UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

[X]☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 20182020

OR

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

For the transition period from ______________ to ______________

Commission file number:000-55594

INDOOR HARVEST CORP

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:

512-309-1776

Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act:Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ]☐ No [X]☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ]☐ No [X]☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [  ]☐ No [X]☒

Indicate by check mark whether the registrant has submitted electronically 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 [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]☒

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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes [  ]☐ No [X]☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at May 30, 2019)on December 31, 2020 was $830,873,$8,404,886, based upon the closing price $0.019of $ 0.0035 of the registrant’s common stock on that date as reported on the OTCQB marketplace of the OTC Markets Group Inc.

As of May 31, 2019,August 27, 2021, there were 43,730,1882,401,396,041 shares of registrant’s common stock outstanding.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This Annual Report on Form 10-K, the other reports, statements, and information that we have previously filed or that we may subsequently file with the Securities and Exchange Commission, or SEC, and public announcements that we have previously made or may subsequently make include, may include, incorporate by reference or may incorporate by reference certain statements that may be deemed to be “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to enjoy the benefits of that act. Unless the context is otherwise, the forward-looking statements included or incorporated by reference in this Form 10-K and those reports, statements, information and announcements address activities, events or developments that Indoor Harvest, Corp. (hereinafter referred to as “we,” “us,” “our,” “our Company” or “Indoor Harvest”) expects or anticipates, will or may occur in the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed elsewhere in this Report.

Certain risk factors could materially and adversely affect our business, financial conditions and results of operations and cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The risks and uncertainties we currently face are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, you may lose all or part of your investment.

The industry and market data contained in this report are based either on our management’s own estimates or, where indicated, independent industry publications, reports by governmental agencies or market research firms or other published independent sources and, in each case, are believed by our management to be reasonable estimates. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey of market shares. We have not independently verified market and industry data from third-party sources. In addition, consumption patterns and customer preferences can and do change. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be verifiable or reliable.

PART I

Item 1. Business.

Organization

Indoor Harvest Corp (the “Company”) is a Texas corporation formed on November 23, 2011. Our principal executive office iswas located at 7401 W. Slaughter Lane #5078, Austin, Texas 78739.78739 for the year ended 2019. From inception until about August 4, 2017, in summary, the Company provided full service, statepursued a business of the art design-build,certain engineering, procurement and construction related services as to the indoor and vertical farming industry. The Company providedindustry and 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 operationspursuits 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 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”). On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production and consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding membership interests of Alamo CBD, LLC (“Alamo CBD”), a Texas limited liability company. Upon closing of the Alamo Acquisition, the membership interests of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub. Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist.

On November 12, 2018,August 14, 2019, the Company’s BoardCompany established a wholly owned subsidiary, IHC Consulting, Inc. (“IHC”), in the State of Directors (the “Board”) amendedNew York of the Company’s Bylaws, effectiveUnited States of America. IHC Consulting will provide consulting and other services to the Company and others on that date.a contracted basis.

Description of Business

Indoor Harvest, through its brand name Indoor Harvest®, is focused on leveraging technology and planning on Vertical Farming, Building Integrated Agriculture, Controlled Environment Agriculture and Aeroponic Cultivation technology with other synergistic enterprises in the Cannabis industry as part of our new 2019 merger and acquistionacquisition or an M&A/vertical integration strategy.

We have developed technology relating to a high pressure aeroponic platform for growing cannabis. Aeroponic production differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as a growing medium, along with essential minerals to sustain plant growth, aeroponics uses no growing medium. We plan to continue to look for partners and opportunities to refine the development and commercialization of our high pressure Aeroponic Cultivation technology.

At the same time, we are aggressively positioning the Company as an integrated consolidation platform offering other cannabis companies the opportunity to be part of a bigger play, sharing intellectual capital, technology, access to new capital markets and liquidity for investors.

Our focus will beprevious efforts focused on aggregating and integrating early stage cannabis companies focused on Genetics, Tissue Culture, Controlled Environment Ag technologies, including high pressure Aeroponic Cultivation, Micropropagation and Cultivation operations. While we don’t have arrangements with such institutions, we are seeking university level science relationships among other relationships.

The current strategy is to position the Company as an integrated consolidation platform offering for cannabis industry companies focused on hemp, other hemp-related products, CBD, with the potential to be part of a bigger opportunity while sharing intellectual capital, technology, expanded business networks, along with access to new capital markets and liquidity for investors.

Our operational expenditures are being refocused to primarily relate d to furtherwill be focused on our plans to create shareholder value through an M&A and strategic partnership strategy, while developing our technology, launching and completing joint test trials, developing research partnerships and collaboration, and of coursemanaging the necessary costs related to being a fully reporting company with the SEC.

COVID-19

A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its managers and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at September30, 2020. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to develop its business plan.

Industry and Regulatory Overview

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 (the “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.

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.

In November 2018, Attorney General Sessions resigned and left the DOJ. As a nominee, Attorney General William Barr testified before the U.S. Senate and wrote to Congress that, as Attorney General, he would not seek to prosecute cannabis companies that relied on the Cole Memo and are complying with state law.

As of April 25, 2019, 34 states, the District of Columbia and Guam allow their citizens to use medical cannabis through de-criminalization. Within this list of jurisdictions, voters in the States of Alaska, California, Colorado, D.C., Maine, Massachusetts, Nevada, Oregon, Vermont, 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.

Nothing herein is a legal opinion or a complete or up to date statement on laws, regulations, or policies, especially given the shifting legal and regulatory landscape.

Changes in Business Operations

Changes in Business Operations

2019 is2020 was a continuation of our 20182019 restructuring, reorganizing, and repositioning for us. Thankfully, withof the help of our financingbusiness. The Company believes it is positioned to start executing its business strategy and other relationships or partners, we are now positioning to reemerge with new management, momentum and ideas to further our technology whilst leveraging ourthe public company to create shareholder value.

At The recent long-term commitments of the same time,new management team coupled with a robust business network to support our business initiatives have laid the Company has expanded its visionfoundation for the future. We will be working on branding and mission to enhance and accelerate the creation ofbuilding our team in 2021, once we have our new value for shareholders by pursuing a new two-pronged strategy.plans funded.

The first prongCompany’s current strategy is to continueposition itself as an integrated consolidation platform offering for cannabis industry companies focused on hemp, other hemp-related products, CBD, CPG, and ancillary business verticals with the potential to lookbe part of a bigger opportunity while sharing intellectual capital, technology, expanded business networks, along with access to new capital markets and liquidity for opportunities to build and deploy our technology designs in partnership with others.

The second prong of the strategy will be to seek out strategic partnerships and M&A opportunities with other synergistic enterprises that can benefit by leveraging our public vehicle and management expertise. We plan to expand our team and capabilities to fill this role.

On March 15, 2018, the Company formed its’ scientific advisory board, which will assist management in the development of its business plans in the cannabis industry. The initial members of the scientific advisory board will consist of Dr. Ronald Walter, Dr. Nadia Sabeh and Mr. Damian Solomon.

Alamo CBD, LLC Asset Acquisition

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 Sub, a wholly owned Texas limited liability company.

On August 4, 2017, the Company consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding membership interests of Alamo CBD, LLC (“Alamo CBD”), a Texas limited liability company. Upon closing of the Alamo Acquisition, the members of Alamo CBD (the “Alamo Surviving Members”) exchanged their membership interests in Alamo CBD for 7,584,008 shares of Indoor Harvest’s common stock. 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 Acquisition, 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 Surviving 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. However, there can be no assurance that Alamo CBD will be awarded such license in the near future or at all.

Additionally, upon Alamo CBD successfully being registered and licensed by the Drug Enforcement Agency (“DEA”) to produce and dispense cannabis under federal law, Indoor Harvest will issue to the individual Alamo Surviving 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 Surviving Members. A combination of cash and common stock may be elected by Alamo Surviving Members individually. However, there can be no assurance that Alamo CBD will be registered or licensed by the DEA, in the near future or at all.

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 Acquisition and in order to facilitate the Alamo Acquisition. The return of common stock by Chad Sykes was a non-cash transaction and reduced the common stock outstanding as of December 31, 2017. The cancellation of shares was not applied to the acquisition of assets from Alamo CBD. Therefore, there was a $1,440,961 impairment loss of intangible assetsinvestors.

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 Alamo Acquisition.

Contractual Joint Venture with Alamo CBD and Vyripharm Enterprises, LLC

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

The Company paid an initial down paymentis subject to risks, no assurance exists of $250,000 under the Joint Venture Agreement on March 30, 2017.

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 basedraise sufficient capital 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 paymentgood 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’sor our ability to pursue a Joint Venture in the future, after the Company, or Alamo CBD, obtained license to produce cannabis. Should the Company voluntarily default on the Joint Venture, the agreement would terminate and neither party would have further obligation to the other.

Other Agreements

On October 11, 2017, we entered into a binding letter of intent (the “Zoned Properties LOI”) with Zoned Properties Inc (“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. If the three independent agreements were not agreed upon prior to January 9, 2018, the Zoned Properties LOI would have automatically terminated. The parties extended the term of the LOI in January 2018.

The extension expired in April 2018 resulting in the Zoned Properties LOI being terminated and the parties having no further obligation to one another. We made total non-refundable payments of $50,000 to Zoned Properties.

Research and Development

MIT CityFarm (MIT OPenAg)

On September 18, 2013, the Company entered into a Letter Agreement (the “MIT Letter Agreement”) for the Transfer of Materials with the Massachusetts Institute of Technology (“MIT”). Pursuant to the MIT Letter Agreement, the Company was to provide MIT with an aeroponic system components and fixtures manufactured by Indoor Harvest 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 CityFarm project, due to decisions by MIT CityFarm principals, in which the terms of the MIT Letter Agreement were not honored due to concerns over the Company’s involvement with cannabis. The MIT Letter 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 MITCityFarm:

become profitable.

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 (the “Canopy Cannabis Pilot”) with Canopy Growth Corporation (formerly Tweed Marijuana Inc.), a Canadian company (“Canopy Growth”). 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 Canopy Cannabis Pilot was broken into two separate phases, as follows:

Phase One Cannabis Pilot

Trial 1: Strain Ghost Train Haze

In March 2015, we began the first trial under the Canopy Cannabis Pilot. ACannabis 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 Canopy 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.

Trial 2: Strain UK Cheese

In December 2015, we began a second trial under our Canopy 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, aCannabis Sativa andCannabis 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:

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 theCannabis 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 Canopy 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 Canopy 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.

Our Current Portfolio of Product Designs

The Company has developed and maintains proprietary high pressure aeroponic cultivation system designs as well as flood and drain and floating raft designs, for cannabis and other agriculture products. 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 MITCityFarm 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

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:

Intellectual Property

The Company relies on a strategy of 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. This does not mean these efforts are up to date or fully effective. The following summarizes certain filings. The Company is currently studying the legal aspects of these, including recent and past communications from counsel and the patent office, and makes no promise or representation as to this information which is subject to correction and update.

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.

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, who assigned the patent application to the Company.

We will research the status of our filings and restructure or update as needed this year.

Plan of Expanded Operations

Our plan of expanded operations for the next 12 months, assuming we secure the necessary funding,current strategy is stated herein. In summary, we plan to growposition the Company through acquisitions, joint venturesas an integrated consolidation platform offering for cannabis industry companies focused on hemp, other hemp-related products, CBD, with the potential to be part of a bigger opportunity while sharing intellectual capital, technology, expanded business networks, along with access to new capital markets and other relationships.liquidity for investors.

Sales and Marketing

We seek to differentiate ourselves in a crowded market. While we continue to look for opportunities to leverage our aeroponic system designs to further refine development and commercialization, we are now also positioning the Company as an integrated consolidation platform offering cannabis companies the opportunity to be part of a bigger play, sharing intellectual capital, technology, access to capital markets and liquidity for investors.

We will be working on branding and building our team in 2019,2020, once we have our new plans funded.

Competition and Market Position

We are takingOur current strategy is to position the Company as an integrated consolidation platform offering for cannabis industry companies focused on hemp, other hemp-related products, CBD, with the potential to be part of a two-pronged approachbigger opportunity while sharing intellectual capital, technology, expanded business networks, along with access to creating shareholder valuenew capital markets and liquidity for Indoor Harvest.

We will continue to look for opportunities to deploy some aspect of our aeroponic cultivation technology in an R&D setting to complete development and commercialization. Additionally, we have an opportunity to leverage our public company as a consolidation vehicle with other synergistic and like-minded companies in the Cannabis industry.investors. This may be done by asset acquisitions, mergers, joint ventures, or other methods.strategic initiatives.

OTC Markets

OTC Markets offer small companies almost all thecomparable benefits of the NYSE or Nasdaq markets, a liquid, secondary trading market, visibility, access to capital, a public market valuation and the ability for small companies to build their brand and reputation across the network, at nearly half the cost of an NYSE listing.

We are positioning to compete with consolidated or vertically integrated cannabis science and technology companies trading on the OTC Markets.

Technology Competition

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 does not foresee manufacturing its own product platform to sell to the cannabis market.

Rather, we will pursue opportunities to develop our technology with third party partners and eventually license or sell that technology or deploy it in the market as part of a joint venture cultivation operation.

The Company plans to source products and accessories from third party manufacturing companies that manufacture products in part using tooling we own, in accordance with our specifications.

Employees

As of MayDecember 31, 2019,2020, we have 2 part-timeno full-time employees andbut use a variety of advisors and consultants.

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.” However, we do not believe that our plans to license and sell technology as described herein violates federal law and we believe that we would prevail if any such action were brought against us although there can be no assurance of this.

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 enforcement actions could have a material adverse effect on our business and results of operations. In November 2018, Attorney General Sessions resigned and left the DOJ. As a nominee, Attorney General William Barr testified before the U.S. Senate and wrote to Congress that, as Attorney General, he would not seek to prosecute cannabis companies that relied on the Cole Memo and are complying with state law. 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.

The regulatory environment on a Federal, State, and Local level remains opaque and ever changing. This areaaspect of business risk is in flux and our disclosure should not be deemed a legal opinion or interpreted as fully addressing the multi-state and Federal government areas.myriad regulatory challenges inherent in the industry.

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.

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 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.

Additional Information

We are a public company and file annual, quarterly and special reports and other information with the SEC. We are not required to, and do not intend to, deliver an annual report to security holders. Our filings are available, at no charge, to the public athttp://www.sec.gov.

ITEM 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information under this item.

ITEM 1B. Unresolved Staff Comments.

Smaller reporting companies are not required to provide the information required by this item.

Item 2. Properties.

Our Offices

Our headquarters are pending.

Item 3. Legal Proceedings.

From time to time, wethe Company 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. WeThe Company may be subject to one or more claims or suits but based on COVID and management changes, and problems with mail deliveries, we are not a partyreadily able to any material current, pending or threatened litigation.supply all details as of this filing and plan to file updates as we are able.

Item 4. Mine Safety Disclosures.

None.Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Trading History

Our common stock is quoted on the OTCQBOTCMarkets under the symbol “INQD”. As of MayDecember 31, 2019, we had 43,730,1882020, there were 2,401,396,041 outstanding shares of common stock and approximately 11274 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.

Dividends

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.

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Texas Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

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.

Common Stock

As of MayDecember 31, 2019, we had 43,730,1882020, there were 2,401,396,041 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 holdersstockholders 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.

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.

Holders of Common Stock

We have 11274 shareholders of record holders offor our common stock, as of MayDecember 31, 2019.2020.

Preferred Stock

As of May 31, 2019, we had 750,000The Company has designated 15,000,000 shares of Series A Preferred Convertible Stock issued and outstanding.with a par value of $0.01.

The stated value of each issued share of Series A Convertible Preferred Stock shall be deemed to be $1.00, 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

IfThe Series A Preferred Stock also had a “down-round” protection feature provided to the investors if the Company shall atsubsequently issued or sold any time after the date of issuance of the Series A Convertible Preferred Stock issue any additional shares of common stock, except exemptedstock options, or convertible securities without cash consideration or forat a cash consideration per shareprice less than the Series A Conversion Price in effect immediately priorconversion price of $1.00 per common share. The conversion price was automatically adjustable down to such issue, thenthe price of the instrument being issued. As a result of conversions during the year ended December 31, 2020, the Series A Conversion Price shall be adjusted by being reduced, concurrently with such issue,Preferred Stock conversion price was reset to a price equal$0.00006 per share.

As of December 31, 2020, the 13 preferred shareholders holding 750,000 preferred shares can convert to the sale price of the additional shares of common stock. If the Company issues securities convertible into12.5 billion shares of common stock, ratherwhich was significantly more than the outstanding common stock at that time. As of December 31, 2020, there are currently 2,401,396,041 shares outstanding. The Company has increased its authorized shares to 10 billion shares in May of 2020, addressing the adjustment shall be based uponpotential Company control issue if conversion of all the conversion price ofpreferred shares were to occur at the convertible securities so issued. The conversion price of the Series A Convertible Preferred Stock as of April 24, 2019 is $0.02275.same time.

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.

As at December 31, 2020, there were 750,000 shares of Series A Convertible Preferred Stock issued and outstanding.

On August 27, 2021, Indoor Harvest Corp (the “Company”) completed an initiative when it entered into a Modification Agreement (the “Modification”) in cooperation with the current Series A Preferred shareholders to modify their conversion privileges to align and support current management team initiatives and shareholder interests.  The modification agreement provides the Preferred shareholders the ability to convert into common shares at a conversion price at the lower of $0.40 (per the original agreement), or the subsequent per share pricing of a  future equity raise greater than Five Hundred Thousand ($500,000) Dollars. This Modification is forecasted to  support anti- dilutive measures potentially to the benefit of our shareholders and may allow the Company to proceed with plans relating to funding needs.

Transfer Agent and Registrar

VStock Transfer, LLC at 18 Lafayette Place, Woodmere, New York 11598 is the registrar and transfer agent for our common stock. Their telephone number is (212) 828-8436.

Warrants

There were no outstanding warrants as of December 31, 2018.2020.

Options

There are no outstanding options to purchase our securities.securities as of December 31, 2020.

Recent Sales of Unregistered Securities

During the year ended December 31, 2018,2020, we issued shares of our common stock that were not registered under the Securities Act, and were not previously disclosed in a Current Report on Form 8-K or on a Quarterly ReportReports on Form 10-Q as follows:

During the year ended December 31, 2020, the Company issued 2,200,358,737 shares of common stock as follows:

We relied upon Section 4(a)(2) of the Securities Act of 1933, as amended for the above issuances to U.S. citizens or residents. We believe that Section 4(a)(2) of the Securities Act of 1933 was available because:

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

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 6. Selected Financial Data.

Not required.

Item 7. Management’s Discussion and Analysis Of Financial Condition and Results Of Operations.

The discussion of our financial condition and results of operations and business and related within this document 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. 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.

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, through its brand name Indoor Harvest®, is focused on leveraging its investment and experience in Vertical Farming, Building Integrated Agriculture, Controlled Environment Agriculture and Aeroponic Cultivation technology with other synergistic enterprises in the Cannabis industry as part of an M&A/consolidation and integration strategy.

The company spent the majority of 20182020 reorganizing, restructuring, and repositioning.repositioning the business.

During the fiscal year of 2018, after an unsuccessful S-1 funding effort, and the inability to fund previous plans, theThe Company decided to move its center of focus and attention to the Boston, MA, market.

We are currentlywas funded by Tangiers Global, LLC through a convertible note structure from 2017 into 2019, that allowsallowed the Company to keep being active while we restructure, reposition and recapitalize the company. We continue to seek funding from other capital sources as we position the company for future growth.

As part of a restructuring and recapitalization effort the Company will be holding a Special Meeting of Stockholders (currently scheduled for June 7, 2019)plans to increaseregularly increases the number of shares of common stock the Company is authorized to issue from fifty million to two hundred million.issue. We believe this will enable the Company to raise additional capital by allowing funding sources to be able to convert debt to shares, a common form of funding, and attract talent.to utilize shares as currency for future M&A transactions or related strategic initiatives.

Raising new capital is critical to the Company going forward. Weforward and is a primary focus as SEC filings are working on our new investor deckbeing completed and business plan to take to market mid-2019.brought current.

We areOur current strategy is positioning the Company more as an integration and consolidation platform offering other cannabis and hemp companies the opportunitypotential to be part of a bigger play,opportunity, sharing intellectual capital, business networks, technology, and access to new capital markets andwith liquidity for investors. Our focusWe will be on aggregatinganalyze cannabis and integrating early stage cannabishemp companies focused on Genetics, Tissue Culture, Controlled Environment Ag technologies, including high pressure Aeroponic Cultivation, Cultivation operations, robotics and AI.AI, Hemp, CBD and other CPG related products.

WeOur operational expenditures will primarily focus on review of existing assets, vetting potential M&A targets and related due diligence costs, as well as the necessary costs related to being a fully reporting company with the SEC.

On March 5, 2020, The Company entered into a material definitive agreement with Fincann Corp., a New York corporation (the “Fincann”). Fincann provides banking related strategies or solutions for the cannabis-related industry through a growing consortium of financial institutions, to help marijuana-related businesses (MRBs) to access essential banking services without complicated workarounds. Due diligence efforts are moving our base of operation to the Boston, MA, area where we believe we can leverage that region’s unique positionongoing.

The Company is in the cannabis, bio tech and bio Ag industries, alongside academic institutions like MIT and Harvard.

At the same time, we plan to continue to look for partners and opportunities to continue to refine the development and commercializationprocess of our Aeroponic Cultivation technology designs.establishing a headquarters.

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 Activities

We are working to leverage our technology with other industry companies to try and do joint ventures or acquisitions.

Results of Operations

YearThe following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2018 compared to year ended December 31, 20172020 and 2019, which are included herein.

The following table presents our operating results forFor the year ended December 31, 20182020 compared to the year ended December 31, 2018:2019

Our operating results for the years ended December 31, 2020 and 2019 and the changes between those periods for the respective items are summarized as follows:

Revenues

During the yearyears ended December 31, 20182020 and December 31, 2017,2019, the Company generated no revenue.

Operating Expenses

Total operating expenses for the year ended December 31, 20182020 and 20172019 were $1,092,384$248,115 and $3,223,678,$632,720 , respectively, for an aggregate decrease of 2,131,294$384,605 or 66%61%. The aggregate decrease is primarily related to the impairment loss of intangible assets of $1,440,961, or 100%, the loss on the investment decrease in joint venture of $250,000, or 100%,stock-based compensation, a 28% decrease in professional fees of $67,253 or 16% associated with the TCUP application as well as the Alamo CBD merger$86,800 and aan 88% decrease in general and administrative expenses of $332,011 or 31% associated with stock based compensation.$175,105.

Other Expense

Total other expense for the year ended December 31, 20182020 and 20172019 were $2,219,534$$46,032,660 and $1,188,372,$2,464,101 , respectively, for an increase of $1,031,162$43,568,559 or 87%1768%. The increase is primarily related to the change in the fair value of the embedded derivative liability of $1,530,543$43,568,559 related to the Tangiers convertible notes payable offset by loss on investment in joint venture incurred in 2017and Series A Preferred Stock, and a decrease181% increase in amortizationinterest expenses of debt discount.$246,526.

Net Loss

As a result of the factors discussed above, net loss for the year ended December 31, 20182020 and 20172019 was $3,311,918$46,280,775 and $4,412,050,$3,096,821, respectively, for a decreasean increase of $1,100,132$43,183,954 or 25%1394%.

Liquidity and Capital Resources

The following table provides selected financial data about our Company as of December 31, 20182020 and December 31, 2017,2019, respectively.

Working Capital

Cash Flows

As atof December 31, 2018,2020, our Company’s cash balance was $155,682$1,207 and total assets were $205,104.$3,083. As atof December 31, 2017,2019, our Company’s cash balance was $35,453$12,353 and total assets were $133,020.$24,989.

As atof December 31, 2018,2020, our Company had total liabilities of $2,583,468,$44,752,523, compared with total liabilities of $1,132,644$4,331,080 as at December 31, 2017.2019.

As atof December 31, 2018,2020, our Company had a working capital deficiency of $2,392,323$44,749,440 compared with a working capital deficiency of $1,029,916$4,313,396 as atof December 31, 2017.2019. The increase in working capital deficiency was primarily attributed to an increase in convertible notes payable, accounts payable and derivative liabilities.liabilities of $40,436,127.

Cash Flow from Operating Activities

Net cash used in operating activities for the year ended December 31, 20182020 and 20172019 were $680,753$17,452 and $1,019,729,$441,602, respectively, for a decrease of $338,976.$424,150. The improvement in net cash used in operating activities is primarily related to a decrease in operating expenses, from reductions in professional fees and general and administrative expenses.

Cash Flow from Investing Activities

Net cash used in investing activities forDuring the year ended December 31, 20182020 and 2017 were $0 and $239,750, respectively, for a decrease of $237,750. The decrease is primarily due to the investment2019, we had no cash used in the Vyripharm joint venture of $250,000.investing activities.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, 20182020 and 20172019 were $800,982$6,306 and $1,216,713,$298,273, respectively, for a decrease of $415,731.$291,967. During the year December 31, 2018, we2020, the Company received $808,500$10,000 by way of a loan under a convertible note payable and repaid note payable of $3,964. During the year December 31, 2019, the Company received $307,304 by way of loan under a convertible note payable and repaid note payable of $7,518. During the year ended December 31, 2017, we received $500,000 by way of loan under a convertible note payable, $824,000 from issuance of common stock, $300,000 from issuance of preferred stock and repaid note payable of $6,787, convertible note of $175,000 and settlement of demand note payable of $225,500

Investing Activities

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:

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 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 10, 2018, the Company issued 307,692 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $20,000 of Note 1 at a conversion price of $0.07.

As of April 17, 2018, the balance under Note 1 is $349,000, which includes $44,000 guaranteed interest. As of April 17, 2018, Note 1 can be converted into 1,378,205 shares of the Company’s common stock.

The Company issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee. 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.

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 650,000 shares of the Company’s common stock.

Note 1 has a maturity date of April 10, 2018 and Note 2 has a maturity date of May 12, 2018. Note 3 had a maturity date of July 16, 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. 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 principle, 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.

Investment Agreement with Tangiers

On October 12, 2017, we entered into an Investment Agreement (the “Tangiers Investment Agreement”) with Tangiers Global, LLC (“Tangiers”). Pursuant to the terms of the Tangiers 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 Tangiers 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.

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.

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 2019. Our auditor has indicated in their Report that these conditions raise substantial doubt about our ability to continue as a going concern.$9,131.

Off-Balance Sheet Arrangements

We do not have anyno off-balance sheet arrangements.arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders

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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 8. Financial Statements and Supplementary Data.

INDOOR HARVEST CORP

CONSOLIDATED FINANCIAL STATEMENTS

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INDOOR HARVEST CORP

CONSOLIDATED BALANCE SHEETS