Indoor Harvest Corp Announces Second Quarter Results

Aug 07, 2015, 10:43 ET from Indoor Harvest Corp

HOUSTON, Aug. 7, 2015 /PRNewswire/ -- Indoor Harvest Corp (OTCQB:INQD), through its brand name Indoor Harvest™, is a design build contractor, developer, marketer and direct-seller of commercial grade aeroponic and hydroponic fixtures and supporting systems for use in urban Controlled Environment Agriculture and Building Integrated Agriculture. The Company is pleased to announce results for the six months ended, June 30, 2015 as well as subsequent events. Our complete 2nd quarter report can be downloaded from our website, or through the SEC's website at the following link:

http://www.sec.gov/Archives/edgar/data/1572565/000155724015000574/inqd-2015june30_10q2.htm

Current Operations

Tweed Pilot Project Update

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

Mr. Chad Sykes, Chief Executive Officer of Indoor Harvest, stated, "We're looking forward to disclosing the data of our first pilot. Having worked with a number of cultivars using our designs, I'm happy to report that we're expecting the final data to be in line with the results we've seen from other cultivars. We continue to conduct our business upon the assumption that aeroponics will potentially be a game changer for the cannabis industry and that the data supplied should continue to validate our assumption."

CLARA Design Build Project

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

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

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

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

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

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

Cory Miner, Managing Partner of EB5 Solutions stated, "City Farms America and EB5 Solutions are establishing an agreement with Indoor Harvest and The City of Pasadena to financially participate in the CLARA model in investing significant capital in this private public partnership. The Board of Directors have determined that  the CLARA model will be the template for expansion thru out the U.S. where the public and the private sectors will join together in establishing a  business platform benefiting numerous cities. We recognize the success will require a collective effort between the private sector and public entities as defined in the CLARA model and we have embraced what we have determined is an unlimited opportunity for all involved."

"Working in cooperation with the City, commercial and non-profit partners, we hope to take the CLARA model from proof of concept through to a viable economic model that can be rolled out Nationwide. Commercial partners must show a history of operations and an ability to fund a multi-State expansion plan. EB5 Solutions has that track record and we look forward to closing terms with them and City Farms America. With climate change, growing demand  for locally grown produce and a lack of skilled farming labor straining the food supply system, we believe the CLARA model will be attractive to municipalities across the Country, potentially opening us up for a strong future sales pipeline," Mr. Sykes also stated.

Results of Operations

We are in the process of developing our products and services. Consequently, we have not generated revenues as of today.  We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during 2015.

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

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

Our expenses related to research and development for the three months ended June 30, 2015 and 2014 were $3,285 and $370, respectively. Our expenses related to research and development for the six months ended June 30, 2015 and 2014 were $12,528 and $1,010, respectively. The increase in research and development expenses was due to increased costs developing our vertical farm framing system and improvements to our existing aeroponic designs.

As of June 30, 2015 we had total liabilities of $54,911, while at December 31, 2014, we had total liabilities of $21,245. The increase in liabilities was due to increases in accrued payroll, deferred rent and a $36,100 note payable to Wells Fargo Bank for tooling equipment. The tooling will be used to manufacture our aeroponic AGT fixtures.

Liquidity and Capital Resources

We anticipate taking the following steps to implement our business plan for the next 12 months. Our capital requirements for implementation of these steps are estimated at $4,000,000 as set forth in the table below. For the next 12 months, we anticipate engaging in the following operational activities, although we may vary our plans depending upon operational conditions and available funding:

Event

Actions


Estimated Time



Estimated Cost


CLARA Phase I

Construct Demonstration Vertical Farm


Q3 2015-
Q3 2016



$

3,500,000


CLARA Phase II

Develop Commercial Retail Campus at CLARA


Q1 2016-
Q4 2016



$

500,000


In order to fund the CLARA activities under our business plan described above, the Company plans to commence a private placement under Regulation D, Rule 506(c) for up to 5,000,000 shares of Series A Convertible Preferred Stock at a price of $1.00 per share for maximum gross proceeds of $5,000,000.

Mr. Sykes further stated, "Our focus up until now has been developing our products and building partnerships. We've established our foundation and are now making the transition from a development stage company to full operations. We have bid on several projects since we officially launched sales on July 1st and expect to begin generating revenue this quarter. We're also wrapping up a comprehensive makeover of our brand and will unveil a new website, that better reflects our Company's direction later this month. Pending the results from our Tweed pilot and closing of terms with CLARA partners, we will also prepare a detailed investor presentation and investor road show to showcase our efforts to date. It is currently anticipated we will begin our investor road show in the next 60 to 90 days."

Consistent with the SEC's April 2013 guidance on using social media outlets like Facebook and Twitter to make corporate disclosures and announce key information in compliance with Regulation FD, Indoor Harvest is alerting investors and other members of the general public that Indoor Harvest will provide weekly updates on operations and progress through its social media on Facebook, Twitter and YouTube. Investors, potential investors and individuals interested in our company are encouraged to keep informed by following us on Twitter, YouTube or Facebook. 

Facebook: http://www.facebook.com/indoorharvest
Twitter: http://www.twitter.com/indoorharvest
YouTube: http://www.youtube.com/indoorharvest

ABOUT INDOOR HARVEST CORP

Indoor Harvest Corp, through its brand name Indoor Harvest™, is an emerging design build contractor and OEM manufacturer of commercial aeroponic and hydroponic system fixtures and framing systems for use in Controlled Environment Agriculture and Building Integrated Agriculture. Our patent pending aeroponic fixtures are based upon a modular concept in which primary components are interchangeable. We are developing our aeroponic and hydroponic systems for use by both horticulture enthusiasts and commercial operators who seek to utilize aeroponic and hydroponic vertical farming methods within a controlled indoor environment. Please visit our website at http://www.indoorharvest.com for more information about our Company.

FORWARD LOOKING STATEMENTS

This release contains certain "forward-looking statements" relating to the business of Indoor Harvest and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "estimates," "believes," "anticipates," "intends," expects" and similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on Indoor Harvest's current expectations and beliefs concerning future developments and their potential effects on Indoor Harvest. There can be no assurance that future developments affecting Indoor Harvest will be those anticipated by Indoor Harvest. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. Indoor Harvest undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Contacts:
Indoor Harvest Corp
CEO, Mr. Chad Sykes
713-410-7903
ccsykes@indoorharvest.com

 

INDOOR HARVEST CORP

 

BALANCE SHEETS

AS OF JUNE 30, 2015 AND DECEMBER 31, 2014

(UNAUDITED)




June 30,

2015



December 31,

2014









ASSETS







Current assets:







Cash


$

288,280



$

411,669


Inventory



4,589




-


Prepaid expenses



6,933




-


Total current assets



299,802




411,669











Furniture and equipment, net



208,971




170,454


Security deposit



12,600




12,600


Intangible asset



2,000




2,000


Other assets



48,783




68,083


Total assets


$

572,156



$

664,806











LIABILITIES









Current liabilities:









Accounts payable & accrued expenses


$

310



$

7,185


Accrued payroll



9,099




5,034


Deferred rent



9,402




9,026


Total current liabilities



18,811




21,245











Long term liabilities:









Note payable



36,100






Total Liabilities



54,911




21,245











Stockholders' equity:









Common stock: $0.001 par value, 50,000,000 shares authorized; 10,155,528 and 9,252,388 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively



10,154




9,251


Additional paid-in capital



1,752,037




1,299,389


Less: Stock subscription receivable



-




(10,000)


Accumulated deficit



(1,244,946)




(655,079)


Total Stockholders' equity



517,245




643,561











Total liabilities and stockholders' equity


$

572,156



$

664,806



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

 

INDOOR HARVEST CORP
STATEMENTS OF OPERATIONS

(UNAUDITED)









For the three months ended
June 30,



For the six months ended
June 30,




2015



2014



2015



2014


Operating Expenses













     Depreciation expense


$

11,430



$

3,665



$

21,444



$

5,614


     Research and development



3,285




370




12,528




1,010


     Professional fees



17,161




11,067




107,972




107,955


General and administrative expenses



274,250




44,707




437,858




89,427


Loss from operations



306,126




59,809




579,802




204,006



















Other Income (Expense)



(84)




93




(10,065)




144



















Net loss


$

(306,210)



$

(59,716)



$

(589,867)



$

(203,862)



















Net loss per common share:

















Net loss per share, basic and diluted


$

(0.03)



$

(0.01)



$

(0.06)



$

(0.03)



















Weighted average number of common shares outstanding:

















Basic and diluted



9,990,229




8,227,388




9,451,732




7,882,677



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

 

INDOOR HARVEST CORP

STATEMENTS OF SHAREHOLDERS' EQUITY

(UNAUDITED)









Additional

Paid-in
Capital









Total

Stockholders'

Equity (Deficit)




Common Stock,
$0.001 Par Value










Shares



Amount



Accumulated

Deficit



Subscription Receivable








































Balances, December 31, 2013



6,505,381



$

6,505



$

359,134



$

(211,797)



$

-



$

153,842



























Issuance of common stock

























For cash



2,474,000




2,474




872,276




-




(10,000)




864,750


For services



273,007




272




67,979




-




-




68,251


Net loss



-




-




-




(443,282)




-




(443,282)



























Balances, December 31, 2014



9,252,388




9,251




1,299,389




(655,079)




(10,000)




643,561



























Issuance of common stock

























For cash



536,000




536




267,464




-




-




268,000


For services



367,180




367




185,184




-




-




185,551


Collection of stock subscription receivable



-




-




-




-




10,000




10,000


Net loss



-




-




-




(589,867)




-




(589,867)



























Balances, June 30, 2015



10,155,568



$

10,154



$

1,752,037



$

(1,244,946)



$

-



$

517,245



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

 

INDOOR HARVEST CORP


STATEMENT OF CASHFLOWS


(UNAUDITED)












For the six months
ended June 30,





2015



2014


Cash flows from operating activities:







Net loss


$

(589,867)



$

(203,862)


Adjustments to reconcile net loss to net cash used in operating activities:









Depreciation expense



21,444




5,614


 Loss on the sale other asset



9,250




-


Stock issued for services - related party



97,500




68,252


Stock issued for services



88,051




-


Change in operating liability:









Deferred rent



376




8,650


Other assets



-




(68,954)


Security deposit



-




(12,600)


Inventory



(4,589)




-


 Prepaid expense



(6,933)




-


Accounts payable and accrued expenses



(6,875)




-


Accrued compensation - officers



4,327




(4,222)


Accrued compensation



(262)




-


Net cash used in operating activities



(387,578)




(207,122)











Cash flows from investing activities:









              Proceeds from sale of equipment



10,050




-


Purchase of equipment



(59,961)




(46,430)


Net cash used in investing activities



(49,911)




(46,430)











Cash flows from financing activities:









Proceeds from note payable



36,100




-


Collection of stock subscription receivable



10,000




-


Issuance of common stock for cash



268,000




362,250


Net cash provided by financing activities



314,100




362,250











Increase cash and cash equivalents



(123,389)




108,698


Cash and cash equivalents at beginning of period



411,669




122,017


Cash and cash equivalents at end of period


$

288,280



$

230,715











Supplemental Disclosures









Interest paid


$

-



$

-


                Income taxes paid


$

-



$

-



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

 

SOURCE Indoor Harvest Corp



RELATED LINKS

http://www.indoorharvest.com