UNDISCOVERED EXACTUS IS TOP CANNABIS CBD PICK

May 15, 2019 -- InvestorsHub NewsWire --

• Exactus (OTC: EXDI) offers tinctures, edibles, capsules, and topical solution products and recently acquired 200-acre proven producer of high-concentration cannabis with new crops underway.

• Scalar Report projects potential $190 million in sales with potential net income of $127 million over next 3 years

• Recently closed over $4 million in new funding, clean Balance Sheet, retired all convertible notes and placed Preferred Shares convertible to common at $4.00 per share.

• Low share price of $.69, small market cap of $22 million, outstanding shares of only 32 million after reducing shares in exchange of 1 for 8.

• Scalar Report values Exactus shares substantially higher than current price and uplist to NASDAQ likely in next 12 months.

For good reason, several cannabis and CBD stocks have been outperforming most sectors of the stock market. Cannabis stocks are the new gold rush today with sales projected to exceed $46 billion by 2025. The well-known Cowen Research report estimates that Cannabis CBD products will generate $16 billion in annual sales by 2025 just in the United States. Roth Capital Partners estimates the U.S. market opportunity of $12.4 billion in 2025 with a potential $31 - $46B hemp-derived CBD market longer-term.

Enormous gains have already been made in some cannabis stocks but there are still a few undiscovered gems that are undervalued and about to soar as they claim their stake in this explosive new market.

Emerging MicroCaps covers several promising and outstanding young microcap companies and is now initiating coverage on Exactus, Inc. (OTC: EXDI) as our top pick for growth in the cannabis CBD sector. We feel that Exactus has thoughtfully developed a business plan that mitigates some of the biggest risks associated with cannabis stocks, has skillfully positioned the company for rapid growth beginning in 2019. Shares appear highly undervalued and based on very low volume and almost no message board chatter, they are undiscovered so far and represent an outstanding opportunity before word gets out.

Operations have already started on the new 200 acre proven cannabis farms. Exactus announced it is intensifying efforts to lead the industry in the hemp-derived Cannabidiol (CBD) market with the Company's initial planting of seedlings in approximately 200 prime acres located in southwest Oregon on its Exactus One World ("EOW") farms later this month.

The Company also disclosed an independent fairness opinion from Scalar, LLC highlighting EOW's estimated enterprise value between approximately $55 million and $74 million, supporting a robust future of the growing organization. At today's capitalization, this translates to a current value of between $1.75 and $2.35 per share compared to the current price of $.85. Scalar employed traditional valuation methods including market, income, and cost valuation approaches, and relied on financial projections and forecasts prepared and provided by the Company.  Link to Valuation Report available HERE.

In a recent press release, Philip Young, CEO of Exactus, Inc. said, "At Exactus our focus is to carry our business forward with our farming efforts forming a broad platform.  Our mission is to take responsibility all the way through the value chain to consumable products marketed directly by us and our partners.  Our farm based business model allows us to control the quality of our products throughout the supply chain to the Exactus label and white label finished products.  Industry data demonstrates that our profit yield should be many multiples over the value inherent in the recently completed valuation model, which merely assumes sale of harvested and dried biomass.  Taking the farm product to the consumer is our plan".  Young concluded saying, "Circumstance may arise where we may be able to sell biomass (for example hemp 'flower' can sell for up to $500/lb and is highly coveted as a consumer product in its own right as are 'pre-rolls'), in addition to isolate or distillate. Neither will become our core business, as we plan to principally focus on developing avenues for sales directly to consumers, yielding far superior revenues than would be the case merely from selling biomass, isolate or distillate to others.   The development of proprietary formulations for tinctures, gel caps and topical lotions are expected to put Exactus in a strong position to build significant customer loyalty by adhering to our core mission; to be recognized as the most trusted, transparent CBD company committed to quality and purity in every product."

Emiliano Aloi, President of Exactus commented, "Through a combination of carefully selecting the genetics from renowned Oregon CBD, partnering with experienced farms who have previously utilized these genetics in the region which is known to generate successful hemp crops with high CBD percentages, we believe we have created an excellent platform for successful harvests in 2019 and beyond.  Although agriculture is an uncertain science, we are highly confident.  We are currently in the process of building out two proprietary drying facilities in which we will not only have the resources capable of handling the capacity of our own harvest, we will be able to create an additional income stream by providing a service  to a number of farmers that reside in the region.  We continue to explore opportunities to acquire extraction and production assets to complete our plans to fully-integrate. Our fields have been completely prepped for planting, the planting crews and equipment are in place and are ready to transfer our seedlings to ground in the next month. We are very excited and expect amazing harvests this year and in the future."

On April 29th, Exactus announced that it had received an independent fairness opinion from Scalar, LLC ("Scalar") in connection with the Company's acquisition of two operating farms located in Southwest Oregon. Scalar is a nationwide business valuation firm engaged in valuation services for tax, financial reporting, transaction advisory, and litigation consulting, which is regularly engaged in providing transaction advisory valuation services in connection with mergers and acquisitions. The Company's Board of Directors selected Scalar to render the fairness opinion on the basis of Scalar's experience in similar transactions, its reputation in the professional services community and its familiarity with the Company and its business.  The fairness opinion confirms and concludes that the transaction consideration to be incurred by the Company in connection with the acquisition is fair, from a financial point of view, to the Company. 

In arriving at its opinion, Scalar performed a valuation analysis.  Scalar employed traditional valuation methods including market, income, and cost valuation approaches, and relied on financial projections and forecasts prepared and provided by the Company.  Through its majority-owned subsidiary Exactus One World, LLC ("One World"), the Company expects to produce over 500,000 pounds of agricultural biomass in the highly coveted Illinois and Rogue Valleys of Oregon.  During March 2019 the Company secured genetics (seeds) from Oregon CBD and commenced planting in April 2019.  The fairness opinion was based in part on the Company's One World forecast for its first harvest expected in approximately five to six months. 

Below is an excerpt from the Company's 2019-2021 Forecast:

Business Update - 

Expansion: During March 2019 Exactus, Inc. acquired a majority interest in two industrial hemp farms, totaling approximately 200 leased acres, from highly regarded hemp farmers located in Southwest Oregon.  Ceed2Med, LLC, a shareholder and supplier to the Company, developed the farms at the request of the Company so the Company can produce its own CBD biomass, isolate and distillate in 2019 and thereafter. The minority holders are experienced farmers who have successfully produced industrial hemp with Ceed2Med in Southwest Oregon.  The Company has acquired proprietary genetics (seeds) from Oregon CBD, a recognized leader in hemp genetics. The seeds purchased have at least a two year history of successful production in Oregon. Planting activities have commenced, with the starting mix and seed planting in the Company's greenhouses, which will yield seedlings in approximately 30 days.   Irrigation and soil preparation are complete and seedling to soil transplanting is expected to commence in approximately 30 days.

Production and Manufacturing:  During April 2019, the Company delivered raw materials (isolate and distillate) and began oversight of product development at two locations.
 

Wholesale and Retail:  During April 2019, the Company initiated discussions with pharmacy and physician groups and commenced direct sales to several customers. 
 

E-Commerce:  An e-commerce platform is in development and is planned to launch in second quarter.
 

Branding:  The Company has hired an internal senior director of marketing and has engaged an outside agency to develop its own Exactus branded product lines (tinctures, creams, gel caps, water) as well as to assist with white label/private label orders.  The brand is expected to launch in May 2019 including initial lines and SKUs.

New Product Development:  The Company is investigating a broad based number of proprietary CBD derived products and technology applications for introduction into the marketplace over the next several quarters.

A copy of the Scalar Valuation can be seen here.

Conclusion

Based on 2019 potential sales and earnings projections of $32,557,000 and $21,462,000 respectively, shares appear highly undervalued. If and when they are reported as projected, the current PE ratio of the S&P at 15 to 1 suggests a valuation of closer to $12.00 per share.

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