DESCRIPTION OF BUSINESS
Indoor Harvest, Corp., through its brand name Indoor Harvest™ is a development stage company that seeks to become an equipment design, developer, marketer and direct-seller of commercial grade aeroponic fixtures and supporting systems for use in urban controlled environment agriculture ("CEA") and Building Integrated Agriculture ("BIA").
Aeroponics is the process of growing plants in an air or mist environment without the use of soil or an aggregate medium (known as geoponics). Aeroponic culture differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as growing medium and essential minerals to sustain plant growth, aeroponics is conducted without a growing medium. Because water is used in aerponics to transmit nutrients, it is sometimes considered a type of hydroponics.
Our fixtures and patent pending system design are based upon a modular concept in which primary components are interchangeable providing a level of customization we believe based upon our knowledge of the industry is not currently offered by other aeroponic system manufactures. We are developing our aeroponic fixtures and systems for use by both horticulture enthusiasts and commercial operators who seek to utilize aeroponic vertical farming methods within a controlled indoor environment.
Our products are designed for the production of aeroponic leafy greens, micro-greens, fruiting plants and herbs. Our products and systems can also be adapted for a variety of other uses such as horticulture research, medicinal plant production, pharmaceutical plant production, plant cloning and hardwood propagation.
Our Products
There are currently several different growing technologies being deployed in urban vertical farming operations. The most common of these technologies include; nutrient film technology, ebb and flow systems, drip irrigation, water culture systems, aquaponic raft systems and aeroponic systems. Our company has chosen to focus on the development of aeroponic fixtures and supporting systems for the urban vertical farming industry. Aeroponics is a method of growing plants in a sealed environment by suspending plant roots in an automated atomized liquid nutrient environment.
The aeroponic environment being free from pests and disease, plants grow healthier and more quickly than plants grown in a medium. CEA and BIA advances plant development, health, growth, flowering and fruiting for any given plant species and cultivars. There are two types of aeroponics commonly used and they are described as follows:
Low Pressure Aeroponics ("LPA") - LPA systems utilize high volume, low-pressure pumps and low pressure misting, or spray nozzles. Low-pressure nozzles require large orifices to disperse the nutrient solution resulting in increased water usage. Due to the large amount of water used, the majority of LPA systems recirculate the nutrient solution to minimize water and fertilizer usage.
High Pressure Aeroponics ("HPA") - HPA systems utilize a low volume, high-pressure pump and high pressure misting, or fog nozzles. The higher pressures when used with an appropriate nozzle create an atomized mist or fog. Unlike LPA designs, HPA can utilize drain to waste configurations for easier operation due to minimal water usage. Average nutrient solution particle size is 50-80 microns. 
The Indoor Harvest™ patent pending "Modular Aeroponic System and Related Methods"
The Indoor Harvest™ Modular Aeroponic System is based around seven primary fixture components. These fixtures consist of an Aeroponic Growth Tray, Aeroponic Growth Lid, Aeroponic Spray Manifold, Aeroponic Pressure Manifold, Nutrient Delivery System, Recirculating System and Lift Station. The individual fixtures are combined to create a variety of aeroponic system configurations and allow for modular system construction. As of August 2013, the Company had completed three prototype system tests. The chart below briefly describes the development status of our seven primary fixture components.
| Aeroponic Growth Tray ("AGT") | Aeroponic Growth Lid ("AGL") | Aeroponic Spray Manifold ("ASM") |
 |  |  |
| Aeroponic Pressure Manifold ("APM") | Nutrient Delivery System ("NDS") | |
 | | |
Indoor Harvest™ Shallow Raft System The system is modular and is based upon the Unistrut framing platform which will make it very versatile in how it is installed and incorporated into mechanical systems. The design uses an open slot face which will allow precise leveling no matter how uneven your floor is. We have designed the frames to use the Illumitex ES-1 and ES-2 fixtures right out of the box with no modifications or custom electrical fabrication. Any brand hydroponic tray will work. We plan to stock Botanicare products in-house. 
Indoor Harvest™ Support Systems for Aeroponics
In addition to our line of aeroponic system fixtures, we also intend to offer private labeled supporting systems for large commercial installations for CEA and BIA farming. These include both wall mount and frame mount reverse osmosis ("R/O") systems ranging in size from 250 gallons per day to over 19,000 gallons per day from Applied Membranes, Inc.. We also intend to offer private labeled inline and drop in chillers ranging from 1/5 HP to 1/2 HP from Trade Wind Chillers.
The use of a R/O system within an aeroponic system can dramatically reduce the potential for maintenance issues such as the clogging of nozzles, solenoids and pumps by filtering incoming system water to below 20 parts per million. Both inline and drop in chillers can also be added to an aeroponic system to chill the nutrient solution thereby increasing dissolved oxygen content of the nutrients and lowering the temperature of a plants root zone. Higher dissolved oxygen and cooler root temperatures promote faster plant growth.
A RECAP OF 2013 AND 2014
2014 proved to be a pivotal year for the Company as we managed to achieve several major milestones. The biggest was being the first Company having a possible ancillary business model for cannabis to go public directly by filing a Form S-1 Registration Statement with the Securities and Exchange Commission ("SEC") rather than a public shell reverse merger. Our Registration Statement went effective by operation of law on November 7, 2014.
On January 15, 2015, we were assigned by FINRA the ticker symbol INQD which will allow our common stock to be quoted and traded in the market for unlisted securities on the over-the-counter market. We will be applying and seeking quotation on OTC Markets Group's Venture Marketplace, OTCQB in the near future. On November 26, 2014, we filed our first quarterly report as a fully reporting Company with the SEC.
We began conducting initial research for a new type of aeroponic design in late 2011. In 2013, we completed three technology pilots and provided proof of concept on a modular aeroponic system by growing a variety of leafy lettuce and basil. On May 15, 2013, we filed a provisional application for patent with the United States Patent and Trademark Office to extend protection of our invention and subsequently filed a non-provisional application for patent on May 15, 2014. Our application was published on November 20, 2014 as US-2014-0338261-A1, a "Modular aeroponic system and related methods." We are currently patent pending.
Aeroponics is the process of growing plants in an air or mist environment without the use of soil or an aggregate medium (known as geoponics). Aeroponic culture differs from both conventional hydroponics and in-vitro (plant tissue culture) growing. Unlike hydroponics, which uses water as growing medium and essential minerals to sustain plant growth, aeroponics is conducted without a growing medium. Because water is used in aerponics to transmit nutrients, it is sometimes considered a type of hydroponics.
Our aeroponic technology is the first fixture based system that allows configuration for both low pressure and high pressure operation and can be operated both drain to waste, or recycled. The system also uses a modular lid and internal manifold design that allows complete custom ability for a wide range of cultivars and plant spacing.
MIT PROJECT
On September 18, 2013, we entered into a material transfer agreement with the Massachusetts Institute of Technology's Media Lab ("MIT Media Lab") to provide aeroponic system components for MITCityFarm. The MITCityFarm project is part of MIT Media Lab's City Science Initiative. We have been responsible for providing technical assistance and materials as a "Technical Systems Adviser" to MITCityFarm. We originally provided MITCityFarm with a scaled down prototype version of our larger aeroponic design as part of their initial pilot. After almost a year of using the initial system we were tasked with building a larger platform for MITCityFarm's growing research. The new platform included both hydroponic and aeroponic systems. The new platform was installed on September 8, 2014 and has since grown a wide variety of cultivars to include broccoli, strawberries, lettuces, basil, kale and a variety of herbs. Articles about MIT project using Indoor Harvest system
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TWEED COLLABORATION
On December 18, 2014, we entered into a Cannabis Production Pilot Agreement with Tweed Marijuana Inc., a TSX Venture Exchange listed company and its wholly-owned subsidiaries Tweed Inc. and Tweed Farms Inc. (formerly Prime1 Construction Services Corp.) which are licensed producers of medical cannabis in Canada. The principal activities of Tweed are the production and sale of cannabis through its wholly owned subsidiaries out of Tweed Inc.'s facility in Smiths Falls, Ontario and Tweed Farms Inc.'s facility in Niagara-on-the-Lake, Ontario as regulated by the Marihuana for Medical Purposes Regulations.
The Pilot Project will test the production of Cannabis using an aeroponic system designed by Indoor Harvest. The Pilot Project will make a record of the growth rate, phytocannabinoid production, water usage, fertilizer usage and labor using the aeroponic system(s) provided by Indoor Harvest. Upon conclusion of the pilot, Tweed will have the option to request design build services. Indoor Harvest would be provided a 10 year exclusive manufacturing contract on any approved designs and both parties would share certain intellectual property rights.
GUIDANCE FOR 2015
Since the start of this year, we have been constructing a prototype aeroponic mobile research lab based on our modular aeroponic system. The lab will be used as part of the initial Cannabis Pilot with Tweed. The data and information yielded in this pilot will be used towards designing a large scale commercial platform specifically for cannabis cultivation. Tweed is under no obligation to use our designs, or purchase equipment from us. Tweed has graciously agreed to provide us space to conduct research in their state-of-the-art-facility and we are providing our mobile research labs free of charge. At the conclusion of the first phase of the pilot project, should the results impress, Tweed will be given exclusive rights to the subsequently developed commercial system in all jurisdictions outside the United States. We will retain exclusive rights to the system within the United States. We will also be given exclusive manufacturing rights for all systems manufactured for Tweed for a period of 10 years.
Chad Sykes, the founder and CEO of Indoor Harvest stated, "We are extremely excited to have been given the opportunity to work with what we believe to be one of the best brands producing and selling medical grade cannabis under the Marihuana for Medical Purposes Regulations in Canada. With medical cannabis heavily regulated and legal under federal law in Canada, we felt it was the best place to conduct our research at this time. We look forward to proving our technology to Tweed as well as collaborating with their amazing team of researchers. Based upon our experience with our system, we're hoping to show a large reduction in the amount of water used, a 40%-60% reduction in plant nutrients and a 20%-30% faster vegetative growth cycle. Our systems are soilless, completely eliminating the need for costly mediums such as rockwool or coco substrates. By eliminating grow mediums, we also eliminate the labor associated with them. This could translate into a nice reduction in the costs associated with cannabis production while reducing the impact on the environment."
Notwithstanding our project with Tweed, we do not view ourselves as a "cannabis company." All of our R&D and operations to date have been focused with a view of serving the vertical farming industry. Nothing in our business plan involves any activities that directly or indirectly violate either the Department of Justice ("DOJ") Cole Memorandum or the related FinCEN guidance. In the future, we will require any individual or entity purchasing equipment for cultivation of cannabis, to provide us proof that they are legally allowed to cultivate cannabis and that they have policies in place to ensure adherence to DOJ and FinCEN guidance.
In late December 2013, the Company began development of a framing system for vertical farming of culinary herbs, microgreens and leafy greens. In keeping with our modular fixture based approach, we have developed a universal framing system that is designed to work with standard strut framing systems, Illumitex® brand horticulture LED's and standard hydroponic systems. Our framing system is also designed for use with our modular aeroponic system, making our complete product line interchangeable.
The Company is also currently constructing a full service research lab within our existing 10,000 sq.ft. facility. We expect construction to be completed in the 2nd Quarter of 2015. We will be installing six large aeroponic systems and six large shallow raft systems. The lab will serve as both our showroom and research facility in order to collect data on various cultivars in order to develop new platforms, fixtures and collect data on possible new business plans for vertical farming. We will also use the facility to begin developing automated controls and best practices.
We are expecting to be in a position to begin limited sales and offering design build services in the 2nd Quarter of 2015. We do not expect to generate significant revenue or profit from operations in 2015 and we will require additional capital investments in order to properly scale to meet the expected demand. The first half of 2015 will be primarily focused on completing tooling, developing marketing materials, attending industry conferences to build brand awareness, hiring and training sales staff, building our management team and creating a board of directors to provide better governance and guidance.
Harking back to the early days in the development of the computer industries, Indoor Harvest's CEO and founder Chad Sykes commented, "We've come a long way since this Company started in my garage back in 2011 growing lettuce and basil. If not for the faith of our investors, none of this would have ever happened. I thank you and above all else, thank you for your patience. We've developed some really strong industry relationships, landed some prestigious collaborations and built a platform technology that I believe will be considered the state-of-the-art for aeroponics and hydroponic systems. We now have to make the transition from proof of concept to a viable, commercial entity. We are working to make 2015 the year we scale up in order to make that happen."
Additional Links:
Cashinbis: Designing the Future of Cultivation? "The carbon footprint of a present-day [cannabis] growing facility is massive; their current methods are out-dated and need to change to ensure that our industry can be sustainable. That is where Chad Sykes, CEO of Indoor Harvest (OTC:INQD), walks onto the scene with his energy-saving aeroponic cultivation systems. He and his team have developed technology that is reducing energy consumption by upwards of 90%! He believes in a strong foundation for our industry and he has a number of ways of how he intends to do that."
MJINews: Indoor Harvest: Growing for a Green Future "Employing its high-tech greenhouse methods, such as modern hydroponic and aeroponic technologies, Indoor Harvest is showing the potential to increase quality and availability of ecologically safe cannabis. Indoor farms, in general, can improve urban accessibility to fresh harvests, despite existing environmental barriers such as a region’s climate or humidity, while also contributing to lower shipping and handling costs and less spoilage. . . . To bolster the company’s offering, Indoor Harvest also has an incredibly forward-thinking design strategy. Recognizing the potential to move the indoor crop cultivation equipment industry away from offering all-in-one units that are limited by their inability to scale up, it offers a customized-design and modular-based solution. "
"Indoor Harvest provides design build for the industry, working as a mechanical contractor. The company not only manufactures fixtures but provides the engineering services for vertical and integrated agriculture. Its focus on the cannabis industry in which customization is proving a key element to success positions it well to create strategic partnerships, such as the recently announced partnership with Tweed to launch an aeroponics pilot project that uses the company’s customized designs and technology."