UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Item 7.01. | Regulation FD Disclosure. |
Attached hereto as Exhibit 99.1 is a press release we issued on May 16, 2022, announcing fiscal Q2 2022 financial results.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Press release issued by Item 9 Labs Corp. on May 16, 2022, announcing fiscal Q2 2022 financial results. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ITEM 9 LABS CORP. | ||
Dated: May 16, 2022 | By: | /s/ Robert Mikkelsen |
Robert Mikkelsen | ||
Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Item 9 Labs Corp. Announces Second Quarter FY 2022 Financial Results with Revenue Growth of 9% to $6.6 Million
· | National Unity Rd. Dispensary Franchise Footprint Expands into Three New States |
· | Cultivation, Production and Processing Expansion in Nevada Nears Completion with Phase One of Arizona Development also on Track |
· | Management to Host Conference Call and Webcast to Discuss Key Operational and Financial Highlights Today at 4:30 p.m. ET |
PHOENIX, May 16, 2022 /PRNewswire/ -- Item 9 Labs Corp. (OTCQX: INLB) (the “Company”)—a vertically integrated cannabis dispensary franchisor and operator that produces premium, award-winning products—today reported its fiscal second quarter operating and financial results for the three months ended March 31, 2022.
“Last year, our team focused on strengthening our position for future growth, both locally in Arizona and nationally across the U.S.,” said Item 9 Labs Corp.'s Chief Executive Officer, Andrew Bowden. “The momentum we’ve achieved over the past quarter demonstrates the power of this foundation and gives a glimpse into what’s ahead for our national growth and product excellence.”
Key Business Highlights During Q2 FY2022 (January 1 - March 31, 2022)
· | Expanded Unity Rd. dispensary franchise into three new markets – securing dispensary licenses in South Dakota and New Mexico as well as partnering with an existing dispensary in Oklahoma that is expected to be converted soon into a Unity Rd. shop. |
· | Actively growing the Unity Rd. national footprint through accretive acquisitions of existing dispensaries that it intends will be converted into Unity Rd. shops. |
· | Recent acquisition activity in the Denver market with the closing of an acquisition in Adams County, Colorado and an Asset Purchase Agreement for a medicinal and recreational dispensary and cultivator operating in the desirable Washington Park neighborhood of Denver. |
· | Item 9 Labs’ Orion 710 series has been making waves throughout the Arizona market, sweeping the best indica and best sativa cannabis vape categories at Arizona’s Spring ERRL Cup in March. |
· | Cultivation site in Pahrump, Nevada is almost completed. |
· | Phase one of the Coolidge, Arizona master site development remains on track with a target completion date this summer. |
· | Added franchising veteran Shane Evans to board of directors. |
Bowden continued, “Focusing on execution sums up our plan for 2022 as we continue our mission to keep the door to cannabis entrepreneurship open to the everyday entrepreneur and bring more high-quality, alternative medicine to consumers nationwide. As large equity holders, our goals remain aligned with our shareholders in creating long-term value and brands that are built to last.”
Key Financial Highlights for Q2 FY2022 (compared with Q2 FY2021)
Conference Call and Webcast Information – Tuesday, May 16, 2022 at 4:30 p.m. ET (1:30 p.m. PT)
Item 9 Labs Corp.'s Chief Executive Officer Andrew Bowden and Chief Financial Officer Bobby Mikkelsen will host the Company's Q2 FY2022 results call.
ITEM 9 LABS CORP. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
March 31, | September 30, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 105,128 | $ | 1,454,460 | ||||
Accounts receivable, net | 1,177,003 | 1,448,280 | ||||||
Inventory | 4,819,619 | 6,391,351 | ||||||
Prepaid expenses and other current assets | 782,556 | 802,558 | ||||||
Total current assets | 6,884,306 | 10,096,649 | ||||||
Property and equipment, net | 24,009,739 | 10,877,848 | ||||||
Right of use asset | 730,516 | 156,938 | ||||||
Construction escrow deposits | 10,096,928 | 17,744,913 | ||||||
Deposits | 98,701 | 600,000 | ||||||
Other assets | 1,229,940 | 608,874 | ||||||
Intangible assets, net | 19,590,433 | 18,659,095 | ||||||
Goodwill | 58,233,386 | 58,064,816 | ||||||
Total Assets | $ | 120,873,949 | $ | 116,809,133 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 5,522,921 | $ | 3,759,818 | ||||
Accrued payroll and payroll taxes | 2,646,036 | 2,678,694 | ||||||
Accrued interest | 1,792,925 | 1,391,766 | ||||||
Accrued expenses | 1,241,683 | 1,169,776 | ||||||
Deferred revenue, current portion | 219,992 | 119,992 | ||||||
Notes payable, current portion, net of discounts | 21,136,912 | 4,536,002 | ||||||
Income tax payable | 3,324 | — | ||||||
Operating lease liability, current portion | 219,773 | 56,592 | ||||||
Convertible notes payable, net of discounts | 2,815,880 | 1,277,394 | ||||||
Total current liabilities | 35,599,446 | 14,990,034 | ||||||
Deferred revenue, net of current portion | 345,855 | 655,851 | ||||||
Operating lease liability, net of current portion | 518,520 | 104,406 | ||||||
Notes payables, net of current portion and discounts | 1,645,043 | 14,957,399 | ||||||
Total liabilities | 38,108,864 | 30,707,690 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity: | ||||||||
Common stock, par value $.0001 per share, 2,000,000,000 shares authorized; 108,269,428 and 107,074,417 shares issued and 95,969,428 and 94,774,417 shares outstanding at March 31, 2022 and September 30, 2021, respectively | 10,827 | 10,707 | ||||||
Additional paid-in capital | 137,280,385 | 133,414,830 | ||||||
Accumulated deficit | (41,097,186 | ) | (33,874,094 | ) | ||||
Treasury stock | (13,450,000 | ) | (13,450,000 | ) | ||||
Total Item 9 Labs Corp. Stockholders' Equity | 82,744,026 | 86,101,443 | ||||||
Non-controlling interest | 21,059 | — | ||||||
Total Stockholders' Equity | 82,765,085 | 86,101,443 | ||||||
Total Liabilities and Stockholders' Equity | $ | 120,873,949 | $ | 116,809,133 |
ITEM 9 LABS CORP. AND SUBSIDIARIES | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
For the three months ended | For the three months ended | For the six months ended | For the six months ended | |||||||||||||
March 31, 2022 | March 31, 2021 | March 31, 2022 | March 31, 2021 | |||||||||||||
Revenues, net | $ | 6,638,186 | $ | 6,110,631 | $ | 12,824,197 | $ | 9,150,195 | ||||||||
Cost of revenues | 3,960,948 | 3,121,045 | 7,748,193 | 4,729,176 | ||||||||||||
Gross profit | 2,677,238 | 2,989,586 | 5,076,004 | 4,421,019 | ||||||||||||
Operating expenses | ||||||||||||||||
Professional fees and outside services | 556,721 | 613,758 | 1,214,166 | 907,713 | ||||||||||||
Payroll and employee related expenses | 3,055,244 | 1,318,842 | 5,205,950 | 2,422,146 | ||||||||||||
Sales and marketing | 613,902 | 84,165 | 1,053,338 | 127,346 | ||||||||||||
Depreciation and amortization | 442,477 | 105,897 | 881,612 | 248,442 | ||||||||||||
Other operating expenses | 786,167 | 349,517 | 1,632,835 | 564,054 | ||||||||||||
Provision for (recovery of) bad debt | (5,000 | ) | — | (5,000 | ) | — | ||||||||||
Total expenses | 5,449,511 | 2,472,179 | 9,982,901 | 4,269,701 | ||||||||||||
Income (loss) from operations | (2,772,273 | ) | 517,407 | (4,906,897 | ) | 151,318 | ||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (1,097,373 | ) | (468,387 | ) | (2,307,763 | ) | (1,176,754 | ) | ||||||||
Other income | 318 | — | 318 | — | ||||||||||||
Total other income (expense), net | (1,097,055 | ) | (468,387 | ) | (2,307,445 | ) | (1,176,754 | ) | ||||||||
Net income (loss), before income tax provision (benefit) | (3,869,328 | ) | 49,020 | (7,214,342 | ) | (1,025,436 | ) | |||||||||
Income tax provision (benefit) | 3,324 | — | 3,324 | — | ||||||||||||
Net income (loss) | (3,872,652 | ) | 49,020 | (7,217,666 | ) | (1,025,436 | ) | |||||||||
Less: Net income attributable to non-controlling interest | 5,426 | — | 5,426 | — | ||||||||||||
Net income (loss) attributable to Item 9 Labs Corp. | $ | (3,878,078 | ) | $ | 49,020 | $ | (7,223,092 | ) | $ | (1,025,436 | ) | |||||
Basic net income (loss) per common share | $ | (0.04 | ) | $ | 0.00 | $ | (0.08 | ) | $ | (0.02 | ) | |||||
Basic weighted average common shares outstanding | 95,271,726 | 65,880,141 | 95,088,960 | 62,143,521 | ||||||||||||
Diluted net income (loss) per common share | $ | (0.04 | ) | $ | 0.00 | $ | (0.08 | ) | $ | (0.02 | ) | |||||
Diluted weighted average common shares outstanding | 95,271,726 | 84,938,235 | 95,088,960 | 62,143,521 |
Three months ended March 31, | Six months ended March 31, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) | $ | (3,872,652 | ) | $ | 49,020 | $ | (7,217,666 | ) | $ | (1,025,436 | ) | |||||
Depreciation and amortization | 442,477 | 105,897 | 881,612 | 248,442 | ||||||||||||
Interest expense | 1,097,373 | 468,387 | 2,307,763 | 1,176,754 | ||||||||||||
Income tax expense | 3,324 | — | 3,324 | — | ||||||||||||
Stock-based expense | 1,363,485 | 304,672 | 1,870,779 | 772,580 | ||||||||||||
Acquisition related costs | 23,676 | 87,060 | 23,676 | 266,738 | ||||||||||||
Adjusted EBITDA | $ | (942,317 | ) | $ | 1,015,036 | $ | (2,130,512 | ) | $ | 1,439,078 |
About Item 9 Labs Corp.
Item 9 Labs Corp. (OTCQX: INLB) is a vertically integrated cannabis operator and
dispensary franchisor delivering premium products from its large-scale cultivation and production facilities in the United States.
The award-winning Item 9 Labs brand specializes in best-in-class products and user experience across several cannabis categories. The
company also offers a unique dispensary franchise model through the national Unity Rd. retail brand. Easing barriers to entry, the franchise
provides an opportunity for both new and existing dispensary owners to leverage the knowledge, resources, and ongoing support needed to
thrive in their state compliantly and successfully. Item 9 Labs brings the best industry practices to markets nationwide through distinctive
retail experience, cultivation capabilities, and product innovation. The veteran management team combines a diverse skill set with deep
experience in the cannabis sector, franchising, and the capital markets to lead a new generation of public cannabis companies that provide
transparency, consistency, and well-being. Headquartered in Arizona, the company is currently expanding its operations space up to
640,000+ square feet on its 50-acre site, one of the largest properties in Arizona zoned to grow and cultivate flower. For additional
information, visit item9labscorp.com.
Use of Non-GAAP Financial Measures
To supplement the Company's financial statements presented on a GAAP basis, Item 9 Labs Corp. provides Adjusted EBITDA
as a supplemental measure of its performance. To provide investors with additional insight and allow for a more comprehensive understanding
of the information used by management in its financial and decision-making surrounding pro forma operations, Item 9 Labs Corp. supplements
its consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with
Adjusted EBITDA as a non-GAAP financial measure of earnings. Adjusted EBITDA represents EBITDA plus stock-based compensation and acquisition
related expenses. Item 9 Labs Corp. management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency
of the business model. The Company uses these non-GAAP financial measures to assess the strength of the underlying operations of the business.
These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze its operations
between periods and over time. Item 9 Labs Corp. finds this especially useful when reviewing pro forma results of operations, which include
large non-cash amortizations of intangible assets from acquisitions and stock-based compensation. Investors should consider its non-GAAP
financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and uncertainties, including, but not limited to, risks and effects of legal
and administrative proceedings and governmental regulation, especially in a foreign country, future financial and operational results,
competition, general economic conditions, proposed transactions that are not legally binding obligations of the company and the ability
to manage and continue growth. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated. Important factors that could cause actual results to differ materially
from the forward-looking statements we make in this news release include the introduction of new technology, market conditions and those
set forth in reports or documents we file from time to time with the SEC. We undertake no obligation to revise or update such statements
to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
###
Media Contact:
Item 9 Labs Corp.
Jayne Levy, VP of Communications
Email: Jayne@item9labs.com
Investor Contact:
Item 9 Labs Corp.
800-403-1140
Email: investors@item9labscorp.com
Cover |
May 16, 2022 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | May 16, 2022 |
Entity File Number | 000-54730 |
Entity Registrant Name | Item 9 Labs Corp. |
Entity Central Index Key | 0001500123 |
Entity Tax Identification Number | 96-0665018 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 2727 N 3rd Street |
Entity Address, Address Line Two | Suite 201 |
Entity Address, City or Town | Phoenix |
Entity Address, State or Province | AZ |
Entity Address, Postal Zip Code | 85004 |
City Area Code | 833 |
Local Phone Number | 867-6337 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
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