10-K: Cannaisseur Group Faces Steep Losses, Shifts to Online Sales

The Cannaisseur Group, Inc. reported a 100% revenue decline and significant net losses for fiscal year 2025, transitioning to an online-only sales model while facing substantial doubt about its ability to continue as a going concern.

Summary

• The company has transitioned from a hemp cultivation and retail business (Atlanta CBD) to a broader health and wellness company, including CBD-related products.
• Current operations are limited to a 51% interest in Atlanta CBD, Inc., which is now focused on selling health and wellness products online.
• Revenue for the fiscal year ended December 31, 2025, was $0, a 100% decrease from $700 in 2024, primarily due to the closure of its retail store.
• The net loss significantly increased to $(1,808,379) in 2025, compared to $(1,273,006) in 2024.
• Gross profit was negative for both 2025 ($(910)) and 2024 ($(3,575)).
• Selling, general, and administrative expenses rose by 35.8% to $1,715,535 in 2025, mainly due to increased stock-based compensation and salaries.
• Cash and cash equivalents decreased sharply from $563 in 2024 to $22 in 2025, and total assets declined from $1,876 to $140.
• The company reported negative working capital of $210,492 and an accumulated deficit of $3,488,889 as of December 31, 2025.
• Auditors have raised substantial doubt about the company's ability to continue as a going concern.
• A subsequent event includes an asset purchase agreement with Sense Technologies, Inc. to acquire real estate, equipment, and IP related to soy processing, human nutrition, agricultural manufacturing, and sensor systems, involving a $965,000 note and significant equity issuance.

Sentiment

Score: 1

Explanation: StockSavvy.ai views this filing as highly negative due to zero revenue, escalating net losses, critically low cash reserves, a going concern warning, and significant corporate governance deficiencies, despite a stated strategic pivot and a recent acquisition agreement.

Positives

• The company is strategically pivoting towards the broader health and wellness market, including functional nutrition and digital health, aligning with projected industry growth rates (functional food CAGR 6.3%, digital health and wellness CAGR 18.93%, wellness apps CAGR 14.9%).
• Total liabilities decreased from $305,576 in 2024 to $235,431 in 2025.
• Several related-party convertible notes and mezzanine equity were successfully converted into common stock, reducing direct debt/equity obligations.
• The company entered into a significant asset purchase agreement with Sense Technologies, Inc., indicating potential for diversification and expansion into new areas like soy processing and agricultural manufacturing.
• Management has implemented Conflict-of-Interest agreements to mitigate potential self-dealing between The Cannaisseur Group and Atlanta CBD.

Negatives

• Revenue declined by 100% to $0 in 2025, down from $700 in 2024, primarily due to the closure of the retail store.
• Net loss increased significantly to $(1,808,379) in 2025 from $(1,273,006) in 2024.
• The company reported negative gross profit for both 2025 and 2024.
• Cash and cash equivalents plummeted to $22 in 2025 from $563 in 2024, and total assets decreased to $140 from $1,876.
• The company has negative working capital of $210,492 and an accumulated deficit of $3,488,889, raising substantial doubt about its ability to continue as a going concern.
• Operating expenses increased by 35.8% to $1,715,535 in 2025, despite zero revenue.
• Other expense, net, increased by 1,330.4% to $91,934 in 2025, driven by losses on conversion of related party debt and mezzanine equity.
• Disclosure controls and procedures were deemed ineffective as of December 31, 2025.
• The Board of Directors lacks independent members, posing corporate governance risks and potential conflicts of interest.
• The company holds no patents or trademarks, nor does it have any pending.
• The company's stock is quoted on the OTC Markets and is subject to SEC penny stock rules, implying high volatility, thin trading, and potential difficulty for investors to sell shares.
• No dividends are anticipated in the foreseeable future, limiting investor returns to stock price appreciation.

Risks

• A pandemic, epidemic, or outbreak of an infectious disease could adversely impact business operations, productivity, costs, supply chains, and customer demand.
• The industry may become subject to expanded regulation and increased enforcement by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC), particularly concerning hemp-derived CBD products, which could require FDA approval or even prohibition.
• Increases in the cost of ingredients, labor, and other operating costs (e.g., inflation, energy) could adversely affect operating results, as these costs may not be passed on to customers.
• Dependence on third-party suppliers and contract manufacturers without long-term contracts poses risks of price increases, delivery failures, or disruption of product availability.
• Any prolonged disruption in packaging facilities could harm the business.
• Loss of key personnel or inability to attract and retain new qualified personnel could hurt business and inhibit successful operation and growth.
• Inability to adequately protect intellectual property (trademarks, copyrights, trade secrets) could harm brand value and lead to costly litigation.
• Pandemics, natural disasters, and geo-political events could adversely affect the company's business.
• The lack of outside/independent directors on the Board could create conflicts of interest and prevent independent judgment and oversight of management.
• Cybersecurity risks and the failure to maintain the integrity of internal, partner, and consumer data could result in damages to reputation, disruption of operations, and/or subject the company to costs, fines, or lawsuits.
• An unstable economy, economic downturns, and reduced consumer spending could adversely affect operating results.
• The company has a limited operating history and operates in a new, highly competitive industry with numerous major competitors.
• Financial statements may not be comparable to those of other companies due to the election to use the extended transition period for complying with new accounting standards (JOBS Act).
• The success of new and existing products and services is uncertain, requiring significant resources and capital without assurance of market acceptance.
• Inability to predict future capital needs or secure additional financing on acceptable terms could lead to substantial dilution or operational delays/reductions.
• Annual and quarterly financial results are subject to significant fluctuations depending on various factors beyond the company's control.
• The company expects to experience variability in revenues and net profit and may incur net losses.
• Inability to successfully manage future growth could place increased strain on management, operational, financial, and other resources.
• Future litigation, including product quality claims or stockholder derivative actions, could have a material adverse impact, particularly due to the lack of Director and Officer (D&O) insurance.
• The company operates in a highly competitive environment and may not be able to compete successfully with other established companies.
• Prior operating results may not be indicative of future results.
• The company does not expect to pay dividends in the future; any return on investment may be limited to the value of the common stock.
• The common stock price is likely to be highly volatile and could be subject to wide fluctuations, and the stock is thinly traded on the OTC Market.
• An active and visible public trading market for the common stock may not develop.
• Issuance of additional common stock or preferred stock may cause the common stock price to decline and dilute existing stockholders' interests.
• The common stock is subject to the SEC's penny stock rules, which may make it difficult for broker-dealers to complete customer transactions and adversely affect trading activity.
• The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors.
• Sales by stockholders of a substantial number of shares of common stock in the public market could adversely affect the market price.
• The business is dependent upon continued market acceptance by consumers.
• The ability to hire additional qualified employees and control costs is a risk.
• Requirements associated with being a reporting public company will require significant company resources and management attention.
• As an emerging growth company, reduced disclosure and governance requirements may make the common stock less attractive to investors.
• FINRA sales practice requirements may limit the ability to buy and sell the stock, which could depress the share price.

Future Outlook

The company intends to develop its own hemp cultivation, extraction, and manufacturing business and work with Atlanta CBD to grow operations. It plans to expand into the health and wellness market by acquiring assets using equity and private placements. The company expects to raise funds through private investors and investment firms, including seeking a $50,000 non-recourse loan for working capital. Management anticipates continued growth in the consumer market for CBD products but also increased competition, which will pressure gross profit margins. The company expects variability in revenues and net profit and may incur net losses.

Management Comments

• "The Company, however, has now transitioned into a health and wellness company, with the aim of promoting and selling health and wellness products, including CBD-related products."
• "TCRG manages and operates Atlanta CBDs business on a day-to-day basis. The Company intends to work in conjunction with Atlanta CBD to grow the business operations."
• "TCRG plans to provide cutting-edge, sustainable, and effective health and wellness options, such as focused wellness products and wellness technology."
• "Ms. Gogo and Mr. Carter place the upmost importance on the success of TCRG, however, the Conflict-of-Interest agreement cannot guarantee that they will not take actions that prioritize the interests of Atlanta CBD over the interests of TCRG."
• "Management plans to provide for the Companys capital requirements by continuing to issue additional equity and debt securities."
• "We intend to retain our future earnings, if any, in order to reinvest in the development and growth of our business and, therefore, do not intend to pay dividends on our common stock for the foreseeable future."

Industry Context

StockSavvy.ai notes that The Cannaisseur Group's strategic pivot towards the broader health and wellness market, including functional nutrition and digital health, aligns with significant industry growth trends. The functional food market is projected to grow at a CAGR of 6.3% from 2023-2035, while the global digital health and wellness market is expected to reach $1663.33 billion by 2033 with an 18.93% CAGR. The wellness apps market also shows robust growth at a 14.9% CAGR from 2025-2030. However, the company operates in a highly competitive landscape with established players like Nestlé, Danone, PepsiCo, and GlaxoSmithKline in functional foods, and PepsiCo, Red Bull, and Coca-Cola in functional beverages, posing significant challenges for a company with limited resources and zero revenue. The regulatory uncertainty surrounding CBD products, despite the 2018 Farm Bill, remains a critical factor, as the FDA continues to evaluate appropriate marketing and distribution pathways.

Comparison to Industry Standards

• The company's current financial performance, with zero revenue and significant net losses, falls far below industry standards for established health and wellness companies.
• Compared to major players like Nestlé S.A., Danone S.A., and PepsiCo Inc. in functional foods, or Red Bull GmbH and The Coca-Cola Company in functional beverages, The Cannaisseur Group lacks the scale, market penetration, and financial stability to compete effectively.
• Its reliance on a 51% interest in a single subsidiary (Atlanta CBD) and a recent shift to online-only sales, following the closure of its retail store, contrasts sharply with the diversified distribution channels and robust R&D of industry leaders.
• The company's lack of patents or trademarks is a significant disadvantage in an innovation-driven market where competitors continuously invest in R&D and intellectual property.
• The 'going concern' warning and minimal cash reserves ($22) are indicative of a company far from industry benchmarks for financial health and operational sustainability.

Corporate Governance

Legal Proceedings

• The company was involved in a civil action (AP 1039 Grant St., LLC v. Inno Medicinals LLC, a/k/a InnoMedicals Atlanta CBD, Inc., Xavier Carter, and Floretta Gogo) initiated by a landlord for failing to pay amounts owed under a lease.
• The company and guarantors filed counterclaims for breach of fiduciary duties, breach of contract, and attorneys fees.
• The matter was settled on October 18, 2023, through a Lease Termination and Settlement Agreement, where the company surrendered the premises, forfeited $9,084 in deposits, and settled an outstanding balance of $47,511 for $18,000, payable in monthly installments.
• As of December 31, 2025, $9,501 was still due under the settlement payable.
• No other current litigation or threatened litigation that would have a material adverse effect on financial position or results of operations.

Related Party Transactions

• A short-term loan of $1,500 from Xavier Carter (CFO) on October 28, 2024, was repaid on January 23, 2025.
• Convertible Note Payable of $5,000 (Brown Note 3) to Ridolfo R. Brown (related party) dated November 18, 2024, was converted into 34,415 shares of common stock on June 2, 2025.
• Convertible Note Payable of $6,000 (Brown Note 2) to Ridolfo R. Brown (related party) dated August 15, 2024, was converted into 41,950 shares of common stock on June 2, 2025.
• Convertible Note Payable of $40,000 (Brown Note) to Ridolfo R. Brown (related party) dated January 3, 2024, was converted into 1,987,732 shares of common stock on July 15, 2025.
• Convertible Note Payable of $40,000 (Legacy Foundation Note) to The National Legacy Foundation (related party) dated December 26, 2023, was converted into 1,932,435 shares of common stock on July 31, 2025.
• Floretta Gogo (CEO) received 2,000,000 shares of common stock (fair value $280,000) as compensation on February 4, 2025, and another 1,000,000 shares (fair value $140,000) on July 25, 2025.
• Xavier Carter (CFO) received 2,000,000 shares of common stock (fair value $280,000) as compensation on February 4, 2025, and another 1,000,000 shares (fair value $140,000) on July 25, 2025.
• The Corporate Secretary received 1,000,000 shares of common stock (fair value $140,000) as compensation on February 4, 2025.
• Floretta Gogo (CEO) converted $115,000 of accrued salaries into 766,667 shares of common stock on July 14, 2025.
• Xavier Carter (CFO) converted $96,000 of accrued salaries into 643,333 shares of common stock on July 14, 2025.
• A director received 1,500,000 shares of common stock (fair value $210,000) as compensation on July 25, 2025.
• Another director received 500,000 shares of common stock (fair value $70,000) as compensation on July 25, 2025.
• Capital contributions from related parties totaled $38,410 during 2025.
• Floretta Gogo and Xavier Carter own 49% of Atlanta CBD and approximately 18% each of TCRG's common stock, and hold executive positions in both entities.

Stakeholder Impact

• Shareholders face significant dilution risk from ongoing and future equity issuances, particularly from the conversion of related-party debt and mezzanine equity. The 'penny stock' status and thin trading on OTC Markets limit liquidity and price stability, and the 'going concern' warning poses a substantial risk of losing their entire investment.
• Employees (3 full-time) may experience job insecurity and limited growth opportunities due to the company's severe financial instability and going concern status.
• Customers may be impacted by the shift to online-only sales, potentially affecting access and experience, though the company aims to build an online audience for its health and wellness products.
• Creditors face high risk due to the company's substantial liabilities, negative working capital, and the 'going concern' qualification, despite some debt conversions.
• Suppliers and vendors may face payment risks or disruptions in relationships given the company's precarious financial health and reliance on third-party manufacturing without long-term contracts.

Next Steps

• Restructuring its website and conducting business online.
• May reopen physical store(s) in the future if advantageous.
• Develop its own hemp cultivation, extraction, and manufacturing business.
• Work in conjunction with Atlanta CBD to grow business operations.
• Acquire assets (CBD cultivation, processing, distribution equipment, infrastructure) from other companies.
• Use equity (common stock) and funds from private placements to acquire assets.
• Raise additional capital through equity or debt financings, collaborative arrangements, or other sources.
• Seek a non-recourse loan for working capital and operating expenses.
• Continue to monitor macro-economic factors such as inflationary pressures, interest rate hikes, and recessionary fears.
• Establish a compensation committee in the near future.
• Apply for Director and Officer (D&O) insurance.
• Close the asset purchase agreement with Sense Technologies, Inc.

Key Dates

Recommendation

The company exhibits severe financial distress, marked by zero revenue, escalating net losses, critically low cash reserves ($22), and a "going concern" warning from its auditors. Significant corporate governance issues, including a lack of independent directors and a Code of Ethics, further compound the risk. While a strategic pivot to health and wellness and a subsequent asset acquisition agreement offer a glimmer of future potential, the immediate financial instability and operational challenges make the stock a highly speculative and high-risk investment. The "penny stock" status and thin trading on the OTC Markets also present liquidity challenges for investors.

Keywords

CBD, Health and Wellness, SEC Filing, 10-K, Annual Report, Going Concern, OTC Markets, Financial Performance, Net Loss, Revenue Decline, Corporate Governance, Risk Factors, Equity Financing, Asset Acquisition, Sense Technologies, Inno Medicinals, Cannabis, Hemp