Integrated Cannabis Solutions, Inc. - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2022

or

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

For the transition period from ____ to ____.

Commission File Number

6810 North State Road 7 Coconut Creek, Florida 33073

(Address of principal executive offices)

(954) 906-0098

(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. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒   No ☐

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.

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 ☐   No ☒

The Company has 1,683,317,059 common stock shares outstanding as of November 14, 2022.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED BALANCE SHEETS

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2022

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2022

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying footnotes are an integral part of these unaudited consolidated financial statements.

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 nominal operations during the nine months ended September 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 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. 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.

 New Business Plan of Athleisure Wear and Management of Cannabis Companies

Upon the closing of the transaction described below, we conducted operations in the Athleisure apparel business, as follows:

Consolidated Apparel, Inc.

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 (formerly 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 September 30, 2022 and for the nine months ended September 30, 2022 and 2021. The results of operations for the nine months ended September 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.

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 $29,641 for accrued interest reported in accounts payable and accrued expenses in the Balance Sheet as of December 31, 2021 were broken out into its own line item.

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 nine months ended September 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 September 30, 2022 and December 31, 2021 were as follows:

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.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – GOING CONCERN

At September 30, 2022, the Company had a working capital deficit of $1,373,831 and we had not yet commenced its plan of operations. The Company’s 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.

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 September 30, 2022 and December 31, 2021, accounts payable and accrued expenses consisted of the following:

NOTE 5 – RELATED PARTY TRANSACTIONS

The Chief Executive Officer/Chairman of the Board (“CEO”) advanced $79,083 to the Company by paying expenses on its behalf during the nine months ended September 30, 2022 for working capital purposes. The Company accrues $500 per month for rent and use of the CEO’s office space. The loans bear interest at 10% per annum and are payable on demand. The balance of the loans was $233,455 and $154,372 and accrued interest was $44,074 and 29,641 as of September 30, 2022 and December 31, 2021, respectively. Interest expense was $14,432 and $8,843 for the nine months ended September 30, 2022 and 2021, respectively

NOTE 6 – NOTES PAYABLE

A third-party lender advanced the Company $3,500 from a third-party lender by paying expenses on behalf of the Company during the nine months ended September 30, 2022. In prior periods, the Company was advanced a total of $391,419 for working capital purposes under a demand note. The advances accrue interest at 10% per annum and are due on demand. The balance on the note was $394,919 and $391,419 and accrued interest was $86,960 and $57,641 as of September 30, 2022 and December 31, 2021, respectively. Interest expense was $29,419 and $24,043 for the nine months ended September 30, 2022 and 2021, respectively.

The Company was advanced $17,500 from a third-party lender by paying expenses on behalf of the Company during the nine months ended September 30, 2022. In prior periods, the Company was advanced a total of $7,500 for working capital purposes under a demand note. The advance accrues interest at 10% per annum and is due on demand. The balance on the note was $25,000 and $7,500 and accrued interest was $1,403 and $633 as of September 30, 2022 and December 31, 2021, respectively. Interest expense was $770 and $444 for the nine months ended September 30, 2022 and 2021, respectively.

NOTE 7 – STOCKHOLDERS’ EQUITY

During July 2022, a holder of 500 shares of our Preferred Series A stock converted those shares into 25,000,000 shares of the Company’s common stock as per the terms of the agreement, with no gain or loss recorded.

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

During August 2022, a holder of 500 shares of our Preferred Series A stock converted those shares into 25,000,000 shares of the Company’s common stock as per the terms of the agreement, with no gain or loss recorded.

NOTE 8 – 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 $180,000 for the 2018 calendar year, $300,000 for the 2019 calendar year, and $500,000 for the 2021 calendar year. The Company has accrued $545,000 and $410,000 as of September 30, 2022, and December 31, 2021, respectively, and recognized $135,000 and $135,000 in wage expenses for the nine months ended September 30, 2022, and 2021, respectively. This agreement terminated on December 31, 2021 and all accrued wages for base salaries for 2017, 2018, and 2019 were written down and reduced to $50,000 in total, for year ending 2020 the base salary was set at $180,000. The Employment Agreement was extended until 6/30/22 at the same rate of $180,000. 

NOTE 9 – STATUS OF ACQUISITION AGREEMENT, HEMP BUSINESS, NAME CHANGE, CLASSES OF PREFERRED SHARES  

Status of Acquisition Agreement - Consolidated Apparel, Inc.

On December 13, 2021, Integrated Holdings Solutions, Inc. (“IHS’ or “Buyer’), the Company’s wholly owned subsidiary, completed an Acquisition Agreement with Consolidated Apparel, Inc. (“Consolidated” or “Seller”) and Eugene Caiazzo (“Caiazzo”), which rescinded a September 1, 2021 agreement and provided for IHS’ acquisition of 100% of Consolidated in return for the Company’s consideration to the Buyer of 328,000 shares of the Company’s Convertible/Redeemable Series B par value $1.00 Preferred shares to Caiazzo. Further, the terms provide that: (a) Caiazzo shall remain as Consolidated’s President and manage Consolidated’s operations; (b) Integrated Cannabis’ director will appoint Caiazzo as a member of the Company’s Board of Directors; (c) IHS and Caiazzo will complete an Employment Agreement providing for Caiazzo’s responsibilities as Consolidated’s President; (d) subject to negotiation between the Parties, Consolidated will grant Cashless stock options to Caiazzo.

As of September 30, 2022, and December 31, 2021, the Consolidated Acquisition Agreement had not yet closed but did close on October 3, 2022 pursuant to an October 3, 2022 Addendum to the December 31, 2021 Consolidated Acquisition Agreement (See Note 10).

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.

Name Change

During June 2022, the Company approved by shareholder consent a change to the Company’s name from Integrated Cannabis Solutions, Inc. changed to “Integrated Holding Solutions, Inc.”, which name change is subject to FINRA review and approval.

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:

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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).

NOTE 10 SUBSEQUENT EVENTS

Consolidated Apparel, Inc.

September 1, 2021 Acquisition Agreement

On September 1, 2021, Integrated Holdings Solutions, Inc. (“IHS’ or “Buyer’), our wholly owned subsidiary, as the Buyer, completed an Acquisition Agreement with Consolidated Apparel, Inc. (“Consolidated”) and Eugene Caiazzo (“Caiazzo”), who collectively are the Sellers, providing for IHS' acquisition of 49.5% of Consolidated’s common stock shares owned by Caiazzo (the “September 1, 2021 Agreement).

December 13, 2021 Acquisition Agreement

(100% Acquisition/Rescission of September 1, 2021 Agreement)

On December 13, 2021, IHS completed an Acquisition Agreement with Consolidated and Caiazzo, which rescinded the September 1, 2021 Agreement and provided for IHS’ acquisition of 100% of Consolidated in return for consideration of 328,000 shares of our Convertible/Redeemable Series B par value $1.00 Preferred shares to Caiazzo. Integrated's Series B convertible preferred stock converts into common stock at the option of the holder at the rate of 1 share of Series B convertible preferred into 20 shares of common stock. Further, the terms provide that post-acquisition: (a) Caiazzo shall remain as Consolidated’s President and manage Consolidated’s operations; (b) our Board of Directors will appoint Caiazzo as our Board member; (c) IHS and Caiazzo will complete an Employment Agreement providing for Caiazzo’s responsibilities as Consolidated’s President; (d) subject to negotiation between the Parties, we will grant Stock Options to Caiazzo with Cashless provisions.

October 3, 2022 Addendum to December 13, 2021 Acquisition Agreement

On October 3, 2022, we amended the December 13, 2021 Acquisition Agreement, via an Addendum providing for the following amended terms in the Consideration Section (Section 2) of the December 13, 2021 Acquisition Agreement:

INTEGRATED CANNABIS SOLUTIONS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Upon the closing of our 100% acquisition on October 3, 2022, Consolidated became our wholly owned subsidiary. Since 2017, Consolidated has conducted its principal business activities in the development, marketing and distribution of customized Performance Apparel using its dba branded names, Native Outfitters and Incite Performance Wear. The sale of Consolidated’s products occurs in the leisure market.

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 September 30, 2022, the agreement terms have not been completed and the transaction has not closed, but it provides for the Buyer’s acquisition of 100% of the Seller’s Membership Units in return for consideration to the Seller of 1,200,000 Preferred B Shares (“Preferred B Share Consideration”) of the Company. For a period of 12 months following the closing date, should the Seller’s revenue exceed certain specified levels specified in the Agreement, the Buyer will be required to pay the Seller additional monetary consideration pertaining to those specified revenue levels. Further, the terms provide that: (a) upon the closing, the Seller shall become the Buyer’s wholly owned subsidiary; (b) the operations of the Seller shall become the operations of the Buyer; (c) the Managing Member of the Seller shall manage GCTR’s operations; and (d) the Buyer will have redemption rights to purchase back the Preferred B Share Consideration within 6 months of our issuance of said shares on the Buyer’s behalf to the Seller at $10.00 per Preferred Share (“Redemption Rights”). The Buyer has the right to extend the Redemption Rights for an additional 6-month period. 

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.

October 25, 2022 Rescission Agreement Rescinding the March 17, 2022 GCTR Agreement

On October 25, 2022, we and GCTR agreed to rescind the March 17, 2022 Agreement. Further, the Parties agreed to work together to complete a new transaction and in connection therewith to complete the required GAAP financial statements.

October 24, 2022 Acquisition Agreement – MTO Wear, LLC

On October 24, 2022, Integrated Holdings Solutions, Inc. (“IHS’ or “Buyer’), our wholly owned subsidiary, as the Buyer, completed an Asset Purchase Agreement (the “Agreement”) with MTO Wear, LLC (the “Seller” or “MTO Wear”), a Florida Limited Liability Company to purchase and acquire from the Seller, only the accounts of the Seller, which consist of names, addresses, phone numbers, and email addresses of previous buyers, which Agreement is filed herein as Exhibit 10.1 in return for consideration by the Buyer of $240,000 in the form of a promissory note attached hereto as Exhibit 10.2 obligating the Buyer to pay the Seller $240,000 for the Purchased Assets at 8% with monthly payments of $10,000 beginning on January 15, 2023, and a balloon payment of the balance on July 15, 2023.

November 8, 2022 Press Release filed in November 8, 2022 Form 8-K titled “Integrated Cannabis to Acquire 3 Operating Entities in the Cannabis Space”. 

On November 8, 2022, we published a press release as filed with our November 8, 2022 Form 8-K stating that upon formation of a newly wholly owned subsidiary, Houdini Group, Inc., we intend to acquire 3 operating Cannabis entities in California: Houdini Labs, GCTR Management and the Tahoe Group.  The press release also states that our goal is to complete the audits for these entities before the end of March 2022.

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). 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 had not yet closed as of September 30, 2022.

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 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 had represented the Company’s closing of its first acquisition upon issuance of the Series B Preferred shares, but said transaction was rescinded on October 25, 2022.

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.

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 September 30, 2022, we had a working capital deficit of approximately $4,147,161 and we have yet to commence our plan of operations. Our current liquidity resources are not sufficient to fund their 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 September 30, 2022, and September 30, 2021

Revenues

We had no revenues for the three months ended September 30, 2022, and 2021.

Operating Expenses

Our operating expenses for the three months ended September 30, 2022, and 2021 totaled $100,061 and $80,996, respectively. The $19,065 increase is due to a $19,887 increase in professional and legal fees, partially offset by a $822 decrease in general and administrative expenses compared to the 2021 period.

Other Income and Expenses

Total other expenses consisted of interest expense of $15,851 and $13,067 for the three months ended September 30, 2022, and 2021, respectively.

Net Loss

We recognized net losses of $115,912 and $94,063 for the three months ended September 30, 2022 and 2021, respectively. The net losses are due to the $100,061 and $80,996 in operating expenses, as well as the $15,851 and $13,067 in other expenses for years ended three months ended September 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 Nine Months Ended September 30, 2022 and 2021 

Revenues

We had no revenues for the nine months ended September 30, 2022, and 2021.

Operating Expenses

Our operating expenses for the nine months ended September 30, 2022, and 2021 totaled $269,259 and $258,263, respectively. The $10,996 increase in operating expenses is due to a $12,194 increase in professional and legal fees and a $1,198 decrease in general and administrative expenses compared to the 2021 period.

Other Income and Expenses

Total other expenses consisted of interest expense of $44,621 and $33,330 for the nine months ended September 30, 2022 and 2021, respectively.

Net Loss

We recognized net losses of $313,880 and $291,583 for the nine months ended September 30, 2022, and 2021, respectively. The net losses are due to the $269,259 and $258,263 in operating expenses, as well as the 44,621 and $33,330 in interest expenses for the nine months ended September 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 September 30, 2022, we had a working capital deficit of $1,373,831 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.

Net Cash Used in Operating Activities.

During the nine months ended September 30, 2022, and 2021, our net cash used in operating activities was $100,083 and $186,747, respectively. During the nine months ended September 30, 2022, cash flows used in operations mainly consist of net losses as discussed above, partially offset by increases of $10,000 and $203,797 in prepaid expenses and accounts payable and accrued expenses, respectively. During the nine months ended September 30, 2021, net we had net losses of $291,593 and decreases of $7,000 in prepaid expenses, partially offset by increases of $203,797 in accounts payable and accrued expenses. 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 nine months ended September 30, 2022, and 2021.

Net Cash Provided by Financing Activities.

Net cash provided by financing activities during the nine months ended September 30, 2022, and 2021 totaled $100,083 and $186,747, respectively. We received $79,0836 and $25,664 in officer advances and $21,000 and $135,883 in proceeds from the issuance of notes payable during the nine months ended September 30, 2022, and 2021, respectively.

Cash Position and Outstanding Indebtedness.

Our total indebtedness on September 30, 2022, and December 31, 2021, was $1,373,831 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 September 30, 2022 and December 31, 2021, we had $0 and $10,000 current assets and our working capital deficit was $1,373,831 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.

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 September 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 September 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 September 30, 2022, that have materially affected or are reasonably likely to materially affect our internal controls.

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 on 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. 

ITEM 6. EXHIBITS

________________ 

*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.

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.