- 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:
in its first announcement of the year, on July 1, 2021, Exactus announced the acquisition of Panacea Life Sciences Inc, a producer of legal, trace THC, hemp-derived cannabinoid products for consumers and pets.
Panacea, founded in 2017 by Leslie Buttorff, operates a 51,000-square-foot cGMP (current good manufacturing practice)-certified facility in Golden, Colorado and PANA Botanical Farms in western Colorado, complete with fully integrated extraction, manufacturing, testing and fulfillment.
The company produces soft gels, gummies, tinctures, sublingual tablets, cosmetics and other topicals for purchase online, in stores and at smart kiosk vending machines being rolled out nationally.
In consideration for the transaction, Exactus issued 1 million shares of Series C convertible preferred stock, 1,000 shares of Series C-1 convertible stock, 1,000 shares of Series D convertible preferred stock and more than 473 million shares of common stock.
Additionally, the company said that Larry Wert had resigned as Exactus chairman, but will remain on the company’s board of directors. In connection with the acquisition closing, it added that Andrew Johnson had resigned as an officer of Exactus but will continue on with Panacea to assist with investor relationships, the company said.
Investors previously 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:
- More news on Panacea Life Sciences acquisition
- Further financial reports
- Regulatory changes for industry
- More contracts and deals
What the boss says:
In the announcement of the Panacea acquisition in July, Larry Wert outgoing Exactus chairman commented: "Since the beginning of 2021, we have focused on restructuring and properly positioning the company to execute a strategic acquisition. We are thrilled to have met Leslie Buttorff and the Panacea team as they have developed a real gem of a CBD company."
"Throughout this process, we have evaluated many companies, and Panacea has proven to be superior in all aspects. We are pleased to provide our loyal shareholders this opportunity to continue in the CBD arena," he added.
Contact the author at jon.hopkins@proactiveinvestors.com