Exactus, Inc. Reports Second Quarter 2020 Financial Results and Conference Call

Second Quarter 2020 Highlights

  • Total Net Revenue of $531,240
  • Continuation of Sales & Marketing Buildout
  • White Label Division Launch
  • European Sales Expansion
  • Strengthened the Balance Sheet

DELRAY BEACH, Fla., Aug. 20, 2020 (GLOBE NEWSWIRE) -- Exactus, Inc. (OTCQB: EXDI) (the “Company”) a leading supplier of hemp-derived ingredients (CBD/CBG) and feminized hemp genetics, reported its financial results for the second quarter 2020 and conference call dial-in information.

During the second quarter of 2020, Exactus continued to generate year over year revenue growth through a time of pandemic.

Focusing on core competencies of bulk raw ingredients, the company has built a solid pipeline of potential opportunities and has been successful in selling into the European market.

The company has continued to attract top talent with the additions Daniel Alberttis as Chief Operating Officer, Mark Alouf as Director of Sales, and recruited Sonya Bain as Sales Manager and Product Specialist to facilitate the growth and manage large scale accounts.

With these additions, the Company will be directing its efforts to specialty ingredients, and white label business to expand its customer base and leverage its relationships to drive more profitable and scalable revenue.

Emiliano Aloi, Interim CEO of Exactus stated, "We are happy to see that our strategic shift is bringing fundamental and tangible results. Our board and management team have worked closely and diligently to achieve this transition. We feel that we are coming together as a company and bringing forth the solutions that our clients and shareholders want. Our year over year sales are up, our burn is down, and our debt is shrinking. Specifically, we are very proud of our new integrated CRM, sales, and E-commerce integration that Mark Alouf and his team have put together, and of Sonya Bain’s leadership in launching our white label division. These are the results that we need to strengthen our position in the market and to enable Exactus to engage in its M&A growth strategy.”

Second Quarter 2020 Financial Summary

Total net revenue for the second quarter 2020 was $531,240 versus $139,683 in the prior year. The increase in revenue was primarily attributable to the build out of sales and marketing. Net loss for the quarter was -$1,529,070 versus -$955,226 million in the prior year. The net loss for the second quarter 2020 was due, primarily, to non-cash expenses for stock-based compensation.

Conference Call

Management will hold a conference call on Thursday, August 20, 2020 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its second quarter 2020 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 13708862.

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 13708862.

The conference call will be broadcast and available for replay on the investor relations section of the Exactus’ website and at http://public.viavid.com/index.php?id=141347.

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

About Exactus: 

Exactus Inc. (OTCQB:EXDI) is a leading producer and supplier of hemp-derived ingredients and feminized hemp genetics. Exactus is committed to creating a positive impact on society and the environment promoting sustainable agricultural practices. Exactus specializes in hemp-derived ingredients (CBD/CBG/CBC/CBN) and feminized seeds that meet the highest standards of quality and traceability. Through research and development, the Company continues to stay ahead of market trends and regulations.  Exactus is at the forefront of product development for the beverage, food, pets, cosmetics, wellness, and pharmaceutical industries.

For more information about Exactus: www.exactushemp.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, 2019 filed with the Securities and Exchange Commission (the "SEC") on May 22, 2020, 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.
509-999-9695
ir@exactusinc.com

     
     
Condensed Balance Sheets (Unaudited) - USD ($) Jun. 30, 2020 Dec. 31, 2019
Current Assets:      
Cash and cash equivalents   $298,754     $18,405  
Accounts receivable, net     42,895       55,725  
Accounts receivable - related party     107,660       18,860  
Inventory     340,528       1,337,809  
Prepaid expenses and other current assets - current     60,114       248,776  
Prepaid expenses and other current assets - related party - current     622,159       622,160  
Due from related parties     0       127,500  
Total current assets     1,472,110       2,429,235  
Other Assets:      
Deposits     0       80,000  
Prepaid expenses and other current assets - long term     9,589       0  
Prepaid expenses and other current assets - related party - long-term     2,175,000       2,492,045  
Property and equipment, net     405,775       477,433  
Intangible assets, net     1,656,894       2,147,311  
Operating lease right-of-use assets, net     310,694       390,810  
Total other assets     4,557,952       5,587,599  
TOTAL ASSETS     6,030,062       8,016,834  
Current Liabilities:      
Accounts payable     2,026,841       1,442,409  
Accounts payable - related party     454,511       454,511  
Accrued expenses     589,148       238,010  
Unearned revenue -related party     0       215,000  
Notes payable - current portion     90,755       0  
Note payable - related parties     78,017       55,556  
Subscription payable     250,000       250,000  
Convertible notes, net of discounts     575,979       85,906  
Derivative liability     468,387       880,410  
Interest payable     39,332       16,677  
Due to related party     84,500       0  
Operating lease liabilities, current portion     178,541       169,869  
Total current liabilities     4,836,011       3,808,348  
Long Term Liabilities:      
Convertible notes payable     0       100,000  
Notes payable - long-term portion     244,755       0  
Operating lease liabilities, long-term portion     132,154       220,942  
Total long term liabilities     376,909       320,942  
TOTAL LIABILITIES     5,212,920       4,129,290  
       



Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) 3 Months Ended 6 Months Ended
Jun. 30, 2020 Jun. 30, 2019 Jun. 30, 2020 Jun. 30, 2019
Income Statement        
Net revenues $531,240     $99,164     $1,051,440     $115,144  
Net revenues - related party   0       40,519       315,800       40,519  
Net revenues   531,240       139,683       1,367,240       155,663  
Cost of sales   562,270       0       1,604,743       0  
Cost of sales - related party   60,000       103,187       417,783       115,787  
Total cost of sales   622,270       103,187       2,022,526       115,787  
Gross profit (loss)   (91,030 )     36,496       (655,286 )     39,876  
Operating Expenses:        
General and administration   760,306       622,079       1,820,893       1,274,288  
Selling and marketing expenses   132,110       176,602       413,000       228,480  
Professional and consulting   552,197       330,891       1,280,068       2,211,038  
Research and development   0       11,975       0       26,975  
Total operating expenses   1,444,613       1,141,547       3,513,961       3,740,781  
Loss from Operations   (1,535,643 )     (1,105,051 )     (4,169,247 )     (3,700,905 )
Other Income (Expenses):        
Derivative gain (loss)   249,982       0       356,468       (1,454,729 )
Gain on extinguishment of debt, net   39,142       0       39,142       0  
(Loss) gain on settlement of debt, net   (16,500 )     0       (23,000 )     3,007,629  
Interest expense   (420,675 )     (2,519 )     (709,141 )     (369,432 )
Total Other Income (Expenses), net   (148,051 )     (2,519 )     (336,531 )     1,183,468  
Loss Before Provision for Income Taxes   (1,683,694 )     (1,107,570 )     (4,505,778 )     (2,517,437 )
Provision for income tax   0       0       0       0  
Net Loss   (1,683,694 )     (1,107,570 )     (4,505,778 )     (2,517,437 )
Net Loss attributable to non-controlling interest   154,624       152,344       310,443       187,948  
Net Loss Attributable to Exactus, Inc.   (1,529,070 )     (955,226 )     (4,195,335 )     (2,329,489 )
Deemed dividend on Preferred Stock   0       0       0       (904,450 )
Net Loss available to Exactus, Inc. common stockholders $(1,529,070 )   $(955,226 )   $(4,195,335 )   $(3,233,939 )
Net Loss per Common Share - Basic and Diluted $(0.03 )   $(0.03 )   $(0.10 )   $(0.09 )
Net Loss attributable to non-controlling interest per Common Share - Basic and Diluted   0       0       (0.01 )     (0.01 )
Net Loss available to Exactus, Inc. common stockholders per Common Share - Basic and Diluted $(0.03 )   $(0.03 )   $(0.09 )   $(0.12 )
Weighted Average Number of Common Shares Outstanding: Basic and Diluted   48,203,183       35,203,356       46,757,076       27,227,822  
                               



Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) 6 Months Ended
Jun. 30, 2020 Jun. 30, 2019
Cash Flows From Operating Activities:    
Net loss $(4,505,778 )   $(2,517,437 )
Adjustments to reconcile net loss to cash used in operations:    
Depreciation   53,787       11,851  
Derivative (gain) loss   (356,468 )     1,454,729  
Gain on extinguishment of debt, net   (39,142 )     0  
Stock-based compensation   1,023,303       2,083,638  
Bad debt expense   51,470       0  
Impairment expense   57,871       0  
Inventory reserve   660,000       0  
Amortization of prepaid stock-based expenses   378,138       0  
Amortization of discount and debt issuance costs for convertible notes   579,115       339,806  
Amortization of intangible assets   490,417       299,355  
Amortization of operating lease right-of-use assets   80,116       0  
Non-cash interest expense   90,000       0  
Loss (gain) on settlement of debt   23,000       (3,007,629 )
(Increase) decrease in operating assets:    
Accounts receivable   (38,640 )     (69,914 )
Accounts receivable - related party   (88,800 )     (40,519 )
Inventory   337,281       (1,047,781 )
Advance to supplier - related party   0       (820,108 )
Prepaid expenses and other current assets - current   127,570       (289,227 )
Prepaid expenses and other current assets - long term   (9,589 )     0  
Deposit   40,000       0  
Increase (decrease) in operating liabilities:    
Accounts payable   561,432       105,400  
Accounts payable - related party   0       6,762  
Accrued expenses   351,138       0  
Unearned revenues   (215,000 )     0  
Interest payable   28,815       6,746  
Operating lease liabilities   (80,116 )     0  
Net Cash Used In Operating Activities   (400,080 )     (3,484,328 )
Cash Flows From Investing Activities:    
Purchase of membership interest in subsidiary   0       (1,000,000 )
Purchase of property and equipment   0       (385,382 )
Net Cash Used In Investing Activities   0       (1,385,382 )
Cash Flows From Financing Activities:    
Advances from related party   97,000       30,000  
Repayments on related party advances   (12,500 )     0  
Proceeds from sale of Common Stock   350,000       5,478,838  
Payments of principal on notes payable   0       (11,129 )
Proceeds from issuance of notes payable   355,929       14,229  
Payments of principal on convertible notes   (110,000 )     (186,443 )
Proceeds from issuance of convertible notes, net of issuance cost   0       206,900  
Net Cash Provided By Financing Activities   680,429       5,532,395  
Net increase in cash and cash equivalents   280,349       662,685  
Cash and cash equivalents at beginning of period   18,405       1,960  
Cash and cash equivalents at end of period   298,754       664,645  
Supplemental Cash Flow Information:    
Cash paid for interest and finance charges   11,211       22,890  
Cash paid for taxes   0       0  
Non-Cash transactions investing and financing activity:    
Proceeds from sale of Series A preferred stock paid directly to settle debts   0       55,090  
Convertible notes and interest payable settled by Series A preferred stock issued   0       849,360  
Note payable, accrued expense and interest payable settled by common stock issued   83,160       40,616  
Convertible notes settled by common stock issued   0       196,000  
Common stock issued for purchase of membership interest in subsidiary   0       1,440,000  
Increase in intangible assets for subscription payable   0       1,650,000  
Initial beneficial conversion feature and debt discount on convertible notes   0       206,910  
Preferred deemed dividend   0       904,450  
Operating lease right-of-use assets and operating lease liabilities recorded upon adoption of ASC 842   0       506,506  
Reduction of operating lease right-of-use asset and operating lease liabilities $80,116     $39,470  
 

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Source: Exactus, Inc.