Thursday, August 18, 2022
Item 9 Labs (INLB)
Challenging Market Conditions, Reducing to Market Perform
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 by up to 640,000-plus square feet on its 50-acre site, one of the largest properties in Arizona zoned to grow and cultivate flower. For additional information, visit https://investors.item9labscorp.com/.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q Results. Item 9 Labs reported disappointing 3Q results. Revenue was $4.9 million, down 26.3% y-o-y and down 26% sequentially. We had projected $7 million. Gross profit margin declined to 32.2% from 43.2% a year ago. Net loss for the quarter was $5.5 million, or $0.06 per share, versus a net loss of $833,905, or $0.01 per share, in 3Q21. Adjusted EBITDA decreased by $1.9 million to a loss of $1.8 million from a positive $217,995 last year.
Inching Forward. Item 9 is making progress on both the Arizona and Nevada expansions, but at a much slower pace than we had expected. The same with the acquisition of Sessions in Canada and the Herbal Cure location in Colorado. We believe these investments will occur, but timing is uncertain….
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.