INLB Item 9 Labs Corporation (CE)

On March 11, 2022, Item 9 Labs Corp., a Delaware corporation ("Company"), and Unity Rd Logan CO LLC ("Buyer"), entered into an Asset Purchase Agreement (the "Agreement") with The Herbal Cure LLC, a Colorado limited liability company ("Seller"), pursuant to which Buyer is purchasing certain assets from the Seller. Effective upon the completion of the Sale, the licenses, contracts and certain personal property to operate a licensed medicinal and recreational marijuana dispensary will be delivered to the Buyer. Each of the parties referred to above may be referred to herein as a "Party" and collectively as the "Parties".

Consideration

(a)            Purchase Price. The total purchase price for the Purchased Assets is Five Million Seven Hundred Fifty Thousand Dollars ($5,750,000.00 USD) (the "Purchase Price"), payable as follows:

(i)       Upon mutual execution and delivery of the Agreement, Buyer shall convey to the Seller Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Down Payment");

(ii)      At the Closing, Buyer shall pay to Seller Three Million Seven Hundred Thousand Dollars ($3,700,000.00) in immediately available funds;

(iii)       Seven Hundred Thousand Dollars ($700,000.00) shall be financed by the Seller and paid pursuant to the terms and conditions of the Secured Promissory Note (the "Note" or "Promissory Note"), which interest shall accrue at a rate of five percent (5%) per annum, for a term of eighteen (18) months commencing on the Closing Date, and payable in even monthly installments until paid in full; and

(iv)        Buyer shall pay the remainder of the purchase price in shares of the Company’s stock on the Closing Date, in such amount of Shares as is the quotient of One Million One Hundred Thousand Dollars ($1,100,000) divided by the product of the ten (10)-day volume weighted average price of the shares as of the Closing Date, and eighty-five percent (85%).

Conditions to the Acquisition

The closing of the acquisition is contingent upon approval of state and local licensing authorities.

The Company has made customary representations and warranties in the Agreement. The Agreement also contains customary covenants and agreements, including covenants and agreements relating to the conduct of the Company's business between the date of the signing of the Agreement and the closing of the transactions contemplated under the Agreement. The representations and warranties made by the Company are qualified by disclosures made in its disclosure schedules and Securities and Exchange Commission ("SEC") filings. 

A copy of the Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Agreement is qualified in its entirety by reference thereto.