10-K/A: Indoor Harvest Corp. Files Amended 10-K, Citing Need for Independent Audit Review and Updated Disclosures

Indoor Harvest Corp. has filed an amendment to its annual report on Form 10-K for the year ended December 31, 2023, to comply with SEC requirements for independent audit reviews and to update financial statements and disclosures.

Summary

• Indoor Harvest Corp. filed an amendment to its annual report on Form 10-K for the year ended December 31, 2023.
• The amendment was made to comply with SEC requirements that annual financial statements be reviewed by an independent public accountant using PCAOB standards.
• The company also updated financial statements and various other disclosures throughout the report.
• The filing includes required certifications from the company's Principal Executive Officer and Principal Financial and Accounting Officer.
• The company reported a net loss of $3,261,618 for the year ended December 31, 2023, compared to a net loss of $3,363,597 for the previous year.
• The company had no revenue for both 2023 and 2022.
• Operating expenses decreased by 42% from $3,370,813 in 2022 to $1,967,414 in 2023.
• The company's working capital deficiency was $1,289,667 as of December 31, 2023, compared to a working capital of $200,526 in 2022.
• As of December 31, 2023, the company had 3,105,704,056 shares of common stock issued and outstanding.
• The company has 103 shareholders of record as of December 31, 2023.
• The company has 761,003,846 warrants and 1,024,000,000 options outstanding as of December 31, 2023.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including no revenue, a large working capital deficiency, and ineffective internal controls. While there are some positive aspects, such as reduced operating expenses and a strategic focus on M&A, the overall sentiment is negative due to the company's precarious financial position and reliance on capital raises.

Positives

• The company's net loss decreased slightly year-over-year.
• Operating expenses were significantly reduced by 42% compared to the previous year.
• The company is actively working on branding and team building for 2024.
• The company is positioning itself as an integrated consolidation platform for plant-based industry companies.

Negatives

• The company reported no revenue for both 2023 and 2022.
• The company's working capital position has significantly deteriorated, resulting in a deficiency of $1,289,667.
• The company has a significant accumulated deficit of $30,320,649.
• The company's internal controls over financial reporting were deemed ineffective as of December 31, 2023.
• The company has a history of losses and negative cash flow from operations.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and executing its business plan.
• The company's internal controls over financial reporting are not effective, which could lead to material misstatements in financial reports.
• The company faces risks related to the regulatory environment surrounding cannabis, which could impact its business operations.
• The company has a significant working capital deficiency and accumulated deficit, which could impact its ability to operate.
• The company has no full-time employees and relies on advisors and consultants, which could impact its operational efficiency.

Future Outlook

The company plans to focus on M&A and strategic partnerships to create shareholder value, while managing costs related to being a fully reporting company. They will be working on branding and building their team in 2024, once they have their new plans funded.

Management Comments

• The company believes it is positioned to start executing its business strategy and leveraging the public company to create shareholder value.
• The recent long-term commitments of the new management team coupled with a robust business network to support our business initiatives have laid the foundation for the future.
• The current business strategy is to position the Company as an integrated consolidation platform for opportunities based on the managements relationships and experience.

Industry Context

The company is positioning itself to compete with other plant-based and hemp-related science and consumer product companies trading on the OTC Markets. The company's focus on the plant-based industry aligns with a growing trend towards alternative and sustainable products.

Comparison to Industry Standards

• The company's lack of revenue is a significant deviation from industry standards for publicly traded companies.
• The substantial working capital deficiency and accumulated deficit are concerning compared to industry benchmarks.
• The company's reliance on private placements for funding is not uncommon for small OTC companies, but the scale of dilution is notable.
• The company's focus on M&A and strategic partnerships is a common strategy for growth in the plant-based industry, but the success of this strategy is yet to be determined.
• The company's lack of full-time employees is unusual for a public company and may indicate operational challenges.

Related Party Transactions

• The company entered into a Convertible Promissory Note with Electrum Partners, LLC, an entity under common control with the Company.
• The company paid professional fees of $1,566,940 and $1,567,352 in 2023 and 2022 respectively.

Stakeholder Impact

• Shareholders face significant risk due to the company's poor financial performance and potential for further dilution.
• Employees and consultants may face uncertainty due to the company's financial instability.
• Customers and suppliers may be hesitant to engage with the company due to its financial challenges.
• Creditors face a high risk of non-payment due to the company's working capital deficiency.

Next Steps

• The company will be working on branding and building its team in 2024.
• The company will continue to seek funding from other capital sources.
• The company will focus on M&A and strategic partnerships to create shareholder value.

Key Dates

Keywords

Indoor Harvest Corp, Form 10-K/A, amended annual report, financial statements, independent audit, cannabis industry, plant-based industry, M&A, working capital, net loss, operating expenses, private placement, stock options, warrants, internal controls