Exactus, Inc. Reports Third Quarter 2019 Results

Second Half 2019 Highlights

  • Acquired Green Goddess Extracts and launched CBD brands
  • Increased expected harvest of top flower to 30,000 pounds
  • Launched e-Commerce marketplace through Exactushemp.com
  • Entered cosmetic market through acquisition of luxury cosmetics brand LeVor Collection
  • Acquired remaining 49.9% interest in 2019 crop

DELRAY BEACH, Fla., Nov. 14, 2019 (GLOBE NEWSWIRE) — Exactus Inc. (OTCQB: EXDI) (“Exactus”), a grower of hemp and producer of hemp-derived phytocannabinoid products, today reported financial results for the third quarter ended September 30, 2019.

During the  third quarter, Exactus  expanded its manufacturing capability and the breadth of its product offerings through its acquisitions of Green Goddess Extracts and LeVor Collection, a luxury cosmetics brand.  Subsequent to the close of the third quarter, in October, Exactus launched Exactushemp.com, an E-commerce marketplace through which it can distribute its products directly to consumers.  Exactus’ 2019 harvest is exceeding expectations with an expected harvest of 30,000 pounds of top flower, up from its original estimate of 20,000 pounds due to better growing conditions than anticipated.  In October, Exactus acquired an additional 49.9% interest in the 2019 harvest, which Exactus expects will provide additional supply that it can monetize beginning in the fourth quarter of 2019.

Emiliano Aloi, President of Exactus stated, “We continue to execute our plan to differentiate our products by providing a traceable supply of quality hemp for all of our CBD products. Our packaged goods have QR coding on every label that allows consumers to view the batch records as well as the internal and third-party laboratory Certificates of Analysis (COA), and product specifications.  We believe he Green Goddess and LeVor Collection brands will enable us to expand our product line while leveraging our production of premium hemp.”

Mr. Aloi continued, “Our 2019 harvest is tracking above plan with most recent estimates of 30,000 pounds of top flower.  We expect a strong fourth quarter with orders to date totaling over $750,000.  This strong momentum is anticipated to continue into 2020 as we build out the product lines under our brands and execute on our current harvest. With the growth of product sales, we anticipate working capital to be a source of cash.”

Third-Quarter 2019 Financial Summary

Financial results are not comparable to the prior year period because Exactus did not begin its hemp based operations until early 2019.  Revenue in the third quarter of 2019 was $60 thousand versus $140 thousand in the prior quarter.  Loss from operations in the third quarter of 2019 was -$2.1 million versus -$1.1 million in the second quarter.  The decline in revenue was primarily attributable to increased costs associated with marketing initiatives, increased compensation as well as increased non-cash charges for stock-based compensation. Exactus expects revenue to improve in the fourth quarter as product from the fall harvest is monetized.  To date, Exactus has secured over $750,000 in customer orders from this harvest.  Exactus expects gross margins to also improve as it begins using lower cost inventory from its fall harvest.

Conference Call

Management will hold a conference call on Thursday, November 14, 2019 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its third quarter results and its business outlook. To access this call, dial 1-877-451-6152 (domestic) or 1-201-389-0879 (international).  The conference ID is 13696592.

Following the conference call, a replay will be available at 1-844-512-2921 (domestic) or 1-412-317-6671 (international). The replay passcode is 13696592. The conference call will be broadcast and available for replay on the investor relations section of the Exactus’ website at http://public.viavid.com/index.php?id=137014.

To learn more about Exactus, Inc., visit the website at  www.exactushemp.com.


Exactus, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues $ 48,013 $ $ 163,157 $
Net revenues – related party 12,140 52,659
Total net revenues 60,153 215,816
Cost of sales – related party 100,418 216,205
Gross profit (40,265 ) (389 )
Operating Expenses:
General and administration 1,389,820 301,859 2,892,588 1,446,867
Professional and consulting 662,857 49,068 2,873,895 179,658
Research and development 10,000 75,000 36,975 225,000
Total Operating Expenses 2,062,677 425,927 5,803,458 1,851,525
Loss from Operations (2,102,942 ) (425,927 ) (5,803,847 ) (1,851,525 )
Other Income (expenses):
Derivative loss (818,355 ) (1,454,729 ) (517,205 )
Loss on stock settlement (223,825 ) (477,126 )
(Loss) gain on settlement of debt, net (3,000 ) 3,004,629
Interest expense (2,105 ) (127,164 ) (371,537 ) (382,971 )
Total Other Expenses, net (5,105 ) (1,169,344 ) 1,178,363 (1,377,302 )
Loss Before Provision for Income Taxes (2,108,047 ) (1,595,271 ) (4,625,484 ) (3,228,827 )
Provision for income taxes
Net Loss (2,108,047 ) (1,595,271 ) (4,625,484 ) (3,228,827 )
Net Loss attributable to non-controlling interest 173,680 361,628
Net Loss Attributable to Exactus, Inc. (1,934,367 ) (1,595,271 ) (4,263,856 ) (3,228,827 )
Deemed dividend on Preferred Stock (904,450 )
Net Loss available to Exactus, Inc. common stockholders $ (1,934,367 ) $ (1,595,271 ) $ (5,168,306 ) $ (3,228,827 )
Net Loss per Common Share – Basic and Diluted $ (0.05 ) $ (0.33 ) $ (0.15 ) $ (0.69 )
Net Loss attributable to non-controlling interest per Common Share – Basic and Diluted $ (0.00 ) $ $ (0.01 ) $
Net Loss available to Exactus, Inc. common stockholders per Common Share – Basic and Diluted $ (0.05 ) $ (0.33 ) $ (0.16 ) $ (0.69 )
Weighted Average Number of Common Shares Outstanding:
  Basic and Diluted 38,951,338 4,812,449 31,173,513 4,647,290
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Exactus, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
2019 2018
Current Assets:
Cash and cash equivalents $ 5,686 $ 1,960
Accounts receivable, net 75,626
Accounts receivable – related party 52,659
Inventory 2,332,890
Prepaid expenses and other current assets 166,149 12,330
Prepaid expenses and other current assets – related party – current 622,159
Total current assets 3,255,169 14,290
Other Assets:
  Deposits 40,000
Prepaid expenses and other current assets – related party – long-term 2,648,864
  Property and equipment, net 549,483
  Intangible assets, net 2,668,005
  Operating lease right-of-use assets, net 2,287,682
Total other assets 8,194,034
TOTAL ASSETS $ 11,449,203 $ 14,290
Current Liabilities:
Accounts payable $ 1,131,883 $ 923,429
Accounts payable – related party 8,342
Accrued expenses 81,693 46,875
Note payable – related parties 6,500 51,400
Subscription payable 282,500
Convertible notes, net of discounts 491,788
Derivative liability 1,742,000
Settlement payable 17,000
Interest payable 8,148 66,300
Due to related party 105,500
Operating lease liabilities, current portion 427,888
Total current liabilities 2,052,454 3,338,792
Long Term Liabilities:
Convertible notes payable 100,000 100,000
Operating lease liabilities, long-term portion 1,902,073
Total long term liabilities 2,002,073 100,000
TOTAL LIABILITIES 4,054,527 3,438,792
Commitment and contingencies (see Note 10)
Equity (Deficit):
Exactus, Inc. Stockholders’s Equity (Deficit)
Preferred stock: 50,000,000 authorized; $0.0001 par value, 5,266,466 undesignated shares
issued and outstanding
Preferred stock Series A: 1,000,000 designated; $0.0001 par value,
583,009 shares issued and outstanding 58
Preferred stock Series B-1: 32,000,000 designated; $0.0001 par value,
1,800,000,and 2,800,000 shares issued and outstanding, respectively 180 280
Preferred stock Series B-2: 10,000,000 designated; $0.0001 par value,
7,684,000 and 8,684,000 shares issued and outstanding, respectively 768 868
Preferred stock Series C: 1,733,334 designated; $0.0001 par value,
none and 1,733,334 shares issued and outstanding, respectively 173
Preferred stock Series D: 200 designated; $0.0001 par value, 29 and 45
shares issued and outstanding, respectively 1
Preferred stock Series E: 10,000 designated; $0.0001 par value, 10,000 and none
shares issued and outstanding, respectively 1
Common stock: 650,000,000 shares authorized; $0.0001 par value,
40,024,389 and 6,233,524 shares issued and outstanding, respectively 4,002 623
  Common stock to be issued (596,249 and none shares to be issued, respectively) 60
Additional paid-in capital 23,457,433 7,111,445
Accumulated deficit (15,706,198 ) (10,537,892 )
Total Exactus Inc. Stockholders’ Equity (Deficit) 7,756,304 (3,424,502 )
  Non-controlling interest in subsidiary (361,628 )
Total Equity (Deficit) 7,394,676 (3,424,502 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Exactus, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30,
2019 2018
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net loss $ (4,625,484 ) $ (3,228,827 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation 36,720
Derivative loss 1,454,729 517,205
Stock-based compensation 2,376,050 599,835
Bad debt expense 9,407
Amortization of prepaid stock-based expenses 110,416
Amortization of discount and debt issuance costs for convertible notes 339,806 345,013
Amortization of intangible assets 558,024
Deferred rent 42,279
(Gain) loss on settlement of debt (3,004,629 ) 477,126
Changes in operating assets and liabilities:
(Increase) decrease in operating assets:
Accounts receivable (85,033 )
Accounts receivable – related party (52,659 )
Inventory (2,298,919 )
Prepaid expenses and other current assets (94,758 ) (334 )
Deposit (40,000 )
Increase (decrease) in operating liabilities:
Accounts payable 208,453 112,699
Accounts payable – related party 8,342
Accrued expenses 44,818 744,931
Settlement payable (20,000 ) (3,000 )
Interest payable 4,764 27,428
Net Cash Used In Operating Activities (5,027,674 ) (407,924 )
Cash Flows From Investing Activities:
Purchase of membership interest in subsidiary (1,467,500 )
Purchase of property and equipment (586,203 )
Net Cash Used in Investing Activities (2,053,703 )
Cash Flows From Financing Activities:
Proceeds from sale of Series D preferred stock 50,000
Advances from related party 231,035
Repayments on related party advances (160,535 )
Proceeds from sale of Common Stock 7,012,046
Payments of principal on notes payable (32,129 )
Proceeds from issuance of notes payable 14,229 101,900
Payments of principal on convertible notes (186,443 ) (25,000 )
Proceeds from issuance of convertible notes, net of issuance cost 206,900 121,100
Net Cash Provided By Financing Activities 7,085,103 248,000
Net increase (decrease) in cash and cash equivalents 3,726 (159,924 )
Cash and cash equivalents at beginning of period 1,960 161,215
Cash and cash equivalents at end of period $ 5,686 $ 1,291
Supplemental Cash Flow Information:
Cash paid for interest $ 26,977 $
Cash paid for taxes $ $
Non-Cash investing and financing activities:
Proceeds from sale of Series D preferred stock paid directly to settle amounts
due to officers and directors $ $ 500,000
Proceeds from sale of Series A preferred stock paid directly to settle debts $ 55,090 $
Convertible notes and interest payable settled by Series A preferred stock issued $ 849,360 $
Note payable, accrued expense and interest payable settled by common stock issued $ 40,616 $
Convertible notes settled by common stock issued $ 196,000 $ 34,120
Accounts payable settled by common stock issued $ $ 85,934
Common stock issued for purchase of membership interest in subsidiary $ 1,440,000 $
Common stock and preferred stock issued for prepaid services $ 3,405,500 $
Common stock issued pursuant to asset purchase agreement $ 70,000 $
Increase in intangible assets for subscription payable $ 1,866,029 $
Increase in inventory for subscription payable $ 33,971 $
Initial benefical conversion feature and debt discount on convertible notes $ 206,910 $ 151,000
Initial derivative liability on convertible notes $ $ 282,000
Preferred deemed dividend $ 904,450 $
Operating lease right-of-use assets and operating lease liabilities
recorded upon adoption of ASC 842 $ 2,431,362 $
Reduction of operating lease right-of-use asset and operating lease liabillities $ 143,680 $
Prepaid expenses directly paid by a related party $ 35,000 $
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


About Exactus:
Exactus Inc. is dedicated to introducing hemp-derived phytocannabinoid products into mainstream consumer markets. Exactus has made investments in farming and has over 200 acres of CBD-rich hemp in Southwest Oregon. Exactus is introducing a range of consumer brands, such as Green Goddess Extracts, Paradise CBD, Levor Collection and Exactus. Hemp is a legal type of cannabis plant containing less than 0.3% THC (tetrahydrocannabinol), which is the psychoactive component of the cannabis plant. After 40 years of prohibition, the Agriculture Improvement Act of 2018, known as the 2018 Farm Bill, legalized hemp at the federal level. Hemp production will be regulated by the United States Department of Agriculture (USDA) and the states. As a result, in 2019 hemp was generally removed from the Controlled Substances Act (CSA) and enforcement by the Drug Enforcement Administration (DEA).

For more information about Exactus: www.exactusinc.com.

Investor Notice:
Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 1A of our most recent Form 10-K for the fiscal year ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2019, and in other periodic and current reports we file with the SEC. If any of these risks were to occur, our business, financial condition, or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. See “Safe Harbor” below.

Safe Harbor – Forward-Looking Statements:
The information provided in this press release may include forward-looking statements relating to future events or the future financial performance of Exactus, including statements concerning harvest expectations, the impact of Exactus’ acquisition of Green Goddess, LeVor Collection, and interests in the 2019 harvest on its supply and product line expansion, Exactus’ ability to monetize its harvest, Exactus’ ability to expand its product lines and brands, the amount of future orders for Exactus products, and Exactus’ future revenue, gross margins and working capital. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as “anticipates,” “plans,” “expects,” “intends,” “will,” “potential,” “hope” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon current expectations of Exactus and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties. Detailed information regarding factors that may cause actual results to differ materially from the results expressed or implied by statements in this press release relating to Exactus may be found in Exactus’ periodic and current filings with the SEC, including the factors described in the sections entitled “Risk Factors”, copies of which may be obtained from the SEC’s website at www.sec.gov. Any forward-looking statement speaks only as of the date on which such statement is made, and Exactus does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

Exactus Contact:

Andrew Johnson
Chief Strategy Officer
Exactus Inc.

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Source: Exactus, Inc.