Panacea Life Sciences Holdings, Inc 10-Q for FY2020 Q2

Panacea Life Sciences Holdings, Inc. (PLSH)

10-Q 2020-08-19 For: 2020-06-30

Added on April 06, 2026

About this 10-Q

Panacea Life Sciences Holdings, Inc filed this 10-Q on August 19, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $531.24K; up 280.3% from $139.68K a year earlier
Net loss: $1.68M; compared with a net loss of $1.11M a year earlier

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Nevada	27-1085858
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

		Page

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits

	Condensed Consolidated Balance Sheets as June 30, 2020 (unaudited) and December 31, 2019;
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited);
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2020 and 2019 (unaudited);
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited);
	Notes to Unaudited Condensed Consolidated Financial Statements.

	June 30,	December 31,
	2020	2019
	(Unaudited)	(As Restated - see Note 14)
ASSETS
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, net	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	-	127,500
Total current assets	1,472,110	2,429,235

Other Assets:
Deposits	-	80,000
Prepaid expenses and other current assets - long-term	9,589	-
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 (see Note 7)	310,694	390,810
Total other assets	4,557,952	5,587,599

TOTAL ASSETS	$6,030,062	$8,016,834

LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable	$2,026,841	$1,442,409
Accounts payable - related parties	454,511	454,511
Accrued expenses	589,148	238,010
Unearned revenue - related party	-	215,000
Notes payable - current portion	90,755	-
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	-
Operating lease liabilities, current portion (see Note 7)	178,541	169,869
Total current liabilities	4,836,011	3,808,348

Long Term Liabilities:
Convertible notes payable	-	100,000
Notes payable - long-term portion	244,755	-
Operating lease liabilities, long-term portion (see Note 7)	132,154	220,942
Total long term liabilities	376,909	320,942

TOTAL LIABILITIES	5,212,920	4,129,290

Commitment and contingencies (see Note 11)

Equity:
Exactus, Inc. Stockholders' Equity
Preferred stock: 50,000,000 shares authorized; $0.0001 par value, 5,266,466 undesignated shares
Preferred stock Series A: 1,000,000 shares designated; $0.0001 par value,
323,019 and 353,109 shares issued and outstanding, respectively	32	35
Preferred stock Series B-1: 32,000,000 shares designated; $0.0001 par value,
1,650,000 shares issued and outstanding	165	165
Preferred stock Series B-2: 10,000,000 shares designated; $0.0001 par value,
7,516,000 shares issued and outstanding	752	752
Preferred stock Series C: 1,733,334 shares designated; $0.0001 par value,
none shares issued and outstanding	-	-
Preferred stock Series D: 200 shares designated; $0.0001 par value,
18 shares issued and outstanding	-	-
Preferred stock Series E: 10,000 shares designated; $0.0001 par value,
10,000 shares issued and outstanding	1	1
Common stock: 650,000,000 shares authorized; $0.0001 par value,
50,266,956 and 43,819,325 shares issued and outstanding, respectively	5,027	4,382
Common stock to be issued (287,500 and 664,580 shares to be issued, respectively)	28	66
Additional paid-in capital	26,905,565	25,343,293
Due from related parties	(127,500)	-
Accumulated deficit	(25,119,016)	(20,923,681)
Total Exactus Inc. Stockholders' Equity	1,665,054	4,425,013

Non-controlling interest in subsidiary	(847,912)	(537,469)

Total Stockholders' Equity	817,142	3,887,544

TOTAL LIABILITIES AND EQUITY	$6,030,062	$8,016,834

Large Accelerated Filer ☐ Non-Accelerated Filer ☐	Accelerated Filer ☐ Smaller reporting company ☑
	Emerging growth company ☐

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	(As Restated - see Note 14)
Net revenues	$531,240	$99,164	$1,051,440	$115,144
Net revenues - related party	-	40,519	315,800	40,519

Total net revenues	531,240	139,683	1,367,240	155,663

Cost of sales	562,270	-	1,604,743	-
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	-	11,975	-	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	-	356,468	(1,454,729)
Gain on extinguishment of debt, net	39,142	-	39,142	-
(Loss) gain on settlement of debt, net	(16,500)	-	(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 taxes	-	-	-	-

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	-	-	-	(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	$(0.00)	$(0.00)	$(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

Balance, December 31, 2019	353,109	$35	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1	43,819,325	$4,382	664,580	$66	$25,343,293	$-	$(20,923,681)	$(537,469)	$3,887,544

Common stock issued for private placement	-	-	-	-	-	-	-	-	-	-	-	-	500,000	50	-	-	99,950	-	-	-	100,000
Common stock issued for unissued common stock	-	-	-	-	-	-	-	-	-	-	-	-	287,500	29	(287,500)	(29)	-	-	-	-	-
Conversion of Series A Preferred Stock to Common Stock	(30,090)	(3)	-	-	-	-	-	-	-	-	-	-	150,450	15	-	-	(12)	-	-	-	-
Common stock issued for services	-	-	-	-	-	-	-	-	-	-	-	-	765,000	77	-	-	378,446	-	-	-	378,523
Stock-based compensation in connection with restricted common stock award grants	-	-	-	-	-	-	-	-	-	-	-	-	209,727	21	(68,750)	(7)	117,889	-	-	-	117,903
Stock options granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	140,866	-	-	-	140,866
Net Loss for the period	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		-	(2,666,265)	(155,819)	(2,822,084)
Balance, March 31, 2020	323,019	32	1,650,000	165	7,516,000	752	-	-	18	-	10,000	1	45,732,002	4,574	308,330	30	26,080,432	-	(23,589,946)	(693,288)	1,802,752

Common stock issued for private placement	-	-	-	-	-	-	-	-	-	-	-	-	2,500,000	250	-	-	249,750	-	-	-	250,000
Common stock issued upon convesion of convertible debt and accrued interest	-	-	-	-	-	-	-	-	-	-	-	-	811,588	81	-	-	99,492	-	-	-	99,573
Common stock issued in connection with forbearance agreement	-	-	-	-	-	-	-	-	-	-	-	-	500,000	50	-	-	89,950	-	-	-	90,000
Stock-based compensation in connection with restricted common stock award grants	-	-	-	-	-	-	-	-	-	-	-	-	723,366	72	(20,830)	(2)	279,263	-	-	-	279,333
Stock options granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	106,678	-	-	-	106,678
Due from related parties reclassified to equity	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(127,500)	-	-	(127,500)
Net Loss for the period	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(1,529,070)	(154,624)	(1,683,694)
Balance, June 30, 2020	323,019	$32	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1	50,266,956	$5,027	287,500	$28	$26,905,565	$(127,500)	$(25,119,016)	$(847,912)	$817,142

Balance, December 31, 2018	-	$-	2,800,000	$280	8,684,000	$868	1,733,334	$173	45	$1	-	$-	6,233,524	$623	-	$-	$7,111,445	$-	$(10,537,892)	$-	$(3,424,502)
Preferred stock issued upon convesion of
convertible debt	849,360	84	-	-	-	-	-	-	-	-	-	-	-	-	-	-	849,276	-	-	-	849,360
Preferred stock issued for private placement	55,090	6	-	-	-	-	-	-	-	-	-	-	-	-	-	-	55,084	-	-	-	55,090
Common stock issued for private placement	-	-	-	-	-	-	-	-	-	-	-	-	15,382,090	1,538	-	-	3,308,115	-	-	-	3,309,653
Common Stock issued for Master Supply	-	-	-	-	-	-	-	-	-	-	-	-	8,385,691	839	-	-	(839)	-	-	-	-
Common stock issued for debt settlement	-	-	-	-	-	-	-	-	-	-	-	-	203,080	20	-	-	40,596	-	-	-	40,616
Common stock issued for purchase of membership interest in subsidiary	-	-	-	-	-	-	-	-	-	-	-	-	937,500	94	-	-	989,906	-	-	-	990,000
Conversion of Series A Preferred Stock to Common Stock	(296,441)	(30)	-	-	-	-	-	-	-	-	-	-	1,482,205	148	-	-	(118)	-	-	-	-
Conversion of Series B-1 Preferred Stock to Common Stock	-	-	(400,000)	(40)	-	-	-	-	-	-	-	-	50,000	5	-	-	35	-	-	-	-
Conversion of Series B-2 Preferred Stock to Common Stock	-	-	-	-	(1,000,000)	(100)	-	-	-	-	-	-	125,000	13	-	-	87	-	-	-	-
Conversion of Series D Prefered Stock to Common Stock	-	-	-	-	-	-	-	-	(4)	(1)	-	-	100,000	10	-	-	(9)	-	-	-	-
Common stock issued upon convesion of
convertible debt	-	-	-	-	-	-	-	-	-	-	-	-	250,000	25	-	-	195,975	-	-	-	196,000
Stock warrants granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	1,114,062	-	-	-	1,114,062
Stock options granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	891,799	-	-	-	891,799
Deemed dividend on Preferred Stock	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	904,450	-	(904,450)	-	-
Net Loss for the period	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(1,374,263)	(35,604)	(1,409,867)
Balance, March 31, 2019	608,009	60	2,400,000	240	7,684,000	768	1,733,334	173	41	-	-	-	33,149,090	3,315	-	-	15,459,864	-	(12,816,605)	(35,604)	2,612,211

Common stock issued and unissued for private placement	-	-	-	-	-	-	-	-	-	-	-	-	1,282,175	128	2,606,958	261	2,168,796	-	-	-	2,169,185
Common stock unissued for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	20,000	2	19,498	-	-	-	19,500
Common stock unissued for purchase of membership interest in subsidiary	-	-	-	-	-	-	-	-	-	-	-	-	-	-	503,298	50	449,950	-	-	-	450,000
Stock options granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	58,279	-	-	-	58,279
Net Loss for the period	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	(955,226)	(152,344)	(1,107,570)
Balance, June 30, 2019	608,009	$60	2,400,000	$240	7,684,000	$768	1,733,334	$173	41	$-	-	$-	34,431,265	$3,443	3,130,256	$313	$18,156,387	$-	$(13,771,831)	$(187,948)	$4,201,605

	At June 30, 2020			At December 31, 2019
Description	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Derivative liabilities	—	—	$468,387	—	—	$880,410

	For the Six Months Ended June 30, 2020
Balance at beginning of period	$880,410
Transfers out due to conversions of convertible notes into common shares	(55,555)
Change in fair value included in derivative gain	(356,468)
Balance at end of period	$468,387

Intangible asset – Hemp farming license	$10,000
Intangible assets – farm leases	2,930,000
Total assets acquired at fair value	2,940,000
Total purchase consideration	$2,940,000

Intangible asset – trademark	$3,500
Intangible assets – customer list	212,529
Inventory	33,971
Total assets acquired at fair value	250,000
Total purchase consideration	$250,000

Intangible asset – Brand	$70,000
Total assets acquired at fair value	70,000
Total purchase consideration	$70,000

	June 30, 2020	December 31, 2019
	(Unaudited)
Finished goods – CBD products	$-	$-
Finished goods – hemp flowers and hemp cuttings	340,528	1,337,809
	$340,528	$1,337,809

	2020	2019
	(Unaudited)	(Unaudited)
Stock Options	4,781,697	5,684,375
Stock Warrants	2,014,299	1,154,500
Restricted stock to be issued upon vesting	6,461,536	-
Convertible Preferred Stock	9,460,845	5,542,212
Convertible Debt	8,143,768	250,000
Total	30,862,145	12,631,087

	Estimated life	As of June 30, 2020	As of December 31,2019
		(Unaudited)
Greenhouse	10 years	$34,465	$34,465
Fencing and storage	5 years	44,543	44,543
Irrigation	5 years	387,975	387,975
Office and computer equipment	3 years	40,834	40,834
Farming Equipment	5 years	11,500	11,500
Leasehold improvement	5 years	21,886	21,886
Total		541,203	541,203
Less: Accumulated depreciation		(117,557)	(63,770)
Less: Impairment expense		(17,871)	-
		$405,775	$477,433

Year ending December 31:	Amount
2020 (remainder)	$488,333
2021	976,667
2022	191,894
	$1,656,894

	As of June 30, 2020	As of December 31, 2019
	(Unaudited)	(As Restated- see Note 14)
Farm lease, ROU Asset	$506,506	$506,506
Less: Accumulated amortization	(195,812)	(115,696)

Balance of ROU asset	$310,694	$390,810

	Useful life	June 30, 2020	December 31, 2019
		(Unaudited)
Farm leases - EOW	3 year	$2,930,000	$2,930,000
Hemp operating license - EOW	1 year	10,000	10,000
Trademark – Green Goddess	3 year	-	3,500
Customer list – Green Goddess	3 year	-	212,529
Brand - Levor	3 year	-	70,000
Total		2,940,000	3,226,029
Less: Accumulated amortization		(1,283,106)	(828,526)
Less: Impairment expense		-	(250,192)
		$1,656,894	$2,147,311

	As of June 30, 2020	As of December 31, 2019
	(Unaudited)	(As Restated- see Note 14)
Farm lease	$506,506	$506,506
Reduction of lease liability	(195,811)	(115,695)
Total	310,695	390,811
Less: current portion	(178,541)	(169,869)
Long term portion of lease liability	$132,154	$220,942

Year ended December 31, 2020	$196,000
Year ended December 31, 2021	196,000
Year ended December 31, 2022	45,336
Total	437,336
Less: undiscounted payments during the six months ended June 30, 2020	(98,004)
Total undiscounted future minimum lease payments due as of June 30, 2020	339,332
Imputed interest	(28,637)
Total operating lease liability	$310,695

Year ended December 31, 2020	$11,859
Year ended December 31, 2021	155,501
Year ended December 31, 2022	68,392
Year ended December 31, 2023	2,091
Year ended December 31, 2024 and thereafter	97,667
Total principal payments	$335,510

	June 30, 2020 (Unaudited)	December 31, 2019
Convertible Notes in the aggregate amount of $100,000, issued on March 22, 2018. The Notes bear interest at a rate of 5% per annum and will mature on February 1, 2023. If a qualified financing from which at least $5 million of gross proceeds are raised occurs prior to the maturity date, then the outstanding principal balance of the notes, together with all accrued and unpaid interest thereon, shall be automatically converted into a number of shares of the Company’s Common Stock at $0.40 per Share. The Notes offer registration rights wherein the Company agrees that within 45 days of a Qualified Offering, prior to the Maturity Date, the Company shall file a registration statement with the SEC registering for resale of the shares of Company’s Common Stock into which the Notes are convertible. The Company shall send a written conversion notice to the lender pursuant to the note agreement during fiscal 2020 and as such the principal balance of the convertible note remains outstanding as of June 30, 2020 and December 31, 2019. The Company reclassed the principal balance to current portion as of June 30, 2020.	$100,000	$100,000

Convertible Note in the amount of $833,333, issued on November 27, 2019. The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single institutional investor (the “Purchaser”), pursuant to which the Company agreed to sell to Purchaser in a series of 3 closings up to $1,944,444 in aggregate principal amount of the Company’s senior secured convertible promissory notes (the “Notes”) and warrants to purchase shares of the Company’s Common Stock (the “Warrants”). On November 27, 2019 (the “Initial Closing Date”), the Company issued a Note in the principal amount of $833,333, and a two-year Warrant to purchase 275,612 shares of Common Stock at an exercise price of $0.756 per share (see Note 10). The Notes will be issued at a 10% original issue discount and bear an interest rate of 8%. The Notes mature one year after their issuance unless accelerated due to an event of default. The Notes are redeemable, in whole or in part, at any time at the discretion of the Company. At the Initial Closing Date, the Company received net proceeds, after the original issue discount and the Purchaser’s counsel fees, of $730,000. Each note is convertible at the option of the note holder at any time into shares of our common stock at the fixed conversion rate of $0.50 per share. However, the conversion rate is subject to adjustment in the event of default, redemption and upon the occurrence of certain events affecting stockholders generally, such as stock splits and recapitalizations. The Company must pay amortization redemption payments equaling one-ninth of the original principal amount due on each note commencing 90 days after issuance and continuing during the following eight months (each an “Amortization Redemption”). The note holder may at its option accelerate up to six future amortization redemption payments, in which case the note holder may demand the accelerated amortization amounts be paid in shares of the Company’s common stock at the lesser of i) the fixed conversion rate of $0.50 per share of common stock, or (ii) the rate equal to 80% of the lowest volume weighted average price, or VWAP, during the 10 trading days immediately before the applicable date of the amortization redemption payment (“Amortization Conversion Rate”). Amortization redemption payment amount is equivalent to 110% of the sum of (i) one-ninth (1/9th) of the Original Principal Amount of this Note, (ii) 100% of all accrued and unpaid interest on the principal amount of this Note that is subject to such Amortization Redemption, (iii) 100% of the Make-Whole Amount payable in respect of the principal amount of this Note that is subject to such Amortization Redemption (as applicable), and (iv) all liquidated damages, costs of collection and other amounts payable in respect of this Note as of the applicable amortization redemption payment Date for such Amortization Redemption. If the Company fails to make a redemption payment, the note holder may demand the amortization amounts be paid in shares of the Company’s common stock at the lesser of fixed conversion rate of $0.50 per share of common stock or the Amortization Conversion Rate. In addition, in the event of a subsequent issuance of the Company’s common stock or debt, the Company is subject to mandatory redemption provisions as defined in the note agreement. The Company may not issue shares of the Company’s common stock to third parties at a price lower than the fixed conversion rate of $0.50 per share of common stock without the consent of the note holder. At this time, the Company is delinquent in its payments under the initial convertible note, with the May 1, 2020, April 1, 2020, and a portion of the February 25, 2020 payments currently in arrears. The Company intends to make these payments and the upcoming monthly payments with receipts from product sales and/or the proceeds of additional equity funding. The Company paid original issuance cost of $83,333, cash commission and loan fees of $92,055, and recorded redemption premium of $88,889 related to the amortization redemption payment in connection with this note payable and are being amortized over the term of the note. On the Initial Closing Date, certain FINRA broker-dealers who acted on behalf of the Company were paid aggregate cash commissions of approximately $72,055 and were granted a four-year warrant to acquire an aggregate of 84,187 shares of Common Stock at an exercise price of $0.792 per share of common stock at any time before the close of business four years after their issuance, subject to adjustment in the event of stock dividends, splits, fundamental transactions, or other changes in our capital structure.	475,979	85,906
Carrying Amount of Convertible Debt, net of debt discount	$575,979	$185,906
Less: Current Portion, net of debt discount	(575,979)	(85,906)
Convertible Notes, Long Term	$-	$100,000

	June 30, 2020 (Unaudited)	December 31, 2019
Principal Amount	$933,333	$933,333
Add: amortization of redemption premium	63,902	8,280
Less: principal payments and conversions	(187,000)	-
Less: unamortized debt discount and debt issuance costs	(234,256)	(755,707)
Total convertible debt less unamortized debt discount and debt issuance costs	$575,979	$185,906

●		The Company has paid the Holder $60,000 in cash before July 1, 2020. Additional monthly payments required under the Amortization Schedule for the note shall continue to be due on or before the first day of each calendar month thereafter, commencing with the $110,000 payment originally due April 1, 2020 now due on or before August 1, 2020, and the subsequent monthly payments listed on the Amortization Schedule to be paid monthly in the sequence listed. Interest shall continue to accrue on the principal balance of the Note at the rate(s) stated therein, with all additional accrued interest resulting from this extension of payment deadlines to be paid as part of the last monthly payment. The Company paid the $110,000 on August 1, 2020.

●		The payments that are in arrears from February, April and May can be paid in whole or in part at any time at the sole election of the Holder in shares of common stock at the Amortization Conversion Price (defined as 80% of the lowest volume weighted average price, or VWAP, during the 10 trading days immediately before the applicable date of the amortization redemption payment).

	June 30, 2020 (Unaudited)	December 31, 2019
Expected Volatility	228.22 to 230.26%	376.76% to 567.11%
Expected Term	0.41 to 0.66 Years	0.25 to 1.0 Years
Risk Free Rate	0.15% to 0.18%	2.41% to 2.54%
Dividend Rate	0.00%	0.00%

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)
Balance at December 31, 2019	2,014,299	$0.45	3.31
Granted	—	—	—
Cancelled	—	—	—
Exercised	—	—	—
Forfeited	—	—	—
Balance at June 30, 2020	2,014,299	$0.45	2.81

Warrants exercisable at June 30, 2020	2,014,299	$0.45	2.81

Weighted average fair value of warrants granted during the period		$—

	Number of Options	Weighted Average ExercisePrice	Weighted Average Remaining Contractual Life(Years)
Balance at December 31, 2019	4,671,280	$0.29	7.29
Granted	1,000,000	0.30	10.00
Forfeited	(889,583)	0.57	0.00
Balance at June 30, 2020	4,781,697	0.29	8.75
Options exercisable at June 30, 2020	3,605,916	$0.25	8.62

Risk-free interest rate	1.55%
Expected volatility	263%
Expected term (in years)	10
Expected dividend yield	0%

	Restricted Stock Common Stock	Weighted Average Grant-Date Fair Value Per Share
Balance at December 31, 2019	3,583,328	$0.68
Granted	4,523,800	0.14
Vested and issued	(933,093)	0.46
Forfeited	(712,499)	0.70
Balance at June 30, 2020	6,461,536	$0.38

	As of March 31, 2020
	Previously	Adjustments	As Corrected
	Reported
Consolidated Balance Sheet
Current assets	$1,661,211	$-	$1,661,211
Current liabilities	$5,338,486	$(564,628)	$4,773,858
Working capital (deficit)	$(3,677,275)	$564,628	$(3,112,647)
Total assets	$8,458,826	$(1,705,115)	$6,753,711
Total liabilities	$6,985,191	$(2,034,232)	$4,950,959
Total stockholders' equity	$1,473,635	$329,117	$1,802,752

	As of September 30, 2019
	Previously	Adjustments	As Corrected
	Reported
Consolidated Balance Sheet
Current assets	$3,255,169	$-	$3,255,169
Current liabilities	$2,052,454	$(302,196)	$1,750,258
Working capital (deficit)	$1,202,715	$302,196	$1,504,911
Total assets	$11,449,203	$(1,858,284)	$9,590,919
Total liabilities	$4,054,527	$(1,940,563)	$2,113,964
Total stockholders' equity	$7,394,676	$82,279	$7,476,955

	For the Three Months Ended
	March 31, 2020
	Previously Reported	Adjustments	As Corrected
Consolidated Statements of Operations
Revenues	$836,000	$-	$836,000
Operating expenses	$2,192,767	$(123,419)	$2,069,348
Loss from operations	$(2,757,023)	$123,419	$(2,633,604)
Other income (expenses)	$(188,480)	$-	$(188,480)
Net loss	$(2,945,503)	$123,419	$(2,822,084)
Net Loss available to Exactus, Inc. common stockholders	$(2,789,684)	$123,419	$(2,666,265)
Basic & diluted EPS	$(0.06)	$0	$(0.06)

	For the Year Ended
	December 31, 2019
	Previously Reported	Adjustments	As Corrected
Consolidated Statements of Operations
Revenues	$345,680	$-	$345,680
Operating expenses	$9,177,988	$(205,698)	$8,972,290
Loss from operations	$(10,878,442)	$205,698	$(10,672,744)
Other income (expenses)	$653,936	$-	$653,936
Net loss	$(10,224,506)	$205,698	$(10,018,808)
Net Loss available to Exactus, Inc. common stockholders	$(10,591,487)	$205,698	$(10,385,789)
Basic & diluted EPS	$(0.31)	$0	$(0.31)

	For the Nine Months Ended
	September 30, 2019
	Previously Reported	Adjustments	As Corrected
Consolidated Statements of Operations
Revenues	$215,816	$-	$215,816
Operating expenses	$5,803,458	$(82,279)	$5,721,179
Loss from operations	$(5,803,847)	$82,279	$(5,721,568)
Other income (expenses)	$1,178,363	$-	$1,178,363
Net loss	$(4,625,484)	$82,279	$(4,543,205)
Net Loss available to Exactus, Inc. common stockholders	$(5,168,306)	$82,279	$(5,086,027)
Basic & diluted EPS	$(0.16)	$0	$(0.15)

Exhibit Number		Description of Exhibit


31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 formatted in Extensible Business Reporting Language (XBRL)

	Exactus, Inc.

August 19, 2020	/s/ Emiliano Aloi
	Emiliano Aloi
	Interim Chief Executive Officer and and Principal Executive Officer