10-K: Cannaisseur Group's 2024 Annual Report Reveals Transition to Health and Wellness, Faces Financial Challenges

The Cannaisseur Group's 2024 annual report highlights a strategic shift towards health and wellness products amidst significant revenue decline and ongoing financial uncertainties.

Summary

• The Cannaisseur Group (TCRG) transitioned into a health and wellness company in 2024, aiming to promote and sell health-related products, including CBD items.
• TCRG's primary asset remains its 51% interest in Atlanta CBD, Inc., which it manages and operates.
• Revenue decreased significantly from $53,130 in 2023 to $700 in 2024, a 98.7% drop attributed to the closure of the company's retail store.
• The company is restructuring its website for online business and may consider reopening physical stores in the future.
• Selling, general, and administrative expenses increased by 484.6% to $1,263,004, driven by costs associated with share registration, stock-based compensation, and salaries.
• The company reported a net loss of $1,273,006 for 2024, compared to a net loss of $172,586 in 2023.
• As of December 31, 2024, TCRG had total assets of $1,876 and total liabilities of $305,576, resulting in a stockholders' deficit of $341,575.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• TCRG plans to raise additional capital through equity sales or debt financing to meet future requirements.
• The company is subject to regulation by the FDA and FTC, and faces risks related to cybersecurity, competition, and dependence on third parties.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to significant revenue decline, increased expenses, net losses, and concerns about the company's ability to continue as a going concern. While there are some positives related to the company's strategic shift, the overall financial situation is concerning.

Positives

• The company is transitioning to the health and wellness market, which has significant growth potential.
• TCRG plans to provide cutting-edge, sustainable, and effective health and wellness options, such as focused wellness products and wellness technology.
• The company intends to develop its own hemp cultivation, extraction, and manufacturing business.
• The company is actively monitoring the USDAs rulemaking efforts regarding hemp production and cultivation restrictions.

Negatives

• The company experienced a significant decrease in revenue due to the closure of its retail store.
• Operating expenses increased substantially, contributing to a large net loss.
• The company has a significant stockholders' deficit and negative working capital.
• Auditors have raised substantial doubt about the company's ability to continue as a going concern.
• The company relies on partners, vendors, and other service providers to provide some of the material and products that it sells.
• The company does not have any outside Board of Directors which could create a conflict of interests and pose a risk from a corporate governance perspective.

Risks

• The company faces risks related to expanded regulation by the FDA and FTC.
• Increases in the cost of ingredients, labor, and other costs could adversely affect operating results.
• The company relies on third parties, and their failure to fulfill requests could harm the business.
• Loss of key personnel or inability to attract new qualified personnel could hurt the business.
• The company may not be able to adequately protect its intellectual property.
• Pandemics, natural disasters, and geo-political events could adversely affect the company's business.
• Cyber security risks and the failure to maintain the integrity of internal, partner, and consumer data could result in damages to the company's reputation, the disruption of operations and/or subject the company to costs, fines or lawsuits.
• The company has a limited operating history and operates in a new industry, and it may not succeed.
• The success of the company's new and existing products and services is uncertain.
• The company cannot predict its future capital needs, and it may not be able to secure additional financing.
• The company's annual and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond its control, which could adversely affect its ability to satisfy its debt obligations as they become due.
• The company does not expect to pay dividends in the future; any return on investment may be limited to the value of the company's common stock.
• The company's stock is quoted on the OTC Market.
• The company's common stock is subject to the SECs penny stock rules and accordingly, broker-dealers may have trouble in completing customer transactions and trading activity in the company's securities may be adversely affected.
• The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors in the company's stock.
• Sales by the company's stockholders of a substantial number of shares of the company's common stock in the public market could adversely affect the market price of the company's common stock.
• The company's business is dependent upon continued market acceptance by consumers.
• Requirements associated with being a reporting public company will require significant company resources and management attention.
• The company is an emerging growth company and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, the company's common stock may be less attractive to investors.
• The company can sell additional shares of common stock without consulting stockholders and without offering shares to existing stockholders, which would result in dilution of existing stockholders interests in the company and could depress the company's stock price.
• Because the company will be subject to penny stock rules, the level of trading activity in the company's stock may be reduced.
• Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit your ability to buy and sell the company's stock, which could depress the company's share price.

Future Outlook

TCRG expects to raise funds through private investors and investment firms and is looking to secure a non-recourse loan for work capital and operating expenses. We intend to continue offering smaller investment opportunities. Long term, we plan to seek larger amounts of investment to expand our operations. TCRG will also look to attain a non-recourse loan of $50,000. There can be no assurances that we will be able to raise additional capital.

Management Comments

• 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.

Industry Context

The company operates in the health and wellness market, which is highly competitive with numerous major competitors. The company's focus is on products that address consumers specific wellness goals, aligning with the growing demand for functional nutrition and hydration solutions. Functional food occupies a significant share of the health and wellness foods market, expected to account for 43.7% in 2025 with a CAGR from 2023 to 2035 of 6.3%. The global digital health and wellness market size was valued at approximately USD 349.39 billion in 2024 and is expected to reach USD 1663.33 billion by 2033, growing at a compound annual growth rate (CAGR) of about 18.93% from 2025 to 2033 according to Business Research Insights.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• To assess the results in the context of global benchmarks, specific comparable companies, projects, and results would need to be identified.
• Without more detailed financial data and industry-specific metrics, a comprehensive comparison is not possible.

Related Party Transactions

• On October 28, 2024, the Company entered into an agreement with Xavier Carter, its Chief Financial Officer, for a short-term loan in the amount of $1,500.
• Convertible Note Payable in the amount of $5,000, dated November 18, 2024, payable to Ridolfo R. Brown, a related party.
• Convertible Note Payable in the amount of $6,000, dated August 15, 2024, payable to Ridolfo R. Brown, a related party.
• Convertible Note Payable in the amount of $40,000, dated January 3, 2024, payable to Ridolfo R. Brown, a related party.
• Convertible Note Payable in the amount of $40,000, dated December 26, 2023, payable to The National Legacy Foundation, a related party.
• On February 28, 2024, the Companys Board of Directors approved the issuance of 1,000,000 shares of common stock with a fair value of $15,000 to each of its Chief Executive Officer and Interim Chief Financial Officer as a bonus.
• On May 17, 2024, the Company issued 1,000,000 shares of common stock with a fair value of $230,000 to one of its directors as compensation.
• On June 4, 2024, the Company issued 1,000,000 shares of common stock with a fair value of $230,000 to each of its Chief Executive Officer and Interim Chief Financial Officer as compensation for ongoing services.
• On June 30, 2024, the Company issued 500,000 shares of common stock with a fair value of $115,000 to its Corporate Secretary as compensation for ongoing services.
• On June 30, 2024, the Company issued 500,000 shares of common stock with a fair value of $115,000 to one of its directors as compensation.
• During the year ended December 31, 2024, the Company received capital contributions from related parties in the amounts of $7,000.
• On April 27, 2023, the Company issued 914,286 shares of common stock to a related party for cash proceeds in the amount of $20,000 ($0.022 per share).
• On May 10, 2023, the Company sold 1,066,666 shares of common stock at a price of $0.015 per share for cash proceeds of $16,000 to each of two related party investors (a total of 2,133,332 shares of common stock for aggregate cash proceeds of $32,000).
• During the year ended December 31, 2023, the Company received capital contributions from related parties in the amounts of $10,502.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial difficulties and potential dilution from future equity offerings.
• Employees may be affected by potential cost-cutting measures or restructuring.
• Customers may experience changes in product offerings as the company transitions to health and wellness.
• Suppliers and creditors face increased risk due to the company's financial instability.

Next Steps

• The company intends to develop its own hemp cultivation, extraction, and manufacturing business.
• The company is restructuring its website and plans to conduct business online.
• The company may reopen a physical store or stores in the future if it is advantageous to its operations.
• TCRG expects to raise funds through private investors and investment firms and is looking to secure a non-recourse loan for work capital and operating expenses.

Key Dates

Keywords

health and wellness, CBD, Cannaisseur Group, Atlanta CBD, financial results, annual report, hemp, OTC Markets, penny stock, going concern