Item 9 Labs (INLB) 10-Q 16 Aug 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2019	Aug. 14, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Current Fiscal Year End Date	--09-30
Entity File Number	000-54730
Entity Registrant Name	Item 9 Labs Corp.
Entity Central Index Key	0001500123
Entity Incorporation, State or Country Code	DE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		63,514,979
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

CONDENSED INTERIM CONSOLIDATED

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2019	Sep. 30, 2018
Current Assets:
Cash	$ 786,813	$ 1,674,266
Accounts receivable	395,941	97,382
Deferred costs	1,607,632	618,718
Notes and interest receivable	258,712	225,074
Receivable for sale of Airware assets	524,000	639,000
Prepaid expenses and other current assets	67,415	6,107
Total current assets	3,640,513	3,260,547
Property and equipment, net	5,991,816	1,234,042
Investment in Health Defense, LLC	100,000	100,000
Deposit on land purchase from related party	600,000	200,000
Receivable for sale of Airware assets, net of unamortized discount of $11,855 and $50,912, respectively	288,145	249,088
Intangible assets, net	3,113,167
Goodwill	5,650,000
Total Assets	19,383,641	5,043,677
Current Liabilities:
Accounts payable	823,754	725,510
Accrued payroll	35,000	36,733
Accrued compensated absences	34,424	17,426
Accrued interest	32,844	11,355
Accrued expenses	1,274,329	81,363
Accrued income tax	451,572	88,826
Convertible notes payable	20,000	20,000
Total current liabilities	2,671,923	981,213
Long term debt	2,700,000	1,500,000
Total liabilities	5,371,923	2,481,213
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $.0001 per share, 2,000,000,000 shares authorized; 63,341,644 and 54,766,642 shares issued and outstanding at June 30, 2019 and September 30, 2018, respectively	6,341	5,477
Additional paid-in capital	17,006,369	3,427,230
Accumulated deficit	(2,947,606)	(870,243)
Total Item 9 Labs Corp stockholders' equity	14,065,104	2,562,464
Noncontrolling Interest	(53,386)
Total Liabilities and Stockholders' Equity	$ 19,383,641	$ 5,043,677

CONDENSED INTERIM CONSOLIDATE_2

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Sep. 30, 2018
Statement of Financial Position [Abstract]
Common stock, par value	$ .0001	$ .0001
Common stock, authorized	2,000,000,000	2,000,000,000
Common stock, issued	63,341,644	54,766,642
Common stock, outstanding	63,341,644	54,766,642

CONDENSED INTERIM CONSOLIDATE_3

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenues, net	$ 1,542,067	$ 439,913	$ 3,627,951	$ 945,595
Cost of services	697,672	376,713	1,702,828	686,476
Gross profit	844,395	63,200	1,925,123	259,119
Operating expenses
Professional fees and outside services	366,397	186,104	920,194	199,862
Payroll and employee related expenses	590,965		1,631,343
Sales and marketing	268,940	39,671	407,288	52,149
Depreciation and amortization	193,455	12,355	275,955	36,825
Other operating expenses	238,496	209,748	616,403	298,442
Total expenses	1,658,253	447,878	3,851,183	587,278
Loss from operations	(813,858)	(384,678)	(1,926,060)	(328,159)
Other income (expense)
Interest income	26,553	5,350	74,386	5,350
Interest expense	(21,314)	(619)	(22,925)	(1,119)
Other income	107,896		107,896
Total other income (expense), net	113,135	4,731	159,357	4,231
Loss from continuing operations, before income tax expense	(700,723)	(379,947)	(1,766,703)	(323,928)
Income tax expense	156,647		364,046
Net loss from continuing operations	(857,370)	(379,947)	(2,130,749)	(323,928)
Income from discontinued operations		34,752		35,231
Net loss	(857,370)	(345,195)	(2,130,749)	(288,697)
Less: Net income (loss) attributable to noncontrolling interest	6,806		(53,386)
Net loss attributable to parent	$ (864,176)	$ (345,195)	$ (2,077,363)	$ (288,697)
Basic net income (loss) per common share	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.01)
Basic weighted average common shares outstanding	63,159,814	42,071,226	60,774,873	41,204,073

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated (Deficit)	Total	Noncontrolling Interest
Beginning balance, shares at Sep. 30, 2017	7,519,182
Beginning balance, amount at Sep. 30, 2017	$ 752	$ 1,149,400	$ (181,522)	$ 968,630
Net income/loss			84,112	84,112
Ending balance, shares at Dec. 31, 2017	7,519,182
Ending balance, amount at Dec. 31, 2017	$ 752	1,149,400	(97,410)	1,052,742
Beginning balance, shares at Sep. 30, 2017	7,519,182
Beginning balance, amount at Sep. 30, 2017	$ 752	1,149,400	(181,522)	968,630
Net income/loss				(288,697)
Ending balance, shares at Jun. 30, 2018	54,733,286
Ending balance, amount at Jun. 30, 2018	$ 5,474	3,376,032	(470,219)	2,938,901
Beginning balance, shares at Dec. 31, 2017	7,519,182
Beginning balance, amount at Dec. 31, 2017	$ 752	1,149,400	(97,410)	1,052,742
Issuance of stock by predecessor, shares	5,346,733
Issuance of stock by predecessor, amount	$ 535	(535)
Increase in additional paid-in capital from merger		618,311		618,311
Issuance of stock for cash, shares	202,400
Issuance of stock for cash, amount	$ 20	202,380		202,400
Merger stock issued, shares	40,355,771
Merger stock issued, amount	$ 4,036	(4,036)
Net income/loss			(27,614)
Ending balance, shares at Mar. 31, 2018	53,424,086
Ending balance, amount at Mar. 31, 2018	$ 5,343	1,965,520	(125,024)	1,873,453
Issuance of stock for cash, shares	1,309,200
Issuance of stock for cash, amount	$ 131	1,309,069		1,309,200
Exchange of shares to be issued for services		99,933		99,933
Stock options to be issued issued for services		1,510		1,510
Net income/loss			(345,195)	(345,195)
Ending balance, shares at Jun. 30, 2018	54,733,286
Ending balance, amount at Jun. 30, 2018	$ 5,474	3,376,032	(470,219)	2,938,901
Beginning balance, shares at Sep. 30, 2018	54,766,642
Beginning balance, amount at Sep. 30, 2018	$ 5,477	3,427,230	(870,243)	2,562,464
Stock issued for acquisition, shares	3,000,000
Stock issued for acquisition, amount	$ 300	7,499,700		7,500,000
Issuance of stock for cash, shares	3,150,000
Issuance of stock for cash, amount	$ 315	3,149,685		3,150,000
Exchange of shares for services, shares	30,000
Exchange of shares for services, amount	$ 3	29,997		30,000
Net income/loss			(323,625)	(323,625)	(47,885)
Ending balance, shares at Dec. 31, 2018	60,946,642
Ending balance, amount at Dec. 31, 2018	$ 6,095	14,106,612	(1,193,868)	12,918,839	(47,885)
Beginning balance, shares at Sep. 30, 2018	54,766,642
Beginning balance, amount at Sep. 30, 2018	$ 5,477	3,427,230	(870,243)	2,562,464
Net income/loss				(2,077,363)
Ending balance, shares at Jun. 30, 2019	63,407,932
Ending balance, amount at Jun. 30, 2019	$ 6,341	17,006,369	(2,947,606)	14,065,104	(53,386)
Beginning balance, shares at Dec. 31, 2018	60,946,642
Beginning balance, amount at Dec. 31, 2018	$ 6,095	14,106,612	(1,193,868)	12,918,839	(47,885)
Issuance of stock for cash, shares	2,116,669
Issuance of stock for cash, amount	$ 212	2,249,791		2,250,003
Exchange of shares for services, shares	58,529
Exchange of shares for services, amount	$ 6	134,994		135,000
Stock compensation, shares	33,144
Stock compensation, amount	$ 3	124,997		125,000
Net income/loss			(889,562)	(889,562)	(12,307)
Ending balance, shares at Mar. 31, 2019	63,154,984
Ending balance, amount at Mar. 31, 2019	$ 6,316	16,616,394	(2,083,430)	14,539,280	(60,192)
Issuance of stock for cash, shares	173,333
Issuance of stock for cash, amount	$ 17	259,983		260,000
Exchange of shares for services, shares	70,000
Exchange of shares for services, amount	$ 7	104,993		105,000
Stock compensation, shares	9,615
Stock compensation, amount	$ 1	24,999		25,000
Net income/loss			(864,176)	(864,176)	6,806
Ending balance, shares at Jun. 30, 2019	63,407,932
Ending balance, amount at Jun. 30, 2019	$ 6,341	$ 17,006,369	$ (2,947,606)	$ 14,065,104	$ (53,386)

CONDENSED INTERIM CONSOLIDATE_4

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash Flows from Operating Activities:
Net loss	$ (2,130,749)	$ (288,697)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	275,955	36,825
Interest accrued on notes receivable	(33,638)
Common stock issued for services	270,000	100,000
Stock compensation expense	150,000	1,510
Gain on sale of Airware assets		(29,930)
Interest accretion on receivable for sale of Airware assets	(39,057)
Changes in operating assets and liabilities:
Accounts receivable	(298,562)	40,827
Deferred costs	(988,914)	(213,440)
Prepaid expenses and other current assets	(61,308)	(17,226)
Accounts payable	98,247	4,490
Accrued payroll	(1,733)
Accrued compensated absences	16,998
Accrued interest	21,489	1,000
Accrued expenses	1,192,966	20,104
Accrued income tax	362,746
Net Cash Used in Operating Activities	(1,165,082)	(344,537)
Cash Flows From Investing Activities:
Issuance of notes receivable		(210,000)
Deposit on land purchase from related party	(400,000)	(200,000)
Purchases of property and equipment	(4,797,374)	(73,616)
Cash paid for purchase of AZ DP Counsulting LLC assets	(1,500,000)
Cash received from sale of Airware assets		300,000
Cash received on receivable for sale of Airware assets	115,000
Cash acquired in merger		26,363
Net Cash Used in Investing Activities	(6,582,374)	(157,253)
Financing Activities:
Proceeds from the sale of common stock, net of issuance costs	5,660,003	1,511,600
Proceeds from the issuance of long term debt	1,200,000
Net Cash Provided by Financing Activities	6,860,003	1,511,600
Net (Decrease)/Increase in Cash	(887,453)	1,009,810
Cash - Beginning of Period	1,674,266	13,860
Cash - End of Period	786,813	1,023,670
Supplemental disclosure of cash flow information:
Interest paid in cash
Income taxes paid in cash
Supplemental disclosure of non-cash investing and financing activities:
Stock issued for asset acquisition of Arizona DP Consulting, LLC	7,500,000
Member equity issued for property, plant and equipment		958,510
Net assets acquired in reverse merger:
Issuance of common stock for reverse merger		683,231
Accounts receivable		(44,801)
Property and equipment		(6,150)
Goodwill		(1,323,780)
Accounts payable and accrued expenses		697,863
Convertible notes payable		20,000
Cash acquired in merger		26,363
Net assets acquired in acquisition of Arizona DP Consulting, LLC
Intangible assets	3,010,000
Goodwill	5,990,000
Total purchase consideration	$ 9,000,000

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	9 Months Ended
	Jun. 30, 2019
Accounting Policies [Abstract]
Description of Business and Summary of Significant Accounting Policies	Note 1 – Description of Business and Summary of Significant Accounting Policies Description of Business Item 9 Labs Corp. (“Item 9 Labs” or the “Company”), formerly Airware Labs Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010 as Crown Dynamics Corp. On October 26, 2012, the Articles of Incorporation were amended to reflect a name change to Airware Labs Corp, and on April 2, 2018, they were amended again to reflect the name change to Item 9 Labs Corp. On October 18, 2018 the Company effected a 1 for 20 reverse stock split of the Company’s common stock. The par value and number of authorized shares were not adjusted as a result of the reverse stock split. The total number of shares outstanding at the time of the split was adjusted from 1,095,332,835 to 54,766,642. All share information in these financial statements has been retroactively adjusted to reflect the effect of the reverse split. On March 20, 2018, the Company closed on an Agreement and Plan of Exchange (the “Agreement”) to acquire all of the membership interests of BSSD Group, LLC (“BSSD”), an Arizona limited liability company formed on May 2, 2017, in exchange for newly issued restricted shares of the Company’s common stock (the “Shares”), which represent approximately 75% of the issued and outstanding shares of the Company’s common stock on a fully-diluted basis. The 40,355,771 Shares were distributed pro-rata to the BSSD members. As part of the Agreement, the Company agreed to increase its authorized shares of common stock to two billion. For accounting purposes the transaction is being recorded as a reverse recapitalization, with BSSD as the accounting acquirer. Consequently, the historical pre-merger financial statements of BSSD are now those of the Company. In its determination that BSSD was the accounting acquirer, the Company considered pertinent facts and circumstances, including the following: (i) the BSSD owners received the largest portion of the voting rights of the combined entity; (ii) the management team of the combined entity is primarily comprised of owners or management of BSSD; (iii) the continuing business of the combined entity will be the business of BSSD. The accompanying consolidated financial statements reflect the consolidated operations of the Company from March 20, 2018. Through a licensing agreement, the Company grows medical marijuana and produces cannabis related products at their facility in Pinal County, Arizona on behalf of licensed medical marijuana dispensaries in the state of Arizona. The major assets of the Company, consisting of five acres of land and a cultivation facility, were contributed by the members of BSSD in May 2017 and were recorded at the historical carrying value (original cost less any related accumulated depreciation) of the member as of the contribution date. On September 12, 2018, the Company executed a $1,500,000 promissory note (see Note 7) which was used to make a capital contribution into Strive Management, LLC, a Nevada limited liability company (“Strive Management”). In exchange for the contribution, the Company received a 20% membership interest in Strive Management. The remaining interests are held by three individuals one of which is the Company’s current Chief Executive Officer. Through a management agreement with Strive Wellness of Nevada, LLC, a related party (the Company CEO is a member of this LLC), Strive Management will facilitate the cultivation, processing and distribution of marijuana in Nevada. Strive Wellness of Nevada, LLC has been allocated cultivation, processing and distribution licenses from the State of Nevada. Additionally, the Company will acquire an additional 31% ownership of Strive Management upon the approval from the State of Nevada to operate the cultivation and processing facility. Principles of Consolidation Item 9 Labs consolidates all variable interest entities (“VIEs”) in which the Company is deemed to be the primary beneficiary and all other entities in which it has a controlling voting interest. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. The Company periodically makes judgments in determining whether its investees are VIEs and, each reporting period, the Company assesses whether it is the primary beneficiary of any of its VIEs. As of June 30, 2019 and September 30, 2018, the Company is deemed the primary beneficiary of Strive Management because the entity has insufficient equity to finance its activities without additional subordinated support. The interests in Strive Management held by non-controlling members has been presented on the statement of operations and statement of stockholders’ equity as non-controlling interest. The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities in which the Company is the primary beneficiary. Intercompany balances and transactions have been eliminated. The accompanying interim unaudited condensed consolidated financial statements of the Company as of June 30, 2019, do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations and should be read in conjunction with our September 30, 2018 audited financial statements filed with the Securities and Exchange Commission on our Form 10-12G filed June 27, 2019. It is management’s opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year ending September 30, 2019. Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include estimated useful lives of property and equipment, deferred income taxes, fair value of acquired intangible assets, the fair value of common stock provided as consideration and the estimated fair value of stock options and warrants. Discontinued Operations The Company sold the former Airware business of nasal dilator sales on May 3, 2018, see Note 4. The operating results related to this business have been classified as discontinued operations in the condensed interim consolidated financial statements in accordance with Accounting Standards Codification 205-20, Discontinued Operations Cash Cash represents cash on hand, demand deposits placed with banks and other financial institutions and all highly liquid instruments purchased with a remaining maturity of three months or less as of the purchase date of such investments. The Company maintains cash on deposit, which, can exceed federally insured limits. The Company has not experienced any losses on such accounts nor believes it is exposed to any significant credit risk on cash. Accounts Receivable and Notes Receivable Accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for accounts receivable. Management believes all accounts receivable outstanding as of the balance sheet dates are fully collectible, and as such has elected to not record a valuation allowance for these periods. Deferred Costs Deferred costs consist of the costs directly related to the production and cultivation of marijuana crops. Deferred costs are relieved to cost of services as products are delivered to dispensaries. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred. The estimated useful lives of property and equipment are: · Cultivation equipment 2-5 years · Buildings 30 years Intangible Assets Subject to Amortization Intangible assets include trade name, customer relationships, website, a noncompete agreement and intellectual property obtained through a business acquisition (see Note 2). Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired. Intangible assets with finite lives are amortized over their estimated useful life and reported net of accumulated amortization, separately from goodwill. Amortization is calculation on the straight-line basis using the following estimated useful lives: · Trade name 10 years · Customer relationships 5 years · Noncompete agreements 3 years · Website and intellectual property 10 years Generally, the Company utilizes the relief from royalty method to value trade name, the with or without method for valuing the customer relationships, and the discounted cash flow method for valuing website and intellectual property. Goodwill Goodwill represents the excess of the purchase price paid for the acquisition of a business over the fair value of the net tangible and intangible assets acquired. Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, and the State of Arizona. The Company is subject to U.S. federal, state, and local income tax examinations by tax authorities. All periods beginning on or after January 1, 2014 are open to examination by taxing authorities. The Company believes it has no tax positions for which the ultimate deductibility is highly uncertain. Revenue Recognition On October 1, 2017, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The majority of the Company’s revenue is associated with a customer contract that represents an obligation to perform services that are delivered at a single point in time. Any costs incurred prior to the period in which the services are performed to completion are deferred and recognized as cost of services in the period in which the performance obligations are completed. Since the Company’s revenue is generated from one customer contract, the Company does not have material contract assets or liabilities that fall under ASC 606. As of June 30, 2019 and 2018, 90% of the Company’s revenues were generated for performance obligations completed in the State of Arizona. The Company recognizes revenue as services are rendered. Services are considered complete upon successful delivery of the product to the dispensary as the Company has no further performance obligations at this point in time and collection is assured. Per the dispensary contract, the Company is paid 85% of the wholesale market price of the marijuana for the services rendered. The Company’s revenues accounted for under ASC 606, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales price is generally fixed at the point of sale and all consideration from the contract is included in the transaction price. The Company’s contracts do not include multiple performance obligations or variable consideration. Fair Value of Financial Instruments The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short term to maturity. The Company’s long-term receivable resulting from the sale of Airware was discounted to its estimated fair value on the date (see Note 4). Net Loss Per Share Basic earnings per share does not include dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. At June 30, 2019, there were 646,008 shares underlying convertible notes payable, warrants and options. Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”, The Black-Scholes option-pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.

Acquisition

Acquisition	9 Months Ended
	Jun. 30, 2019
Business Combinations [Abstract]
Acquisition	Note 2 –Acquisition On November 26, 2018, the company’s wholly owned subsidiary AZ DP Holdings, LLC (AZDP) performed an acquisition of the majority of the assets of Arizona DP Consulting, LLC (AZDPC), a consulting firm specializing in obtaining marijuana dispensary permits and cannabis related business plans. The purchase price was $1,500,000 in cash and 3,000,000 shares of restricted common stock having an aggregate value of $7,500,000 or $2.50 per share based on current market price of the Company shares at time asset purchase agreement was executed. Pursuant to the agreement, Sara Gullickson transitioned from President to CEO under a 3 year employment agreement and became a member of the board of directors of the company. Additionally, AZDP agreed to hire the employees of AZDPC and lease its existing office space which requires $3,200 of monthly rent through May 2019. This acquisition effectiv ely terminates the contract dated June 26, 2018 described in Note 11. Below is a summary of AZDPC’s revenue, expense and net income for January 1, 2018 through August 31, 2018, and January 1, 2017 through December 31, 2017. Assets and liabilities of AZDPC were negligible so presentation was not deemed necessary. (unaudited) (unaudited) January 1 through January 1 through August 30, 2018 to December 31, 2017 Revenue $ 744,822 $ 1,084,202 Expense (356,169 ) (655,911 ) Net Income $ 388,653 $ 428,291 In accordance with ASC 805, Business Combinations A summary of assets acquired in the acquisition and their fair values are presented below: Tradename $ 120,000 Customer Relationship 290,000 Templates, website, and other IP 2,470,000 Noncompete agreement 470,000 Goodwill 5,650,000 $ 9,000,000 Identifiable intangible assets consist of the following as of June 30, 2019: Balance at Additions from Balance at October 1, 2018 Acquisitions Amortization June 30, 2019 Tradename $ — $ 120,000 $ (6,000 ) $ 114,000 Customer Relationship — 290,000 (29,000 ) 261,000 Websites and intellectual property — 2,470,000 (123,500 ) 2,346,500 Noncompete agreement — 470,000 (78,333 ) 391,667 Total $ — $ 3,350,000 $ (236,833 ) $ 3,113,167 Future amortization of the identifiable intangible assets is as follows: Remaining 2019 2020 2021 2022 2023 Thereafter Total Tradename $ 3,000 $ 12,000 $ 12,000 $ 12,000 $ 12,000 $ 63,000 $ 114,000 Customer Relationship 14,500 58,000 58,000 58,000 58,000 14,500 261,000 Websites and intellectual property 61,750 247,000 247,000 247,000 247,000 1,296,750 2,346,500 Noncompete agreement 39,167 156,668 156,668 39,164 — — 391,667 Total $ 118,417 $ 473,668 $ 473,668 $ 356,164 $ 317,000 $ 1,374,250 $ 3,113,167 Amortization expense for the three- and nine-month periods ended June 30, 2019 was $82,500 and $236,833, respectively. The Company had no amortizable intangible assets during the nine months ended June 30, 2018. The goodwill arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations and personnel of the businesses. These synergies include access into new markets.

Property and Equipment, Net

Property and Equipment, Net	9 Months Ended
	Jun. 30, 2019
Property, Plant and Equipment [Abstract]
Property and Equipment, Net	Note 3 - Property and Equipment, Net The following represents a summary of our property and equipment as of June 30, 2019 and September 30, 2018: June 30, 2019 September 30, 2018 Manufacturing Equipment $ 154,059 $ 154,059 Construction in Progress 5,031,143 233,768 Land and Building 913,314 913,314 6,098,516 1,301,141 Accumulated Depreciation (106,700 ) (67,099 ) $ 5,991,816 $ 1,234,042 The construction in progress relates to cultivation facilities being built in Arizona and Nevada which were not yet complete or in use as of June 30, 2019; therefore, we have not yet began to depreciate the costs of constructing these facilities. Depreciation expense for the nine months ended June 30, 2019 and 2018 was $39,122 and $36,825, respectively, and for the three months ended June 30, 2019 and 2018 was $13,200 and $12,355, respectively.

Sale of Airware Assets and Inve

Sale of Airware Assets and Investment in Health Defense LLC	9 Months Ended
	Jun. 30, 2019
Business Combinations [Abstract]
Sale of Airware Assets and Investment in Health Defense LLC	Note 4 – Sale of Airware Assets and Investment in Health Defense LLC On May 3, 2018, the Company entered into an intellectual property sales agreement with Health Defense LLC. Pursuant to the terms of the agreement, the Company sold all of the assets related to the former business of the Company, nasal dilator sales. In consideration for entering into the agreement, the Company received: (i) $300,000 in cash at execution, (ii) $700,000 in cash within one year of execution and (iii) an additional $300,000 by December 31, 2019. Due to the long-term nature of the final $300,000, the Company recognized a discount of $70,070 using a discount rate of 21.50%. During the nine months ended June 30, 2019, the Company recognized $39,057 of interest income related to the accretion of this discount which is included in interest income on the accompanying consolidated statements of operations. As of June 30, 2019, the receivable was in default, though management believes it to be fully collectible within one year of these consolidated financial statements. As of June 30, 2019, unamortized discount on this long-term receivable was $11,855. As of September 30, 2018, unamortized discount on this long-term receivable was $50,912. As additional consideration, the Company was also given a 10% ownership interest in Health Defense LLC. This ownership is valued at $100,000 and is reflected on the balance sheet as an other long-term asset.

Notes Receivable

Notes Receivable	9 Months Ended
	Jun. 30, 2019
Receivables [Abstract]
Notes Receivable	Note 5 – Notes Receivable On May 11, 2018, the Company entered into a Promissory Note Agreement with borrower in principal amount of $150,000. This is a one year note with 20% non-compounded annual interest payable at maturity. It is convertible at the discretion of the Company into a unit offering of the borrower at a 15% discount. The note is personally guaranteed by the borrower. On May 15, 2018, the Company entered into a Promissory Note Agreement with borrower in principal amount of $60,000. This is a one year note with 15% non-compounded annual interest payable at maturity. It is convertible at the discretion of the Company into an interest in a strategic partnership of ownership and operations of a certain dispensary license. The note is personally guaranteed by the borrower. For the nine months ended June 30, 2019 and year ended September 30, 2018, the Company has accrued $48,712 and $15,074, respectively, of interest receivable related to these notes which is included in notes and interest receivables on the accompanying consolidated balance. As of the date of the condensed financial statements, the notes receivable are in default though management believes them to be fully collectible in the next twelve months.

Unsecured Convertible Note Paya

Unsecured Convertible Note Payable	9 Months Ended
	Jun. 30, 2019
Debt Disclosure [Abstract]
Unsecured Convertible Note Payable	Note 6 – Unsecured Convertible Note Payable In the reverse recapitalization disclosed in Note 1, the Company assumed one unsecured convertible note payable with principal balance totaling $20,000 which was due in August 2012, carry an interest rate of 8% and is convertible to common stock at $.50 per share. As of June 30, 2019 and September 30, 2018, this unsecured convertible note payable is considered in default and has been presented as a current liability on the condensed interim consolidated balance sheets.

Long Term Debt

Long Term Debt	9 Months Ended
	Jun. 30, 2019
Debt Disclosure [Abstract]
Long Term Debt	Note 7 – Long Term Debt On September 13, 2018, the Company entered into a Loan and Revenue Participation Agreement with Viridis Group I9 Capital LLC (“Viridis”) in which Viridis has agreed to loan the Company up to $2.7 million for the expansion of the Company’s Arizona and Nevada properties (see Note 10). As of September 30, 2018, the Company received $1,500,000 of proceeds from Viridis in the form of a promissory note. The $1,500,000 proceeds were utilized to acquire a 20% ownership in Strive Management, LLC as described in Notes 1 and 8. In exchange for the loan, Viridis will be repaid in the form of waterfall revenue participation schedules. Viridis shall receive 5% of the Company’s gross revenues from the Nevada operations, until the loan is repaid, 2% until repaid 200% of the amount loaned, and 1% of gross revenues in perpetuity or until a change in control. Payments on the loan will commence 90 days after the Nevada operation begins earning revenue. Parties acknowledge that the Company is expected to own only 51% of the Nevada operations and therefore Viridis’ revenue participation is limited to the Company’s interest. The operations in Nevada have not yet begun as of the date of this filing. The additional $1,200,000 proceeds were utilized to construct an additional 10,000 square foot cultivation and processing facility in Arizona that became operational in June 2019. The proceeds were received as construction draws between November 2018 and January 2019. In exchange for the loan, Viridis will be repaid in the form of waterfall revenue participation schedules. Viridis shall receive 5% of the Company’s gross revenues from the Arizona operations, until the loan is repaid, 2% until repaid 200% of the amount loaned, and 1% of gross revenues in perpetuity or until a change in control. Payments on the loan will commence 90 days after the Arizona operation begins earning revenue. Interest on the notes accrue monthly at a 2.9% annual rate. Interest of $24,097 has been accrued as of June 30, 2019.

Variable Interest Entity

Variable Interest Entity	9 Months Ended
	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entity	Note 8 – Variable Interest Entity As of June 30, 2019, the Company has determined that it holds a variable interest in Strive Management due to the Company being its sole source of capital. Further, the Company has agreed to construct an operational facility in Nevada. As such, Item 9 Labs Corp will raise funds as necessary ($4,000,000 expected) to construct the facility, which will be wholly owned by a subsidiary of Item 9 Labs Corp and leased to Strive Management, LLC, the operating company. No funds have been raised as of the date of these financial statements. If the funds are not raised, the additional 31% interest due to the Company upon operational approval from the State of Nevada as discussed in Note 1 would be subject to reclamation by the other members of Strive Management. The Company has been determined to be the primary beneficiary of Strive Management has the Company has the power to direct the activities that significantly impact Strive Management’s economic performance and the obligation to absorb losses. Strive Managements financial statements as of June 30, 2019 and September 30, 2018 have been consolidated with the Company. Upon consolidation, the asset of Strive Management was recorded at its carrying amounts. As of June 30, 2019, and September 30, 2018 the effects of consolidating Strive Management resulted in an increase in assets of $626,067 and $1,500,000, respectively, primarily from cash. For the three and nine months ended June 30, 2019, Strive Management incurred income of $8,508 and a loss of $66,732, respectively.

Concentrations

Concentrations	9 Months Ended
	Jun. 30, 2019
Risks and Uncertainties [Abstract]
Concentrations	Note 9 - Concentrations For the three and nine months ended June 30, 2019 and 2018, 92% and 100%, respectively, of the Company’s revenue was generated from a single customer. All trade accounts receivable at June 30, 2019 and 2018 was due from one customer.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 10 - Commitments and Contingencies The production and possession of marijuana is prohibited by the United States of America, though the state of Arizona allows these activities to be performed at licensed facilities such as BSSD. The Company does not believe the federal prohibition of these activities will negatively impact the business. As such, the Company has not elected to record a related accrual contingency. The Company is in default on convertible notes payable totaling $20,000 (see Note 6). The Company has attempted to communicate with the note holder to request extension or conversion, but has been unsuccessful in doing so. The full balance on this note is included in current liabilities. On April 20, 2018, the Company entered into an agreement for the purchase of approximately 44 acres of land from an affiliate of a founding member of BSSD. The purchase price of the property is $3,000,000, payable as follows; (i) $200,000 deposited with escrow agent as an initial earnest money deposit in April 2018, (ii) on or before February 1, 2019, the Company will deposit an additional $800,000 into escrow as additional earnest money deposit and (iii) the balance of the purchase price shall be paid via a promissory note. The earnest money amounts are non-refundable. The Company has negotiated an amendment to this agreement that will spread the $800,000 payment over the course of 4 months through June 30, 2019. As of June 30, 2019, the Company had paid a total of $600,000 which was deposited in escrow, and classified as a long-term asset on the consolidated balance sheet as of June 30, 2019. As of the date of these financial statements, a total of $600,000 has been deposited in escrow. On June 26, 2018, the Company entered into a contractor agreement with Chase Herschman pursuant to which he will provide services in exchange for $120,000 annually, payable each month; up to $420,000 in common stock options which shall vest upon the occurrence of certain benchmarks as described in the contractor agreement and a commission of 1% of the gross profits of the Company. The term of the agreement is a period of three years. Under the terms of the Loan and Revenue Participation Agreement (see Note 7), upon a change in control of the Company, Viridis will be entitled to receive 200% of the principal amount of the loans to the Company computed after considering previous revenue participation payments through the date of change of control and 1% of the aggregate sales price or consideration received in the change in control transaction. As of September 30, 2018, the Company received the $1,500,000 and invested the funds in Strive Management (see Notes 7 and 8). The remaining $1,200,000 has been provided by Viridis directly to contractors of the Arizona property from an account owned and controlled by Viridis. The Company recorded the $1,200,000 as construction in progress (see Note 3) a long-term debt (see Note 7) upon the completion and occupancy of the Arizona facility expansion, as agreed upon in the terms of the note which occurred in June 2019. As part of the agreement to invest in Strive Management, the Company has committed to raise funding of approximately $4,000,000 to complete the construction of a cultivation and processing facility in Nevada which will be leased to Strive Management LLC. On October 22, 2018 the Company entered into a 6 month services agreement with Axiom Group to provide marketing and data distribution services. As part of the agreement, the Company will pay a sum of $15,000 and issue 15,000 shares of common stock to Axiom Group each month the agreement is in place. This contract was terminated in December 2018. On March 11, 2019 the Company entered into a 6 month services agreement with JLS Ventures to provide marketing and data distribution services. As part of the agreement, the Company will pay a sum of $15,000 and issue 35,000 shares of common stock to JLS Ventures each month the agreement is in place. This contract was terminated in May 2019. The Company made a commitment to its Chief Operating Officer to issue 9,615 common stock shares quarterly, starting January 2019, as compensation through October 2019. The shares are being valued at $2.60 per share as that was the market closing price as of the date the agreement was signed. The Company recognized $25,000 of stock compensation for the shares issued in April 2019 which is included in payroll and employee related expenses on the statements of operations.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Jun. 30, 2019
Related Party Transactions [Abstract]
Related Party Transactions	Note 11– Related Party Transactions As discussed in Note 1, on March 20, 2018, the Company issued 40,355,771 shares of common stock to the members of BSSD for their membership interests. As discussed in Note 10, the Company has entered into an agreement as of April 20, 2018 for the purchase of land. The land owner is one of the original members of BSSD and a current employee of the Company. As discussed in Notes 7 and 10, the Company has entered into a Loan and Revenue Participation Agreement and Promissory Note with Viridis. The member of Viridis was elected to the Company’s board of directors on December 21, 2018. As discussed in the Description of the Business

Stockholders' Deficit

Stockholders' Deficit	9 Months Ended
	Jun. 30, 2019
Equity [Abstract]
Stockholders' Deficit	Note 12 - Stockholders’ Deficit Common Stock As discussed in Note 1, on March 20, 2018, the Company issued 40,355,771 shares of common stock to the members of BSSD for their membership interests. During the nine months ended June 30, 2019, the Company raised $5,660,003 via private placements. The selling price for 5,000,000 shares was $1 per share and the selling price for 440,000 was $1.50 per share for a total of 5,440,002 shares of common stock issued. Additionally, 158,529 shares with a market value of $270,000 were issued to contractors for services and 42,759 shares valued at $150,000 were issued to employees as compensation Warrants As of June 30, 2019 there are 298,411 warrants for purchase of the Company’s common stock outstanding. The Company issued no new warrants during the nine months ended June 30, 2019 and no warrants expired during that period. Warrants outstanding are as follows: Common Shares Issuable Upon Exercise of Warrants Exercise Price of Warrants Date Issued Expiration Date Warrants issued by predecessor 175,000 $ 2.00 3/31/2015 8/31/2020 Warrants issued by predecessor 100,000 $ 1.00 7/28/2016 7/28/2021 Warrants issued by predecessor 23,411 $ 1.30 12/22/2016 12/22/2019 Balance of Warrants at June 30, 2019 298,411 Stock Options On May 8, 2018, the Company granted 22,500 stock options to board members. The options are exercisable at $2.40 per share with a ten year term. The options will vest equally over three years unless there is a change of control of the Company at which time any unvested options vest immediately. As of June 30, 2019, there are 294,991 stock options outstanding. As discussed in Note 2, on March 20, 2018 the Company executed an agreement to acquire all the voting interest in BSSD Group, LLC. As BSSD Group, LLC is the accounting acquirer, all previously outstanding options were re-issued and vested immediately as this was considered a change in control. The Company determines the fair value of stock options issued on the date of grant using the Black-Scholes option-pricing model. There was no option activity in the nine months ended June 30, 2019. The following assumptions were used for determining the fair value of the options granted during the year ended September 30, 2018: Expected stock price volatility 34.72% Expected dividend yield 0.00% Risk-free interest rate 2.97% Option life 10 years Stock-based compensation recognized 3,773 Unrecognized compensation expense 23,390 to be recognized in future periods We do not have an extensive history as a public company and our common stock transactions are too infrequent, therefore we could not practicably estimate the expected volatility of our own stock. Accordingly, we have substituted the historical volatility of a relevant comparable company that is publicly traded and does business within the industry we operate. The options granted during the year ended September 30, 2018 were determined to have a fair value at date of grant of $2.40. The unrecognized compensation expense of $13,856 will be recognized over a weighted average period of 1.09 years. Compensation expense in the amount of $3,178 and $9,534, respectively, was recognized in the three and nine months ended June 30, 2019. There was no activity in stock options during the nine months ended June 30, 2019 and 2018. 294,991 and 272,491 options remain outstanding as of June 30, 2019 and 2018, respectively. 272,491 options were exercisable as of June 30, 2019 and 2018.

Subsequent Events

Subsequent Events	9 Months Ended
	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	Note 13 - Subsequent Events On July 1, 2019, the Company entered into a 3 year agreement with a concert venue to be the name sponsor for the venue. In exchange, the Company issued 45,457 shares of restricted common stock valued at $200,000($4.40/share) and is to pay $5,000 monthly for the first 12 months and $60,000 in July 2020 and 2021. On July 3, 2019, the Company’s Board approved an employment agreement for a sales director. In connection therewith, the Company granted 16,667 common stock shares totaling $50,000 which will vest six months from the employment agreement.

Description of Business and S_2

Description of Business and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Jun. 30, 2019
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation Item 9 Labs consolidates all variable interest entities (“VIEs”) in which the Company is deemed to be the primary beneficiary and all other entities in which it has a controlling voting interest. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. The Company periodically makes judgments in determining whether its investees are VIEs and, each reporting period, the Company assesses whether it is the primary beneficiary of any of its VIEs. As of June 30, 2019 and September 30, 2018, the Company is deemed the primary beneficiary of Strive Management because the entity has insufficient equity to finance its activities without additional subordinated support. The interests in Strive Management held by non-controlling members has been presented on the statement of operations and statement of stockholders’ equity as non-controlling interest. The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities in which the Company is the primary beneficiary. Intercompany balances and transactions have been eliminated. The accompanying interim unaudited condensed consolidated financial statements of the Company as of June 30, 2019, do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations and should be read in conjunction with our September 30, 2018 audited financial statements filed with the Securities and Exchange Commission on our Form 10-12G filed June 27, 2019. It is management’s opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year ending September 30, 2019.
Accounting Estimates	Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include estimated useful lives of property and equipment, deferred income taxes, fair value of acquired intangible assets, the fair value of common stock provided as consideration and the estimated fair value of stock options and warrants.
Discontinued Operations	Discontinued Operations The Company sold the former Airware business of nasal dilator sales on May 3, 2018, see Note 4. The operating results related to this business have been classified as discontinued operations in the condensed interim consolidated financial statements in accordance with Accounting Standards Codification 205-20, Discontinued Operations
Cash	Cash Cash represents cash on hand, demand deposits placed with banks and other financial institutions and all highly liquid instruments purchased with a remaining maturity of three months or less as of the purchase date of such investments. The Company maintains cash on deposit, which, can exceed federally insured limits. The Company has not experienced any losses on such accounts nor believes it is exposed to any significant credit risk on cash.
Accounts Receivable and Notes Receivable	Accounts Receivable and Notes Receivable Accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for accounts receivable. Management believes all accounts receivable outstanding as of the balance sheet dates are fully collectible, and as such has elected to not record a valuation allowance for these periods.
Deferred Costs	Deferred Costs Deferred costs consist of the costs directly related to the production and cultivation of marijuana crops. Deferred costs are relieved to cost of services as products are delivered to dispensaries.
Property and Equipment	Property and Equipment Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method, over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. Gains and losses on the disposition of property and equipment are recorded in the period incurred. The estimated useful lives of property and equipment are: · Cultivation equipment 2-5 years · Buildings 30 years
Intangible Assets Subject to Amortization	Intangible Assets Subject to Amortization Intangible assets include trade name, customer relationships, website, a noncompete agreement and intellectual property obtained through a business acquisition (see Note 2). Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired. Intangible assets with finite lives are amortized over their estimated useful life and reported net of accumulated amortization, separately from goodwill. Amortization is calculation on the straight-line basis using the following estimated useful lives: · Trade name 10 years · Customer relationships 5 years · Noncompete agreements 3 years · Website and intellectual property 10 years Generally, the Company utilizes the relief from royalty method to value trade name, the with or without method for valuing the customer relationships, and the discounted cash flow method for valuing website and intellectual property.
Goodwill	Goodwill Goodwill represents the excess of the purchase price paid for the acquisition of a business over the fair value of the net tangible and intangible assets acquired. Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.
Income Taxes	Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, and the State of Arizona. The Company is subject to U.S. federal, state, and local income tax examinations by tax authorities. All periods beginning on or after January 1, 2014 are open to examination by taxing authorities. The Company believes it has no tax positions for which the ultimate deductibility is highly uncertain.
Revenue Recognition	Revenue Recognition On October 1, 2017, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance did not have a material effect on the Company’s financial position, results of operations or cash flows. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The majority of the Company’s revenue is associated with a customer contract that represents an obligation to perform services that are delivered at a single point in time. Any costs incurred prior to the period in which the services are performed to completion are deferred and recognized as cost of services in the period in which the performance obligations are completed. Since the Company’s revenue is generated from one customer contract, the Company does not have material contract assets or liabilities that fall under ASC 606. As of June 30, 2019 and 2018, 90% of the Company’s revenues were generated for performance obligations completed in the State of Arizona. The Company recognizes revenue as services are rendered. Services are considered complete upon successful delivery of the product to the dispensary as the Company has no further performance obligations at this point in time and collection is assured. Per the dispensary contract, the Company is paid 85% of the wholesale market price of the marijuana for the services rendered. The Company’s revenues accounted for under ASC 606, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales price is generally fixed at the point of sale and all consideration from the contract is included in the transaction price. The Company’s contracts do not include multiple performance obligations or variable consideration.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying value of the Company’s financial instruments, consisting of cash, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short term to maturity. The Company’s long-term receivable resulting from the sale of Airware was discounted to its estimated fair value on the date (see Note 4).
Net Loss Per Share	Net Loss Per Share Basic earnings per share does not include dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. At June 30, 2019, there were 646,008 shares underlying convertible notes payable, warrants and options.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC Subtopic 718-10, “Compensation – Stock Compensation”, The Black-Scholes option-pricing model requires the input of certain assumptions that require the Company’s judgment, including the expected term and the expected stock price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future.
Reclassifications	Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.

Acquisition (Tables)

Acquisition (Tables)	9 Months Ended
	Jun. 30, 2019
Business Combinations [Abstract]
Summary of AZDPC’s revenue, expense and net income	(unaudited) (unaudited) January 1 through January 1 through August 30, 2018 to December 31, 2017 Revenue $ 744,822 $ 1,084,202 Expense (356,169 ) (655,911 ) Net Income $ 388,653 $ 428,291
Summary of assets acquired in acquisition and fair values	Tradename $ 120,000 Customer Relationship 290,000 Templates, website, and other IP 2,470,000 Noncompete agreement 470,000 Goodwill 5,650,000 $ 9,000,000
Identifiable intangible assets	Balance at Additions from Balance at October 1, 2018 Acquisitions Amortization June 30, 2019 Tradename $ — $ 120,000 $ (6,000 ) $ 114,000 Customer Relationship — 290,000 (29,000 ) 261,000 Websites and intellectual property — 2,470,000 (123,500 ) 2,346,500 Noncompete agreement — 470,000 (78,333 ) 391,667 Total $ — $ 3,350,000 $ (236,833 ) $ 3,113,167
Future amortization of identifiable intangible assets	Remaining 2019 2020 2021 2022 2023 Thereafter Total Tradename $ 3,000 $ 12,000 $ 12,000 $ 12,000 $ 12,000 $ 63,000 $ 114,000 Customer Relationship 14,500 58,000 58,000 58,000 58,000 14,500 261,000 Websites and intellectual property 61,750 247,000 247,000 247,000 247,000 1,296,750 2,346,500 Noncompete agreement 39,167 156,668 156,668 39,164 — — 391,667 Total $ 118,417 $ 473,668 $ 473,668 $ 356,164 $ 317,000 $ 1,374,250 $ 3,113,167

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	9 Months Ended
	Jun. 30, 2019
Property, Plant and Equipment [Abstract]
Summary of property and equipment	June 30, 2019 September 30, 2018 Manufacturing Equipment $ 154,059 $ 154,059 Construction in Progress 5,031,143 233,768 Land and Building 913,314 913,314 6,098,516 1,301,141 Accumulated Depreciation (106,700 ) (67,099 ) $ 5,991,816 $ 1,234,042

Income Taxes (Tables)

Income Taxes (Tables)	9 Months Ended
	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income tax provision computed on taxable income since reverse merger	Three months ended June 30, Nine months ended June 30, 2019 2018 2019 2018 Federal $ 155,347 $ 13,272 $ 395,808 $ 54,415 State — (18,617 ) (33,062 ) (15,872 ) Income Tax Provision $ 155,347 $ (5,345 ) $ 362,746 $ 38,543
Effective income tax rate reconciliation	Three months ended June 30, Nine months ended June 30, 2019 2018 2019 2018 U.S. federal statutory rate $ 91,877 $ — $ 215,898 $ — Non-deductible items 63,470 — 179,910 — $ 155,347 $ — $ 395,808 $ —

Stockholders' Deficit (Tables)

Stockholders' Deficit (Tables)	9 Months Ended
	Jun. 30, 2019
Equity [Abstract]
Warrants outstanding	Common Shares Issuable Upon Exercise of Warrants Exercise Price of Warrants Date Issued Expiration Date Warrants issued by predecessor 175,000 $ 2.00 3/31/2015 8/31/2020 Warrants issued by predecessor 100,000 $ 1.00 7/28/2016 7/28/2021 Warrants issued by predecessor 23,411 $ 1.30 12/22/2016 12/22/2019 Balance of Warrants at June 30, 2019 298,411
Assumptions used for determining fair value of options granted	Expected stock price volatility 34.72% Expected dividend yield 0.00% Risk-free interest rate 2.97% Option life 10 years Stock-based compensation recognized 3,773 Unrecognized compensation expense 23,390 to be recognized in future periods

Description of Business and S_3

Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	9 Months Ended
	Jun. 30, 2019	Oct. 18, 2018	Sep. 12, 2018	Mar. 20, 2018
Accounting Policies [Abstract]
Reverse stock split	1-for-20
Shares outstanding at time of split, pre-split		1,095,332,835
Shares outstanding at time of split, post-split		54,766,642
Acquisition of BSSD, shares distributed				40,355,771
Promissory note used to make capital contribution into Strive Management			$ 1,500,000
Accounts payable from discontinued operations	$ 427,389
Antidilutive securities not included in computation of earnings per share	646,008

Acquisition - Summary of AZDPC

Acquisition - Summary of AZDPC revenue, expense and net income (Details) - USD ($)	8 Months Ended	12 Months Ended
	Aug. 30, 2018	Dec. 31, 2017
Business Combinations [Abstract]
Revenue	$ 744,822	$ 1,084,202
Expense	(356,169)	(655,911)
Net Income	$ 388,653	$ 428,291

Acquisition - Summary of assets

Acquisition - Summary of assets acquired in acquisition and fair values (Details)	Jun. 30, 2019USD ($)
Assets acquired, fair value	$ 9,000,000
Tradename
Assets acquired, fair value	120,000
Customer Relationship
Assets acquired, fair value	290,000
Templates, website, and other IP
Assets acquired, fair value	2,470,000
Noncompete agreement
Assets acquired, fair value	470,000
Goodwill
Assets acquired, fair value	$ 5,650,000

Acquisition - Identifiable inta

Acquisition - Identifiable intangible assets (Details) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018
Additions from acquisitions			$ 1,323,780
Amortization	$ (82,500)	(236,833)
Tradename
Beginning balance
Additions from acquisitions		120,000
Amortization		(6,000)
Ending balance	114,000	114,000
Customer Relationship
Beginning balance
Additions from acquisitions		290,000
Amortization		(29,000)
Ending balance	261,000	261,000
Websites and intellectual property
Beginning balance
Additions from acquisitions		2,470,000
Amortization		(123,500)
Ending balance	2,346,500	2,346,500
Noncompete agreement
Beginning balance
Additions from acquisitions		470,000
Amortization		(78,333)
Ending balance	391,667	391,667
Total
Beginning balance
Additions from acquisitions		3,350,000
Amortization		(236,833)
Ending balance	$ 3,113,167	$ 3,113,167

Acquisition - Future amortizati

Acquisition - Future amortization of identifiable intangible assets (Details)	Jun. 30, 2019USD ($)
Tradename
Remaining 2019	$ 3,000
2020	12,000
2021	12,000
2022	12,000
2023	12,000
Thereafter	63,000
Total	114,000
Customer Relationship
Remaining 2019	14,500
2020	58,000
2021	58,000
2022	58,000
2023	58,000
Thereafter	14,500
Total	261,000
Websites and intellectual property
Remaining 2019	61,750
2020	247,000
2021	247,000
2022	247,000
2023	247,000
Thereafter	1,296,750
Total	2,346,500
Noncompete agreement
Remaining 2019	39,167
2020	156,668
2021	156,668
2022	39,164
2023
Thereafter
Total	391,667
Total
Remaining 2019	118,417
2020	473,668
2021	473,668
2022	356,164
2023	317,000
Thereafter	1,374,250
Total	$ 3,113,167

Acquisition (Details Narrative)

Acquisition (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Nov. 26, 2018
Business Combinations [Abstract]
Acquisition of AZDPC, purchase price		$ 1,500,000
Acquisition of AZDPC, shares of restricted common stock, issued		3,000,000
Acquisition of AZDPC, shares of restricted common stock, aggregate value		$ 7,500,000
Acquisition of AZDPC, shares of restricted common stock, price per share			$ 2.50
Amortization expense	$ (82,500)	$ (236,833)

Property and Equipment, Net - S

Property and Equipment, Net - Summary of property and equipment (Details) - USD ($)	Jun. 30, 2019	Sep. 30, 2018
Property and Equipment, Gross	$ 6,098,516	$ 1,301,141
Accumulated Depreciation	(106,700)	(67,099)
Property and Equipment, Net	5,991,816	1,234,042
Manufacturing Equipment
Property and Equipment, Gross	154,059	154,059
Construction in Progress
Property and Equipment, Gross	5,031,143	233,768
Land and Building
Property and Equipment, Gross	$ 913,314	$ 913,314

Property and Equipment, Net (De

Property and Equipment, Net (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property, Plant and Equipment [Abstract]
Depreciation expense	$ (13,200)	$ (12,355)	$ (39,122)	$ (36,825)

Sale of Airware Assets and In_2

Sale of Airware Assets and Investment in Health Defense LLC (Details Narrative) - USD ($)	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018
Business Combinations [Abstract]
Sale of Airware Assets, cash received at execution	$ 300,000
Sale of Airware Assets, cash to be received within one year of execution	700,000
Sale of Airware Assets, cash to be received within by end of year	300,000
Discount recognized on long-term receivable	70,070
Interest income recognized in relation to accretion of discount	39,057
Unamortized discount on long-term receivable	$ 11,855	$ 50,912
Additional consideration, ownership interest received	10.00%
Additional consideration, ownership interest value	$ 100,000

Notes Receivable (Details Narra

Notes Receivable (Details Narrative) - USD ($)	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018	May 15, 2018	May 11, 2018
Accrued interest receivable related to notes	$ 48,712	$ 15,074
Promissory Note Agreement (1)
Promissory note, principal amount				$ 150,000
Promissory note, annual interest rate	20.00%
Promissory Note Agreement (2)
Promissory note, principal amount			$ 60,000
Promissory note, annual interest rate	15.00%

Unsecured Convertible Note Pa_2

Unsecured Convertible Note Payable (Details Narrative)	9 Months Ended
	Jun. 30, 2019USD ($)$ / shares
Debt Disclosure [Abstract]
Convertible note payable assumed, principal balance | $	$ 20,000
Convertible note payable assumed, interest rate	8.00%
Convertible note payable assumed, price per share | $ / shares	$ 0.50

Long Term Debt (Details Narrati

Long Term Debt (Details Narrative)	9 Months Ended
	Jun. 30, 2019USD ($)
Debt Disclosure [Abstract]
Proceeds received, Viridis loan	$ 2,700,000

Variable Interest Entity (Detai

Variable Interest Entity (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Increase in assets from consolidating Strive Management	$ 626,067	$ 626,067	$ 1,500,000
Income (loss) incurred by Strive Management	$ (66,732)	$ 8,508

Concentrations (Details Narrati

Concentrations (Details Narrative)	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Revenue generated from a single customer
Concentration risk	92.00%	100.00%

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative)	9 Months Ended
	Jun. 30, 2019USD ($)$ / sharesshares
Commitments and Contingencies Disclosure [Abstract]
BSSD affiliate property purchase price, amounts deposited in escrow	$ 600,000
Contractor agreement, annual compensation amount	120,000
Contractor agreement, value common stock issuable	$ 420,000
Common stock issued to Chief Operating Officer as part of compensation agreement, quarterly share number | shares	9,615
Common stock issued to Chief Operating Officer as part of compensation agreement, price per share | $ / shares	$ 2.60
Common stock issued to Chief Operating Officer as part of compensation agreement, stock compensation recognized	$ 25,000

Related Party Transactions (Det

Related Party Transactions (Details Narrative)	Mar. 20, 2018shares
Related Party Transactions [Abstract]
Acquisition of BSSD, shares distributed	40,355,771

Stockholders' Deficit - Warrant

Stockholders' Deficit - Warrants outstanding (Details)	9 Months Ended
	Jun. 30, 2019$ / sharesshares
Warrants issued by predecessor (1)
Common shares issuable upon exercise of warrants	175,000
Exercise price of warrants | $ / shares	$ 2
Date issued	Mar. 31, 2015
Expiration date	Aug. 31, 2020
Warrants issued by predecessor (2)
Common shares issuable upon exercise of warrants	100,000
Exercise price of warrants | $ / shares	$ 1
Date issued	Jul. 28, 2016
Expiration date	Jul. 28, 2021
Warrants issued by predecessor (3)
Common shares issuable upon exercise of warrants	23,411
Exercise price of warrants | $ / shares	$ 1.30
Date issued	Dec. 22, 2016
Expiration date	Dec. 22, 2019
Balance of Warrants
Common shares issuable upon exercise of warrants	298,411

Stockholders' Deficit - Assumpt

Stockholders' Deficit - Assumptions used for determining fair value of options granted (Details)	9 Months Ended
	Jun. 30, 2019USD ($)
Equity [Abstract]
Expected stock price volatility	34.72%
Expected dividend yield	0.00%
Risk-free interest rate	2.97%
Option life	10 years
Stock-based compensation recognized	$ 3,773
Unrecognized compensation expense to be recognized in future periods	$ 23,390

Stockholders' Deficit (Details

Stockholders' Deficit (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019
Common Stock
Private placements, amount			$ 5,660,003
Private placements, shares of common stock issued			5,440,002
Additional common stock issued to contractors for services, shares			158,529
Additional common stock issued to contractors for services, market value			$ 270,000
Additional common stock isued to employees as compensation, shares			42,759
Additional common stock isued to employees as compensation, value			$ 150,000
Warrants
Warrants outstanding	298,411		298,411
Stock Options
Stock options granted to board members		22,500
Stock options outstanding	294,991	272,491	294,991
Stock options exercisable	272,491	272,491	272,491
Unrecognized compensation expense	$ 13,856		$ 13,856
Compensation expense recognized	$ 3,178		$ 3,178

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)	Jul. 03, 2019	Jul. 01, 2019
Subsequent Events [Abstract]
Shares of restricted common stock issued, shares		45,457
Shares of restricted common stock issued, value		$ 200,000
Employment agreement for sales director, common stock shares granted	16,667
Employment agreement for sales director, common stock shares granted, value	$ 50,000