Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial


          Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On March 30, 2023, Item 9 Labs Corp., a Delaware corporation (the "Company"), and its wholly owned subsidiary, 938287AZ, LLC ("938287AZ"), an Arizona limited liability company (collectively, the Company and 938287AZ are referred to as the "Borrower"), and the Company's Board of Directors (the "Board"), became aware that Pelorus Fund REIT, LLC, a Delaware limited liability company ("Pelorus") filed a Notice of Trustee's Sale on March 16, 2023 (the "Foreclosure") with respect to that certain Construction Loan and Security Agreement dated as of August 25, 2021 (the "Loan Agreement") by and between 938287AZ and Pelorus (the "Pelorus Notice") and the trust deed recorded October 29, 2021. The Company had been in discussions with Pelorus to restructure the loan and to avoid the Foreclosure, but those discussions have not yet resulted in an agreement. As of the date of this current report, April 5, 2023, none of the Company, the Board or the Company's management have received any formal notice from Pelorus or any regulatory bodies regarding this Foreclosure.

The Company has taken steps to protect its interests in the property, including retaining legal counsel to represent the Company in the Foreclosure, which is set to occur June 16, 2023. The Company is currently evaluating the potential impact of the Foreclosure on its financial statements, liquidity, and operations. The Company will provide additional information as it becomes available.

The Company previously disclosed that the Loan Agreement was in default in a Form 10-Q filed with the SEC on February 14, 2023 and Form 10-K for year ended September 30, 2022 filed with the SEC on January 13, 2023, as well as in a Form 8-K on March 7, 2023.

The foregoing description of the Loan Agreement is not complete and is qualified in its entirety by reference to the full text of the Loan Agreement, a copy of which was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 31, 2021, which report is incorporated herein by reference. The Company is not aware of any other foreclosure actions involving the Company or any of its subsidiaries.

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