Item 9 Labs Corp. (OTCQX:INLB)

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Item 9 Labs Reports Record Revenue for Fiscal Year 2020
  • Annual revenue growth of 65% fueled by increases in production and market demand
  • Stage is set for 2021 developments across Arizona cannabis product expansion and new distribution through merger with national dispensary franchise

  

Phoenix, AZ  – January 13, 2021 – Item 9 Labs Corp. (OTCQX: INLB) (“Item 9 Labs” or the “Company”), a vertically integrated cannabis operator that produces premium products, today reported the Company’s operating and financial results for the fiscal year (FY) ended September 30, 2020.

 

Key Financial Highlights for FY 2020

 

  • Revenue increased 65% to $8.1 million
  • Gross profit increased 39% to $3.3 million
  • Operating loss decreased 46% to $5.4 million
  • Operating expenses as a percentage of gross profit declined from 526% to 265%
  • Adjusted EBITDA loss decreased 9% to $2.1 million

 

Key Business Highlights for FY 2020

 

  • Ramped up cultivation and production operations
  • Continued to improve the operating capacity of cultivation and processing facilities
  • Signed definitive merger agreement with ONE Cannabis Group
  • Named Mike (Mic) Keskey, retired former President of U.S. Retail for Best Buy Co., Inc. (NYSE: BBY), and Doug Bowden, a 30-year consumer electronics veteran with extensive experience in real estate investment and development, to Board of Directors
  • Appointed Andrew Bowden as Chief Executive Officer
  • Earned one Errl Cup and four 710 Degree Cup awards, Arizona’s largest cannabis competitions
  • Qualified to trade on OTCQX Market (upgraded from OTC Pink to OTCQB, then from OTCQB to OTCQX, both in August)

 

Management Commentary

 

“This past year has been an exciting and successful time for our team,” commented Item 9 Labs Chief Executive Officer Andrew Bowden. “We’ve seen strong, steady performance with sequential quarter-over-quarter growth rates of nearly 20% since my appointment as CEO at the start of our 2020 fiscal year. Our team continues to exceed expectations and has efficiently ramped production to meet heightened demand for our products, setting the stage for key strategic and operational developments in 2021. We anticipate increased business activities as we continue to pursue opportunities that position the company for growth and profitability.”

 

Bowden continued, “We are still in the early stages of our growth and are already seeing an acceleration with Arizona’s adult-use marijuana market opening in the first half of 2021, which we estimate will increase our consumer base by 500%. We’re prepared to meet this demand through our streamlined production process and by expanding our operational cultivation footprint by more than 300% in the year ahead.”

 

“In addition to continued growth in Arizona, we look forward to closing our pending merger with ONE Cannabis Group and their cannabis franchise, Unity Rd. We expect the combination of our premium, award-winning cannabis products with the nation’s leading dispensary franchise will elevate our brand footprint through national distribution across Unity Rd.’s locally owned and operated dispensaries. This will ease new market product entry and create recurring revenue streams through franchise royalty fees,” Bowden concluded.

 

Subsequent to the End of FY 2020

 

Item 9 Labs’ 45-acre marijuana cultivation site expansion was approved by Coolidge, Arizona officials in November 2020. Local city council supports the Company’s master site expansion plan that will create 650,000+ square feet of marijuana operations. Known for its award-winning, premium cannabis products, Item 9 Labs is expected to expand its marijuana operations space by more than 3,000% at the conclusion of the expansion. Currently, the Company has two 10,000 square-foot facilities on its 50-acre site. The site will see expansion on 45 of its acres to include six additional buildings, 12 greenhouses and six greenhouse support buildings (head houses). Seven of the buildings will be for indoor cultivation and one will be for expansion of the Company’s lab and support space for finished product. In addition to the above uses, the Company is currently awaiting state approval for five acres of on-site outdoor cultivation. Upon breaking ground, ongoing construction will take place over three years in six phases, with the initial phase beginning in early 2021. Phase one includes the construction of two 26,000 square-foot greenhouses, one head house and two 10,000 square-foot buildings – one for indoor cultivation and one for the lab and packaging. This phase adds 72,000 square feet of operations space. Construction on phase two is anticipated to begin in summer 2021.

 

The Company finalized its merger agreement with ONE Cannabis Group (OCG Inc.) in December 2020 and expects to close the merger in early 2021. Based in Colorado, ONE Cannabis Group is the parent company to the dispensary franchise Unity Rd. The cannabis franchise pioneer helps eager operators enter the complex cannabis industry with ease by offering its franchise partners the knowledge, resources, and ongoing support needed to compliantly and profitably operate a dispensary. Currently, Unity Rd. has agreements signed for the development of more than two dozen franchisee owned and operated shops across multiple states and expects the first store to open within the next six months.

 

Item 9 Labs raised $5.667 million in equity at $0.85 per common share in preparation for the cultivation site expansion, recently approved adult-use legislation in Arizona and the ONE Cannabis Group merger.

 

Financial Results for FY 2020, Ended September 30, 2020:

 

  • Revenue: For the 12 months ended September 30, 2020, revenue was $8.1 million, an increase of $3.2 million or 65%, compared to $4.9 million for the 12 months ended September 30, 2019. This increase was primarily due to operational improvements that increased production outputs as well as an overall increase in monthly sales as product demand grew.

 

  • Gross Profit: For the 12 months ended September 30, 2020, gross profit was $3.3 million, an increase of $0.9 million or 39%, compared to $2.4 million for the 12 months ended September 30, 2019. The resulting gross margin was 41% for the 12 months ended September 30, 2020, compared to 48% for the 12 months ended September 30, 2019.

 

The increase in gross profit was due to the ramp up in operations and continued improvement in the operating capacity of the Company’s cultivation and processing facilities. With the Company’s continued increase in capacity and focus on efficiencies and cost reduction, management expects gross profit to continue to grow going forward.

 

Item 9 Labs increased operational efficiency throughout fiscal year 2020, and management believes costs of revenues will increase at a lower rate than revenues in future periods, which will lead to higher profit margins than these historical figures illustrate. Through bulk purchasing, increasing efficiencies in production, and investments in equipment, management believes that the Company will continue to improve gross profit margins.

 

  • Total Operating Expenses: For the 12 months ended September 30, 2020, total operating expenses were $8.7 million, a decrease of $3.8 million, or 30%, compared to $12.5 million for the 12 months ended September 30, 2019. Operating expenses as a percentage of gross profit decreased from 526% to 265% for the years compared. Management believes this ratio will decrease going forward as the expectation is that revenues will continue to grow at a higher rate than operating expenses.

 

Of note, $0.9 million of the Company’s operating expenses for the year ended September 30, 2020 were depreciation of fixed assets and amortization of other intangible assets, and $0.4 million is a provision for bad debt; management does not believe the latter to be indicative of future results. Additionally, $1.8 million of the Company’s operating expenses in fiscal year 2020 were paid through the issuance of shares of common stock of the Company and employee stock options. $5.8 million of the Company’s operating expenses for the year ended September 30, 2019 were a loss on impairment of goodwill and other intangible assets, and $0.4 million is a provision for bad debt, both items that management does not believe to be indicative of future results. Additionally, $1.1 million of the Company’s operating expenses in 2019 were paid through the issuance of shares of common stock of the Company.

 

  • Operating Loss: For the 12 months ended September 30, 2020, operating loss was $5.4 million, a decrease of $4.7 million, or 46%, compared to operating loss of $10.1 million for the 12 months ended September 30, 2019.

 

  • Adjusted EBITDA Loss: After adding back non-cash operating expenses, depreciation and amortization, interest and stock-based compensation, Adjusted EBITDA loss for the 12 months ended September 30, 2020 was $2.1 million, a decrease of $0.2 million, or 9%, compared to $2.3 million for the 12 months ended September 30, 2019.

 

  • Net Loss: For the 12 months ended September 30, 2020, net loss was $12.3 million, a decrease of $2.4 million, or 24%, compared to $9.9 million for the 12 months ended September 30, 2019. The resulting loss per share for the 12 months ended September 30, 2020 was ($0.20) per share, compared to ($0.16) per share for the twelve months ended September 30, 2019. $2.2 million of the net loss for the 12 months ended September 30, 2020 relates to the warrants issued to debtholders during the year, and $2.6 million relates to the related beneficial conversion features. The five founding members of Item 9 Labs returned 10 million shares to treasury to make the transaction non-dilutive to the remaining shareholders.

 

Use of Non-GAAP Financial Measures

 

To supplement the Company’s financial statements presented on a GAAP basis, Item 9 Labs 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 supplements its consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, Adjusted EBITDA as a non-GAAP financial measures of earnings. Adjusted EBITDA represents EBITDA plus stock-based compensation and change in fair value of derivative liabilities. Item 9 Labs management uses Adjusted EBITDA as financial measures 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 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.

 

About Item 9 Labs Corp. 

 

Item 9 Labs Corp. (OTCQX: INLB) is a vertically integrated cannabis operator headquartered in Arizona. The Company creates best-in-class products and canna-business solutions designed to help people become the best versions of themselves. With an award-winning CPG brand and nationally recognized application team, Item 9 Labs improves the cannabis experience while providing transparency, consistency, and well-being for those relying on them. For additional information, please visit: item9labscorp.com.

 

Forward-Looking Statement

 

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

Jayne Levy, Director of Communications

Email: Jayne@unityrd.com

 

Investor Contact:

800-403-1140
Email: IR@item9labs.com

 

 

SOURCE:  Item 9 Labs Corp.

Item 9 Labs Finalizes Merger Agreement with U.S. Cannabis Franchisor

Expects to Close Merger of ONE Cannabis Group, Parent Company to Dispensary Franchise Unity Rd., in January 2021

 

Phoenix, AZ – December 16, 2020 – Item 9 Labs Corp. (OTCQX: INLB) (“Item 9 Labs,” or the “Company”), a vertically integrated cannabis operator that produces premium products, announced today that it has finalized its merger agreement with ONE Cannabis Group (OCG, Inc.) and expects to close the merger in January 2021.

 

ONE Cannabis Group, based in Colorado, is the parent company to the cannabis dispensary franchise Unity Rd. Built up from the legacy of a 10-plus year, award-winning Colorado dispensary & cultivator and infused with decades of franchise experience, the company helps eager operators enter the complex industry with ease. The cannabis franchise pioneer offers its partners the knowledge, resources, and ongoing support needed to compliantly and profitably operate a dispensary. Currently, Unity Rd. has franchise agreements signed for the development of more than two dozen shops across multiple states and expects the first store to open in quarter one 2021.

 

Recently, it was named one of the top cannabis retail leaders in the nation by MJBizDaily magazine and one of the “Best Cannabis Companies to Work For” in both the dispensary and cultivation categories in Cannabis Business Times’ elite 2020 list. The company is also the first cannabis business to earn a Franchise Times Dealmakers award – a recognition presented to the boldest players driving mergers and acquisitions in franchising. For more information on ONE Cannabis Group, visit ocginc.com and head to unityrd.com for details on the Unity Rd. franchise opportunity.

 

“Our teams have been working on parallel paths to ensure a smooth integration and are eager to officially operate as one unit. This was a significant milestone for all and we look forward to closing [the merger] in January 2021,” Item 9 Labs’ Chief Executive Officer, Andrew Bowden, commented. “The merger with ONE Cannabis Group greatly enhances our business capabilities with its retail distribution and unique franchise operation. Their business model and national network of Unity Rd. franchise partners create highly predictable, recurring revenue streams.”

 

About Item 9 Labs Corp.

 

Item 9 Labs Corp. (OTCQX: INLB) is a vertically integrated cannabis operator headquartered in Arizona. The Company creates best-in-class products and canna-business solutions designed to help people become the best versions of themselves. With an award-winning CPG brand and nationally recognized application team, Item 9 Labs improves the cannabis experience while providing transparency, consistency, and well-being for those relying on them. For additional information, please visit: item9labscorp.com.

 

Forward-Looking Statement

 

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

Jayne Levy, Director of Communications

Email: Jayne@unityrd.com

 

Investor Contact:

ClearThink
Email: nyc@clearthink.capital

 

Source:  – Item 9 Labs Corp.

Item 9 Labs to Present at The 13th Annual LD Micro Main Event Conference

Phoenix, AZ – December 8, 2020 – Item 9 Labs Corp. (OTCQX:INLB) (“Item 9 Labs,” or the “Company”), a vertically integrated cannabis operator that produces premium products, today announced that it will be presenting at the 13th annual LD Micro Main Event investor conference on Monday, December 14 at 11am EST. Chief Executive Officer Andrew Bowden will be presenting to a live, virtual audience.

 

Register here: ve.mysequire.com/

 

The Main Event will feature a new and unique format, with companies presenting for 10 minutes, followed by 10 minutes of Q&A by a panel of investors and analysts.

 

“The time has finally come to do something different in the virtual conference world. Let’s see if we can pull off something that can be enjoyed by both executives and investors alike,” stated Chris Lahiji, Founder of LD, now a wholly owned subsidiary of SRAX, Inc.

 

The Main Event will take place on December 14th and 15th, exclusively on the Sequire Virtual Events platform.

 

View Item 9 Labs’ profile here: http://www.ldmicro.com/profile/INLB

 

About LD Micro/SEQUIRE

 

LD Micro began in 2006 with the sole purpose of being an independent resource to the microcap world. What started as a newsletter highlighting unique companies, has transformed into the pre-eminent event platform in the space. For more information, please visit ldmicro.com.

 

The upcoming Main Event will be highlighting a new format that will benefit both executives and the investors tuning in from all over the globe.

 

In September 2020, LD Micro. Inc. was acquired by SRAX, Inc., a financial technology company that unlocks data and insights for publicly traded companies. Through its premier investor intelligence and communications platform, Sequire, companies can track their investors’ behaviors and trends and use those insights to engage current and potential investors across marketing channels. For more information on SRAX, visit srax.com and mysequire.com.

 

About Item 9 Labs Corp.

 

Item 9 Labs Corp. (OTCQX: INLB) is a vertically integrated multi-state cannabis operator headquartered in Arizona. The Company creates best-in-class products and canna-business solutions designed to help people become the best versions of themselves. With an award-winning CPG brand and nationally recognized application team, Item 9 Labs improves the cannabis experience while providing transparency, consistency, and well-being for those relying on them. For additional information, please visit: item9labscorp.com.

 

Forward-Looking Statement

 

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
Jayne Levy, Director of Communications
Email: Jayne@unityrd.com

 

Investor Contact:

ClearThink
Email: nyc@clearthink.capital

 

SOURCE: Item 9 Labs Corp.

About Item 9 Labs


Item 9 Labs Corp. (OTCQX: INLB) (Item 9 Labs or the Company), creates comfortable cannabis health solutions for the modern consumer. The Company is bringing best of industry practices to markets from coast to coast through cultivation and production, distinctive retail environments, licensing services, and diverse product suites catering to different medical cannabis demographics.

 

Item 9 Labs Corp. is headquartered in Phoenix, Arizona, with medical cannabis operations in multiple U.S. markets. Item 9 Labs Corp.’s asset portfolio includes Dispensary Permits, Dispensary Templates, Strive Life and Item 9 Labs flagship product brand. These assets provide services specific to different stakeholder groups. Dispensary Permits is the Company’s consulting firm specializing in strategic license application and compliance. Dispensary Templates, a subdivision of the firm, is a technology platform with an extensive digital library of licensing and business planning resources. Strive Life is a turnkey dispensary model for the retail sector, elevating the patient experience with consistent and superior service, high-end design, and precision-tested products. It is currently being implemented in Arizona and North Dakota. The Item 9 Labs brand focus has, and always will be to cultivate the highest quality cannabis products while providing transparency, consistency, and well-being for those who rely on us. Those are not just words we put on a wall for our team, but our way of life, and our commitment to each and every patient and community.

 

In addition, Item 9 Labs Corp. is advancing the industry with its dynamic product suites. The Company has created complementary brands Item 9 Labs and Strive Wellness to channel consumer diversity. Propriety delivery platforms include the Apollo Vape and Pod system, as well as a pioneering intra-nasal device. The Company has received multiple accolades for its medical-grade flower and concentrates. Item 9 Labs Corp. will be managing cultivation, processing, distribution, and dispensary operations in up to ten U.S. markets by the end of 2019. Current facilities include cultivation and processing operation in Coolidge Arizona, distribution and processing operations Strive Wellness of Ohio and Strive Wellness of Nevada, as well as dispensary Strive Life North Dakota.

 

Mission & Vision

 

Item 9 Labs Corp is ushering in a new era of wellness by creating comfortable health solutions for the modern consumer. Through the development of innovative products and proprietary delivery platforms, Item 9 Labs seamlessly merges medical cannabis into a lifestyle.

 

Item 9 Labs will continue developing the luxury cannabis experience making this available to all patients and adult consumers nationwide. Item 9 Labs will facilitate the national expansion by combining our award-winning manufacturing brand and product offering with the luxury retail and distribution brand of Strive Life. This powerful combination provides national scalability and brings the highest quality marijuana, product knowledge, and experience of top professionals to consumers and patients.

 

Item 9 Labs, the company’s production brand, has a proven track record in manufacturing high-grade medical cannabis and is currently developing an innovative, proprietary intra-nasal delivery system. This progressive approach offers significant health benefits, setting a new benchmark in medicinal cannabis products. Always with the consumer in mind, Item 9 focuses on organic, cost-effective proprietary delivery solutions for whole body health.

 

Strive Life is a turnkey dispensary model for the retail sector, elevating the patient experience with consistent and superior service, high-end design, and precision-tested products. Strive Life, the company’s “franchise style” dispensary model, aims to elevate any marijuana market by offering the documents and systems necessary for launching a successful dispensary. The model includes a Project Plan, Welcome Kit, Brand Guidelines, Interior Concept, and Policy and Procedures for the facility. The Strive vision is to implement best industry practices from across the United States to offer optimal medical services and support through the dispensing and sale of medical marijuana.

Dispensary Permits, the company’s strategic licensing consulting brand, will ensure compliance and continued expansion throughout the United States. Dispensary Permits is one of the most established marijuana business consultancies in the U.S. They offer expert advice in obtaining cultivation, dispensing, processing, and transporting permits in the Cannabis industry. Dispensary Permits has a proven track record in successfully obtaining marijuana business permits for their clientele in over 14 different states.

Source: https://www.item9labscorp.com/

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