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 | |||||