Item 9 Revenue Grows 104% YoY To $6.2M In Q1, Continues To Ramp Up Operations In Arizona & Nevada

Vertically integrated cannabis dispensary franchisor and operator Item 9 Labs Corp. INLB reported operating and financial results for the first quarter for its fiscal year 2022 which ended December 31, 2021.

Q1 FY2022 Key Financial Highlights

• Revenue increased 104% year-over-year to $6.2 million.
• Gross profit increased 68% year-over-year to $2.4 million.
• Gross margin remained strong at approximately 39%.
• Operating loss of $2.1 million compared with operating loss of $0.4 million in the same period of last year.
• Operating expenses were $4.5 million, an increase of $2.7 million, or 152%, compared with $1.8 million for the three months ended December 31, 2020.
• Net loss of $3.3 million compared with net loss of $1.1 million in the corresponding quarter of fiscal 2021.
• Net loss included $1.2 million ($76,000 paid in cash) of interest expense compared with $0.70 million ($319,000 paid in cash), in the prior year’s period.
• Adjusted EBITDA loss of $1.2 million compared with adjusted EBITDA profit of $0.4 million in the first quarter of last year.
• Escrow deposits of $12.8 million in cash set aside for expansion.

Q1 2022 & Recent Key Business Highlights

• Broke ground on expansion of cultivation and lab site in Arizona - as part of the master site expansion, the company recently acquired the neighboring 45 acres and anticipates increasing its operations space to 640,000-plus square feet, a 3,100% increase from its current operations.
• Earned five podium finishes at 710 Degree Cup.
•  Executed asset purchase agreement for a Colorado Dispensary Kickstarts National Growth Plan - Item 9 plans to aggressively expand its dispensary franchise, Unity Rd., by acquiring and converting cannabis retail stores, training the local team and selling the business to new and existing Unity Rd. franchise partners.
• Signed first partner through Local Alliance Program - Unity Rd. launched its Local Alliance Program in 2021 to support existing dispensary owners and operators and signed its first partner in January 2022 with an Oklahoma City dispensary, Ringside Medical. The shop is located at 14201 N. May Ave. #205 and will be rebranded to Unity Rd.   
• Signed first Unity Rd. agreement in South Dakota that will bring the brand's first shop to the Mount Rushmore State. The retailer has partnered with local serial entrepreneur BJ Olson and his business partner to develop at least one Unity Rd. shop and is currently guiding them through the state's dispensary license process.
• The company's 20,000 square-foot facility in Pahrump, Nevada is currently approximately 95% finished.

Management Commentary

"Demand remains strong for Item 9 Labs in Arizona, and we anticipate it will only accelerate more," Andrew Bowden, the company’s CEO, said. "Our product offerings will continue expanding in the year ahead to further meet the needs and interests of today's modern-day cannabis consumer,” Mike Weinberger, the company’s  chief franchise officer, said.

"Continued legalization and awareness of our dispensary franchise opportunity is keeping our development pipeline robust. Unity Rd. now has a franchised shop open in Boulder, Colorado as well as agreements with close to 20 partners to open more than three dozen shops across 9 states. A majority in development are in various stages of state licensing; we also have a wide range of appealing markets in our acquisitions pipeline and expect to make further announcements over the next few months."

Photo: Courtesy of Chris Briggs on Unsplash