UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ____ to ____.
Commission File Number
(Exact name of small business issuer as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Company’s telephone number, including area code)
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 past 90 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) | Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The Company has
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
PART I – FINANCIAL INFORMATION
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
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ASSETS |
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CURRENT ASSETS: |
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Prepaid expenses |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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CURRENT LIABILITIES: |
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Accounts payable and accrued expenses |
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Accrued interest, related party |
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Note payable |
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Advances from officer |
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Total Liabilities |
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STOCKHOLDERS’ DEFICIT: |
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Preferred Series A stock, $ |
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Preferred Series B stock, $ |
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Preferred Series C stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| F-1 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
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| For the Six months Ended June 30, |
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Revenue |
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Operating expenses: |
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Salaries and wages |
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Selling, general and administrative |
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Professional and legal fees |
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Total operating expenses |
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Loss from operations |
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Other expense: |
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Interest expense |
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Total other expense |
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Net loss |
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Net loss per common share - basic and diluted |
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Weighted average number of shares outstanding - basic and diluted |
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The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| F-2 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
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| Common Stock |
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Balance, March 31, 2021 |
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Preferred stock Series A conversion to common |
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Net loss for three months ended June 30, 2021 |
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Balance, June 30, 2021 |
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Balance, March 31, 2022 |
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Net loss for three months ended June 30, 2022 |
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Balance, June 30, 2022 |
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The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| F-3 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
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| Common Stock |
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| Accumulated |
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Balance, December 31, 2020 |
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Preferred stock Series A conversion to common |
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Net loss for six months ended June 30, 2021 |
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Balance, June 30, 2021 |
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Balance, December 31, 2021 |
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Net loss for six months ended June 30, 2022 |
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Balance, June 30, 2022 |
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The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| F-4 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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Adjustment to reconcile net loss to net cash used in operating activities: |
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Change in operating assets and liabilities: |
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Prepaid expenses |
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Accounts payable and accrued expenses |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Advances from officer |
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NET CASH PROVIDED BY FINANCING ACTIVITIES |
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NET CHANGE IN CASH |
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Cash at beginning of year |
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CASH AT END OF YEAR |
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SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: |
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Cash paid for interest |
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Cash paid for income taxes |
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The accompanying footnotes are an integral part of these unaudited consolidated financial statements.
| F-5 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – INCORPORATION AND OPERATIONS
Prior Planned Operations
Integrated Cannabis Solutions, Inc. and Subsidiary (the “Company”) is a Nevada corporation and publicly traded company under the ticker “IGPK”. The Company was formed on December 31, 2003 and has had had nominal operations during the six months ended June 30, 2022 and the year ended December 31, 2021. The Company previously planned to process hemp or biomass into Cannabidiol (“CBD”) by establishing a processing plant in Wisconsin to supply manufacturers or pharmaceutical companies for their manufacture, distribution and sale of CBD related products such as edibles for human consumption, vitamins, and multi-vitamins, and topical products for human use such as oils, tinctures, creams, oils and salves, and vaping liquids. Additionally, the Company planned to promote and assist in the establishment of a co-op with local farmers for the purpose of establishing a consistent supply of biomass and enter into long term supply contracts. On May 21, 2019, the Company formed Integrated Farming Solutions, LLC as a limited liability company, in the state of Nevada. Integrated Farming Solutions, LLC is a wholly owned subsidiary and has not yet begun operations.
Prior Planned Operations Terminated – New Business Plan of Athleisure Wear and Management of Cannabis Companies
On January 3, 2022, the Company publicly announced it will not be renewing its Hemp licenses in Wisconsin since the Hemp market prices have dropped due to the increased number of new farmers. As of January 3, 2022, the Company is no longer pursuing a Hemp related business.
Upon the closing of the transactions described below, we will be conducting operations in the Athleisure apparel business as well as management of cannabis companies, as follows:
| (a) | as a result of the transaction more specifically described below in Note 8, that on December 13, 2021, Integrated Holding Solutions (“IHS” or the “Buyer’), which is the Company’s wholly owned subsidiary, as the Buyer, entered into an Acquisition Agreement with Consolidated Apparel, Inc. (“Consolidated” or the “Seller”) and Eugene Caiazzo, its owner (“Caiazzo”), the Sellers in the Agreement, providing for IHS’ acquisition of 100% of Consolidated’s shares owned by Caiazzo in return for the Buyer’s consideration to the Seller of 328,000 shares of the Company’s Convertible/Redeemable Series B par value $1.00 Preferred shares to Caiazzo. |
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| (b) | As a result of the transaction more specifically described below in Note 8, on March 17, 2022, we amended a January 26, 2022 Agreement (“3/17/2022 Agreement”) between IHS, our wholly owned subsidiary (and that is the Buyer in the transaction), and GCTR Management, LLC (the “Seller” or “GCTR”) , a California Limited Liability Company providing for the Buyer’s purchase of 49.9% of the Seller with the Buyer’s option to purchase the remaining 50.1% of the Seller within 6 months of the date of the 3/17/22 Agreement. The 3/17/2022 Agreement provides for an exchange of our Preferred B Shares with the Seller’s 598,800 Membership Units, as more specifically detailed in Note 8 below for the respective 49.9% and 50.1% purchases, respectively, which exchange occurred on or about March 22, 2022, and represents the Company’s closing on the 49.9% purchase of GCTR. |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of Integrated Cannabis Solutions, Inc. and Subsidiary have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited financial statements and notes thereto. In the opinion of management, such statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed financial statements of the Company as of June 30, 2022 and for the six months ended June 30, 2022 and 2021. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year the full year ending December 31, 2022 or any other period. These unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2021 and for the year then ended included elsewhere in this filing.
| F-6 |
| Table of Contents |
INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.
Accounting method and use of estimates
The Company’s financial statements are prepared using the accrual method in accordance with Generally Accepted Accounting Principles in the United State of America (“GAAP”). The preparation of financial statements in conformity with 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 financial statements and the reported amount of revenues and expenses during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Significant estimates made by management include, but are not limited to, valuation of stock options, stock-based compensation, convertible debt and the valuation allowance associated with deferred tax assets. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Reclassifications of Prior Period Balances
Certain amounts in prior periods have been reclassified to conform to the current year presentation with no effect on previously reported net loss or stockholder’s equity (deficit). Amounts totaling $
Loss per Share
In accordance with the provisions of ASC 260, “Earnings Per Share”, net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options and convertible debt are not considered in the diluted loss per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the six months ended June 30, 2022 and 2021, therefore, the basic and diluted weighted-average shares of common stock outstanding were the same for all years. The anti-dilutive shares of common stock outstanding as of June 30, 2022 and December 31, 2021 were as follows:
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Potentially dilutive securities: |
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Series A Preferred Stock |
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Series B Preferred Stock |
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Series C Preferred Stock |
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Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – GOING CONCERN
At June 30, 2022, the Company had a working capital deficit of $
The Company’s ability to continue operations depends on its ability to generate and grow revenue and results of operations as well as its ability to access capital markets when necessary to accomplish its strategic objectives. The Company expects that it will continue to incur losses for the immediate future and will need additional equity or debt financing until the Company can achieve profitability and positive cash flows from operating activities. The Company’s future capital requirements for its operations will depend on many factors, including the ability to generate revenues and its ability to obtain capital. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations and implement its business plan in the future.
NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
As of June 30, 2022 and December 31, 2021, accounts payable and accrued expenses consisted of the following:
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NOTE 5 – RELATED PARTY TRANSACTIONS
The Company was advanced $
NOTE 6 – NOTES PAYABLE
The Company was advanced $
The Company was advanced $3,500 from a third-party lender by paying expenses on behalf of the Company during the six months ended June 30, 2022. In prior periods, the Company was advanced a total of $
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INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company from time to time is party to certain lawsuits, legal proceedings and various claims relating to matters in the normal course of its business.
On January 1, 2018, the Company entered into an employment agreement with the CEO. Under the terms of the employment agreement, the Company is required to pay the CEO a salary at a rate of $
NOTE 8 – SIGNIFICANTT EVENTS
Status of Acquisition Agreement - Consolidated Apparel, Inc.
As of June 30, 2022, and December 31, 2021, the Consolidated Acquisition Agreement has not yet closed.
Termination of Hemp Business
On January 3, 2022, the Company publicly announced it will not be renewing its Hemp licenses in Wisconsin since the Hemp market prices have dropped due to the increased number of new farmers. As of January 3, 2022, the Company is no longer pursuing a Hemp related business.
NOTE 9 – SUBSEQUENT EVENTS
Status of Acquisition Agreement and 49.9% Acquisition – GCTR Management , LLC
On January 26, 2022, the Company’s wholly owned subsidiary, Integrated Holding Solutions, Inc. (the “Buyer”), entered into an Acquisition Agreement (the “Agreement”) with GCTR Management, LLC, a California Limited Liability Company (the “Seller” or “GCTR”) in the business of managing cannabis companies, and its Managing Member. As of June 30, 2022, the agreement terms have not been completed and the transaction has not closed, but it provides for the Buyer’s acquisition of
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INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
On March 17, 2022, the Company amended the January 26, 2022 agreement with GCTR providing for the Company’s purchase of 49.9% of the Seller with the Company’s option to purchase the remaining 50.1% of GCTR within 6 months of the date of the March 17, 2022 Agreement. The March 17, 2022 Agreement provides for an exchange of our Preferred B Shares with the Seller’s 598,800 Membership Units, as more specifically detailed in Note 8 below for the respective 49.9% and 50.1% purchases, respectively, which 49.9% exchange and corresponding 49.9% purchase of GCTR executed on or about March 22, 2022, and represents the Company’s closing of its first acquisition upon issuance of the Series B Preferred shares.
July 21, 2022 Amended and Restated Certificate of Designation – Series A, B, C Preferred Stock
On July 21, 2022, our Board of Directors approved the Amended and Restated Certificate of Designation, including the rights, preferences, and limitations assigned to Series A, Series B, and Series C of 5,000,000 of our Preferred Shares, as follows:
| · | 1,000,0000 Series A Preferred Stock A Shares which has 50,000 votes Per Preferred A Share; our Chief Executive Officer owns 987,440 Preferred A Share or 49,372,000,000 votes. |
| · | 1.500,000 Preferred B Shares, each Preferred B share of which may be converted into 20 Common Stock Shares; 598,800 Preferred B Shares of which were issued to GCTR |
| · | 540,000 Preferred C Shares, each Preferred C Share of which may be converted into 1,000 Common Stock Shares, of which our Chief Executive Officer owns all 540,000 Preferred C Shares. |
The Amended and Restated Certificate of Designation was filed with the State of Nevada on July 21, 2022.
July 21, 2022 Increase in Authorized Shares to 2,650,000,000
On July 21, 2022, our Board of Directors approved Amended and Restated Articles of Incorporation, which Amended and Restated Articles of Incorporation were filed with the State of Nevada on July 21, 2022, including an increase or our authorized shares of Common Stock to Two Billion Six Hundred Fifty Million (2,650,000,000).
Name Change
During June 2022, the Company approved by shareholder consent a change the name of the Company was changed to “Integrated Holding Solutions, Inc.”, which name change is subject to FINRA review and approval.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Formation
We are a Nevada corporation formed on December 31, 2003 (although we were incorporated on October 9, 1995, in Texas under the name, Posh International, Inc. and on December 31, 2003, we changed our domicile from Texas to Nevada). On June 14, 2022, we changed our name from Integrated Cannabis, Inc. to Integrated Holdings, Inc. Our headquarters are in Coconut Creek, FL.
Overview
We have experienced recurring losses and negative cash flows from operations since inception, including in our current business model. We anticipate that our expenses will increase as we ramp up our expansion, which likely will lead to additional losses, until such time that we approach profitability, of which there are no assurances. We have relied on equity and debt financing to fund operations. There can be no guarantee that we will ever become profitable, or that adequate additional financing will be realized in the future or otherwise may be available to us on acceptable terms, or at all. If we are unable to raise capital when needed, we would be forced to delay the development of our operations. We will need to generate significant revenues to achieve profitability, of which there are no assurances.
We are a Nevada corporation publicly traded company under the ticker “IGPK”. We were formed on December 31, 2003, and had nominal operations during the years ended December 31, 2021 and 2020. Under our prior business plan, we planned to process hemp or biomass into Cannabidiol (“CBD”) by establishing a processing plant in Wisconsin to supply manufacturers or pharmaceutical companies for their manufacture, distribution, and sale of CBD-related products such as edibles for human consumption, vitamins, and multi-vitamins, and topical products for human use such as oils, tinctures, creams, oils and salves, and vaping liquids. We also planned to promote and assist in the establishment of a co-op with local farmers for the purpose of establishing a consistent supply of biomass and enter into long-term supply contracts. On May 21, 2019, the Company formed Integrated Farming Solutions, LLC as a limited liability company, in the state of Nevada. Integrated Farming Solutions, LLC is a wholly-owned subsidiary and has not yet begun operations.
On December 13, 2021, we completed an agreement with Consolidated Apparel to acquire 100% of Consolidated and pursue the athleisure apparel business, which has not yet closed.
On January 26, 2022, the Company’s wholly-owned subsidiary, Integrated Holding Solutions, Inc. entered into an Acquisition Agreement with GCTR Management, LLC and its Managing Member, a California Limited Liability Company in the business of managing cannabis companies providing for the Integrated Holding Solutions’ acquisition of 100% of GCTR. On March 17, 2022, the Company amended the January 26, 2022 agreement with GCTR providing for the Company’s purchase of 49.9% of the Seller with the Company’s option to purchase the remaining 50.1% of GCTR within 6 months of the date of the March 17, 2022, Agreement. The March 17, 2022 Agreement provides for an exchange of our Preferred B Shares with the Seller’s 598,800 Membership Units, as more specifically detailed in Note 8 below for the respective 49.9% and 50.1% purchases, respectively, which 49.9% exchange and corresponding 49.9% purchase of GCTR was executed on or about March 22, 2022, and represents the Company’s closing of its first acquisition upon issuance of the Series B Preferred shares.
No assurance can be provided that we will be successful in implementing and executing our business plans.
COVID-19 RELATED RISKS
The outbreak of the coronavirus may negatively impact our business, results of operations and financial condition.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. The significant outbreak of COVID-19 has resulted in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and could adversely and negatively materially affect our business, results of operations, and financial condition.
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Certain historical data regarding our business, results of operations, financial condition, and liquidity do not reflect the impact of the COVID-19 pandemic and related containment measures and therefore do not purport to be representative of our future performance
The information included in this Quarterly Report on Form 10-Q and our other reports filed with the SEC includes information regarding our business, results of operations, financial condition, and liquidity as of dates and for periods before and during the impact of the COVID-19 pandemic and related containment measures (including quarantines and governmental orders requiring the closure of certain businesses, limiting travel, requiring that individuals stay at home or shelter in place and closing borders). Therefore, certain historical information, therefore, does not reflect the adverse impacts of the COVID-19 pandemic and the related containment measures. Accordingly, investors are cautioned not to unduly rely on such historical information regarding our business, results of operations, financial condition, or liquidity, as that data does not reflect the adverse impact of the COVID-19 pandemic and therefore does not purport to be representative of the future results of operations, financial condition, liquidity or other financial or operating results of us, or our business.
Going Concern
On June 30, 2022, we had a working capital deficit of approximately $1,257,919 and we have yet to commence our plan of operations. Our current liquidity resources are not sufficient to fund its anticipated level of operations for at least the next 12 months from the date these financial statements were issued. As a result, there is substantial doubt regarding the Company’s ability to continue as a going concern.
Our ability to continue operations depends on its ability to generate and grow revenue and results of operations as well as its ability to access capital markets when necessary to accomplish its strategic objectives. We expect that we will continue to incur losses in the immediate future and will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities. Our future capital requirements for its operations will depend on many factors, including the ability to generate revenues and its ability to obtain capital. There is no assurance that we will be successful in any capital-raising efforts that it may undertake to fund operations and implement its business plan in the future.
Results of Operations
The following information should be read in conjunction with the financial statements and notes appearing elsewhere in this Report. We have not generated any revenues from inception to date.
For the Three Months Ended June 30, 2022, and June 30, 2021
Revenues
We had no revenues for the three months ended June 30, 2022, and 2021.
Operating Expenses
Our operating expenses for the three months ended June 30, 2022, and 2021 totaled $88,518 and $106,211, respectively. The $17,693 decrease in our operating expenses is due to a $19,217 decrease in professional and legal fees, partially offset by a $1,524 increase in general and administrative expenses compared to the 2021 period.
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Other Income and Expenses
Total other expenses consisted of interest expense of $14,890 and $11,179 for the three months ended June 30, 2022, and 2021, respectively.
Net Loss
We recognized net losses of $103,408 and $117,390 for the three months ended June 30, 2022 and 2021, respectively. The net losses are due to the $88,518 and $106,211 in operating expenses, as well as the $14,890 and $11,179 in other expenses for years ended three months ended June 30, 2022 and 2021, respectively, as discussed above.
We anticipate losses from operations will increase during the next twelve months due to anticipated increased payroll expenses as we add necessary staff and increases in legal and accounting expenses associated with maintaining a reporting company. We expect that we will continue to have net losses from operations for several years until revenues from operating facilities become sufficient to offset operating expenses.
For the Six Months Ended June 30, 2022 and 2021
Revenues
We had no revenues for the six months ended June 30, 2022, and 2021.
Operating Expenses
Our operating expenses for the six months ended June 30, 2022, and 2021 totaled $169,198 and $177,267, respectively. The $8,069 decrease in operating expenses is due to a $7,693 decrease in professional and legal fees and a $376 decrease in general and administrative expenses compared to the 2021 period.
Other Income and Expenses
Total other expenses consisted of interest expense of $28,770 and $20,263 for the six months ended June 30, 2022 and 2021, respectively.
Net Loss
We recognized net losses of $197,968 and $197,530 for the six months ended June 30, 2022, and 2021, respectively. The net losses are due to the $169,198 and $177,267 in operating expenses, as well as the $28,770 and $20,263 in interest expenses for the six months ended June 30, 2022, and 2021, respectively, as discussed above.
We anticipate losses from operations will increase during the next twelve months due to anticipated increased payroll expenses as we add necessary staff and increases in legal and accounting expenses associated with maintaining a reporting company. We expect that we will continue to have net losses from operations for several years until revenues from operating facilities become sufficient to offset operating expenses.
Liquidity and Capital Resources
We have generated no revenues since inception. We have obtained cash for operating expenses mainly through advances and/or loans from affiliates and stockholders.
On June 30, 2022, we had a working capital deficit of $1,257,919 and have yet to commence our plan of operations. Our current liquidity resources are not sufficient to fund our anticipated level of operations. As a result, there is substantial doubt regarding our ability to continue as a going concern. Our ability to continue operations depends on our ability to generate and grow revenue as well as access capital markets when necessary to fund strategic objectives. We expect to continue to incur losses in the immediate future and will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations and implement our business plan in the future.
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Net Cash Used in Operating Activities.
During the six months ended June 30, 2022, and 2021, our net cash used in operating activities was $70,017 and $144,863, respectively. Cash flows used in operations mainly consist of net losses as discussed above, partially offset by increases of $117,951 and $52,584 in accounts payable and decreases of $10,000 and $83 in change in prepaid assets during the six months ended June 30, 2022, and 2021, respectively. Our primary uses of funds in operations were payments made for legal and professional costs.
Net Cash Provided by Investing Activities.
We had no cash investing activities during the six months ended June 30, 2022, and 2021.
Net Cash Provided by Financing Activities.
Net cash provided by financing activities during the six months ended June 30, 2022, and 2021 totaled $70,017 and $144,863, respectively. We received $63,017 and $8,980 in officer advances and $7,000 and $135,883 in proceeds from the issuance of notes payable during the six months ended June 30, 2022, and 2021, respectively.
Cash Position and Outstanding Indebtedness.
Our total indebtedness on June 30, 2022, and December 31, 2021, was $1,257,919 and $1,069,951, respectively, all of which are considered current liabilities. Current liabilities consist primarily of accounts payable and accrued expenses, advances from officer, and notes payable.
At June 30, 2022 and December 31, 2021, we had $0 and $10,000 current assets and our working capital deficit was $1,257,919 and $1,059,951, respectively.
Off-Balance Sheet Arrangements
We have not and do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of establishing off-balance sheet arrangements or other contractually narrow or limited purposes. Therefore, we do not believe we are exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.
The following discussion should be read in conjunction with our consolidated financial statements and the related notes. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Plan of Operations
Once we commence our plan of operations, we anticipate that we will incur approximately $2.1 million of total expenses during the initial 12 months, including hiring personnel, purchasing lab equipment, and training over the first three months of our operations at a burn rate of $54,550 per month. During months 4 to 12 of our Plan of Operations, our burn rate is estimated at $232,216 per month. Based on our current working capital deficit and our absence of any historical revenues, we will have to rely on our sole officer and third-party financing to fund our operations. The initial 12-month Plan of Operations is contingent upon obtaining minimum financing of at least $1,296,416.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure the information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of June 30, 2022, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
The determination that our disclosure controls and procedures were not effective as of June 30, 2022, is a result of not having adequate staffing and supervision within the accounting operations of our Company. The Company plans to expand its accounting operations as the business of the Company expands.
MANAGEMENT’S QUARTERLY REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting during the quarter ended June 30, 2022, that have materially affected or are reasonably likely to materially affect our internal controls.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 23, 2021, we and our Chief Executive Officer were served with a Complaint in the Superior Court for Sacramento, California alleging negligence and premises liability by over 100 persons and entities. The complaint has no merit and we intend to vigorously defend the matter.
ITEM 1A RISK FACTORS
As a smaller reporting company, we are not required to include risk factors; however, our S-1 Registration Statement contains various risk factors at the following link:
https://www.sec.gov/Archives/edgar/data/1002771/000147793221003534/igpk_s1a.htm
We have included risk factors pertaining to Covid-19 at page 7.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINING SAFETY DISCLOSURE
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. Exhibits.
EXHIBIT INDEX
Exhibit Number |
| Description |
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101.INS* |
| Inline 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* |
| Inline XBRL Taxonomy Extension Schema Document. |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB* |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of the registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INTEGRATED CANNABIS SOLUTIONS, INC. |
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Date: August 12, 2022 | By: | /s/ Matthew Dwyer |
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| Matthew Dwyer |
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| Chief Executive Officer |
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| (Principal Executive Officer Chief Executive Officer) |
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| By: | /s/ Matthew Dwyer |
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| Matthew Dwyer |
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| Chief Financial Officer |
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| (Chief Financial Officer/Chief Accounting Officer) |
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