Fresh off the heels of a promising new acquisition, another following close behind and bolstered by recent federal initiatives to explore loosening the reins on marijuana law, Integrated Cannabis Solutions (OTCMKTS: IGPK) has quickly established itself as a promising yet undervalued player in the rapidly growing fintech and medical/recreational marijuana industries.
As the latest moves by the Biden administration show, the interest in reclassifying and likely legalizing marijuana at a federal level is gaining momentum, which could open the financial floodgates and generate a lot of investor interest for companies in this growing industry. For investors looking for undervalued, up-and-coming companies with proven value-adds in the cannabis space, IGPK checks a lot of important boxes.
Earlier this month, the Florida-based IGPK closed a $1.2 million deal to acquire the remaining 51% of Consolidated Apparel, which operates under the brands Native Outfitters and Incite Performance Wear. Both are leisure apparel companies and bring approximately $400,000 in assets under the IGPK umbrella. Over the past 6 months, Consolidated Apparel generated $675,000 in revenue–15% gross profit– which represents a final purchase price of less than 1X sales. Consolidated Apparel also recently generated a lot of buzz showcasing their wares at the Surf Expo in Orlando, FL, the largest and longest-running board sports and beach/resort lifestyle tradeshow in the world. On an annualized basis, the popular niche apparel company grew 10% last year, and is anticipated to quickly bring more than $200,000 in additional revenue to IGPKs bottom line.
The acquisition is the latest for IGPK, a development-stage company actively engaged in evaluating investment opportunities in early-stage ventures, primarily in the fintech and medical/recreational marijuana industries. Closing the remaining portion of the Consolidated Apparel deal brings a burgeoning apparel brand name entirely under the IGPK wing and provides a new avenue for revenue generation within its own existing markets and in support of IGPKs broader portfolio companies.
As outlined in the 8-K, the Consolidated deal includes approximately $400,000 in debt and stock as well as the assumption of existing debt into 175 million shares at an above-market price of $.002. Since this was primarily a debt deal, it’s minimally dilutive to shareholders. Terms of the deal also place six-month sale restrictions, and then only allow up to 18 million shares sold a quarter due to existing SEC rules. The terms, coupled with existing SEC regulations, effectively restrict selling until October 3, 2023. This means limited to no dilution, barring any financing in conjunction with any new acquisitions or an uplisting, both of which would be positive developments for shareholders. It’s also important to note that the company has no toxic debt on its books, so the continuing growth of its portfolio using non-dilutive and fiscally prudent means should give would-be investors confidence IGPK CEO Matt Dwyer and team are proceeding prudently with shareholder interests in mind.
Having another brand under their umbrella also opens up the ability to raise capital to execute the company’s expansion plans. The company has been actively working to shed the shell status stigma from the OTC markets. This acquisition is a key step in that process and makes it easier for current investors to clear stock and new investors to enter.
More Growth Ahead
With the Consolidated deal now closed, IGPK is turning its attention to another promising acquisition coming quickly down the pike that fits well within its business model. The company currently owns 49.9% of Sacramento-based GCTR Management, LLC, a cannabis management company focused on supporting compliant cannabis companies. GCTR specializes in providing real estate, build-out designs, equipment financing, SOP’s, bookkeeping, product development, compliance, and more to the growing cannabis industry. GCTR currently generates revenues of more than $300,000 a month and is tracking toward $1 million by the first quarter of 2023. The growing success and the company’s business model make it an attractive–and immediately profitable–an addition that fits well into the IGPK portfolio.
GCTR also has tangible assets worth over $3 million, primarily in equipment, and generates additional revenue leasing this equipment to its client, Houdini Labs. Earlier this year, IGPK’s wholly-owned subsidiary, Integrated Holding Solutions, Inc., acquired 49.9% of GCTR in exchange for 598,800 shares of the Company’s Series B Preferred stock. IGPK will soon exercise the option to acquire the remaining 50.1% in exchange for an additional 601,200 Series B shares. The company stated its goals were to generate $15 -$30 million in revenues.
The company is continuing to look for other potential targets, seeking new acquisitions to increase revenues throughout the coming year.
Earlier this month, the Biden administration not only sought to pardon those with simple federal marijuana offenses but also asked for a review to determine whether or not marijuana should remain classified as a Schedule 1 substance. Schedule 1 classification severely restricts the financial capabilities and access to markets and lending for companies operating in the space as well as their ability to raise cash and generate investment. It also drives many companies off U.S. based exchanges.
Reclassification could solve those challenges, unleashing a tide of capital flooding into the cannabis markets. At the same time, legalization of both recreational and medicinal marijuana at a federal level would open the entire U.S, stir competition and increased research, eliminate the legal complexities and provide an air of greater legitimacy to this nascent industry.
Companies such as IGPK, who are established within the space, could see increased interest from the retail and institutional investment communities, find it easier to raise capital, lower costs of doing business and be able to tap into a much larger market, which is anticipated to grow 14.9% to almost $200B.
A Prudent Approach
Recent acquisitions, and the manner in which they were made, demonstrate that Dwyer and IGPK are keen to shed the lingering side effects of shell status, and move forward executing their short and long-term objectives while keeping their value proposition – and shareholder interests– top of mind. The company also recently approved the creation of two new independent board positions, members to be appointed, affirming its commitment to sound corporate governance.
With these acquisitions soon closed, IGPK is also focusing its attention on concluding its ongoing audit. Once the audit is complete, the company and its acquisitions will be consolidated and on the books under a new organizational structure, with a total worth climbing from $1.2M today to approximately $12,000,000–a 900% increase almost overnight. The company then anticipates moving forward with plans to strategically uplist to OTCQB followed by OTCQX.
For existing investors, IGPKs recent acquisitions demonstrated shareholder commitment and ongoing plans to adhere to strict standards of corporate and fiscal governance should provide confidence that the company is proceeding prudently with shareholder interest in mind.
Led by seasoned CEO Dwyer, IGPK is charting a solid growth trajectory bringing in working assets and generating revenue on day-one. The company maintains a clean balance sheet and has demonstrated its ability to execute.
Coupling those qualities with audited financials, and a strategic plan to uplist and changing attitudes towards the Cannabis industry at a federal level, IGPK presents a compelling and low-risk opportunity with a $2.3 million market cap for potential investors looking for early-entry on an undervalued gem providing unique offerings in what will likely be a huge growth industry.
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