Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 13-May-15 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Indoor Harvest Corp | |
Entity Central Index Key | 1572565 | |
Trading Symbol | indo | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,957,388 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
BALANCE_SHEETS_UNAUDITED
BALANCE SHEETS (UNAUDITED) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $430,856 | $411,669 |
Prepaid expenses | 47,051 | |
Total current assets | 477,907 | 411,669 |
Furniture and equipment, net | 203,256 | 170,454 |
Security deposit | 12,600 | 12,600 |
Intangible asset | 2,000 | 2,000 |
Other assets | 48,783 | 68,083 |
Total assets | 744,546 | 664,806 |
Current liabilities: | ||
Accounts payable & accrued expenses | 7,991 | 7,185 |
Accrued payroll | 4,937 | 5,034 |
Deferred rent | 9,214 | 9,026 |
Total current liabilities | 22,142 | 21,245 |
Stockholders' equity: | ||
Common stock: $0.001 par value, 50,000,000 shares authorized;9,957,388 and 9,252,388 shares issued and outstandingat March 31, 2015 and December 31, 2014, respectively | 9,956 | 9,251 |
Additional paid-in capital | 1,651,184 | 1,299,389 |
Less: Stock subscription receivable | -10,000 | |
Deficit accumulated during the development stage | -938,736 | -655,079 |
Total Stockholders' equity | 722,404 | 643,561 |
Total liabilities and stockholders' equity | $744,546 | $664,806 |
BALANCE_SHEETS_Parentheticals_
BALANCE SHEETS (Parentheticals) (UNAUDITED) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 9,957,388 | 9,252,388 |
Common stock, shares outstanding | 9,957,388 | 9,252,388 |
STATEMENTS_OF_OPERATIONS_UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating Expenses | ||
Depreciation expense | $10,013 | $1,949 |
Research and development | 9,242 | 640 |
Professional fees | 90,811 | 96,888 |
General and administrative expenses | 163,610 | 44,719 |
Loss from operations | 273,676 | 144,196 |
Other Income (Expense) | -9,981 | 50 |
Net loss | ($283,657) | ($144,146) |
Net loss per common share: | ||
Net loss per share, basic and diluted (in dollars per share) | ($0.03) | ($0.02) |
Weighted average number of common shares outstanding: | ||
Basic and diluted (in shares) | 9,451,732 | 7,530,219 |
STATEMENTS_OF_SHAREHOLDERS_EQU
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (USD $) | Common Stock, $0.001 Par Value | Additional Paid-in Capital | Accumulated Deficit | Subscription Receivable | Total |
Balance at Dec. 31, 2014 | $9,251 | $1,299,389 | ($655,079) | ($10,000) | $643,561 |
Balance (in shares) at Dec. 31, 2014 | 9,252,388 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
For cash | 536 | 267,464 | 268,000 | ||
For cash (in shares) | 536,000 | ||||
For services - related party | 169 | 84,331 | 84,500 | ||
For services - related party (in shares) | 169,000 | ||||
Collection of stock subscription receivable | 10,000 | 10,000 | |||
Net loss | -283,657 | -283,657 | |||
Balance at Mar. 31, 2015 | $9,956 | $1,651,184 | ($938,736) | $722,404 | |
Balance (in shares) at Mar. 31, 2015 | 9,957,388 |
STATEMENTS_OF_CASH_FLOWS_UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | ($283,657) | ($144,146) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 10,013 | 1,948 |
Loss on the sale other asset | 9,250 | |
Stock issued for services - related party | 72,000 | 68,252 |
Stock issued for services | 12,500 | |
Changes in: | ||
Deferred rent | 188 | 63 |
Other assets | -68,724 | |
Security deposit | -12,600 | |
Prepaid expense | -47,051 | |
Accounts payable and accrued expenses | 806 | |
Accrued compensation - officers | 1,972 | |
Accrued compensation | -97 | |
Net cash used in operating activities | -226,048 | -153,235 |
Cash flows from investing activities: | ||
Proceeds from sale of equipment | 10,050 | |
Purchase of equipment | -42,815 | -2,092 |
Net cash used in investing activities | -32,765 | -2,092 |
Cash flows from financing activities: | ||
Collection of stock subscription receivable | 10,000 | |
Issuance of common stock for cash | 268,000 | 362,250 |
Net cash provided by financing activities | 278,000 | 362,250 |
Increase cash and cash equivalents | 19,187 | 206,923 |
Cash and cash equivalents at beginning of period | 411,669 | 122,017 |
Cash and cash equivalents at end of period | 430,856 | 328,940 |
Supplementary disclosure of non-cash financing activity: | ||
Sale of stock for subscriptions receivable | ||
Cash paid during the period for: | ||
Interest | ||
Income taxes |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Basis of presentation | |||||||||
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). | |||||||||
It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. | |||||||||
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"). | |||||||||
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. | |||||||||
Cash and Cash Equivalents | |||||||||
The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents. | |||||||||
Stock-based Compensation | |||||||||
The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). | |||||||||
Loss per Share | |||||||||
Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since Indoor Harvest has incurred losses for all periods, the impact of the common stock equivalents would be anti-dilutive and therefore are not included in the calculation. | |||||||||
Fair Value of Financial Instruments | |||||||||
The Company's financial instruments consisted primarily of cash and accrued expenses. The carrying amounts of the Company's financial instruments generally approximate their fair values as of March 31, 2015 and December 31, 2014, respectively, due to the short-term nature of these instruments. | |||||||||
Income Taxes | |||||||||
The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. | |||||||||
FASB ASC 740 establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation. Tax years subsequent to 2008 remain open to examination by U.S. federal and state tax jurisdictions. | |||||||||
Tax years 2014, 2013, 2012 and 2011, remain subject to examination by the IRS and respective states. | |||||||||
Property and Equipment | |||||||||
Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table: | |||||||||
Estimate Useful | |||||||||
Asset Description | Life (Years) | ||||||||
Furniture & Equipment | 5-Mar | ||||||||
Software | 5-Mar | ||||||||
Tooling Equipment | 10 | ||||||||
Leasehold improvements | * | ||||||||
* The shorter of 5 years or the life of the lease. | |||||||||
Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income. | |||||||||
Intangible Asset | |||||||||
The Company's intangible assets consist of domain names and is accounted for as an indefinite lived intangible asset in accordance with ASC 350 "Goodwill and Other Intangible Assets" ("ASC 350"). | |||||||||
Domain names are not being amortized as they are determined to have indefinite lives. | |||||||||
Intangible assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairment charges taken during the years ended March 31, 2015 and 2014. | |||||||||
Patent and Patent Application Expenses | |||||||||
Although the Company believes that its patent and underlying technology will have continuing value, the amount of future benefits to be derived from the patent is uncertain. Therefore, patent costs are expensed as incurred. | |||||||||
Research and Development | |||||||||
Research and development expenditures are charged to expense as incurred. Research and development expense was as follows: | |||||||||
3 Months ended | |||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Research and Development Expense | $ | 9,242 | $ | 640 | |||||
Advertising Expense | |||||||||
Advertising and promotional costs are expensed as incurred. Advertising expense was as follows: | |||||||||
3 Months ended | |||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Advertising Expense | $ | 19,694 | $ | 4,135 | |||||
Reclassifications | |||||||||
Certain expense items have been reclassified in the statement of operations for the three months ended March 31, 2014, to conform to the reporting format adopted for the three months ended March 31, 2015. | |||||||||
Recent Accounting Pronouncements | |||||||||
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASUE 2014-10"). The guidance is intended to reduce the overall cost and complexity associated with financial reporting for development stage entities without reducing the availability of relevant information. The Company adopted this pronouncement for the year ended December 31, 2014. | |||||||||
In June 2014, FASB issued Accounting Standards Update ("ASU") No. 2014-12, "Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be achieved after the Requisite Service Period". The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial conditions. | |||||||||
In August 2014, the FASB issued Accounting Standards Update "ASU" 2014-15 on "Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". Currently, there is no guidance in U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. | |||||||||
We do not believe any other recent pronouncements will have any impact on our presentation of financial position or results of operations. |
GOING_CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2015 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 2 - GOING CONCERN |
As reflected in the accompanying consolidated financial statements, the Company had a net loss of $283,657 and net cash used in operations of $226,048 for the three months ended March 31, 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. |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
PROPERTY AND EQUIPMENT | NOTE 3 - PROPERTY AND EQUIPMENT | ||||||||
Property and equipment consist of the following at March 31, 2015 and December 31, 2014: | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Furniture and Equipment | $ | 110,719 | $ | 89,327 | |||||
Software | 1,023 | 1,023 | |||||||
Leasehold Improvements | 107,821 | 86,398 | |||||||
Tooling Equipment | 18,309 | 18,309 | |||||||
Total | 237,872 | 195,057 | |||||||
Less: accumulated depreciation and amortization | (34,616 | ) | (24,603 | ) | |||||
Property and Equipment, Net | $ | 203,256 | $ | 170,454 | |||||
Depreciation expense for the three months ended March 31, 2015 and 2014, totaled $10,013 and $1,948, respectively. | |||||||||
During the year ended December 31, 2014, the Company paid deposits and or acquired equipment totaling $68,083 which has not been placed in service as of December 31, 2014 and is included in Other Assets as of December 31, 2014. During the three months ended March 31, 2015, the Company sold some of the equipment for $10,050 with a cost of 19,300 and recorded a loss on the sale of $9,250. As of March 31, 2015 $48,783 is included in the Other Assets. |
COMMITMENTS_CONTINGENCIES
COMMITMENTS & CONTINGENCIES | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
COMMITMENTS & CONTINGENCIES | NOTE 4 – COMMITMENTS & CONTINGENCIES | ||||||||
A Cannabis Production Pilot Agreement ("Agreement") was entered into as of the 18th day of December 2014 by and between Indoor Harvest Corp. ("Indoor Harvest"), a Texas Corporation, and Tweed Marijuana Inc. ("Tweed"), a Canadian company. | |||||||||
Tweed Marijuana Inc. is a TSX Venture Exchange listed company. Its 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. | |||||||||
Indoor Harvest will be provided exclusive manufacturing rights for a period of 10 years on the New IP developed under the Agreement. All equipment manufactured by Indoor Harvest will be provided to Tweed by way of a "cost plus agreement" not to exceed 15% allowable for profit. | |||||||||
Both parties are responsible for the costs associated with meeting their obligations outlined in this Agreement. Under no circumstance, do Tweed's costs exceed those associated with the cost of plants, labor and general costs of production including water and electricity. However, any costs related to third party laboratory analysis and testing of phytocannabinoids will be shared equally by both parties. | |||||||||
On February 20, 2014 the Company signed a 60 month lease on a 10,000 sqft. office/warehouse facility and paid a deposit of $12,600. The monthly base rent is $4,200 increasing 6% every two years for the term of the lease. The property is adequate for all of the Company's currently planned activities. | |||||||||
Deferred rent payable at March 31, 2015 was $9,216. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods. | |||||||||
Rent expense for the periods noted is as follows: | |||||||||
3 Months ended | |||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Rent expense | $ | 12,788 | 4,263 | ||||||
At March 31, 2015, rental commitments are as follows: | |||||||||
Year | Amount | ||||||||
2015 | $ | 50,400 | |||||||
2016 | 52,416 | ||||||||
2017 | 53,424 | ||||||||
2018 | 55,560 | ||||||||
2019 | 18,876 | ||||||||
$ | 230,676 | ||||||||
On September 18, 2013, the Company entered into a material transfer agreement with the Massachusetts Institute of Technology's Media Lab ("MIT") to provide aeroponics system components and fixtures to be used for the purpose of developing a wall facade aeroponics system as part of MIT Media Lab's Changing Places research. The Company is responsible for providing technical assistance and materials. In connection with this agreement, MIT has agreed to reimburse the Company $12,242 in costs incurred as of December 31, 2014; the Company has recorded this reimbursement as Other Assets as of December 31, 2014 and a reduction in research and development expense. | |||||||||
In July of 2014, the Company entered into a presentation and design agreement for the development of presentations for the Company. Total anticipated cost of $5,500 with a one-third due upon acceptance, one-third due upon design approval and remainder due 10 days after the project has been completed. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 5 – RELATED PARTY TRANSACTIONS |
On December 31, 2013, the Company had accrued payroll to a related party, Chad Sykes, our CEO of $6,181. Additionally, for the year ended December 31, 2013, we issued shares for services to related parties amounting to $82,552. There were no related party transactions for the year ended December 31, 2014 or the quarter ended March 31, 2015. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2015 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 6- SHAREHOLDERS' EQUITY |
COMMON 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). | |
During the year ended December 31, 2014, the company issued a total of 2,474,000 shares of common stock ($0.25-0.50/share) for cash totaling $864,750 and a subscription receivable of $10,000. | |
During the quarter ended March 31, 2015, the Company issued a total of 536,000 shares of Common stock at $0.50 per share for cash totaling $268,000. | |
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 over a two year period as directed in the Director Agreement. As of March 31, 2015, the shares have not been issued and have not vested and no compensation expense was recorded on the books | |
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 over a two year period as directed in the Director Agreement. As of March 31, 2015, the shares have not been issued and have not vested and no compensation expense was recorded on the books. | |
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. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 7 - SUBSEQUENT EVENTS |
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 over a two year period as directed in the Director Agreement |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Basis of presentation | Basis of presentation | ||||||||
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP). | |||||||||
It is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. | |||||||||
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"). | |||||||||
Use of estimates | 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. | |||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||
The Company considers all highly liquid instruments with a maturity of three months or less to be cash and cash equivalents. | |||||||||
Stock-based Compensation | Stock-based Compensation | ||||||||
The Company follows ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). | |||||||||
Loss per Share | Loss per Share | ||||||||
Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since Indoor Harvest has incurred losses for all periods, the impact of the common stock equivalents would be anti-dilutive and therefore are not included in the calculation. | |||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||
The Company's financial instruments consisted primarily of cash and accrued expenses. The carrying amounts of the Company's financial instruments generally approximate their fair values as of March 31, 2015 and December 31, 2014, respectively, due to the short-term nature of these instruments. | |||||||||
Income taxes | Income Taxes | ||||||||
The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. | |||||||||
FASB ASC 740 establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation. Tax years subsequent to 2008 remain open to examination by U.S. federal and state tax jurisdictions. | |||||||||
Tax years 2014, 2013, 2012 and 2011, remain subject to examination by the IRS and respective states. | |||||||||
Property and Equipment | Property and Equipment | ||||||||
Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table: | |||||||||
Estimate Useful | |||||||||
Asset Description | Life (Years) | ||||||||
Furniture & Equipment | 5-Mar | ||||||||
Software | 5-Mar | ||||||||
Tooling Equipment | 10 | ||||||||
Leasehold improvements | * | ||||||||
* The shorter of 5 years or the life of the lease. | |||||||||
Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income. | |||||||||
Intangible Asset | Intangible Asset | ||||||||
The Company's intangible assets consist of domain names and is accounted for as an indefinite lived intangible asset in accordance with ASC 350 "Goodwill and Other Intangible Assets" ("ASC 350"). | |||||||||
Domain names are not being amortized as they are determined to have indefinite lives. | |||||||||
Intangible assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairment charges taken during the years ended March 31, 2015 and 2014. | |||||||||
Patent and Patent Application Expenses | Patent and Patent Application Expenses | ||||||||
Although the Company believes that its patent and underlying technology will have continuing value, the amount of future benefits to be derived from the patent is uncertain. Therefore, patent costs are expensed as incurred. | |||||||||
Research and Development | Research and Development | ||||||||
Research and development expenditures are charged to expense as incurred. Research and development expense was as follows: | |||||||||
3 Months ended | |||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Research and Development Expense | $ | 9,242 | $ | 640 | |||||
Advertising Expense | Advertising Expense | ||||||||
Advertising and promotional costs are expensed as incurred. Advertising expense was as follows: | |||||||||
3 Months ended | |||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Advertising Expense | $ | 19,694 | $ | 4,135 | |||||
Reclassification | Reclassifications | ||||||||
Certain expense items have been reclassified in the statement of operations for the three months ended March 31, 2014, to conform to the reporting format adopted for the three months ended March 31, 2015. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASUE 2014-10"). The guidance is intended to reduce the overall cost and complexity associated with financial reporting for development stage entities without reducing the availability of relevant information. The Company adopted this pronouncement for the year ended December 31, 2014. | |||||||||
In June 2014, FASB issued Accounting Standards Update ("ASU") No. 2014-12, "Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be achieved after the Requisite Service Period". The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial conditions. | |||||||||
In August 2014, the FASB issued Accounting Standards Update "ASU" 2014-15 on "Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". Currently, there is no guidance in U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. | |||||||||
We do not believe any other recent pronouncements will have any impact on our presentation of financial position or results of operations. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Schedule of estimated useful life by asset description | Estimate Useful | ||||||||
Asset Description | Life (Years) | ||||||||
Furniture & Equipment | 5-Mar | ||||||||
Software | 5-Mar | ||||||||
Tooling Equipment | 10 | ||||||||
Leasehold improvements | * | ||||||||
* The shorter of 5 years or the life of the lease. | |||||||||
Schedule of research and development expense | 3 Months ended | ||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Research and Development Expense | $ | 9,242 | $ | 640 | |||||
Schedule of advertising expense | 3 Months ended | ||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Advertising Expense | $ | 19,694 | $ | 4,135 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of property and equipment | 31-Mar-15 | 31-Dec-14 | |||||||
Furniture and Equipment | $ | 110,719 | $ | 89,327 | |||||
Software | 1,023 | 1,023 | |||||||
Leasehold Improvements | 107,821 | 86,398 | |||||||
Tooling Equipment | 18,309 | 18,309 | |||||||
Total | 237,872 | 195,057 | |||||||
Less: accumulated depreciation and amortization | (34,616 | ) | (24,603 | ) | |||||
Property and Equipment, Net | $ | 203,256 | $ | 170,454 |
COMMITMENTS_CONTINGENCIES_Tabl
COMMITMENTS & CONTINGENCIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Schedule of rent expense | 3 Months ended | ||||||||
31-Mar-15 | 31-Mar-14 | ||||||||
Rent expense | $ | 12,788 | 4,263 | ||||||
Schedule of rental commitments | Year | Amount | |||||||
2015 | $ | 50,400 | |||||||
2016 | 52,416 | ||||||||
2017 | 53,424 | ||||||||
2018 | 55,560 | ||||||||
2019 | 18,876 | ||||||||
$ | 230,676 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Furniture & Equipment | Minimum | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 3 years |
Furniture & Equipment | Maximum | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 5 years |
Software | Minimum | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 3 years |
Software | Maximum | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 5 years |
Tooling Equipment | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | 10 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Parentheticals) (Details) (Leasehold improvements, Maximum) | 3 Months Ended |
Mar. 31, 2015 | |
Leasehold improvements | Maximum | |
Accounting Policies [Line Items] | |
Estimate Useful Life (Years) | P5Y |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Accounting Policies [Abstract] | ||
Research and development expense | $9,242 | $640 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Accounting Policies [Abstract] | ||
Advertising expense | $19,694 | $4,135 |
GOING_CONCERN_Detail_Textuals
GOING CONCERN (Detail Textuals) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Going Concern [Abstract] | ||
Net loss | ($283,657) | ($144,146) |
Net cash used in operations | ($226,048) | ($153,235) |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total | $237,872 | $195,057 |
Less: accumulated depreciation and amortization | -34,616 | -24,603 |
Property & equipment, Net | 203,256 | 170,454 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 110,719 | 89,327 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,023 | 1,023 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 107,821 | 86,398 |
Tooling equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $18,309 | $18,309 |
PROPERTY_AND_EQUIPMENT_Detail_
PROPERTY AND EQUIPMENT (Detail Textuals) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $10,013 | $1,948 |
PROPERTY_AND_EQUIPMENT_Detail_1
PROPERTY AND EQUIPMENT (Detail Textuals 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Proceeds from sale of equipment | $10,050 | |
Purchase cost of equipment | 19,300 | |
Loss on the sale equipment | 9,250 | |
Other assets | $48,783 | $68,083 |
COMMITMENTS_CONTINGENCIES_Deta
COMMITMENTS & CONTINGENCIES (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $12,788 | $4,263 |
COMMITMENTS_CONTINGENCIES_Deta1
COMMITMENTS & CONTINGENCIES (Details 1) (USD $) | Mar. 31, 2015 |
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $50,400 |
2016 | 52,416 |
2017 | 53,424 |
2018 | 55,560 |
2019 | 18,876 |
Rental commitments | $230,676 |
COMMITMENTS_CONTINGENCIES_Deta2
COMMITMENTS & CONTINGENCIES (Detail Textuals) (USD $) | 1 Months Ended | 12 Months Ended | |||
Dec. 18, 2014 | Jul. 31, 2014 | Feb. 20, 2014 | Dec. 31, 2014 | Mar. 31, 2015 | |
sqft | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Term of manufacturing rights | 10 years | ||||
Description of lease arrangements | On February 20, 2014 the Company signed a 60 month lease on a 10,000 sqft. office/warehouse facility and paid a deposit of $12,600. The monthly base rent is $4,200 increasing 6% every two years for the term of the lease. The property is adequate for all of the Company's currently planned activities. | ||||
Period of rental agreement | 60 months | ||||
Area of land | 10,000 | ||||
Deposit on rent facility | $12,600 | ||||
Monthly rent payable | 4,200 | ||||
Monthly base rent increasing percentage | 6.00% | ||||
Period of increasing base rent | 2 years | ||||
Deferred rent payable | 9,216 | ||||
Reimbursement revenue | 12,242 | ||||
Anticipated cost | $5,500 | ||||
Description of anticipated cost due for payment | Total anticipated cost of $5,500 with a one-third due upon acceptance, one-third due upon design approval and remainder due 10 days after the project has been completed. | ||||
Maximum | |||||
Commitments And Contingencies [Line Items] | |||||
Cost plus agreement allowable for profit percentage | 15.00% |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Detail Textuals) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ||||
Accrued payroll - related party | $6,181 | |||
Stock issued for services - related party | $72,000 | $68,252 | $82,552 |
STOCKHOLDERS_EQUITY_Detail_Tex
STOCKHOLDERS' EQUITY (Detail Textuals) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | Jan. 31, 2015 | Mar. 01, 2015 | Mar. 13, 2015 | Mar. 23, 2015 | Jan. 31, 2014 | |
Shareholders Equity [Line Items] | |||||||
Issuance of common stock for cash (in shares) | 2,474,000 | ||||||
Issuance of common stock for cash | $268,000 | $864,750 | |||||
Amount received from issuance of common stock | 84,500 | ||||||
Subscription receivable | 10,000 | ||||||
Legal Counsel | |||||||
Shareholders Equity [Line Items] | |||||||
Issuance of common stock for cash (in shares) | 144,000 | ||||||
Issued price (in dollars per share) | $0.50 | ||||||
Amount received from issuance of common stock | 72,000 | ||||||
Director Agreement | William Jamieson | 2015 Stock Incentive | |||||||
Shareholders Equity [Line Items] | |||||||
Common stock awarded to director | 166,560 | ||||||
Vesting period | 2 years | ||||||
Director Agreement | John Choo | 2015 Stock Incentive | |||||||
Shareholders Equity [Line Items] | |||||||
Common stock awarded to director | 166,560 | ||||||
Vesting period | 2 years | ||||||
Consulting agreement | Smallcapvoice.com | |||||||
Shareholders Equity [Line Items] | |||||||
Issuance of common stock for cash (in shares) | 25,000 | 25,000 | |||||
Issued price (in dollars per share) | $1 | ||||||
Issuance of common stock for cash | 25,000 | 25,000 | |||||
Amount received from issuance of common stock | 25,000 | ||||||
Common stock | |||||||
Shareholders Equity [Line Items] | |||||||
Issued price (in dollars per share) | $0.50 | ||||||
Issuance of common stock for cash | 268,000 | ||||||
Number of common stock issued under agreement | 536,000 | ||||||
Common stock | Minimum | |||||||
Shareholders Equity [Line Items] | |||||||
Issued price (in dollars per share) | $0.25 | ||||||
Common stock | Maximum | |||||||
Shareholders Equity [Line Items] | |||||||
Issued price (in dollars per share) | $0.50 | ||||||
Common stock | Four advisory agreement | |||||||
Shareholders Equity [Line Items] | |||||||
Issued price (in dollars per share) | $0.25 | ||||||
Number of common stock issued under agreement | 65,552 | ||||||
Amount received from issuance of common stock | 16,388 | ||||||
Common stock | Legal Counsel | |||||||
Shareholders Equity [Line Items] | |||||||
Issued price (in dollars per share) | $0.25 | ||||||
Number of common stock issued under agreement | 207,455 | ||||||
Amount received from issuance of common stock | $51,864 |
SUBSEQUENT_EVENTS_Detail_Textu
SUBSEQUENT EVENTS (Detail Textuals) (Subsequent Event, John Zimmerman, Director Agreement, 2015 Stock Incentive) | 0 Months Ended |
Apr. 15, 2015 | |
Subsequent Event | John Zimmerman | Director Agreement | 2015 Stock Incentive | |
Subsequent Event [Line Items] | |
Common stock awarded to director | 166,560 |
Vesting period | 2 years |