UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from ______________ to ______________

Commission File Number:

INDOOR HARVEST CORP
(Exact name of registrant as specified in its charter)

 
Texas
 
45-5577364
(State or other jurisdiction of incorporation or organization)
 
IRS I.D.
 
5300 East Freeway Suite A
Houston, Texas
 (Address of principal executive offices)
 
713-410-7903
(Registrant's telephone number, including area code)
 
 
N/A
(Former name, former address and former phone number, if changed since last report)
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and 2) has been subject to such filing requirements for the past 90 days. Yes  No 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
 
As of August 6, 2015 there were 10,176,348 shares issued and outstanding of the registrant's common stock.


TABLE OF CONTENTS
 
 
 
3
 
 
 
Item 1.
 
3
Item 2.
 
11
Item 3.
 
16
Item 4.
 
16
 
 
 
 
17
 
 
 
Item 1.
 
17
Item 2.
 
17
Item 3.
 
17
Item 4.
 
17
Item 5.
 
17
Item 6.
 
18
 
 SIGNATURES 19
 

 
PART I — FINANCIAL INFORMATION
 
Item 1. Financial Statements.
 
INDOOR HARVEST CORP
 
BALANCE SHEETS
AS OF JUNE 30, 2015 AND DECEMBER 31, 2014
(UNAUDITED)
 

 
 
June 30,
2015
   
December 31,
2014
 
 
       
ASSETS
       
Current assets:
       
Cash
 
$
288,280
   
$
411,669
 
      Inventory
   
4,589
     
-
 
       Prepaid expenses
   
6,933
     
-
 
Total current assets
   
299,802
     
411,669
 
 
               
Furniture and equipment, net
   
208,971
     
170,454
 
Security deposit
   
12,600
     
12,600
 
Intangible asset
   
2,000
     
2,000
 
Other assets
   
48,783
     
68,083
 
          Total assets
 
$
572,156
   
$
664,806
 
 
               
LIABILITIES
               
Current liabilities:
               
Accounts payable & accrued expenses
 
$
310
   
$
7,185
 
Accrued payroll
   
9,099
     
5,034
 
Deferred rent
   
9,402
     
9,026
 
Total current liabilities
   
18,811
     
21,245
 
 
               
Long term liabilities:
               
                Note payable
   
36,100
         
          Total Liabilities
   
54,911
     
21,245
 
 
               
Stockholders' equity:
               
Common stock: $0.001 par value, 50,000,000 shares authorized; 10,155,528 and 9,252,388 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
   
10,154
     
9,251
 
Additional paid-in capital
   
1,752,037
     
1,299,389
 
Less: Stock subscription receivable
   
-
     
(10,000
)
Accumulated deficit
   
(1,244,946
)
   
(655,079
)
Total Stockholders' equity
   
517,245
     
643,561
 
 
               
Total liabilities and stockholders' equity
 
$
572,156
   
$
664,806
 

The accompanying notes are an integral part of these financial statements.
 
INDOOR HARVEST CORP
STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 
 
       
 
 
For the three months ended
June 30,
   
For the six months ended
June 30,
 
 
 
2015
   
2014
   
2015
   
2014
 
Operating Expenses
               
     Depreciation expense
 
$
11,430
   
$
3,665
   
$
21,444
   
$
5,614
 
     Research and development
   
3,285
     
370
     
12,528
     
1,010
 
     Professional fees
   
17,161
     
11,067
     
107,972
     
107,955
 
General and administrative expenses
   
274,250
     
44,707
     
437,858
     
89,427
 
Loss from operations
   
306,126
     
59,809
     
579,802
     
204,006
 
 
                               
Other Income (Expense)
   
(84
)
   
93
     
(10,065
)
   
144
 
 
                               
Net loss
 
$
(306,210
)
 
$
(59,716
)
 
$
(589,867
)
 
$
(203,862
)
 
                               
Net loss per common share:
                               
Net loss per share, basic and diluted
 
$
(0.03
)
 
$
(0.01
)
 
$
(0.06
)
 
$
(0.03
)
 
                               
Weighted average number
                               
of common shares outstanding:
                               
Basic and diluted
   
9,990,229
     
8,227,388
     
9,451,732
     
7,882,677
 

The accompanying notes are an integral part of these financial statements.
 
INDOOR HARVEST CORP
STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
           
Additional
Paid-in Capital
           
Total
Stockholders'
Equity (Deficit)
 
   
Common Stock, $0.001 Par Value
         
   
Shares
   
Amount
   
Accumulated
Deficit
   
Subscription Receivable
 
                         
                         
Balances, December 31, 2013
   
6,505,381
   
$
6,505
   
$
359,134
   
$
(211,797
)
 
$
-
   
$
153,842
 
                                                 
Issuance of common stock
                                               
For cash
   
2,474,000
     
2,474
     
872,276
     
-
     
(10,000
)
   
864,750
 
For services
   
273,007
     
272
     
67,979
     
-
     
-
     
68,251
 
Net loss
   
-
     
-
     
-
     
(443,282
)
   
-
     
(443,282
)
                                                 
Balances, December 31, 2014
   
9,252,388
     
9,251
     
1,299,389
     
(655,079
)
   
(10,000
)
   
643,561
 
                                                 
Issuance of common stock
                                               
For cash
   
536,000
     
536
     
267,464
     
-
     
-
     
268,000
 
For services
   
367,180
     
367
     
185,184
     
-
     
-
     
185,551
 
Collection of stock subscription receivable
   
-
     
-
     
-
     
-
     
10,000
     
10,000
 
Net loss
   
-
     
-
     
-
     
(589,867
)
   
-
     
(589,867
)
                                                 
Balances, June 30, 2015
   
10,155,568
   
$
10,154
   
$
1,752,037
   
$
(1,244,946
)
 
$
-
   
$
517,245
 

The accompanying notes are an integral part of these financial statements.
INDOOR HARVEST CORP
 
STATEMENT OF CASHFLOWS
 
(UNAUDITED)
 
 
   
 
   
 
 
For the six months ended June 30,
 
 
 
 
2015
   
2014
 
Cash flows from operating activities:
       
Net loss
 
$
(589,867
)
 
$
(203,862
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation expense
   
21,444
     
5,614
 
 Loss on the sale other asset
   
9,250
     
-
 
Stock issued for services - related party
   
97,500
     
68,252
 
Stock issued for services
   
88,051
     
-
 
Change in operating liability:
               
Deferred rent
   
376
     
8,650
 
Other assets
   
-
     
(68,954
)
Security deposit
   
-
     
(12,600
)
Inventory
   
(4,589
)
   
-
 
 Prepaid expense
   
(6,933
)
   
-
 
Accounts payable and accrued expenses
   
(6,875
)
   
-
 
Accrued compensation - officers
   
4,327
     
(4,222
)
Accrued compensation
   
(262
)
   
-
 
Net cash used in operating activities
   
(387,578
)
   
(207,122
)
 
               
Cash flows from investing activities:
               
              Proceeds from sale of equipment
   
10,050
     
-
 
Purchase of equipment
   
(59,961
)
   
(46,430
)
Net cash used in investing activities
   
(49,911
)
   
(46,430
)
 
               
Cash flows from financing activities:
               
Proceeds from note payable
   
36,100
     
-
 
Collection of stock subscription receivable
   
10,000
     
-
 
Issuance of common stock for cash
   
268,000
     
362,250
 
Net cash provided by financing activities
   
314,100
     
362,250
 
 
               
Increase cash and cash equivalents
   
(123,389
)
   
108,698
 
Cash and cash equivalents at beginning of period
   
411,669
     
122,017
 
Cash and cash equivalents at end of period
 
$
288,280
   
$
230,715
 
 
               
Supplemental Disclosures
               
Interest paid
 
$
-
   
$
-
 
                Income taxes paid
 
$
-
   
$
-
 
 

The accompanying notes are an integral part of these financial statements.


INDOOR HARVEST CORP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of presentation
 
Indoor Harvest Corp., or the "Company," is a Texas corporation formed on November 23, 2011.  Indoor Harvest Corp., through its brand name Indoor Harvest™, is a company specializing in equipment 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").
 
The Company prepared these financial statements according to the instructions for Form 10-Q. Therefore, the financial statements do not include all disclosures required by generally accepted accounting principles in the United States. However, the Company has recorded all transactions and adjustments necessary to fairly present the financial statements included in this Form 10-Q. The adjustments made are normal and recurring. The following notes describe only the material changes in accounting policies, account details or financial statement notes during the first six months of 2015. Therefore, please read these financial statements and notes to the financial statements together with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2014. The income statement for the six months ended June 30, 2015 cannot necessarily be used to project results for the full year.
 
Use of estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("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 estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.
  
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.

Reclassifications

Certain expense items have been reclassified in the statement of operations for the three and six months ended June 30, 2014, to conform to the reporting format adopted for the three and six months ended June 30, 2015.

Recent Accounting Pronouncements

We do not believe any recent pronouncements will have any impact on our presentation of financial position or results of operations.

NOTE 2 - GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company had a net loss of $589,867 and net cash used in operations of $387,578 for the six months ended June 30, 2015. 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: (i) complete product development; (ii) commence product marketing, product assembly and sales; (iii) develop the aerofarmer.com web portal; (iv) construct a demonstration CEA and BIA farm; and (v) offer design build services. The Company's long-term strategy is to direct sale, license and franchise their patented technologies and methods.
 
The accompanying consolidated 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 – LOAN PAYABLE
On June 5, 2015, the Company entered into a five year loan agreement with the principal loan amount of $36,100. The loan carries an interest rate of 10.25%.  As of June 30, 2015, the remaining balance is $36,100 and accrued interest due is $308.

NOTE 4 – RELATED PARTY TRANSACTIONS
On June 30, 2015, the Company had accrued payroll to a related party, Chad Sykes, our CEO of $4,327. Additionally, on May 31, 2015, we issued shares for services to related parties amounting to $21,236.

In May 2015, the Company issued 50,000 shares of Common stock to Chad Sykes, our CEO with valuation of $25,500 ($0.51/share) at the most recent trading price per share of the Company's stock.

In January of 2014, the Company entered into an advisory agreement where the advisor agreed to act as a mentor or advisor to the Company and provide advice and assistance ranging from attending quarterly meetings to providing feedback on Company strategy to making introductions and assisting in acquisitions. The Company issued 65,552 common shares in connection with this agreement with a valuation of $16,388 ($0.25/share). All shares to be issued per this agreement have been issued.

In January of 2014, the Company issued 207,455 shares of Common stock to the Company's legal counsel as part of legal fees with a valuation of $51,864 ($0.25/share).

NOTE 5 - SHAREHOLDERS' EQUITY
 
In January of 2015, the Company issued 144,000 shares of common stock to the Company's legal counsel as part of legal fees with a valuation of $72,000 ($0.50/share) at the most recent price per share for cash sales of the Company's stock.

On March 1, 2015, we 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 Plan over a two year period as directed in the Director Agreement.  On May 31, 2015, the Company issued a total 20,820 shares of common stock with a valuation of $10,618 ($0.51/share) at the most recent trading price per share of the Company's stock.

On March 13, 2015, we entered into a Director Agreement with John Choo. 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 Plan over a two year period as directed in the Director Agreement.  On May 31, 2015, the Company issued a total 20,820 shares of common stock with a valuation of $10,618 ($0.51/share) at the most recent trading price per share of the Company's stock.
On March 23, 2015 we 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 valuation of $25,000 ($1.00/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, we entered into a Director Agreement with John Zimmerman. 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 Plan over a two year period as directed in the Director Agreement. As of June 30, 2015, the shares have not been issued and have not vested and no compensation expense was recorded on the books.

In May 2015, the Company issued 106,500 shares of Common Stock, pursuant to the Company's 2015 Stock Incentive Plan, for employees and consulting expense to various consultants with valuation of $54,315 ($0.51/share) at the most recent trading price per share of the Company's stock.

In May 2015, the Company issued 50,000 shares of Common Stock to Chad Sykes, our CEO, pursuant to the Company's 2015 Stock Incentive Plan with valuation of $25,500 ($0.51/share) at the most recent trading price per share of the Company's stock (See Note 4).
 
During the six months ended June 30, 2015, the Company issued a total of 536,000 shares of common stock at $0.50 per share for cash totaling $268,000.

NOTE 6 - SUBSEQUENT EVENTS
 
On July 15, 2015, the Company issued 20,820 shares related to a Director Agreement with John Zimmerman, of common stock with a valuation of $9,369 ($0.45/share) at the most recent trading price per share of the Company's stock.

On August 3, 2015, the Company's Board of Directors signed a written action that included the following:

1.
The Board of Directors have approved the creation of 5,000,000 shares of Series A Convertible Preferred Stock and to take the required steps to amend the Corporations articles of incorporation and any other such SEC filings, or Company records as needed.

2.
The Board of Directors have approved a Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock.

3.
The Board of Directors have approved a Regulation D, Rule 506(c) offering of up to 5,000,000 shares of Series A Convertible Preferred Stock in order to raise up to $5,000,000 in capital per the Company's Plan of Operation and to take the steps to file the required SEC and State filings.

10

Item 2. Management's Discussion and Analysis or Plan of Operation.
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 Form 10-Q.
 
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 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 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 our Form 10-K.
 
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
 
Indoor Harvest Corp, through its brand name Indoor Harvest™, is a design build contractor, developer, marketer and direct-seller of commercial grade aeroponic and hydroponic fixtures and supporting mechanical systems for use in urban Controlled Environment Agriculture ("CEA") and Building Integrated Agriculture ("BIA"). Indoor Harvest Corp was incorporated in the state of Texas on November 23, 2011. We are currently transitioning from a development-stage company to full operations and have not generated revenue from operations as of the date of this report. Our independent registered public accounting firm has issued a going concern opinion. This means there is substantial doubt that we can continue as an on-going business unless we obtain additional capital to pay our ongoing operational costs. Accordingly, we must locate sources of capital to pay our operational costs.

We currently offer a vertical farm racking system with integrated LED lighting. Our vertical farm racking system was designed to be used for both aeroponic and hydroponic layered crop production within a CEA or BIA operation. Our racking system will work with any standard 48" X 96" or 24" X 48" third party flood table or aeroponic system. We also offer patent pending aeroponic fixtures that are compatible with our vertical farm racking system. We are developing our vertical farm racking system and aeroponic fixtures for use by both horticulture enthusiasts and commercial operators who seek to utilize vertical farming methods within a controlled indoor environment.

Aeroponics is the process of growing plants in an air or mist environment without the use of soil or an aggregate medium (known as geoponics). Aeroponic culture 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.

The Company intends to generate revenue from vertical farm rack system sales, aeroponic fixture sales and design build construction management services.

Current Operations

Tweed Pilot Project
 
On December 18, 2014, we entered into a Cannabis Production Pilot Agreement with Tweed Marijuana Inc. ("Tweed"), a TSX Venture Exchange listed company, to test the applicability of aeroponic technology in the production of medical cannabis. Tweed's wholly owned subsidiaries Tweed Inc. and Tweed Farms Inc. (formerly Prime1 Construction Services Corp.) are licensed producers of medical cannabis in Canada. The principal activities of Tweed are the production and sale of cannabis through its wholly owned subsidiaries out of Tweed Inc.'s facility in Smiths Falls, Ontario and Tweed Farms Inc.'s facility in Niagara-on-the-Lake, Ontario as regulated by the Marihuana for Medical Purposes Regulations.

On April 20, 2015, we began our test pilot at Tweed's facility in Smith Falls, Ontario, by growing a sativa dominate strain from clone in order to collect certain production data. As of the date of this report, the first aeroponic pilot has concluded and we are expecting the production data on or before August 31, 2015. We conducted a control test using a coco, drip irrigation production method. The tests were staggered by approximately four weeks. The comparative results between the control and aeroponic system test will be published on or before September 30, 2015.

CLARA Design Build Project

On March 31, 2015 the Company announced the signing of a LOI with the City of Pasadena, Texas to fund the establishment and provisioning of an indoor agricultural facility (vertical farm) to be located in Pasadena, Texas. Under the LOI, the City was to provide Indoor Harvest, or a partner of their designation with City approval, with two facilities owned by the City for the sum of ten dollars ($10.00) per annum for a period not to exceed twenty (20) years as well as provide tax abatements on these properties for use in the construction of a Community Located Agricultural Research Area ("CLARA") project. In addition, the Pasadena Second Century Corp. (economic development entity for the City of Pasadena) has been asked by City officials to consider a budgetary proposal of $500,000 as seed money for the project's economic development portion in north Pasadena.

The CLARA project, based on current negotiations, is expected to be divided into two phases. Phase One will focus on developing the non-profit aspects of the project and is envisioned to include the construction of a 6,000 sq. ft. vertical farm R&D facility and 6,000 sq. ft. of classroom and office space. Phase Two is envisioned to support a commercial retail operation on approximately two acres of land and additional properties adjacent to the vertical farm and education centers.

The Phase One vertical farm facility is intended to serve dual roles, with Indoor Harvest using the facility as a demonstration farm and R&D facility and Harris County BUILD Partnership, a non-profit group, using the facility for educational and charitable purposes. It is anticipated that the crops grown will be donated, or sold at cost, to provide fresh produce to low income families in the North Pasadena area. The entire proposed campus area, almost two city blocks, will be designed and built to allow the flow of tourists without impacting operations. The City has been asked to develop a project overview to be presented in August to department heads at the Pasadena Independent School District's Kirk Lewis Career & Technical High School and the Continuing and Professional Development Department of San Jacinto College regarding academic curriculum development to be located at the CLARA campus.

Based upon an existing timeline provided by the City and the current status of negotiations between the parties, it is anticipated that the project MOU will be finalized and property lease executed by the end of August 2015. Under the timeline, construction on Phase One is planned for completion June 2016. As of the date of this Report, we do not yet have a binding agreement concerning this Project

Phase Two of the project is anticipated to be developed on two acres of land and additional buildings currently available adjacent to the existing properties being provided by the City. Indoor Harvest, as the primary developer of the campus, expects to be able to provide commercial operators who build on the CLARA campus a unique group of incentives and key advantages in regards to distribution, manufacturing intelligence and access to resourcing and key agricultural production talent. The City of Pasadena is currently working to secure additional land surrounding the CLARA campus for use by commercial partners.

We are currently in the final stages of negotiating terms with City Farms America, LLC and EB5 Solutions, LLC, to build commercial operations on the CLARA campus. EB5 Solutions would be responsible for providing investment capital to City Farms America for the construction with terms that include a multi-State expansion plan of the CLARA model. Indoor Harvest would act as the primary design build contractor for both CLARA construction and future expansion plans. We are currently negotiating terms with City Farms America and EB5 Solutions in connections with the MOU for CLARA. As of the date of this Report, we do not yet have a binding agreement with these entities.

In addition, City officials are currently considering creating a tax increment reinvestment zone (TIRZ) in the immediate area surrounding the CLARA campus.  A TIRZ is a public financing structure that Texas law allows to target tax revenue helping to support redevelopment in underserved areas. Such a zone, if created, could provide an additional economic incentive for tangential services to locate on the project site. As of now, the City is not obligated to create a TIRZ zone and no such zone may ever come to fruition.
 
On April 15, 2015, the Company signed a LOI with PUE 1.0. Under the terms of the letter of intent, it is anticipated that a final agreement will include the following terms:  Indoor Harvest will be responsible for the design of a vertical farming system and its related systems. PUE 1.0 will be responsible for the design of a HVAC system to be used with Indoor Harvest's vertical farming design. Both parties have agreed to share any data during the development stage. PUE 1.0 will retain all rights to its intellectual property and any new intellectual property developed as part of the collaboration. Indoor Harvest will be provided exclusive rights to market and distribute the final design for a period to be determined by way of a memorandum of understanding, to be finalized in connection with the closing of terms outlined in our letter of intent with the City of Pasadena. During the development stage, all equipment to be provided by PUE 1.0 for the purpose of the technology and economic pilot to be constructed at the 112 N Walter property will be provided at cost.

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 U.S. Securities and Exchange Commission's (SEC's) reporting and disclosure rules (See "Emerging Growth Companies" section above). 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. As a result 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 line of productions, developing our in-house manufacturing and fabrication facilities, engaging in projects to refine our products, negotiating agreements related to our business focus and the costs related to being a fully reporting company with the Securities and Exchange Commission.

Results of Operations

We are in the process of developing our products and services. Consequently, we have not generated revenues as of the date of this report.  We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2015. Our auditor has indicated in their Report that these conditions raise substantial doubt about our ability to continue as a going concern. 

We cannot guarantee we will be successful in our business operations.  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 develop the business plan and execute the plan.

We are unable to provide a timeline for the generation of revenues which casts substantial doubt on the viability of our business and our ability to continue as a going concern.

For the three months ended June 30, 2015 and 2014, we had a net loss of $306,210 and $59,716, respectively. For the six months ended June 30, 2015 and 2014, we had a net loss of $589,867 and $203,862, respectively. The primary driver behind the increase in the loss was attributable to the increase in expenses as noted below.

For the three months ended June 30, 2015 and 2014, we incurred $306,126 and $59,809, respectively, in operating expenses. For the six months ended June 30, 2015 and 2014, we incurred $579,802 and $204,006, respectively, in operating expenses. The increase in our operating expenses is due to increases in costs related to research and development, increased payroll costs, depreciation expense, listing expenses to have our common stock traded on the OTCQB and professional expenses related to being a SEC reporting Company.

Our expenses related to research and development for the three months ended June 30, 2015 and 2014 were $3,285 and $370, respectively. Our expenses related to research and development for the six months ended June 30, 2015 and 2014 were $12,528 and $1,010, respectively. The increase in research and development expenses was due to increased costs developing our vertical farm framing system and improvements to our existing aeroponic designs.
 
As of June 30, 2015 we had total liabilities of $54,911, while at December 31, 2014, we had total liabilities of $21,245. The increase in liabilities was due to increases in accrued payroll, deferred rent and a $36,100 note payable to Wells Fargo Bank for tooling equipment. The tooling will be used to manufacture our aeroponic AGT fixtures.

Deferred rent payable at June 30, 2015 was $9,402. 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.

Liquidity and Capital Resources

We anticipate taking the following steps to implement our business plan for the next 12 months. Our capital requirements for implementation of these steps are estimated at $4,000,000 as set forth in the table below. For the next 12 months, we anticipate engaging in the following operational activities, although we may vary our plans depending upon operational conditions and available funding: 
 
Event
 
Actions
 
Estimated Time
   
Estimated Cost
 
CLARA Phase I
Construct Demonstration Vertical Farm
   
Q3 2015- Q3 2016
   
$
3,500,000
 
CLARA Phase II
Develop Commercial Retail Campus at CLARA
   
Q1 2016- Q4 2016
   
$
500,000
 
 
As of August 1, 2015, we had $224,900 in our bank account and had credit lines totaling $25,000 of which $25,000 was available for use.
14

 
The total estimated costs to maintain minimal operational activities during the next 12 months is $314,144, plus an estimated $75,000 in maintaining public company reporting requirements, as set forth below. In order to fully implement our Plan of Operations for the next 12 months, we will need an additional $4,000,000. If we are unable to raise additional funds through private placements, registered offerings, debt financing or other sources we may need to postpone the development of our business plan. Without additional funding, we may only be partially successful or completely unsuccessful in implementing our business plan.

In order to fund the CLARA activities under our business plan described above, the Company plans to commence a private placement under Regulation D, Rule 506(c) for up to 5,000,000 shares of Series A Convertible Preferred Stock at a price of $1.00 per share for maximum gross proceeds of $5,000,000.  The Company has submitted a Form 424, Certificate of Amendment with the Secretary of State of Texas to its Articles of Incorporation containing a Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock which is filed as an exhibit to this Form 10-Q.  There is no assurance that we will raise any or all of the funds in this proposed offering.

Management has no written or oral agreement to advance additional funds. If we do not secure additional funds either from operational cash flow when we begin to sell our products and services or additional debt or equity financing, the implementation of our planned future business development activities will be delayed. We are currently working on projects to start generating cash flow.  We anticipate that our current cash on hand plus cash flow we expect to start generating during the next 12 months will enable us to maintain minimum operations and working capital requirements for at least the next twelve months.

Our estimated day-to-day operational costs, exclusive of those costs in our Plan of Operations for the next 12 months, as set forth above, are estimated to be approximately $314,144 to maintain minimal operational activities during the next 12 months. Our minimal annual operating expenses include our previously executed employment agreement with our CEO and sole founder for a salary of $70,000 annually, non-management salaries and consultants of $170,144, our lease agreement for our 10,000 sq. ft. facility of $50,400 per year, our estimated annual utility expenses of $10,800 and $12,800 in miscellaneous operating expenses. In addition, we will have $75,000 in costs related to maintaining our publicly traded status over the next 12 months. However, as stated above, in order to implement our Plan of Operations for the next 12 months we will need to secure an additional $4,000,000 in funds. If we are unable to secure the necessary additional funds, we will not be able to undertake some or all of our planned business development activities. Accordingly, we anticipate, based upon the assumption of $389,144 in our minimal day-to-day operational and public company reporting costs during the next 12 months as set forth above, a minimum average monthly burn rate of no more than $32,428 during the next 12 months, which will be paid from our existing funds, plus cash flow we expect to start generating during the next 12 months.

We are actively engaged in a number of projects which could generate cash flow.  We have bid on two requests for proposal on our vertical farm racking system. We are also working hard to secure final agreements on our CLARA project.  However we have no final agreements concerning these projects and we may not ever secure final agreements.
 
Based upon the assumption of our monthly burn rate exclusive of those costs in our Plan of Operations for the next 12 months as set forth above, the Company currently has sufficient funds to meet our current estimated day-to-day operations, plus SEC filing costs for the next 7 months. Assuming the burn rate continues for the first quarter of fiscal year 2016, we will need to secure additional funds of $164,244 either through capital raise or operating revenues to meet our minimal operating requirements for the next 12 months. There is no assurance we will obtain these funds and thus if we don't, 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.
 
We have not generated revenues as of the date of this Report. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2015. Our auditor has indicated in their Report that these conditions raise substantial doubt about our ability to continue as a going concern.

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 1.
 
Item 3. Quantitative and Qualitative Disclosure about Market Risk.

Not applicable.
 
Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
 
The Company's management, consisting solely of the Company's Chief Executive Officer/Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer/Chief Financial Officer has concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective.
 
Changes in Internal Control over Financial Reporting
 
There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 
 
PART II — OTHER INFORMATION
 
Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
We had no unregistered sales of equity securities during the quarter ended June 30, 2015.  However, during the quarter ended June 30, 2015, we issued 198,140 shares of common stock to employees, directors and consultants pursuant to the Company's 2015 Stock Incentive Plan under a registration statement filed on Form S-8. As of June 30, 2015, the 198,140 shares have vested and compensation expense of $101,051, or $0.51 per share was recorded on the books.

Item 3. Defaults Upon Senior Securities.
 
None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.
 
17

Item 6. Exhibits.

Exhibit No.
 
Document Description
 
 
 
4.1 
 
31.1
 
 
32.1 *
 
 
Exhibit 101 
 
Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**
XBRL Instance Document**
 
XBRL Taxonomy Extension Schema Document**

 
XBRL Taxonomy Extension Calculation Linkbase Document**

 
XBRL Taxonomy Extension Definition Linkbase Document**

 
XBRL Taxonomy Extension Label Linkbase Document**

 
XBRL Taxonomy Extension Presentation Linkbase Document**
____________
* This exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 


SIGNATURES
 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 
 
Indoor Harvest Corp, a Texas corporation
 
Title
 
Name
 
Date
 
Signature
 
 
 
 
 
 
 
Principal Executive Officer
 
Chad Sykes
 
August 6, 2015
 
/s/ Chad Sykes
 
In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
SIGNATURE
 
NAME
 
TITLE
 
DATE
 
 
 
 
 
 
 
/s/ Chad Sykes
 
 
Chad Sykes
 
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting
 
August 6, 2015
 
 













19



Exhibit 4.1

ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
INDOOR HARVEST CORP

CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
of
SERIES A CONVERTIBLE PREFERRED STOCK

Indoor Harvest Corp, a corporation organized and existing under the laws of the State of Texas (the "Corporation"), hereby certifies that the Board of Directors of the Corporation (the "Board of Directors" or the "Board"), pursuant to authority of the Board of Directors as required by applicable corporate law, and in accordance with the provisions of its Certificate of Incorporation and Bylaws, has and hereby authorizes a series of the Corporation's newly authorized Preferred Stock, par value $.01 per share (the "Preferred Stock"), and hereby states the designation and number of shares, and fixes the rights, preferences, privileges, powers and restrictions thereof, as follows:

SERIES A PREFERRED STOCK DESIGNATION AND AMOUNT

5,000,000 shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated "Series A Convertible Preferred Stock" with the following rights, preferences, powers, privileges, restrictions, qualifications and limitations.
 
1.            Stated Value.  The stated value of each issued share of Series A Convertible Preferred Stock shall be deemed to be $1.00 (the "Stated Value"), 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. The Stated Value adjusted for the issuance of Additional Shares of Common Stock as provided herein shall be deemed the Series A Conversion Price.

2.            Dividends. There are no dividends payable on the Series A Convertible Preferred Stock. As to dividends on common stock if and after conversion, currently the Corporation does not have a dividend policy. Should the Corporation offer dividends in the future, Series A Preferred Stockholders would receive dividends alongside common stockholders on an as-converted basis.

3.            Voting.

a.            Number of Votes.  On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of a meeting), 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.
1


4.            Liquidation, Dissolution, or Winding-Up.

Upon any liquidation, dissolution or winding-up of the Corporation 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 ("Series A Preferred Liquidation Payment"), 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 (the "Junior 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. If, upon such liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the assets to be distributed among the holders of shares of Series A Convertible Preferred Stock shall be insufficient to permit payment to the holders of Series A Convertible Preferred Stock of an aggregate amount equal to the aggregate Series A Liquidation Preference Payment, then the entire assets of the Corporation to be so distributed shall be distributed ratably among the holders of Series A Convertible Preferred Stock (based on the Individual Series A Preferred Liquidation Preference Payments due to the respective holders of Series A Convertible Preferred Stock).

4.            Optional Conversion.  The holders of Series A Convertible Preferred Shares shall have the conversion rights as follows (the "Conversion Rights").

(a)            Right to Convert.  Each share of Series A Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time and without the payment of additional consideration by the holder thereof, into a number of shares of common stock equal to the Stated Value of the Series A Convertible Preferred Shares divided by the Conversion Price.

(i)            Initial Conversion Price.  The initial Conversion Price shall be the Stated Value of the Series A Convertible Preferred Shares.

(ii)            Revised Conversion Price Upon the issuance of Additional Shares of Common Stock.  If the Corporation shall at any time after the date of issuance of the Series A Convertible Preferred Stock ("Series A Original Issue Date") issue any additional shares of common stock except Exempted Securities as provided in Section 5 below (collectively "Additional Shares of Common Stock"), 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 Corporation issues securities convertible into shares of Common Stock rather than Common Stock, the adjustment herein shall be based upon the conversion price of the convertible securities so issued.  Example:  The Corporation sells Common Stock for $.50 per share or securities convertible into Common Stock at a conversion price of $.50 per share in the future.  The new Conversion Price for Series A Convertible Preferred Stock shall be reduced to $.50.  Thus, the holder of a share of Series A Convertible Preferred Stock will obtain upon conversion of the Series A Convertible Preferred Stock a number of shares of Common Stock equal to the Stated Value ($1.00) divided by the new Conversion Price ($.50 in this example), or two shares of Common Stock upon conversion of each share of Series A Convertible Preferred Stock.
2

(iii)            Circumstances Requiring No Adjustment of Series A Conversion Price.  No adjustment in the Series A Conversion Price shall be made as the result of the issuance of Additional Shares of Common Stock if the cash price per share of Common Stock, or conversion price into shares of Common Stock if the issuance involves convertible securities, for such Additional Shares of Common Stock as set forth above issued or deemed to be issued by the Corporation is equal to or greater than the applicable Series A Conversion Price in effect immediately prior to the issuance or deemed issuance of such Additional Shares of Common Stock.
 
(b)            Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Series A Convertible Preferred Stock.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors, or round-up to the next whole number of shares, at the Corporation's option.  Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Convertible Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

(c)            Mechanics of Conversion.
(i)            For a holder of Series A Convertible Preferred Stock to voluntarily convert shares of Series A Convertible Preferred Stock into shares of Common Stock, that holder shall surrender the certificate or certificates for such shares of Series A Convertible Preferred Stock (or, if the registered holder alleges that such certificate has been lost, stolen, or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft, or destruction of such certificate), at the office of the transfer agent for the Series A Convertible Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that the holder elects to convert all or any number of the shares of the Series A Convertible Preferred Stock represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent.  The notice shall state the holder's name or the names of the nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued.  If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her, or its attorney duly authorized in writing.  The close of business on the date of receipt by the transfer agent of such certificates (or lost certificate affidavit and agreement) and notice (or by the Corporation if the Corporation serves as its own transfer agent) shall be the time of conversion (the "Conversion Time"), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of that date.  The Corporation shall, as soon as practicable after the Conversion Time, issue and deliver at such office to the holder of Series A Convertible Preferred Stock, or to his, her, or its nominee(s), a certificate or certificates for the number of shares of Common Stock to which the holder(s) shall be entitled, together with cash in lieu of any fraction of a share.
3

(ii)            The Corporation shall at all times while the Series A Convertible Preferred Stock is outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series A Convertible Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A Convertible Preferred Stock; and if, at any time, the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then-outstanding shares of the Series A Convertible Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation.
(iii)            All shares of Series A Convertible Preferred Stock that shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding, and all rights with respect to such shares, including the rights, if any, to receive notices, to vote, and to receive payment of any dividends accrued or declared but unpaid thereon, shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor.  Any shares of Series A Convertible Preferred Stock so converted shall be retired and cancelled and shall not be reissued as shares of such series, and the Corporation (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of Series A Convertible Preferred Stock accordingly.
(iv)            Upon any such conversion, no adjustment to the Series A Conversion Price shall be made for any accrued or declared but unpaid dividends on the Series A Convertible Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.
5.            Excluded Shares From Conversion Price Adjustment per Section 4(a)(ii) above.
Notwithstanding any provision of this Certificate of Rights and Preferences to the contrary, there shall be no adjustment to the Series A Conversion Price upon the issuance of any of the following securities (collectively "Exempted Securities"):
(i)            shares of Common Stock issued or deemed issued to employees or directors of, or consultants to, the Corporation or any of its Subsidiaries for services rendered pursuant to a plan, agreement, or arrangement approved by the Board of Directors, not to exceed 980,000 shares in the aggregate, as registered under our 2015 Stock Incentive Plan, from the Series A Original Issue Date.
(ii)            shares of Common Stock issued or deemed issued in connection with a bona fide joint venture or business acquisition of or by the Corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock, or otherwise; provided that any such issuance is approved by the Board of Directors, and, at the time of such issuance, the aggregate of that issuance and similar issuances in the preceding twelve (12) month period shall not exceed twenty percent (20%) of the then-outstanding Common Stock (assuming full conversion and exercise of all convertible and exercisable securities).
4

6.            SEC Stock Ownership Reporting.  The Corporation shall report in its SEC filings concerning stock ownership all shares of Common Stock and/or all shares of Series A Convertible Preferred Stock for which any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended ("Person") is deemed the beneficial owner as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.

7.            Waiver.  Any of the rights, powers, or preferences of the holders of Series A Convertible Preferred Stock set forth herein may be waived by the affirmative consent or vote of the holders of at least a majority of the shares of Series A Convertible Preferred Stock then outstanding.
 
 
 
 
 
 
 

 
[signature page follows]
5

 
IN WITNESS WHEREOF, this Certificate of Designation has been executed by a duly authorized officer of the Corporation on this 3rd day of August, 2015.

INDOOR HARVEST CORP


By:       /s/ Chad Sykes                                
Name:  Chad Sykes
Title:  CEO


6



Exhibit 31.1
 
CERTIFICATION

I, Chad Sykes, certify that:

1. I have reviewed this report on Form 10-Q of Indoor Harvest Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Indoor Harvest Corp 
 
 
 
 
 
Dated: August 6, 2015
By:
/s/ Chad Sykes                               
 
 
 
Chad Sykes
 
 
 
Chief Executive Officer/Chief Financial Officer
 
 




Exhibit 32.1
 

 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended June 30, 2015 of Indoor Harvest Corp (the "Company") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Indoor Harvest Corp
 
 
 
 
 
Dated: August 6, 2015
By:
/s/ Chad Sykes               
 
 
 
Chad Sykes
 
 
 
Chief Executive Officer/Chief Financial Officer
 

 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Indoor Harvest Corp and will be retained by Indoor Harvest Corp and furnished to the Securities and Exchange Commission or its staff upon request.

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