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, or 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 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, 2022 and 2021. We plan to process hemp or biomass into Cannabidilol (“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 plan 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. The transaction has not yet closed.
No assurance can be provided that we will be successful in implementing and executing our business plans.
Trends and Uncertainties
Our business is subject to the following trends and uncertainties:
| · | State and Federal laws regarding growing and processing industrial hemp; currently hemp is legal to be grown in all 50 States pursuant to the 2018 Farm Act signed into law in July of 2018. |
| · | With the passing of the Farm Act, more growers have entered the market causing the price of refined hemp to drop; we believe this will continue to drop for another year before the market stabilizes |
| · | Testing requirements have and will continue to evolve meaning less Biomass maybe available to refine designated as pharmaceutical grade |
| · | Weather is a major factor, with wild climate swings taking place this could also cause a shortage in available Biomass. Earlier this year in Colorado, the largest grower of cannabis plants lost their entire crop to a freeze. |
Going Concern
At March 31, 2022, we had a working capital deficit of approximately $1,154,511 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’ 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 for 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.
Our plans to implement our Plan of Operations include the following:
| · | Renting space in an area in Wisconsin where we can setup a processing lab and start processing some of the Biomass harvested during 2019. |
| · | Once the processing lab is set up, we will meet with farmers in the area growing hemp and seek to form a co-op with them, where they farm the crop, and we process the crop and sell the Isolate. |
The foregoing goals will increase expenses and lead to possible net losses. There is no assurance that we will ever be profitable or that debt or equity financing will be available to us. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern. There is no assurance we will be successful in any of these goals.
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. We anticipate that we may not receive any significant revenues from operations until we begin our planned operations 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 plan 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.
For the Three Months Ended March 31, 2022 and 2021
Revenues
We had no revenues for the three months ended March 31, 2022 and 2021.
Operating Expenses
Our operating expenses for three months ended March 31, 2022 and 2021 totaled $80,680 and $71,056, respectively. The $9,624 increase is mainly due to a $11,524 increase in professional and legal fees, partially offset by a $1,900 decrease in general and administrative expenses.
Other Income and Expenses
Total other expenses consisted of interest expense for the three months ended March 31, 2022 and 2021 totaled $13,880 and $9,084, respectively.
Net Loss
For the three months ended March 31, 2022 and 2021, we recognized net losses of $94,560 and $ 180,140, respectively. The net losses are due to the $80,680 and $71,056 in operating expenses, as well as the $13,880 and $9,084 in other expenses for the three months ended March 31, 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.
At March 31, 2022, we had a working capital deficit of $1,154,511 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 for 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 three months ended March 31, 2022 and 2021, our net cash used in operating activities was $26,369 and $30,625, respectively. The decrease is mainly due to the $14,420 increase in net losses as discussed above, partially offset by a $7,000 increase in the change in prepaid expenses and a $11,676 increase in in the change in accounts payable and accrued expenses during the three months ended March 31, 2022 compared to the March 31, 2021 period. 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 three months ended March 31, 2022 and 2021.
Net Cash Provided by Financing Activities.
Net cash provided by financing activities during the three months ended March 31, 2022 and 2021 totaled $26,369 and $30,625. We received $26,369 and $1,875 in officer advances and $0 and $28,750 in proceeds from issuance of notes payable during the three months ended March 31, 2022 and 2021, respectively.
Cash Position and Outstanding Indebtedness.
Our total indebtedness at March 31, 2021 and December 31, 2020 was $1,154,511 and $1,069,951, respectively, all of which are considered current liabilities. Current liabilities consist primarily of accounts payable, accounts payable to related parties, short-term debt and accrued liabilities.
At March 31, 2022 and December 31, 2021, we had $0 and $10,000 current assets and our working capital deficit was $1,154,511 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 a minimum financing of at least $1,296,416.
There are no assurances that we will be able to obtain financing or on terms acceptable to us. Our Plan of Operations will begin four months after we receive financing, if ever. We have researched and identified the equipment needed to operate a plant capable of initially processing one acre per day that can be expanded to processing three to five acres per day; we have not yet purchased any equipment. We have not offered any services to local or out of state farmers at this time. It will take approximately four months to begin operations after the order and delivery of the processing equipment, after which we will introduce ourselves to the local farms in a hundred-mile radius around the plant, in an attempt to enter into multi-year processing agreements. We will also complete a website that will offer the finished product Isolate for sale by the liter and encourage buyers to enter into annual contracts for a minimum number of liters per month at a discount.