Exactus seeing revenue growth as it looks to build profitable company in the CBD space

Exactus seeing revenue growth as it looks to build profitable company in the CBD space

Highly scalable hemp farming knowledge base Mission to lead the hemp industry into mainstream consumer markets Experienced management What Exactus Inc does: Exactus Inc (OTCMKTS:EXDI) farms and manufactures hemp-derived cannabidiol (CBD) products. The company sells its CBD products through its own Exactus brand (Green Goddess) and white label products to third-party resellers. It is also engaged in producing industrial hemp from farms in Oregon and plans to extract and manufacture directly through certified good manufacturing practice (cGMP) facilities. Exactus One World is the name of the group’s farming and production initiative, which the firm says captures “the expansive and inclusive nature of the vision of a comprehensive seed to sale consumer program”. The seeds (genetics) used at Exactus One World are sourced from Oregon CBD, founded by Seth and Eric Crawford, who are believed to have developed superior strains of hemp seeds and are thought to be one of the world’s leading breeding, research and production facilities for CBD seed. The company has struck a supply and distribution agreement with cannabigerol (CBG) market leader Hemptown USA, opening a new revenue source to distribute Hemptown’s specialized cannabinoids, including top-flower, biomass and raw materials, namely crude, isolates and distillates. Found in low levels (usually less than 1%) in most cannabis strains, CBG is considered a minor cannabinoid but it has been found to act on specific human physiological problems, and results for medicinal use have been promising. For example, it has shown promise in fighting cancer. How is it doing: Investors last heard from Exactus in November 2020, when the company revealed tenfold revenue growth and its first profitable quarter in its third-quarter results. In the three months ended September 30, 2020, Exactus brought in revenue of $678,050, up from $60,153 in the third quarter of 2019. The increase was primarily attributable to a new customer who represented approximately 24% of the company’s net sales in the quarter. Gross profit for the quarter was $114,529. Exactus attributed its first profits in part to a growing digital sales infrastructure and increased investment into its back-end systems. The company recently launched the Exactus Alibaba storefront, which has helped the company automate sales processes for scalable revenue growth.  The company said it believes the hemp ingredient sector is maturing and taking a turn for the positive. The industry as a whole has experienced a major influx of investment into the space resulting in a recent departure of overleveraged companies, the company said. An increase in demand has led to new opportunities for Exactus, including distressed assets and underserved markets. Net loss for the third quarter was $3 million compared to $2 million in the same period last year. The net loss was primarily due to a non-cash impairment of intangible assets related to farm leases after the company decided not to pursue further farm operations in Oregon. Inflection points: Financial reports Regulatory changes More contracts and deals What the boss says: In the company’s third-quarter 2020 results statement in November, Exactus CEO Emiliano Aloi said: “We see renewed energy in the space, from investors to consumer markets. Our processes are streamlined from outreach all the way to fulfillment.” “With these new tools in place, our team can scale up sales and plug in new skus in a much faster, cost efficient, and organized manner. We have a clear direction, expanding supply chain, and growing sales. We look forward to ending the year strong, and on track with our M&A growth strategy as we make Exactus healthier, leaner, and more profitable,” he added. Contact the author at jon.hopkins@proactiveinvestors.com

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