0001493152-18-016480.txt : 20181119 0001493152-18-016480.hdr.sgml : 20181119 20181119162536 ACCESSION NUMBER: 0001493152-18-016480 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181119 DATE AS OF CHANGE: 20181119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Indoor Harvest Corp CENTRAL INDEX KEY: 0001572565 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 455577364 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55594 FILM NUMBER: 181192785 BUSINESS ADDRESS: STREET 1: 5300A EAST FREEWAY CITY: HOUSTON STATE: TX ZIP: 77020 BUSINESS PHONE: (346) 310-3427 MAIL ADDRESS: STREET 1: 5300A EAST FREEWAY CITY: HOUSTON STATE: TX ZIP: 77020 10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended

September 30, 2018

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

000-55594

INDOOR HARVEST CORP

(Exact name of registrant as specified in its charter)

Texas		45-5577364
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

5300 East Freeway Suite A, Houston, Texas		77020
(Address of principal executive offices)		(Zip Code)

(713) 410-7903

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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.

[X] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]		Accelerated filer	[ ]
Non-accelerated filer	[ ]	(Do not check if a smaller reporting company)	Smaller reporting company	[X]
			Emerging growth company	[X]

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

[ ] YES [X] NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 33,548,008 common shares issued and outstanding as of November 15, 2018.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		F-1

Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition or Plan of Operation	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9

PART II - OTHER INFORMATION		10

Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures	12
Item 5.	Other Information	12
Item 6.	Exhibits	12
SIGNATURES		13

FORWARD-LOOKING STATEMENTS

Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain “forward-looking statements’’ within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,’’ “will,’’ “expect,’’ “intend,’’ “estimate,’’ “anticipate,’’ “believe,’’ “continue’’ or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:

●	the success or failure of management’s efforts to implement our business plan;

●	our ability to fund our operating expenses;

●	our ability to compete with other companies that have a similar business plan;

●	the effect of changing economic conditions impacting our plan of operation; and

●	our ability to meet the other risks as may be described in future filings with the Securities and Exchange Commission (the “SEC”).

Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.

When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time-frame, or at all.

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

INDOOR HARVEST CORP

BALANCE SHEETS

(UNAUDITED)

	September 30, 2018			December 31, 2017
ASSETS
Current Assets:
Cash and cash equivalents	$	113,933		$	35,453
Prepaid expenses		16,500			4,452
Unused commitment fee		50,000			50,000
Total Current Assets		180,433			89,905

Furniture and equipment, net		16,838			24,623
Security deposit		12,600			12,600
Intangible asset, net		4,603			5,892
TOTAL ASSETS	$	214,474		$	133,020

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	188,497		$	89,033
Accrued payroll		3,722			6,653
Deferred rent		3,195			6,239
Convertible notes payable, net of debt discount of $26,334 and $69,541, respectively		831,076			455,459
Derivative liability		1,240,041			554,917
Note payable - current portion		8,118			7,520
Total Current Liabilities		2,274,649			1,119,821

Long Term Liabilities:
Note payable		6,659			12,823
Total Liabilities		2,281,308			1,132,644

Stockholders’ Deficit
Preferred stock: 5,000,000 authorized; $0.01 par value 750,000 shares issued and outstanding at September 30, 2018 and December 31, 2017		7,500			7,500
Common stock: 125,000,000 authorized; $0.001 par value 31,041,459 and 25,503,678 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		31,041			25,502
Additional paid in capital		8,874,804			7,376,196
Accumulated deficit		(10,980,179	)		(8,408,822	)
Total Stockholders’ Deficit		(2,066,834	)		(999,624	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	214,474		$	133,020

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

F-1

INDOOR HARVEST CORP

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

Revenue	$	-		$	4,245		$	-		$	4,245
Cost of sales		-			1,165			-			15,594
Gross (Profit) Loss		-			3,080			-			(11,349	)

Operating Expenses
Depreciation and amortization		3,019			12,792			9,074			39,046
Research and development		-			-			-			1,625
Impairment loss		-			1,440,961			-			1,440,961
Professional fees		81,717			8,107			194,756			374,707
General and administrative		161,830			157,592			626,861			910,400
Total Operating Expenses		246,566			1,619,452			830,691			2,766,739

Loss from operations		(246,566	)		(1,616,372	)		(830,691	)		(2,778,088	)

Other Income (Expense)
Other income		-			7,177			-			7,192
Loss on investment in joint venture		-			-			-			(250,000	)
Interest expense		(39,128	)		(6,141	)		(87,313	)		(125,373	)
Amortization of debt discount		(16,047	)		(45,186	)		(125,957	)		(294,888	)
Change in fair value of embedded derivative liability		(1,089,075	)		-			(1,527,396	)		-
Total other expense		(1,144,250	)		(44,150	)		(1,740,666	)		(663,069	)

Loss before income taxes		(1,390,816	)		(1,660,522	)		(2,571,357	)		(3,441,157	)

Provision for income taxes		-			-			-			-

Net Loss	$	(1,390,816	)	$	(1,660,522	)	$	(2,571,357	)	$	(3,441,157	)

Basic and dilutive loss per common share	$	(0.05	)	$	(0.08	)	$	(0.10	)	$	(0.18	)

Weighted average number of common shares outstanding		27,954,160			19,929,506			25,878,110			18,644,318

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

F-2

INDOOR HARVEST CORP

STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

	Series A Convertible Preferred Stock				Common Stock						Additional Paid in		Accumulated			Total Stockholders’
	Number of Shares		Amount		Number of Shares			Amount			Capital		Deficit			Deficit

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

Common stock issued for services - third party		-		-		1,107,833			1,108			92,332		-			93,440
Common stock issued for services - related party		-		-		903,546			904			164,191		-			165,095
Convertible debt converted into common stock		-		-		6,806,872			6,807			380,783		-			387,590
Derivative liability		-		-		-			-			842,272		-			842,272
Beneficial conversion feature		-		-		-			-			15,750		-			15,750
Voluntary return of stock by related party		-		-		(3,280,470	)		(3,280	)		3,280		-			-
Net loss		-		-		-			-			-		(2,571,357	)		(2,571,357	)

Balance - September 30, 2018		750,000	$	7,500		31,041,459		$	31,041		$	8,874,804	$	(10,980,179	)	$	(2,066,834	)

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

F-3

INDOOR HARVEST CORP

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	September 30,
	2018			2017

Cash Flows from Operating Activities:
Net loss	$	(2,571,357	)	$	(3,441,157	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		9,074			39,046
Impairment loss		-			1,440,961
Amortization of debt discount		125,957			294,888
Change in fair value of embedded derivative liability		1,527,396			-
Stock issued for services - third party		93,440			407,000
Stock issued for services - related party		165,095			159,930
Changes in operating assets and liabilities:
Accounts receivable		-			34,853
Other receivable		-			7,323
Prepaid expenses		(12,048	)		-
Accounts payable and accrued expenses		99,464			41,571
Billing in excess of costs and estimated earnings		-			(20,155	)
Deferred rent		(3,044	)		(1,705	)
Accrued comp - officers		(2,931	)		(3,420	)
Net Cash used in Operating Activities		(568,954	)		(1,040,865	)

Cash Flows from Investing Activities:
Purchase of property and equipment		-			(550	)
Net Cash used in Investing Activities		-			(550	)

Cash Flows from Financing Activities:
Repayments of note payable		(5,566	)		(230,526	)
Proceeds from convertible notes, less OID costs paid		653,000			250,000
Repayments of convertible note		-			(175,000	)
Proceeds from Issuance of preferred stock for cash and warrants		-			300,001
Proceeds from issuance of common stock		-			824,000
Net Cash provided by Financing Activities		647,434			968,475

Net increase (decrease) in cash and cash equivalents		78,480			(72,940	)
Cash and cash equivalents, beginning of period		35,453			78,219
Cash and cash equivalents, end of period	$	113,933		$	5,279

Supplemental Cash Flow Information
Cash paid for interest	$	1,380		$	1,917
Cash paid for taxes	$	-		$	-

Non-Cash Investing and Financing Activities:
Beneficial conversion feature	$	15,750		$	95,333
Settlement of convertible note into common shares	$	387,590		$	100,000
Conversion of preferred shares into common shares	$	-		$	2,500
Derivative liability reclassified to paid-in capital	$	842,272		$	-
Voluntary return of stock by related party	$	3,280		$	-
Shares issued due to Alamo CBD asset acquisition	$	-		$	890,961

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

F-4

INDOOR HARVEST CORP

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Indoor Harvest Corp (the “Company,”) is a Texas corporation formed on November 23, 2011. Our principal executive office is located at 5300 East Freeway Suite A, Houston, Texas 77020. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”). On August 4, 2017, we consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Acquisition, the member interests of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist. Pursuant to ASC 805 “Business Combinations,” the Company determined the Alamo Acquisition was an asset purchase.

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

Basis of Presentation

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

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

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

F-5

Reclassification

Certain expense items have been reclassified in the statement of operations for the nine months ended September 30, 2017, to conform to the reporting format adopted for the nine months ended September 30, 2018.

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

Loss per Share

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

Fair Value of Financial Instruments

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

	●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	●	Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
	●	Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Income Taxes

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

F-6

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

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

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

Property and Equipment

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

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

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

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

Intangible Assets

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

Derivative Liability

The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.

F-7

Beneficial Conversion Feature

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

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

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 for the nine months ended September 30, 2018 and 2017 are $0 and $1,625, respectively.

Advertising Expense

Advertising and promotional costs are expensed as incurred. Advertising expense for the nine months ended September 30, 2018 and 2017 are $837 and $16,185, respectively.

Recent Accounting Pronouncements

Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

NOTE 2 - GOING CONCERN

As reflected in the accompanying financial statements, the Company had a net loss of $2,571,357, net cash used in operations of $568,954 and has an accumulated deficit of $10,980,179, for the nine months ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

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

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

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

F-8

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of September 30, 2018and December 31, 2017:

Classification	September 30, 2018			December 31, 2017
Furniture and equipment	$	11,666		$	11,666
Leasehold improvements		38,717			38,717
Computer equipment		3,019			3,019
Total		53,402			53,402
Less: Accumulated depreciation		(36,564	)		(28,779	)
Property and equipment, net	$	16,838		$	24,623

Depreciation expense for the nine months ended September 30, 2018 and 2017, totaled $7,785 and $37,765, respectively.

NOTE 4 – INTANGIBLE ASSETS

There were no impairment charges taken for the domain name during the nine months ended September 30, 2018 and 2017.

Intangible assets consist of the following as of September 30, 2018and December 31, 2017:

Classification	September 30, 2018			December 31, 2017
Domain name	$	2,000		$	2,000
Facilities Manager’s Package Online		1,022			1,022
MLC CD Systems (software)		7,560			7,560
Total		10,582			10,582
Less: Accumulated amortization		(5,979	)		(4,690	)
Intangible assets, net	$	4,603		$	5,892

Amortization expense for the nine months ended September 30, 2018 and 2017, totaled $1,289 and $1,281, respectively.

NOTE 5 - COMMITMENTS & CONTINGENCIES

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

Deferred rent payable at September 30, 2018 was $3,195. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods.

Rent expense, net of sublease payments received, for the nine months ended September 30, 2018 and 2017 were $34,831 and $39,763, respectively.

NOTE 6 - FAIR VALUE MEASUREMENTS

Carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent convertible notes payable of $831,076 and $455,459 at September 30, 2018 and December 31, 2017, respectively. Financial instruments classified as Level 3 in the fair value hierarchy represents derivative liability of $1,240,041 and $554,917 September 30, 2018 and December 31, 2017, respectively.

F-9

NOTE 7 - NOTE PAYABLE

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

	September 30, 2018		December 31, 2017
Balance as of period ended	$	14,777	$	20,343
Less: current portion		8,118		7,520
Long-term note payable, net	$	6,659	$	12,823

NOTE 8 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable at September 30, 2018 and December 31, 2017 are as follows:

	September 30, 2018			December 31, 2017
Note 1	$	87,410		$	475,000
Note 2		50,000			50,000
Note 3		550,000			-
Note 4		170,000
Total convertible notes payable		857,410			525,000

Less: Unamortized debt discount		(26,334	)		(69,541	)
Total convertible notes		831,076			455,459

Less: current portion of convertible notes		831,076			455,459
Long-term convertible notes	$	-		$	-

Note 1

On March 24, 2017, the Company entered into a securities purchase agreement with Tangiers Global, LLC (“Tangiers”) relating to the issuance and sale of notes (“Note 1”) in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 1 is convertible into shares of common stock at a price equal to $0.30 per share; provided, however that if Note 1 is not retired on or before the maturity date, defined in Note 1 as a “Maturity Default” the conversion price shall be adjusted to be equal to the lower of: (i) $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 date that the Company receives a notice of conversion. The Tangiers Note 1 carries interest on the unpaid principal amount at the rate of 8% per annum and is due and payable eight months from the effective date of each payment. As of September 30, 2018, the balance under Note 1 is $131,410, which includes $44,000 guaranteed interest. As of September 30, 2018, Note 1 can be converted into 4,264,243 shares of the Company’s common stock.

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

F-10

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

The execution of Amendment #1 to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding 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 May 1, 2018, Tangiers has informed the Company that they have elected at this time not to enforce the default interest rate of 18% under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion.

Note 2

The Company issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee for the Investment Agreement. The promissory note (“Note 2”) maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers any time, into shares of the Company’s common stock at a conversion price of $0.1666 per share. The promissory note is in a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retired 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. The default interest rate is 20%. As of September 30, 2018, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of September 30, 2018, Note 2 can be converted into 1,677,009 shares of the Company’s common stock.

Note 3

On January 16, 2018, the Company issued and sold an 8% Fixed Convertible Promissory Note (“Note 3”) to Tangiers (the “Buyer”), in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 3 is convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. However, if Note 3 is not paid back on or before the maturity date, defined in Note 3 as a “Maturity Default”, the conversion price of Note 3 shall then be adjusted to be equal to the lower of: (i) $0.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion of Note 3.

On February 13, 2018, April 17, 2018, June 13, 2018, and July 27, 2018, the Company executed Amendments #1, #2, #3, and #4 to the Tangiers Note 3 for draws of $132,000, $132,000, $101,750 and $101,750, respectively. All other terms and conditions of the Tangiers Note 3 remain effective. As of September 30, 2018, the balance under Note 3 is $594,000, which includes $44,000 guaranteed interest.

Note 4

On September 14, 2018, the Company issued and sold an 8% Fixed Convertible Promissory Note (“Note 4”) to Tangiers (the “Buyer”), in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 4 is convertible into shares of the Company’s common stock at a conversion price of $0.08 per share. However, if Note 4 is not paid back on or before the maturity date, defined in Note 4 as a “Maturity Default”, the conversion price of Note 4 shall then be adjusted to be equal to the lower of: (i) $0.08 or (ii) 65% of the lowest trading price of the Company’s common stock during the 15 consecutive trading days prior to the date on which Buyer elects to convert all or part of the Note 4.

F-11

As of September 30, 2018 and December 31, 2017, the Company accrued $134,945 and $49,000, respectively, in interest expense related to the outstanding the notes.

Debt Discount and Original Issuance Costs for Convertible Note

The debt discount amount consists of debt discount due to beneficial conversion features, warrant, original issue costs, and debt issue costs. The debt discounts recorded in 2018 and 2017, pertain to beneficial conversion feature on the convertible notes. The notes are required to be bifurcated and reported at fair value on the date of grant.

During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company amortized $125,957 and $466,862 to interest expense, respectively.

	September 30, 2018			December 31, 2017
Debt discount, beginning of period	$	69,541		$	152,617
Additional debt discount and debt issue cost		82,750			383,786
Amortization of debt discount and debt issue cost		(125,957	)		(466,862	)
Debt discount, end of period	$	26,334		$	69,541

Debt Issuance Costs for Convertible Note

During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company did not pay any debt issue costs.

NOTE 9 - DERIVATIVE LIABILITIES

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

The following schedule shows the change in fair value of the derivative liabilities for the nine months ended September 30, 2018:

Balance - December 31, 2017	$	554,917
Addition of new derivatives recognized as loss on derivatives		1,019,033
Settled on issuance of common stock		(842,272	)
Gain on change in fair value of the derivative		508,363
Balance - September 30, 2018		1,240,041
Less: current portion		(1,240,041	)
Long-term derivative liabilities	$	-

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

Derivative liabilities - December 31, 2016	$	-
Add fair value at the commitment date for convertible notes issued during the current year		213,453
Less derivatives due to conversion		(18,800	)
Fair value mark to market adjustment for derivatives		360,264
Derivative liabilities - December 31, 2017		554,917
Less : current portion		(554,917	)
Long-term derivative liabilities	$	-

F-12

NOTE 10 - RELATED PARTY TRANSACTIONS

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

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

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

F-13

NOTE 11 - STOCKHOLDERS’ DEFICIT

Series A Convertible Preferred Stock

As at September 30, 2018 and December 31, 2017, there were 750,000 shares of Series A Convertible Preferred Stock issued and outstanding.

Common Stock

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

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

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

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

On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.09.

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

On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.08 per share.

On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $0.065 per share.

On April 17, 2018, the Company issued 300,000 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $51,000 ($0.17 per share) based upon the most current trading price of the Company’s stock.

F-14

On May 20, 2018, the Company issued 99,012 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $16,832 ($0.17 per share) based upon the most current trading price of the Company’s stock.

On May 23, 2018, the Company issued 30,000 shares of common stock related to an Director Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $5,100 ($0.17 per share) based upon the most current trading price of the Company’s stock.

On June 21, 2018, the Company issued 295,858 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.0845 per share.

On June 6, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $2,550 ($0.085 per share) based upon the most recent trading price of the Company’s stock.

On June 27, 2018, the Company issued 424,500 shares of common stock related to an advisory agreement with Electrum Partners, LLC. The Company recorded a fair value of $50,940 ($0.12 per share) based upon the most current trading price of the Company’s stock.

On July 2, 2018, the Company issued 244,755 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.072.

On July 12, 2018, the Company issued 269,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.065.

On August 1, 2018, the Company issued 50,000 shares of its common stock to Electrum Partners pursuant to an advisory agreement. The Company recorded fair value of $4,500 ($0.09 per share) based upon the most recent trading price per share of the Company’s stock.

On August 2, 2018, the Company issued 1,307,846 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.031.

On August 13, 2018, the Company issued 460,617 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.034.

On July 2, 2018, the Company issued 244,755 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.07.

On July 12, 2018, the Company issued 269,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.07.

On August 2, 2018, the Company issued 1,307,846 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.033.

On August 13, 2018, the Company issued 460,617 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.033.

On August 22, 2018, the Company issued 583,333 shares of its common stock to Ideal Business Partners pursuant to an advisory agreement. The Company recorded fair value of $35,000 ($0.06 per share) based upon the most recent trading price per share of the Company’s stock.

F-15

On September 1, 2018, the Company issued 50,000 shares of its common stock to Electrum Partners pursuant to an advisory agreement. The Company recorded fair value of $3,000 ($0.06 per share) based upon the most recent trading price per share of the Company’s stock.

On September 20, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $1,800 ($0.06 per share) based upon the most recent trading price of the Company’s stock.

On September 24, 2018, the Company issued 569,801 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $20,000 of Note 1 at a conversion price of $.035.

On September 28, 2018, the Company issued 1,424,501 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.035.

Common Stock Warrants

For the nine months ended September 30, 2018 and the year ended December 31, 2017, no warrants were outstanding.

NOTE 12 - SUBSEQUENT EVENTS

On October 8, 2018, the Company issued 2,621,083 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $35,383 of Note 1 at a conversion price of $.0351.

F-16

Item 2.

Management’s Discussion and Analysis of Financial Condition or Plan of Operation

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

General Overview

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

On August 4, 2017, we consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Acquisition, the member interests (“Alamo Survivor Members”) of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist. For accounting purposes, the Alamo Acquisition is treated as an asset acquisition rather than a business combination.

Upon 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 Survivor Members, an additional Eight Million Five Hundred Thousand Dollars ($8,500,000) of newly-issued shares of common stock of Indoor Harvest, par value $0.001, based upon the three (3) day average closing price of the Company’s common stock, as quoted on the OTCQB, prior to the time of issuance.

Additionally, upon Alamo CBD successfully being registered and licensed by the DEA to produce and dispense cannabis under federal law, Indoor Harvest will issue to the individual Alamo Survivor 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 Survivor Member. A combination of cash and common stock may be elected by Alamo Survivor Member individually.

Our Current Business

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

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

We, through Alamo CBD, have applied to produce and dispense low-tetrahydrocannabinol (“THC”) cannabis under the Texas Compassionate Use Program (“TCUP”). THC is a psychotropic cannabinoid and is the principal psychoactive constituent of cannabis.

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

Current Operations

On July 10, 2017, we entered into a Cultivation Design Agreement with Bright Orchard Developments, Ltd. (“Bright Orchard”), for the design of an aeroponic cannabis production facility by a pending licensed producer in Canada. On July 25, 2018, we received formal cancelation of the agreement from Bright Orchard.

On October 11, 2017, we entered into a binding letter of intent (“LOI”) with Zoned Properties outlining three pending independent agreements to complete research and development projects for licensed medical cannabis facilities to be located in Tempe, Arizona, Parachute, Colorado and Stockdale, Texas or other location to be determined after approval of a provisional license under the TCUP. If the three independent agreements were not agreed to prior to January 9, 2018, the 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 LOI being terminated and the parties having no further obligation to each other. We made total non-refundable payments of $50,000 to Zoned Properties.

The Company is currently exploring production and technology partnerships in Colorado and Massachusetts, in addition to its pending application to produce cannabis in Texas under the TCUP. There can be no assurance that any of these plans can occur as planned or at all.

Texas Compassionate Use Program Applicant

We, through our wholly owned subsidiary Alamo CBD, have applied to produce and dispense low-THC cannabis under the TCUP. Our Company also expects to file an application with the DEA to register the facility under the CSA. Our Company expects to generate revenue through the production and sale of cannabis under the TCUP. There is no assurance that any or all of the agreements will be executed or that we will be successful in obtaining a license to produce cannabis in Texas or in registering the completed facility with the DEA.

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

On September 29, 2017, the DPS published a Self-Evaluation Report (the “DPS Report”) which was submitted to the Sunset Advisory Commission (the “Sunset Commission”). The Sunset Commission is an agency of the Texas Legislature that evaluates state agencies and makes recommendations to the legislature on the need for, performance of, and improvements to agencies under review. The Sunset Commission On page 543 of the DPS Report, question (D), the report states that the DPS originally interpreted the Texas Compassionate Use Act, 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.

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

There can be no assurance that any of the foregoing plans can occur as planned or at all.

Results of Operations

The following summary of our operations should be read in conjunction with our unaudited financial statements for the three and nine months ended September 30, 2018 and 2017.

Three months ended September 30, 2018 compared to three months ended September 30, 2017.

	Three Months Ended
	September 30,
	2018			2017			Change			%
Revenue	$	-		$	4,245		$	(4,245	)		(100	%)
Cost of Sales		-			1,165			(1,165	)		(100	%)
Gross Profit (loss)		-			3,080			(3,080	)		(100	%)
Operating expenses
Depreciation and amortization expense		3,019			12,792			(9,773	)		(76	%)
Research and development		-			-			-			-
Impairment loss		-			1,440,961			(1,440,961	)		(100	%)
Professional fees		81,717			8,107			73,610			908	%
General and administrative expenses		161,830			157,592			4,238			3	%
Total operating expenses		246,566			1,619,452			(1,372,886	)		(85	%)
Loss from operations		(246,566	)		(1,616,372	)		1,369,806			(85	%)
Other expense
Other income (expense)		-			7,177			(7,177	)		(100	%)
Interest expense		(39,128	)		(6,141	)		(32,987	)		537	%
Amortization of debt discount		(16,047	)		(45,186	)		29,139			(64	%)
Change in fair value of embedded derivative liability		(1,089,075	)		-			(1,089,075	)		-
Total other income (expense)		(1,144,250	)		(44,150	)		(1,100,100	)		2492	%
Net loss	$	(1,390,816	)	$	(1,660,522	)	$	269,706			(16	%)

We earned no revenues for the three months ended September 30, 2018 and $4,245 for the three months ended September 30, 2017.

Total operating expenses for the three months ended September 30, 2018 and September 30, 2017 were $246,566 and $1,619,452. The decrease is primarily related to a one-time impairment charge in 2017 of $1,440,961. During the three months ended September 30, 2018 operating expenses, excluding impairment charge, increased approximately $68,000 due primarily from an increase in professional fees of $73,610 and a reduction in depreciation expense of $9,773, as compared to 2017. Our general and administrative expenses were relatively unchanged increasing by approximately $4,200 in 2018 from the same period in 2017.

Total other expense for the three months ended September 30, 2018 was $1,144,250 and total other expense for the three months ended September 30, 2017 was $44,150, for an increase in loss of $1,100,100. The increase in 2018 is primarily related to embedded derivative liability related to the Tangiers convertible notes payable discussed in Notes 8 and 9 to our unaudited financial statements.

As a result of the factors discussed above, net loss for the three months ended September 30, 2018 and September 30, 2017 was $1,390,816 and $1,660,522, respectively, for an decrease in net loss of $269,706 or 16%.

Nine months ended September 30, 2018 compared to nine months ended September 30, 2017.

	Nine Months Ended
	September 30,
	2018			2017			Change			%
Revenue	$	-			4,245		$	(4,245	)		(100)	%
Cost of Sales		-			15,594			(15,594	)		(100	)%
Gross Profit (loss)		-			(11,349	)		11,349			(100	)%
Operating expenses
Depreciation and amortization expense		9,074			39,046			(29,972	)		(77	)%
Research and development		-			1,625			(1,625	)		(100	)%
Impairment loss		-			1,440,961			(1,440,961	)		(100	)%
Professional fees		194,756			374,707			(179,951	)		(48	)%
General and administrative expenses		626,861			910,400			(283,539	)		(31	)%
Total operating expenses		830,691			2,766,739			(1,936,048	)		(70	)%
Loss from operations		(830,691	)		(2,778,088	)		1,947,397			(70	)%
Other expense
Other income (expense)		-			7,192			(7,192	)		(100	)%
Loss on investment in joint venture		-			(250,000	)		250,000			(100	)%
Interest expense		(87,313	)		(125,373	)		38,060			(30	)%
Amortization of debt discount		(125,957	)		(294,888	)		168,931			(57	)%
Change in fair value of embedded derivative liability		(1,527,396	)		-			(1,527,396	)		-
Total other income (expense)		(1,740,666	)		(663,069	)		(1,077,597	)		163	)%
Net loss	$	(2,571,357	)	$	(3,441,157	)	$	869,800			(25	)%

We earned no revenues for the nine months ended September 30, 2018 and $4,245 for the nine months ended September 30, 2017.

Total operating expenses for the nine months ended September 30, 2018 and September 30, 2017 were $830,601 and $2,766,739. The decrease is primarily related to a one-time impairment charge in 2017 of $1,440,961. During the nine months ended September 30, 2018 operating expenses, excluding impairment charge, decreased approximately $495,000 due primarily to a decrease in professional fees of $179,951 and general and administrative expenses of $283,529, as compared to 2017.

Total other expense for the nine months ended September 30, 2018 was $1,740,666 and total other expense for the nine months ended September 30, 2017 was $663,069, for an increase of $1,077,597 or 163%. The increase in 2018, is primarily related to embedded derivative liability related to the Tangiers convertible notes payable discussed in Notes 8 and 9 to our unaudited financial statements.

As a result of the factors discussed above, net loss for the nine months ended September 30, 2018 and September 30, 2017 was $2,571,357 and $3,441,157 respectively, for a decrease in net loss of $869,800 or 25%.

Liquidity and Capital Resources

The following table provides selected financial data about our Company as of September 30, 2018 and December 31, 2017, respectively.

Working Capital

	September 30,			December 31,
	2018			2017			Change
Current assets	$	180,433		$	89,905		$	90,528
Current liabilities	$	2,274,649		$	1,119,821		$	1,154,828
Working capital deficiency	$	(2,094,216	)	$	(1,029,916	)	$	(1,064,300	)

Cash Flows

	Nine Months Ended
	September 30,
	2018			2017			Change
Cash used in operating activities	$	(568,954	)	$	(1,040,865	)	$	471,911
Cash used in investing activities	$	-		$	(550	)	$	550
Cash provided by financing activities	$	647,434		$	968,475		$	(321,041	)
Net Change in Cash During Period	$	78,480		$	(72,940	)	$	151,420

As at September 30, 2018 our Company’s cash balance was $113,933 and total assets were $214,474. As at December 31, 2017, our Company’s cash balance was $35,453 and total assets were $133,020.

As at September 30, 2018, our Company had total liabilities of $2,281,308, compared with total liabilities of $1,132,644 as at December 31, 2017.

As at September 30, 2018, our Company had a working capital deficiency of $2,094,216 compared with aworking capital deficiency of $1,029,916 as at December 31, 2017. The increase in working capital deficiency was primarily attributed to an increase in convertible notes payable, accounts payable and derivative liabilities.

Cash Flow from Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2018 and September 30, 2017 were $568,954 and $1,40,864, respectively, for a decrease of $471,911. 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 for the nine months ended September 30, 2018 and September 30, 2017 were $0 and $550, respectively.

Cash Flow from Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2018 and September 30, 2017 were $647,434 and $968,474, respectively, for a decrease of $321,041. For 2018, the Company received $653,000 from convertible notes and repaid $5,566 in a note payable. For 2017, the Company received $250,000 from convertible notes, $300,001 form the issuance of preferred stock, $824,000 from the issuance of common stock and repaid a note payable $230,526 and a convertible note for $175,000.

Existing Cash and Operational Cash Flow

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

Meeting Cash Requirements

Based upon the assumption of our monthly current operational burn rate remaining unchanged during the fiscal year, our Company will need to raise additional funds to implement its business plans. There is no assurance we will obtain the anticipated funds from our sources of funding. If we do not obtain additional funding, and we do not take other measures such as cutting back operational activities, we may not have sufficient funds to continue operations for the next 12 months or to grow our business. During the first half of 2018, our Company laid off two employees.

Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. To become profitable and competitive, we must continue to execute our business plan as described above.

We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2018.

Off-Balance Sheet Arrangements

We have no off-balance sheet 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 are material to stockholders.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company’s management, consisting solely of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that, as of September 30, 2018, the Company’s disclosure controls and procedures were not effective because of the following internal control over financial reporting deficiencies:

● We currently have an insufficient complement of personnel with the necessary accounting expertise and an inadequate supervisory review structure with respect to the requirements and application of US GAAP and SEC disclosure requirements.

● We currently have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

● We currently lack a formal process and timeline for closing the books and records at the end of each reporting period and such weaknesses restrict the Company’s ability to timely gather, analyze and report information relative to the financial statements.

● Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, other than as previously disclosed, we are currently not aware of any such legal proceedings or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition or results of operations.

Item 1A.

Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On July 2, 2018, we issued 244,755 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.072 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On July 12, 2018, we issued 269,231 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.065 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On August 1, 2018, we issued 50,000 shares of our common stock to Electrum Partners pursuant to an advisory agreement. We recorded fair value of $4,500 ($0.09 per share) based upon the most recent trading price per share of our Company’s stock. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On August 2, 2018, we issued 1,307,846 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.031 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On August 13, 2018, we issued 460,617 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.034 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On July 2, 2018, we issued 244,755 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $0.07 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On July 12, 2018, we issued 269,231 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $0.07 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On August 2, 2018, we issued 1,307,846 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.033 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On August 13, 2018, we issued 460,617 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.033 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On August 22, 2018, we issued 583,333 shares of our common stock to Ideal Business Partners pursuant to an advisory agreement. We recorded fair value of $35,000 ($0.06 per share) based upon the most recent trading price per share of our Company’s stock. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On September 1, 2018, we issued 50,000 shares of our common stock to Electrum Partners pursuant to an advisory agreement. We recorded fair value of $3,000 ($0.06 per share) based upon the most recent trading price per share of our Company’s stock. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On September 20, 2018, we issued 30,000 shares of our common stock to members of our Company’s Advisory Board. We recorded a fair value of $1,800 ($0.06 per share) based upon the most recent trading price of our Company’s stock. The securities were issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

On September 24, 2018, we issued 569,801 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $20,000 of Note 1 at a conversion price of $.035 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

On September 28, 2018, we issued 1,424,501 shares of our common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.035 per share. The issuance of the above securities was exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not Applicable.

Item 5.

Other Information

(a) Not applicable.

(b) Not applicable.

Item 6.

Exhibits

The following exhibits are included as part of this report:

		INCORPORATED BY REFERENCE
Exhibit	Description	Form	Exhibit	Filing Date

(10)	Material Contracts
10.1	Engagement Letter with Ideal Business Partners executed August 22, 2018.	10.1	8-K	August 24, 2018

10.2	Form of $550,000 Promissory Note issued September 14, 2018.	10.1	8-K	September 20, 2018

(31)	Rule 13a-14(a)/15d-14(a) Certifications
*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer

(32)	Section 1350 Certifications
*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer

(101)	Interactive Data Files
*	XBRL Instance Document
*	XBRL Taxonomy Extension Schema Document
*	XBRL Taxonomy Extension Calculation Linkbase Document
*	XBRL Taxonomy Extension Definition Linkbase Document
*	XBRL Taxonomy Extension Label Linkbase Document
*	XBRL Taxonomy Extension Presentation Linkbase Document

†	Management Contract or Compensation Plan

* Filed herewith. In addition, in accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INDOOR HARVEST CORP.
	(Registrant)

Dated: November 19, 2018	/s/ Daniel Weadock
	Daniel Weadock
	Chief Executive Officer and Director
	(Principal Executive Officer)

Dated: November 19, 2018	/s/ Chad Sykes
	Chad Sykes
	Principal Financial Officer and Principal Accounting Officer
	(Principal Financial Officer and Principal Accounting Officer)

EX-31.1 2 ex31-1.htm

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel Weadock, certify that:

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

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

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

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

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

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

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

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

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

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

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018

/s/ Daniel Weadock
Daniel Weadock
Chief Executive Officer and Director
(Principal Executive Officer)

EX-31.2 3 ex31-2.htm

Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chad Sykes, certify that:

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

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018

/s/ Chad Sykes
Chad Sykes
Principal Financial Officer and Principal Accounting Officer
(Principal Financial Officer and Principal Accounting Officer)

EX-32.1 4 ex32-1.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Daniel Weadock, Chief Executive Officer, of Indoor Harvest Corp, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the quarterly report on Form 10-Q of Indoor Harvest Corp for the period ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Indoor Harvest Corp.

Dated: November 19, 2018

/s/ Daniel Weadock
Daniel Weadock
Chief Executive Officer and Director
(Principal Executive Officer)

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

EX-32.2 5 ex32-2.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Chad Sykes, Principal Financial Officer and Principal Accounting Officer, of Indoor Harvest Corp, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Indoor Harvest Corp.

Dated: November 19, 2018

/s/ Chad Sykes
Chad Sykes
Principal Financial Officer and Principal Accounting Officer
(Principal Financial Officer and Principal Accounting Officer)

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The following schedule shows the change in fair value of the derivative liabilities for the nine months ended September 30, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 82%">Balance - December 31, 2017</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">554,917</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Addition of new derivatives recognized as loss on derivatives</td> <td> </td> <td> </td> <td style="text-align: right">1,019,033</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Settled on issuance of common stock</td> <td> </td> <td> </td> <td style="text-align: right">(842,272</td> <td>)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Gain on change in fair value of the derivative</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">508,363</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Balance - September 30, 2018</td> <td> </td> <td> </td> <td style="text-align: right">1,240,041</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less: current portion</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(1,240,041</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term derivative liabilities</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The following schedule shows the change in fair value of the derivative liabilities for the year ended December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Derivative liabilities - December 31, 2016</td> <td> </td> <td>$</td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 82%">Add fair value at the commitment date for convertible notes issued during the current year</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 15%; text-align: right">213,453</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Less derivatives due to conversion</td> <td> </td> <td> </td> <td style="text-align: right">(18,800</td> <td>)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Fair value mark to market adjustment for derivatives</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">360,264</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Derivative liabilities - December 31, 2017</td> <td> </td> <td> </td> <td style="text-align: right">554,917</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less : current portion</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(554,917</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term derivative liabilities</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

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NOTE 2 - GOING CONCERN   As reflected in the accompanying financial statements, the Company had a net loss of $2,571,357, net cash used in operations of $568,954 and has an accumulated deficit of $10,980,179, for the nine months ended September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern.   The ability of the Company to continue as a going concern is dependent on Management’s plans which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity financings. The Company will likely rely upon related party debt or equity financing in order to ensure the continuing existence of the business.   The business plan of the Company is to engage in the design, development, marketing and direct-selling of commercial grade aeroponics fixtures and supporting systems for use in urban Controlled Environment Agriculture (“CEA”) and Building Integrated Agriculture (“BIA”). During the next twelve months, the Company’s strategy is to: complete ongoing product development; commence product marketing, product assembly and sales; construct a demonstration CEA and BIA farm; and offer design-build services. The Company’s long-term strategy is to direct sale, license and franchise their patented technologies and methods.   The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Nature of Operations and Organization   Indoor Harvest Corp (the “Company,”) is a Texas corporation formed on November 23, 2011. Our principal executive office is located at 5300 East Freeway Suite A, Houston, Texas 77020. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”). On August 4, 2017, we consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Acquisition, the member interests of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist. Pursuant to ASC 805 “Business Combinations,” the Company determined the Alamo Acquisition was an asset purchase.   From inception until August 4, 2017, the Company provided full service, state of the art design-build, engineering, procurement and construction services to the indoor and vertical farming industry. The Company provided production platforms, mechanical systems and complete custom designed build outs for both Controlled Environment Agriculture (“CEA”) and Building Integrated Agriculture (“BIA”), for two unique industries, produce and cannabis. In mid-2016, the Company began efforts to separate its produce and cannabis related operations due to ongoing feedback from both clients and potential institutional investors. It was determined that the Company’s involvement in the cannabis industry was creating conflicts for clients and potential institutional investors wishing to work with the Company from the produce industry due to the public perception and political issues surrounding the cannabis industry. By late-2016, the Company had decided to cease actively selling its products and services to the vertical farming industry and to focus on utilizing the Company’s developed technology and methods for the cannabis industry. On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production.   Basis of Presentation   The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).   It is management’s opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.   Use of Estimates   The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Significant estimates include, but are not limited to, the estimate of percentage of completion on construction contracts in progress at each reporting period which we rely on as a primary basis of revenue recognition, estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.   Reclassification   Certain expense items have been reclassified in the statement of operations for the nine months ended September 30, 2017, to conform to the reporting format adopted for the nine months ended September 30, 2018.   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 recognizes stock-based compensation in accordance with ASC 718-10, Stock Compensation. ASC 718-10 focuses on transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus in which an entity obtains employee services in stock-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award (with limited exceptions).   Loss per Share   Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since Indoor Harvest has incurred losses for all periods, the impact of the common stock equivalents would be anti- dilutive and therefore are not included in the calculation.   Fair Value of Financial Instruments   We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share- based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px; text-align: justify"> </td> <td style="width: 24px; text-align: justify">●</td> <td style="text-align: justify">Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.</td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.</td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.</td></tr> </table>   Income Taxes   The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse.   ASB ASC 740 establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation.   Tax years 2017, 2016, 2015, 2014, and 2013, remain subject to examination by the IRS and respective states.   On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). We recognize the impact of tax legislation in the period in which the law is enacted. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Reform Act. Consistent with that guidance, we recognized provisional amounts based upon our interpretation of the tax laws and estimates which require significant judgments. The actual impact of these tax laws may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in our interpretations and assumptions, additional guidance that may be issued by the government and actions we may take as a result of these enacted tax laws. Any adjustments recorded to the provisional amounts will be included in income from operations as an adjustment to tax expense.   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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; width: 51%; border-bottom: black 1.5pt solid; text-align: center">Asset description</td> <td style="white-space: nowrap; width: 1%; text-align: center"> </td> <td style="white-space: nowrap; width: 48%; border-bottom: black 1.5pt solid; text-align: center">Estimated Useful Life (Years)</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Furniture and equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">3 - 5</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Tooling equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">10</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Leasehold improvements</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">*</td></tr> </table>   * 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 Assets   In accordance with ASC 350 Goodwill and Other Intangible Assets, indefinite-lived intangible assets are not amortized but are evaluated for impairment annually or more often if indicators of a potential impairment are present. Indefinite-lived intangible assets consist of the Company’s domain name. Finite-lived intangible assets include software and is amortized over a 3 to 5 year period.   Derivative Liability   The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.   Beneficial Conversion Feature   For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.   When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt.   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 for the nine months ended September 30, 2018 and 2017 are $0 and $1,625, respectively.   Advertising Expense   Advertising and promotional costs are expensed as incurred. Advertising expense for the nine months ended September 30, 2018 and 2017 are $837 and $16,185, respectively.   Recent Accounting Pronouncements   Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

NOTE 3 - PROPERTY AND EQUIPMENT   Property and equipment consist of the following as of September 30, 2018and December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Classification</td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Furniture and equipment</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">11,666</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">11,666</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Leasehold improvements</td> <td> </td> <td> </td> <td style="text-align: right">38,717</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">38,717</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Computer equipment</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,019</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,019</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td> </td> <td> </td> <td style="text-align: right">53,402</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">53,402</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Accumulated depreciation</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(36,564</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(28,779</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Property and equipment, net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">16,838</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">24,623</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   Depreciation expense for the nine months ended September 30, 2018 and 2017, totaled $7,785 and $37,765, respectively.

NOTE 4 – INTANGIBLE ASSETS   There were no impairment charges taken for the domain name during the nine months ended September 30, 2018 and 2017.   Intangible assets consist of the following as of September 30, 2018and December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Classification</td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Domain name</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">2,000</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">2,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify">Facilities Manager’s Package Online</td> <td> </td> <td> </td> <td style="text-align: right">1,022</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1,022</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">MLC CD Systems (software)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,560</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,560</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td> </td> <td> </td> <td style="text-align: right">10,582</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">10,582</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Accumulated amortization</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(5,979</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(4,690</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Intangible assets, net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">4,603</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">5,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   Amortization expense for the nine months ended September 30, 2018 and 2017, totaled $1,289 and $1,281, respectively.

NOTE 5 - COMMITMENTS & CONTINGENCIES   On February 20, 2014, the Company signed a 60-month lease on a 10,000 sq. ft. office/warehouse facility and paid a deposit of $12,600. The monthly base rent is $4,200 increasing 6% every two years for the term of the lease. The property is adequate for all of the Company’s currently planned activities. On January 22, 2018, the Company entered into a 6-month sublease agreement for a portion of the 10,000 sq. ft. office/warehouse facility. The term of the sublease is February 1, 2018 through July 31, 2018 at $2,000 per month. The Company records the sublease income as a reduction of rent expense in the Statements of Operations within general and administrative expenses.   Deferred rent payable at September 30, 2018 was $3,195. Deferred rent payable is the sum of the difference between the monthly rent payment and the straight-line monthly rent expense of an operating lease that contains escalated payments in future periods.   Rent expense, net of sublease payments received, for the nine months ended September 30, 2018 and 2017 were $34,831 and $39,763, respectively.

NOTE 6 - FAIR VALUE MEASUREMENTS   Carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to their relatively short maturity. Debt classified as Level 2 in the fair value hierarchy represent convertible notes payable of $831,076 and $455,459 at September 30, 2018 and December 31, 2017, respectively. Financial instruments classified as Level 3 in the fair value hierarchy represents derivative liability of $1,240,041 and $554,917 September 30, 2018 and December 31, 2017, respectively.

NOTE 7 - NOTE PAYABLE   On June 5, 2015, the Company entered into a five-year loan agreement totaling $36,100. The loan carries interest at a rate of 10.25%.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Balance as of period ended</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">14,777</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">20,343</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less: current portion</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">8,118</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,520</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term note payable, net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">6,659</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">12,823</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

NOTE 9 - DERIVATIVE LIABILITIES   The Company identified the conversion features embedded within its convertible debts as financial derivatives. The Company has determined that the embedded conversion option should be accounted for at fair value.   The following schedule shows the change in fair value of the derivative liabilities for the nine months ended September 30, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 82%">Balance - December 31, 2017</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 15%; text-align: right">554,917</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Addition of new derivatives recognized as loss on derivatives</td> <td> </td> <td> </td> <td style="text-align: right">1,019,033</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Settled on issuance of common stock</td> <td> </td> <td> </td> <td style="text-align: right">(842,272</td> <td>)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Gain on change in fair value of the derivative</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">508,363</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Balance - September 30, 2018</td> <td> </td> <td> </td> <td style="text-align: right">1,240,041</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less: current portion</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(1,240,041</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term derivative liabilities</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   The following schedule shows the change in fair value of the derivative liabilities for the year ended December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Derivative liabilities - December 31, 2016</td> <td> </td> <td>$</td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 82%">Add fair value at the commitment date for convertible notes issued during the current year</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 15%; text-align: right">213,453</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Less derivatives due to conversion</td> <td> </td> <td> </td> <td style="text-align: right">(18,800</td> <td>)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Fair value mark to market adjustment for derivatives</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">360,264</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Derivative liabilities - December 31, 2017</td> <td> </td> <td> </td> <td style="text-align: right">554,917</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less : current portion</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(554,917</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term derivative liabilities</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

NOTE 10 - RELATED PARTY TRANSACTIONS   On January 15, 2018 Ms. Sandra Fowler, was appointed as the Chief Marketing Officer of the Company. Pursuant to the terms of the Fowler Employment Agreement, Ms. Fowler shall serve as Chief Marketing Officer of the Company. The initial term of the agreement will expire on January 15, 2019 and commencing on January 15, 2019 and on each anniversary of such date thereafter, the term of the Fowler Employment Agreement shall automatically renew for a one-year period, unless earlier terminated by either party pursuant to the terms of the Fowler Employment Agreement. In consideration for Ms. Fowler’s services, under the Fowler Employment Agreement, Ms. Fowler shall receive (i) an annual base salary of $48,000 and (ii) 200,000 shares of restricted common stock of the Company. Further, pursuant to the Fowler Employment Agreement, the Company agreed to revise the annual base compensation for Ms. Fowler to $65,000, after 90 days of the execution of the Fowler Employment Agreement, or after the Company raises not less than $1,000,000 from sales of its equity securities subsequent to the execution of the Fowler Employment Agreement, whichever may come first. In addition, Ms. Fowler shall be eligible to participate in any equity-based incentive compensation plan or programs adopted by the Company’s board of directors.   On February 5, 2018, Dr. Coleman and Benjamin Coleman voluntarily returned and canceled an aggregate of 3,280,470 common shares in order to prevent dilution to the shareholders during the Company’s efforts to secure new senior management, provide additional incentive equity and to form an advisory board. The return of common stock by Dr. Coleman and Benjamin Coleman was a non-cash transaction.   On February 20, 2018, Mr. Daniel Weadock was appointed Chief Executive Officer and Director of the Company. On February 20, 2018, the Company entered into an executive employment agreement with Mr. Weadock (the “Weadock Employment Agreement”), pursuant to which Mr. Weadock agreed to act as the Company’s chief executive officer. Pursuant to the terms of the Weadock Employment Agreement, Mr. Weadock initial will not receive a salary. However, effective on the business day after the date on which the Company achieves Capitalization (as hereinafter defined) of $2,000,000 or more, Mr. Weadock’s annual base salary will be $100,000. For purposes of the Weadock Employment Agreement, “Capitalization” means aggregate net cash proceeds received by the Company from (a) the Company’s sale of common stock pursuant to Puts (as such term is defined in the Investment Agreement dated as of October 12, 2017 by and between the Company and Tangiers Global, LLC (the “Investment Agreement”)) under the Investment Agreement, and/or (b) any other sale by the Company of common stock or preferred stock, whether in a public offering or a private placement. In addition, pursuant to the terms of the Weadock Employment Agreement, the Company agreed to grant Mr. Weadock (i) 300,000 shares of restricted stock as soon as administratively practicable following execution of the Weadock Employment Agreement, and (ii) 1,584,202 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however, that no grant will be made and no shares will be issued with respect to any grant if Mr. Weadock is not employed by the Company as an executive on the respective Date of Grant as set forth in the agreement. The Weadock Employment Agreement has a term of one year, unless Mr. Weadock’s employment is terminated sooner by the board of directors, and the term will be extended for additional one-year periods unless the Company or Mr. Weadock gives the other party at least 30 days’ prior written notice of its intent not to renew. On February 20, 2018, the Company also entered into a compensation agreement with Mr. Weadock (the “Director Compensation Agreement”).Pursuant to the terms of the Director Compensation Agreement, the Company agreed to grant Mr. Weadock an aggregate of 240,000 shares of restricted common stock, consistent with the grant and vesting schedule set forth in the agreement; provided, however, that no grant will be made and no shares will be issued with respect to any grant, if Mr. Weadock is not a member of the Company’s board of directors on the respective Date of Grant as set forth in the agreement. If the Company is acquired by, or merged into and with, another entity prior to the last Date of Vesting set forth in the agreement (i.e. February 23, 2022), all shares issuable to Mr. Weadock under the Director Compensation Agreement will become fully vested and non-forfeitable. The Company also agreed to reimburse Mr. Weadock for all reasonable travel and incidental expenses incurred by Mr. Weadock in performing his services and attending meetings as approved in advance by the Company. Also, on February 20, 2018, the Company also entered into an indemnity agreement with Mr. Weadock (the “Weadock Indemnity Agreement”). Pursuant to the terms of the Indemnity Agreement, the Company agreed to use reasonable efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers; provided, however, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage is reduced by exclusions so as to provide an insufficient benefit, or Mr. Weadock is covered by similar insurance maintained by a subsidiary of the Company. In addition the foregoing, the Company will indemnify Mr. Weadock from certain third party actions, derivative actions and actions where Mr. Weadock is decreased; provided, however, the Company shall not be obligated to indemnify Mr. Weadock for actions including, but not limited to, actions initiated by Mr. Weadock, for any action in which it is determined that the material assertions made by Mr. Weadock in such proceeding were not made in good faith or were frivolous, for any settlements not authorized by the Company, for any actions on the account of Mr. Weadock’s willful misconduct, and for any expenses and the payment of profits arising from the purchase and sale Mr. Weadock of securities in violation of Section 16(b) of the Securities Exchange Act, or any similar successor statute; provided, further that, that the Company shall not be obligated to indemnify Mr. Weadock for expenses or liabilities of any type whatsoever which have been paid directly to Mr. Weadock pursuant to the Company’s D&O Insurance policy.

NOTE 11 - STOCKHOLDERS’ DEFICIT   Series A Convertible Preferred Stock   As at September 30, 2018 and December 31, 2017, there were 750,000 shares of Series A Convertible Preferred Stock issued and outstanding.   Common Stock   On January 9, 2018, the Company issued 899,685 shares of its common stock to Tangiers pursuant to Tangiers’ conversion of $100,000 of Note 1 at a conversion price of $0.11.   On January 15, 2018, the Company issued 200,000 shares of common stock related to an Employment Agreement with Sandra Fowler, Chief Marketing Officer. The Company recorded a fair value of $66,000 ($0.33 per share) based upon the most current trading price of the Company’s stock.   On February 5, 2018, Dr. Coleman and Benjamin Coleman voluntarily returned and canceled an aggregate of 3,280,470 common shares in order to prevent dilution to the shareholders during the Company’s efforts to secure new senior management, provide additional incentive equity and to form an advisory board. The return of common stock by Dr. Coleman and Benjamin Coleman was a non-cash transaction and reduces the common stock outstanding as of March 31, 2018.   On February 20, 2018, the Company issued 43,387 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $7,810 ($0.18 per share) based upon the most current trading price of the Company’s stock.   On February 23, 2018, the Company issued 12,135 shares of common stock related to an Director Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $2,063 ($0.17 per share) based upon the most current trading price of the Company’s stock.   On March 5, 2018, the Company issued 269,716 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.09.   On March 20, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $4,200 ($0.14 per share) based upon the most recent trading price of the Company’s stock.   On March 21, 2018, the Company issued 295,631 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.08 per share.   On April 13, 2018, the Company issued 769,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $0.065 per share.   On April 17, 2018, the Company issued 300,000 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $51,000 ($0.17 per share) based upon the most current trading price of the Company’s stock.   On May 20, 2018, the Company issued 99,012 shares of common stock related to an Employment Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $16,832 ($0.17 per share) based upon the most current trading price of the Company’s stock.   On May 23, 2018, the Company issued 30,000 shares of common stock related to an Director Agreement with Daniel Weadock, Chief Executive Officer. The Company recorded a fair value of $5,100 ($0.17 per share) based upon the most current trading price of the Company’s stock.   On June 21, 2018, the Company issued 295,858 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $25,000 of Note 1 at a conversion price of $0.0845 per share.   On June 6, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $2,550 ($0.085 per share) based upon the most recent trading price of the Company’s stock.   On June 27, 2018, the Company issued 424,500 shares of common stock related to an advisory agreement with Electrum Partners, LLC. The Company recorded a fair value of $50,940 ($0.12 per share) based upon the most current trading price of the Company’s stock.   On July 2, 2018, the Company issued 244,755 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.072.   On July 12, 2018, the Company issued 269,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.065.   On August 1, 2018, the Company issued 50,000 shares of its common stock to Electrum Partners pursuant to an advisory agreement. The Company recorded fair value of $4,500 ($0.09 per share) based upon the most recent trading price per share of the Company’s stock.   On August 2, 2018, the Company issued 1,307,846 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.031.   On August 13, 2018, the Company issued 460,617 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.034.   On July 2, 2018, the Company issued 244,755 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.07.   On July 12, 2018, the Company issued 269,231 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $17,500 of Note 1 at a conversion price of $.07.   On August 1, 2018, the Company issued 50,000 shares of its common stock to Electrum Partners pursuant to an advisory agreement. The Company recorded fair value of $4,500 ($0.09 per share) based upon the most recent trading price per share of the Company’s stock.   On August 2, 2018, the Company issued 1,307,846 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $42,590 of Note 1 at a conversion price of $.033.   On August 13, 2018, the Company issued 460,617 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $15,000 of Note 1 at a conversion price of $.033.   On August 22, 2018, the Company issued 583,333 shares of its common stock to Ideal Business Partners pursuant to an advisory agreement. The Company recorded fair value of $35,000 ($0.06 per share) based upon the most recent trading price per share of the Company’s stock.   On September 1, 2018, the Company issued 50,000 shares of its common stock to Electrum Partners pursuant to an advisory agreement. The Company recorded fair value of $3,000 ($0.06 per share) based upon the most recent trading price per share of the Company’s stock.   On September 20, 2018, the Company issued 30,000 shares of its common stock to members of the Company’s Advisory Board. The Company recorded a fair value of $1,800 ($0.06 per share) based upon the most recent trading price of the Company’s stock.   On September 24, 2018, the Company issued 569,801 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $20,000 of Note 1 at a conversion price of $.035.   On September 28, 2018, the Company issued 1,424,501 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $50,000 of Note 1 at a conversion price of $.035.   Common Stock Warrants   For the nine months ended September 30, 2018 and the year ended December 31, 2017, no warrants were outstanding.

NOTE 12 - SUBSEQUENT EVENTS   On October 8, 2018, the Company issued 2,621,083 shares of its common stock to Tangiers pursuant to Tangier’s conversion of $35,383 of Note 1 at a conversion price of $.0351.

Basis of Presentation   The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).   It is management’s opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

Use of Estimates   The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Significant estimates include, but are not limited to, the estimate of percentage of completion on construction contracts in progress at each reporting period which we rely on as a primary basis of revenue recognition, estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.

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

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

Fair Value of Financial Instruments   We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share- based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px; text-align: justify"> </td> <td style="width: 24px; text-align: justify">●</td> <td style="text-align: justify">Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.</td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.</td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.</td></tr> </table>

Income Taxes   The Company accounts for income taxes pursuant to FASB ASC 740—Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse.   ASB ASC 740 establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions that meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns. The Company files tax returns in the U.S. and states in which it has operations and is subject to taxation.   Tax years 2017, 2016, 2015, 2014, and 2013, remain subject to examination by the IRS and respective states.   On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). We recognize the impact of tax legislation in the period in which the law is enacted. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Reform Act. Consistent with that guidance, we recognized provisional amounts based upon our interpretation of the tax laws and estimates which require significant judgments. The actual impact of these tax laws may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in our interpretations and assumptions, additional guidance that may be issued by the government and actions we may take as a result of these enacted tax laws. Any adjustments recorded to the provisional amounts will be included in income from operations as an adjustment to tax expense.

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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; width: 51%; border-bottom: black 1.5pt solid; text-align: center">Asset description</td> <td style="white-space: nowrap; width: 1%; text-align: center"> </td> <td style="white-space: nowrap; width: 48%; border-bottom: black 1.5pt solid; text-align: center">Estimated Useful Life (Years)</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Furniture and equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">3 - 5</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Tooling equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">10</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Leasehold improvements</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">*</td></tr> </table>   * 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 Assets   In accordance with ASC 350 Goodwill and Other Intangible Assets, indefinite-lived intangible assets are not amortized but are evaluated for impairment annually or more often if indicators of a potential impairment are present. Indefinite-lived intangible assets consist of the Company’s domain name. Finite-lived intangible assets include software and is amortized over a 3 to 5 year period.

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

Research and Development   Research and development expenditures are charged to expense as incurred. Research and development expense for the nine months ended September 30, 2018 and 2017 are $0 and $1,625, respectively.

Advertising Expense   Advertising and promotional costs are expensed as incurred. Advertising expense for the nine months ended September 30, 2018 and 2017 are $837 and $16,185, respectively.

Recent Accounting Pronouncements   Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

Derivative Liability   The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At September 30, 2018 and December 31, 2017, the Company did not have any derivative instruments that were designated as hedges.

Beneficial Conversion Feature   For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.   When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt.

The estimated useful life by asset description is noted in the following table:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; width: 51%; border-bottom: black 1.5pt solid; text-align: center">Asset description</td> <td style="white-space: nowrap; width: 1%; text-align: center"> </td> <td style="white-space: nowrap; width: 48%; border-bottom: black 1.5pt solid; text-align: center">Estimated Useful Life (Years)</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Furniture and equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">3 - 5</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Tooling equipment</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">10</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">Leasehold improvements</td> <td style="white-space: nowrap; text-align: center"> </td> <td style="white-space: nowrap; text-align: center">*</td></tr> </table>   * The shorter of 5 years or the life of the lease.

Property and equipment consist of the following as of September 30, 2018and December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Classification</td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Furniture and equipment</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">11,666</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">11,666</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Leasehold improvements</td> <td> </td> <td> </td> <td style="text-align: right">38,717</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">38,717</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Computer equipment</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,019</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,019</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td> </td> <td> </td> <td style="text-align: right">53,402</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">53,402</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Accumulated depreciation</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(36,564</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(28,779</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Property and equipment, net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">16,838</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">24,623</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

Intangible assets consist of the following as of September 30, 2018and December 31, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Classification</td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Domain name</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">2,000</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">2,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: justify">Facilities Manager’s Package Online</td> <td> </td> <td> </td> <td style="text-align: right">1,022</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1,022</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">MLC CD Systems (software)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,560</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,560</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td> </td> <td> </td> <td style="text-align: right">10,582</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">10,582</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Accumulated amortization</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(5,979</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(4,690</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Intangible assets, net</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">4,603</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">5,892</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Debt discount, beginning of period</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">69,541</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">152,617</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Additional debt discount and debt issue cost</td> <td> </td> <td> </td> <td style="text-align: right">82,750</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">383,786</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Amortization of debt discount and debt issue cost</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(125,957</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(466,862</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Debt discount, end of period</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">26,334</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">69,541</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table> Nature of Operations and Organization   Indoor Harvest Corp (the “Company,”) is a Texas corporation formed on November 23, 2011. Our principal executive office is located at 5300 East Freeway Suite A, Houston, Texas 77020. On August 3, 2017, we formed Alamo Acquisition, LLC, a wholly owned Texas limited liability company (“Alamo Acquisition Sub”). On August 4, 2017, we consummated a business acquisition (the “Alamo Acquisition”) pursuant to which Alamo Acquisition Sub acquired all of the outstanding member interests of Alamo CBD, LLC. (“Alamo CBD”), a Texas limited Liability Company. Upon closing of the Alamo Acquisition, the member interests of Alamo CBD were exchanged for 7,584,008 shares of Indoor Harvest’s common stock, the parent company of Alamo Acquisition Sub, and Alamo CBD continued as our surviving wholly-owned subsidiary, and Alamo Acquisition Sub ceased to exist. Pursuant to ASC 805 “Business Combinations,” the Company determined the Alamo Acquisition was an asset purchase.   From inception until August 4, 2017, the Company provided full service, state of the art design-build, engineering, procurement and construction services to the indoor and vertical farming industry. The Company provided production platforms, mechanical systems and complete custom designed build outs for both Controlled Environment Agriculture (“CEA”) and Building Integrated Agriculture (“BIA”), for two unique industries, produce and cannabis. In mid-2016, the Company began efforts to separate its produce and cannabis related operations due to ongoing feedback from both clients and potential institutional investors. It was determined that the Company’s involvement in the cannabis industry was creating conflicts for clients and potential institutional investors wishing to work with the Company from the produce industry due to the public perception and political issues surrounding the cannabis industry. By late-2016, the Company had decided to cease actively selling its products and services to the vertical farming industry and to focus on utilizing the Company’s developed technology and methods for the cannabis industry. On August 4, 2017, the Company ceased actively supporting business development of vertical farms for produce production.

Reclassification   Certain expense items have been reclassified in the statement of operations for the nine months ended September 30, 2017, to conform to the reporting format adopted for the nine months ended September 30, 2018.

Convertible notes payable at September 30, 2018 and December 31, 2017 are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Note 1</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">87,410</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">475,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Note 2</td> <td> </td> <td> </td> <td style="text-align: right">50,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">50,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Note 3</td> <td> </td> <td> </td> <td style="text-align: right">550,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Note 4</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">170,000</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Total convertible notes payable</td> <td> </td> <td> </td> <td style="text-align: right">857,410</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">525,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Unamortized debt discount</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(26,334</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(69,541</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total convertible notes</td> <td> </td> <td> </td> <td style="text-align: right">831,076</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">455,459</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less: current portion of convertible notes</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">831,076</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">455,459</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term convertible notes</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

7584008

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NOTE 8 - CONVERTIBLE NOTES PAYABLE   Convertible notes payable at September 30, 2018 and December 31, 2017 are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Note 1</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">87,410</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">475,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Note 2</td> <td> </td> <td> </td> <td style="text-align: right">50,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">50,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Note 3</td> <td> </td> <td> </td> <td style="text-align: right">550,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Note 4</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">170,000</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Total convertible notes payable</td> <td> </td> <td> </td> <td style="text-align: right">857,410</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">525,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Less: Unamortized debt discount</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(26,334</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(69,541</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total convertible notes</td> <td> </td> <td> </td> <td style="text-align: right">831,076</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">455,459</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Less: current portion of convertible notes</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">831,076</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">455,459</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">Long-term convertible notes</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">-</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   Note 1   On March 24, 2017, the Company entered into a securities purchase agreement with Tangiers Global, LLC (“Tangiers”) relating to the issuance and sale of notes (“Note 1”) in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 1 is convertible into shares of common stock at a price equal to $0.30 per share; provided, however that if Note 1 is not retired on or before the maturity date, defined in Note 1 as a “Maturity Default” the conversion price shall be adjusted to be equal to the lower of: (i) $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 date that the Company receives a notice of conversion. The Tangiers Note 1 carries interest on the unpaid principal amount at the rate of 8% per annum and is due and payable eight months from the effective date of each payment. As of September 30, 2018, the balance under Note 1 is $131,410, which includes $44,000 guaranteed interest. As of September 30, 2018, Note 1 can be converted into 4,264,243 shares of the Company’s common stock.   On October 12, 2017, the Company entered into an Investment Agreement with Tangiers. Pursuant to the terms of the Investment Agreement, Tangiers committed to purchase up to $2,000,000 of our common stock over a period of up to 36 months. From time to time during the 36-month period commencing from the effectiveness of the registration statement, we may deliver a put notice to Tangiers which states the dollar amount that we intend to sell to Tangiers on a date specified in the put notice. The maximum investment amount per notice must be no more than 200% of the average daily trading dollar volume of our common stock for the eight (8) consecutive trading days immediately prior to date of the applicable put notice and such amount must not exceed an accumulative amount of $250,000. The minimum put amount is $5,000. The purchase price per share to be paid by Tangiers will be the 80% of the of the average of the two lowest closing bid prices of the common stock during the pricing period applicable to the put notice, provided, however, an additional 10% will be added to the discount of each put if (i) we are not DWAC eligible and (ii) an additional 15% will be added to the discount of each put if we are under DTC “chill” status on the applicable date of the put notice.   On October 10, 2017, the Company executed Amendment #1 to the Tangiers Note 1 for a final draw of $250,000 payment plus a 10% original issue discount. Amendment #1 modified the maturity date for the Tangier Note from eight months to six months from the effective date of each payment. All other terms and conditions of the Tangiers Note 1 remain effective.   The execution of Amendment #1 to Note 1 on October 10, 2017 caused the Company to default on the first draw due under Note 1 due to the acceleration of the maturity date. The default allows Tangiers to demand payment in cash equal to 150% of the outstanding principal and interest, which is automatically added to the outstanding 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 May 1, 2018, Tangiers  has informed the Company that they have elected at this time not to enforce the default interest rate of 18% under Note 1 and also not to enforce the fees, reserving its rights to enforce the foregoing in their discretion.   Note 2   The Company issued a fixed convertible promissory note to Tangiers for the principal sum of $50,000 as a commitment fee for the Investment Agreement. The promissory note (“Note 2”) maturity date is May 12, 2018. The principal amount due under Note 2 can be converted by Tangiers any time, into shares of the Company’s common stock at a conversion price of $0.1666 per share. The promissory note is in a “Maturity Default,” which is defined in Note 2 as the event in which Note 2 is not retired 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. The default interest rate is 20%. As of September 30, 2018, the balance under Note 2 is $55,000, which includes $5,000 guaranteed interest. As of September 30, 2018, Note 2 can be converted into 1,677,009 shares of the Company’s common stock.   Note 3   On January 16, 2018, the Company issued and sold an 8% Fixed Convertible Promissory Note (“Note 3”) to Tangiers (the “Buyer”), in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 3 is convertible into shares of the Company’s common stock at a conversion price of $0.30 per share. However, if Note 3 is not paid back on or before the maturity date, defined in Note 3 as a “Maturity Default”, the conversion price of Note 3 shall then be adjusted to be equal to the lower of: (i) $0.30 or (ii) 65% multiplied by the lowest trading price of the Company’s common stock in the fifteen (15) consecutive trading day period immediately preceding the trading day that the Company receives a notice of conversion of Note 3.   On February 13, 2018, April 17, 2018, June 13, 2018, and July 27, 2018, the Company executed Amendments #1, #2, #3, and #4 to the Tangiers Note 3 for draws of $132,000, $132,000, $101,750 and $101,750, respectively. All other terms and conditions of the Tangiers Note 3 remain effective. As of September 30, 2018, the balance under Note 3 is $594,000, which includes $44,000 guaranteed interest.   Note 4   On September 14, 2018, the Company issued and sold an 8% Fixed Convertible Promissory Note (“Note 4”) to Tangiers (the “Buyer”), in the aggregate principal amount of up to $550,000, which includes a 10% original issue discount. Note 4 is convertible into shares of the Company’s common stock at a conversion price of $0.08 per share. However, if Note 4 is not paid back on or before the maturity date, defined in Note 4 as a “Maturity Default”, the conversion price of Note 4 shall then be adjusted to be equal to the lower of: (i) $0.08 or (ii) 65% of the lowest trading price of the Company’s common stock during the 15 consecutive trading days prior to the date on which Buyer elects to convert all or part of the Note 4.   As of September 30, 2018 and December 31, 2017, the Company accrued $134,945 and $49,000, respectively, in interest expense related to the outstanding the notes.   Debt Discount and Original Issuance Costs for Convertible Note   The debt discount amount consists of debt discount due to beneficial conversion features, warrant, original issue costs, and debt issue costs. The debt discounts recorded in 2018 and 2017, pertain to beneficial conversion feature on the convertible notes. The notes are required to be bifurcated and reported at fair value on the date of grant.   During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company amortized $125,957 and $466,862 to interest expense, respectively.   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Debt discount, beginning of period</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">69,541</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">152,617</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Additional debt discount and debt issue cost</td> <td> </td> <td> </td> <td style="text-align: right">82,750</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">383,786</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Amortization of debt discount and debt issue cost</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(125,957</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(466,862</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Debt discount, end of period</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">26,334</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">69,541</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>   Debt Issuance Costs for Convertible Note   During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company did not pay any debt issue costs.

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[Member] Note 1 [Member] Note 2 [Member] Note 3 [Member] Title of Individual [Axis] Advisory Board Member [Member] Advisory Agreement [Member] Electrum Partners, LLC [Member] Electrum Partners [Member] 8% Fixed Convertible Promissory Note [Member] Amendment 1 [Member] Amendment 2 [Member] Amendment 3 [Member] Amendment 4 [Member] Note 4 [Member] Ideal Business Partners [Member] Subsequent Event Type [Axis] Subsequent Event [Member] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Filer Category Entity Small Business Flag Entity Emerging Growth Company Entity Ex Transition Period Entity Common Stock, Shares Outstanding Trading Symbol Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current Assets: Cash and cash equivalents Prepaid expenses Unused commitment fee Total Current Assets Furniture and equipment, net Security deposit Intangible asset, net TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable and accrued expenses Accrued payroll Deferred rent Convertible notes payable, net of debt discount of $26,334 and $69,541, respectively Derivative liability Note payable - current portion Total Current Liabilities Long Term Liabilities: Note payable Total Liabilities Stockholders' Deficit Preferred stock: 5,000,000 authorized; $0.01 par value 750,000 shares issued and outstanding at September 30, 2018 and December 31, 2017 Common stock: 125,000,000 authorized; $0.001 par value 31,041,459 and 25,503,678 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively Additional paid in capital Accumulated deficit Total Stockholders' Deficit TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT Debt discount on note payable Preferred Stock, shares authorized Preferred Stock, par value Preferred Stock, shares issued Preferred Stock, shares outstanding Common stock, shares authorized Common stock, par value Common stock, shares issued Common stock, shares outstanding Income Statement [Abstract] Revenue Cost of sales Gross (Profit) Loss Operating Expenses Depreciation and amortization Research and development Impairment loss Professional fees General and administrative Total Operating Expenses Loss from operations Other Income (Expense) Other income Loss on investment in joint venture Interest expense Amortization of debt discount Change in fair value of embedded derivative liability Total other expense Loss before income taxes Provision for income taxes Net Loss Basic and dilutive loss per common share Weighted average number of common shares outstanding Statement [Table] Statement [Line Items] Balance Balance, shares Common stock issued for services - third party Common stock issued for services - third party, shares Common stock issued for services - related party Common stock issued for services – related party, shares Convertible debt converted into common stock Convertible debt converted into common stock, shares Derivative liability Beneficial conversion feature Voluntary return of stock by related party Voluntary return of stock by related party, shares Net loss Balance Balance, shares Statement of Cash Flows [Abstract] Cash Flows from Operating Activities: Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense Amortization of debt discount Change in fair value of embedded derivative liability Stock issued for services - third party Stock issued for services - related party Changes in operating assets and liabilities: Accounts receivable Other receivable Prepaid expenses Accounts payable and accrued expenses Billing in excess of costs and estimated earnings Deferred rent Accrued comp - officers Net Cash used in Operating Activities Cash Flows from Investing Activities: Purchase of property and equipment Net Cash used in Investing Activities Cash Flows from Financing Activities: Repayments of note payable Proceeds from convertible notes, less OID costs paid Repayments of convertible note Proceeds from Issuance of preferred stock for cash and warrants Proceeds from issuance of common stock Net Cash provided by Financing Activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental Cash Flow Information Cash paid for interest Cash paid for taxes Non-Cash Investing and Financing Activities: Beneficial conversion feature Settlement of convertible note into common shares Conversion of preferred shares into common shares Derivative liability reclassified to paid-in capital Voluntary return of stock by related party Shares issued due to Alamo CBD asset acquisition Accounting Policies [Abstract] Summary of Significant Accounting Policies Organization, Consolidation and Presentation of Financial Statements [Abstract] Going Concern EX-101.PRE 11 inqd-20180930_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Nov. 15, 2018
Document And Entity Information
Entity Registrant Name	Indoor Harvest Corp
Entity Central Index Key	0001572565
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		33,548,008
Trading Symbol	INQD
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML 13 R2.htm IDEA: XBRL DOCUMENT

Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 113,933	$ 35,453
Prepaid expenses	16,500	4,452
Unused commitment fee	50,000	50,000
Total Current Assets	180,433	89,905
Furniture and equipment, net	16,838	24,623
Security deposit	12,600	12,600
Intangible asset, net	4,603	5,892
TOTAL ASSETS	214,474	133,020
Current Liabilities:
Accounts payable and accrued expenses	188,497	89,033
Accrued payroll	3,722	6,653
Deferred rent	3,195	6,239
Convertible notes payable, net of debt discount of $26,334 and $69,541, respectively	831,076	455,459
Derivative liability	1,240,041	554,917
Note payable - current portion	8,118	7,520
Total Current Liabilities	2,274,649	1,119,821
Long Term Liabilities:
Note payable	6,659	12,823
Total Liabilities	2,281,308	1,132,644
Stockholders' Deficit
Preferred stock: 5,000,000 authorized; $0.01 par value 750,000 shares issued and outstanding at September 30, 2018 and December 31, 2017	7,500	7,500
Common stock: 125,000,000 authorized; $0.001 par value 31,041,459 and 25,503,678 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	31,041	25,502
Additional paid in capital	8,874,804	7,376,196
Accumulated deficit	(10,980,179)	(8,408,822)
Total Stockholders' Deficit	(2,066,834)	(999,624)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 214,474	$ 133,020

XML 14 R3.htm IDEA: XBRL DOCUMENT

Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Debt discount on note payable	$ 26,334	$ 69,541
Preferred Stock, shares authorized	5,000,000	5,000,000
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares issued	750,000	750,000
Preferred Stock, shares outstanding	750,000	750,000
Common stock, shares authorized	125,000,000	125,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	31,041,459	25,503,678
Common stock, shares outstanding	31,041,459	25,503,678

XML 15 R4.htm IDEA: XBRL DOCUMENT

Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
Statements of Operations (Unaudited) - USD ($)	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue		$ 4,245		$ 4,245
Cost of sales		1,165		15,594
Gross (Profit) Loss		3,080		(11,349)
Operating Expenses
Depreciation and amortization	3,019	12,792	9,074	39,046
Research and development				1,625
Impairment loss		1,440,961		1,440,961
Professional fees	81,717	8,107	194,756	374,707
General and administrative	161,830	157,592	626,861	910,400
Total Operating Expenses	246,566	1,619,452	830,691	2,766,739
Loss from operations	(246,566)	(1,616,372)	(830,691)	(2,778,088)
Other Income (Expense)
Other income		7,177		7,192
Loss on investment in joint venture				(250,000)
Interest expense	(39,128)	(6,141)	(87,313)	(125,373)
Amortization of debt discount	(16,047)	(45,186)	(125,957)	(294,888)
Change in fair value of embedded derivative liability	(1,089,075)		(1,527,396)
Total other expense	(1,144,250)	(44,150)	(1,740,666)	(663,069)
Loss before income taxes	(1,390,816)	(1,660,522)	(2,571,357)	(3,441,157)
Provision for income taxes
Net Loss	$ (1,390,816)	$ (1,660,522)	$ (2,571,357)	$ (3,441,157)
Basic and dilutive loss per common share	$ (0.05)	$ (0.08)	$ (0.10)	$ (0.18)
Weighted average number of common shares outstanding	27,954,160	19,929,506	25,878,110	18,644,318

XML 16 R5.htm IDEA: XBRL DOCUMENT

Statements of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($)	Series A Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 7,500	$ 25,502	$ 7,376,196	$ (8,408,822)	$ (999,624)
Balance, shares at Dec. 31, 2017	750,000	25,503,678
Common stock issued for services - third party		$ 1,108	92,332		93,440
Common stock issued for services - third party, shares		1,107,833
Common stock issued for services - related party		$ 904	164,191		165,095
Common stock issued for services – related party, shares		903,546
Convertible debt converted into common stock		$ 6,807	380,783		387,590
Convertible debt converted into common stock, shares		6,806,872
Derivative liability			842,272		842,272
Beneficial conversion feature			15,750		15,750
Voluntary return of stock by related party		$ (3,280)	3,280
Voluntary return of stock by related party, shares		(3,280,470)
Net loss				(2,571,357)	(2,571,357)
Balance at Sep. 30, 2018	$ 7,500	$ 31,041	$ 8,874,804	$ (10,980,179)	$ (2,066,834)
Balance, shares at Sep. 30, 2018	750,000	31,041,459

XML 17 R6.htm IDEA: XBRL DOCUMENT

Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
Statements of Cash Flows (Unaudited) - USD ($)	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities:
Net loss	$ (2,571,357)	$ (3,441,157)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	9,074	39,046
Impairment loss		1,440,961
Amortization of debt discount	125,957	294,888
Change in fair value of embedded derivative liability	1,527,396
Stock issued for services - third party	93,440	407,000
Stock issued for services - related party	165,095	159,930
Changes in operating assets and liabilities:
Accounts receivable		34,853
Other receivable		7,323
Prepaid expenses	(12,048)
Accounts payable and accrued expenses	99,464	41,571
Billing in excess of costs and estimated earnings		(20,155)
Deferred rent	(3,044)	(1,705)
Accrued comp - officers	(2,931)	(3,420)
Net Cash used in Operating Activities	(568,954)	(1,040,865)
Cash Flows from Investing Activities:
Purchase of property and equipment		(550)
Net Cash used in Investing Activities		(550)
Cash Flows from Financing Activities:
Repayments of note payable	(5,566)	(230,526)
Proceeds from convertible notes, less OID costs paid	653,000	250,000
Repayments of convertible note		(175,000)
Proceeds from Issuance of preferred stock for cash and warrants		300,001
Proceeds from issuance of common stock		824,000
Net Cash provided by Financing Activities	647,434	968,475
Net increase (decrease) in cash and cash equivalents	78,480	(72,940)
Cash and cash equivalents, beginning of period	35,453	78,219
Cash and cash equivalents, end of period	113,933	5,279
Supplemental Cash Flow Information
Cash paid for interest	1,380	1,917
Cash paid for taxes
Non-Cash Investing and Financing Activities:
Beneficial conversion feature	15,750	95,333
Settlement of convertible note into common shares	387,590	100,000
Conversion of preferred shares into common shares		2,500
Derivative liability reclassified to paid-in capital	842,272
Voluntary return of stock by related party	3,280
Shares issued due to Alamo CBD asset acquisition		$ 890,961

XML 18 R7.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Basis of Presentation

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

Use of Estimates

Reclassification

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

Loss per Share

Fair Value of Financial Instruments

	●	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
	●	Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
	●	Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Income Taxes

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

Property and Equipment

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

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

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 Assets

Derivative Liability

Beneficial Conversion Feature

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

Patent and Patent Application Expenses

Research and Development

Research and development expenditures are charged to expense as incurred. Research and development expense for the nine months ended September 30, 2018 and 2017 are $0 and $1,625, respectively.

Advertising Expense

Advertising and promotional costs are expensed as incurred. Advertising expense for the nine months ended September 30, 2018 and 2017 are $837 and $16,185, respectively.

Recent Accounting Pronouncements

Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

XML 19 R8.htm IDEA: XBRL DOCUMENT

Going Concern

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

NOTE 2 - GOING CONCERN

XML 20 R9.htm IDEA: XBRL DOCUMENT

Property and Equipment

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of September 30, 2018and December 31, 2017:

Classification	September 30, 2018			December 31, 2017
Furniture and equipment	$	11,666		$	11,666
Leasehold improvements		38,717			38,717
Computer equipment		3,019			3,019
Total		53,402			53,402
Less: Accumulated depreciation		(36,564	)		(28,779	)
Property and equipment, net	$	16,838		$	24,623

Depreciation expense for the nine months ended September 30, 2018 and 2017, totaled $7,785 and $37,765, respectively.

XML 21 R10.htm IDEA: XBRL DOCUMENT

Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

NOTE 4 – INTANGIBLE ASSETS

There were no impairment charges taken for the domain name during the nine months ended September 30, 2018 and 2017.

Intangible assets consist of the following as of September 30, 2018and December 31, 2017:

Classification	September 30, 2018			December 31, 2017
Domain name	$	2,000		$	2,000
Facilities Manager’s Package Online		1,022			1,022
MLC CD Systems (software)		7,560			7,560
Total		10,582			10,582
Less: Accumulated amortization		(5,979	)		(4,690	)
Intangible assets, net	$	4,603		$	5,892

Amortization expense for the nine months ended September 30, 2018 and 2017, totaled $1,289 and $1,281, respectively.

XML 22 R11.htm IDEA: XBRL DOCUMENT

Commitments & Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments & Contingencies

NOTE 5 - COMMITMENTS & CONTINGENCIES

Rent expense, net of sublease payments received, for the nine months ended September 30, 2018 and 2017 were $34,831 and $39,763, respectively.

XML 23 R12.htm IDEA: XBRL DOCUMENT

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 6 - FAIR VALUE MEASUREMENTS

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

XML 24 R13.htm IDEA: XBRL DOCUMENT

Note Payable

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Note Payable

NOTE 7 - NOTE PAYABLE

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

	September 30, 2018		December 31, 2017
Balance as of period ended	$	14,777	$	20,343
Less: current portion		8,118		7,520
Long-term note payable, net	$	6,659	$	12,823

XML 25 R14.htm IDEA: XBRL DOCUMENT

Convertible Notes Payable

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Convertible Notes Payable

NOTE 8 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable at September 30, 2018 and December 31, 2017 are as follows:

	September 30, 2018			December 31, 2017
Note 1	$	87,410		$	475,000
Note 2		50,000			50,000
Note 3		550,000			-
Note 4		170,000
Total convertible notes payable		857,410			525,000

Less: Unamortized debt discount		(26,334	)		(69,541	)
Total convertible notes		831,076			455,459

Less: current portion of convertible notes		831,076			455,459
Long-term convertible notes	$	-		$	-

Note 1

Note 2

Note 3

Note 4

As of September 30, 2018 and December 31, 2017, the Company accrued $134,945 and $49,000, respectively, in interest expense related to the outstanding the notes.

Debt Discount and Original Issuance Costs for Convertible Note

During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company amortized $125,957 and $466,862 to interest expense, respectively.

	September 30, 2018			December 31, 2017
Debt discount, beginning of period	$	69,541		$	152,617
Additional debt discount and debt issue cost		82,750			383,786
Amortization of debt discount and debt issue cost		(125,957	)		(466,862	)
Debt discount, end of period	$	26,334		$	69,541

Debt Issuance Costs for Convertible Note

During the nine months ended September 30, 2018 and for the year ended December 31, 2017, the Company did not pay any debt issue costs.

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Derivative Liabilities

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

NOTE 9 - DERIVATIVE LIABILITIES

The following schedule shows the change in fair value of the derivative liabilities for the nine months ended September 30, 2018:

Balance - December 31, 2017	$	554,917
Addition of new derivatives recognized as loss on derivatives		1,019,033
Settled on issuance of common stock		(842,272	)
Gain on change in fair value of the derivative		508,363
Balance - September 30, 2018		1,240,041
Less: current portion		(1,240,041	)
Long-term derivative liabilities	$	-

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

Derivative liabilities - December 31, 2016	$	-
Add fair value at the commitment date for convertible notes issued during the current year		213,453
Less derivatives due to conversion		(18,800	)
Fair value mark to market adjustment for derivatives		360,264
Derivative liabilities - December 31, 2017		554,917
Less : current portion		(554,917	)
Long-term derivative liabilities	$	-

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions

NOTE 10 - RELATED PARTY TRANSACTIONS

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Stockholders' Deficit

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Deficit