Securities Registration Statement (s-1/a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1 /A

(Amendment No. 1)

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

INDOOR HARVEST CORP

(Exact name of registrant as specified in its charter)

Texas		3590		45-5577364
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Indoor Harvest Corp

5300 East Freeway Suite A

Houston, Texas 77020

(346) 310-3427

(Address, including zip code, and telephone
number, including area code, of registrant’s
principal executive offices)

Daniel Weadock Chief Executive Officer

5300 East Freeway Suite A

Houston, Texas 77020

(346) 310-3427

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Laura Anthony, Esq.

Legal & Compliance, LLC

330 Clematis Street, Suite 217

West Palm Beach, Florida 33401

Telephone: (800) 341-2684

Telefax: (561) 514-0832

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	[ ]
Non-accelerated filer	[ ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)		Emerging growth company	[X]

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 to Section 7(a)(2)(B) of the Securities Act. [ ]

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The Selling Stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated May_____, 2018

PRELIMINARY PROSPECTUS

This prospectus (this “Prospectus”) relates to the offer and sale of up to 5,000,000 shares of common stock, par value $0.001 of Indoor Harvest Corp, a Texas corporation, by Tangiers Global, LLC (the “Selling Stockholder” or “Tangiers”). We are registering the resale of up to 5,000,000 shares of common stock issuable under an equity line in the amount of $2,000,000 (the “Equity Line”) established by the Investment Agreement, as more fully described in this Prospectus. The resale of such shares by the Selling Stockholder pursuant to this Prospectus is referred to as the “Offering.”

We are not selling any securities under this Prospectus and will not receive any of the proceeds from the sale of shares of common stock by the Selling Stockholder. We will, however, receive proceeds from our sale of our shares of common stock under the Equity Line to the Selling Stockholder.

The Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”). The Selling Stockholder may sell the shares of common stock described in this Prospectus in a number of different ways and at varying prices. See “Plan of Distribution” for more information about how the Selling Stockholder may sell the shares of common stock being registered pursuant to this Prospectus.

We will pay the expenses incurred in registering the shares, including legal and accounting fees. See “Plan of Distribution.”

Our common stock is currently quoted on the OTC Market Group, Inc.’s OTCQB tier under the symbol “INQD.” On May 30, 2018, the last reported sale price of our common stock was $0.17.

Our principal executive offices are located at 5300 East Freeway Suite A, Houston, Texas 77020.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 of this Prospectus.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is ________________, 2018.

Table of Contents

		Page Number
Prospectus Summary		1
Summary Financial Data		5
Cautionary Note Regarding Forward-Looking Statements		5
Risk Factors		5
Use of Proceeds		19
Dilution		20
Selling Stockholder		22
Plan of Distribution		24
Description of Securities to be Registered		25
Description of Business		27
Description of Properties		48
Quantitative and Qualitative Disclosures About Market Risk		48
Determination of Offering Price		48
Market for Common Equity and Related Stockholder Matters		49
Financial Statements		50
Management’s Discussion and Analysis of Financial Condition and Results of Operations		51
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		61
Directors and Executive Officers		61
Executive Compensation		64
Security Ownership of Certain Beneficial Owners and Management		69
Certain Relationships and Related Party Transactions and Director Independence		71
Shares Eligible for Future Sale		71
Legal Matters		72
Experts		72
Interests of Named Experts and Counsel		72
Disclosure of Commission Position of Indemnification for Securities Act Liabilities		72
Where You Can Find More Information		72
Other Expenses of Issuance and Distribution		74
Indemnification of Directors and Officers		74
Recent Sales of Unregistered Securities		75
Exhibits and Financial Statement Schedules		79

You should rely only on the information contained in this Prospectus. We have not authorized, and the Selling Stockholder has not authorized, anyone to provide you with information that is different from that contained in this Prospectus. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The information in this Prospectus is complete and accurate only as of the date on the front cover regardless of the time of delivery of this Prospectus or of any sale of our securities.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this Prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire Prospectus, including our financial statements and the documents to which we refer you. The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this Registration Statement on Form S-1 (the “Registration Statement”) of which this Prospectus is a part.

Unless the context indicates or suggests otherwise, references to “we,” “our,” “us,” the “Company,” “Indoor Harvest,” or the “Registrant” refer to Indoor Harvest Corp, a Texas corporation, and Alamo CBD, LLC, our wholly owned subsidiary.

Business Overview

We, under our brand name Indoor Harvest®, are a technology company focused on enabling the production of bio pharma grade cannabis for research and development of true pharma grade personalized medicines. We are also a provider of advanced cultivation methods and processes for the cannabis industry. Our integrated technology platform design allows us to manipulate the environment of the plant to influence its phenotypic expression. Among other things, we are also seeking to use the proprietary technology we have developed to become a registered producer and seller under the federal Controlled Substances Act (“CSA”) of pharmaceutical grade cannabis for research and targeted treatment of specific medical symptoms by third parties.

We have developed a patent pending high pressure aeroponic process of growing cultivars in an air or mist environment without the use of soil or an aggregate growing medium. Aeroponic production differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as a growing medium and essential minerals to sustain plant growth, aeroponics is conducted by suspending plant roots in the air and spraying them with a nutrient-laden mist. Because water is used in aeroponics to transmit nutrients, it is sometimes considered a type of hydroponics. Our high pressure aeroponic process and production methods provide an ability to test the phenotypic plasticity of cannabis and to test and develop specific phenotypic response. Phenotypic plasticity refers to the changes in cannabis morphology and physiology due to its adaption to a unique environment and its impact on phytochemical production.

We have also developed a significant set of industry partnerships and relationships over the last 7 years uniquely positioning us to create fully integrated facilities designs for fully controlled and automated growing environments that would include not only our patent pending high pressure aeroponic systems but also a patent pending HVAC system design, leading LED lighting technology plus controls and sensors.

We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense low-tetrahydrocannabinol (“THC”) cannabis under the Texas Compassionate Use Program (“TCUP”). THC is a psychotropic cannabinoid and is the principal psychoactive constituent of cannabis. We have signed a binding Letter of Intent (“LOI”) with Zoned Properties, Inc. (“Zoned Properties”) outlining three independent pending agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other locations to be determined after approval of a provisional license under the TCUP.

At the same time, we continue to explore other avenues of opportunity to deploy our technology in partnership with license holders in attractive jurisdictions.

The Company intends to generate revenue from the manufacture or co-manufacturing and sales of pharma grade cannabis to research and development organizations through related engineering, project management, equipment leasing and technology licensing from constructed facilities in Tempe, Arizona and Parachute, Colorado and through the development and licensing of related environmental and climate recipes.

Our operational expenditures are primarily related to further developing our technology, launching and completing test trials, developing research partnerships and collaborations related to perfecting precise expressions of personalized medicine and the costs related to being a fully reporting company with the SEC.

Government Regulation of Cannabis

The United States federal government regulates drugs through the CSA (21 U.S.C. § 811), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug, which is viewed as highly addictive and having no medical value. The United States Federal Drug Administration (“FDA”) has not approved the sale of cannabis for any medical application. Doctors may not prescribe cannabis for medical use under federal law, however, they can recommend its use under the First Amendment. In 2010, the United States Veterans Affairs Department clarified that veterans using medicinal cannabis will not be denied services or other medications that are denied to those using illegal drugs.

State legalization efforts conflict with the CSA, which makes cannabis use and possession illegal on a national level. On August 29, 2013, the U.S. Department of Justice (“DOJ”) issued a memorandum (“Cole Memo”) providing that where states and local governments enact laws authorizing cannabis-related use, and implement strong and effective regulatory and enforcement systems, the federal government will rely upon states and local enforcement agencies to address cannabis activity through the enforcement of their own state and local narcotics laws. The memorandum further stated that the DOJ’s limited investigative and prosecutorial resources will be focused on eight priorities (the “Eight Priorities”) to prevent unintended consequences of the state laws, as follows:

	●	Preventing the distribution of marijuana to minors;
	●	Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
	●	Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
	●	Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking or other illegal drugs or other illegal activity;
	●	Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
	●	Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
	●	Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands, and
	●	Preventing marijuana possession or use on federal property.

On December 11, 2014, the DOJ issued another memorandum about its position and enforcement protocol with regard to Indian Country, stating that the Eight Priorities in the Cole Memo would guide the United States Attorneys’ cannabis enforcement efforts in Indian Country. On December 16, 2014, as a component of the federal spending bill, the Obama administration enacted regulations that prohibit the DOJ from using funds to prosecute state-based legal medical cannabis programs.

On January 4, 2018, the DOJ suspended the Cole Memo and replaced it with a new Memorandum titled with the subject “Marijuana Enforcement” from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the broad safe harbor provided under the Cole Memo.

On April 9, 2018, the Food and Drug Administration requested interested persons to submit comments concerning abuse potential, actual abuse, medical usefulness, trafficking, and impact of scheduling changes on availability for medical use of Psychotropic Substances; Single Convention on Narcotic Drugs; Cannabis Plant and Resin; Extracts and Tinctures of Cannabis; Delta-9-Tetrahydrocannabinol; Stereoisomers of Tetrahydrocannabinol; Cannabidiol. These comments will be considered in preparing a response from the United States to the World Health Organization (WHO) regarding the abuse liability and diversion of these drugs. WHO will use this information to consider whether to recommend that certain international restrictions be placed on these drugs. This notice requesting comments is required by the Controlled Substances Act (the CSA).

On April 13, 2018, it was announced that the Trump administration had provided assurances to Colorado Sen. Cory Gardner, that the Trump administration would support federalism-focused legislation that will allow U.S. states to decide how they want to regulate cannabis without fear of federal interference. However, there can be no assurance that this position will not change.

As of January 4, 2018, 29 states, the District of Columbia and Guam allow their citizens to use medical cannabis through de-criminalization. Voters in the States of Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington have legalized cannabis for adult recreational use.

The Company continues to follow and monitor the actions and statements of the Trump administration, the DOJ and Congress’ positions on federal law and cannabis policy. As the possession and use of cannabis is illegal under the CSA, we could be deemed to be aiding and abetting illegal activities through the equipment we intend to sell in the U.S. and directly violating federal law if we should begin producing cannabis under State law. Under federal law, and more specifically the CSA, the possession, use, cultivation, and transfer of cannabis is illegal. Our equipment could be used by persons or entities engaged in the business of possession, use, cultivation, and/or transfer of cannabis.

As a result, law enforcement authorities, in their attempt to regulate the illegal use of cannabis, could seek to bring an action or actions against us, including, but not limited to, a claim of aiding and abetting another’s criminal activities or directly violating the CSA. The federal aiding and abetting statute provides that anyone who “commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal” (18 U.S.C. §2(a).) Enforcement of federal law regarding cannabis would likely result in the Company being unable to proceed with our business plans, could expose us to potential criminal liability and could subject our properties to civil forfeiture which could lead to an entire loss of any investment in the Company. Any changes in banking, insurance or other business services may also affect our ability to operate our business. See Risk Factors, beginning on page 5 .

Financing Transaction Related to the Offering

On October 12, 2017, we entered into the Investment Agreement with Tangiers Global, LLC, as the Selling Stockholder, providing for the Equity Line. The Investment Agreement provides that, upon the terms and subject to the conditions thereof, the Selling Stockholder is committed to purchase, on an unconditional basis, shares of the Company’s common stock (the “Commitment Shares”) at an aggregate price of up to $2,000,000 over the course of its 36-month term. The Selling Stockholder’s obligation to purchase all $2,000,000 of Commitment Shares is referred to as the “Total Commitment.”

From time to time over the 36-month term of the Investment Agreement, we may, in our sole discretion, provide the Selling Stockholder with a put notice (each, a “Put Notice”), to purchase a specified number of Commitment Shares (each, the “Put Amount Requested”).

The actual amount of proceeds we receive pursuant to each Put Notice (each, the “Put Amount”) will be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price of each Commitment Share equals 80% of the of the average of the two lowest closing bid prices of the Company’s common stock during the pricing period applicable to the put notice.

Use of Proceeds

We intend to use the proceeds from the Equity Line for general working capital purposes and to fund the development of our business plans in Arizona, Colorado and Texas as set forth under “Use of Proceeds” beginning on page 19 .

We intend to raise additional capital through equity and debt financing as needed, though there cannot be any assurance that such funds will be available to us on acceptable terms, on an acceptable schedule, or at all. If we are unable to secure additional capital, we may not be able to complete some or all of our business plans outlined in this Prospectus.

Corporate Information

Our principal executive offices are located at 5300 East Freeway Suite A, Houston, Texas 77020. Our telephone number is (346) 310-3427. We maintain a corporate website at www.indoorharvest.com.

Transfer Agent

The transfer agent for our common stock is VStock Transfer at 18 Lafayette Place, Woodmere, NY 11598. The transfer agent’s telephone number is (212) 828-8436.

Emerging Growth Company Status

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We elected to take advantage of all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period.

We will be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although we will lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Offering

Common Stock Offered by the Selling Stockholder		5,000,000 shares

Common Stock Outstanding Before the Offering		24,957,471 shares as of May 31, 2018.

Common Stock Outstanding After the Offering		29,957,471 shares, assuming all 5,000,000 shares are sold to the Selling Stockholder under the Equity Line. If we sell fewer shares of common stock to the Selling Stockholder under the Equity Line, we will have substantially less common stock outstanding after the Offering.

Use of Proceeds		We will not receive any of the proceeds from the sale of the common stock registered hereunder. We will receive proceeds from our sales of Commitment Shares to the Selling Stockholder under the Equity Line. We intend to use such proceeds, if any, as set forth under “Use of Proceeds” beginning on page 19

Risk Factors		An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Further, the issuance to, or sale by, the Selling Stockholder of a significant amount of shares being registered in the Registration Statement of which this Prospectus forms a part at any given time could cause the market price of our common stock to decline and to be highly volatile and we do not have the right to control the timing and amount of any sales by the Selling Stockholder of such shares. Prior to making an investment decision, you should carefully consider all of the information in this Prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 5 .

OTCQB Symbol		INQD

SUMMARY FINANCIAL DATA

The following information represents selected audited and unaudited financial information for our Company for the years ended December 31, 2017 and 2016 . The summarized financial information presented below is derived from, and should be read in conjunction with, our audited financial statements, including the notes to those financial statements which are included elsewhere in this Prospectus, along with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The historical results are not necessarily indicative of results to be expected for any future periods.

	Year Ended December 31,
Statements of Operations Data	2017			2016
Revenue	$	—		$	163,996
Cost of sales	$	—		$	111,581
Total operating expenses	$	3,223,678		$	1,305,472
Net loss	$	(4,412,050	)	$	(2,075,000	)
Basic and diluted net loss per share	$	(0.22	)	$	(0.16	)

	As of December 31,
Balance Sheets Data	2017			2016
Cash and cash equivalents	$	35,453		$	78,219
Total current assets	$	89,905		$	122,755
Total current liabilities	$	1,119,821		$	430,566
Working capital deficit	$	(1,029,916	)	$	(307,811	)
Total stockholders’ deficit	$	(999,624	)	$	(149,531	)
Accumulated deficit	$	(8,408,822	)	$	(3,996,772	)

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except for statements of historical facts, this Prospectus contains forward-looking statements involving risks and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions or variations thereof are intended to identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the risks contained in the section of this Prospectus entitled “Risk Factors”) relating to our industries, operations, and results of operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date hereof.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with our financial statements and the related notes included in this Prospectus.

RISK FACTORS

An investment in our securities is subject to numerous risks, including the risk factors described below. You should carefully consider the risks, uncertainties, and other factors described below, in addition to the other information set forth in this Prospectus, before making an investment decision with regard to our securities. Any of these risks, uncertainties, and other factors could materially and adversely affect our business, financial condition, results of operations, cash flows, or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. See also “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

Because the use, sale or possession of marijuana is illegal under federal law, THE COMPANY AND ITS OFFICERS, DIRECTORS AND EMPLOYEES COULD BE SUBJECT TO CRIMINAL AND CIVIL SANCTIONS.

The U.S. Government classifies marijuana as a Schedule I controlled substance, meaning marijuana is an illegal substance under federal law and its prescription, use, sale or possession is a violation thereof. Although 29 states, the District of Columbia and Guam allow the use of medical marijuana, eight states and the District of Columbia have legalized marijuana for adult recreational use, and recently-enacted federal spending legislation prohibits the Department of Justice from using federal funds to prevent states from implementing their own marijuana laws, the United States Supreme Court has ruled that federal laws criminalizing the use of marijuana pre-empt state laws. Thus, even if we limit our business to marijuana-friendly states, by possessing, distributing or even aiding others in distributing marijuana or marijuana-based products such as cannabinoid oils, the Company, its Officers, Directors and employees may face the prospect of criminal and/or civil sanctions for engaging in activities in violation of federal law and the Company could be at risk of civil and/or criminal forfeiture actions against its assets and operations for such violations. As our business plan depends upon the possession, sale, and use of marijuana and certain cannabinoid extracts, such sanctions or forfeiture actions would be debilitating to the business of the Company and would have a material adverse effect on our operations. In February 2017, the Trump administration made announcements that there could be “greater enforcement” of federal laws regarding cannabis and as a result on January 4, 2018, the DOJ suspended certain Obama era protections set forth previously in the Cole Memo, which was replaced with a new Memorandum titled with the subject “Marijuana Enforcement” from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the broad safe harbor provided under the Cole Memo. Any such enforcement actions could have a material adverse effect on our business and results of operations.

Changes in federal law enforcement policy concerning federal marijuana laws could force a suspension or termination of our operations.

The commercial production, processing, distribution and sale of marijuana within the various states of the United States that have legalized these activities for medical and/or recreational purposes has proceeded largely free from federal investigation and prosecution as the result of recently-enacted federal spending legislation prohibiting the DOJ from using federal funds to prevent states from implementing their own marijuana laws. The statements issued by the DOJ are, however, only guidelines provided to federal law enforcement agencies in setting priorities for the investigation and prosecution of violations of federal laws criminalizing marijuana and the effects of the federal spending legislation are not yet apparent.

Further, major changes in the executive administration could result in changes to, or even the withdrawal or reversal of, current federal law enforcement policy concerning the investigation and prosecution of activities involving marijuana including those which are legal under certain state laws. On January 4, 2018, the Department of Justice suspended certain protections under the Cole Memo which was replaced with a new Memorandum titled with the subject “Marijuana Enforcement” from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the broad safe harbor provided under the Cole Memo. This creates uncertainty as to federal prosecution in States which have legalized cannabis production and use. Likewise, there are no guarantees that legislation enacted in subsequent years will contain similar marijuana-friendly provisions. As our business plan depends upon the possession, sale, and use of marijuana and certain cannabinoid extracts, a change or reversal of federal law enforcement policy and/or federal spending legislation concerning marijuana would be debilitating to our business as it could result in a temporary suspension or the permanent cessation of our operations.

Even in states where the sale and use of recreational or medical marijuana is permitted, we may be unable to obtain a license and may have to rely on collaborative arrangements with licensed entities.

Certain states in which we seek to operate may prohibit non-resident companies from conducting business directly in the state and/or may require certain licensure, such as a Medical Marijuana Infused Product Manufacturer License (“MMIP”), for us to conduct our business. In such states, we may be required to enter into a collaborative arrangement with a local entity holding the necessary MMIP license, whereby we would agree to lease our facilities and employees to the licensed entity. Securing such an arrangement may be difficult to enter into and/or expensive to maintain. Additionally, our operations would be entirely dependent on the licensed entity’s ability to maintain the required licenses, and a loss of licensure by the licensed entity would have a material adverse effect on our operations.

In states where we are permitted to operate directly, licensing requirements may be difficult and/or expensive to satisfy and maintain.

In states where we are permitted to operate directly, the licensure application and approval process may require significant time and expense. Additionally, upon becoming authorized to do business in a state, it may be difficult or expensive for us to comply with the various laws, regulations and licensure requirements of each state. Compliance may also include a subjective factor that could allow a state to revoke our MMIP license even though we believed we were complying with all applicable requirements. The loss of such an MMIP license for any reason would likely result in a material adverse effect on our operations.

In states where the sale and use of recreational or medical marijuana is permitted, local ordinances and regulations may adversely affect the Company and our strategic collaborators, such as growers and dispensaries.

In addition to the federal pre-emption and state law issues mentioned above, local laws and regulations may impact the Company and our strategic collaborators, such as growers and dispensaries, in jurisdictions where marijuana is legal under state law. Ordinances and regulations related to zoning, limiting the size of growers or levying exorbitant taxes and fees on marijuana-related businesses may have a material adverse effect on business and operations.

Laws and regulations affecting the regulated marijuana industry are constantly changing and we cannot predict the impact of future regulations.

Local, state and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations. Legal or regulatory changes in the jurisdictions in which we operate or intend to operate may require us to incur substantial costs associated with compliance or alterations to our business plan. For example, on January 4, 2018, the DOJ suspended the Cole Memo and was replaced with a new Memorandum titled with the subject “Marijuana Enforcement” from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the safe harbor provided under the Cole Memo. Further, violations of these ever-changing laws and regulations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations.

Our ability to achieve significant financial success is dependent on additional states and local governments legalizing marijuana.

There can be no assurance that the number of states that allow the use of medical or recreational marijuana will increase and there can be no assurance that the 29 existing states that permit the medical use of marijuana will not reverse their position in the future. As our growth is dependent upon the continued legalization of marijuana for medical and recreational use, the failure of additional states and local governments to legalize marijuana would significantly curtail our growth potential.

The difficulty of the Company to obtain various insurances that are typically available to businesses may expose us to additional risk and financial liabilities.

Workers compensation, general liability, and directors’ and officers’ insurance, among other types of business-related insurance, may be more difficult and/or more expensive to secure due to our engagement in the marijuana industry. If we are forced to go without such insurance or pay a substantially higher premium than anticipated, we may be prevented from engaging in certain strategic collaborations or partnerships, our growth may be inhibited, and we may be exposed to additional risk and financial liabilities.

The Company and its clients, partners and strategic collaborators may have difficulty accessing the service of banks.

On February 14, 2014, the U.S. government issued rules allowing banks to legally provide financial services to state-licensed marijuana-related businesses. However, such guidance fell short of the explicit legal authorization that banking industry officials requested from the federal government. To date, it is unclear whether any banks have relied on the guidance and accepted marijuana-related companies as customers. If we, as well as our clients, partners and strategic collaborators, have difficulty accessing the service of banks, we may not have access to the capital necessary to maintain our operations or may be subject to the security risks of a cash business.

The market for our products is unproven.

While consumer demand for marijuana-based products is well established, consumer demand for marijuana e-cigarettes and other products utilizing cannabinoid extracts is still unproven. Lack of acceptance by end users and/or the failure of distributors or customers to accept our products, or the price point of our products could have a material adverse effect on us and could prevent us from ever becoming profitable. Further, the cost of educating the market regarding marijuana e-cigarettes and other products utilizing cannabinoid extracts could prove to be unfeasible.

The medical marijuana industry faces strong opposition.

Well-funded, politically significant businesses may provide strong economic and political opposition to the medical marijuana industry and the industry could face a material threat from the pharmaceutical companies as marijuana continues to take market share from their products. Any inroads the pharmaceutical industry makes in halting or rolling back the medical marijuana movement could have a detrimental impact on the market for our products and thus on our business, operations and financial condition.

Our future customers are going to be subject to higher effective federal tax rates, which higher rates could also apply to us if we are deemed to be a marijuana business.

The Internal Revenue Code prohibits marijuana businesses from deducting their ordinary and necessary business expenses, forcing them to pay higher effective federal tax rates than similar companies in other industries. The effective tax rate for a marijuana business depends on how large its ratio of non-deductible expenses is to its total revenue but can be as high as 90%. This could have an adverse effect on the profitability of our customers, which, in turn, could adversely impact us. In addition, although we may not sell cannabis and may not be classified as a marijuana business, if we are so classified, this tax provision could have a material adverse effect on our net income and on our ability to ever become profitable.

We may not be able to obtain approval to become registered under the CSA to manufacture cannabis to supply researchers in the United States.

We intend to register under the CSA with the Drug Enforcement Agency (the “DEA”) pursuant to a rule adopted by the DEA on August 12, 2016. To facilitate research involving cannabis and its chemical constituents, the DEA adopted a new policy that is designed to increase the number of entities registered under the CSA to produce cannabis to supply legitimate researchers in the United States. The DEA will evaluate applications for such registration consistent with the CSA and the obligations of the United States under the applicable international drug control treaty. We may be unsuccessful in our attempts to obtain registration under the CSA which may lead to the inability of us to proceed with our business plan.

FDA regulation of cannabis and the possible registration of facilities where cannabis is grown could negatively affect the cannabis industry, which would directly and negatively affect our business and financial condition.

Should the federal government legalize cannabis for medical use, it is possible that the FDA would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including certified goods manufacturing practices (“cGMPs”) related to the growth, cultivation, harvesting and processing of cannabis. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where cannabis is grown be registered with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we do not know what the impact would be on the cannabis industry and what costs, requirements and possible prohibitions may be enforced. If we are unable to comply with the regulations and/or registration as prescribed by the FDA, we may be unable to continue to operate our business.

We do not presently own a facility capable of producing cannabis, and we face risks in leasing such facilities.

We have entered into a binding LOI to construct facilities in Texas, Arizona and Colorado. We do not presently own or lease a facility capable of producing cannabis. Construction of our facilities is dependent upon the execution of final agreements under our binding LOI and our relationship with the Selling Stockholder and its continued willingness to perform under the Investment Agreement. If the Selling Stockholder were not to purchase our common stock as required pursuant to the Investment Agreement, we would need to find other sources of capital to construct or lease our facilities. The Investment Agreement does not provide sufficient capital to construct all of our planned facilities, and additional capital will be required. There can be no assurance that such additional capital will be available. Also, if we need to lease facilities, there is no assurance of availability of a suitable partner with an existing cannabis production license under state law to lease the constructed facilities, or that suitable facilities will be available on terms favorable to us.

We have a risk of failing to deliver our products and services in an efficient and timely matter, as federal law currently prohibits transportation of cannabis products across state lines.

Federal law presently prohibits and criminalizes the transport of cannabis across state lines. Certain states also prohibit or limit the intrastate transport of cannabis. Accordingly, there can be no assurance that we will be able to deliver our products and services in an efficient and timely manner, either across state lines or within certain states because of legal and regulatory constraints. Failure to make efficient and timely delivery of our services can result in loss of revenue and material adverse impact to our shareholders.

The Company’s services and strategy are new and its industry is evolving. We run the risk of customer acceptance of our technology, methods, and our brand. We have a new business strategy in entering the cannabis market. We transitioned on August 4, 2017, to focus solely on becoming a cannabis producer and technology provider for the cannabis industry after offering engineering and equipment to the vertical farming industry since inception on November 23, 2011.

You should consider the Company’s prospects in light of the risks, uncertainties and difficulties frequently encountered by companies in their early stage of development, particularly companies in the rapidly evolving legal cannabis industry. To be successful in this industry, the Company must, among other things:

	●	develop and introduce functional and attractive service offerings;

	●	attract and maintain a large base of consumers;

	●	increase awareness of the Company brand and develop consumer loyalty;

	●	establish and maintain strategic relationships with distribution partners and service providers;

	●	respond to competitive and technological developments;

	●	build an operations structure to support the Company business; and

	●	attract, retain and motivate qualified personnel.

The Company cannot guarantee that it will succeed in achieving these goals, and its failure to do so would have a material adverse effect on its business, prospects, financial condition and operating results.

Risks Related to the Company

We have a limited operating history. We have incurred losses and further anticipate to continue to incur losses and are uncertain of future profitability.

We have a limited operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. We are still in development of our technology and operations, and we depend upon Tangiers’s continuing funding of our Investment Agreement to continue development. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.

We have not yet generated significant operational revenues. Since we have an evolving and unpredictable business model, we may not be able to manage growth or grow revenue.

We have only generated revenues of $265,590 from our inception on November 23, 2011 through December 31 , 2017. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth due to future advances in technology, methods or processes by our competitors. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our product offering, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

There is substantial doubt about our ability to continue as a going concern. If we are unable to generate significant revenue or secure additional financing, we may be unable to implement our business plan and grow our business.

We are a development stage company and are in the process of developing our products and services. Consequently, we have only generated revenues of $265,590 as of the date of this Prospectus. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2018. Our auditor has indicated in their Report that these conditions raise substantial doubt about our ability to continue as a going concern. The continuation of our business as a going concern is dependent upon the continued the Company’s ability to raise additional investment capital from both current and potential future investors, of which there can be no assurance.

We need to raise significant capital and generate significant cash from operations to implement our business plan.

There is uncertainty regarding our ability to implement our Additional Planned Operational Activities as described below and to grow our business to a greater extent than we can with our existing financial resources, also described below, without additional financing. Other than the Investment Agreement with Tangiers, we have no agreements, commitments or understandings to secure additional financing at this time, and there is no assurance we can raise additional financing in the future. Our long-term future growth and success is dependent upon our ability to increase revenue from selling our products and services, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to increase revenue from selling our products and services, generate sufficient cash from operations, or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our ability to fully implement our Additional Planned Operational Activities, as described below, and grow our business to a greater extent than we can with our existing financial resources, also described below.

Management of growth will be necessary for us to be competitive.

Successful expansion of our business will depend on our ability to effectively attract and manage staff, strategic business relationships, and shareholders. Specifically, we will need to hire skilled management and technical personnel as well as manage partnerships to navigate shifts in the general economic environment. Expansion has the potential to place significant strains on financial, management, and operational resources, yet failure to expand will inhibit our profitability goals.

We are entering a highly competitive market.

The markets for ancillary businesses in the medical and recreational cannabis industries are competitive and evolving. In particular, we face strong competition from larger companies that may be in the process of offering similar products and services to ours. Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing and other resources and larger client bases than we have (or may be expected to have).

The Company also expects that new competitors may introduce products, systems or services that are directly or indirectly competitive with the Company. These competitors may succeed in developing products, systems and services that have greater functionality or are less costly than the Company’s products, systems and services, and may be more successful in marketing such products, systems and services. Technological changes have lowered the cost of operating communications and computer systems and purchasing software. These changes reduce the Company’s cost of providing services but also facilitate increased competition by reducing competitors’ costs in providing similar services. This competition could increase price competition and reduce anticipated profit margins.

Given the rapid changes affecting the global, national, and regional economies generally and the medical and recreational cannabis industries, in particular, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on our ability to keep pace with any changes in its markets, especially with legal and regulatory changes. Our success will depend on our ability to respond to, among other things, changes in the economy, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition, operating results, liquidity, cash flow and our operational performance.

There could be unidentified risks involved with an investment in our securities; there is no anticipated liquidity of our securities.

The foregoing risk factors are not a complete list or explanation of the risks involved with an investment in our securities. Additional risks will likely be experienced that are not presently foreseen by the Company. Prospective investors must not construe the information provided herein as constituting investment, legal, tax or other professional advice. Before making any decision to invest in our securities, you should read this entire Prospectus and consult with your own investment, legal, tax and other professional advisors. An investment in our securities is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period of time and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect to the likelihood of the success or the business of the Company, the value of our securities, any financial returns that may be generated or any tax benefits or consequences that may result from an investment in the Company.

The Company’s failure to continue to attract, train, or retain highly qualified personnel could harm the Company’s business.

The Company’s success also depends on the Company’s ability to attract, train, and retain qualified personnel, specifically those with management and product development skills. In particular, the Company must hire additional skilled personnel to further the Company’s research and development efforts. Competition for such personnel is intense. If the Company does not succeed in attracting new personnel or retaining and motivating the Company’s current personnel, the Company’s business could be harmed.

The Company may be unable to respond to the rapid technological change in its industry and such change may increase costs and competition that may adversely affect its business.

Rapidly changing technologies, frequent new product and service introductions and evolving industry standards characterize the Company’s market. The continued growth of the internet and intense competition in the Company’s industry exacerbate these market characteristics. The Company’s future success will depend on its ability to adapt to rapidly changing technologies by continually improving the performance features and reliability of its products and services. The Company may experience difficulties that could delay or prevent the successful development, introduction or marketing of its products and services. In addition, any new enhancements must meet the requirements of its current and prospective users and must achieve significant market acceptance. The Company could also incur substantial costs if it needs to modify its products and services or infrastructures to adapt to these changes.

As our products, technology and methods are in early stages of development and commercialization, functionality and market acceptance cannot be predicted.

Some of the Company’s products, technology and methods are new and are only in early stages of development and commercialization. The Company is not certain that these products, technology and methods will function as anticipated or be desirable to its intended market. Also, some of the Company’s products, technology and methods may have limited functionalities, which may limit their appeal to consumers and put the Company at a competitive disadvantage. If the Company’s current or future products, technology or methods fail to function properly or if the Company does not achieve or sustain market acceptance, it could lose customers or could be subject to claims which could have a material adverse effect on the Company business, financial condition and operating results.

As is typical in a new and rapidly evolving industry, demand and market acceptance for recently introduced products, technology and methods are subject to a high level of uncertainty and risk. Because the market for the Company is new and evolving, it is difficult to predict with any certainty the size of this market and its growth rate, if any. The Company cannot guarantee that a market for the Company will develop or that demand for Company services will emerge or be sustainable. If the market fails to develop, develops more slowly than expected or becomes saturated with competitors, the Company’s business, financial condition and operating results would be materially adversely affected.

We need to establish and maintain an effective system of internal control, so we can to report our financial results accurately and prevent fraud. Any inability to report and file our financial results accurately and timely could materially harm our reputation and results of operations, and adversely impact the future trading price of our common stock.

Because of the Company’s limited resources, there are limited controls over financial information processing. The Company determined that its internal control over financial reporting was not effective as of December 31, 2017. The basis for the conclusions that such internal control was ineffective included the following considerations:

	●	We currently have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
	●	Additionally, there is a lack of formal process and timeline for closing the books and records at the end of each reporting period and such weaknesses restrict the Company’s ability to timely gather, analyze and report information relative to the financial statements.
	●	Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist.

Material risks associated with the above issues include the following:

	●	Because the Company currently has insufficient written policies and procedures with regard to financial reporting, this could cause the Company to be inefficient and potentially encounter errors in preparing its financial reports due to the lack of a written policy for the company to follow.
	●	Because there is a lack of formal process and timeline, this cold lead the Company not to be able to timely prepare its financial statements and could cause it to either file a report late or to a file a report which may contain some errors.
	●	Because the Company’s management is composed of a small number of persons, there is a lack of segregation of duties.

The Company is taking the following remediation initiatives in order to address the deficiencies identified in the Company’s internal control of financial reporting:

	●	The Company’s Chief Financial Officer is working to establish sufficient policies and procedures for financial statements and reporting and plans to have this completed by July 31, 2018.
	●	The Company’s Chief Financial Officer is also drafting a Code of Conduct and Ethics for the review and execution by the Company’s Officers, Directors, and employees and plans to have this completed by July 31, 2018.

●

The Company plans to hire additional staff, but currently Company is unable to hire additional staff to facilitate greater segregation of duties but will reassess its capabilities after completion of the Offering.

Risks associated with ineffective control over financial reporting include the following:

	●	Effective internal control is necessary for us to provide reliable financial reports and prevent fraud.
	●	If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital.

If we fail to protect our intellectual property, our business could be adversely affected.

Our viability will depend, in part, on our ability to develop and maintain the proprietary aspects of our technology and brands to distinguish our products and services from our competitors’ products and services. We presently rely on patents-pending, copyrights, trademarks, trade secrets, and confidentiality provisions to establish and protect our intellectual property. However, we cannot assure you that we will be able to adequately protect our technology or other intellectual property from misappropriation in the U.S. and abroad. This risk may be increased due to the lack of any patent and/or copyright protection. Any patent issued to us could be challenged, invalidated or circumvented or rights granted thereunder may not provide a competitive advantage to us. Furthermore, patent applications that we file may not result in issuance of a patent, or, if a patent is issued, the patent may not be issued in a form that is advantageous to us.

Trade secrets, in particular, are difficult to protect. We enter into confidentiality or non-disclosure agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third party’s confidential information developed by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property, and we enter into assignment agreements to perfect our rights.

Competitors may also harm our sales by designing products that mirror the capabilities of our products or technology without infringing on our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue. In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the U.S., which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by us.

We may also find it necessary to bring infringement or other actions against third parties to seek to protect our intellectual property rights. Litigation of this nature, even if successful, is often expensive and time-consuming to prosecute and there can be no assurance that we will have the financial or other resources to enforce our rights or be able to enforce our rights or prevent other parties from developing similar technology or designing around our intellectual property.

Risks Related to Management and Personnel

We depend heavily on members of senior management, Daniel Weadock, Chief Executive Officer and Director, Rick Gutshall, Former Interim Chief Executive Officer and current Director and Annette Knebel, Chief Financial Officer and Director, the loss of any member of senior management could harm the Company.

Our future business and results of operations depend in significant part upon the continued contributions of Daniel Weadock, our Chief Executive Officer and Director, Rick Gutshall, our former Interim Chief Executive Officer and current Director and Annette Knebel, Chief Financial Officer and Director. If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled employees in addition to Mr. Weadock, Mr. Gutshall and Ms. Knebel, as needed, our business could suffer. Loss of Mr. Weadock’s, Mr. Gutshall’s and/or Ms. Knebel’s services could significantly deplete our institutional knowledge held by our existing senior management. We depend on the skills and abilities of these key employees in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.

We depend heavily on Chad Sykes, Founder, the loss of which would materially harm the Company.

Our future business and results of operations depend in significant part upon the continued contributions of our founder Chad Sykes. If we lose his services our business would suffer. Loss of Mr. Sykes’s services would significantly deplete our institutional knowledge and our ability to operate our business would be harmed. We depend on the skills and abilities of Mr. Sykes in managing the product acquisition, marketing and sales aspects of our business, any part of which would be harmed if we lose his services.

Most of our management has limited experience in managing the day-to-day operations of a public company and, as a result, we may incur additional expenses associated with the management of our Company.

Rick Gutshall, former Interim Chief Executive Officer and current Director, Annette Knebel, Chief Financial Officer and Director, and Daniel Weadock, our Chief Executive Officer and Director are responsible for the operations and reporting of our Company. While Ms. Knebel has experience in the management of small public companies, the requirements of operating as a small public company are new to most of our management. This lack of public company experience could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be costlier than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.

Because we do not have an audit committee, shareholders will have to rely on our Directors to perform this function.

We do not have an audit committee, nor do we have independent directors. The Board of Directors performs these functions as a whole. Thus, there is a potential conflict in that Board members who are also part of management will participate in discussions concerning audit issues that may affect management decisions.

Because directors and executive officers of the Company, as a group, currently and for the foreseeable future will continue to hold a substantial amount of the Company’s voting securities, this will reduce our other shareholders ability to have a say in the policies and operations of the Company.

Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The company’s directors and executive officers beneficially own approximately 11.76% of the Company’s outstanding common stock. Due to such significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management.

In addition, sales of significant amounts of shares held by our Officers and Directors, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Our relationship with the Selling Stockholder presents substantial risks.

There are substantial risks to investors as a result of the issuance of shares of our common stock to the Selling Stockholder pursuant to the Investment Agreement. These risks include risk of the Selling Stockholder’s non-performance under the Investment Agreement, dilution of stockholders’ percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed. As we depend upon Tangiers’s continuing funding of our Investment Agreement to continue much of our development, if there is no such continued funding our business plans and operations would be negatively affected.

Risks Related to Our Common Stock

We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

Our common stock is subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock rule.” Section 15(g) sets forth certain requirements for transactions in penny stock, and Rule 15g-9(d) incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the Exchange Act. The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. We are subject to the SEC’s penny stock rules.

Since our common stock is deemed to be penny stock, trading in the shares of our common stock is subject to additional sales practice requirements on broker-dealers who sell penny stock to persons other than established customers and accredited investors. “Accredited investors” are persons with assets in excess of $1,000,000 (excluding the value of such person’s primary residence) or annual income exceeding $200,000 or $300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such security and must have the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document, prepared by the SEC, relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in an account and information about the limited market in penny stocks. Consequently, these rules may restrict the ability of brokers-dealers to trade and/or maintain a market in our common stock and may affect the ability of the Company’s stockholders to sell their shares of common stock.

There can be no assurance that our shares of common stock will qualify for exemption from the penny stock rule. In any event, even if our common stock was exempt from the penny stock rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.

The issuance of a large number of shares of our common stock could significantly dilute existing stockholders and negatively impact the market price of our common stock.

On October 12, 2017, we entered into the Investment Agreement with the Selling Stockholder providing that, upon the terms and subject to the conditions thereof, the Selling Stockholder is committed to purchase, on an unconditional basis, shares of common stock at an aggregate price of up to $2,000,000 over the course of its 36-month term.

The Selling Stockholder will receive shares of common stock if we elect to sell shares to it under the Investment Agreement. The number of shares we will sell under the Investment Agreement will be determined, in general, based on 80% of the actual market price. As a result, if we sell shares of common stock under the Investment Agreement, we will be issuing common stock at below market prices, which could cause the market price of our common stock to decline, and if such issuances are significant in number, the amount of the decline in our market price could also be significant. In general, we are unlikely to sell shares of common stock under the Investment Agreement at a time when the additional dilution to stockholders would be substantial unless we are unable to obtain capital to meet our financial obligations from other sources on better terms at such time. However, if we were to do so, the dilution that could result from such issuances could have a material adverse impact on existing stockholders and could cause the price of our common stock to fall rapidly based on the amount of such dilution.

The shares of our common stock we may issue in the future and the options we may issue in the future may have an adverse effect on the market price of our common stock and cause dilution to investors.

We may issue shares of common stock and warrants to purchase common stock pursuant to private offerings and we may issue options to purchase common stock to our executive officers pursuant to their employment agreements. The sale, or even the possibility of sale, of shares pursuant to a separate offering or to executive officers could have an adverse effect on the market price of our common stock or on our ability to obtain future financing.

We may sell additional equity securities in the future and your ownership interest in the Company may be diluted as a result of such sales.

We intend to sell additional equity securities in order to fully implement our business plan. Such sales will be made at prices determined by our Board of Directors based on the market value of the Company and could be made at prices less than the price of the shares of our common stock purchased pursuant to this Prospectus, in which case, investors could experience dilution of their investment.

There is a limited public market for our common stock. Trading in our common stock on the OTCQB has been subject to wide fluctuations.

Our common stock is currently quoted for public trading on the OTCQB. The trading price of our common stock has been subject to wide fluctuations and the public market is limited. Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.

We have provided indemnification of Officers and Directors at our expense and limit their liability which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.

We have entered into indemnification agreements with Officers and Directors that eliminate the personal liability of our Directors for monetary damages to the fullest extent possible under the laws of the State of Texas or other applicable law. These provisions eliminate the liability of our Directors and our shareholders for monetary damages arising out of any violation of a Director of his fiduciary duty of due care. Under Texas law, however, such provisions do not eliminate the personal liability of a Director for (i) breach of the Director’s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the Director derived an improper benefit. These provisions do not affect a Director’s liabilities under the federal securities laws or the recovery of damages by third parties.

We do not intend to pay dividends on any investment in the shares of stock of our Company and any gain on an investment in our Company will need to come through an increase in our stock’s price, which may never happen.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our Company will need to come through an increase in the stock’s price. This may never happen, and investors may lose all of their investment in our Company.

The Selling Stockholder will pay less than the then-prevailing market price for our common stock.

Our common stock to be issued to the Selling Stockholder pursuant to the Investment Agreement will be purchased at 80% of the average of the two lowest closing bid prices of our common stock during the pricing period applicable to the put notice, provided, however, an additional 10% will be added to the discount of each put if (i) we are not DWAC eligible and (ii) an additional 15% will be added to the discount of each put if we are under DTC “chill” status on the applicable date of the put notice. Currently the Company is both DTC and DWAC eligible. Tangiers has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Tangiers sells the shares, the price of our common stock could decrease. If our stock price decreases, Tangiers may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.

Your ownership interest may be diluted and the value of our common stock may decline by exercising the put right pursuant to the Investment Agreement.

Pursuant to the Investment Agreement, when we deem it necessary, we may raise capital through the private sale of our common stock to the Selling Stockholder at a discounted price. Because the put price is lower than the prevailing market price of our common stock, to the extent that the put right is exercised, your ownership interest may be diluted.

Certain restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance of shares in connection with the Investment Agreement with Tangiers, and as such, Tangiers may sell a large number of shares, resulting in substantial dilution to the value of shares held by existing stockholders.

Tangiers has agreed, subject to certain exceptions listed in the Investment Agreement with Tangiers, to refrain from holding an amount of shares which would result in Tangiers or its affiliates owning more than 9.99% of the then-outstanding shares of our common stock at any one time. These restrictions, however, do not prevent Tangiers from selling shares of our common stock received in connection with a put, and then receiving additional shares of our common stock in connection with a subsequent put. In this way, Tangiers could sell more than 9.99% of the outstanding common stock in a relatively short time frame while never holding more than 9.99% at one time.

Risks Related to this Offering

Since our common stock is thinly traded, our stock price may be volatile and investors may have difficulty selling our shares.

Although our common stock trades on the OTCQB, there is limited trading in our common stock in the over-the-counter market. Such thinly traded, illiquid stocks are more susceptible to significant and sudden price changes than stocks that are widely followed by the investment community and that are actively traded on an exchange. Thus, we cannot assure investors that there will at any time in the future be an active trading market for our common stock. Our stock is not listed on a stock exchange and we currently do not intend to seek listing on an exchange. Even if we successfully list the common stock on a stock exchange, we nevertheless could not assure shareholders that an organized public market for our common stock would develop. Investors should purchase shares for long-term investment only and should purchase our securities if and only if they are capable of making and are seeking to make a long-term investment in the Company.

Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our common stock, which could depress the price of our common stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares of common stock, have an adverse effect on the market for our shares of common stock, and thereby depress our price per share of common stock.

Our securities are traded on the OTCQB, which may not provide as much liquidity for our investors as more recognized senior exchanges such as the NASDAQ Stock Market or other national or regional exchanges.

Our securities are quoted on the OTCQB Market. The OTC Markets are inter-dealer, over-the- counter markets that provide significantly less liquidity than the NASDAQ Stock Market or other national or regional exchanges. Securities traded on these OTC Markets are usually thinly traded, highly volatile, have fewer market makers and are not followed by analysts. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Markets. Quotes for stocks included on the OTC Markets are not listed in newspapers. Therefore, prices for securities traded solely on the OTC Markets may be difficult to obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any price.

Our stock price may be volatile, and you may not be able to sell your shares for more than what you paid or at all.

Our stock price may be subject to significant volatility, and you may not be able to sell shares of common stock at or above the price you paid for them or at all. The trading price of our common stock has been subject to fluctuations in the past and the market price of the common stock could continue to fluctuate in the future in response to various factors, including, but not limited to: quarterly variations in operating results; our ability to control costs and improve cash flow; announcements of innovations or new products by us or by our competitors; changes in investor perceptions; and new products or product enhancements by us or our competitors.

The Selling Stockholder may sell a large number of shares, resulting in substantial diminution to the value of shares held by existing stockholders.

Pursuant to the Investment Agreement, we are prohibited from delivering a Put Notice to the Selling Stockholder to the extent that the issuance of shares would cause the Selling Stockholder to beneficially own more than 9.99% of our then-outstanding shares of common stock. These restrictions however, do not prevent the Selling Stockholder from selling shares of common stock received in connection with the Equity Line and then receiving additional shares of common stock in connection with a subsequent issuance. In this way, the Selling Stockholder could sell more than 9.99% of the outstanding shares of common stock in a relatively short time frame while never holding more than 9.99% at any one time. As a result, existing stockholders and new investors could experience substantial diminution in the value of their shares of common stock. Additionally, we do not have the right to control the timing and amount of any sales by the Selling Stockholder of the shares issued under the Equity Line.

Risks Relating to Competitive Factors

We compete in an industry characterized by extensive research and development efforts and rapid technological progress and we may be unable to compete effectively.

New developments occur and are expected to continue to occur at a rapid pace in the marijuana industry, and there can be no assurance that discoveries or commercial developments by our competitors will not render some or all of our potential products obsolete or non-competitive, which could have a material adverse effect on our business, financial condition and results of operations. We expect to compete with fully integrated and well-established companies in the near and long term. Most of these companies have substantially greater financial, manufacturing and marketing experience and resources than us and represent substantial long-term competition. Such companies may succeed in discovering and developing products and/or extraction processes more rapidly than us and may be more successful than us in manufacturing, sales and marketing.

Strategic collaborations may never materialize or may fail.

We intend to explore a variety of strategic collaborations with existing marijuana growers, dispensaries and related businesses. Currently, we cannot predict what form such strategic collaborations might take. We are likely to face significant competition in seeking appropriate strategic collaborators, and these strategic collaborations can be complicated and time consuming to negotiate and document. We may not be able to negotiate strategic collaborations on acceptable terms, or at all, and we are unable to predict when, if ever, we will enter into any such strategic collaborations due to the numerous risks and uncertainties associated with establishing strategic collaborations.

Risks Relating to Intellectual Property Protection

Our pending patent application may not be approved.

Our success depends on our ability to protect our proprietary process and methods. Although we filed a patent application regarding our extraction and conversion process, there can be no assurances that such application will result in the issuance of a patent. Further, even if a patent is issued, there can be no assurances that future patent claims will be held valid and enforceable against third-party infringement or that our methods and processes will not infringe any third-party patent or intellectual property or that such claims will afford us protection against competitors with similar technology or permit the commercialization of our products without infringing third-party patents or other intellectual property rights.

If we are unable to protect the secrecy of our proprietary process and methods, we may not be able to compete effectively or operate profitably.

Our success will depend, in large part, on our ability to protect the secrecy of our patent pending process and methods. As we hire employees, enter into strategic collaborations and bring our products to market, maintaining this secrecy will become increasingly difficult, especially if our patent application is denied or the issuance of the patent is delayed. If competitors are made aware of the aspects of our proprietary process and methods that are not protected by a patent, they may be able to duplicate them or independently develop similar or alternative technologies without infringing on our intellectual property rights.

We may rely on trade secrets to protect our process and methods and may attempt to protect these trade secrets, in part, with confidentiality and non-disclosure agreements with our employees, consultants, partners, strategic collaborators and certain contractors, but there can be no assurance that these agreements would not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors. If our patent pending proprietary process, methods or related trade secrets become known to competitors, we may be unable to compete effectively, resulting in a material adverse effect on our business, financial condition and results of operations.

We may be subject to litigation with respect to the ownership and use of intellectual property that will be costly to defend or pursue and uncertain in its outcome.

Our success also will depend, in part, on refraining from infringing patents or otherwise violating intellectual property owned or controlled by others. Others may have filed patent applications or have received, or may obtain, issued patents in the United States or elsewhere relating to aspects of our extraction processes or methods, and they may institute litigation against us to protect their intellectual property rights. Such litigation, regardless of the merits, would be extremely expensive and detrimental to our operations. Additionally, it is uncertain whether the issuance of any third-party patents will require us to alter our products or processes, obtain licenses, or cease certain activities. If any licenses are required, there can be no assurance that we will be able to obtain any such licenses on commercially favorable terms, if at all, and if these licenses are not obtained, we might be prevented from pursuing the development and commercialization of certain of our potential products.

Other Risks

There are other unidentified risks.

The risks set forth above are not a complete list of the risks facing our potential investors. We acknowledge that there may exist significant risks yet to be recognized or encountered to which we may not be able to effectively respond. There can be no assurance that we will succeed in addressing these risks or future potential risks, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations.

USE OF PROCEEDS

This Prospectus relates to shares of our common stock that may be offered and sold from time to time by the Selling Stockholder. We will receive no proceeds from the sale of shares of common stock by the Selling Stockholder in this Offering. The proceeds from the sales will belong to the Selling Stockholder. However, we will receive proceeds from the sale of the Commitment Shares to the Selling Stockholder pursuant to the Investment Agreement.

We intend to use the proceeds that we may receive from the sale of the Commitment Shares for general corporate and working capital purposes, for the construction of a demonstration facility in Tempe, Arizona, to secure development rights in Parachute, Colorado, or for other purposes that our Board of Directors, in its good faith, deems to be in the best interest of the Company. Proceeds from the Commitment Shares are expected to be used as follows:

Category	25% of Offering		50% of Offering		75% of Offering		100% of Offering
General working capital	$	275,000	$	275,000	$	500,000	$	1,000,000
Development rights, Parachute, Colorado	$	225,000	$	225,000	$	225,000	$	225,000
Facility Construction, Tempe, Arizona	$	—	$	500,000	$	775,000	$	775,000

There can be no assurance that we will sell any of the Commitment Shares to the Selling Stockholder under the Investment Agreement. We cannot provide any assurance that we will be able to draw down any or all of the Total Commitment, such that the proceeds received would be a source of financing for us.

We intend to raise additional capital through equity and debt financing, as needed, though there cannot be any assurance that such funds will be available to us on acceptable terms, on an acceptable schedule, or at all. If we are unable to secure additional capital, we may not be able to complete some or all of our business plans outlined in this Prospectus.

We will pay for expenses of this offering, except that the Selling Stockholder will pay any broker discounts or commissions or equivalent expenses and expenses of its legal counsel applicable to the sale of its shares.

DILUTION

The sale of our common stock to the Selling Stockholder in accordance with the Investment Agreement will have a dilutive impact on our stockholders. As a result, our net loss per share could increase in future periods and the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise our put option, the more shares of our common stock we will have to issue to the Selling Stockholder to draw down pursuant to the Investment Agreement. If our stock price decreases during the pricing period, then our existing stockholders would experience greater dilution.

Investment Agreement with Tangiers

On October 12, 2017, we entered into an Investment Agreement with Tangiers. Pursuant to the terms of the Investment Agreement, Tangiers committed to purchase up to $2,000,000 of our common stock over a period of up to 36 months. From time to time during the 36-month period commencing from the effectiveness of the registration statement, we may deliver a put notice to Tangiers which states the dollar amount that we intend to sell to Tangiers on a date specified in the put notice. The maximum investment amount per notice must be no more than 200% of the average daily trading dollar volume of our common stock for the eight (8) consecutive trading days immediately prior to date of the applicable put notice and such amount must not exceed an accumulative amount of $250,000. The minimum put amount is $5,000. The purchase price per share to be paid by Tangiers will be the 80% of the of the average of the two lowest closing bid prices of the common stock during the pricing period applicable to the put notice, provided, however, an additional 10% will be added to the discount of each put if (i) we are not DWAC eligible and (ii) an additional 15% will be added to the discount of each put if we are under DTC “chill” status on the applicable date of the put notice.

In connection with the Investment Agreement with Tangiers, we also entered into a Registration Rights Agreement with Tangiers, pursuant to which we agreed to use our best efforts to, within 45 days of October 12, 2017, file with the SEC a registration statement, covering the resale of 5,000,000 shares of our common stock underlying the Investment Agreement with Tangiers.

On January 16, 2018, the Company also issued a fixed convertible promissory note to Tangiers for the principal sum of $550,000. The promissory note maturity date is 6 months from the effective date of each payment under the note. The initial principal sum due under this note was $82,500. On February 13, 2018, the Company and Tangiers entered into Amendment #1 to this promissory note. Pursuant to the amendment, Tangiers agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in original issue discount). On April 17, 2018, the Company and Tangiers entered into Amendment #2 to this promissory note, and pursuant to this amendment Tangiers agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in OID) under the note and the Company agreed that within two months of the payment it would use the proceeds as follows: $27,000 for estimated audit fees and $24,000 for estimated attorney fees related to the Company’s Form 10-K and Form S-1/A, and $68,000 for two months of general and administrative expenses.

The 5,000,000 shares being offered pursuant to the Investment Agreement with Tangiers represents 16.69% of the shares issued and outstanding, assuming that the Selling Stockholder will sell all of the shares offered for sale. The 5,000,000 shares being offered pursuant to this Prospectus represent 22.72% of the shares issued and outstanding held by non-affiliates of our Company. The Investment Agreement with Tangiers is not transferable, and any benefits attached thereto may not be assigned.

At an assumed purchase price under the Investment Agreement of $0.13 (equal to 80% of the closing price of our common stock of $0.16 on May 31, 2018), we will be able to receive up to $650,000 in gross proceeds, assuming the sale of the entire 5,000,000 put shares being registered hereunder pursuant to the Investment Agreement. At an assumed purchase price of $0.13 under the Investment Agreement, we would be required to register 10,384,615 additional shares to obtain the balance of $1,350,000 under the Investment Agreement. Due to the floating offering price, we are not able to determine the exact number of shares that we will issue under the Investment Agreement. There are substantial risks to investors as a result of the issuance of shares of our common stock under the Investment Agreement with Tangiers. These risks include dilution of stockholders’ percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed.

We intend to sell Tangiers, periodically, our common stock under the Investment Agreement and Tangiers will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Tangiers to raise the same amount of funds, as our stock price declines.

The proceeds received from any “puts” tendered to Tangiers under the Investment Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that our Board of Directors (“Board”), in its good faith deem to be in the best interest of the Company.

We may have to increase the number of our authorized shares in order to issue the shares to Tangiers if we reach our current amount of authorized shares of common stock. Increasing the number of our authorized shares will require Board and stockholder approval. Accordingly, because our ability to draw down any amounts under the Investment Agreement with Tangiers is subject to a number of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $2,000,000 under the Investment Agreement with Tangiers.

Tangiers Promissory Notes

The Company has issued the following promissory notes to Tangiers:

	●	“Note 1”: $550,000 Promissory Note dated March 22, 2017 and amendment thereto dated October 10, 2017.
	●	“Note 2”: $50,000 Promissory Note dated October 12, 2017.
	●	“Note 3”: $550,000 Promissory Note dated January 16, 2018, amendment thereto dated February 13, 2018, and amendment thereto dated April 17, 2018.

As of December 31, 2017, the balance under Note 1 was $519,000, which includes $44,000 guaranteed interest. As of December 31, 2017, Note 1 can be converted into 3,280,255 shares of the Company’s common stock.

On January 9, 2018, the Company issued 899,685 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $100,000 of Note 1 at a conversion price of $0.11. On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $25,000 of Note 1 at a conversion price of $0.09. On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $25,000 of Note 1 at a conversion price of $0.08. On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $50,000 of Note 1 at a conversion price of $0.07.

As of May 31, 2018, the balance under Note 1 is $319,000, which includes $44,000 guaranteed interest. As of May 31, 2018, Note 1 can be converted into 1,378,205 shares of the Company’s common stock.

The Company issued Note 2, a fixed convertible promissory note on October 12, 2017, to Tangiers for the principal sum of $50,000 as a commitment fee. The Note 2 maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers at any time into shares of the Company’s common stock at a conversion price of $0.1666 per share. Upon a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retied prior to its maturity date, Tangiers’ conversion rights under Note 2 would be adjusted such that the conversion price would be the lower of (i) $0.1666 or (ii) b) 65% of the average of the two lowest trading prices of the Company’s common stock during the 10 consecutive trading days prior to the date on which Tangiers elects to convert all or part of the note. As of December 31, 2017 and May 31, 2018, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of December 31, 2017 and May 31, 2018, Note 2 can be converted into 300,120 shares of the Company’s common stock.

Note 3 is convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. However, if Note 3 is not paid back on or before the maturity date, defined in Note 3 as a “Maturity Default”, the conversion price of Note 3 shall then be adjusted to be equal to the lower of: (i) $0.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion of Note 3. As of May 31, 2018, the balance under Note 3 is $374,220, which includes $27,720 guaranteed interest. As of May 31, 2018, Note 3 can be converted into 1,155,000 shares of the Company’s common stock.

Further, the amount of shares issuable upon conversion stated above are estimates only and any conversion of Note 1, Note 2 or Note 3, by Tangiers is solely at its discretion and the notes may never be converted, and further if a conversion does occur, the timing of such conversion would affect the potential number of common stock shares issued upon any such conversion based on the outstanding note amount and applicable conversion price at the time of any such conversion.

The execution of the amendment to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. Further, the Company is in default on the funds provided pursuant to Note 1 Amendment #1 as the maturity date of April 10, 2018 for this draw has expired. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. On May 12, 2018, the Company defaulted on Note 2. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 2 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 21, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 2 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion in the future. Other than the foregoing, none of the above listed notes are currently in default.

SELLING STOCKHOLDER

This Prospectus relates to the possible resale from time to time by the Selling Stockholder named in the table below of any or all of the shares of common stock that has been or may be issued by us to the Selling Stockholder under the Investment Agreement. For additional information regarding the transaction relating to the issuance of common stock covered by this Prospectus, see “Management’s Discussion and Analysis of Results of Operation and Financial Condition – Liquidity and Capital Resources – Arrangements with Selling Stockholder” above. We are registering the shares of common stock pursuant to the provisions of the Registration Rights Agreement in order to permit the Selling Stockholder to offer the shares for resale from time to time.

The table below presents information regarding the Selling Stockholder and the shares of common stock that it may offer from time to time under the Investment Agreement pursuant to this Prospectus. This table is prepared based on information supplied to us by the Selling Stockholder and reflects holdings as of May 31, 2018. The number of shares in the column “Maximum Number of Shares of Common Stock to be Offered Pursuant to this Prospectus” represents all of the shares of common stock that the Selling Stockholder may offer under this Prospectus. The Selling Stockholder may sell some, all or none of its shares offered by this Prospectus. We do not know how long the Selling Stockholder will hold the shares before selling them, and we currently have no agreements, arrangements, or understandings with the Selling Stockholder regarding the sale of any of the shares.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act and includes shares of common stock with respect to which the Selling Stockholder has voting and investment power. With respect to the Equity Line with the Selling Stockholder, because the purchase price of the shares of common stock issuable under the Equity Purchase Agreement is determined on each settlement date, the number of shares that may actually be sold by us under the Equity Purchase Agreement may be fewer than the number of shares being offered by this Prospectus. The fourth column assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this Prospectus.

	Number of Shares of Common Stock Owned Prior to Offering					Maximum Number of Shares of Common Stock to be Offered	Number of Shares of Common Stock Owned after Offering
Name of Selling Stockholder	Number		Percent			Pursuant to this Prospectus	Number (1)		Percent
Tangiers Global, LLC (2)(3)		—		—	%	5,000,000		—		—	%

* Represents beneficial ownership of less than one percent of the outstanding shares of our common stock.

(1) Assumes the sale of all shares being offered pursuant to this Prospectus.

(2) The Selling Stockholder’s principal business is that of a private investment firm. We have been advised that the Selling Stockholder is not a member of FINRA, or an independent broker-dealer, and that neither the Selling Stockholder nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Justin Ederle holds the voting and dispositive powers with respect to the shares of common stock being registered for sale by the Selling Stockholder.

(3) As further described in detail above, we have issued 3 convertible promissory notes to Tangiers. The conversion of debt into common stock underlying these notes could cause additional dilution to our stockholders and could have further adverse effects on the market price for our securities or on our ability to obtain future financing. As of May 31, 2018, 2,833,325 shares of the Company’s common stock are issuable upon conversion of the notes issued by the Company to Tangiers. However, the foregoing amounts are estimates only and any conversion of the notes by Tangiers is in solely at its discretion and the notes may never be converted, and further if a conversion does occur, the timing of such conversion would affect the potential number of common stock shares issued upon any such conversion based on the outstanding note amount and applicable conversion price at the time of any such conversion. Further, the Company has reserved 18,523,997 shares of its common stock for issuance upon any potential conversion of the notes held by Tangiers, in the event that the Company cannot pay of such notes prior to any conversion of same. The Company has the ability to repay the indebtedness to Tangiers without recourse to monies to be received under the Investment Agreement if the Company chooses to use funds received for that purpose.

PLAN OF DISTRIBUTION

The Selling Stockholder may, from time to time, sell any or all of their securities covered hereby which were acquired under the Investment Agreement on the OTC Bulletin Board or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at market prices prevailing at the time of sale, prices related to prevailing market prices, fixed prices or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	exchange distributions in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlements of short sales;
	●	transactions through broker-dealers that agree with the Selling Stockholder to sell a specified number of such securities at a stipulated price per security;
	●	writings or settlements of options or other hedging transactions, whether through an options exchange or otherwise;
	●	combinations of any such methods of sale; or
	●	any other methods permitted pursuant to applicable law.

The Selling Stockholder may also sell securities under Rule 144 under the Securities Act, if available, rather than under this Prospectus.

Broker-dealers engaged by the Selling Stockholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the Selling Stockholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this Prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this Prospectus (as supplemented or amended to reflect such transaction).

The Selling Stockholder and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Because the Selling Stockholder is deemed to be an “underwriter” within the meaning of the Securities Act, it will be subject to the Prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this Prospectus. The Selling Stockholder has advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholder.

We have agreed to keep this Prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholder without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) the sale of all of the securities pursuant to this Prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholder or any other person. We will make copies of this Prospectus available to the Selling Stockholder and have informed it of the need to deliver a copy of this Prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

DESCRIPTION OF SECURITIES

General

The following summary includes a description of material provisions of our capital stock; however, the description does not purport to be complete and is subject to, and is qualified by, our Articles of Incorporation and Bylaws, which are filed as exhibits to the Registration Statement of which this Prospectus is a part.

Capital Stock

We are authorized to issue 5,000,000 shares of Series A Preferred Convertible Stock, $0.01 par value, and 50,000,000 shares of common stock, $0.001 par value.

Preferred Stock

As of May 31, 2018, we had 750,000 shares of Series A Preferred Convertible Stock issued and outstanding.

The stated value of each issued share of Series A Convertible Preferred Stock shall be deemed to be $0.40, as the same may be equitably adjusted whenever there may occur a stock dividend, stock split, combination, reclassification or similar event affecting the Series A Convertible Preferred Stock. There are no dividends payable on the Series A Convertible Preferred Stock. Each holder of outstanding shares of Series A Convertible Preferred Stock shall be entitled to cast the number of votes for the Series A Convertible Preferred Stock in an amount equal to the number of whole shares of common stock into which the shares of Series A Convertible Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Holders of Series A Convertible Preferred Stock shall vote together with the holders of common stock, and with the holders of any other series of Preferred Stock the terms of which so provide, together as a single class.

If the Company shall at any time after the date of issuance of the Series A Convertible Preferred Stock issue any additional shares of common stock except exempted securities, without cash consideration or for a cash consideration per share less than the Series A Conversion Price in effect immediately prior to such issue, then the Series A Conversion Price shall be adjusted by being reduced, concurrently with such issue, to a price equal to the sale price of the additional shares of common stock. If the Company issues securities convertible into shares of common stock rather than common stock, the adjustment shall be based upon the conversion price of the convertible securities so issued.

Upon any liquidation, dissolution or winding-up of the Company under Texas law, whether voluntary or involuntary, the holders of the shares of Series A Convertible Preferred Stock shall be paid an amount equal to the aggregate stated value of their shares of Series A Convertible Preferred Stock, before any payment shall be paid to the holders of common stock, or any other stock ranking on liquidation junior to the Series A Convertible Preferred Stock, an amount for each share of Series A Convertible Preferred Stock held by such holder equal to the sum of the Stated Value thereof.

Common Stock

As of May 31, 2018, we had 24,957,471 shares of common stock issued and outstanding.

The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.

All shares of common stock now outstanding are fully paid for and non-assessable. We refer you to our certificate of incorporation, bylaws and the applicable statutes of the State of Texas for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section.

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.

Dividends

We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Dividend rights of both our common and preferred shareholders will entitle them to the same dividend that other shareholders of the same class receive.

Warrants

On September 26, 2016, the Company issued the Rifici Note to Chuck Rifici Holdings, Inc., relating to the issuance of $225,500 in aggregate principal including a $204,000 actual payment of purchase price plus a 10% original issue discount. In conjunction with the issuance of the Rifici Note, the Company issued a one-year warrant to purchase 250,000 shares of common stock at an exercise price of $0.30 per share. The warrant expired September 26, 2017 and was not exercised.

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2016		500,000		0.40		—
Granted		—		—		—
Exercised		—		—		—
Canceled/Forfeited		250,000		0.50		—
Expired		250,000		0.30		—
Balance December 31, 2017		—	$		$	—

There were no warrants outstanding as of December 31, 2017.

For the year ended December 31, 2016, the following warrants were outstanding:

Exercise Price Warrants Outstanding

Warrants
Exercisable

Weighted

Average
Remaining
Contractual

Life

Aggregate

Intrinsic

Value

0.30 - 0.50

500,000

0.69

32,500

Lattice Binomial model was used to value aggregate intrinsic value.

Options

There are no outstanding options to purchase our securities.

Registration Rights

In accordance with the Registration Rights Agreement, the Selling Stockholder is entitled to certain rights with respect to the registration of the shares of common stock issued in connection with the Investment Agreement (the “Selling Stockholder Registrable Securities.

We are obligated to file a registration statement with respect to the Selling Stockholder Registrable Securities. Upon becoming effective, such registration statement shall remain effective at all times until the earliest of (i) the date that the Selling Stockholder may sell all of the Selling Stockholder Registrable Securities required to be covered by such registration statement without restriction pursuant to Rule 144 and without the need for current public information as required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable), and (ii) the date the Selling Stockholder no longer owns any of the Selling Stockholder Registrable Securities. We must also take such action as is necessary to register and/or qualify the Selling Stockholder Registrable Securities under such other securities or blue-sky laws of all applicable jurisdictions in the United States.

We will pay all reasonable expenses incurred in connection with the registrations described above. However, we will not be responsible for any broker or similar concessions or any legal fees or other costs of the Selling Stockholder.

DESCRIPTION OF THE BUSINESS

Organization

We are a Texas corporation formed on November 23, 2011. Our principal executive office is located at 5300 East Freeway Suite A, Houston, Texas 77020. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”).

On August 4, 2017, we consummated a reverse triangular merger (the “Alamo Merger”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Merger, the member interests (“Alamo Surviver Members”) of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist.

In addition to the foregoing, following the closing of the Alamo Merger, and Alamo CBD being successfully awarded a provisional or full license to produce and dispense cannabis in the State of Texas, Indoor Harvest will issue to the individual Alamo Surviver Members, an additional Eight Million Five Hundred Thousand Dollars ($8,500,000) of newly-issued shares of common stock of Indoor Harvest, par value $0.001, based upon the three (3) day average closing price of the Company’s common stock, as quoted on the OTCQB, prior to the time of issuance.

Additionally, upon Alamo CBD successfully being registered and licensed by the DEA to produce and dispense cannabis under federal law, Indoor Harvest will issue to the individual Alamo Surviver Members, an additional Two Million Five Hundred Thousand Dollars ($2,500,000) cash payment, or newly-issued shares of common stock of Indoor Harvest, par value $0.001, based upon the three (3) day average closing price of the Company’s common stock, as quoted on the OTCQB, prior to the time of issuance, at the option of the individual Alamo Surviver Member. A combination of cash and common stock may be elected by Alamo Surviver Member individually.

Description of Business

Indoor Harvest, through its brand name Indoor Harvest®, is a technology company focused on producing bio pharma grade cannabis for research and development and a provider of advanced cultivation methods and processes for the cannabis industry. We are seeking to use the proprietary technology we have developed to become a registered producer and seller under the CSA of pharmaceutical grade cannabis for research and targeted treatment of specific medical symptoms by third parties.

We have developed a patent pending aeroponic process of growing cultivars in an air or mist environment without the use of soil or an aggregate growing medium. Aeroponic production differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as a growing medium and essential minerals to sustain plant growth, aeroponics is conducted without a growing medium. Because water is used in aeroponics to transmit nutrients, it is sometimes considered a type of hydroponics. Our aeroponic process and production methods provide an ability to test the phenotypic plasticity of cannabis and to test and develop specific phenotypic response. Phenotypic plasticity refers to the changes in cannabis morphology and physiology due to its adaption to a unique environment and its impact on phytochemical production.

We, through Alamo CBD, have applied to produce and dispense low-tetrahydrocannabinol cannabis under the Texas Compassionate Use Program. THC is a psychotropic cannabinoid and is the principal psychoactive constituent of cannabis. We have signed a binding LOI with Zoned Properties outlining three independent pending agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. The Company intends to generate revenue from production of cannabis under the TCUP, through related engineering, project management, equipment leasing and technology licensing from constructed facilities in Tempe, Arizona and Parachute, Colorado and through the development and licensing of related environmental and climate recipes.

Industry and Regulatory Overview

The United States federal government regulates drugs through the CSA, which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug, which is viewed as highly addictive and having no medical value. The United States Federal Drug Administration (“FDA”) has not approved the sale of cannabis for any medical application. Doctors may not prescribe cannabis for medical use under federal law, however, they can recommend its use under the First Amendment. In 2010, the United States Veterans Affairs Department clarified that veterans using medicinal cannabis will not be denied services or other medications that are denied to those using illegal drugs.

The above State legalization efforts conflict with the CSA, which makes cannabis use and possession illegal on a national level. On August 29, 2013, the U.S. Department of Justice issued a memorandum providing that where states and local governments enact laws authorizing cannabis-related use, and implement strong and effective regulatory and enforcement systems, the federal government will rely upon states and local enforcement agencies to address cannabis activity through the enforcement of their own state and local narcotics laws. The memorandum further stated that the DOJ’s limited investigative and prosecutorial resources will be focused on eight priorities to prevent unintended consequences of the state laws, including, but not limited to, distribution of cannabis to minors, preventing the distribution of cannabis from states where it is legal to states where it is not, and preventing money laundering, violence and drugged driving.

On December 11, 2014, the DOJ issued another memorandum about its position and enforcement protocol with regard to Indian Country, stating that the Eight Priorities in the Cole Memo would guide the United States Attorneys’ cannabis enforcement efforts in Indian Country. On December 16, 2014, as a component of the federal spending bill, the Obama administration enacted regulations that prohibits the DOJ from using funds to prosecute state-based legal medical cannabis programs.

As of May 31, 2018, 29 states, the District of Columbia and Guam allow their citizens to use medical cannabis through de-criminalization. Voters in the States of Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington have legalized cannabis for adult recreational use.

The Company continues to follow and monitor the actions and statements of the Trump administration, the DOJ and Congress’ positions on federal law and cannabis policy. As the possession and use of cannabis is illegal under the CSA, we could be deemed to be aiding and abetting illegal activities through the equipment we intend to sell in the U.S. and directly violating federal law if we should begin producing Cannabis under State law. Under federal law, and more specifically the CSA, the possession, use, cultivation, and transfer of cannabis is illegal. Our equipment could be used by persons or entities engaged in the business of possession, use, cultivation, and/or transfer of cannabis.

As a result, law enforcement authorities, in their attempt to regulate the illegal use of cannabis, could seek to bring an action or actions against us, including, but not limited to, a claim of aiding and abetting another’s criminal activities or directly violating the CSA. The federal aiding and abetting statute provides that anyone who “commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal” (18 U.S.C. §2(a).) Enforcement of federal law regarding cannabis would likely result in the Company being unable to proceed with our business plans, could expose us to potential criminal liability and could subject our properties to civil forfeiture. Any changes in banking, insurance or other business services may also affect our ability to operate our business.

Investment Agreement with Tangiers

The Company also issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee on October 12, 2017. The promissory note maturity date is May 12, 2018. On February 13, 2018, the Company and Tangiers entered into Amendment #1 to this promissory note issued on January 16, 2018 pursuant to which Tangiers agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in original issue discount) under the January 16, 2018 note. On April 17, 2018, the Company and Tangiers entered into Amendment #2 to this promissory note, and pursuant to this amendment Tangiers agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in OID) under the note and the Company agreed that within two months of the payment it would use the proceeds as follows: $27,000 for estimated audit fees and $24,000 for estimated attorney fees related to the Company’s Form 10-K and Form S-1/A, and $68,000 for two months of general and administrative expenses.

There are substantial risks to investors as a result of the issuance of shares of our common stock under the Investment Agreement with Tangiers. These risks include dilution of stockholders’ percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed.

The proceeds received from any “puts” tendered to Tangiers under the Investment Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that our Board of Directors, in its good faith deem to be in the best interest of the Company.

Changes in Business Operations

CEA is the process of manipulating any agricultural technology to allow the farmer an ability to manipulate a crop’s environment to desired conditions. Technologies include greenhouse production, hydroponics, aquaculture, aquaponics and aeroponics. Controlled variables may include temperature, lighting, humidity, pH and nutrient analysis.

BIA is the process of locating CEA methods on, or in, mixed use buildings to provide synergy with the buildings infrastructure and the agriculture process. Earliest examples of BIA include the use of hydroponics, aeroponics and aquaponics, where waste heat is captured through the building’s existing heating, ventilation and air conditioning system as well as the combined use of solar, rainwater collection and evaporative systems. Current operating examples include such buildings as Eli Zabar’s rooftop greenhouse, The Sun Works Center for Environmental Studies, Gotham Greens, Sky Vegetables, Top Sprouts, Cityscape Farms, Dongtan, Masdar City, AeroFarms, Solar 2, Lufa Farms, BrightFarms, FarmedHere, Green Sense Farms, Green Spirit Farms and Big Box Farms. The term building-integrated agriculture was coined by Dr. Ted Caplow in a paper delivered at the 2007 Passive and Low Energy Cooling Conference in Crete, Greece.

The Company began generating revenue in late 2015 from its products and design-build, engineering, procurement and construction management services. Our products were designed for the production of aeroponic and hydroponic leafy greens, micro-greens, fruiting plants and herbs. Our fixtures and systems could also be adapted for a variety of other uses such as horticulture research, medicinal plant production, pharmaceutical plant production, plant cloning and hardwood propagation.

In mid-2016, the Company began efforts to separate its produce and cannabis related operations due to ongoing feedback from both clients and potential institutional investors. It was determined that the Company’s involvement in the cannabis industry was creating conflicts for clients and potential institutional investors wishing to work with the Company from the produce industry due to the public perception and political issues surrounding the cannabis industry. By late-2016, the Company had decided to cease actively selling its products and services to the vertical farming industry and to focus on utilizing the Company’s developed technology and methods for the cannabis industry. On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production.

Merger of Alamo CBD, LLC

On January 3, 2017, the Company signed a binding LOI with Alamo CBD to enter discussions to combine and create a medical cannabinoids pharmaceutical group. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“ Alamo Acquisition Sub”).

On August 4, 2017, we consummated a business combination (the “Alamo Merger”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Merger, the member interests (“Alamo Surviver Members”) of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist. The Company does not consider Alamo CBD as the predecessor of the Company. The Company acquired Alamo CBD as Alamo CBD had a pending license under the Texas Compassionate Use Act. The Company’s Board of Directors consists of 5 members, Dr. Lang Coleman and Rick Gutshall are the only Directors from Alamo CBD. Rick and Dr. Coleman are members of the Company’s compensation committee. Operations of the Company are managed by officers and employees of the Company. Alamo CBD does not have the ability to control operations or make decisions on behalf of the Company. However, Rick Gutshall and Dr. Lang Coleman may request actions for the Company’s board to consider.

On August 8, 2017, Chad Sykes, the Company’s Founder and Chief of Cultivation, returned 2,500,000 shares of common stock to the Company. Mr. Sykes voluntarily returned such shares in order to prevent dilution to the Company’s shareholders as a result of the merger and in order to facilitate the merger. The return of common stock by Chad Sykes was a non-cash transaction and reduced the common stock outstanding as of December 31, 2017. Mr. Sykes’ return of stock was valued $2,500, or at par value of $0.001 per share.

On September 6, 2017, the Company issued an aggregate of 7,584,008 shares of common stock to the members of Alamo CBD related to the Merger. The Company recorded goodwill at a fair value of $1,440,961 ($0.19 per share) based upon closing price per share of the Company’s common stock on the date the stock was issued. The Company subsumed into goodwill all intangible assets acquired in the transaction , which is Alamo CBD’s pending provisional or full license to produce and dispense cannabis in the State of Texas.

As of December 31,2017, the Company’s management decided to impair the goodwill created by the Alamo Merger, as there are doubts regarding when a license may be issued, as the license is pending and may, or may not ever be issued, and whether upon receipt of the license if it will lead to significant positive cash flows. The Company recorded an impairment of goodwill in the Statement of Operations for the year ended December 31, 2017.

Contractual Joint Venture with Alamo CBD and Vyripharm Enterprises, LLC

On March 23, 2017, Indoor Harvest entered into a Contractual Joint Venture Agreement by and between Vyripharm Enterprises, LLC (“Vyripharm”) and Alamo CBD, collectively the parties, pursuant to which the parties agreed to participate in an unincorporated joint venture (the “Joint Venture”) for the following business purposes:

●

The parties would work together to enhance the ability of Alamo CBD to apply for and obtain licensure, or a permit, to grow and/or dispense marijuana products for medical and/or consumer use, as the case may be:

In Texas, pursuant to the Texas Compassionate Use Act, as may be amended;

ii.

In Colorado, pursuant to recent Colorado legislation permitting foreign ownership of entities that grow and/or dispense marijuana products for medical and/or consumer use; and

iii.

Pursuant to recent United States Drug Enforcement Administration regulations which expand the opportunities for entities providing research involving marijuana and its chemical constituents, as referenced in 21 U.S.C. 822(a)(1) and 21 U.S.C. 823(a), et. seq.

●

To establish Alamo CBD as a supplier of a variety of medical use cannabis oil to Vyripharm for Vyripharm’s use in conducting research and development to create novel pharmaceutical and radiopharmaceutical compounds designed to image and treat certain debilitating diseases including, but not limited to epilepsy, post-traumatic stress disorder, Alzheimer’s, ALS, and other neurodegenerative diseases; and to establish Indoor Harvest as the project developer and engineering, procurement and construction group, in which Indoor Harvest is responsible for costs and efforts related to Alamo CBD’s efforts to become licensed under the Texas Compassionate Use Act and to meet its obligations under this Joint Venture agreement.

The initial term of the Joint Venture was to be five (5) years following the effective date, and the Joint Venture Agreement could be extended beyond this initial term by mutual consent of the parties. Pursuant to the Joint Venture terms, the Company agreed to contribute a total of $5,000,000 on the basis of $1,000,000 per year for each of the first five (5) years of the Initial Term. Should the Company fail to make payment under the Joint Venture, the agreement would terminate and neither party would have further obligation to the other.

The Company paid an initial down payment of $250,000 under the Joint Venture Agreement on March 30, 2017.

Background for the Contractual Joint Venture

The purpose of the above-described change in business and Joint Venture was twofold, as follows:

●

It would separate the Company’s cannabis and produce related operations, as we indicated was previously a goal.

●

It would put in place all elements necessary for the resulting Joint Venture, of which the resulting public reporting company would have a significant on-going interest, to become a registered producer under the federal CSA to produce cannabis.

As of December 1, 2017, only one entity, the University of Mississippi can legally manufacture Cannabis to supply researchers involved in the various studies about using cannabis to treat maladies such as PTSD or Epilepsy. On August 12, 2016, the DOJ and the DEA issued a policy statement on cannabis issues, as follows:

●

It is well known that the DOJ and DEA have said that cannabis would continue to be classified as a Schedule 1 drug, like heroin.

●

It is not so well known that the DOJ and DEA also reset the policy regarding entities that could legally manufacture cannabis to supply researchers involved in various clinical studies using cannabis to treat maladies such as PTSD or Epilepsy.

According to the policy statement, the purpose of this policy reset is to increase the number of U.S. entities registered under the CSA to grow (manufacture) cannabis to supply researchers on the effectiveness of medical grade cannabis in treating these and other maladies.

The CSA under subsection 823(a)(1) provides, DEA is obligated to register only the number of bulk manufacturers of a given schedule I or II controlled substance that is necessary to “produce an adequate and uninterrupted supply of these substances under adequately competitive conditions for legitimate medical, scientific, research, and industrial purposes.”

The policy statement (Federal Register Vol. 81) provided additional explanation on how the DEA would evaluate applications for such registration consistent with the CSA and the obligations of the United States under the applicable international drug control treaty. The Company had reviewed these guidelines and believed all applicable requirements which could not be met by the Company alone would be met by the following:

●

Our previous Cannabis Pilot Agreement and completed technology trials with Canopy Growth Corporation, a Canadian licensed producer under the Marihuana for Medical Purposes Regulations, had demonstrated that our aeroponic technology could augment and improve the quality and production of cannabis for use in cannabis research.

●

We believed that the proposed combination with Alamo and the joint venture with Vyripharm Enterprises, LLC, in which the Company would have an equity interest due to its combination with Alamo, would meet all the additional guidelines and conditions set forth regarding the expected required experience in handling of a controlled substance and its related research with cannabis for pharmaceutical use that is one of the conditions of the policy statement.

Voluntary Default of Joint Venture and Status of Application with DPS

As published in the Texas Department of Public Safety (“DPS”) Self-Evaluation Report, on page 543, question (D), dated September 29, 2017, the DPS originally interpreted the statute as requiring a market-based system by which the number and location of licensees are determined by market factors rather than by regulation – as not mandating or limiting the number of licensed distributors. It was originally understood that the applicants would be required to satisfy certain basic requirements prior to licensure, and the ability to maintain compliance with DPS guidelines will be evaluated through on-going audits and inspections.

In late 2016, the DPS modified its approach to restrict the number of licenses to three. This necessitated the development of a competitive review process, where three applicants were conditionally approved based on the review of the submitted application materials. Upon successful onsite inspection of their facilities, qualified applicants will be issued licenses. Because of this competitive review process, the Joint Venture group placed 16th out of 43 applicants and its application is currently considered pending by the DPS.

On June 30, 2017, the Company, Alamo CBD and Vyripharm entered into discussions to amend and extend the payment terms under the Joint Venture Agreement due to the group not being awarded one of the three initial provisional licenses to produce cannabis in Texas under the TCUP.

On August 7, 2017, after negotiations, the Company advised Vyripharm that it intended to voluntarily default on the Joint Venture Agreement and the Company wrote off the $250,000 down payment towards the Joint Venture investment and there is no further obligation by either party under the terms of the Joint Venture. The Company’s management determined that without a license to produce cannabis, the Company would not be able to fully utilize the intent of the Joint Venture partnership and the Company would be financially burdened by the ongoing Joint Venture terms. Both parties agreed that this decision would not impair either party’s ability to pursue a Joint Venture in the future, after the Company, or Alamo CBD, obtained license to produce cannabis.

The Company is a member and is working with the Medical Cannabis Association of Texas and expects both lobbying and legislative efforts currently being undertaken to result in the program being expanded, additional permits being awarded, and new legislation being introduced in 2019 to allow for a separate permitting process to conduct cannabis research in line with the CSA. There is no guarantee that these efforts will result in the Company obtaining a license or permit to produce cannabis in Texas or that legislation will be adopted allowing a separate licensing or permitting process for research purposes.

Our Current Product Portfolio

The company designs fully integrated controlled environment facilities technology for the cannabis industry that enables the manipulation of the plants environment to influence the phenotypic expression of the plant. This precision agriculture technology will be critical to developing true pharma grade cannabis and real personalized cannabis medicines. Our integrated controlled environment facility design includes our patent pending high pressure aeroponics, patent pending HVAC system design, leading LED lighting technology, in addition to a variety of sensors and control technologies.

The Company has developed and maintains a portfolio of equipment designs to include the Company’s patent pending high pressure aeroponic designs as well as flood and drain and floating raft designs. On August 4, 2017, the Company ceased all direct operations within the vertical farming industry. The Company intends to sell its portfolio of vertical farming designs through third party reseller agreements. The Company currently has pending agreements under the terms of the merger agreement with Alamo CBD to resell the Company’s products by Civic Farms, LLC and Bright Orchard Developments, Ltd. No agreements have been executed as of the date of this Prospectus. The Company has also begun early stage discussions with additional groups to resell the Company’s products. There is no guarantee the Company will be successful in securing licensing or reseller agreements. Below is a brief description of the Company’s products.

The Indoor Harvest® Modular HP-Aeroponics Platform

The system comprises of seven primary fixture components that consist of an Aeroponic Growth Tray (“AGT”), Aeroponic Growth Lid (“AGL”), Aeroponic Spray Manifold (“ASM”), Aeroponic Pressure Manifold (“APM”), Nutrient Delivery System (“NDS”), Water Reclamation and Recirculation System, and Lift Station. The combination of an AGT, AGL and ASM is known as an “HPA Table”. The combination of an APM and NDS is known as a “Nutrient Pump Skid”. Each of these individual modular fixtures are combined to create custom configurations suitable for any form of indoor growing environment.

Initially designed to produce leafy greens, micro-greens, fruiting plants and herbs, our fixtures can be easily adapted for a variety of other uses, such as horticultural research, medicinal plant production, plant cloning and hardwood propagation. A smaller version of our basic design was utilized at MIT CityFarm and our larger system has been independently tested by Canopy Growth Corporation. The results of these and the Company’s own internal trials has shown the following benefits over a more traditional hydroponic system:

● Up to a 95% reduction in water usage

● Up to a 70% reduction in fertilizers

● Accelerated growth rate

● Increased plant biomass

● Increased phytochemical content

● Elimination of growing mediums

● Sterile production

Below are pictures of the Company’s HPA Table’s and Nutrient Pump Skid being installed at Tweed Marijuana, Inc., a subsidiary of Canopy Growth Corporation:

The Indoor Harvest® Low Tide VFRack™ Platform

The Low Tide VFRack platform is an easy to install, commercial quality vertical farming system designed to produce microgreens, leafy greens and herbs. Each Low Tide VFRack™ System comes standard with 4 levels offering up to 128 sq. ft. of production or can support up to 18 individual 10”X20” trays per layer.

The system uses Botanicare 4ft X 8ft ID Low Tide Grow Trays and a 115 gallon or larger reservoir. Each unit comes complete with all pumps, plumbing, LED lighting and is ready to grow, just add plants and nutrients. The modular nature of the system allows for easy expansion. The Low Tide VFRack system is designed specifically for flood and drain operation and provides the following benefits:

● Integrated LED lighting

● Open slot face to accommodate unlevel floors

● Plug and play installation

● Reduced installation costs

● Unistrut based platform

Below are pictures of the Company’s Low Tide VFRack platform that were installed at Moon Flowers Farms:

The Indoor Harvest® Shallow Raft VFRack™ Platform

The Shallow Raft VFRack™ platform is an easy to install, commercial quality, shallow raft vertical farming system. Each Shallow Raft VFRack™ System comes standard with three levels, offering 216, 336, 432 and 864 plant sites. The system uses Botanicare 4ft X 8ft ID Grow Trays, 115 gallon or larger reservoir and 2ft X 4ft rafts and is designed for the production of leafy greens and herbs.

Each unit comes complete with all pumps, plumbing, LED lighting and is ready to grow, just add plants and nutrients. The modular nature of the system allows for easy expansion.

The Shallow Raft VFRack system is designed specifically for floating raft operation and provides the following benefits:

● Integrated LED lighting

● Open slot face to accommodate unlevel floors

● Plug and play installation

● Reduced installation costs

● Unistrut based platform

Below are pictures of the Company’s Shallow Raft VFRack:

Design-Build, Engineering, Procurement and Construction Services

On August 4, 2017, the Company ceased all outside Design-Build, Engineering Procurement and Construction (“DBEPC”) services for the Vertical Farming industry. The Company is currently in discussions with third party companies to handle the Company’s future DBEPC needs in the Cannabis industry. As part of our proprietary intellectual property and industry knowledge, we plan to continue to be actively involved in the design phase of these projects. Therein lies some of our core expertise and competitive advantage. No agreements have been executed and there is no assurance such agreements will be consummated.

Financing for Products and Services

On December 14, 2015, we entered into an agreement with Noesis, a financing provider for sellers of commercial building improvements, to provide financing programs for our products and services. Under the agreement, the Company would be provided access to multiple Noesis lenders that support lease/loan vehicles tailored for HVAC, lighting and controls, building equipment, municipalities and specialty projects. In addition, the Company was provided loan/lease vehicles for solar, energy service agreements and PACE vehicles. The Noesis platform provided a back-end proposal and quoting support system that integrates into the Company’s client sales platform. Due to the Company’s changes in business focus, the Company ceased offering financing through Noesis on August 4, 2017.

Operational Activities

Design Partnership with Freight Farms

On December 17, 2015 we entered into a design partnership with Freight Farms to jointly explore new cultivar platforms. Freight Farms, makers of the Leafy Green Machine shipping container farms, would leverage Indoor Harvest’s unique expertise as the leading design-build firm of indoor farms to explore innovative new applications for its Leafy Green Machine. Freight Farms launched in 2010 to create a more sustainable and connected food system by creating highly sustainable farms in shipping containers.

The companies planned to work together to explore how Freight Farms’ containerized approach to indoor farming could be deployed in new ways to reach into untapped markets, including those internationally, as well as applications for non-profits and pharmaceutical research. Freight Farms is already deployed by academic institutions, restaurants, wholesale produce distributors and small business owners. No projects ever materialized from this agreement and due to changes in the Company’s business as of August 4, 2017, no future projects are expected to be initiated.

MOA with IGES Canada Ltd .

On January 27, 2016 the Company entered into a Memorandum of Agreement (“MOA”) with IGES Canada Ltd. (“IGESCA”), a Canadian company that is a technology solution integrator in the vertical farming market. The MOA sets forth terms for a relationship between the Company and IGESCA to grow, market and sell vertical farming solutions globally.

Subject to the terms of the MOA, IGESCA and Indoor Harvest agreed to partner to market and sell Indoor Harvest’s solutions in conjunction with the IGESCA business platform to clients globally. Our responsibilities included delivering turnkey engineering, procurement and construction solutions for CEA facilities, ongoing support and access to financing options through Noesis for designated projects. The responsibilities of IGESCA include identifying new and concluding project engagements from the current potential portfolio of 15 facilities, ongoing operations and regulatory navigation.

Both Indoor Harvest and IGESCA agreed that any intellectual property, which was jointly developed and filed through activities covered under the MOA, could be used by either party for sales/marketing purposes with the consent of the other party which was to be set forth in initial guidance. All other intellectual property used in the implementation of the MOA would remain the property of the party that provided it. This property could be used by either party for purposes covered by the MOA but consent would be obtained from the owner of the property before using it for purposes not covered by the MOA. The MOA was to remain in effect for a period of three (3) years from the date of signing unless earlier terminated.

On July 13, 2016, we entered into a DBEPC, maximum guaranteed price agreement, for a 40,000 sq. ft. vertical farm project in Johnstown Ontario with IGESCA. The project was estimated at $11,374,500 with 5% of the total, $568,725 due upon the start of design work. Originally contracted to begin work on September 23, 2016, the project continued to run into delays and IGES was unable to secure funding for the project. On August 4, 2017, the Company ceased all efforts to support IGESCA projects due to changes in the Company’s business plans, to include five other pending projects which included Welland, Tyendinaga, Kingston, Galipeau and Easton.

TexAg Ventures, LLC

On July 27, 2016, we entered into a DBEPC, cost plus agreement, with TexAg Ventures, LLC, to provide full design and engineering, system prototyping and system testing of a custom vertical farming platform. An initial deposit of $35,000 was required to begin prototyping. Design and engineering services were to be provided free and remaining project costs would be deemed construction coordination services and billed at cost plus. As of September 30, 2016, 100% of the design work had been completed but the client had not provided the required deposit to begin prototyping. On August 4, 2017, we ceased efforts to support the project due to changes in the Company’s business plans.

Head North Agreement

In the Company’s initial effort to separate its cannabis and produce operations, on August 22, 2016 we entered into a memorandum of agreement with Head North LLC (“Head North”) to provide Head North with an exclusive period to negotiate an acquisition, merger, or joint venture, of our cannabis related operations in exchange for certain funding obligations.

On September 2, 2016, the Company received an executed subscription agreement for $375,000 of our Series A Preferred shares related to the terms outlined in our MOA. On September 23, 2016, we issued 30 day notice to Head North that we were terminating the agreement under Section VIII due to default under the terms of the MOA and a failure to fund its subscription.

Current Operations

On May 31, 2017, the Company notified Canopy Growth that it had completed the majority of work under Phase Two of its Cannabis Pilot. The Company installed 13 HPA Table systems and 1 custom built Nutrient Pump Skid at Canopy Growth for an internal economic pilot. During Phase Two, the Company submitted proposals to Canopy Growth for three designs for potential New IP development. Canopy Growth did not pursue these proposals to develop New IP and chose to procure only the Company’s HPA Table system and a custom built Nutrient Pump Skid that was integrated into existing fertigation and mechanical systems at Canopy Growth. As a result of integration into existing facilities, the Company provided Canopy Growth with a limited warranty. The Company additionally informed Canopy Growth that it would not seek continued development under the Cannabis Pilot. As a result, the Cannabis Pilot expired on December 18, 2017.

On July 10, 2017, Indoor Harvest Corp entered into a Cultivation Design Agreement with Bright Orchard Developments, Ltd., for the design of an aeroponic cannabis production facility by a pending licensed producer in Canada.

On October 11, 2017, the Company entered into a binding letter of intent (“LOI”) with Zoned Properties outlining three pending independent agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. Zoned Properties is an OTCQX quoted Company and strategic real estate development firm whose primary mission is to identify, develop, and lease sophisticated, safe, and sustainable properties in emerging industries, including the licensed medical cannabis industry.

Under the terms of the binding LOI, the two companies will work together to mutually agree upon terms, provisions and obligations of three simultaneous, independent agreements.

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Tempe Arizona Research Cultivation Site – an agreement for the development and installation of a research cultivation site utilizing Indoor Harvest’s cultivation technology and equipment within at most 2,500 square feet of space at Zoned Properties’ Tempe Medical Marijuana Business Park.

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Parachute Colorado Production Facility – an agreement for the development and operation of Zoned Properties’ Parachute Medical Marijuana Business Park and for Indoor Harvest to engage Zoned Properties as the exclusive Strategic Development Advisory.

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Texas Compassionate Use Program Applicant – an agreement for Indoor Harvest to engage Zoned Properties as the exclusive Strategic Development Advisory for Indoor Harvest’s anticipated future development located in Stockdale, Texas or at another location to be determined.

Execution of any of the three individual agreements is subject to, among other things, satisfactory due diligence and the negotiation and execution of definitive agreements, each of which will contain customary representations, warranties, covenants and closing conditions. There is no assurance that any or all of the agreements will be executed nor consummated.

The binding LOI includes non-refundable payments totaling $50,000 by Indoor Harvest to Zoned Properties. The payments are consideration for entering into the binding LOI and represents a 20% deposit to be applied towards the assignment of the Parachute Development Rights which have been valued at $250,000 within the binding LOI.

On October 26, 2017, the Company entered into a LOI with Harvest Air, LLC (“Harvest Air”) and on November 1, 2017, entered into a LOI with Biological Innovations and Optimization Systems, LLC (“BIOS Lighting”). The two companies plan to collaborate with Indoor Harvest towards the development of a fully integrated platform designed to provide cannabis producers the ability to manage and record phenotypic plasticity in the cannabis plant. By combining Indoor Harvest’s proven aeroponic methods, Harvest Air’s HVAC designs, and customized lighting solutions from BIOS Lighting, the three Companies plan to demonstrate an ability to manipulate and control phenotypic expression in the cannabis plant for the purpose of research and production of pharmaceuticals.

In addition to collaborative research and development, the group plans to develop advanced automation strategies to control the growth of cultivars with high pressure aeroponics by integrating power generation, HVAC, LED lighting systems, phytometric devices, and near-infrared technologies, into a fully integrated facilities package. By using real time measurements of plant physiological processes and precision management of the production facility environment, the group intends to offer scalable solutions and production methods designed specifically for cannabis phytochemistry and precise phytochemical production.

Prototype development will take place in Tempe, Arizona, as part of Indoor Harvest’s planned cannabis technology development described below. In exchange for Harvest Air and BIOS Lighting support and services, Indoor Harvest has agreed to exclusively utilize any developed hardware or strategies provided by both companies in its future developments in Parachute, Colorado and Stockdale, Texas, or other location in Texas approved under the TCUP as described in more detail below.

Tempe Arizona Research Cultivation Site

The Company plans to install 20 HPA Tables at an existing licensed medical cannabis production facility at Zoned Properties’ Tempe Medical Marijuana Business Park. The purpose of this project is to conduct a demonstration of the Company’s aeroponic technology while integrating LED and HVAC designs, provided by BIOS Lighting and Harvest Air, respectively. The resulting demonstration will be compared to traditional flood irrigation, HVAC and lighting methods. The Company plans to prepare a case study and white paper to showcase industry adoption value and to serve as a proof of concept for the construction of larger facilities in Parachute, Colorado and Stockdale, Texas, or other location in Texas approved under the TCUP.

Both Zoned Properties and Indoor Harvest will work together in good faith to mutually agree upon the terms, provisions and obligations of an agreement for the development, installation, and research of Indoor Harvest’s cultivation technology and equipment within at most 2,500 square feet of space at Zoned Properties’ Tempe Medical Marijuana Business Park located at 410 S. Madison Dr. Tempe, Arizona 85281. The Company expects to generate revenue from the Tempe, Arizona facility through future leasing and licensing agreements. The 20 HPA Table installation is expected to produce over 206 pounds of cannabis annually at under $150 per pound in cost of goods with an expected breakeven point of 430 pounds for the equipment. There is no assurance that any or all of the agreements will be executed nor consummated.

Parachute Colorado Production Facility

The Company has secured rights to develop Zoned Properties Parachute Medical Marijuana Business Park. The Company intends to construct a 25,000 square foot facility based on the technology developed and tested at the Tempe Arizona Research Cultivation Site and to generate revenue through the leasing of the facility and licensing of the Company’s technology to either a medical or recreational licensee, which has yet to be determined. The Company would additionally conduct research and development towards creating specific environmental and climate recipes for the production of cannabis in order to produce and replicate a desired phenotypic response. The Company also expects to file an application with the DEA to register the facility under the CSA and to obtain rights to acquire the operating license from the licensee upon changes in Colorado law, which currently does not allow direct ownership by a publicly traded Company.

Both Zoned Properties and Indoor Harvest will work together in good faith to mutually agree upon the terms, provisions and obligations of an agreement for the assignment and/or sale of Zoned Properties’ Parachute Development Rights for the Parachute Marijuana Business Park located at Lot #7 N. Diamond Loop Rd, Parachute, Colorado 81635. The agreement would include: (a) the assignment and/or sale of the Parachute Development Rights from Zoned Properties to Indoor Harvest, and (b) the engagement by Indoor Harvest of Zoned Properties as the exclusive Strategic Development Advisor for the Parachute Property. The Company has paid a $25,000 deposit towards securing these rights. There is no assurance that any or all of the additional agreements will be executed or that the Company will be successful in registering the facility with the DEA.

Texas Compassionate Use Program Applicant

We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense low-THC cannabis under the TCUP. The Company plans to partner with Zoned Properties, Harvest Air and BIOS Lighting to develop a 50,000 square foot facility in Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. Zoned Properties and Indoor Harvest will work together in good faith to mutually agree upon the terms, provisions and obligations of an Agreement for Indoor Harvest to engage Zoned Properties as the exclusive Strategic Development Advisory for Indoor Harvest’s development in Texas under the TCUP. The Company also expects to file an application with the DEA to register the facility under the CSA. The Company expects to generate revenue through the production and sale of cannabis under the TCUP. There is no assurance that any or all of the agreements will be executed or that the Company will be successful in obtaining a license to produce cannabis in Texas or in registering the completed facility with the DEA.

As published in the Texas DPS Self-Evaluation Report, on page 543, question (D), dated September 29, 2017, the DPS originally interpreted the statute as requiring a market-based system by which the number and location of licensees are determined by market factors rather than by regulation – as not mandating or limiting the number of licensed distributors. It was originally understood that the applicants would be required to satisfy certain basic requirements prior to licensure, and the ability to maintain compliance with DPS guidelines will be evaluated through on-going audits and inspections.

In late 2016, the DPS modified its approach to restrict the number of licenses to three. This necessitated the development of a competitive review process, where three applicants were conditionally approved based on the review of the submitted application materials. Upon successful onsite inspection of their facilities, qualified applicants will be issued licenses. Because of this competitive review process, Alamo CBD placed 16th out of 43 applicants and its application is currently considered pending by the DPS. The Company and other pending applicants have questioned the last minute modification in approach by the DPS and the lack of transparency in the reviewing process.

The Company is a member of and is working with the Medical Cannabis Association of Texas and expects both lobbying and legislative efforts currently being undertaken to result in the program being expanded, additional permits being awarded, and new legislation being introduced in 2019 to allow for a separate permitting process to conduct cannabis research in line with the CSA. There is no guarantee that these efforts will result in the Company obtaining a license or permit to produce cannabis in Texas or that legislation will be adopted allowing a separate licensing or permitting process for research purposes.

Research and Development

MIT CityFarm (MIT OpenAg)

On September 18, 2013, the Company entered into a Letter Agreement for the Transfer of Materials (“MIT Agreement”) with the Massachusetts Institute of Technology in response to a MIT Media Lab request for aeroponic system components and fixtures manufactured by Indoor Harvest to be used for the purpose of developing a wall facade aeroponic and hydroponic system, also known as the “Food Server”, as part of MIT’s Media Lab “Changing Places” project (“MIT CityFarm”) . Indoor Harvest was responsible for providing technical assistance and materials as a “Technical Systems Adviser”. Per the Company’s role as a Technical Systems Adviser, the Company was exposed to research that showed the potential for using aeroponics, LED lighting, controlled environments and sensor technologies in the development of environmental and climate recipes to achieve a specific phenotypic response of cultivars.

On March 14, 2017, the Company ceased all support for the MIT OpenAg Initiative, formerly MIT CityFarm, due to previous decisions by MIT CityFarm principals, in which the terms of the MIT Agreement were not honored due to concerns over the Company’s involvement with cannabis. The MIT Agreement required the acknowledgement by MIT CityFarm, of the use of any source materials, such as the Company’s aeroponic designs, in any publications reporting its use.

Below are pictures of the Company’s installation of aeroponic and hydroponic systems at MIT CityFarm:

Canopy Growth Cannabis Pilot

Based on knowledge gained while working with MIT CityFarm, the Company saw a business opportunity to use the Company’s technology and methods within the cannabis industry. On December 18, 2014, the Company entered into a Cannabis Production Pilot Agreement (“Cannabis Pilot”) with Canopy Growth Corporation (formerly Tweed Marijuana Inc.), a Canadian company. Canopy Growth Corporation (“Canopy Growth”) is a Toronto Stock Exchange listed company. Its wholly owned subsidiaries Tweed Inc., Tweed Farms Inc. (formerly Prime1 Construction Services Corp.), Bedrocan Canada and Spectrum Cannabis are licensed producers of medical cannabis in Canada. The principal activities of Canopy Growth are the production and sale of cannabis through its wholly owned subsidiaries as regulated by the Marihuana for Medical Purposes Regulations. The Cannabis Pilot was broken into two separate phases, as follows:

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During Phase One, tests were conducted using prototypes provided by Indoor Harvest. The purpose of Phase One was to test the initial design and evaluate the root mass development of various strains of cannabis chosen by Canopy Growth. Two trials were conducted during Phase One. Phase One recorded the growth rate, phytocannabinoid production, water usage, fertilizer usage and labor using the aeroponics systems provided by Indoor Harvest.

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During Phase Two, Canopy Growth was given the option to request Design Build services to be provided by Indoor Harvest. Indoor Harvest provided these services free of charge and provided projected costs associated with the manufacture and installation of new aeroponic designs (“New IP”). Canopy Growth was then provided the option to purchase equipment from Indoor Harvest based on these projected costs.

Phase One Cannabis Pilot

Trial 1: Strain Ghost Train Haze

In March 2015, we began a first trial under the Cannabis Pilot. A Cannabis Sativa dominant strain, Ghost Train Haze, was selected and 8 plants were grown in a 64-cubic foot root chamber HPA Table prototype using a “Screen of Green” cultivation method, in which plants are cropped and trained to produce a higher yield from a single plant. The initial Cannabis Pilot utilized 1040 watts of illumitex® brand LED lighting using the F3 Spectrum and 2,000 watts of Mogul based HPS lighting. The system was operated drain to waste, in which no water was recirculated or recaptured. The following results were recorded under the initial Cannabis Pilot.

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An increase of up to 91% in average dry yield under HPS lighting when compared to the existing average.

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An increase of up to 71% in average dry yield under LED lighting when compared to the existing average.

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An increase of up to 117% in liters of water per day/plant under HPS lighting.

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An increase of up to 183% in liters of water per day/plant under LED lighting.

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A decrease of up to 21% in nutrient use under HPS lighting and no change under LED lighting.

Trial 2: Strain UK Cheese

In December 2015, we began a second trial under our Cannabis Pilot with Canopy Growth and similar results were achieved confirming the initial trial results. The second trial utilized an increased plant count of 20 plants per HPA Table prototype and the strain selected was UK Cheese, a Cannabis Sativa and Cannabis Indica hybrid. The second trial also tested root mass differences between a prototype 64 cubic foot and a 32-cubic foot root chamber. The second trial utilized 1040 watts of illumitex® brand LED lighting using the X5 Spectrum and 2,000 watts of Double Ended based HPS lighting and used a “Screen of Green” cultivation method. The following results from the second trial were recorded:

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An increase of up to 86% in average dry yield under HPS lighting when compare to the existing average.

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An increase of up to 25% in average dry yield under LED lighting when compared to the existing average.

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An increase of up to 89% in liters of water per day/plant under HPS lighting.

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An increase of up to 70% in liters of water per day/plant under LED lighting.

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A decrease of up to 69% in nutrient use under HPS lighting and 72% decrease under LED lighting.

Trial 1 and 2 Summary

Indoor Harvest provided minimal instructional input during both trials. The Company believes the results of the Cannabis Pilot show the potential for the Company’s technology and that without any significant instructional support, operators can achieve significant gains in yield and reductions in costs. There was a noticeable difference recorded in the morphology of the Cannabis strains tested utilizing the Company’s aeroponic platforms over the baseline using drip irrigation and a coco medium. During the first trial, the strain tested showed a significant increase in the size of the plants fan leaves over the baseline methods leading to a potential increase of up to 150% in produced biomass.

The aeroponic systems provided showed a significant increase in growth rate during the vegetative stage, as compared to baseline methods. Additionally, there were noticeable differences in the development of roots under certain conditions and difference we’re recorded in phenotypic response. The results of both trials showed an ability to provide greater control over the root environment, provided an ability to monitor nutrient uptake, provided an increase in yield, showed a dramatic decrease in nutrient use and provided an ability to prevent contamination by eliminating mediums. The Company believes that with further development of additional automation, integration of LED, HVAC and controls that we can continue to improve on the performance of the Company’s technology and methods. All trials were conducted using primarily a drain to waste configuration in which system runoff was not recaptured or recycled.

Phase Two Cannabis Pilot

On July 6, 2016, we entered into Phase Two of our Cannabis Pilot with Canopy Growth Corporation and signed a design-build, DBEPC, cost plus contract with Tweed, a subsidiary of Canopy Growth, to construct a high Pressure Aeroponic production system.

On May 31, 2017, the Company notified Canopy Growth that it had completed the majority of work under Phase Two of its Cannabis Pilot. The Company installed 13 HPA Table systems and 1 custom built Nutrient Pump Skid at Canopy Growth for an internal economic pilot. The Company submitted proposals to Canopy Growth for three designs for potential New IP development under the Cannabis Pilot. Canopy Growth did not pursue these proposals and chose to integrate the Company’s HPA Table fixtures and a custom-built Nutrient Pump Skid into previously existing facility fertigation and mechanical systems at Canopy Growth. This integration further proved the Company’s fixture-based design allowing for custom installations based on an operator’s specifications. Canopy Growth has ongoing rights to purchase additional equipment from Indoor Harvest through a fixed cost-plus agreement but is under no obligation to do so. The Phase Two Cannabis Pilot expired December 18, 2017.

Below are pictures from Phase One and Phase Two of the Company’s Cannabis Pilot with Canopy Growth.

Tempe Arizona Demonstration Pilot

The Company has entered into letters of intent with Harvest Air and BIOS Lighting to collaborate with Indoor Harvest toward the development of a fully integrated platform designed to provide cannabis producers the ability to manage and record phenotypic plasticity in the cannabis plant. By combining Indoor Harvest’s proven patent pending aeroponic methods, Harvest Air’s patent pending HVAC designs, and patented lighting solutions from BIOS Lighting, the three companies plan to demonstrate an ability to manipulate and control phenotypic expression in the cannabis plant for the purpose of research and production of pharmaceuticals and to design modular facility infrastructure.

In addition to collaborative research and development, the group plans to develop advanced automation strategies to control the growth of cultivars with high pressure aeroponics by integrating power generation, HVAC, LED lighting systems, phytometric devices, and near-infrared technologies, into a fully integrated facilities package. By using real time measurements of plant physiological processes and precision management of the production facility environment, the group intends to offer scalable solutions and production methods designed specifically for Cannabis phytochemistry and precise phytochemical production.

Prototype development is planned to take place in Tempe, Arizona, as part of Indoor Harvest’s planned partnership with Zoned Properties. In exchange for Harvest Air and BIOS Lighting support and services, Indoor Harvest has agreed to exclusively utilize any developed hardware or strategies provided by the partners in developments at Parachute, Colorado and Stockdale, Texas, or other location in Texas approved under the TCUP.

Research and development expenses were $6,376 for the year ended December 31, 2017, and $16,184 for the year ended December 31, 2016.

Intellectual Property

The Company relies on a combination of patent law, trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights, which are primarily our brand names, product designs and marks.

The Company’s primary trademark is “Indoor Harvest.” This trademark was registered (Registration. Number 4,795,471) in the United States on August 18, 2015. This registration will stay active as long as the Company continues to use the trademark in commerce. A declaration of “continued use” of the trademark under 15 U.S.C. § 1058 is due after February 18, 2021 and before February 18, 2022. An optional declaration of “incontestability” of the trademark, which makes the validity of the trademark harder to challenge by competitors or infringers, is also planned to be filed under 15 U.S.C. § 1065 after Feb. 18, 2021 and before February 18, 2022.

The Company filed a patent application (Serial Number 14/120,275) with the United States patent office related to an invention titled: “modular aeroponic system and related methods.” The inventor is Chad Sykes, our sole Founder and Chief of Cultivation, who assigned the patent application to the Company. The application has priority to May 14, 2013. The Company and the patent office have exchanged correspondence on several occasions related to the scope of the patent rights requested.

The Company filed a continuation patent application, in the first quarter of 2018, based on the most recent correspondence from the patent office. In that action, the patent office asked the Company to justify the patentability of its invention over several prior art references in related technology fields. The Company prepared a response, through its intellectual property counsel, Buche & Associates, P.C. While the patent application is still under review, the Company continues to use the term “patent pending” on all published materials related to the invention. There is no guarantee that a patent will be granted.

Plan of Expanded Operations

Our plan of expanded operations for the next 12 months, assuming we secure the necessary funding, is set forth in “Liquidity and Capital Resources” section below.

Sales and Marketing

We intend to offer our products through licensing and reseller agreements. We are currently developing our marketing plans for both production and technology sales, which may include some or all of the following marketing methods:

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Internet and Social Media. - Allows us to build an online presence, community and engage with our Industry Peer Groups

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Internet Mail - The use of online mail campaigns allows us to build a database of subscribers to reach a broader audience within targeted markets. A direct online campaign may consist of a letter of introduction and monthly newsletters.

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Marcom collateral materials which will include a brochure highlighting our company featuring our products and services

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Trade Shows and Special Events - We intend to participate in industry trade shows and events in order to create market awareness for its products and services. We may also cross promote, co-brand and sponsor key conferences and other industry events as relevant and appropriate.

Marketing our products in the U.S. in state and local jurisdictions where cannabis is legal is still uncertain due to the uncertain legal status of the growth, sale and use of cannabis due to conflicting laws under which what is illegal federally is to varying extents legal under certain state laws to the contrary, and even greater uncertainty as to what would constitute ancillary illegal activities such as aiding or abetting if any such direct actions are deemed illegal. The Company cannot predict with any accuracy whether even if direct illegality laws were enforced, whether any ancillary related laws such as aiding and abetting would, if ever, be enforced. If such laws are enforced this could adversely affect the Company’s planned and current operations.

Significant Customers

For the years ended December 31, 2017 and December 31, 2016, the Company had a concentration of sales as follows:

	December 31, 2017					December 31, 2016
Customer	Revenue ($)		Percentage			Revenue ($)		Percentage
Tweed (Canopy Growth Corporation)	$	—		—	%	$	80,620		50	%
ER Michigan (Michigan State University)	$	—		—	%	$	28,385		18	%
Urbanika Farms	$	—		—	%	$	27,600		17	%
University of Arizona CEAC	$	—		—	%	$	18,626		11	%
GSS Colorado	$	—		—	%	$	5,000		2	%
PH Research Platform	$	—		—	%	$	3,765		2	%
Total	$	—		—	%	$	163,996		100	%

Competition and Market Position

Vertically Integrated Companies

Broadly speaking we compete with vertically integrated technology companies seeking to produce pharma grade cannabis for research and development of new personalized medicines. Companies in this space would include some of the current global players like Canopy Growth and Aurora along with smaller players like Surna, Terra Tech and GB Sciences.

Production Competition

There are a number of companies seeking to take the development and manufacture of pharmaceutical grade cannabis to the next level and they would certainly be considered competitors. These companies would include Bedrocan, CanniMed, BOL Pharma, and Sira Naturals.

Since 1968, the University of Mississippi has been the sole registered producer of cannabis and its constituents under the CSA. Working under a contract with the National Institute on Drug Abuse (“NIDA”), University of Mississippi supplies cannabis and its constituents to the NIDA Drug Supply Program, which is the sole source supply of cannabis used by researchers to study its potential harmful and beneficial effects. However, certain members of the scientific community have questioned the standards employed by University of Mississippi. In a 2017 PBS NewsHour report, the quality of the University of Mississippi’s cannabis was questioned, and the report contained accusations of mold contamination and that in some instances, cannabis tested positive for lead. The University of Mississippi produces cannabis primarily on a 12-acre outdoor farm, under direct sunlight, exposed to the elements, with no ability to control environmental or climate related impact of phenotypic response.

Cannabis contains over 113 cannabinoids and over 200 terpenes, as well as hundreds of other chemical compounds. In 1998, research conducted by S. Ben-Shabat and Raphael Mechoulam, introduced the phrase “Entourage Effect” to cannabinoid science. The Entourage Effect represents a novel endogenous cannabinoid molecular route. This new scientific discovery opens up the ability to provide whole plant and whole person caregiver synergy treatments over isolated compound pharmacological dosages. Other cannabinoids and terpenes that contribute to the clinical effects of cannabis have been espoused as an Entourage Effect.

The Entourage Effect is a combination of chemicals produced through the phenotypic response of cannabis. Phenotypic response, while governed by the specific genotype, can be manipulated and altered by changes in the environment and climate selected during production. It is therefore known, that precise control over both the environment and climate conditions can produce specific, and consistent phenotypic response in cannabis. Indoor Harvest has developed tested and proven technology and methods through the use of Building Integrated Agriculture that can allow such precise control over environmental and climate conditions. This allows Indoor Harvest to produce a superior quality and consistent Entourage Effect over the production methods of the University of Mississippi and provides researchers another pathway for discovery by providing an ability to develop specific phenotypic response specific to the research being conducted. The Company believes this provides a competitive advantage and offering currently not being provided to cannabis researchers or developers of cannabis medicines.

Technology Competition

There are two companies that currently manufacture high pressure aeroponic systems, Agrihouse™ and Aerofarms™. These companies are currently engaged in the manufacture and sales of commercial aeroponic vertical farming systems for produce production and have had limited or no use in the cannabis industry. These systems can only be used in a single mode with high pressure aeroponics and offer limited sizing options. Our system is capable of operating in dual modes, both low pressure and high pressure, and our aeroponic system is available in optional sizes that our competitors currently do not offer. There are also companies such as general Hydroponics® and Botanicare® that manufacture aeroponic and hydroponic growing systems for the hobbyist. These systems are only available in low pressure aeroponics and require individual reservoirs. They also are offered in limited sizes and are not designed for commercial operation. These systems only provide a single mode of operation.

Additionally, we have one established aeroponic competitor in the cannabis industry, AEssense Corporation. AEssense has developed an aeroponic platform under the brand name AEtrium. The AEtrium is a full system design, which utilizes low pressure aeroponics as opposed to high pressure aeroponics. The AEtrium is a standalone, full system design and not a fixture-based design such that Indoor Harvest has developed. We believe our fixture-based design and facilities approach allows us to develop fully customized installations that our competitors cannot offer.

We will be a small competitor in the industry. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do. We believe based upon management’s knowledge of the industry that we are the first company to develop and offer a fixture based, fully integrated aeroponic biomanufacturing platform for the cannabis industry. Instead of relying on a product- based design, we have developed individual fixtures that can be used in whole, or in part, to create a variety of modular designs of any scale, or size. By breaking our platform down into individual, independent fixtures, we offer a level of customizability that currently is not offered by our competitors.

Manufacturing

The Company plans to source our products and accessories from third party manufacturing companies that manufacture products in part using tooling we own, in accordance with our specifications, and subject to our patent pending intellectual property rights. We currently own tooling to produce HDPE aeroponic trays in 48”X96”X12” and 48”X96”X24” sizes through a process known as rotational molding and thermoforming. We also own tooling to produce thermoformed molds in 24”X48” for acrylonitrile butadiene styrene (“ABS”) plastic.

All of our products and fixtures are made using very common fabrication and manufacturing methods. We have access to numerous companies around the world that offer metal fabrication, powder coating and plastic thermoforming and rotational molding. We contract and source from companies based on geographic location and volume ability. We can transport our tooling from one manufacturer to another and in some cases we may contract to have new tooling built depending on the volume of a client’s order. Because we use common manufacturing methods and because our products are designed with these common manufacturing methods in mind, we are able to meet any scale or project size. Any volume limits or lead times based on available manufacturing will be discussed with the client during the design phase and pricing phase. The capacity limits are those of our suppliers and manufacturers, not of ours. If we have more orders than these suppliers and manufactures can supply parts and/or complete third-party manufacturing in any month, we will advise our client of a delay in the delivery time. We have no formal agreements or contracts with any manufacturer and place orders based on a case by case basis.

Employees

As of May 31, 2018, we have five full-time employees.

Governmental Regulation and Certification

Except as set forth below, we are not aware of any material governmental regulations or approvals for any of our products or services.

As the possession and use of cannabis is illegal under the CSA, we could be deemed to be aiding and abetting illegal activities through the equipment we intend to sell, lease and license in the U.S. to grow cannabis. Additionally, we would be violating federal law should we begin to manufacture and dispense cannabis under the TCUP. Under federal law, and more specifically the CSA, the possession, use, cultivation, and transfer of cannabis is illegal. Our equipment could be used by persons or entities engaged in the business of possession, use, cultivation, and/or transfer of cannabis. As a result, law enforcement authorities, in their attempt to regulate the illegal use of cannabis, could seek to bring an action or actions against us, including, but not limited, to a claim of aiding and abetting another’s criminal activities or directly violating federal law by manufacturing or distributing cannabis. The federal aiding and abetting statute provides that anyone who “commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.”

Cannabis is a Schedule-I controlled substance and is illegal under federal law. Even in such states that have legalized the use of cannabis, its use remains a violation of federal law. Since federal law criminalizing the use of cannabis preempts state laws that legalize its use, strict enforcement of federal law regarding cannabis would likely result in our inability to proceed with our business plan, notably with respect to our plans for cannabis cultivation, production and research. In addition, our assets, including real property, cash, equipment and other goods, could be subject to asset forfeiture because cannabis is still illegal at the federal level should we begin to manufacture and distribute cannabis under the TCUP.

In February 2017, the Trump administration made announcements that there could be “greater enforcement” of federal laws regarding cannabis. To this end, on January 4, 2018, the DOJ suspended certain Obama era protections set forth previously in the Cole Memo, as such term is defined above, which was replaced with a new Memorandum titled with the subject “Marijuana Enforcement” from Attorney General Jeff Sessions which provides that each U.S. Attorney has the discretion to determine which types of cannabis-related cases should be federally prosecuted, thus ending the broad safe harbor provided under the Cole Memo.

Any such future enforcement actions could have a material adverse effect on our business and results of operations. The Company plans to continue to follow and monitor the actions and statements of the Trump administration, the DOJ and Congress’ positions on federal law and cannabis policy.

Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not a party to any current, pending or threatened litigation.

Emerging Growth Company Status

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions.

We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act.

DESCRIPTION OF PROPERTY

Our Offices

Our headquarters are located at 5300 East Freeway, Suite A, Houston, Texas 77020, where we lease office space under a contract effective March 1, 2014, expiring on April 30, 2019. The monthly rental cost for this facility under the lease is approximately $4,452. We are currently actively seeking to get out of this lease due to our change in business plan as of August 4, 2017, and have as of February 1, 2018, entered into a sublease for this lease with a tenant who is paying $2,000 per month under the lease reducing our total monthly expenses thereunder to $2,452.

We believe that our existing office facilities are adequate for our needs at this time, but are actively seeking to get out of the lease of the existing office and after the foregoing is completed, we’ll seek to obtain new office space, and we believe that such space can be secured on commercially reasonable terms.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by Item 304 of Regulation S-K.

DETERMINATION OF OFFERING PRICE

The offering price for the shares sold to the Selling Stockholder under the Investment Agreement will be equal to 80% of the average of the two lowest closing bid prices of the common stock during the pricing period applicable to the put notice, To the extent that the disparity between the offering price and market price of our common stock is material, such disparity was determined by us to be fair in consideration of the Selling Stockholder establishing an equity line to facilitate our ongoing operations.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTCQB under the symbol “INQD”. The following table sets forth the quarterly high and low sale prices for our common shares for the last two completed fiscal years and the subsequent interim periods. The prices set forth below represent interdealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions. The following table sets forth, for the periods indicated, the high and low closing sales prices of our common stock:

2017	High		Low
Quarter Ended March 31	$	0.39	$	0.37
Quarter Ended June 30	$	0.20	$	0.19
Quarter Ended September 30	$	0.19	$	0.15
Quarter Ended December 31	$	0.35	$	0.12

2016	High		Low
Quarter Ended March 31	$	0.56	$	0.30
Quarter Ended June 30	$	0.74	$	0.40
Quarter Ended September 30	$	0.63	$	0.17
Quarter Ended December 31	$	0.90	$	0.21

At May 31, 2018, we had 24,957,471 outstanding shares of common stock and approximately 68 shareholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of bank, brokers and other nominees.

We have not paid any cash dividends on our common stock to date. Any future decisions regarding dividends will be made by our Board of Directors. We do not anticipate paying dividends in the foreseeable future but expect to retain earnings to finance the growth of our business. Our Board of Directors has complete discretion on whether to pay dividends. Even if our Board of Directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance.

Holders of Common Stock

We have 68 record holders of our common stock, as of May 31, 2018.

Dividends

Penny Stock Regulations

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our common stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability of investors to sell their common stock in the secondary market.

FINANCIAL STATEMENTS

Financial Statements for the Years Ended December 31, 2017 and 2016		Page
Indoor Harvest, Corp.
Report of Independent Registered Public Accounting Firm		F-1

Consolidated Balance Sheets as of December 31, 2017 and 2016		F-2

Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016		F-3

Consolidated Statement of Changes in Stockholders’ Equity for the Years Ended December 31, 2017 and 2016		F-4

Consolidated Statements of Cash Flow for the Years Ended December 31, 2017 and 2016		F-5

Notes to the Consolidated Financial Statements		F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Indoor Harvest Corp

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Indoor Harvest Corp (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2017, and the related notes (collectively referred to as the consolidated financial statements). These consolidated financial statements are the responsibility of the Company’s management. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Thayer O’Neal Company, LLC

Thayer O’Neal Company, LLC

We have served as the Company’s auditor since 2013.

Houston, Texas

April 17, 2018

F- 1

INDOOR HARVEST CORP

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

	2017			2016
ASSETS
Current assets:
Cash	$	35,453		$	78,219
Accounts receivable		—			34,853
Other receivable		—			7,323
Inventory		—			2,360
Prepaid rent		4,452			—
Unused commitment fee		50,000			—
Total current assets		89,905			122,755

Furniture and equipment, net		24,623			158,418
Security deposit		12,600			12,600
Intangible asset, net		5,892			7,604
Total assets	$	133,020		$	301,377

LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	89,033		$	55,797
Convertible notes payable, net of debt discount of $27,014 and $152,617, respectively		668,912			122,383
Derivatives liability, net of discount of $213,453 and $0, respectively		341,464			—
Note payable, net of discount of $0 and $15,714, respectively		—			209,786
Accrued payroll		6,653			7,142
Deferred rent		6,239			8,513
Note payable - current portion		7,520			6,790
Billing in excess of costs and estimated earnings		—			20,155
Total current liabilities		1,119,821			430,566

Long term liabilities:
Note payable		12,823			20,342
Total liabilities		1,132,644			450,908

Stockholders’ deficit:
Series A Convertible Preferred stock: $0.01 par value, 5,000,000 shares authorized; 750,000 and 250,000 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		7,500			2,500
Common stock: $0.001 par value, 50,000,000 shares authorized; 25,503,678 and 15,213,512 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		25,502			15,213
Additional paid-in capital		7,376,196			3,829,528
Accumulated deficit		(8,408,822	)		(3,996,772	)
Total stockholders’ deficit		(999,624	)		(149,531	)
Total liabilities and stockholders’ deficit	$	133,020		$	301,377

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements

F- 2

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	2017			2016
Revenue	$	—		$	163,996

Cost of sales		—			111,581

Gross profit		—			52,415

Operating expenses
Depreciation and amortization expense	$	51,507		$	51,484
Research and development		1,625			16,184
Loss on investment in joint venture		250,000			—
Impairment of goodwill		1,440,961			—
Professional fees		418,092			108,093
General and administrative expenses		1,061,493			1,129,711
Total operating expenses		3,223,678			1,305,472

Loss from operations		(3,223,678	)		(1,253,057	)

Other income (expense)
Other income (expense)		7,196			52,323

Interest expense		(163,047	)		(16,427	)
Derivatives interest expense		—			(66,980	)
Amortization of debt discount		(515,814	)		(438,032	)
Amortization of debt issuance costs		—			(20,000	)
Amortization of original issuance discount		—			(22,500	)
Loss on debt settlement		—			(131,944	)
Loss on sale of equipment		(73,750	)		(36,627	)

Change in fair value of embedded derivative liability		(442,957	)		(141,756	)
Total other income (expense)		(1,183,372	)		(821,943	)

Net loss	$	(4,412,050	)	$	(2,075,000	)

Net loss from continuing operations per common share:
Net loss from continuing operations per share, basic and diluted	$	(0.22	)	$	(0.16	)

Weighted average number of common shares outstanding:
Basic and diluted		20,234,995			12,742,137

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements

F- 3

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	Series A Convertible Preferred Stock, $0.01 Par Value						Common Stock, $0.001 Par Value						Additional Paid in		Accumulated			Total Stockholders’ Equity
	Shares			Amount			Shares			Amount			Capital		Deficit			(Deficit)
Balances, January 1, 2015		—			—			11,204,571		$	11,204		$	2,233,663	$	(1,921,772	)	$	323,095

Issuance of common stock
For cash		—			—			100,000			100			49,900		—			50,000
For services		—			—			1,327,380			1,327			464,097		—			465,424
Convertible debt converted into common stock		—			—			2,581,561			2,582			200,737		—			203,319
Beneficial conversion feature		—			—			—			—			316,269		—			316,269
Debt discount on warrants		—			—			—			—			30,243		—			30,243
Derivative liability		—			—			—			—			412,119		—			412,119

Issuance of preferred stock for cash		250,000			2,500			—			—			122,500		—			125,000

Net loss for the year ended December 31, 2016		—			—			—			—			—		(2,075,000	)		(2,075,000	)

Balances, December 31, 2016		250,000		$	2,500			15,213,512		$	15,213		$	3,829,528	$	(3,996,772	)	$	(149,531	)

Issuance of common stock
For cash		—			—			2,060,000			2,060			821,940		—			824,000
For services		—			—			1,549,840			1,550			565,380		—			566,930
Convertible debt converted into common stock		—			—			1,179,651			1,178			173,823		—			175,001
Beneficial conversion feature		—			—			—			—			120,333		—			120,333
Derivative liability		—			—			—			—			101,493		—			101,493
Conversion of preferred stock into common shares		(250,000	)		(2,500	)		416,667			417			35,321		—			33,238
For Alamo CBD acquisition		—			—			7,584,008			7,584			1,433,377		—			1,440,961

Issuance of preferred stock for cash		750,000			7,500			—			—			292,501		—			300,001

Voluntary return of stock by related party		—			—			(2,500,000	)		(2,500	)		2,500		—			—

Net loss for the year ended December 31, 2017		—			—			—			—			—		(4,412,050	)		(4,412,050	)

Balances, December 31, 2017		750,000		$	7,500			25,503,678		$	25,502		$	7,376,196	$	(8,408,822	)	$	(999,624	)

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements

F- 4

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2017 and 2016

	2017			2016
Cash flows from operating activities:
Net loss from continuing operations	$	(4,412,050	)	$	(2,075,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		51,507			51,484
Loss on sale of equipment		73,750			36,626
Loss on debt settlements		—			131,944
Amortization of original issue discount		—			22,500
Amortization of debt discount		515,814			438,032
Amortization of debt offering costs		—			20,000
Loss on impairment of goodwill		1,440,961			—
Loss on investment in joint venture		250,000			—
Derivative interest expense		—			66,980
Change in fair value of embedded derivative liability		442,957			141,756
Stock issued for services - related party		159,930			—
Stock issued for services		407,000			465,424
Change in:
Accounts receivable		34,853			17,024
Other receivable		7,323			—
Inventory		2,360			4,641
Prepaid expense		(4,452	)		1,697
Accounts payable and accrued expenses		33,236			15,763
Deferred rent		(2,274	)		(1,265	)
Accrued compensation - officers		(489	)		—
Costs and estimated earnings in excess of billings		(20,155	)		224
Net cash used in operating activities		(1,019,729	)		(662,170	)

Cash flows from investing activities:
Proceeds from the sale of equipment		10,800			10,000
Investment in joint venture		(250,000	)		—
Purchase of equipment and software		(550	)		(12,294	)
Net cash used in investing activities		(239,750	)		(2,294	)

Cash flows from financing activities:
Repayments of note payable		(6,787	)		—
Proceeds from convertible notes payable, less offering costs and OID costs paid		500,000			675,000
Repayment of convertible note		(175,000	)		(208,223	)
Settlement of demand note payable, less OID costs paid		(225,500	)		—
Issuance of preferred stock for cash		300,000			125,000
Issuance of common stock for cash		824,000			50,000
Net cash provided by financing activities		1,216,713			641,777

Decrease cash and cash equivalents		(42,766	)		(22,687	)
Cash and cash equivalents at beginning of period		78,219			100,906
Cash and cash equivalents at end of period	$	35,453		$	78,219

Supplementary disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,469		$	3,481
Income taxes	$	—		$	—
Supplemental disclosure of non-cash investing and financing activities:
Beneficial conversion feature	$	120,333		$	333,900
Shares issued for debt issuance costs	$	—		$	143,500
Shares issued on conversion of convertible debt	$	—		$	203,351
Unused commitment fee	$	50,000		$	—
Settlement of convertible note into common shares	$	100,000		$	—
Partial conversion of convertible note into common shares	$	75,000			—
Conversion of preferred shares into common shares	$	2,500		$	—
Stock issued for the Alamo CBD acquisition	$	1,440,961		$	—
Voluntary return of stock by related party	$	2,500		$	—

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements

F- 5

INDOOR HARVEST CORP

Notes to Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Indoor Harvest Corp. (the “Company,”) is a Texas corporation formed on November 23, 2011. Our principal executive office is located at 5300 East Freeway Suite A, Houston, Texas 77020. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”). On August 4, 2017, we consummated a reverse triangular merger (the “Alamo Merger”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Merger, the member interests (“Alamo Surviver Members”) of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist

From inception until August 4, 2017, the Company provided full service, state of the art design-build, engineering, procurement and construction services to the indoor and vertical farming industry. The Company provided production platforms, mechanical systems and complete custom designed build outs for both Controlled Environment Agriculture (“CEA”) and Building Integrated Agriculture (“BIA”), for two unique industries, produce and cannabis. In mid-2016, the Company began efforts to separate its produce and cannabis related operations due to ongoing feedback from both clients and potential institutional investors. It was determined that the Company’s involvement in the cannabis industry was creating conflicts for clients and potential institutional investors wishing to work with the Company from the produce industry due to the public perception and political issues surrounding the cannabis industry. By late-2016, the Company had decided to cease actively selling its products and services to the vertical farming industry and to focus on utilizing the Company’s developed technology and methods for the cannabis industry. On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production.

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

It is management’s opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

Use of Estimates

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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates include, but are not limited to, the estimate of percentage of completion on construction contracts in progress at each reporting period which we rely on as a primary basis of revenue recognition, estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.

Principles of Consolidation

The consolidated financial statements include the accounts of Indoor Harvest Corp. and its wholly-owned subsidiary, Alamo CBD. All significant inter-company accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents.

Accounts Receivable and Work in Progress

Work in progress consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at September 30, 2017, and December 31, 2016. The Company records revenue based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed at milestone completion and are reflected as accounts receivable when billed. Costs and estimated earnings are accumulated on projects in process and compared to amounts billed based on the percentage of completion method of accounting (cost to cost). Costs incurred in excess of amounts billed and related profit recognized are reflected as an asset on the balance sheet as costs and estimated earnings in excess of billings. Unearned billings are reflected in the balance sheet as a liability as billings in excess of costs and estimated earnings on projects in process (See Note 9).

Inventories

Inventory consists primarily of raw materials and packaging materials and is valued at the lower of cost or market. Cost is determined using the weighted average method and the average cost is recomputed after each inventory purchase or sale. Inventory is periodically reviewed to identify obsolete or damaged inventory and impaired values. Inventory is comprised of raw materials such as steel for our framing systems and packaging materials such as boxes and pallets.

Revenue Recognition

The Company recognizes revenue on arrangements in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company will generate revenue from the design and installation of the equipment and licensing of technology.

F- 6

INDOOR HARVEST CORP

Notes to Financial Statements

Revenue from construction contracts are reported under the percentage of completion method for financial statement purposes. The estimated revenue for each contract reflected in the financial statements represent that percentage of estimated total revenue that costs incurred to date bear to estimated total costs, based on the Company’s current estimates. With respect to contracts that extend over one or more accounting periods, revisions in costs and revenue estimates during the work are reflected in the period the revisions become known. When current estimates of total contract costs indicate a loss, provision is made for the entire estimated loss.

The asset, “costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed. The liability, “Estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized.

Billing practices for these projects are governed by the contract terms of each project based upon actual costs incurred, achievement of milestones, or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage of completion method of accounting. Except for claims and change orders that are in the process of being negotiated with customers, unbilled work is usually billed during normal billing processes following achievement of the contractual requirements.

Stock Based Compensation

The Company recognizes stock-based compensation in accordance with ASC 718-10, Stock Compensation. ASC 718-10 focuses on transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus in which an entity obtains employee services in stock-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award (with limited exceptions).

Loss per Share

Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since Indoor Harvest has incurred losses for all periods, the impact of the common stock equivalents would be anti- dilutive and therefore are not included in the calculation.

Fair Value of Financial Instruments

We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share- based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

●	Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

●	Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Income Taxes

The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse.

ASB ASC 740 establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation. Tax years subsequent to 2008 remain open to examination by U.S. federal and state tax jurisdictions.

Tax years 2017, 2016, 2015, 2014, and 2013, remain subject to examination by the IRS and respective states.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). We recognize the impact of tax legislation in the period in which the law is enacted. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Reform Act. Consistent with that guidance, we recognized provisional amounts based upon our interpretation of the tax laws and estimates which require significant judgments. The actual impact of these tax laws may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in our interpretations and assumptions, additional guidance that may be issued by the government and actions we may take as a result of these enacted tax laws. Any adjustments recorded to the provisional amounts will be included in income from operations as an adjustment to tax expense.

F- 7

INDOOR HARVEST CORP

Notes to Financial Statements

Property and Equipment

Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table:

Asset description	Estimated Useful Life (Years)
Furniture and equipment		3 - 5
Tooling equipment		10
Leasehold improvements		*

* The shorter of 5 years or the life of the lease.

Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income.

Goodwill

In accordance with ASC 350 Goodwill is not amortized but evaluated for impairment annually or more often if indicators of a potential impairment are present.

Intangible Assets

In accordance with ASC 350 Goodwill and Other Intangible Assets, indefinite-lived intangible assets are not amortized but are evaluated for impairment annually or more often if indicators of a potential impairment are present. Indefinite-lived intangible assets consist of the Company’s domain name. Finite-lived intangible assets include software and is amortized over a 3 to 5-year period.

Patent and Patent Application Expenses

Although the Company believes that its patent and underlying technology will have continuing value, the amount of future benefits to be derived from the patent is uncertain. Therefore, patent costs are expensed as incurred.

Research and Development

Research and development expenditures are charged to expense as incurred.

Advertising Expense

Advertising and promotional costs are expensed as incurred.

Reclassifications

Certain expense items have been reclassified in the statement of operations for the year ended December 31, 2016, to conform to the reporting format adopted for the year ended December 31, 2017.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect as of the date of the issuance of these financial statements. The following pronouncements may significantly impact future reporting of financial position and results of operations. Management is currently assessing implementation.

The FASB has issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, clarifying the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business.

For public companies, the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods.

The FASB has issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).

Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

	●	A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and

	●	A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

	●	Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

	●	The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.

Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). The FASB has issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees.

F- 8

INDOOR HARVEST CORP

Notes to Financial Statements

Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows.

For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, the amendments are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any organization in any interim or annual period.

The FASB has issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.

The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by one year.

Derivative Liability

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At December 31, 2017 and December 31, 2016, the Company did not have any derivative instruments that were designated as hedges.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt.

NOTE 2 - GOING CONCERN

As reflected in the accompanying financial statements, the Company had a net loss of $4,412,050, net cash used in operations of $1,269,729 and has an accumulated deficit of $8,408,822, for the year ended December 31, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on Management’s plans which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity financings. The Company will likely rely upon related party debt or equity financing in order to ensure the continuing existence of the business.

The business plan of the Company is to engage in the design, development, marketing and direct-selling of commercial grade aeroponics fixtures and supporting systems for use in urban Controlled Environment Agriculture (“CEA”) and Building Integrated Agriculture (“BIA”). During the next twelve months, the Company’s strategy is to: complete ongoing product development; commence product marketing, product assembly and sales; construct a demonstration CEA and BIA farm; and offer design-build services. The Company’s long-term strategy is to direct sale, license and franchise their patented technologies and methods.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 2017 and 2016:

Classification	2017			2016
Furniture and equipment	$	11,666		$	123,829
Tooling equipment		—			27,015
Leasehold improvements		38,717			57,780
Computer equipment		3,019			8,933
Research and development lab		—			59,482
Total		53,402			277,039
Less: Accumulated depreciation		(28,779	)		(118,621	)
Property and equipment, net	$	24,623		$	158,418

Depreciation expense for the years ended December 31, 2017 and 2016, totaled $49,797 and $51,484, respectively.

F- 9

INDOOR HARVEST CORP

Notes to Financial Statements

During the year ended December 31, 2017, the Company sold $23,467 of equipment in exchange for $10,800. In addition, the Company wrote off $201,651 of equipment primarily related to the fabrication of vertical farming equipment for produce. As a result of these disposals, the Company recorded a loss of $73,750 that was recorded in the Condensed Statement of Operations within general and administrative expenses.

During the year ended December 31, 2016 the Company sold $46,626 of other assets which were equipment in exchange for $10,000 and recorded a loss on the sale of equipment of $36,626. The Company also placed in service $2,157 from other assets .

NOTE 4 - COMMITMENTS & CONTINGENCIES

Deferred rent payable at December 31, 2017 was $6,239. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods.

Rent expense for the years ended December 31, 2017 and 2016, were:

		2017				2016
Rent expense		$	52,550			$	51,403

At December 31, 2017, rental commitments are as follows:

Years Ending December 31,	Amount
2018	$	55,560
2019		18,876
Total	$	74,436

NOTE 5 - BUSINESS COMBINATIONS

Merger of Alamo CBD, LLC

F- 10

INDOOR HARVEST CORP

Notes to Financial Statements

On August 8, 2017, Chad Sykes, the Company’s Founder and Chief of Cultivation, returned 2,500,000 shares of common stock to the Company. Mr. Sykes voluntarily returned such shares in order to prevent dilution to the Company’s shareholders as a result of the merger and in order to facilitate the merger. The return of common stock by Chad Sykes was a non-cash transaction and reduces the common stock outstanding as of December 31, 2017.

On September 6, 2017, the Company issued an aggregate of 7,584,008 shares of common stock to the members of Alamo CBD related to the Merger. The Company recorded goodwill at a fair value of $1,440,961 ($0.19 per share) based upon closing price per share of the Company’s common stock on the date the stock was issued. The Company subsumed into goodwill all intangible assets acquired in the transaction, which is Alamo CBD’s pending provisional or full license to produce and dispense cannabis in the State of Texas.

As of December 31,2017, the Company’s management decided to impair the goodwill created by the Alamo CBD Merger, as there are doubts regarding when a license may be issued, as the license is pending and may or may not ever be issued, and whether upon receipt of the license if it will lead to significant positive cash flows. The Company recorded an impairment of goodwill in the Statement of Operations for the year ended December 31, 2017.

F- 11

INDOOR HARVEST CORP

Notes to Financial Statements

Contractual Joint Venture with Alamo CBD and Vyripharm Enterprises, LLC

●

	i.	In Texas, pursuant to the Texas Compassionate Use Act, as may be amended;

	ii.	In Colorado, pursuant to recent Colorado legislation permitting foreign ownership of entities that grow and/or dispense marijuana products for medical and/or consumer use; and

	iii.	Pursuant to recent United States Drug Enforcement Administration regulations which expand the opportunities for entities providing research involving marijuana and its chemical constituents, as referenced in 21 U.S.C. 822(a)(1) and 21 U.S.C. 823(a), et. seq.

●

F- 12

INDOOR HARVEST CORP

Notes to Financial Statements

The Company paid an initial down payment of $250,000 under the Joint Venture Agreement on March 30, 2017.

Background for the Contractual Joint Venture

The purpose of the above-described change in business and Joint Venture was twofold, as follows:

	●	It would separate the Company’s cannabis and produce related operations, as we indicated was previously a goal.

●

As of December 1, 2017, only one entity, the University of Mississippi can legally manufacture Cannabis to supply researchers involved in the various studies about using cannabis to treat maladies such as PTSD or Epilepsy. On August 12, 2016, the DOJ and the DEA issued a policy statement on cannabis issues, as follows:

	●	It is well known that the DOJ and DEA have said that cannabis would continue to be classified as a Schedule 1 drug, like heroin.

●

	●	Our previous Cannabis Pilot Agreement and completed technology trials with Canopy Growth Corporation, a Canadian licensed producer under the Marihuana for Medical Purposes Regulations, had demonstrated that our aeroponic technology could augment and improve the quality and production of cannabis for use in cannabis research.

●

Voluntary Default of Joint Venture and Status of Application with DPS

F- 13

INDOOR HARVEST CORP

Notes to Financial Statements

As part of the Company’s annual impairment evaluation, management decided to impair the goodwill created by the Alamo Merger as there are doubts regarding when a license may be issued, as the license is pending and may or may not ever be issued, and whether upon receipt of the license if it will lead to significant positive cash flows. The Company recorded an impairment of goodwill in the Statement of Operations for the year ended December 31, 2017 of $1,440,961.

NOTE 6 - LOAN PAYABLE

On June 5, 2015, the Company entered into a five-year loan agreement totaling $36,100. The loan carries an interest rate of 10.25%. During the year ended December 31, 2017 the Company repaid $6,789 of the principal and the remaining balance is $20,343, of which $7,520 is recorded as a current note payable.

Year Ending December 31,	Amount

2018	$	7,520
2019		8,328
2020		4,495
	$	20,343

F- 14

INDOOR HARVEST CORP

Notes to Financial Statements

NOTE 7 - CONCENTRATIONS

At December 31, 2017 and December 31, 2016, the Company had concentrations of accounts receivable of:

Customer		December 31, 2017				December 31, 2016
Tweed, Inc.			0	%			100	%

For the years ended December 31, 2017 and December 31, 2017, the Company had a concentration of sales of:

	2017					2016
Customer	Revenue ($)		Percentage			Revenue ($)		Percentage
Tweed (Canopy Growth Corporation)	$	—		—	%	$	80,620		50	%
ER Michigan (Michigan State University)	$	—		—	%	$	28,385		18	%
Urbanika Farms	$	—		—	%	$	27,600		17	%
University of Arizona CEAC	$	—		—	%	$	18,626		11	%
GSS Colorado	$	—		—	%	$	5,000		2	%
PH Research Platform	$	—		—	%	$	3,765		2	%
Total	$	—		—	%	$	163,996		100	%

For the year ended December 31, 2017, the Company had a purchasing concentration of $3,897 with Illumitex, LLC, a manufacturer largely specializing in the production and development of LED lights for indoor and vertical farming totaling 74%.

For the year ended December 31, 2016, the Company had a purchasing concentration of $29,500 with 3 rd Coast Pump & Equipment, LLC, a manufacturer of custom specialty pump and control packages totaling 37%.

NOTE 8 - INTANGIBLE ASSETS

There were no impairment charges taken for the domain name during the year ended December 31, 2017 and December 31, 2016.

Intangible assets consist of the following at December 31, 2017 and December 31, 2016:

Classification	2017			2016
Domain name	$	2,000		$	2,000
Facilities Manager’s Package Online		1,022			1,022
MLC CD Systems (software)		7,560			7,560
Total		10,582			10,582
Less: Accumulated amortization		(4,690	)		(2,978	)
Intangible assets, net	$	5,892		$	7,604

F- 15

INDOOR HARVEST CORP

Notes to Financial Statements

NOTE 9 - WORK IN PROCESS

Work in progress as of December 31, 2017 and December 31, 2016, consisted of the following:

Description	2017		2016
Costs incurred on uncompleted contracts	$	—	$	80,620
Estimated earnings		—		—
Less: Billings to date		—		(100,775	)
Total		—		(20,155	)

Reflected in balance sheet as:
Costs and estimated earnings in excess of billings on contracts in process	$	—	$	—
Billings in excess of costs and estimated earnings on contracts in process		—		20,155
Total	$	—	$	20,155

NOTE 10 - FAIR VALUE MEASUREMENTS

Carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent note payable, net of debt discount, of $0 and $209,786 at December 31, 2017 and December 31, 2016, respectively, and convertible notes payable of $668,912 and $122,383 at December 31, 2017 and December 31, 2016, respectively. Debt classified as Level 3 in the fair value hierarchy represents derivative liability of $554,916 and $0 at December 31, 2017 and December 31, 2016, respectively.

NOTE 11 - DEBT AND CONVERTIBLE LOAN PAYABLE

On March 20, 2017, the Company entered into a settlement agreement relating to a promissory note with Chuck Rifici Holdings, Inc originally dated September 26, 2016 (“Rifici Note”). The Company settled the amount owed by paying $269,498 in cash. The Company was released from any further liability under this Rifici Note upon payment of this amount.

On March 20, 2017, the Company entered into a settlement agreement relating to two (2) promissory notes with FirstFire Global Opportunities Fund, LLC dated October 19, 2016 and December 12, 2016. Pursuant to the settlement, the Company paid the holder an aggregate of $252,917 in cash and issued 333,333 shares of common stock with a fair value of $100,000 based upon the conversion price of $0.30 per share. The Company was released from any further liability under this FirstFire Global Opportunities Fund, LLC note upon payment of this amount.

On March 24, 2017, the Company entered into a securities purchase agreement with Tangiers Global, LLC (“Tangiers”) relating to the issuance and sale of notes (“Note 1”) in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note1 is convertible into shares of common stock at a price equal to $0.30 per share; provided, however that if Note 1 is not retired on or before the maturity date, defined in Note 1 as a “Maturity Default” the conversion price shall be adjusted to be equal to the lower of: (i) $.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the date that the Company receives a notice of conversion. The Tangiers Note carries interest on the unpaid principal amount at the rate of 8% per annum and is due and payable eight months from the effective date of each payment. As of December 31, 2017, the balance under Note 1 is $519,000, which includes $44,000 guaranteed interest. As of December 31, 2017, Note 1 can be converted into 3,280,255 shares of the Company’s common stock.

On October 12, 2017, the Company entered into an Investment Agreement with Tangiers. Pursuant to the terms of the Investment Agreement, Tangiers committed to purchase up to $2,000,000 of our common stock over a period of up to 36 months. From time to time during the 36-month period commencing from the effectiveness of the registration statement, we may deliver a put notice to Tangiers which states the dollar amount that we intend to sell to Tangiers on a date specified in the put notice. The maximum investment amount per notice must be no more than 200% of the average daily trading dollar volume of our common stock for the eight (8) consecutive trading days immediately prior to date of the applicable put notice and such amount must not exceed an accumulative amount of $250,000. The minimum put amount is $5,000. The purchase price per share to be paid by Tangiers will be the 80% of the of the average of the two lowest closing bid prices of the common stock during the pricing period applicable to the put notice, provided, however, an additional 10% will be added to the discount of each put if (i) we are not DWAC eligible and (ii) an additional 15% will be added to the discount of each put if we are under DTC “chill” status on the applicable date of the put notice.

The Company issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee for the Investment Agreement. The promissory note maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers any time, into shares of the Company’s common stock at a conversion price of $0.1666 per share. Upon a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retied prior to its maturity date, Tangiers’ conversion rights under Note 2 would be adjusted such that the conversion price would be the lower of (i) $0.1666 or (ii) b) 65% of the average of the two lowest trading prices of the Company’s common stock during the 10 consecutive trading days prior to the date on which Tangiers elects to convert all or part of the note. As of December 31, 2017, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of December 31, 2017, Note 2 can be converted into 300,120 shares of the Company’s common stock.

On October 17, 2017, the Company converted debt and accrued interest, totaling $30,000 into 329,670 shares of common stock.

On December 18, 2017, the Company converted debt and accrued interest, totaling $45,000 into 516,648 shares of common stock. On October 10, 2017, the Company executed Amendment #1 to the Tangiers Note for a final draw of $250,000 payment plus a 10% original issue discount (“Note 2”). Amendment #1 modified the maturity date for the Tangier Note from eight months to six months from the effective date of each payment. All other terms and conditions of the Tangiers Note remain effective.

F- 16

INDOOR HARVEST CORP

Notes to Financial Statements

The execution of the amendment to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of March 13, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. Other than the foregoing, none of the above listed notes are currently in default.

For the year ended December 31, 2017 and December 31, 2016, the Company accrued $49,000 and $10,334, respectively, in accrued interest related to outstanding the note.

Debt Discount and Original Issuance Costs

During the year end December 31, 2017 and 2016, the Company recorded debt discounts totaling $383,786 and $417,834, respectively. The debt discount amount consists of debt discount due to beneficial conversion features, warrant, original issue costs, and debt issue costs.

The debt discounts recorded in 2017 and 2016, pertain to beneficial conversion feature on the convertible notes. The notes are required to be bifurcated and reported at fair value on the date of grant.

The Company amortized $466,862 and $265,217 to interest expense during the years ended December 31, 2017 and 2016, as follows:

	2017			2016
Debt discount, beginning of period	$	152,617		$	—
Additional debt discount and debt issue cost		383,786			417,834
Amortization of debt discount and debt issue cost		(466,862	)		(265,217	)
Debt discount, end of period	$	69,541		$	152,617

Debt Issuance Costs

During the year ended December 31, 2017 and 2016, the Company paid debt issue costs totaling $0 and $20,000, respectively. During the years ended December 31, 2017 and 2016, the Company amortized $0 and $20,000 of debt issue costs, respectively. The following is a summary of the Company’s debt issue costs for the years ended December 31, 2017 and 2016:

	2017		2016
Debt discount, beginning of period	$	—	$	—
Additional debt discount		—		20,000
Amortization of debt discount		—		(20,000	)
Debt discount, end of period	$	—	$	—

NOTE 12 - DERIVATIVE LIABILITIES

The Company identified the conversion features embedded within its convertible debts as financial derivatives. The Company has determined that the embedded conversion option should be accounted for at fair value.

The following schedule shows the change in fair value of the derivative liabilities at year end December 31, 2017:

Derivative liabilities - December 31, 2016	$	—
Add fair value at the commitment date for convertible notes issued during the current year		213,453
Less derivatives due to conversion		(101,493	)
Fair value mark to market adjustment for derivatives		442,957
Derivative liabilities - December 31, 2017		554,917
Less : current portion		(554,917	)
Long-term derivative liabilities	$	—

The following schedule shows the change in fair value of the derivative liabilities at year end December 31, 2016:

Derivative liabilities - December 31, 2015	$	—
Add fair value at the commitment date for convertible notes issued during the current year		270,331
Less derivatives due to conversion		(412,086	)
Fair value mark to market adjustment for derivatives		141,755
Derivative liabilities - December 31, 2017		—
Less : current portion		—
Long-term derivative liabilities	$	—

F- 17

INDOOR HARVEST CORP

Notes to Financial Statements

The Company recorded the debt discount to the extent of the gross proceeds raised and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note. The Company recorded derivative interest expenses for the year ended December 31, 2017 of $0.

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions during the current quarter:

Assumption	Commitment Date			Remeasurement Date
Expected dividends:		—	%		—	%
Expected volatility:		134	%		130 - 169	%
Expected term (years):		0.42			0.15 - 0.36 years
Risk free interest rate:		1.19	%		1.25 - 1.39	%

F- 18

INDOOR HARVEST CORP

Notes to Financial Statements

NOTE 13 - RELATED PARTY TRANSACTIONS

On January 16, 2017, the Company issued 145,740 shares of common stock related to a Director Agreement with Pawel Hardej. The Company recorded fair value of $64,126 ($0.44 per share) based upon the most recent trading price per share of the Company’s stock.

On January 16, 2017, the Company issued 41,640 shares of common stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $18,322 ($0.44 per share) based upon the most recent trading price per share of the Company’s stock.

On January 16, 2017, the Company issued 62,460 shares of common stock related to a Director Agreement with John Choo. The Company recorded fair value of $27,482 ($0.44 per share) based upon the most recent trading price per share of the Company’s stock.

On August 8, 2017, Chad Sykes, the Company’s Founder and Chief of Cultivation, returned 2,500,000 shares of common stock to the Company. Mr. Sykes voluntarily returned such shares in order to prevent dilution to the Company’s shareholders as a result of the Alamo Merger and in order to facilitate the merger. The return of common stock by Chad Sykes was a non-cash transaction and reduces the common stock outstanding as of December 31, 2017.

On August 9, 2017, Chad Sykes, the Company founder, tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

On August 9, 2017, John Choo tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

On August 9, 2017, Pawel Hardej tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

On August 9, 2017, John Seckman was elected a Director and member of the Board of Directors. On November 1, 2017, John Seckman resigned as a Director of the Company and as a member of the Board of Directors, effective December 4, 2017. Mr. Seckman’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies (including accounting or financial policies) or practices, the Company’s management or the Board. Mr. Seckman’s resignation was due to time constraints based on new business and increasing demands of John Seckman and Associates, of which Mr. Seckman is principal.

On August 9, 2017, we entered into a Director Agreement with Rick Gutshall. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

On August 9, 2017, we entered into a Director Agreement with Annette Knebel. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

On August 9, 2017, we entered into a Director Agreement with Dr. Lang Coleman. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

On September 6, 2017, the Company issued 758,401 shares of common stock Rick Gutshall, former Interim-Chief Executive Office, former Chief Financial Officer, and Director, related to the merger of the Company and Alamo CBD. The Company recorded fair value of $144,096 ($0.19 per share) based upon the most recent trading price per share of the Company’s stock.

On September 15, 2017, the Company issued 250,000 shares of common stock related to an Employment Agreement with Annette Knebel, Chief Financial Officer and Director and former Chief Accounting Officer. The Company recorded fair value of $50,000 ($0.20 per share) based upon the most recent trading price per share of the Company’s stock.

On May 9, 2016, the Company entered into a Director Agreement with Pawel Hardej. The Company will reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company shall award to the Director 166,560 shares of common stock over a two-year period as directed in the Director Agreement. As of December 31, 2016, the Company issued 20,820 shares of common stock having a fair value of $13,512 ($0.65/share) based upon the most recent trading price per share of the Company’s common stock (See Note 11).

F- 19

INDOOR HARVEST CORP

Notes to Financial Statements

On April 8, 2016 the Company entered into an employment agreement with John Zimmerman, to serve as a Vice President of Business Development. The term of the agreement will continue until April 8, 2017, unless the employment is sooner terminated by the Board of Directors. As compensation for services, the employee will receive 100,000 shares of common stock and a percentage of closed projects as follows:

	●	5% on Purchase Orders (facilities and production finishing hardware) minus taxes, fees and shipping for sole sourced projects that lead to a signed Design Build Agreement.

	●	5% of Facilities portion of Purchase Order only on signed Design Build agreements brought in from Authorized Dealers.

	●	Discretionary % split agreed to by Executive on a case-by-case basis for supporting services he chooses to bring into closing an agreement.

	●	Compensation payments dispersed at the same % rate as the contractually agreed client payments schedule is received from the client/finance group (i.e.: 5% down, 50% at Purchase Order, 45% at shipping, etc.)

On April 8, 2016, we issued 100,000 shares of common stock related to an Executive Employment Agreement with John Zimmerman. The Company recorded fair value of $54,500 ($0.545/share) based upon the most recent trading price per share of the Company’s stock (See Note 11).

On March 1, 2015, the Company entered into a Director Agreement with William Jamieson. The Company will reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company shall award to the Director 166,560 shares of common stock pursuant to the Company’s 2015 Stock Incentive over a two-year period as directed in the Director Agreement. As of December 31, 2016, the Company issued 83,280 shares of common stock having a fair value of $36,435 ($0.30 - $0.5/share) based upon the most recent trading price per share of the Company’s common stock (See Note 11).

On May 9, 2016, Mr. William Jamieson resigned as a Director in the Company. Mr. Jamieson’s resignation was not the result of any disagreement with us on any matter relating to our operations, policies (including accounting or financial policies) or practices. A majority of the Board of Directors decided to restructure the Board of Directors to better reflect the Company’s current business direction and Mr. Jamieson voluntarily agreed to resign as part of that restructuring effort. Mr. Jamieson was issued 83,280 shares of common stock as part of an agreement with the Company and the Company recorded a fair value of $54,049($0.649/share) based upon the most recent trading price per share of the Company’s common stock.

NOTE 14 - SHAREHOLDERS’ EQUITY

Convertible Series A Preferred Stock

During the third quarter of fiscal 2016, the Company initiated a subscription agreement to offer accredited investors up to 1,000,000 units (“Units”) of securities, each Unit consists of one (1) share of Series A Convertible Preferred Stock and one (1) Series A Warrant (“Warrant”). The price per Unit was $0.50 for a maximum aggregate proceeds of $500,000. There are no dividends on the Series A Convertible Preferred Stock. The Warrants were exercisable at $0.50 per share for a period of one year. As of September 30, 2017, the warrants were not exercised. Therefore, the Company has disclosed the expiration of the Warrants.

From August 15 to August 29, 2016, the Company sold an aggregate of 250,000 Units to three (3) investors for total proceeds of $125,000. During the year ended December 31, 2017 and 2016, the Company amortized $33,238 and $0 of debt discount related to the warrants, respectively. The remaining debt discount related to the warrants is $0.

On March 20, 2017, the Company’s Series A Preferred Convertible Stock shareholders (“Series A Holders”) each voted to waive and remove the provisions of Section 5(iii) of the Certificate of Designations of the Series A Preferred Stock Designation. Series A Holders have each agreed individually and also as a group to convert their Series A Convertible Preferred Stock into common stock at a conversion price equal to $0.30 per share. A total of 250,000 shares of the Company’s Series A Preferred Convertible Stock were converted into an aggregate of 416,667 shares of common stock. As a result of this action, there currently are no Series A Convertible Preferred Stock issued and outstanding.

From April 26, 2017 through May 3, 2017, the Company sold an aggregate of 750,000 shares of Series A Preferred Common Stock to thirteen (13) U.S. accredited investors at $0.40 per share for proceeds of $300,000.

Common Stock

On January 19, 2016, the Company issued 300,000 shares of common stock to Kodiak Capital Group, LLC as a commitment fee for a Two Million Dollar Equity Financing Agreement. The Company recorded a fair value of $120,000 ($0.40 per share) based upon the most recent trading price per share of the Company’s stock. The Company is subject to a Registration Rights Agreement which requires the Company to file a S1 Registration Statement with the SEC by March 31, 2016 and must receive a notice of effectiveness from the SEC prior to executing a Put Notice. The Purchase Price of the security is based on 80% of the market price based on the Put Date. Market price is calculated on the lowest daily volume weight average price for any trading day during the valuation period, which is the five days from the Put Notice to the Put Date.

On January 22, 2016, the Company issued 125,000 shares of common stock to Emerging Growth, LLC, to provide investor and public relations services. The Company recorded a fair value of $43,750 ($0.35 per share) based upon the most recent trading price per share of the Company’s stock.

On March 14, 2016, the Company issued 11,330 shares to a consultant for services rendered, of common stock with a fair value of $4,986 ($0.44 per share) based upon the most recent trading price per share of the Company’s stock.

F- 20

INDOOR HARVEST CORP

Notes to Financial Statements

On March 22, 2016, the Company entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC, and Rockwell Capital Partners Inc., relating to the issuance and sale of notes of $272,500 in aggregate principal amount including $250,000 actual payment of purchase price plus a 9% original issue discount, and an aggregate total of 50,000 shares of common stock valued at $23,500 ($0.47 per share). The notes carry an interest on the unpaid principal amount at the rate of 3% per annum. Any principal amount or interest which is not paid when due shall bear interest at the rate of 15% per annum from the due date until the same is paid. The notes mature on September 22, 2016 and may be prepaid in whole or in part except otherwise explicitly set forth in the Note. If the Company exercises its right to prepay or repay the notes, the Company shall make payment to the note holders of an amount in cash equal to the sum of 125% multiplied by the principal amount plus accrued and unpaid interest on the principal amount to the optional prepayment date plus default interest, if any. The notes convert into shares of common stock at a price equal to $0.30; provided, however that from and after the occurrence of any event of default hereunder, the conversion price shall be the lower of: (i) the fixed conversion price or (ii) 45% multiplied by the lowest sales price of the common stock in a public market during the ten (10) consecutive trading day period immediately preceding the trading day that the Company receives a Notice of Conversion (as defined in the notes).

On March 23, 2016, the Company issued 100,000 shares of common stock to one U.S. accredited investor at $0.50 per share for cash totaling $50,000.

On March 31, 2016, the Company issued 5,000 shares to a consultant for services rendered, of common stock with a fair value of $2,050 ($0.41 per share) based upon the most recent trading price per share of the Company’s stock.

On January 17, 2017, the Company issued 800,000 shares of common stock to Lyons Capital, LLC for a six-month consulting and road show services agreement. The Company recorded fair value of $352,000 ($0.44 per share) based upon the most recent trading price per share of the Company’s stock.

From February 22, 2017 through March 15, 2017, the Company sold, in reliance upon Regulation D Rule 506, a total of 2,060,000 shares of common stock to seventeen (17) U.S. accredited investors at $0.40 per share for cash totaling $824,000.

On March 20, 2017, the Company’s Series A Preferred Convertible Stock shareholders (“Series A Holders”) each voted to waive and remove the provisions of Section 5(iii) of the Certificate of Designations of the Series A Preferred Stock. Series A Holders have each agreed individually and also as a group to convert their Series A Convertible Preferred Stock into common stock at a conversion price equal to $0.30 per share. A total of 250,000 shares of the Company’s Series A Preferred Convertible Stock were converted into an aggregate of 416,667 shares of common stock.

On March 20, 2017, the Company entered into a settlement agreement relating to two (2) promissory notes with FirstFire Global Opportunities Fund, LLC dated October 19, 2016 and December 12, 2016. Pursuant to the settlement, the Company paid the holder an aggregate of $252,917 in cash and issued 333,333 shares of common stock. The Company was released from any further liability under this FirstFire Global Opportunities Fund, LLC note upon payment of this amount.

On March 24, 2017, the Company entered into a securities purchase agreement with Tangiers Global, LLC (“Tangiers”) relating to the issuance and sale of notes (“Tangiers Note”) in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. The Tangiers Note is convertible into shares of common stock at a price equal to $0.30 per share. On October 10, 2017, the Company executed Amendment #1 (“Amendment #1”) to the Tangiers Note for a final draw of $250,000 payment plus a 10% original issue discount (the “Final Draw”). Amendment #1 modified the maturity date of the Tangiers Note from eight months to six months from the effective date of each payment. In addition, Amendment #1 included use of proceeds for the $250,000 received from Tangiers. All other terms and conditions of the Tangiers Note remain effective and were not amended.

On June 1, 2017, the Company issued 250,000 shares of common stock for a 12-month investor relations consulting agreement. The Company recorded fair value of $55,000 ($0.22 per share) based upon the most recent trading price per share of the Company’s stock.

On October 17, 2017, the Company issued 329,670 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $30,000 of Note 1 at a conversion price of $0.09.

On December 18, 2017, the Company issued 516,648 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $45,000 of Note 1 at a conversion price of $0.09.

Common Stock Warrants

F- 21

INDOOR HARVEST CORP

Notes to Financial Statements

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)
Balance, December 31, 2016		500,000	$	0.40		—
Granted		—		—		—
Exercised		—		—		—
Canceled/Forfeited		250,000		0.50		—
Expired		250,000		0.30
Balance December 31, 2017		—	$			—

There were no warrants outstanding as of December 31, 2017.

Common Stock Equivalents

For the year ended December 31, 2016, the following warrants were outstanding:

	Exercise Price Warrants Outstanding		Warrants Exercisable		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	$0.30 - 0.50		500,000		0.69		32,500

Lattice Binomial model was used to value aggregate intrinsic value.

The Company has the following common stock equivalents for the years ended December 31, 2017 and 2016, respectively:

	2017		2016
Convertible debt (exercise price - $0.30/share)		3,580,375		916,667
Series A convertible preferred shares (exercise price - $0.08/share)		—		1,633,987
		3,580,375		2,550,654

NOTE 15 - INCOME TAXES

Indoor Harvest operates in the United States; accordingly, federal and state income taxes have been provided based upon the tax laws and rates of the US. Deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse.

The components of deferred income tax assets and liabilities as of December 31, 2017 and 2016 are as follows:

Description	2017			2016

Deferred tax assets
Net operating losses	$	1,118,472		$	1,005,468
Deferred tax liabilities
Accelerated tax depreciation		19,183			19,183

Net deferred tax assets		1,137,655			986,285
Less: Valuation allowance		(1,137,655	)		(986,285	)

Net	$	—		$	—

At December 31, 2017 and 2016, the Company has provided a full valuation allowance for the deferred tax assets. The Company’s accumulated net operating loss as of December 31, 2017 of $5,856,768, if not used, will begin to expire in 2037.

The change in the valuation allowance for the year ended December 31, 2017 amounted to $151,370, $8,000 of which was attributable to the change in tax rates resulting form 2017 tax legislation.

The Company experienced a change in control for tax purposes in 2017 as a result of the merger with Alamo CBD. Accordingly, the future utilization of net operating losses will be severely restricted by Section 382 of the Internal Revenue Code. Management is in the process of assessing this impact.

This loss carryforward expires according to the following schedule:

Year Ending December 31,	Amount

2033	$	217,074
2034		368,378
2035		761,615
2036		1,610,192
2037		2,899,509
	$	5,856,768

NOTE 16 - SUBSEQUENT EVENTS

On January 9, 2018, the Company issued 899,685 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $100,000 of Note 1 at a conversion price of $0.11.

On January 15, 2018 Ms. Sandra Fowler, was appointed as the Chief Marketing Officer of the Company. Pursuant to the terms of the Fowler Employment Agreement, Ms. Fowler shall serve as Chief Marketing Officer of the Company. The initial term of the agreement will expire on January 15, 2019 and commencing on January 15, 2019 and on each anniversary of such date thereafter, the term of the Fowler Employment Agreement shall automatically renew for a one-year period, unless earlier terminated by either party pursuant to the terms of the Fowler Employment Agreement. In consideration for Ms. Fowler’s services, under the Fowler Employment Agreement, Ms. Fowler shall receive (i) an annual base salary of $48,000 and (ii) 200,000 shares of restricted common stock of the Company. Further, pursuant to the Fowler Employment Agreement, the Company agreed to revise the annual base compensation for Ms. Fowler to $65,000, after 90 days of the execution of the Fowler Employment Agreement, or after the Company raises not less than $1,000,000 from sales of its equity securities subsequent to the execution of the Fowler Employment Agreement, whichever may come first. In addition, Ms. Fowler shall be eligible to participate in any equity-based incentive compensation plan or programs adopted by the Company’s board of directors.

F- 22

INDOOR HARVEST CORP

Notes to Financial Statements

On January 16, 2018, the Company issued and sold an 8% Fixed Convertible Promissory Note (“Note 3”) to Tangiers (the “Buyer”), in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 3 is convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. However, if Note is not paid back on or before the maturity date, defined in Note 3 as a “Maturity Default”, the conversion price of Note 3 shall then be adjusted to be equal to the lower of: (i) $0.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion of Note 3. As of April 17, 2018, the balance under Note 3 is $231,660, which includes $17,160 guaranteed interest. As of April 17, 2018, Note 3 can be converted into 1,155,000 shares of the Company’s common stock. The first draw under Note 3 provided on January 16, 2018, has a maturity date of July 16, 2018. The funds provided to the Company pursuant to Note 3 Amendment #1 on February 13, 2018, have a maturity date of August 13, 2018. The funds provided to the Company pursuant to Note 3 Amendment #2 on April 17, 2018, have a maturity date of October 17, 2018.On February 5, 2018, Dr. Coleman and Benjamin Coleman voluntarily returned and canceled an aggregate of 3,280,470 common shares in order to prevent dilution to the shareholders during the Company’s efforts to secure new senior management, provide additional incentive equity and to form an advisory board. The return of common stock by Dr. Coleman and Benjamin Coleman was a non-cash transaction and reduces the common stock outstanding as of April 17, 2018.

On February 20, 2018, Mr. Daniel Weadock was appointed Chief Executive Officer and Director of the Company. On February 20, 2018, the Company entered into an executive employment agreement with Mr. Weadock (the “Weadock Employment Agreement”), pursuant to which Mr. Weadock agreed to act as the Company’s chief executive officer. Pursuant to the terms of the Weadock Employment Agreement, Mr. Weadock initial will not receive a salary. However, effective on the business day after the date on which the Company achieves Capitalization (as hereinafter defined) of $2,000,000 or more, Mr. Weadock’s annual base salary will be $100,000. For purposes of the Weadock Employment Agreement, “Capitalization” means aggregate net cash proceeds received by the Company from (a) the Company’s sale of common stock pursuant to Puts (as such term is defined in the Investment Agreement dated as of October 12, 2017 by and between the Company and Tangiers Global, LLC (the “Investment Agreement”)) under the Investment Agreement, and/or (b) any other sale by the Company of common stock or preferred stock, whether in a public offering or a private placement. In addition, pursuant to the terms of the Weadock Employment Agreement, the Company agreed to grant Mr. Weadock (i) 300,000 shares of restricted stock as soon as administratively practicable following execution of the Weadock Employment Agreement, and (ii) 1,584,202 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however, that no grant will be made and no shares will be issued with respect to any grant if Mr. Weadock is not employed by the Company as an executive on the respective Date of Grant as set forth in the agreement. The Weadock Employment Agreement has a term of one year, unless Mr. Weadock’s employment is terminated sooner by the board of directors, and the term will be extended for additional one-year periods unless the Company or Mr. Weadock gives the other party at least 30 days’ prior written notice of its intent not to renew. On February 20, 2018, the Company also entered into a compensation agreement with Mr. Weadock (the “Director Compensation Agreement”).Pursuant to the terms of the Director Compensation Agreement, the Company agreed to grant Mr. Weadock an aggregate of 240,000 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however, that no grant will be made and no shares will be issued with respect to any grant, if Mr. Weadock is not a member of the Company’s board of directors on the respective Date of Grant as set forth in the agreement. If the Company is acquired by, or merged into and with, another entity prior to the last Date of Vesting set forth in the agreement (i.e. February 23, 2022), all shares issuable to Mr. Weadock under the Director Compensation Agreement will become fully vested and non-forfeitable. The Company also agreed to reimburse Mr. Weadock for all reasonable travel and incidental expenses incurred by Mr. Weadock in performing his services and attending meetings as approved in advance by the Company. Also, on February 20, 2018, the Company also entered into an indemnity agreement with Mr. Weadock (the “Weadock Indemnity Agreement”). Pursuant to the terms of the Indemnity Agreement, the Company agreed to use reasonable efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers; provided, however, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage is reduced by exclusions so as to provide an insufficient benefit, or Mr. Weadock is covered by similar insurance maintained by a subsidiary of the Company. In addition the foregoing, the Company will indemnify Mr. Weadock from certain third party actions, derivative actions and actions where Mr. Weadock is decreased; provided, however, the Company shall not be obligated to indemnify Mr. Weadock for actions including, but not limited to, actions initiated by Mr. Weadock, for any action in which it is determined that the material assertions made by Mr. Weadock in such proceeding were not made in good faith or were frivolous, for any settlements not authorized by the Company, for any actions on the account of Mr. Weadock’s willful misconduct, and for any expenses and the payment of profits arising from the purchase and sale Mr. Weadock of securities in violation of Section 16(b) of the Securities Exchange Act, or any similar successor statute; provided, further that, that the Company shall not be obligated to indemnify Mr. Weadock for expenses or liabilities of any type whatsoever which have been paid directly to Mr. Weadock pursuant to the Company’s D&O Insurance policy.

On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.09.

On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.08.

On April 10, 2018, the Company defaulted on the funds provided pursuant to Note 1 Amendment #1, the second draw due under Note 1, as the maturity date expired. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. Other than the foregoing, none of the above listed notes are currently in default.

On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.07.

On April 17, 2018, the Company executed Amendment #2 to the Tangiers Note 3 for a draw of $120,00 payment plus a 10% original issue discount. All terms and conditions of the Tangiers Note 3 remain effective. As of May 31, 2018, the balance under Note 3 is $374,220, which includes $27,720 guaranteed interest. As of May 31, 2018, Note 3 can be converted into 1,155,000 shares of the Company’s common stock. The first draw under Note 3 provided on January 16, 2018, has a maturity date of July 16, 2018. The funds provided to the Company pursuant to Note 3 Amendment #1 on February 13, 2018, have a maturity date of August 13, 2018. The funds provided to the Company pursuant to Note 3 Amendment #2 on April 17, 2018, have a maturity date of October 17, 2018.

F- 23

Consolidated Financial Statements (Unaudited)	F-25

Consolidated Balance Sheets—March 31, 2018 and December 31, 2017	F-25

Consolidated Statements of Operations—for the three months ended March 31, 2018 and 2017	F-26

Consolidated Statements of Changes in Stockholders’ Deficit—for the three months ended March 31, 2018 and 2017	F-27

Consolidated Statements of Cash Flows—for the three months ended March 31, 2018 and 2017	F-28

Notes to Consolidated Financial Statements	F-29

F- 24

INDOOR HARVEST CORP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31, 2018			December 31, 2017
ASSETS
Current assets:
Cash	$	42,981		$	35,453
Prepaid rent		-			4,452
Unused commitment fee		50,000			50,000
Total current assets		92,981			89,905

Furniture and equipment, net		22,014			24,623
Security deposit		12,600			12,600
Intangible asset, net		5,463			5,892
Total assets	$	133,058		$	133,020

LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	109,574		$	89,033
Convertible notes payable, net of debt discount of $24,228 and $69,541, respectively		565,272			455,459
Derivatives liability		25,006			554,917
Accrued payroll		3,722			6,653
Deferred rent		5,671			6,239
Note payable - current portion		7,714			7,520
Total current liabilities		716,959			1,119,821

Long term liabilities:
Note payable		10,821			12,823
Total liabilities		727,780			1,132,644

Stockholders’ deficit:
Series A Convertible Preferred stock: $0.01 par value, 5,000,000 shares authorized; 750,000 shares issued and outstanding at both March 31, 2018 and December 31, 2017		7,500			7,500
Common stock: $0.001 par value, 50,000,000 shares authorized; 23,688,240 and 25,503,678 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		23,971			25,502
Additional paid-in capital		7,909,845			7,376,196
Accumulated deficit		(8,536,038	)		(8,408,822	)
Total stockholders’ deficit		(594,722	)		(999,624	)
Total liabilities and stockholders’ deficit	$	133,058		$	133,020

The Accompanying Notes are an Integral Part of these Financial Statements

F- 25

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended March 31,
	2018			2017
Revenue	$	-		$	-

Cost of sales		-			-

Gross profit		-			-

Operating expenses
Depreciation and amortization expense	$	3,038		$	13,141
Research and development		-			737
Professional fees		71,375			90,547
General and administrative expenses		198,190			622,403
Total operating expenses		272,603			726,828

Loss from operations		(272,603	)		(726,828	)

Other income (expense)
Other income (expense)		4			(11,733	)
Interest expense		(17,669	)		(112,685	)
Amortization of debt discount		(80,563	)		(205,007	)
Change in fair value of embedded derivative liability		243,615			-
Total other income (expense)		145,387			(329,425	)

Net loss	$	(127,216	)	$	(1,056,253	)

Net loss per common share:
Net loss per share, basic and diluted	$	(0.01	)	$	(0.06	)

Weighted average number of common shares outstanding:
Basic and diluted		24,649,867			16,816,214

The Accompanying Notes are an Integral Part of these Financial Statements

F- 26

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

	Series A Convertible Preferred Stock, $0.01 Par Value				Common Stock, $0.001 Par Value						Additional Paid in		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount			Capital		Deficit			(Deficit)
Balances, December 31, 2017		750,000	$	7,500		25,503,678		$	25,502		$	7,376,196	$	(8,408,822	)	$	(999,624	)

Common stock issued for services – related party		-		-		285,522			285			79,788		-			80,073
Convertible debt converted into common stock		-		-		1,465,032			1,464			148,535		-			149,999
Voluntary return of stock by related party		-		-		(3,280,470	)		(3,280	)		3,280		-			-
Derivative liability		-		-		-			-			286,296		-			286,296
Beneficial conversion feature		-		-		-			-			15,750		-			15,750

Net loss for the three months ended March 31, 2018		-		-		-			-			-		(127,216	)		(127,216	)

Balances, March 31, 2018		750,000	$	7,500		23,973,762		$	23,971		$	7,909,845	$	(8,536,038	)	$	(594,722	)

The Accompanying Notes are an Integral Part of these Financial Statements

F- 27

INDOOR HARVEST CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the three months ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(127,216	)	$	(1,056,253	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		3,038			13,141
Amortization of debt discount		80,563			205,007
Change in fair value of embedded derivative liability		(243,615	)		-
Stock issued for services - related party		80,073			109,930
Stock issued for services		-			352,000
Change in operating liability:
Decrease in accounts receivable		-			34,853
Decrease in prepaid expense		4,452			-
Increase (decrease) in accounts payable and accrued expenses		20,541			(3,071	)
Decrease in deferred rent		(568	)		(568	)
Decrease in accrued compensation - officers		(2,931	)		(7,142	)
Net cash used in operating activities		(185,663	)		(352,103	)

Cash flows from investing activities:
Investment in joint venture		-			(250,000	)
Purchase of equipment and software		-			(550	)
Net cash used in investing activities		-			(250,550	)

Cash flows from financing activities:
Repayments of note payable		(1,809	)		(227,132	)
Proceeds from convertible notes payable, less offering costs and OID costs paid		195,000			-
Proceeds from demand note payable, less OID costs paid		-			250,000
Repayment of convertible note		-			(175,000	)
Issuance of common stock for cash		-			824,000
Net cash provided by financing activities		193,191			671,868

Decrease in cash and cash equivalents		7,528			69,215
Cash and cash equivalents at beginning of period		35,453			78,219
Cash and cash equivalents at end of period	$	42,981		$	147,434

Supplementary disclosure of cash flow information:
Cash paid during the period for:
Interest	$	506		$	682
Income taxes	$	-		$	-
Supplemental disclosure of non-cash investing and financing activities:
Beneficial conversion feature	$	15,750		$	95,333
Settlement of convertible note into common shares	$	-		$	100,000
Partial conversion of convertible note into common shares	$	150,000		$	-
Conversion of preferred shares into common shares	$	-		$	2,500
Derivative liability reclassified to paid-in capital	$	286,296		$	-
Voluntary return of stock by related party	$	3,280		$	-

The Accompanying Notes are an Integral Part of these Financial Statements

F- 28

INDOOR HARVEST CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

Principles of Consolidation

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents.

F- 29

Accounts Receivable and Work in Progress

Work in progress consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at March 31, 2018 and December 31, 2017. The Company records revenue based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed at milestone completion and are reflected as accounts receivable when billed. Costs and estimated earnings are accumulated on projects in process and compared to amounts billed based on the percentage of completion method of accounting (cost to cost). Costs incurred in excess of amounts billed and related profit recognized are reflected as an asset on the balance sheet as costs and estimated earnings in excess of billings. Unearned billings are reflected in the balance sheet as a liability as billings in excess of costs and estimated earnings on projects in process.

Stock Based Compensation

Loss per Share

F- 30

Fair Value of Financial Instruments

●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

●	Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

●	Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Income Taxes

Tax years 2017, 2016, 2015, 2014, and 2013, remain subject to examination by the IRS and respective states.

Property and Equipment

Asset description		Estimated Useful Life (Years)
Furniture and equipment		3 - 5
Tooling equipment		10
Leasehold improvements		*

* The shorter of 5 years or the life of the lease.

F- 31

Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income.

Goodwill

In accordance with ASC 350 Goodwill is not amortized but evaluated for impairment annually or more often if indicators of a potential impairment are present.

Intangible Assets

Patent and Patent Application Expenses

Research and Development

Research and development expenditures are charged to expense as incurred. Research and development expense for the three months ended March 31, 2018 and 2017 are as follows:

		2018				2017
Research and development expense		$	-			$	737

Advertising Expense

Advertising and promotional costs are expensed as incurred. Advertising expense for the three months ended March 31, 2018 and 2017 are as follows:

		2018				2017
Advertising expense		$	112			$	9,852

Recent Accounting Pronouncements

The FASB has issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).

Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

F- 32

●

A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and

●

A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

●

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

●

The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.

Derivative Liability

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At March 31, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

F- 33

Reclassification

Certain expense items have been reclassified in the statement of operations for the three months ended March 31, 2017, to conform to the reporting format adopted for the three months ended March 31, 2018.

NOTE 2 - GOING CONCERN

As reflected in the accompanying financial statements, the Company had a net loss of $127,216, net cash used in operations of $185,663 and has an accumulated deficit of $8,536,038, for the three months ended March 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Classification	March 31, 2018			December 31, 2017
Furniture and equipment	$	11,666		$	11,666
Leasehold improvements		38,717			38,717
Computer equipment		3,019			3,019
Total		53,402			53,402
Less: Accumulated depreciation		(31,388	)		(28,779	)
Property and equipment, net	$	22,014		$	24,623

Depreciation expense for the three months ended March 31, 2018, totaled $2,609.

F- 34

NOTE 4 – INTANGIBLE ASSETS

There were no impairment charges taken for the domain name during the three months ended March 31, 2018 and 2017.

Intangible assets consist of the following as of March 31, 2018 and December 31, 2017:

Classification	2018			2017
Domain name	$	2,000		$	2,000
Facilities Manager’s Package Online		1,022			1,022
MLC CD Systems (software)		7,560			7,560
Total		10,582			10,582
Less: Accumulated amortization		(5,119	)		(4,690	)
Intangible assets, net	$	5,463		$	5,892

NOTE 5 - COMMITMENTS & CONTINGENCIES

On February 20, 2014, the Company signed a 60-month lease on a 10,000 sq. ft. office/warehouse facility and paid a deposit of $12,600. The monthly base rent is $4,200 increasing 6% every two years for the term of the lease. The property is adequate for all of the Company’s currently planned activities. On January 22, 2018, the Company entered into a 6-month sublease agreement for a portion of the 10,000 sq. ft. office/warehouse facility. The term of the sublease is February 1, 2018 through July 31, 2018 at $2,000 per month. The Company records the sublease income as a reduction of rent expense in the Consolidated Statements of Operations within general and administrative expenses.

Deferred rent payable at March 31, 2018 was $5,667. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods.

Rent expense, net of sublease payments received, for the three months ended March 31, 2018 and 2017 were as follows:

		2018				2017
Rent expense		$	13,240			$	18,639

NOTE 6 - FAIR VALUE MEASUREMENTS

Carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent convertible notes payable of $778,725 and $122,383 at March 31, 2018 and December 31, 2017, respectively. Financial instruments classified as Level 3 in the fair value hierarchy represents derivative liability of $25,006 and $554,916 March 31, 2018 and December 31, 2017, respectively.

NOTE 7 - NOTE PAYABLE

On June 5, 2015, the Company entered into a five-year loan agreement totaling $36,100. The loan carries interest at a rate of 10.25%.

	March 31, 2018		December 31, 2017
Balance as of period end	$	18,535	$	20,343
Less: current portion		7,714		7,520
Long-term note payable, net	$	10,821	$	12,823

NOTE 8 - DEBT AND CONVERTIBLE LOAN PAYABLE

Convertible Note Payable

On March 24, 2017, the Company entered into a securities purchase agreement with Tangiers Global, LLC (“Tangiers”) relating to the issuance and sale of notes (“Note 1”) in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 1 is convertible into shares of common stock at a price equal to $0.30 per share; provided, however that if Note 1 is not retired on or before the maturity date, defined in Note 1 as a “Maturity Default” the conversion price shall be adjusted to be equal to the lower of: (i) $.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the date that the Company receives a notice of conversion. The Tangiers Note 1 carries interest on the unpaid principal amount at the rate of 8% per annum and is due and payable eight months from the effective date of each payment. As of March 31, 2018, the balance under Note 1 is $369,000, which includes $44,000 guaranteed interest. As of March 31, 2018, Note 1 can be converted into 1,768,738 shares of the Company’s common stock.

F- 35

The Company issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee for the Investment Agreement. The promissory note maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers any time, into shares of the Company’s common stock at a conversion price of $0.1666 per share. Upon a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retied prior to its maturity date, Tangiers’ conversion rights under Note 2 would be adjusted such that the conversion price would be the lower of (i) $0.1666 or (ii) b) 65% of the average of the two lowest trading prices of the Company’s common stock during the 10 consecutive trading days prior to the date on which Tangiers elects to convert all or part of the note. As of March 31, 2018, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of March 31, 2018, Note 2 can be converted into 300,120 shares of the Company’s common stock.

On October 10, 2017, the Company executed Amendment #1 to the Tangiers Note 1 for a final draw of $250,000 payment plus a 10% original issue discount (“Note 2”). Amendment #1 modified the maturity date for the Tangier Note from eight months to six months from the effective date of each payment. All other terms and conditions of the Tangiers Note 1 remain effective.

The execution of Amendment #1 to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. Other than the foregoing, none of the above listed notes are currently in default.

On October 17, 2017, the Company issued 329,670 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $30,000 of Note 1 at a conversion price of $0.09.

On December 18, 2017, the Company issued 516,648 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $45,000 of Note 1 at a conversion price of $0.09.

On January 9, 2018, the Company issued 899,685 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $100,000 of Note 1 at a conversion price of $0.11.

F- 36

On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.09.

On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.08.

For the three months ended March 31, 2018, the Company accrued $17,160 in guaranteed interest related to the outstanding the notes.

Debt Discount and Original Issuance Costs for Convertible Note

During the three months ended March 31, 2018 and for the year ended December 31, 2017, the Company recorded debt discounts totaling $24,228 and $69,541, respectively. The debt discount amount consists of debt discount due to beneficial conversion features, warrant, original issue costs, and debt issue costs.

The debt discounts recorded in 2018 and 2017, pertain to beneficial conversion feature on the convertible notes. The notes are required to be bifurcated and reported at fair value on the date of grant.

During the three months ended March 31, 2018 and for the year ended December 31, 2017, the Company amortized $80,563 and $466,862 to interest expense, respectively.

	March 31, 2018			December 31, 2017
Debt discount, beginning of period	$	69,541		$	152,617
Additional debt discount and debt issue cost		35,320			383,786
Amortization of debt discount and debt issue cost		(80,563	)		(466,862	)
Debt discount, end of period	$	24,298		$	69,541

Debt Issuance Costs for Convertible Note

During the three months ended March 31, 2018 and for the year ended December 31, 2017, the Company did not pay any debt issue costs.

NOTE 9 - DERIVATIVE LIABILITIES

The following schedule shows the change in fair value of the derivative liabilities for the three months ended March 31, 2018:

Derivative liabilities - December 31, 2017	$	554,916
Add fair value at the commitment date for convertible notes issued during the current year		-
Less derivatives due to conversion		(286,296	)
Fair value mark to market adjustment for derivatives		(243,615	)
Derivative liabilities - March 31, 2018		25,005
Less : current portion		(25,005	)
Long-term derivative liabilities	$	-

The following schedule shows the change in fair value of the derivative liabilities for the year ended December 31, 2017:

Derivative liabilities - December 31, 2016	$	-
Add fair value at the commitment date for convertible notes issued during the current year		213,453
Less derivatives due to conversion		(18,800	)
Fair value mark to market adjustment for derivatives		360,263
Derivative liabilities - December 31, 2017		554,916
Less : current portion		(554,916	)
Long-term derivative liabilities	$	-

F- 37

NOTE 10 - RELATED PARTY TRANSACTIONS

On February 5, 2018, Dr. Coleman and Benjamin Coleman voluntarily returned and canceled an aggregate of 3,280,470 common shares in order to prevent dilution to the shareholders during the Company’s efforts to secure new senior management, provide additional incentive equity and to form an advisory board. The return of common stock by Dr. Coleman and Benjamin Coleman was a non-cash transaction.

F- 38

NOTE 11 - STOCKHOLDERS’ DEFICIT

Series A Convertible Preferred Stock

During the third quarter of fiscal 2016, the Company initiated a subscription agreement to offer accredited investors up to 1,000,000 units (“Units”) of securities, each Unit consists of one (1) share of Series A Convertible Preferred Stock and one (1) Series A Warrant (“Warrant”). The price per Unit was $0.50 for a maximum aggregate proceeds of $500,000. There are no dividends on the Series A Convertible Preferred Stock. The Warrants were exercisable at $0.50 per share for a period of one year. As of March 31, 2018, the warrants were not exercised. Therefore, the Company has disclosed the expiration of the Warrants.

Common Stock

On January 9, 2018, the Company issued 899,685 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $100,000 of Note 1 at a conversion price of $0.11.

On January 15, 2018, the Company issued 200,000 shares of common stock related to an Employment Agreement with Sandra Fowler, Chief Marketing Officer. The Company recorded a fair value of $66,000 ($0.33 per share) based upon the most current trading price of the Company’s stock.

On February 20, 2018, the Company issued 43,387 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $7,810 ($0.18 per share) based upon the most current trading price of the Company’s stock.

On February 23, 2018, the Company issued 12,135 shares of common stock related to a Director Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $2,063 ($0.17 per share) based upon the most current trading price of the Company’s stock.

On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.09.

On March 20, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $4,200 ($0.14 per share) based upon the most recent trading price of the Company’s stock.

On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $.08.

F- 39

Common Stock Warrants

For the three months ended March 31, 2018 and the year ended December 31, 2017, no warrants were outstanding.

NOTE 12 - SUBSEQUENT EVENTS

On April 10, 2018, the Company defaulted on Amendment #1, the second draw due under Note 1, as the maturity date expired. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion in the future.

On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.07.

On May 12, 2018, the Company defaulted on Note 2, which was issued on October 12, 2017 with a principal amount of $50,00. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 2 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 21, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 2 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion.

F- 40

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this filing. Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Although the forward-looking statements in this registration statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes, and other financial information included in this filing.

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

We, under our brand name Indoor Harvest®, are a developer of personalized cannabis medicines and a provider of advanced cultivation methods and processes for the cannabis industry. We are seeking to use the relationships and technology we have developed to become a registered producer and seller under the CSA of pharmaceutical grade cannabis for research by third parties developing targeted treatment for specific medical symptoms.

We have developed a patent pending aeroponic process of growing cultivars in an air or mist environment without the use of soil or an aggregate growing medium. Aeroponic production differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as a growing medium and essential minerals to sustain plant growth, aeroponics is conducted by suspending plant roots in the air and spraying them with a nutrient-laden mist. Because water is used in aeroponics to transmit nutrients, it is sometimes considered a type of hydroponics. Our aeroponic process and production methods provide an ability to test the phenotypic plasticity of cannabis and to test and develop specific phenotypic response. Phenotypic plasticity refers to the changes in cannabis morphology and physiology due to its adaption to a unique environment and its impact on phytochemical production.

We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense low- THC cannabis under the TCUP. THC is a psychotropic cannabinoid and is the principal psychoactive constituent of cannabis. We have signed a binding LOI with Zoned Properties outlining three independent pending agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. The Company intends to generate revenue from the manufacture and distribution of low-THC cannabis to treat intractable epilepsy under the TCUP, through related engineering, project management, equipment leasing and technology licensing from constructed facilities in Tempe, Arizona and Parachute, Colorado and through the development and licensing of related environmental and climate recipes.

We are an “emerging growth company” (“EGC”) that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business Startups Act (“the JOBS Act”), that eases restrictions on the sale of securities; and increases the number of shareholders a company must have before becoming subject to the SEC’s reporting and disclosure rules. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. Because of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

Our operational expenditures are primarily related to developing our technology, sources and methods, developing research partnerships and collaborations and the costs related to being a fully reporting company with the SEC.

Current Projects

On October 11, 2017, the Company entered into a binding LOI with Zoned Properties outlining three pending independent agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. Zoned Properties is an OTCQX quoted Company and strategic real estate development firm whose primary mission is to identify, develop, and lease sophisticated, safe, and sustainable properties in emerging industries, including the licensed medical cannabis industry.

Under the terms of the binding LOI, the two companies will work together to mutually agree upon terms, provisions and obligations of three simultaneous, independent agreements.

●

On October 26, 2017, the Company entered into a LOI with Harvest Air and on November 1, 2017, entered into a LOI with BIOS Lighting. The three companies plan to collaborate with Indoor Harvest towards the development of a fully integrated platform designed to provide cannabis producers the ability to manage and record phenotypic plasticity in the cannabis plant. By combining Indoor Harvest’s proven aeroponic methods, Harvest Air’s HVAC designs, and customized lighting solutions from BIOS Lighting, the three Companies plan to demonstrate an ability to manipulate and control phenotypic expression in the cannabis plant for the purpose of research and production of pharmaceuticals.

Tempe Arizona Research Cultivation Site

Parachute Colorado Production Facility

Texas Compassionate Use Program Applicant

We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense Low-THC cannabis under the TCUP to treat intractable. The Company plans to partner with Zoned Properties, Harvest Air and BIOS Lighting to develop a 50,000 square foot facility in Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. Zoned Properties and Indoor Harvest will work together in good faith to mutually agree upon the terms, provisions and obligations of an Agreement for Indoor Harvest to engage Zoned Properties as the exclusive Strategic Development Advisory for Indoor Harvest’s development in Texas under the TCUP. The Company also expects to file an application with the DEA to register the facility under the CSA. The Company expects to generate revenue through the production and sale of cannabis under the TCUP. There is no assurance that any or all of the agreements will be executed or that the Company will be successful in obtaining a license to produce cannabis in Texas or in registering the completed facility with the DEA.

In late 2016, the DPS modified its approach to restrict the number of licenses to three. This necessitated the development of a competitive review process, where three applicants were conditionally approved based on the review of the submitted application materials. Upon successful onsite inspection of their facilities, qualified applicants will be issued licenses. Because of this competitive review process, Alamo CBD placed 16th out of 43 applicants and its application is currently considered pending by the DPS. The Company and other pending applicants have questioned the last-minute modification in approach by the DPS and the lack of transparency in the reviewing process.

Results of Operations

Three months ended March 31, 2018 compared to the three months ended March 31, 2017

The following table presents our operating results for the three months ended March 31, 2018 compared to March 31, 2017:

	For the three months ended March 31,
	2018			2017			$ Change			% Change
Revenue	$	-		$	-		$	-			-	%
Cost of Sales		-			-			-			-	%
Gross profit (loss)		-			-			-			-	%
Operating expenses
Depreciation and amortization expense		3,038			13,141			(10,103	)		(77	)%
Research and development		-			737			(737	)		(100	)%
Professional fees		71,375			90,547			(19,172	)		(21	)%
General and administrative expenses		198,190			622,403			(424,213	)		(68	)%
Total operating expenses		272,603			726,828			(454,225	)		(62	)%
Loss from operations		(272,603	)		(726,828	)		(454,225	)		(62	)%
Other expense
Other income (expense)		4			(11,733	)		11,737			(100	)%
Interest expense		(17,669	)		(112,685	)		(95,016	)		(84	)%
Amortization of debt discount		(80,563	)		(205,007	)		(124,444	)		(61	)%
Change in fair value of embedded derivative liability		243,615			-			(243,615	)		100	%
Total other expense		145,387			(329,425	)		(474,812	)		(144	)%
Net loss	$	(127,216	)	$	(1,056,253	)	$	(929,037	)		(88	)%

Year ended December 31, 2017 compared to year ended December 31, 2016

The following table presents our operating results for the year ended December 31, 2017 compared to December 31, 2016:

	2017			2016			$ Change			% Change
Revenue	$	—		$	163,996		$	(163,996	)		(100	)%
Cost of Sales		—			111,581			(111,581	)		(100	)%
Gross profit (loss)		—			52,415			(52,415	)		(100	)%
Operating expenses
Depreciation and amortization expense		51,507			51,484			23			0	%
Research and development		1,625			16,184			(14,559	)		(90	)%
Professional fees		418,092			108,093			309,999			287	%
Loss on impairment of goodwill		1,440,961			—			1,440,961			100	%
Loss on investment in joint venture		250,000			—			250,000			100	%
General and administrative expenses		1,061,493			1,129,711			(68,218	)		(6	)%
Total operating expenses		3,223,678			1,305,472			1,918,206			147	%
Loss from operations		(3,223,678	)		(1,253,057	)		1,970,621			157	%
Other expense
Other income (expense)		7,196			52,323			(45,127	)		(86	)%
Interest expense		(163,047	)		(16,427	)		146,620			893	%
Derivatives interest expense		—			(66,980	)		(66,980	)		(100	)%
Amortization of debt discount		(515,814	)		(438,032	)		77,782			18	%
Amortization of debt issuance costs		—			(20,000	)		(20,000	)		(100	)%
Amortization of original issue discount		—			(22,500	)		(22,500	)		(100	)%
Loss on debt settlement		—			(131,944	)		(131,944	)		(100	)%
Loss on sale of equipment		(73,750	)		(36,627	)		37,123			101	%
Change in fair value of embedded derivative liability		(442,957	)		(141,756	)		301,201			212	%
Total other expense		(1,188,372	)		(821,943	)		366,429			45	%
Net loss	$	(4,412,050	)	$	(2,075,000	)	$	2,337,050			113	%

Revenues

Revenue for the year ended December 31, 2017 and December 31, 2016 were $0 and $163,996, respectively, for a decrease of $163,996 or 100%. The decrease is primarily due to the completion of the projects with ER Michigan, Urbanika Farms, University of Arizona CEAC, GSS Colorado and PH Research Platform during 2016. The Tweed pilot project was primarily performed during 2016 and completed during the first quarter 2017. In addition, revenues decreased due to the Company’s management’s decision in late-2016 to discontinue actively selling its products and services to the vertical farming industry and to focus on utilizing the Company’s developed technology and methods for the cannabis industry. There was no revenue for the three months ended March 31, 2018 and March 31, 2017.

Cost of Sales

Cost of sales for the year ended December 31, 2017 and December 31, 2016 were $0 and $111,581, respectively, for a decrease of $111,581 or 100%. The decrease is primarily due to the completion of the projects with ER Michigan, Urbanika Farms, University of Arizona CEAC, GSS Colorado and PH Research Platform during 2016. The Tweed pilot project was primarily performed during 2016 and completed during the first quarter 2017. In addition, on August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production. There were no costs of sales for the three months ended March 31, 2018 and March 31, 2017.

Gross Profit (Loss)

Gross profit (loss) for the year ended December 31, 2017 and December 31, 2016 were $0 and $52,415, respectively, for a decrease of $52,415 or -100%. The decrease is primarily the result of the completion of the projects as noted above as well as the incurrence of warranty expenses. On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production.

Operating Expenses

Total operating expenses for the year ended December 31, 2017 and December 31, 2016 were $3,223,678 and $1,305,472, respectively, for an aggregate increase of $1,918,206 or 147%. The aggregate increase is primarily related to the loss on impairment of goodwill of $1,440,961, or 100%, the loss on the investment in joint venture of $250,000, or 100 and an increase in professional fees of $309,999 or 287% associated with the TCUP application as well as the Alamo CBD merger.

Total operating expenses for the three months ended March 31, 2018 and March 31, 2017 were $272,603 and $726,828 respectively, for an aggregate decrease of $454,225 or 62%. The decrease is primarily related to stock issued to consultants and directors for services performed of $461,930 during the first quarter of 2017 compared to $80,073 during the first quarter of 2018.

Other Expense

Total other expense for the year ended December 31, 2017 and December 31, 2016 were $1,188,372 and $821,943, respectively, for an increase of $366,429 or 45%. The increase is primarily related to the change in the fair value of the embedded derivative liability of $301,201 related to the Tangiers convertible notes payable, and an increase in interest expenses of $146,620 or 9% related to the paydown of the FirstFire Notes and Chuck Rifici Notes and the addition of interest expense due to the Tangiers Notes. The increase is offset in part by the loss on debt settlement that was incurred in 2016 and not in 2017.

Total other income for the three months ended March 31, 2018 was $145,387 and total other expense for the three months ended March 31, 2017 was ($329,425), for an improvement of $474,812 or 144%. The improvement is primarily related to a positive change in the fair value of the embedded derivative liability of $243,615 or 100% related to the Tangiers convertible notes payable, a decrease in interest expenses of $95,016 or 84% related to the paydown of the FirstFire Notes and Chuck Rifici Notes and a decrease in amortization of debt discount of $124,444 or 61%.

Net Loss

As a result of the factors discussed above, net loss for the year ended December 31, 2017 and December 31, 2016 was $4,412,050 and $2,075,000, respectively, for an increase of $2,337,050 or 113%.

As a result of the factors discussed above, net loss for the three months ended March 31, 2018 and March 31, 2017 was $127,216 and $1,056,253, respectively, for a decrease in net loss of $929,037 or 88%.

Liquidity and Capital Resources

As of December 31, 2017, we had $89,905 in total current assets and current liabilities of $1,119,821. Accordingly, our working capital deficit at December 31, 2017 was $1,029,916. We have the ability to raise additional capital as needed through external equity financing transactions.

As of March 31, 2018, we had $92,981 in total current assets and current liabilities of $716,959. Accordingly, our working capital deficit at March 31, 2018 was $623,978. We have the ability to raise additional capital as needed through external equity financing transactions.

Operating Activities

Net cash used in operating activities for the year ended December 31, 2017 and December 31, 2016 were $1,019,729 and $662,170, respectively, for an increase of $357,559 or 54%. The increase is primarily related to the increase in our net loss of $4,412,050, offset by the non-cash impairment of goodwill of $1,440,961.

Net cash used in operating activities for the three months ended March 31, 2018 and March 31, 2017 were $185,663 and $352,103, respectively, for a decrease of $166,440 or 47%. The improvement in net cash used in operating activities is primarily related to a decrease in our net loss of $929,037, offset by a decrease in the amortization of debt discount of $124,444 or 61%, a decrease in the change in fair value of embedded derivative liability of $243,6156 or 100%, a decrease in stock issued for services of $381,857 or 83%.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2017 and December 31, 2016 were $239,750 and $2,294, respectively, for an increase of $237,456 or 10351%. The increase is primarily due to the investment in the Vyripharm joint venture of $250,000.

Net cash used in investing activities for the three months ended March 31, 2018 and March 31, 2017 were $0 and $250,550, respectively, for a decrease of $250,550 or 100%. The decrease is primarily due to the investment in the Vyripharm joint venture of $250,000 in the first quarter 2017.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2018 and March 31, 2017 were $193,191 and $671,868, respectively, for a decrease of $478,677 or 71%. The decrease is primarily related a decrease in the issuance of common stock for cash of $824,000 or 100% and a decrease in proceeds from demand note payable, less OID costs paid, of $250,000 or 100%, offset by a decrease in repayments of note payable of $225,323 or 99%, an increase in proceeds from convertible notes payable, less offering costs and OID costs paid, of $195,000 or 100% and a decrease in the repayment of convertible note of $175,000 or 100%.

Cash Requirements: Potential Future Planned Operational Activities

During the next 12 months, we anticipate engaging in the additional planned operational activities set forth in the table below, although we may vary our plans depending upon operational conditions and available funding.

Category	Estimated Time	Estimated Cost
Development Rights, Parachute, Colorado	Q1 2018- Q4 2018	$	225,000
Facility Construction, Tempe, Arizona	Q1 2018- Q4 2018	$	775,000

Existing Cash and Operational Cash Flow

During the next twelve months, we anticipate that we will incur a minimum of approximately $560,000 of general and administrative expenses and $1,000,000 in development expenses in order to execute our current business plans. We also plan to incur significant sales, marketing, research and development expenses during the next 12 months. We must obtain additional financing to continue our operations. We may not be able to obtain additional funding on terms that are favorable to us or at all. We may not be able to obtain sufficient funding to continue our operations, or if we do receive funding, to generate adequate revenues in the future or to operate profitably in the future. These conditions raise substantial doubt about our ability to continue as a going concern.

Meeting Cash Requirements

Based upon the assumption of our monthly current operational burn rate remaining unchanged during the fiscal year, exclusive of those costs in our additional planned operations for the next 12, months as set forth above, the Company currently has sufficient funds through a combination of the sources of funding above to continue our current operations for the next 12 months. There is no assurance we will obtain the anticipated funds from our sources of funding. If we don’t obtain additional funding, and we don’t take other measures such as cutting back operational activities, we may not have sufficient funds to continue operations for the next 12 months. During March 2017, the Company laid-off two employees and as cost cutting measures in anticipation of our ultimate combination with Alamo CBD.

The ability to fund our operational activities is contingent upon us obtaining additional financing. If we don’t obtain the anticipated funds from our sources of funding beyond those needed for current operational activities, we may be able to finance our additional planned operations and continue growing our business.

We cannot guarantee we will be successful in our business operations, both current and potential future operations as described above.

We cannot guarantee that we will have sufficient financial resources to fund current operational activities and additional planned operational activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. To become profitable and competitive, we must continue to execute our business plan as described above.

We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2018. Our auditor has indicated in their Report that these conditions raise substantial doubt about our ability to continue as a going concern.

Net cash provided by financing activities for the year ended December 31, 2017 and December 31, 2016 were $1,216,713 and $641,777, respectively, for an increase of $574,936 or 90%. The increase is primarily related to year over year increases in the issuance of common stock of $774,000 and issuance of preferred stock for cash of $175,000, offset by the settlement of demand note payable, less OID costs paid during 2017 of $225,500 and a decrease in proceeds from convertible notes payable, less offering costs and OID costs paid year over year of $175,000.

Cash Requirements: Current Operational Activities

Our estimated minimum day-to-day operational costs, exclusive of those costs in our Potential Future Planned Operational Activities for the next 12 months, as set forth before, are estimated to be approximately $522,024 to maintain current operational activities during the next 12 months. Our minimal annual operating expenses includes $320,000 in payroll expenses, our lease agreement for our 10,000 sq. ft. facility of $53,424 per year, our estimated annual utility expenses of $10,800 and $12,800 in miscellaneous operating expenses. In addition, we will have $125,000 in costs related to maintaining our publicly traded status over the next 12 months.

Cash Requirements: Potential Future Planned Operational Activities

Category	Estimated Time	Estimated Cost
Development Rights, Parachute, Colorado	Q1 2018- Q4 2018	$	225,000
Facility Construction, Tempe, Arizona	Q1 2018- Q4 2018	$	775,000

Existing Cash and Operational Cash Flow

Kodiak Capital Group LLC Investment Agreement for $2,000,000

On January 30, 2016, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with Kodiak Capital Group, LLC (the “Purchaser”). On May 12, 2016, the SEC declared our registration statement effective. On June 28, 2016, we requested that the SEC withdraw the registration statement. No shares were issued under the Purchase Agreement. Pursuant to Rule 477(c), the Company advised the Commission that it may, upon consideration of its financing and strategic options under discussion, undertake a subsequent private offering in reliance on Rule 155(c) promulgated under the Securities Act.

FirstFire and Rockwell Bridge Financing for $250,000

On March 22, 2016, the Company entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC (“FirstFire”), and Rockwell Capital Partners Inc. (“Rockwell”), relating to the issuance and sale of notes of $272,500 in aggregate principal amount including $250,000 actual payment of purchase price plus a 9% original issue discount, and an aggregate total of 50,000 shares of common stock valued at $23,500 ($0.47/share). The notes carry interest on the unpaid principal amount at the rate of 3% per annum. Any principal amount or interest which is not paid when due shall bear interest at the rate of 15% per annum from the due date until the same is paid. The notes matured on September 22, 2016. The Company defaulted on the Notes on September 23, 2016.

On September 27, 2016, the Company paid $203,441 in cash to Rockwell to settle debts owed and issued 2,581,561 shares of common stock at $0.08 per share, pursuant to the terms of the Note, to FirstFire to settle $203,351 in debts owed. This share issuance was treated as a conversion of debt to equity.

Chuck Rifici Holdings Note for $204,000

On September 26, 2016, we entered into a promissory note and warrant purchase agreement with Chuck Rifici Holdings, Inc., a Canadian Corporation. The note consisted of $225,500 in aggregate principal amount including $204,000 actual payment of purchase price plus a 10% original issue discount. The warrant purchase agreement consisted of an aggregate total of 250,000 common stock warrants to purchase common stock for $0.30 for a period of 12 months, to the buyer, in accordance with and in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended and/or Regulation S of the Securities Act of 1933, as amended for the above issuances to non-US citizens or residents.

On March 20, 2017, the Company settled $269,498 in principal and interest, plus 115% multiplied by the principal amount of $225,500 plus accrued interest of $8,846 on the principal amount of a promissory note with Chuck Rifici Holdings, Inc. originally dated September 26, 2016. The Company settled the amount owed by paying $269,498 in cash. The Company was released from any further liability under this Rifici Note upon payment of this amount.

FirstFire October Note for $125,000

On October 19, 2016, the Company entered into a securities purchase agreement with FirstFire relating to the issuance and sale of a promissory note of $137,500 in aggregate principal amount including $125,000 actual payment of purchase price plus a 10% original issue discount.

On March 20, 2017, the Company settled $177,604 in principal and interest, plus 125% multiplied by the principal amount of $137,500 plus accrued interest of $4,583 on the principal amount of a promissory note with FirstFire originally dated October 19, 2016. The Company settled the amount owed by paying $77,604 in cash and by issuing 333,333 shares of common stock at the fixed conversion price of $0.30 per share for a total value of $100,000. The Company was released from any further liability under the FirstFire note upon delivery of these amounts of cash and stock.

FirstFire December Note for $125,000

On December 14, 2016, the Company entered into a securities purchase agreement with FirstFire relating to the issuance and sale of a promissory note of $137,500 in aggregate principal amount including $125,000 actual payment of purchase price plus a 10% original issue discount.

On March 20, 2017, the Company settled $175,313 in principal and interest, plus 125% multiplied by the principal amount of $137,500 plus accrued interest of $2,750 on the principal amount of a promissory note with FirstFire originally dated December 14, 2016. The Company settled the amount owed by paying $175,313 in cash. The Company was released from any further liability under this FirstFire Note upon payment of this amount.

Rule 506(b) Private Stock Offering

From February 22, 2017 through March 15, 2017, the Company sold, in reliance upon Regulation D Rule 506, a total of 2,060,000 shares of common stock to 17 U.S. accredited investors at $0.40 per share for cash totaling $824,000.

Tangiers Promissory Notes

The Company has issued the following promissory notes to Tangiers:

●

“Note 1”: $550,000 Promissory Note dated March 22, 2017 and amendment thereto dated October 10, 2017.

	●	“Note 2”: $50,000 Promissory Note dated October 12, 2017.
	●	“Note 3”: $550,000 Promissory Note dated January 16, 2018, amendment thereto dated February 13, 2018, and amendment thereto dated April 17, 2018.

As of May 31 2018, the balance under Note 1 is $319,000, which includes $44,000 guaranteed interest. As of May 31, 2018, Note 1 can be converted into 1,378,205 shares of the Company’s common stock.

The Company issued Note 2, a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee on October 12, 2017. The Note 2 maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers any time, into shares of the Company’s common stock at a conversion price of $0.1666 per share. Upon a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retied prior to its maturity date, Tangiers’ conversion rights under Note 2 would be adjusted such that the conversion price would be the lower of (i) $0.1666 or (ii) b) 65% of the average of the two lowest trading prices of the Company’s common stock during the 10 consecutive trading days prior to the date on which Tangiers elects to convert all or part of the note. As of December 31, 2017 and May 31, 2018, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of December 31, 2017 and May 31, 2018, Note 2 can be converted into 300,120 shares of the Company’s common stock.

Note 3 is convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. However, if Note is not paid back on or before the maturity date, defined in Note 3 as a “Maturity Default”, the conversion price of Note 3 shall then be adjusted to be equal to the lower of: (i) $0.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion of Note 3. As of May 31, 2018, the balance under Note 3 is $374,220, which includes $27,720 guaranteed interest. As of May 31, 2018, Note 3 can be converted into 1,155,000 shares of the Company’s common stock.

The funds provided to the Company pursuant to Note 1 on March 22, 2017 have a maturity date of September 24, 2017, and the funds provided pursuant to Note 1 Amendment #1 on October 10, 2017 have a maturity date of April 10, 2018. Note 2 has a maturity date of May 12, 2018. The first draw under Note 3 provided on January 16, 2018, has a maturity date of July 16, 2018. The funds provided to the Company pursuant to Note 3 Amendment #1 on February 13, 2018, have a maturity date of August 13, 2018. The funds provided to the Company pursuant to Note 3 Amendment #2 on April 17, 2018, have a maturity date of October 17, 2018. Further, the amount of shares issuable upon conversion stated above are estimates only and any conversion of Note 1 or Note 2 or Note 3, by Tangiers is in solely at its discretion and the notes may never be converted, and further if a conversion does occur, the timing of such conversion would affect the potential number of common stock shares issued upon any such conversion based on the outstanding note amount and applicable conversion price at the time of any such conversion.

The execution of the amendment to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. Further, the Company is in default on the funds provided pursuant to Note 1 Amendment #1 as the maturity date of April 10, 2018 has expired. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 1 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. On May 12, 2018, the Company defaulted on Note 2. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding principal, and convert all or a portion of the outstanding principal into shares of common stock of the Company. The default conversion rate of Note 2 is now the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion. As of May 21, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate under Note 2 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion. Other than the foregoing, none of the above listed notes are currently in default.

Investment Agreement with Tangiers

Meeting Cash Requirements

The ability to fund our Operational Activities is contingent upon us obtaining additional financing. If we don’t obtain the anticipated funds from our sources of funding beyond those needed for current operational activities, we may be able to finance our additional planned operations and continue growing our business.

We cannot guarantee we will be successful in our business operations, both current and potential future operations as described above.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

For a discussion of our accounting policies and related items, please see the Notes to the Financial Statements, included in Item 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

DIRECTORS AND EXECUTIVE OFFICERS

The following sets forth our Officers and Directors as of May 31 , 2018. The Board of Directors elects our Executive Officers annually. Our Directors shall be elected for the term of one year, and until their successors are elected and qualified, or until their earlier resignation or removal. Our Officers also shall be elected for the term of one year, and until a successor is elected and qualified, or until an earlier resignation or removal. Our Directors and Executive Officers are as follows:

Name	Position	Age
Daniel Weadock	Chief Executive Officer & Director	56
Annette Knebel	Chief Financial Officer & Director	45
Sandra Fowler	Chief Marketing Officer	41
Rick Gutshall	Director	43
John Zimmerman	Director	36
Dr. Lang Coleman	Director	63

Daniel Weadock. On February 20, 2018, Mr. Daniel Weadock was appointed Chief Executive Officer and Director of the Company. Since August 2017, Mr. Weadock was Co-Founder and CEO of Junebug Technologies, LLC, a next generation microbial biotechnology company focused on developing solutions based on photosynthetic bacteria and other versatile microorganisms. Since 2005, Mr. Weadock also has served as President and CEO of The International in Bolton, Massachusetts, a world class golf and special event destination with its own boutique lodge and signature restaurant. As a change maker, he led a cultural and business transformation, from a very traditional and conservative enterprise to a more modern, open and forward-thinking organization. Prior to 2005, Mr. Weadock served as Vice President of Enterprise Sales for Williams Telecommunications from 2002 through 2004, building a new sales team and opening new doors in enterprise markets. From 1999 through 2001, Mr. Weadock served as Co-Founder and CEO of FilmAxis, an online, broadband virtual film market, where he led business plan development and capital raising. Prior to FilmAxis, Mr. Weadock was an Executive Vice President of Consortio from 1999 through 2000, a Seattle, Washington incubator of internet-based business to business communities, where he led business development. Before joining Consortio, Mr. Weadock spent a year working with Fast Engines as their VP of Sales and President, from 1998 through 1999, his first start up in Cambridge, Massachusetts, a small software development company. Prior to Fast Engines, Mr. Weadock spent more than 10 years with Cable & Wireless Plc in a variety of roles around the world. After landing what was at the time one of the largest data networking infrastructure deals in Cable & Wireless’ history, Mr. Weadock was awarded a Fellowship to MIT’s Sloan School of Management where he earned a Master of Science in Management. Mr. Weadock is a forward-thinking visionary who will bring his many years of experience as a thought leader and an agent of change to the next stage of the Company’s development. As a member of the board, Mr. Weadock contributes the benefits of his executive leadership and management experience in developing corporate strategy, assessing emerging industry trends, and business operations. The Company believes that his contributions and deep understanding of all aspects of our business, products and markets will provide substantial experience to fuel our corporate growth.

Annette Knebel . Ms. Knebel has served as our Chief Financial Officer since December 2017, and as a member of the Board since August 2017. Ms. Knebel served as our Chief Accounting Officer from August 2017 to December 2017. Since 2016, Ms. Knebel has operated a financial reporting and business consulting firm offering outsourced accounting management. From 2014 to 2016, Ms. Knebel worked for Shawcor Ltd., a pipeline services company as both the Division Manager of Policy and Compliance and Division Assistant Controller. From 2013 until 2014, Ms. Knebel was the Senior Balance Sheet Accounting Analyst for Hewlett-Packard, working directly with the CFO, Corporate Controller and Investor Relations ensuring proper cash flow reporting and guidance to ensure compliance with U.S. generally accepted accounting principles (“GAAP”), and corporate policies. From 2012 until 2013, Ms. Knebel worked as an Internal Audit Supervisor for KBR, Inc. (“KBR”), an engineering company, managing anti-corruption and operational audits across KBR’s multi-national business segments as well as risk management and developing corporate accounting policies and procedures. From 1998 until 2011, Ms. Knebel worked for various accounting firms as an Assurance Manager and Assurance Senior, responsible for both private and public company accounting and audits. Ms. Knebel received a Bachelor of Business Administration from the University of Houston in 1998. Ms. Knebel has been a Certified Public Accountant since 2004. As a member of the Board and Chief Financial Officer, Ms. Knebel will contribute the benefits of her senior level accounting experience and will manage the Company’s accounting policy and procedures. Her contributions and deep understanding of all aspects of our business and industry will provide substantial experience to develop accounting procedures and policies and guide management in accounting decisions.

Sandra Fowler. On January 16, 2018 Ms. Sandra Fowler was appointed as the Chief Marketing Officer for Indoor Harvest Corp. From August 2010 through June 2016 Ms. Fowler held positions at Cargill Corporation, where she worked on strategy and innovation with a focus on stage gate for product commercialization. From 2006 through 2009 she held key marketing positions within the Starbucks Coffee Company. There, she was instrumental in driving beverage innovation and the launch of the hot breakfast sandwich program.

From 2002 to 2006 Ms. Fowler held a number of different positions within the Sara Lee Corporation, working with quick service restaurant partners to managing the gaming and lodging business for the protein division and later leading marketing efforts for the coffee and tea business unit. From 1997 to 2002 Ms. Fowler was an Associate Brand Manager and Brand Manager for YUM! Brands, supporting the Taco Bell business. There, she led cross functional team as project manager to create and launch products. Under her leadership, the iconic late night sub-brand of big brand Taco Bell was re-positioned and re-launched.

Ms. Fowler has 15 years of brand marketing, product development, consumer insights and strategy & innovation experience in the consumer-packaged goods, and food & beverage spaces. Ms. Fowler received her BS in Food Science and her MBA from the University of California, Davis. As Chief Marketing Officer, Ms. Fowler will lead the re-brand, and re-positioning efforts of Indoor Harvest as we position ourselves as market leaders in the Medicinal Cannabis space. She will contribute to developing Corporate Strategy, identify and assess emerging industry trends and align the Company with strategic partners who are leveraging science to be at the forefront of precision genetics for personalized medicine.

Rick Gutshall. Mr. Gutshall has served as our Interim Chief Executive Officer since August 2017 to February 20, 2018 and has served as a member of our Board of Directors since August 2017 and served as our Chief Financial Officer from August 2017 to December 2017. Since 2016, Mr. Gutshall has served as Chief Financial Officer of Alamo CBD LLC, and since 1999, he has served as a principal of KW Gutshall & Associates (“KW Gutshall”). Mr. Gutshall is responsible for personalized financial planning, wealth management and retirement planning for clients at KW Gutshall and has been a licensed financial advisor since 1997. Mr. Gutshall received his Bachelor of Business Administration, Management and Operations from Concordia University-Austin in 1997. As a member of the Board, Mr. Gutshall will contribute the benefits of his executive leadership and management experience in finance, business development, contract negotiations and public speaking. On February 20, 2018, Mr. Rick Gutshall resigned as Interim Chief Executive Officer of the Company.

John Zimmerman. Mr. Zimmerman has served as a Director since 2015. He also served as Vice President of Business Development from 2016 to December 2017. Currently, Mr. Zimmerman is the founder and CEO of Harvest Air. Prior to founding Harvest Air, Mr. Zimmerman served as Director of Sales and Marketing at PUE 1.0. Mr. Zimmerman also held positions as a Project Manager and Business Development Manager for The Brandt Companies, from 2011 until 2014. From 2004 through 2011, Mr. Zimmerman held the position of Project Manager for TDIndustries. In these positions, he spent much of his career designing, selling, and building mechanical systems for large-scale commercial buildings.

He obtained a bachelor’s degree in Mechanical Engineering from the University of Texas at Austin. John also obtained a master’s degree in Building Construction Management from Purdue University, and is a registered Professional Engineer in the State of Texas.

As a member of the Board, John contributes his expertise in mechanical system design and construction in developing mechanical systems to support and optimize the indoor farms of the future. His mission it to have Indoor Harvest be the leader in research and development of mechanical systems for use in indoor farming, which we believe currently is nearly non-existent.

Dr. Lang Coleman . In August 2017, Dr. Lang Coleman was appointed as a member of the Board. Dr. Coleman is a proud disabled Army veteran, long-time Texas resident, and psychologist specializing in Neuropsychology. Dr. Coleman received his B.S. and M.A. from Austin Peay State University in Clarksville, Tennessee, his Ph.D. in Clinical Psychology from the University of Kansas, and he attended law school at the University of Texas at Austin. Dr. Coleman completed his medical internship at William Beaumont Army Medical Center in El Paso, Texas, and spent 22 years, from 1972 through 1994, in U.S. Army Psychiatry. A pensioned Army Officer and decorated combat veteran, Dr. Coleman formerly directed soldiers and planned both treatments and evacuations for psychiatric casualties in a theatre of war for over 30,000 soldiers and marines. From his time as an Army Major, he has extensive knowledge and experience with chain of custody in his dealings with deliverables ranging from drug-testing biological samples to weapons and ordinance and holds the Combat Medical Badge. After serving 17 years, from 1998 through 2015, Dr. Coleman retired as a tenured professor of psychology at St. Philip’s College in San Antonio, Texas, where he taught Abnormal Psychology and Statistics courses. Dr. Coleman authored curriculum in 1994 for a juvenile justice alternative education program and licensed the copyright, for one year, to The Key Corporation. The school was successfully launched in Dallas. As the CEO of Alamo CBD since March 2017, Dr. Coleman has regularly facilitated, sponsored and participated in many community activities. He has frequently appeared on television and at the Texas State Capital as an advocate for the Compassionate-Use Program. As a member of the Board, Dr. Coleman will contribute the benefits of his military experience treating veterans with post-traumatic stress disorder, or PTSD, and other medical conditions and will manage the Company’s medical and science policy and procedures. His contributions and deep understanding of all aspects of our business and industry will provide considerable experience in developing the Company’s medical and scientific procedures and policies.

Family Relationships

There are no family relationships between any director or executive officer.

Involvement in Certain Legal Proceedings

No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:

	●	Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,

	●	Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),
	●	Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,
	●	Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
	●	Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.
	●	Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.
	●	Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.

EXECUTIVE COMPENSATION

The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for the Company’s last two completed fiscal years for all services rendered to the Company.

2017 Summary Compensation Table

Name and Position	Year		Salary ($)		Bonus ($)		Stock Awards ($) (1)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation ($)		All Other Compensation ($)		Total ($)
Chad Sykes, former CEO, Secretary		2017 (2)		70,000		—		—		—		—		—		—		70,000
		2016		70,000		—		—		—		—		—		—		70,000
John Choo, Former President		2017 (3)		29,999		—		27,482		—		—		—		—		—
		2016		95,272		—		—		—		—		—		—		95,272
John Zimmerman, Former Vice President		2017 (4)		—		—		18,322		—		—		—		—		—
		2016 (5)		—		—		66,000		—		—		—		—		66,000
Annette Knebel, CFO and former CAO		2017 (6)		75,000		—		50,000		—		—		—		—		125,000
Rick Gutshall
Former interim CEO and Former CFO (7)		2017		—				—		—		—		—				—

(1)	For valuation purposes, the dollar amount shown is calculated based on the market price of the common stock on the grant dates. The number of shares granted, the grant date, and the market price of such shares for each named executive officer is set forth below.

(2)	Chad Sykes, Founder, resigned as CEO, Secretary on January 2, 2017 and was appointed Chief Innovation Officer. On August 9, 2017, Mr. Sykes resigned as Chief Innovation Officer.

(3)	John Choo was elected CEO on January 2, 2017 and resigned as President and CEO of Indoor Harvest August 9, 2017.

(4)	John Zimmerman resigned as Vice President of Indoor Harvest December 13, 2017.

(5)	On April 18, 2016, Mr. Zimmerman was elected as Vice President of Business Development and was issued 100,000 shares of common stock per his employment agreement.

(6)	On August 9, 2017, Ms. Knebel was elected as Chief Accounting Officer and was issued 250,000 shares of common stock per her employment agreement. Ms. Knebel served as our Chief Accounting Officer from August 2017 to December 2017. In December 2017, Ms. Knebel was elected as Chief Financial Officer.

(7)

Mr. Gutshall served as the Company’s Chief Financial Officer from August 2017 to December 2017, and as the Company’s Interim Chief Executive Officer from August 2017 to February 20, 2018. On February 20, 2018, Mr. Rick Gutshall resigned as Interim Chief Executive Officer of the Company. Mr. Gutshall was not compensated in any way by the Company relating to his services as the Company’s Interim Chief Executive Officer or as the Company’s Chief Financial Officer in 2017. Mr. Gutshall did receive 758,401 shares of the Company’s common stock in connection with the Alamo Merger, however, such share issuance was not in any way connected or related to Mr. Gutshall’s previous officer positions with the Company nor his position as a director of the Company.

EMPLOYMENT AGREEMENTS

Daniel Weadock, Chief Executive Officer and Director

On February 20, 2018, Mr. Daniel Weadock was appointed Chief Executive Officer and Director of the Company. On February 20, 2018, the Company entered into an executive employment agreement with Mr. Weadock (the “Weadock Employment Agreement”), pursuant to which Mr. Weadock agreed to act as the Company’s chief executive officer. Pursuant to the terms of the Weadock Employment Agreement, Mr. Weadock initial will not receive a salary. However, effective on the business day after the date on which the Company achieves Capitalization (as hereinafter defined) of $2,000,000 or more, Mr. Weadock’s annual base salary will be $100,000. For purposes of the Weadock Employment Agreement, “Capitalization” means aggregate net cash proceeds received by the Company from (a) the Company’s sale of common stock pursuant to Puts (as such term is defined in the Investment Agreement dated as of October 12, 2017 by and between the Company and Tangiers Global, LLC (the “Investment Agreement”)) under the Investment Agreement, and/or (b) any other sale by the Company of common stock or preferred stock, whether in a public offering or a private placement. In addition, pursuant to the terms of the Weadock Employment Agreement, the Company agreed to grant Mr. Weadock (i) 300,000 shares of restricted stock as soon as administratively practicable following execution of the Weadock Employment Agreement, and (ii) 1,584,202 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however , that no grant will be made and no shares will be issued with respect to any grant if Mr. Weadock is not employed by the Company as an executive on the respective Date of Grant as set forth in the agreement. The Weadock Employment Agreement has a term of one year, unless Mr. Weadock’s employment is terminated sooner by the board of directors, and the term will be extended for additional one-year periods unless the Company or Mr. Weadock gives the other party at least 30 days’ prior written notice of its intent not to renew. On February 20, 2018, the Company also entered into a compensation agreement with Mr. Weadock (the “Director Compensation Agreement”).Pursuant to the terms of the Director Compensation Agreement, the Company agreed to grant Mr. Weadock an aggregate of 240,000 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however, that no grant will be made and no shares will be issued with respect to any grant, if Mr. Weadock is not a member of the Company’s board of directors on the respective Date of Grant as set forth in the agreement. If the Company is acquired by, or merged into and with, another entity prior to the last Date of Vesting set forth in the agreement (i.e. February 23, 2022), all shares issuable to Mr. Weadock under the Director Compensation Agreement will become fully vested and non-forfeitable. The Company also agreed to reimburse Mr. Weadock for all reasonable travel and incidental expenses incurred by Mr. Weadock in performing his services and attending meetings as approved in advance by the Company. Also on February20, 2018, the Company also entered into an indemnity agreement with Mr. Weadock (the “Weadock Indemnity Agreement”). Pursuant to the terms of the Indemnity Agreement, the Company agreed to use reasonable efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers; provided, however, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage is reduced by exclusions so as to provide an insufficient benefit, or Mr. Weadock is covered by similar insurance maintained by a subsidiary of the Company. In addition the foregoing, the Company will indemnify Mr. Weadock from certain third party actions, derivative actions and actions where Mr. Weadock is decreased; provided, however, the Company shall not be obligated to indemnify Mr. Weadock for actions including, but not limited to, actions initiated by Mr. Weadock, for any action in which it is determined that the material assertions made by Mr. Weadock in such proceeding were not made in good faith or were frivolous, for any settlements not authorized by the Company, for any actions on the account of Mr. Weadock’s willful misconduct, and for any expenses and the payment of profits arising from the purchase and sale Mr. Weadock of securities in violation of Section 16(b) of the Securities Exchange Act, or any similar successor statute; provided, further that, that the Company shall not be obligated to indemnify Mr. Weadock for expenses or liabilities of any type whatsoever which have been paid directly to Mr. Weadock pursuant to the Company’s D&O Insurance policy.

Rick Gutshall, Former Interim Chief Executive Officer and Current Director

Mr. Gutshall served as our Interim Chief Executive Officer from August 2017 until February 2018 as a member of our Board of Directors since August 2017, and as our Chief Financial Officer from August 2017 to December 2017. On August 9, 2017, the Company entered into a director agreement (the “Gutshall Director Agreement”), employment agreement (the “Gutshall Employment Agreement”) and an indemnity agreement (the “Gutshall Indemnity Agreement”) with Rick Gutshall. The Gutshall Employment Agreement commenced on August 9, 2017.

Pursuant to the terms of the Gutshall Director Agreement, Mr. Gutshall shall serve as a member of the Company’s Board and will receive a stock award in such amount as determined by the Board upon the earlier of (i) 30 days from August 9, 2017 and (ii) the closing of a financing pursuant to which the Company receives a minimum of $500,000 in proceeds. In addition, Mr. Gutshall shall be reimbursed for all reasonable travel and other incidental expenses incurred in the performance of his services, including attendance at meetings, as approved by the Company.

Pursuant to the terms of the Gutshall Employment Agreement, Mr. Gutshall agreed to serve as Interim Chief Executive Officer and Chief Financial Officer of the Company. The initial term of the agreement will expire on August 9, 2018 and commencing on August 9, 2018 and on each anniversary of such date thereafter, the term of the Gutshall Employment Agreement shall automatically renew for one-year periods, unless earlier terminated pursuant to the terms of the Gutshall Employment Agreement. In consideration for Mr. Gutshall’s services, the Board shall determine Mr. Gutshall’s compensation upon the earlier of (i) 30 days from August 9, 2017 and (ii) the closing of a financing pursuant to which the Company receives a minimum of $500,000 in proceeds. On February 20, 2018, Mr. Rick Gutshall resigned as Interim Chief Executive Officer of the Company.

Annette Knebel, Chief Financial Officer and Director

Ms. Knebel has served as our Chief Financial Officer since December 2017, and as a member of the Board since August 2017. Ms. Knebel served as our Chief Accounting Officer from August 2017 to December 2017. On August 9, 2017, the Company entered into a director agreement (the “Knebel Director Agreement”), employment agreement (the “Knebel Employment Agreement”) and an indemnity agreement (the “Knebel Indemnity Agreement”) with Annette Knebel.

Pursuant to the terms of the Knebel Director Agreement, Ms. Knebel shall serve as a member of the Company’s Board and will receive a stock award in such amount as determined by the Board upon the earlier of (i) 30 days from August 9, 2017 and (ii) the closing of a financing pursuant to which the Company receives a minimum of $500,000 in proceeds. In addition, Ms. Knebel shall be reimbursed for all reasonable travel and other incidental expenses incurred in the performance of her services, including attendance at meetings, as approved by the Company.

Pursuant to the terms of the Knebel Employment Agreement, Ms. Knebel shall serve as Chief Financial Officer of the Company. The initial term of the agreement will expire on August 9, 2018 and commencing on August 9, 2018 and on each anniversary of such date thereafter, the term of the Knebel Employment Agreement shall automatically renew for a one-year period, unless earlier terminated pursuant to the terms of the Knebel Employment Agreement. In consideration for Ms. Knebel’s services, Ms. Knebel shall receive (i) an annual base salary of $75,000 and (ii) 250,000 shares of restricted common stock of the Company. In addition, Ms. Knebel shall be eligible to participate in any equity-based incentive compensation plan or programs adopted by the Board.

Sandra Fowler, Chief Marketing Officer

Ms. Fowler was elected our Chief Marketing Officer on January 15, 2018 and the Company entered into an employment agreement (the “Fowler Employment Agreement”) and an indemnity agreement (the “Fowler Indemnity Agreement”) with Ms. Fowler.

Pursuant to the terms of the Fowler Employment Agreement, Ms. Fowler shall serve as Chief Marketing Officer of the Company. The initial term of the agreement will expire on January 15, 2019 and commencing on January 16, 2019 and on each anniversary of such date thereafter, the term of the Fowler Employment Agreement shall automatically renew for a one-year period, unless earlier terminated by either party pursuant to the terms of the Fowler Employment Agreement. In consideration for Ms. Fowler’s services, under the Fowler Employment Agreement, Ms. Fowler shall receive (i) an annual base salary of $48,000 and (ii) 200,000 shares of restricted common stock of the Company. Further, pursuant to the Fowler Employment Agreement, the Company agreed to revise the annual base compensation for Ms. Fowler to $65,000, after 90 days of the execution of the Fowler Employment Agreement, or after the Company raises not less than $1,000,000 from sales of its equity securities subsequent to the execution of the Fowler Employment Agreement, whichever may come first. In addition, Ms. Fowler shall be eligible to participate in any equity-based incentive compensation plan or programs adopted by the Company’s board of directors.

Retirement Benefits

We do not currently provide our named executive officers with supplemental or other retirement benefits.

Outstanding Equity Awards at December 31, 2017

As of December 31, 2017 , we had not granted any stock-based compensation awards to any of our named executive officers.

Director Compensation

The following table sets forth the compensation paid to our directors during the year ended December 31, 2017 paid in their capacity as directors.

Name	Fees Earned Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Rick Gutshall (1)		—		—		—		—		—		—		—
Annette Knebel (2)		—		—		—		—		—		—		—
Dr. Lang Coleman (3)		—		—		—		—		—		—		—
Chad Sykes (4)		—		—		—		—		—		—		—
John Zimmerman (5)		—		18,322		—		—		—		—		18,322
John Choo (6)(7)		—		27,482		—		—		—		—		27,482
Pawel Hardej (8)(9)		—		64,126		—		—		—		—		64,126
John Seckman (10)		—										13,000		13,000

(1) On August 9, 2017, we entered into a Director Agreement with Rick Gutshall. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

(2) On August 9, 2017, we entered into a Director Agreement with Annette Knebel. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

(3) On August 9, 2017, we entered into a Director Agreement with Dr. Lang Coleman . The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company.

(4) On August 9, 2017, Chad Sykes, the Company founder, tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

(5) On April 15, 2015, we entered into a Director Agreement with John Zimmerman. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company issued 166,560 shares of common stock to Mr. Zimmerman pursuant to terms of the Director Agreement.

(6) On March 13, 2015, we entered into a Director Agreement with John Choo. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company issued 166,560 shares of common stock to Mr. Choo pursuant to the terms of the Director Agreement.

(7) On August 9, 2017, John Choo tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

(8) On May 9, 2016, we entered into a Director Agreement with Paul Hardej. The Company agreed to reimburse the Director for reasonable travel and other incidental expenses incurred by the Director in performing his services and attending meetings as approved in advance by the Company. The Company issued 166,560 shares of common stock to Mr. Hardej pursuant to the terms of the Director Agreement.

(9) On August 9, 2017, Pawel Hardej tendered his resignation as a Director and member of the Board of Directors as part of the Company’s merger agreement with Alamo CBD.

(10) On August 9, 2017, John Seckman was elected a Director and member of the Board of Directors. On November 1, 2017, John Seckman resigned as a Director of the Company and as a member of the Board of Directors, effective December 4, 2017. Mr. Seckman’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies (including accounting or financial policies) or practices, the Company’s management or the Board. Mr. Seckman’s resignation was due to time constraints based on new business and increasing demands of John Seckman and Associates, of which Mr. Seckman is principal. The compensation reflected in the “All Other Compensation” tab was made pursuant to a consultant agreement with Mr. Seckman which was not related to his services as a former member of the Company’s board of directors.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers receive stock options at the discretion of our Board. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our Board.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our Company.

Certain Relationships and Related Transactions, and Director Independence

There were no related party transactions in 2015 or 2016.

On August 8, 2017, Chad Sykes, Founder and Chief of Cultivation, returned 2,500,000 shares of common stock to the Company related to the merger of the Company and Alamo CBD. The Company recorded fair value of $550,000 ($0.22 per share) based upon the most recent trading price per share of the Company’s stock.

On September 6, 2017, the Company issued 758,401 shares of common stock Rick Gutshall, Interim-Chief Executive Office, Chief Financial Officer and Director, related to the merger of the Company and Alamo CBD. The Company recorded fair value of $144,096 ($0.19 per share) based upon the most recent trading price per share of the Company’s stock.

On September 15, 2017, the Company issued 250,000 shares of common stock related to an Employment Agreement with Annette Knebel, Chief Accounting Officer and Director. The Company recorded fair value of $50,000 ($0.20 per share) based upon the most recent trading price per share of the Company’s stock.

Board Committees

The Company currently does not have a standing nominating or audit committee. Rather, the Company’s Board of Directors performs the functions of these committees. The Company also currently does not have an “audit committee financial expert” on our Board of Directors as that term is defined by Item 401(d)(5)(ii) of Regulation S-K. The Company believes that such committees are not needed at this time as the Company’s Directors are able to give sufficient time and attention to such matters to be involved in all decision making. Further, because the Company’s common stock is not listed for trading or quotation on a national securities exchange, the Company is not required to have such committees.

Director Independence

Our Board of Directors has determined that we do not have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3) (iv)(B) of Schedule 14A under the Securities Exchange Act, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our director, and our executive officer and director as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are no pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address of the shareholders is 5300 East Freeway Suite A, Houston, Texas 77020.

Name	Number of Shares of Common Stock		Percentage
Daniel Weadock(1)*		300,000		1.20	%
Chad Sykes(2)		1,849,000		7.41	%
Rick Gutshall(3)*		758,401		3.04	%
Annette Knebel(4)*		255,000		1.02	%
Sandra Fowler(5)*		200,000		0.80	%
John Zimmerman(6)*		104,100		0.42	%
Lang Coleman (7)*		1,317,528		5.28	%
All executive officers and directors as a group (6 persons)		2,935,029		11.76	%

5% Stockholders:
Benjamin Coleman		1,317,528		5.28	%
Keith Spinelli(8)		1,853,201		7.43	%

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 24,957,471 shares of common stock outstanding as of May 31, 2018.

(1)

Mr. Daniel Weadock was appointed Chief Executive Officer and Director of the Company on February 20, 2018. Mr. Weadock currently holds 300,000 shares of the Company’s common stock; he is also planned to receive an additional 1,584,202 shares of the Company’s common stock to be issued quarterly over 4 years pursuant to his employment agreement with the Company. In addition, Mr. Weadock is planned to receive 240,000 shares of the Company’s common stock to be issued quarterly over 2 years pursuant to his director agreement with the Company.

(2)

Chad Sykes, the Company’s Founder and Chief of Cultivation, resigned as CEO, Secretary on January 2, 2017 and was appointed Chief Innovation Officer. On August 9, 2017, Mr. Sykes resigned as Chief Innovation Officer and Director. Mr. Sykes’ shares of common stock included in the table are currently held in street name and he has both voting and dispositive control over such shares.

(3)

On February 20, 2018, Mr. Rick Gutshall resigned as Interim Chief Executive Officer of the Company on February 20, 2018 and has served as a member of the Company’s Board of Directors since August 9, 2017.

(4)

Ms. Knebel has served as our Chief Financial Officer since December 13, 2017, and as a member of the Board since August 9, 2017. Ms. Knebel served as our Chief Accounting Officer from August 9, 2017 to December 13, 2017.

(5)

On January 16, 2018 Ms. Sandra Fowler was appointed as our Chief Marketing Officer. Ms. Fowler currently holds 200,000 shares of the Company’s common stock.

(6)

Mr. Zimmerman has served as a Director of the Company since 2015. He also served as Vice President of Business Development from 2016 to December 2017.

(7)

On August 9, 2017, Dr. Lang Coleman was appointed as a member of the Board.

(8)

Mr. Spinelli filed a Schedule 13G with the SEC on December 29, 2017, reporting his beneficial ownership as an owner of 5% or more of the Company’s common stock.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

There were no related party transactions in 2015 or 2016.

On September 6, 2017, the Company issued 2,957,763 shares of common stock to Dr. Lang Coleman, Director, related to the merger of the Company and Alamo CBD.

On September 15, 2017, the Company issued 250,000 shares of common stock related to an Employment Agreement with Annette Knebel, Chief Accounting Officer and Director.

Director Independence

Our board of directors has determined that we do not have a board member that qualifies as “independent” as the term is used in Item 7(d)(3) (iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

SHARES ELIGIBLE FOR FUTURE SALE

We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. The availability for sale of a substantial number of shares of our common stock acquired through the exercise of outstanding Series A Convertible Preferred Stock could materially adversely affect the market price of our common stock. In addition, sales of our common stock in the public market after the restrictions lapse as described below, or the perception that those sales may occur, could cause the prevailing market price to decrease or to be lower than it might be in the absence of those sales or perceptions.

Sale of Restricted Shares

As of May 31, 2018, there were 24,957,471 shares of common stock outstanding. The 5,000,000 shares of common stock being offered by this Prospectus will be freely tradable, other than by any of our “affiliates,” as defined in Rule 144(a) under the Securities Act, without restriction or registration under the Securities Act. In addition, 17,285,156 outstanding shares were issued and sold by us in private transactions and those shares, as well as shares issuable on exercise of currently outstanding convertible notes are, or will be, eligible for public sale if registered under the Securities Act or sold in accordance with Rule 144 under the Securities Act. These remaining shares are “restricted securities” within the meaning of Rule 144 under the Securities Act.

Rule 144

In general, under Rule 144, as currently in effect, a person (or persons whose shares are required to be aggregated), including a person who may be deemed an “affiliate” of a company, who has beneficially owned restricted securities for at least six months may sell, within any three-month period, a number of shares that does not exceed the greater of: (1) 1% of the then-outstanding shares of common stock, or (2) if and when the common stock is listed on a national securities exchange, the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of such sale was filed under Rule 144. Sales under Rule 144 are also subject to certain requirements as to the manner of sale, notice, and availability of current public information about our Company. A person who is not deemed to have been an affiliate of us at any time during the 90 days preceding a sale by such person, and who has beneficially owned the restricted shares for at least one year, is entitled to sell such shares under Rule 144 without regard to any of the restrictions described above.

We cannot estimate the number of shares of our common stock that our existing stockholders will elect to sell under Rule 144.

Transfer Agent

The transfer agent for our common stock is VStock Transfer, LLC at 18 Lafayette Place, Woodmere, NY. VStock Transfer’s telephone number is (212) 828-8436.

LEGAL MATTERS

The law firm of Legal & Compliance, LLC has provided opinions regarding the validity of the shares of our common stock offered pursuant to this Prospectus. The address of Legal & Compliance, LLC is 330 Clematis Street, Suite 217, West Palm Beach, FL 33401.

EXPERTS

The consolidated financial statements of the Company and its subsidiary as of December 31, 2017 and 2016 and for the years and period then ended, respectively, have been audited by Thayer O’Neal Company, LLC, an independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.

INTERESTS OF NAMED EXPERTS AND COUNSEL

None.

DISCLOSURE OF THE SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer, or controlling person in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.

WHERE YOU CAN FIND MORE INFORMATION

We have filed the Registration Statement, together with all amendments and exhibits, with the SEC. This Prospectus, which forms a part of the Registration Statement, does not contain all information included in the Registration Statement. Certain information is omitted and you should refer to the Registration Statement and its exhibits. With respect to references made in this Prospectus to any of our contracts or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the Registration Statement for copies of the actual contracts or documents. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our filings and the Registration Statement, of which this Prospectus is a part, can also be reviewed by accessing the SEC’s website at www.sec.gov .

We file periodic reports and other information with the SEC. Such periodic reports and other information are available for inspection and copying at the public reference room and website of the SEC referred to above. We maintain a website at www.indoorharvest.com. You may access our annual reports on Form 10-K and quarterly reports on Form 10-Q free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information and other content contained on any of our websites are not part of this Prospectus.

Indoor Harvest Corp

5,000,000 Shares of Common Stock

Prospectus

__________________, 2018

Until _______________, 2018 (the 25 ^th day after the date of this Prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.

Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses will be borne by the Selling Stockholder. All of the amounts shown are estimates, except for the SEC registration fee.

Securities and Exchange Commission registration fee	$	249
Accounting fees and expenses	$	27,000
Legal fees and expenses	$	30,000
Miscellaneous fees and expenses	$	—
Total	$	57,249

Item 14.

Indemnification of Directors and Officers

Texas Law

Sections 8.101 and 8.105 of the Texas Business Organizations Code (the “TBOC”) permit corporations to indemnify a person who was or is a governing person, officer, employee or agent of such corporation or who serves at the corporation’s request as a representative of another enterprise, organization or employee benefit plan (an “outside enterprise”), who was, is, or is threatened to be named a respondent in a legal proceeding by virtue of such person’s position in the corporation or in an outside enterprise, but only if the person acted in good faith and reasonably believed, in the case of conduct in the person’s official capacity, that the conduct was in or, in the case of all other conduct, that the conduct was not opposed to the corporation or outside enterprise’s best interest, and, in the case of a criminal proceeding, the person had no reasonable cause to believe the conduct was unlawful. A person may be indemnified within the above limitations against judgment and expenses that are reasonable and actually incurred by the person in connection with the proceeding; however, indemnification is limited to reasonable expenses actually incurred in a proceeding in which the person is found liable to the corporation or is found to have improperly received a personal benefit and shall not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the corporation, breach of the person’s duty of loyalty owed to the corporation or an act or omission not committed in good faith that constitutes a breach of a duty owed by the person to the corporation. Indemnification pursuant to Section 8.101 of the TBOC can be made by the corporation only upon a determination made in the manner prescribed by Section 8.103 of the TBOC that indemnification is proper in the circumstances because the party seeking indemnification has met the applicable standard of conduct for such indemnification.

Section 8.051 of the TBOC requires a corporation to indemnify a governing person, former governing person or person serving an outside enterprise at the corporation’s request against reasonable expenses actually incurred in connection with a proceeding in which the person is a party because of the person’s corporate position, if the person was wholly successful, on the merits or otherwise, in the defense of the proceeding.

Under certain circumstances, a corporation may also advance expenses to any of the above persons. Section 8.151 of the TBOC also permits a corporation to purchase and maintain insurance or to make other arrangements on behalf of any of such persons against any liability asserted against and incurred by the person in such capacity or arising out of the person’s status as such a person, without regard to whether the corporation would have the power to indemnify the person against the liability under applicable law.

We have entered into indemnification agreements with officers and directors that eliminate the personal liability of our directors for monetary damages to the fullest extent possible under the laws of the State of Texas or other applicable law. These provisions eliminate the liability of our directors and our shareholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Texas law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director’s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director’s liabilities under the federal securities laws or the recovery of damages by third parties.

Charter Provisions and Other Arrangements

Our Articles of Incorporation provide that no director or officer of the Company shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty by such person as a director or officer, except for the payment of dividends in violation of Texas law. Our Bylaws provide, in pertinent part, that the Company shall indemnify any person made a party to or involved in any civil, criminal or administrative action, suit or proceeding by reason of the fact that such person is or was a director or officer of the Company, or of any corporation which such person served as such at the request of the Company, against expenses reasonably incurred by, or imposed on, such person in connection with, or resulting from, the exercise of such action, suit, proceeding or appeal thereon, except with respect to matters as to which it is adjudged in such action, suit or proceeding that such person was liable to the Company, or such other corporation, for negligence or misconduct in the performance of such persons duties as a director or officer of the Company. The determination of the rights of such indemnification and the amount thereof may be made, at the option of the person to be indemnified, by (1) order of the Court or administrative body or agency having jurisdiction over the matter for which indemnification is being sought; (2) resolution adopted by a majority of a quorum of our disinterested directors; (3) if there is no such quorum, resolution adopted by a majority of the committee of stockholders and disinterested directors of the Company; (4) resolution adopted by a majority of the quorum of directors entitled to vote at any meeting; or (5) order of any Court having jurisdiction over the Company. Such right of indemnification is not exclusive of any other right which such director or officer may have, and without limiting the generality of such statement, they are entitled to their respective rights of indemnification under any bylaws, agreement, vote of stockholders, provision of law, or otherwise in addition to their rights under our Bylaws.

Item 15. Recent Sales of Unregistered Securities

During the past three years, the following securities were sold or otherwise issued by the Company and were not registered under the Securities Act:

On March 23, 2015, the Company entered into a consulting agreement with Smallcapvoice.com to provide public and investor relations services for a period of 30 days starting on March 31, 2015. The Company paid $25,000 in cash plus issued 25,000 shares with a fair value of $12,500 ($0.50 per share) based on the most recent closing price per share of our common stock traded on the OTCQB. For the three months ended March 31, 2015, the Company recorded $25,000 paid in cash and 25,000 shares of common stock as a prepaid expense. As of June 30, 2015, the services have been completed and the Company expensed the prepaid expense.

On April 15, 2015, the Company entered into a Director Agreement with John Zimmerman, a current member of the Company’s board of directors. The Company agreed to reimburse Mr. Zimmerman for reasonable travel and other incidental expenses incurred by him in performing his services and attending meetings as approved in advance by the Company. The Company further agreed to award to Mr. Zimmerman 166,560 shares of common stock pursuant to the Company’s 2015 Stock Award Plan over a two-year period as directed in the Director Agreement. On July 15, 2015, the Company issued 20,820 shares, of common stock with a fair value of $9,369 ($0.45 per share) based upon the most recent trading price per share of the Company’s stock. On October 16, 2015, the Company issued 20,820 shares, of common stock with a fair value of $9,992 ($0.48 per share) based upon the recent trading price per share of the Company’s stock

In May 2015, the Company issued 106,500 shares of common stock to various employees and consultants with a fair value of $54,315 ($0.51 per share) based upon the most recent trading price per share of the Company’s stock.

On May 31, 2015, the Company issued 50,000 shares of common stock to Chad Sykes, our former CEO with a fair value air of $25,500 ($0.51 per share) at the most recent trading price per share of the Company’s stock.

On May 31, 2015, the Company issued 20,820 shares of common stock related to a Director Agreement with William Jamieson. The Company recorded fair value of $10,618 ($0.51 per share) based upon the most recent trading price per share of the Company’s stock.

On August 31, 2015, the Company issued 20,820 shares of common stock related to a Director Agreement with William Jamieson. The Company recorded fair value of $11,451 ($0.55 per share) based upon the most recent trading price per share of the Company’s stock.

On August 31, 2015, the Company issued 12,000 shares of common stock for consulting expense with a fair value $6,600 ($0.55 per share) based upon the most recent trading price per share of the Company’s stock.

On November 17, 2015, the Company issued 125,000 shares of common stock to the Company’s legal counsel as part of legal fees with a fair value of $56,250 ($0.45 per share) based upon the most recent trading price per share of the Company’s stock.

On November 30, 2015, the Company issued 20,820 shares of common stock related to a Director Agreement with William Jamieson. The Company recorded fair value of $6,246 ($0.30 per share) based upon the most recent trading price per share of the Company’s stock.

On December 1, 2015, the Company issued 7,063 shares of common stock for consulting expense with a fair value of $3,178 ($0.45 per share) based upon the most recent trading price per share of the Company’s stock.

On December 7, 2015, the Company issued 125,000 shares of common stock to FMW Media Works, Inc. in order to provide investor and public relations services. The Company recorded a fair value of $47,500 ($0.38 per share) based upon the most recent trading price per share of the Company’s stock.

During the year ended December 31, 2015, the Company issued a total of 836,000 shares of common stock to 4 U.S. accredited investors and 2 non-U.S. investors at $0.50 per share for cash totaling $418,000.

On January 17, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $9,369 ($0.45 per share) based upon the most recent trading price per share of the Company’s stock.

On February 29, 2016, the Company issued 41,640 shares of common stock related to a Director Agreement with John Choo and William Jamieson. The Company recorded fair value of $14,574 ($0.35 per share) based upon the most recent trading price per share of the Company’s stock.

On March 23, 2016, the Company issued 100,000 shares of common stock to one U.S. accredited investor at $0.50 per share for cash totaling $50,000.

On April 14, 2016, the Company issued 100,000 shares of common stock related to an Executive Employment Agreement with John Zimmerman. The Company recorded fair value of $66,000 ($0.66 per share) based upon the most recent trading price per share of the Company’s stock.

On April 18, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $14,782 ($0.71 per share) based upon the most recent trading price per share of the Company’s stock.

On May 19, 2016, the Company issued 83,200 shares of common stock to William Jamieson in connection with his resignation as a Director. The Company recorded fair value of $54,080 ($0.65 per share) based upon the most recent trading price per share of the Company’s stock.

On July 19, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $14,366 ($0.69 per share) based upon the most recent trading price per share of the Company’s stock.

On August 9, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with Pawel Hardej. The Company recorded fair value of $13,512 ($0.65 per share) based upon the most recent trading price per share of the Company’s stock.

On August 31, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with John Choo. The Company recorded fair value of $12,288 ($0.59 per share) based upon the most recent trading price per share of the Company’s stock.

On October 20, 2016, the Company issued 20,820 shares of common stock related to a Director Agreement with John Zimmerman. The Company recorded fair value of $9,577 ($0.46 per share) based upon the most recent trading price per share of the Company’s stock.

On March 20, 2017, the Company’s Series A Preferred Convertible Stock shareholders (“Series A Holders”) each voted to waive and remove the provisions of Section 5(iii) of the Certificate of Designations of the Series A Preferred Stock. Series A Holders have each agreed individually and also as a group to convert their Series A Convertible Preferred Stock into common stock at a conversion price equal to $0.30 per share. A total of 250,000 shares of the Company’s Series A Preferred Convertible Stock were converted into an aggregate of 416,667 shares of common stock.

On March 20, 2017, the Company entered into a settlement agreement relating to two (2) promissory notes with FirstFire Global Opportunities Fund, LLC dated October 19, 2016 and December 12, 2016. Pursuant to the settlement, the Company paid the holder an aggregate of $252,917 in cash and issued 333,333 shares of common stock. The Company was released from any further liability under this FirstFire Global Opportunities Fund, LLC note upon payment of this amount.

On September 6, 2017, the Company issued 2,957,763 shares of common stock to Dr. Lang Coleman, Director, related to the merger of the Company and Alamo CBD. The Company recorded fair value of $561,975 ($0.19 per share) based upon the most recent trading price per share of the Company’s stock. On February 5, 2018, the Company renegotiated a reduction of shares issued for the Alamo CBD acquisition resulting in the return of 1,640,235 shares of common stock from Dr. Coleman.

On October 12, 2017, the Company issued a promissory note to Tangiers Global, in the principal amount of $50,000 in order to induce Tangiers Global to enter into the Investment Agreement. The note bears interest at a rate of 10% per annum and matures on May 12, 2018. Tangiers Global may, at any time, convert the unpaid principal amount of the note into shares of the Company’s common stock at a conversion price of $0.1666 per share. Further, as the maturity date for this note of May 12, 2018, has passed, the note now has a conversion rate of the lower of the conversion rate then in effect or 65% of the lowest trading price for the 15 days prior to Tangiers’ notice of conversion.

On October 17, 2017, the Company converted debt and accrued interest, totaling $30,000 into 329,670 shares of common stock.

On December 18, 2017, the Company converted debt and accrued interest, totaling $45,000 into 516,648 shares of common stock.

On January 9, 2018, the Company issued 899,685 shares of its common stock pursuant to a conversion of a portion of a convertible promissory note. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On January 15, 2018, the Company issued 200,000 shares of common stock to Sandra Fowler, Chief Marketing Officer, pursuant to an employment agreement. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On January 16, 2018, the Company issued a fixed convertible promissory note for the principal sum of $50,000 as a commitment fee. The promissory note maturity date is May 12, 2018. On February 13, 2018, the Company and the lender entered into Amendment #1 to this promissory note. Pursuant to the amendment, the lender agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in original issue discount). On April 17, 2018, the Company and the lender entered into Amendment #2 to this promissory note, and pursuant to this amendment the Lender agreed to make a payment to the Company in the amount of $132,000 ($120,000 in cash and $12,000 in OID) under the note. The issuances of the above securities were exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On February 20, 2018, the Company issued 300,000 shares of common stock to Dan Weadock, Chief Executive Officer, pursuant to an employment agreement. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On March 5, 2018, the Company issued 269,716 shares of its common stock pursuant to a conversion of a portion of a convertible promissory note. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.07.

We relied upon Section 4(a)(2) of the Securities Act for the above issuances to U.S. citizens or residents. We believe that Section 4(a)(2) of the Securities Act was available because:

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None of these issuances involved underwriters, underwriting discounts or commissions.

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Restrictive legends were and will be placed on all certificates issued as described above.

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The distribution did not involve general solicitation or advertising.

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The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.

We relied upon Regulation S of the Securities Act for the above issuances to non-U.S. citizens or residents.

We believe that Regulation S was available because:

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None of these issuances involved underwriters, underwriting discounts or commissions;

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We placed Regulation S required restrictive legends on all certificates issued;

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No offers or sales of stock under the Regulation S offering were made to persons in the United States;

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No direct selling efforts of the Regulation S offering were made in the United States.

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

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Access to all our books and records.

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Access to documents relating to our operations.

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The opportunity to obtain any additional information, including information relating to all of our agreements with third parties which were only oral and not written, to the extent we possessed such information, and including all information necessary to verify the accuracy of the information to which the investors were given access.

Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

Item 16.

Exhibits and Financial Statement Schedules

Statements contained above as to the contents of any contract or other document that we have filed as an exhibit hereto, as listed below, are qualified in their entirety by reference to the exhibits for a complete statement of their terms and conditions. The following exhibits are included as part of this Registration Statement by reference:

Exhibit		Description

2.1		Agreement and Plan of Merger and Reorganization. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 4, 2017).

3.1		Certificate of Merger. (Incorporated by reference to exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 29, 2017).

3.2		Certificate of Correction. (Incorporated by reference to exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 12, 2017).

3.3		Certificate of Formation of Indoor Harvest Corp. (Incorporated by reference to exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194326) filed with the SEC on March 5, 2014).

3.4		Bylaws of Indoor Harvest Corp. (Incorporated by reference to exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194326) filed with the SEC on March 5, 2014).

3.5		Amended Bylaws – Indoor Harvest, Corp. (Incorporated by reference to exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2017).

4.1		Form of common stock Certificate of Indoor Harvest, Corp. (Incorporated by reference to exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on March 5, 2014).

4.2		Indoor Harvest 2015 Stock Award Plan. (Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 (File No. 333-201635) filed with the SEC on January 21, 2015).

5.1		Legal opinion of Legal & Compliance, LLC.

10.1		Investment Agreement with Tangiers Global, LLC. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8- K filed with the SEC on October 13, 2017).

10.2		Registration Rights Agreement with Tangiers Global, LLC. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 13, 2017).

10.3		Convertible Promissory Note with Tangiers Global, LLC dated October 12, 2017. (Incorporated by reference to exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 13, 2017).

10.4		Amendment dated October 10, 2017 to Convertible Promissory Note dated March 22, 2017, with Tangiers Global, LLC. (Incorporated by reference to exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 13, 2017).

10.5		Joint Venture Agreement between Indoor Harvest, Alamo CBD and Vyripharm. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 28, 2017).

10.6		Tangiers 8% Fixed Convertible Promissory Note dated March 22, 2017. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 28, 2017).

10.7†		Choo Director Agreement. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 13, 2015).

10.8†		Zimmerman Director Agreement. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 15, 2015).

10.9†		Choo Employment Agreement. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2015).

10.10		Rockwell Securities Purchase Agreement dated March 22, 2016. (Incorporated by reference to exhibits 10.1 – 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 24, 2016).

10.11		Rockwell Form of Senior Convertible Promissory Note. (Incorporated by reference to exhibits 10.1 – 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 24, 2016).

10.12		FirstFire Securities Purchase Agreement dated March 22, 2016. (Incorporated by reference to exhibits 10.1 – 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 24, 2016).

10.13		FirstFire Form of Senior Convertible Promissory Note. (Incorporated by reference to exhibits 10.1 – 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 24, 2016).

10.14†		Zimmerman Employment Agreement. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 11, 2016).

10.15		Equity Purchase Agreement between Indoor Harvest Corp. and Kodiak Capital Group, LLC. (Incorporated by reference to Exhibit 10.23 to Amendment No. 1 the Registrant’s Registration Statement on Form S-1/A (File No. 333-210789) filed with the SEC on May 10, 2016).

10.16		Memorandum of Agreement with Head North. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 23, 2016).

10.17		Promissory Note dated September 26, 2016 with Chuck Rifici Holdings, Inc. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 27, 2016).

10.18		Warrant Purchase Agreement dated September 26, 2016 with Chuck Rifici Holdings, Inc. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 27, 2016).

10.19		FirstFire Securities Purchase Agreement dated October 19, 2016. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2016).

10.20		FirstFire Form of Senior Convertible Promissory Note. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 21, 2016).

10.21		FirstFire Securities Purchase Agreement dated December 14, 2016. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 16, 2016).

10.22		FirstFire Form of Senior Convertible Promissory Note. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 16, 2016).

10.23		Share Exchange Agreement with Alamo CBD, LLC and the members of Alamo CBD, LLC. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 26, 2017).

10.24†		Gutshall Director Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8- K filed with the SEC on August 14, 2017).

10.25†		Gutshall Employment Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.26†		Knebel Director Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.27†		Knebel Employment Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.28†		Coleman Director Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.29†		Seckman Director Agreement dated August 9, 2017. (Incorporated by reference to exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.30		Form of Indemnity Agreement. (Incorporated by reference to exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 14, 2017).

10.31†		Fowler Employment Agreement dated January 15, 2018. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2018).

10.32		Fowler Indemnity Agreement dated January 15, 2018. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2018).

10.33		Tangiers 8% Fixed Convertible Promissory Note dated January 16, 2018. (Incorporated by reference to exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2018).

10.34		Amendment dated February 13, 2018 to the Convertible Promissory Note issued to Tangiers on January 16, 2018. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 20, 2018).

10.35†		Executive Employment Agreement dated February 20, 2018 between Indoor Harvest Corp and Daniel Weadock. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2018).

10.36†		Compensation Agreement dated February 20, 2018 between Indoor Harvest Corp and Daniel Weadock. (Incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2018).

10.37		Indemnity Agreement dated February 20, 2018 by and between Indoor Harvest Corp and Daniel Weadock. (Incorporated by reference to exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2018).

10.38		Amendment dated April 17, 2018 to the Convertible Promissory Note issued to Tangiers on January 16, 2018. (Incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 20, 2018).

21.1		Subsidiaries of Indoor Harvest Corp.

23.1		Consent of independent registered public accounting firm.

23.2		Consent of Legal & Compliance LLC (included in Exhibit 5.1).

24.1		Power of Attorney (set forth on signature page to the Registrant’s registration statement on Form S-1 filed with the SEC on January 29, 2018).

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

†		Management Contract or Compensation Plan

Item 17.

Undertakings

(a)

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining liability under the Securities Act to any purchaser:

(i) If the registrant is relying on Rule 430B:

(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(1) For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) or under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities as that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Houston, State of Texas, on May 31, 2018.

	INDOOR HARVEST CORP

	By:	/s/ Daniel Weadock
		Daniel Weadock
		Chief Executive Officer
		(principal executive officer)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.

Signatures	Title	Date

/s/ Rick Gutshall	Director	May 31, 2018
Rick Gutshall

/s/ Annette Knebel	Chief Financial Officer and Director (principal financial officer and principal accounting officer)	May 31, 2018
Annette Knebel

*	Chief Marketing Officer	May 31, 2018
Sandra Fowler

*	Director	May 31, 2018
John Zimmerman

*	Director	May 31, 2018
Dr. Lang Coleman