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

August, 20 2020 10:52 AM Exactus Inc

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

Company Name:	Exactus Inc
Stock Symbol:	EXDI
Market:	OTC
Website:	exactushemp.com/

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