees of $177,926 (2025: $240,364), legal and professional charges of $71,147 (2025: $96,228) comprising legal, review, accounting and Edgar agent fee, depreciation expense amounting to $458,613 (2025: $445,418) and office and general amounting to $238,053 (2025: $234,826).”see in full comparison
“Other income and expenses comprised, change in fair value of derivative and warranty liability amounting to negative $106 (2025: positive $2,289), interest and bank charges amounting to $577,419 (2025: $514,736), exchange gain $77,061 (2025: loss of $107,614), and debt issuance cost of $nil (2025: $23,678).”see in full comparison
“The Company generated revenue of $2,260,280 during the quarter ended in 2026 while $2,646,163 in the comparable period of 2025. The revenue represents the sale of cannabis product and the revenue was concentrated to seven customers (2025: twelve).”see in full comparison
Full comparison: every changed paragraph (32)
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 threesix months ended MarchJune 31,30, 2026 and were prepared and presented in accordance with generally accepted accounting principles in the United States.
As of MarchJune 31,30, 2026, $3,587$3,519 (CAD $5,000) is still outstanding from CLI which is presented as other receivable on the consolidated balance sheet.
As of MarchJune 31,30, 2026, the Company had 42 employees which include Anthony Zarcone, Chief Executive Officer.
Balance sheet – As of MarchJune 31,30, 2026 and December 31, 2025
On MarchJune 31,30, 2026, the Company had cash of $201,647$5,914 (excluding restricted cash of $8,250$8,092) compared to $100,410 (excluding restricted cash of $8,390) as of December 31, 2025. The decrease isin duecash was primarily attributable to the loansettlement repaymentsof made by the company.liabilities.
Accounts receivable are recorded at the net value of the face amount less an allowance for doubtful accounts. As of MarchJune 31,30, 2026 accounts receivable totaled $454,765$522,374 (2025: $446,283). The majority of the balance at period end is current and will be received subsequent to period end.
As of MarchJune 31,30, 2026, the company’s allowance for doubtful accounts was $2,715$2,663 compared to $2,761$2,774 at December 31, 2025.
As of MarchJune 31,30, 2026, the inventory in the amount of $1,676,545$1,715,945 (2025: $1,669,053) consists of WIP and finished cannabis goods.
On MarchJune 31,30, 2026, the Company had prepaid asset of $40,533$39,759 compared to $41,222 as of December 31, 2025. The balance represents the security deposit for the leased land for the facility to produce medical marijuana.
On MarchJune 31,30, 2026 the gross sales tax recoverable is $115,252$84,797 compared to December 31, 2025 $67,256 while the gross sales tax payable as of MarchJune 31,30, 2026 is $nil compared to $nil as at December 31, 2025.
Sales tax recoverable allowance on MarchJune 31,30, 2026 is $19,227$9,802 (December 31, 2025: $6,750).
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).Act. On June 4, 2021, Canary received its Sales License amendment from Health Canada.
Accounts payable amounting to $2,926,448$3,149,059 as of MarchJune 31,30, 2026, primarily represents consulting and construction services related to capital work in progress amounting to $99,109,$5,692, interest on promissory notes and loans amounting to $1,276,624,$1,696,832, and outstanding, accrued professional fees amounting to $905,179.$895,227.
As of MarchJune 31,30, 2026, the Company had $10,423,034$10,229,180 payable to related parties as compared to $10,361,576 as of December 31, 2025. 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.
Interest amounting to $9$10 was accrued for the threesix months ended MarchJune 31,30, 2026 (MarchJune 31,30, 2025: $10$9).
The principal amount outstanding as of MarchJune 31,30, 2026 and December 31, 2025 was $480. At both reporting dates, the entire balance was current.
Statement of Operations – For the three months ended MarchJune 31,30, 2026 and 2025:
The Company generated revenue of $879,442$1,380,838 during the quarter ended in 2026 while $1,400,439$1,245,724 in the comparable period of 2025. The Company revenue represents the sale of cannabis product and the revenue was concentrated to three customers that represent over 10% of total revenue.revenue during the three month period.
The Company’s expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, depreciation expense and office and general expense. The decreaseincrease in operating expenses during the current quarter ended compared to comparable prior quarter ended is mainly due to decrease in legal and professional fees, office and general expenses and advisory and consultancy fee in the current period.
Other income and expenses comprised, change in fair value of derivative and warranty liability amounting to negative $43$149 (2025: negative $10,402$8,113), interest and bank charges amounting to $288,249$289,170 (2025: $250,766$263,970), exchange gain of $35,030$42,031 (2025: loss of $995$106,619), and debt issuance cost of nil$nil (2025: $11,689$11,989).
Statement of Operations – For the six months ended June 30, 2026 and 2025:
Revenue
The Company generated revenue of $2,260,280 during the quarter ended in 2026 while $2,646,163 in the comparable period of 2025. The revenue represents the sale of cannabis product and the revenue was concentrated to seven customers (2025: twelve).
Expenses
Our expenses are classified primarily into advisory and consultancy fees, management fees, salaries and wages, legal and professional fees, and depreciation expense. The decrease in operating expenses during the current quarter ended compared to comparable prior quarter ended is due to decrease in consulting fee, management service fees, operating lease expense and legal and professional fees in the current period.
Expenses primarily represented consulting fees of $78,067 (2025: $109,753), management fees of $177,926 (2025: $240,364), legal and professional charges of $71,147 (2025: $96,228) comprising legal, review, accounting and Edgar agent fee, depreciation expense amounting to $458,613 (2025: $445,418) and office and general amounting to $238,053 (2025: $234,826).
Changes in other income and expenses were due to: (1) the revaluation of the warrant and convertible debt liabilities on each quarter-end which increased in magnitude because none of the warrants expired during the current period ended; (2) increase in the principal balance led to increased interest expense; and (3) and significant increase in exchange gain 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 $106 (2025: positive $2,289), interest and bank charges amounting to $577,419 (2025: $514,736), exchange gain $77,061 (2025: loss of $107,614), and debt issuance cost of $nil (2025: $23,678).
As of MarchJune 31,30, 2026, the Company had a working capital deficit of $11,342,944$11,232,219 (December 31, 2025: $11,052,097). The Company is actively seeking various financing opportunities to meet the deficit capital requirements.
Statement of Cash Flow – For the threesix months ended MarchJune 31,30, 2026 and 2025:
Investing activities used cash of $40,055$46,571 for the threesix months ended MarchJune 31,30, 2026 compared to $27,965$43,869 cash provided in the corresponding period of the prior year. This is due to the purchase of assets during the period.
Financing activities provided cash of $240,570$271,508 for the threesix months ended MarchJune 31,30, 2026 compared to cash used of $557,440$1,055,997 during the threesix months of 2025 this was due to the loan received from related party.
CBDY insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding CBDY (13F)
None of the 59 investors we track reported a position in their latest 13F.