10-Q/A - PLSH - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-38190

Exactus, Inc.

(Exact name of registrant as specified in its charter)

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

80 NE 4th Avenue, Suite 28, Delray Beach, FL 33483

(Address of principal executive offices, Zip Code)

(800) 881-9352

(Registrant's telephone number, including area code)

________________________________________________________

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 111,859,759 shares of common stock, par value $0.0001 per share, outstanding as of May 15, 2021.

Explanatory Note – this amended Quarterly Report on Form 10-Q amends certain information contained in our 10-Q for the quarter ended March 31, 2021, as filed with the Commission on May 24, 2021 (the “Original 10-Q”). The Original 10-Q was filed prior to the completion of a review by our Independent Accountant. Our Independent Accountant has reviewed the financial statements disclosed in this 10-Q/A.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item<br>1.	Financial<br>Statements	1
Item<br>2.	Management's<br>Discussion and Analysis of Financial Condition and Results of<br>Operations	17
Item<br>3.	Quantitative<br>and Qualitative Disclosures About Market Risk	21
Item<br>4.	Controls<br>and Procedures	21
	PART II – OTHER INFORMATION
Item<br>1.	Legal<br>Proceedings	22
Item<br>1A.	Risk<br>Factors	22
Item<br>2.	Unregistered<br>Sales of Equity Securities and Use of Proceeds	22
Item<br>3.	Defaults<br>Upon Senior Securities	22
Item<br>4.	Mine<br>Safety Disclosures	22
Item<br>5.	Other<br>Information	22
Item<br>6.	Exhibits	23
	Signatures	24

-i-

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Exactus, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	December<br>31,<br><br><br>2020

ASSETS
Current<br>Assets:
Cash<br>and cash equivalents	$25,139
Inventory,<br>net	10,712
Prepaid<br>expenses and other current assets	15,258
Total<br>current assets	51,109
Property<br>and equipment, net	20,159
Total<br>Assets	$71,268
LIABILITIES AND (DEFICIT)
Current<br>Liabilities:
Accounts<br>payable	$2,027,507
Accounts<br>payable - related parties	506,585
Accrued<br>expenses	620,391
Notes<br>payable - current portion - PPP loans	31,244
Note<br>payable - related parties	115,517
Subscription<br>payable	250,000
Convertible<br>notes, net of discounts	646,036
Convertible<br>notes – related party	50,250
Derivative<br>liability	237,022
Interest<br>payable	52,051
Operating<br>lease liabilities, current portion	269,115
Total<br>current liabilities	4,805,718
Notes Payable -<br>long term - SBA	99,100
Notes<br>payable - long term - PPP loans	205,166
Total<br>Liabilities	5,109,984
Commitment and contingencies (see Note7)
Preferred<br>stock Series A: 1,000 shares designated; 0.0001 par value, 500 and<br>0 shares issued and outstanding, respectively	-
Exactus, Inc. Stockholders' (Deficit)
Preferred stock: 50,000,000 shares authorized;<br>0.0001 par value, 7,999,000 undesignated<br>shares
Preferred<br>stock Series A: 1,000,000 shares designated; 0.0001 par value, 0<br>and 323,019 shares issued and outstanding,<br>respectively	32
Preferred<br>stock Series B-1: 32,000,000 shares designated; 0.0001 par value,<br>1,500,000 and 1,650,000, shares issued and outstanding,<br>respectively	165
Preferred<br>stock Series B-2: 10,000,000 shares designated; 0.0001 par value,<br>6,000,000 and 7,516,000 shares issued and outstanding,<br>respectively	752
Preferred<br>stock Series C: 1,733,334 shares designated; 0.0001 par value, 0<br>shares issued and outstanding	-
Preferred<br>stock Series D: 200 shares designated; 0.0001 par value, 0 and 18<br>shares issued and outstanding, respectively	-
Preferred<br>stock Series E: 10,000 shares designated; 0.0001 par value, 0 and<br>10,000 shares issued and outstanding	1
Common stock: 650,000,000 shares authorized;<br>0.0001 par value, 99,724,710<br>and 56,356,431 shares issued and outstanding,<br>respectively	5,636
Common<br>stock to be issued (100,000 shares to be issued )	10
Additional<br>paid-in capital	27,485,796
Due<br>from related party	(128,489)
Accumulated<br>deficit	(30,384,380)
Total<br>Exactus Inc. Stockholders' (Deficit)	(3,020,477)
Non-controlling<br>interest in subsidiary	(2,018,239)
Total (Deficit)	(5,038,716)
Total Liabilities and (Deficit)	$71,268

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

-1-

Table of Contents

Exactus, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended March 31,
	2021	2020
		(restated)
Net<br>revenues	$-	$520,200
Net<br>revenues - related party	-	315,800
Total net revenues	-	836,000
Cost<br>of sales	-	1,042,473
Cost<br>of sales - related party	-	357,783
Total cost of sales	-	1,400,256
Gross<br>profit (loss)	-	(564,256)
Operating<br>Expenses:
General<br>and administration	3,457,728	1,060,587
Selling<br>and marketing expense	26,097	280,890
Professional<br>and consulting	69,207	727,871
Total<br>Operating Expenses	3,553,032	2,069,348
Loss<br>from Operations	(3,553,032)	(2,633,604)
Other<br>Income (expenses):
Derivative<br>(loss) gain	(1,407,062)	106,486
Gain<br>(loss) on extinguishment of debt, net	153,931	(6,500)
Interest<br>expense	(200,753)	(288,466)
Total<br>Other Income (Expenses), net	(1,453,884)	(188,480)
Loss<br>Before Provision for Income Taxes	(5,006,916)	(2,822,084)
Provision<br>for income taxes	-	-
Net<br>Loss	(5,006,916)	(2,822,084)
Net<br>Loss attributable to non-controlling interest	-	155,819
Net<br>Loss Attributable to Exactus, Inc.	(5,006,916)	(2,666,265)
Deemed<br>dividend on preferred stock	(1,927,343)	-
Net<br>Loss available to Exactus, Inc. common stockholders	$(6,934,259)	$(2,666,265)
Net<br>Loss per Common Share - Basic and Diluted	$(0.06)	$(0.06)
Net<br>Loss attributable to non-controlling interest per Common Share -<br>Basic and Diluted	$-	$-
Net<br>Loss available to Exactus, Inc. common stockholders per Common<br>Share - Basic and Diluted	$(0.08)	$(0.06)
Weighted<br>Average Number of Common Shares Outstanding:
Basic<br>and Diluted	84,321,861	45,293,865

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

-2-

Table of Contents

Exactus, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' (Deficit) Equity

(Unaudited)

	Preferred<br>Stock		Common<br>Stock - Issued		Common<br>Stock -Unissued		Additional<br>Paid in	Accumulated	Non-controlling
	Shares	Amount	Shares	Amount	Shares	Amount	Capital	Deficit	Interest	Total
Balance, December 31, 2019 (restated)	9,529,127	$ 35	43,819,32	$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	(30,900)	(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<br>award grants - Q1 2020			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 (restated)	9,499,037	$ 950	45,732,002	$4,574	308,330	$30	$26,080,432	$(23,589,946)	$(693,288)	$1,802,752
	Preferred<br>Stock		Common<br>Stock - Issued		Common<br>Stock - Unissued		Additional<br><br><br>Paid<br>in	Due<br>from related	Accumulated	Non-controlling
---	---	---	---	---	---	---	---	---	---	---	---
	Shares	Amount	Shares	Amount	Shares	Amount	Capital	party	Deficit	Interest	Total
Balance, December 31, 2020	9,499,037	$950	56,356,431	$5,636	100,000	$10	$27,485,796	$(128,489)	$(30,384,380)	$(2,018,239)	$(5,038,716)
Common<br>stock issued for settlement of accounts payable and<br>accruals	-	-	10,605,240	1,061	-	-	602,820	-	-	-	603,881
Common<br>stock issued for settlement of convertible notes payables - related<br>party	-	-	2,383,841	238	-	-	443,156	-	-	-	443,394
Stock-based<br>compensation related to settlement of accounts payable and accruals	-	-	-	-	-	-	1,120,226	-	-	-	1,120,226
Stock-based<br>compensation in connection with equity awards	-	-	10,345,538	1,035	-	-	2,263,777	-	-	-	2,264,812
Conversion<br>of Preferred Stock to Common Stock	(1,999,037)	(200)	20,033,660	2,005	-	-	553,195	-	-	-	553,195
Net<br>loss	-	-	-	-	-	-	-	-	(5,006,916)	-	(5,006,916)
Balance March 31,<br>2021	7,500,500	$ 750	99,724,710	$9,975	100,000	$10	$ 32,468,970	$(128,489)	$(35,391,296)	$(2,018,239)	$(5,058,319)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

-3-

Table of Contents

Exactus, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Three<br>Months Ended March 31,
	2021	2020
Cash<br>Flows from Operating Activities:		(restated)
Net<br>loss	$(5,006,916)	$ (2,822,084)
Adjustments to<br>reconcile net loss to cash used in operating<br>activities:
Depreciation	3,090	26,727
Derivative (gain)<br>loss	1,407,062	(106,486)
Stock-based<br>compensation	3,385,038	637,292
Bad debt<br>expense	-	18,592
Inventory<br>reserve	-	553,440
Amortization of<br>prepaid stock-based expenses	-	195,299
Amortization of<br>discount and debt issuance costs for convertible notes	-	268,350
Amortization of<br>intangible assets	-	246,250
Deferred<br>rent	-	3,418
Loss (gain) on<br>settlement of debt	(153,931)	6,500
Non-cash interest<br>expense	186,692	-
Changes in<br>operating assets and liabilities:
(Increase) decrease<br>in operating assets:
Accounts<br>receivable	-	(236,360)
Accounts receivable<br>related party	-	(88,800)
Inventory	-	387,271
Prepaid expenses<br>and other current assets - current	4,702	88,240
Prepaid expenses<br>and other current assets - long term	-	(15,959)
Deposit	-	40,000
Increase (decrease)<br>in operating liabilities:
Accounts<br>payable	25,423	552,292
Accrued<br>expenses	110,231	287,730
Unearned<br>revenues	-	(215,000)
Interest<br>payable	13,191	9,005
Net<br>Cash Used In Operating Activities	(25,418)	(164,283)
Cash<br>Flows From Investing Activities:
Net<br>Cash Used in Investing Activities	-	-
Cash<br>Flows From Financing Activities:
Advances from<br>related party	-	85,000
Proceeds from sale<br>of common stock	-	100,000
Proceeds from<br>issuance of notes payable	20,000	20,419
Payments of<br>principal on convertible notes	-	(50,000)
Net<br>Cash Provided By Financing Activities	20,000	155,419
Net<br>(decrease) in cash and cash equivalents	(5,418)	(8,864)
Cash<br>and cash equivalents at beginning of year	25,139	18,405
Cash<br>and cash equivalents at end of period	$19,721	$9,541
Supplemental<br>Cash Flow Information:
Cash paid for<br>interest and finance charges	$-	$11,111
Cash paid for<br>taxes	$-	$-
Non-Cash<br>investing and financing activities:
Conversion of<br>preferred stock to common stock	$2,005	$-
Convertible notes<br>and interest payable settled by common stock issued	$50,250	$-
Accounts payable,<br>accrued expense and interest payable settled by common stock<br>issued	$828,144	$-
Preferred stock<br>deemed dividend	$1,927,343	$-
Reduction of<br>operating lease right-of-use asset and operating lease<br>liabilities	$-	$116,887

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

-4-

Table of Contents

EXACTUS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

NOTE 1 - NATURE OF ORGANIZATION

Organization and Business Description

Exactus, Inc. (the “Company”, “we”, “us”, “our”) was incorporated on January 18, 2008 as an alternative energy research and development company. During much of its history the Company had designed solar monitoring and charging systems which were discontinued in 2016 to focus on developing point-of-care diagnostic devices. In January 2019, the Company added to the scope of its business activities, efforts to produce, market and sell products made from industrial hemp containing cannabidiol (“CBD”).

The Company operates in one segment.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company’s unaudited condensed consolidated financial statements include the financial statements of its 50.1% subsidiary, Exactus One World, LLC (“EOW”) and 51% subsidiary, Paradise Medlife. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information, which includes consolidated unaudited interim financial statements and present the consolidated unaudited interim financial statements of the Company and its majority-owned subsidiary as of March 31, 2021. All intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, stockholders’ equity (deficit) and cash flows as of March 31, 2021 and 2020, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2020 and footnotes thereto included in the Company’s Report on Form 10K filed with the SEC on April 23, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

Going concern

The accompanying unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of the Company’s assets and the carrying amount of its liabilities based on the going concern uncertainty. As reflected in the accompanying unaudited condensed consolidated financial statements, the Company had a net loss attributable to Exactus Inc. common stockholders of $6.9 million as of March 31, 2021. The net cash used in operating activities was approximately $25,000 for the three months ended March 31, 2021. Additionally, the Company had an accumulated deficit of $35.4 million and working capital deficit of $3.5 million as of March 31, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of common and preferred shares and from the issuance of convertible promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending soon, management expects that the Company will need to further curtail its operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

-5-

Table of Contents

The Company expects to realize revenue through its efforts, if successful, to sell wholesale and retail products to third parties. However, as the Company is in a start-up phase, in a new business venture, in a rapidly evolving industry, many of its costs and challenges are new and unknown. In order to fund the Company’s activities, the Company will need to raise additional capital either through the issuance of equity and/or the issuance of debt.

The COVID-19 pandemic has resulted in a global slowdown of economic activity which is likely to continue to reduce the future demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains for an unknown period of time until the virus is fully contained. The Company’s business operations have been negatively impacted by the COVID-19 pandemic and related events and the Company expects this disruption to continue to have a negative impact on its revenue and results of operations, the size and duration of which is currently difficult to predict. The impact to date has included a decline in product and sales demand. Although the Company is unable to predict the full impact and duration of COVID-19 on its business, the Company is actively managing its financial expenditures in response to the current uncertainty.

The impact of the COVID-19 pandemic and related events, including actions taken by various government authorities in response, have increased market volatility and make the estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes more difficult. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.

Use of Estimates

The Company prepares its condensed consolidated financial statements in conformity with GAAP which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. In preparing the condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated balance sheet, and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include but are not limited to the fair value of derivative liabilities, income taxes, contingent liabilities, and fair value of non-cash equity transactions.

Recently Adopted Accounting Pronouncements

There have been no changes to the Company’s accounting policies or recent accounting pronouncement as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed on April 23, 2021 with the exception of the adoption of ASU 2020-06 Debt – Debt with Conversion and Other Options and Derivatives and Hedging.

ASU 2020-06 Debt – Debt with Conversion and Other Options and Derivatives and Hedging

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company early adopted ASU 2020-06 on January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

-6-

Table of Contents

Fair Value Measurements

The Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value, and expands disclosure of fair value measurements. The guidance prioritizes the inputs used in measuring fair value and establishes a three-tier value hierarchy that distinguishes among the following:

●	Level<br>1—Valuations based on unadjusted quoted prices in active<br>markets for identical assets or liabilities that the Company has<br>the ability to access.
●	Level<br>2—Valuations based on quoted prices for similar assets or<br>liabilities in active markets, quoted prices for identical or<br>similar assets or liabilities in markets that are not active and<br>models for which all significant inputs are observable, either<br>directly or indirectly.
---	---
●	Level<br>3—Valuations based on inputs that are unobservable and<br>significant to the overall fair value measurement.
---	---

The Company measures certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2021 and December 31, 2020:

	At<br>March 31, 2021			At<br>December 31, 2020
Description	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Derivative<br>liabilities	—	—	$—	—	—	$237,022

A roll forward of the level 3 valuation financial instruments is as follows:

	March 31,<br>2021
Balance at<br>beginning of year	$237,022
Transfers out due<br>to conversions of convertible notes	(1,644,084)
Change in fair<br>value included in derivative	1,407,062
Balance at end of<br>year	$—

The fair value of derivative liability is estimated using a lattice valuation model. Key assumptions of the lattice valuation model are the expected stock price, risk-free interest rate, expected volatility, expected term, and expected dividends. The stock price is based on the trade price of the underlying stock. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the derivative. Expected volatility is based on the historical stock price volatility. An expected term is estimated based on historical exercise behavior, post-vesting termination patterns, and future expected exercise behavior. The estimated assumptions used in the lattice valuation model to value our derivative liability were as follows:

	Derivative liability
	Year Quarter March 31, As of December 31,
	2021	2020
Risk-free<br>interest rate	0.08%	0.08%
Expected<br>volatility	233%	211%
Expected<br>term	2 months	2 months
Expected<br>dividends	0.0%	0.0%

As of March 31, 2021, the Company has no assets that are re-measured at fair value.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other assets consisted of the following:

	March<br>31,<br><br><br>2021	December<br>31,<br><br><br>2020
Prepaid<br>insurance	$7,556	$9,288
Other<br>assets	6,000	6,000
	$10,556	$15,258

Earnings per Share

The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, “Earnings per Share”. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if preferred stock converted to Common Stock and warrants are exercised. Stock options, stock warrants, restricted stock to be issued upon vesting, convertible preferred stock and convertible debt are excluded from the diluted earnings per share calculation if their effect is anti-dilutive.

-7-

Table of Contents

For the three months ended March 31, 2021 and 2020, the following potentially dilutive shares were excluded from the computation of diluted earnings per shares because their impact was anti-dilutive:

	March<br>31,
	2021	2020
Stock<br>options	7,251,749	4,809,822
Stock<br>warrants	1,578,549	2,014,299
Restricted<br>stock to be issued upon vesting	2,608,990	3,651,379
Convertible<br>preferred stock	11,875,000	9,460,845
Convertible debt	250,000	10,833,865
Total	23,564,288	30,770,210

Troubled Debt Restructuring

In February 2021, the Company agreed to settle certain debt instruments through the issuance of Series A Preferred Shares. Due to the Company's financial condition and the relative value of the Series A Preferred Shares in relation to the debt, we determined the transaction to be a troubled debt restructuring. See Note 5 for further discussion.

Preferred share exchange offering

In January 2021, the Company offered a modification to the terms of the Series A Preferred Shares, Series B-1 Preferred Shares and Series B-2 Preferred Shares with the intention of inducing conversion to common shares (collectively the “Inducement Securities”) In accordance with ASC 470, Debt a modification of an instruments that modifies a conversion option for the purposes of inducing a conversion that both 1) is exercisable for a limited period of time and 2) includes the issuance of all of the equity securities issuable pursuant to the conversion privileges. The modification of the Inducement Securities qualifies of such accounting treatment. As a result, the Company will report the impact of such changes as a charge against additional paid in capital and reflect the amount as a reconciling item between net income and income available to common shareholders.

NOTE 3 – INVENTORY

Inventory, net consisted of the following:

	March<br>31,<br><br><br>2021	December<br>31,<br><br><br>2020
Finished goods<br>– CBD	$10,712	$10,712

During the three months ended March 31, 2020, the Company recorded a reserve or inventory write-off related to damaged inventory of $553,440 due to mold and is included in cost of sales as reflected in the accompanying unaudited condensed consolidated statements of operations.

NOTE 4 - RELATED PARTY

Some of the officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. We have not formulated a policy for the resolution of such conflicts.

On January 22, 2021, the Company entered into a Settlement and Release Agreement (Settlement and Release Agreement) with Ceed2Med, LLC (C2M), a former affiliate of the company. Over the course of 2018-2019 the Company entered into a series of agreements for product and funding with C2M in connection with the seed-to-sale strategy for our hemp-derived CBD business, to secure farming rights and expertise, and to secure product, distribution, and funding. The Company previously issued 10,000 shares of Series E Preferred Stock convertible into 6,250,000 shares of common stock to C2M. Pursuant to the Settlement and Release Agreement, C2M permitted the Company to transfer all outstanding shares of Series E Preferred stock to settle various third-party claims and obligations, avoiding dilution in furtherance of ongoing restructuring efforts. The Company issued 3,000,000 common shares to a vendor to settle $575,000 of commercial accounts payable with a vendor resulting in the Company recognizing a $20,000 gain on the settlement of debt. The Company issued an officer of the Company 1,250,000 common shares valued at $231,250 at compensation in negotiating the settlement. Under the Settlement and Release Agreement with Ceed2Med, all existing agreements, obligations and claims have been cancelled and rescinded, the parties exchanged full mutual releases and the Company is to receive a cash payment of $200,000, of which $54,737 has been paid as of March 31, 2021 and included as a component of accrued liabilitues. If the remaining balance is not paid, the agreement with C2M may not be effectuated.

-8-

Table of Contents

NOTE 5 - Debt

The Company’s debt obligations are summarized as follows:

U.S. Small Business Administration Loan

On May 28, 2020, the Company received a Secured Disaster Loan in the amount of $99,100 from the U.S. Small Business Administration. The loan carries interest at a rate of 3.75% per year, requires monthly payments of principal and interest, and matures in thirty (30) years. Installment payments, including principal and interest, of $483 monthly, will begin twelve (12) months from the date of the promissory Note. The SBA loan is secured by a security interest in the Company's tangible and intangible assets. The loan proceeds are to be used as working capital to alleviate economic injury caused by the Covid-19 disaster occurring in the month of January 31, 2020 and continuing thereafter. As of March 31, 2021, the principal balance of this note amounted to $99,100 and accrued interest was approximately $2,047

Paycheck Protection Program Funding

On May 22, 2020, the Company received federal funding in the amount of $236,410 through the Paycheck Protection Program (the “PPP”). PPP funds have certain restrictions on use of the funding proceeds, and generally must be repaid within two (2) years at 1% interest. The PPP loan may, under circumstances, be forgiven. There shall be no payment due by the Company during the six months period beginning on the date of this note (“Deferral Period”). Commencing one month after the expiration of the Deferral Period, the Company was to pay the lender monthly payments of principal and interest, each in equal amount required to fully amortize by the maturity date. As no payment has been made, the lender shall charge a late fee of up to 5% of the unpaid portion of the regularly scheduled payment. As of March 31, 2021, the principal balance of this note amounted to $236,410 and accrued interest was approximately $3,146. In May 2021, the Company has received notification the principal and accrued interest have been forgiven.

Notes payable to unrelated parties is summarized below:

	March<br>31, 2021	December<br>31, 2020
Principal<br>amount	$335,510	$335,510
Less: current<br>portion	(209,825)	(130,344)
Notes payable -<br>long term portion	$125,685	$205,166

Minimum principal payments under notes payable to unrelated parties at March 31, 2021 are as follows:

Year ended<br>December 31, 2021	$ 167,360
Year ended<br>December 31, 2022	68,392
Year ended<br>December 31, 2023	2091
Year ended<br>December 31, 2024	2061
Year ended<br>December 31, 2025 and thereafter	95,506
Total principal<br>payments	$335,510

Notes payable – related party

During the fourth quarter 2020, the Company received $37,000 in cash proceeds from the former Chief Executive Officer and stockholder of the Company as an unsecured obligation with no term or stated interest. As of March 31, 2021, and December 31, 2020, the principal balance due is $37,000. In May 2021, the Company issued 700,000 common shares in settlement of $35,000 of the principle balance due.

During February 2020, the Company entered a short-term promissory note for principal amount of $22,461 and gross cash proceeds of $20,419 (original issue discount of $2,042) with a stockholder of the Company. The note became due and payable on March 8, 2020 and bore interest at a rate of eighteen (18%) percent per annum prior to the maturity date, and eighteen (18%) per annum if unpaid following the maturity date. The note is an unsecured obligation of the Company. In addition, the note carries a 10% original issue discount of $2,042 which have been amortized and recorded in interest expense on the accompanying statements of operations. The Company is currently negotiating to extend the maturity date of the related party note. As of March 31, 2021, and December 31, 2020, the principal balance of this note amounted to $22,461.

-9-

Table of Contents

During October 2019, the Company entered a short-term promissory notes with an officer of the Company, for an aggregate principal amount of $55,556. The note originally became due and payable between October 18, 2019 and December 16, 2019 and bore interest at a rate of twelve (12%) percent per annum prior to the maturity date, and eighteen (18%) per annum if unpaid following the maturity date. The current interest rate is 18%. The note is an unsecured obligation of the Company. The notes carry a 10% original issue discount of $5,556 which has been amortized and recorded in interest expense on the accompanying condensed consolidated statements of operations. As of March 31, 2021, and December 31, 2020, the principal balance under the note was $55,556. The Company is currently negotiating on extending the maturity date of the related party note.

During February 2021, the Company entered a short-term promissory note for principal amount of $20,000 with a stockholder of the Company. The note is payable on demand and bears interest at a rate of eight (8%) percent per annum. The note is unsecured obligation of the Company. As of March 31, 2021, the principal balance of this note amounted to $20,000 and accrued interest was $340.

Interest expense totaled approximately $6,200 for the three months ended March 31, 2021 and $2,200 for the three months ended March 31, 2020.

Convertible notes payable

Convertible Notes in the aggregate amount of $100,000 were issued on March 22, 2018. The Notes bear interest at a rate of 5% per annum and 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 offers 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 and as such the principal balance of the convertible note remains outstanding as of December 31, 2020 and 2019. The Company reclassed the principal balance to current portion as of December 31, 2020. During the second quarter 2021, the Company notified the holders the shares will be converted into common as the Company met the conversion requirements in 2019.

The following is a summary of the carrying amounts of all convertible notes as of March 31, 2021 and December 31, 2020:

	March<br>31, 2021	December<br>31, 2020
Principal<br>Amount	$100,000	$933,333
Add: additional<br>principal - related party	-	50,250
Add: amortization<br>of redemption premium	-	88,889
Less: redemption<br>premium payments	-	(20,800)
Less: principal<br>payments and conversions	-	(356,186)
Less: unamortized<br>debt discount and debt issuance costs	-	-
Total convertible<br>debt less unamortized debt discount and debt issuance<br>costs	$100,000	$696,286

Sale of Convertible Note

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. The Notes were issued at a 10% original issue discount and bear an interest rate of 8%. The Notes matured one year after their issuance unless accelerated due to an event of default. The Notes were 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 was convertible at the option of the note holder at any time into shares of common stock at the fixed conversion rate of $0.50 per share subject to adjustments.

On November 12, 2020, 3i provided notice of default to the Company, accelerating its obligations to pay the entire remaining principal balance of the Note, plus interest. Under the terms of the Note, upon an “Event of Default,” Exactus is required to pay to 3i an “Event of Default Redemption Amount” equal to 135% of the sum of the outstanding principal and accrued pre- and post-default interest under the Note. On February 8, 2021, 3i sold the Note to FFG. In connection with the sale of the Note to FFG, Exactus agreed to repurchase said Note and the related warrants in exchange for 500 shares of Series A Preferred Shares. The Series A Preferred Shares are convertible into 10,000,000 common shares at the option of the holder.

-10-

Table of Contents

In February 2021, the Company settled convertible debt with a carrying value of $732,728 and a derivative liability with a balance of $1,644,084 with 500 shares of Series A Preferred Shares, valued at $1,499,000. This transaction was accounted for as a troubled debt restructuring and resulted in the recognition of a gain on settlement of $0.9 million or $0.00 per share.

The changes in convertible debt for the quarter ended March 31, 2021 are:

Beginning<br>balance	$696,286
Cash<br>payments	-
Stock<br>settlement	(596,286)*
Ending<br>balance	$100,000

*excludes accrued interest and penalties of $136,442, which was reported in the interest payable

NOTE 6 - STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock

The Company’s authorized Common Stock consists of 650,000,000 shares with a par value of $0.0001 per share.

During the first quarter 2021, the Company issued 8,186,240 shares of common stock to an officer of the Company in settlement of $26,995 of payables due, $150,632 of accrued payroll, and $11,946 of interest due on a note with the officer. The fair value of the common shares amounted to approximately $1,310,000 resulting in the Company recognizing $1,120,226 of additional stock-based compensation.

During the first quarter 2021, the Company issued 2,419,000 shares of common stock to various vendors in settlement of $62,063 of commercial accounts payables. The fair value of the common shares amounted to approximately $414,000 resulting in the Company recognizing approximately $352,000 of loss on settlement of debt.

During the first quarter 2021, the Company issued 2,383,841 shares of common stock to a related party in settlement of a convertible note payable with a principal balance of $50,250 and accrued interest of $1,508. The fair value of the common shares amounted to approximately $444,000 resulting in the Company recognizing approximately $391,000 of loss on settlement of debt.

During the first quarter of 2021, the Company issued its four board members a total of 10,000,000 shares of common stock. The deemed fair vlaue of the shares amount to $1.7 million of stock-based compensation.

Common Stock Options

Stock Option Plan

In September 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for the issuance of incentive awards in the form of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company or to a subsidiary of the Company. The exercise price for stock options must not be less than the fair market value of the underlying shares on the date of grant. The incentive awards shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board or Compensation Committee may specify. Stock options expire no later than ten years from the date of grant. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 9,500,000. Unless sooner terminated, the Plan shall terminate in 10 years.

-11-

Table of Contents

A summary of the stock option activity is presented below:

	Options Outstanding
		Weighted	Weighted
		Average	Average
	Number of	Exercise	Remaining	Aggregate
	Shares Subject	Price Per	Contractual	Intrinsic
	to Options	Share	Life (in years)	Value
Balance at December 31, 2020	3,751,749	$0.23	8.0
Options<br>granted	3,500,000	$0.025	1.81
Options<br>exercised	—
Options<br>canceled / expired	—
Balance at March 31, 2021	7,251,749	$0.13	4.89	$667,500
Vested and exercisable at March 31, 2021	5,220,499	$0.17	5.76	$373,750

During the quarter ended March 31, 2021, the Company issued 3,500,000 options to an employee. The grant vested 50% on date of grant and 50% upon an approved combination transaction. The company recognized $262,500 of stock-based compensation related to the option grant. The company used the black-scholes option pricing model to determine the fair value of the award with the following inputs: exercise price $0.025, life of 24 months, risk free rate of 0.08% and volatility of 211.12%.

Warrants

As of March 31, 2021 and December 31, 2020, there were 1,578,549 common stock warrants outstanding with a weighted average exercise price of $0.49.

Restricted Common Stock

A summary of the restricted stock activity is presented below:

	Restricted Stock Common Stock	Weighted Average Grant-Date Fair Value Per Share
Balance<br>at December 31, 2020	2,960,803	$0.41
Granted	—	—
Vested	(351,813)	0.21
Forfeited	—	—
Balance<br>at March 31, 2021	2,608,990	$0.34

As of March 31, 2021, unamortized or unvested stock-based compensation costs related to restricted share arrangements was approximately $.2 million and will be recognized over a weighted average period of 0.72 years. The Company recognized approximately $70,000 of stock-based compensation in relation to the vesting of Restricted Common Stock during the quarter ended March 31, 2021.

-12-

Table of Contents

Preferred Stock

The Company’s authorized preferred stock consists of 50,000,000 shares with a par value of $0.0001.

	Preferred<br>Stock
	Series<br>A		Series<br>A		Series<br>B-1		Series<br>B-2		Series<br>C		Series<br>D		Series<br>E
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance, December 31, 2019	353,109	$35	-	-	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1
Conversion of<br>Series A Preferred Stock to Common Stock	(30,090)	(3)	-	-	-	-	-	-	-	-	-	-	-	-
Balance, March 31, 2020	323,019	$32	-	-	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1
	Preferred<br>Stock
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Series<br>A		Series<br>A		Series<br>B-1		Series<br>B-2		Series<br>C		Series<br>D		Series<br>E
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance, December 31, 2020	323,019	$32	-	$-	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1
Conversion<br>of Preferred Stock to Common Stock	(323,019)	(32)			(150,000)	(15)	(1,516,000)	(152)	-	-	(18)	-	(10,000)	(1)
Conversion of<br>Convertible note into Preferred Series<br>A	-	-	500	1,499,000	-	-	-	-	-	-	-	-
Balance, March 31, 2021	-	$-	500	$ 1,499,000	1,500,000	$150	6,000,000	$600	-	$-	-		$-	$-

During the quarter ended March 31, 2021, the Company offered to modify the conversion price of the outstanding Series A Preferred Shares (from $0.20 to $0.025), Series B-1 Preferred Shares and Series B-2 Preferred Shares (from $0.25 to $0.125) the “Exchange Offering”). As a result of the Exchange offering, the holders converted 323,019 Series A Preferred Stock into 12,917,160 shares of common stock, 150,000 Series B-1 Preferred Stock into 37,500 shares of common stock, 1,516,000 Series B-2 Preferred Stock into 379,000 shares of common stock. This resulted in a gain of conversion of $1,927,343, The gain was reported as a credit to additional paid in capital and reflected as a deemed dividend in reporting earnings available to common shareholders. In addition to the Exchange Offering, 18 Series D Preferred Stock converted into 450,000 shares of common stock, and 10,000 Series E Preferred Stock converted into 6,250,000 shares of common stock.

On February 16, 2021, the Company entered into a Securities Purchase Agreement with 3i, LP (“3i”) and an institutional investor (“Investor”) under which the Investor agreed to purchase and 3i agreed to sell certain 8% senior secured convertible note dated November 27, 2019 (the “Note”) and all of our warrants previously issued to 3i and 3i agreed settle and release all claims asserted against the Company. As a result, 3i agreed to dismiss all pending litigation against the Company. Furthermore, the Subsidiary Guaranty, IP Security Agreement and Registration Rights Agreement with 3i were also terminated.

In addition, the Company entered into an Exchange Agreement with the Investor and filed with the Secretary of State of the State of Nevada a Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred Stock under which the Note in the original principal amount of $750,000 would be exchanged for 500 shares of a new series of our preferred stock designated 0% Series A Convertible Preferred Stock (the “Series A Preferred”) with a stated value of $1,000 per share (the “Stated Value”).

The Company authorized the issuance of a total of 1,000 ($1,000,000) of Series A Preferred for issuance. Each share of Series A Preferred is convertible at the option of the Holder, into that number of shares of our common stock, par value $0.0001 per share) (the “Common Stock”) (subject to certain limitations on beneficial ownership) determined by dividing the Stated Value by $0.05 per share (the “Conversion Price”), subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications or similar transactions that proportionately decrease or increase the Common Stock.

-13-

Table of Contents

The Company is prohibited from effecting the conversion of the Series A Preferred to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99% (which may be increased to 9.99% upon 61 days’ written notice to the Company), in the aggregate, of the issued and outstanding shares of the Common Stock calculated immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred. Holders of the Series A Preferred shall be entitled to vote on all matters submitted to the Company’s stockholders and shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series A Preferred Stock are convertible, subject to applicable beneficial ownership limitations. The Series A Preferred Stock provides a liquidation preference equal to the Stated Value, plus any accrued and unpaid dividends, fees or liquidated damages.

The Series A Preferred can be redeemed at the Company’s option upon payment of a redemption premium between 120% to 135% of the Stated Value of the outstanding Series A Preferred redeemed. The Company is not obligated to file a registration statement under the Securities Act of 1933, as amended (the “Act”), with respect to the shares of Common Stock into which Series A Preferred may be converted however the Investor will be deemed to have held the Series A Preferred on the original issue date to 3i for the purposes of the availability of an exemption from registration provided by Rule 144 under the Act.

On February 16, 2021 the Company offered to our prior Series A preferred stock enhanced conversion inducements to voluntarily convert preferred shares into our Common Stock and filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred Stock, all of which has been converted to Common Stock, in order to issue the new Series A Preferred stock described herein.

On April 7, 2021 the Company filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock, all of which has been cancelled or converted into Common Stock.

On February 16, 2021, the Company offered to our Series E preferred stock accelerated vesting to voluntarily convert preferred shares into our Common Stock.

-14-

Table of Contents

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Legal Matters

In the ordinary course of business, the Company enters into agreements with third parties that include indemnification provisions which, in its judgment, are normal and customary for companies in the Company’s industry sector. These agreements are typically with business partners, clinical sites, and suppliers. Pursuant to these agreements, the Company generally agrees to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to the Company’s product candidates, use of such product candidates, or other actions taken or omitted by us. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, the Company has no liabilities recorded for these provisions as of March 31, 2021 or 2020.

On February 26, 2020 a complaint was filed against the Company in the Circuit Court, Palm Beach County, Florida on behalf of two former employees of the Company. The case is entitled Ryan Borcherds and Miriam Martinez vs. Exactus, Inc. (Case No. 103978709). These former employees were hired in January 2020. The complaint alleged the Company failed to pay wages and compensation to 2 employees under the Fair Labor Standards Act, breach of contract and violation of various Florida statutes, including allegations on behalf of other similarly situated persons. On May 8, 2020, an amended complaint was filed against the Company in the Circuit Court, Palm Beach County, Florida on behalf of six former employees, with one additional employee added to the suit in June 2020. The amended case is entitled Ryan Bocherds, Marc Reiss, Jeannine Boffa, Benjamin Blair, Miriam Martinez and Michael Amoroso vs. Exactus, Inc, (Case No. 50-2020-CA-002274-MB). The other four former employees were hired between April 2019 and December 2019. As of December 31, 2019, the Company has recorded total accrued salaries of $26,494 related to these former employees. On September 8, 2020, the Company entered into settlement agreements and mutual releases with all plaintiffs. Under the settlement agreements, the Company is obligated to pay a total of $131,130 (including $16,000 in legal fees and excluding any applicable payroll taxes) to the plaintiffs. Under the settlement agreements, the Company paid each plaintiff 50% of the settlement amount at the time of signing and are obligated to pay the remaining settlement amounts in six monthly installments. In May 2021, the Company settled this matter for approximately $50,000.

The 50% amount as well as the first monthly installment for each plaintiff was paid and we are in default for the remaining 5 monthly payments.

On October 26, 2020 two complaints were filed in the Circuit Court, Palm Beach County, Florida on behalf of a former vendors of the Company. The cases entitled SEP COMMUNICATIONS LLC V EXACTUS INC. 50-2020-CA-011680-XXXX-MB and SOUTHEASTERN PRINTING COMPANY V EXACTUS INC 50-2020-CC-009475-XXXX-SB seeks approximately $54,612.80 & $19,528.36 respectively, plus interests and court costs. In May 2021, the Company settled this matter for $20,000.

NOTE 8. RESTATEMENT OF PRIOR FINANCIAL INFORMATION

Subsequent to the Company’s external auditor’s periodic review of the Form 10-Q for the Periods Ended September 30, 2019 and March 31, 2020, annual audit for the year ended December 31, 2019 and, in the process of review, the current Form 10-Q for the Period Ended June 30, 2020, the Company conducted further reviews of the consolidated financial statements. Based on such reviews, the following determinations were made:

Error in Accounting for Operating Lease Right-of-Use Asset and Operating Lease Liabilities

During the second quarter of fiscal 2020, the Company has determined that the commercial lease with Skybar Holding, LLC is not in compliance with current laws or regulations in the City of Delray Beach and does not represent an enforceable contract and was void from the moment of execution. Therefore, the accounting treatment for the recognition of the operating lease right-of -use asset and operating lease liabilities upon adoption of ASC 842 related to this commercial lease was incorrect. As a result of a detailed review of this commercial lease, the Company has made an assessment in the second quarter of fiscal 2020 that the lease is unenforceable and should not have been accounted for under ASC 842. Additionally, the Company reversed previously recorded accrued expenses related to this commercial lease agreement.

In accordance with the guidance provided by the Accounting Standards Codification (“ASC”) 250 – “Accounting Changes and Error Corrections” (“ASC 250”), SEC’s Staff Accounting Bulletin 99, Materiality (“SAB 99”) and Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”), the Company has determined that the impact of adjustments relating to the corrections of this accounting error are not material to previously issued annual audited and unaudited financial statements and as such no restatement was necessary. Correcting prior year financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior year financial statements. Accordingly, these misstatements were corrected during the period ended September 30, 2020 and will be disclosed prospectively.

The effect on these revisions on the Company’s condensed consolidated balance sheet is as follows:

	As of March 31,<br>2020
	Previously Reported	Adjustments	As Corrected
Consolidated Balance Sheet
Current<br>assets	$1,661,211	$-	$1,661,211
Current<br>liabilities	$5,338,486	$(564,628)	$4,773,858
Working<br>capital (deficit)	$(3,677,275)	$564,628	$(3,112,647)
Total<br>assets	$8,458,826	$(1,705,115)	$6,753,711
Total<br>liabilities	$6,985,191	$(2,034,232)	$4,950,959
Total<br>stockholders' equity	$1,473,635	$329,117	$1,802,752
	For the Three<br>Months Ended
---	---	---	---
	March 31,<br>2020
	Previously Reported	Adjustments	As Corrected
Consolidated Statements of Operations
Revenues	$836,000	$-	$836,000
Operating<br>expenses	$2,192,767	$(123,419)	$2,069,348
Loss<br>from operations	$(2,757,023)	$123,419	$(2,633,604)
Other<br>income (expenses)	$(188,480)	$-	$(188,480)
Net<br>loss	$(2,945,503)	$123,419	$(2,822,084)
Net<br>Loss available to Exactus, Inc. common stockholders	$(2,789,684)	$123,419	$(2,666,265)
Basic<br>& diluted EPS	$(0.06)	$0	$(0.06)

The revisions had no effect in the cash used in operating activities on the Company’s consolidated statements of cash flows.

-15-

Table of Contents

NOTE 9 – CONCENTRATION OF REVENUE AND SUPPLIERS

During the three months ended March 31, 2020, total sale of CBD products and hemp flowers to two customers represented approximately 89% (51%, and 38% - related party) of the Company’s net sales.

As of December 31, 2020, total accounts payable with one vendor was approximately 27% of total accounts payable.

NOTE 10 - SUBSEQUENT EVENTS

U.S. Small Business Administration Loan

On April 26, 2021, we received a loan in the principal amount of $236,410 from the U.S. Small Business Administration under the Paycheck Protection Program. The loan, which is documented by a Note and Loan Agreement, bears interest at a rate of 1% per year and is due in five (5) years. No payments under the Note are due during the time that payments are deferred under the Coronavirus Aid, Relief, and Economic Security Act, Paycheck Protection Program Flexibility Act of 2020, and the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Act”). One month after the deferral period provided under the Act expires, we will be required to make monthly payments of principal and interest in such equal amounts as are required to fully amortize the loan by the maturity date. The Note may be prepaid at any time without penalty. Upon fulfillment of conditions for forgiveness provided by the Paycheck Protection Program under the Act, the loan may be forgiven in whole or in part.

Reverse Stock Split

On March 31, 2021, a majority of our shareholders approved a reverse split of our common stock by written consent. The consenting shareholders approved a reverse split of our common stock, par value $0.001 per share, at by a ratio of not less than one-for-twenty five and not more than one-for-one hundred to take effect at any time prior to December 31, 2021, with the exact ratio to be set at a whole number within this range as determined by the Company’s board of directors in its sole discretion. The effective date of the reverse split, if undertaken in the discretion of the board of directors, will be as determined by the board in coordination with FINRA.

Share Issuance

During the second quarter 2021, the Company issued 9,286,609 shares to resolved approximately $324,000 of accounts payable and accruals, 1,848,440 shares in settlement of approximately $159,000 in principal on various notes and 1.0 million shares in relation to the conversion of Series A preferred shares into common stock.

PPA Loan Forgiveness

In May 2020, the Company received notice the PPP principal and accrued interest balance totalling approximately $239,000 was forgiven.

-16-

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

Cautionary Statement Regarding Forward-Looking Statements

The following discussion should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the year ended December 31, 2020 found in the Form 10-K /A (the “Form 10-K”).

This Quarterly Report contains forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements.

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” in our annual report on Form 10-K and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

As used herein, the “Company,” “we,” “us” and “our” refer to Exactus, Inc. Unless specified otherwise, the financial results in this Quarterly Report are those of the Company and its subsidiaries on a consolidated basis.

Business Overview

Exactus, Inc. was incorporated on January 18, 2008 as an alternative energy research and development company. During much of its history the Company had designed solar monitoring and charging systems which were discontinued in 2016 to focus on developing point-of-care diagnostic devices. In January 2019, the Company added to the scope of its business activities, efforts to produce, market and sell products made from industrial hemp containing cannabidiol (“CBD”).

The Company operates in one segment.

Our principal executive offices were located at 80 NE 4th Avenue, Suite 28 Delray Beach, FL 33483 until mid-2020 when we commenced remote operations due to Covid-19, and our telephone number is (800) 881-9352.

-17-

Table of Contents

Industrial Hemp

We seek to take advantage of an emerging worldwide trend to utilize the production of cannabinoids derived from industrial hemp, such as CBD, CBG and CBN, to produce consumer products. Hemp is being used in cosmetics, nutritional supplements, and animal feed, where we also intend to focus our efforts. The market for hemp-derived products is expected to increase substantially over the next five years.

The therapeutic potential of cannabinoids is attributable to the valuable overlap between phyto-cannabinoids (i.e. plant-derived cannabinoids) and the endogenous cannabinoid system in humans, termed a “therapeutic handshake”. Clinical trials demonstrate few adverse effects from oral CBD doses of up to 1,500 mg/day or up to 30 mg IV. The scientific understanding of CBD’s clinical effects is based mostly on studies in specific indications, like epilepsy. One company, GW Pharmaceuticals pls, a leading company developing pharmaceutical drugs and cannabinoid-based medicines, has sought and obtained US and foreign approvals since 2018. EPIDIOLEX®/EPIDYOLEX® (cannabidiol), the first prescription, plant-derived cannabis-based medicine approved by the U.S. Food and Drug Administration (FDA) for use in the U.S. and the European Commission (EC) for use in Europe, is an oral solution which contains highly purified cannabidiol (CBD). In the U.S., EPIDIOLEX® is indicated for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS), Dravet syndrome or Tuberous Sclerosis Complex (TSC) in patients one year of age and older. EPIDIOLEX® has received approval in the European Union under the tradename EPIDYOLEX® for adjunctive use in conjunction with clobazam to treat seizures associated with LGS and Dravet syndrome in patients two years and older. In September 2020, EPIDYOLEX® was approved by the Australian Therapeutic Goods Administration (TGA) for use in Australia for the treatment of seizures associated with LGS or Dravet syndrome in patients two years of age and older. EPIDYOLEX® has received Orphan Drug Designation from the European Medicines Agency (EMA) for the treatment of seizures associated TSC.

Healthcare

Currently, CBD products are not a covered benefit, or an extra benefit, under managed care, insurance, Medicare, Medicaid or any state programs. This will likely continue to be the case for the intermediate term. Legal issues and confusion concerning legality, lack of FDA regulation and availability as an OTC medication will likely continue for an indefinite period impeding adoption and payor acceptance.

Competition

We believe a multitude (hundreds) of companies, large and small, have launched or intend to launch retail brands and white label products containing cannabinoids like CBD. Many of these are dependent upon third parties to provide raw material inventory for sale. We believe this makes many of the participants in the industry vulnerable to shortages, quality issues, reliability, and pricing variability. Our industry relationships may allow us to build an efficient supply chain that will put us among the few companies that maintain a competitive pricing and supply advantage.

The CBD-based consumer product industry is highly fragmented with numerous companies, many of which are under-capitalized. There are also large, well-funded companies that currently do not offer hemp-based consumer products including large agribusiness companies such as Cargill and Tyson Foods, but may do so in the future and become significant competitors.

Our goal is to rapidly establish one or more principal sources of supply and to develop wholesale and retail sales channels for end-products, such as nutraceuticals, supplements and pet and farm products.

Environmental Matters

Compliance with federal, state and local requirements regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, have not had, nor are they expected to have, any direct material effect on our capital expenditures, earnings or competitive position, however such factors could indirectly affect us as well as participants in the supply chain for our products, and our business, operations, vendors or suppliers.

Recent Developments

Expected Changes in Number of Employees, Plant, and Equipment

We do not currently plan to purchase specific additional physical plant and significant equipment within the immediate future.

-18-

Table of Contents

Results of Operations

Three months ended March 31, 2021 and 2020:

Net Revenues

The Company is principally engaged in the business production and selling of products made from industrial hemp.

During the three months ended March 31, 2021, we generated no revenue due to limited capital resources.

During the three months ended March 31, 2020, we generated total revenues of $836,000 from the sale of CBD products and hemp flowers, including revenues of $315,800 from a related party, C2M, who was a majority stockholder of the Company,

Cost of Sales

The primary components of cost of sales include the cost of the CBD product. For the three months ended March 31, 2020, the Company’s cost of sales amounted to $1,400,256 which primarily represents cost of CBD products and hemp flowers sold including cost of hemp flowers sold to C2M for a total of $357,783 and inventory write-off of hemp flowers of $553,440 due to damages from mold.

Operating Expenses

General and administrative expenses increased by $2.4 million from $1,060,587 in 2020 to $3,457,728 during the three months ended March 31, 2021. The increase is mainly as a result of reduced operating activity related to lack of available capital to operate the business. The majority of the current period expense is related to non-cash stock-based compensation related to compensation of employees and the settlement of outstanding liabilities.

Selling and marketing expenses decreased by $254,793 from $280,890 in 2020 to $26,097 for the three months ended March 31, 2021, primarily due to decrease in sales activity related to limited capital resources.

Professional and consulting fees decreased by $658,664 from $727,871 in 2020 to $69,207 for the three months ended March 31, 2021, primarily due to due to decrease in sales activity related to limited capital resources.

Other Expenses, net

Change in Fair Value of Derivative Liability increased by $1,513,548 for the three months ended March 31, 2021 primarily due to the adjustments to fair value and reflects the increase of our stock price at quarter end. The underlying derivative was settled during the quarter when the convertible note was converted to common stock.

Gain on extinguishment of debt increased by $160,431 for the three months ended March 31, 2021 primarily due to the conversion of notes and interest into common stock offset by the settlement of accounts payable, accrued expenses, accrued payroll and convertible notes payable – related party with common stock.

Interest expense decreased by $87,713 for the three months ended March 31, 2021 primarily due to conversion of the convertible note.

Liquidity and Capital Resources

These unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of the Company’s assets and the carrying amount of its liabilities based on the going concern uncertainty. Since our inception in 2008, we have generated losses from operations. As of March 31, 2021, our accumulated deficit was $35.4 million, we had $19,721 in cash and working capital deficit of $3.5 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. In addition, due to insufficient revenue, we will need to obtain further funding through public or private equity offerings, debt financing, collaboration arrangements or other sources in order to maintain active business operations. We currently do not have sufficient cash flow to pay our ongoing financial obligations on a consistent basis. The issuance of any additional shares of Common Stock, preferred stock or convertible securities could be substantially dilutive to our shareholders. In addition, adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital, we will be forced to delay, reduce or eliminate our research and development programs, we may not be able to continue as a going concern, and we may be forced to discontinue operations. These unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

-19-

Table of Contents

At March 31, 2021, the Company had various outstanding payables and debts totaling $3.6 million and approximately $19,721 in cash.

Net cash used in operating activities for the three months ended March 31, 2021 was $25,418, due to our net loss of $5.0 million offset by non-cash stock based compensation of $3.4 million, non-cash derivative liability of $1.4 million, and non-cash interest of $186,692 offset by non-cash gain of $153,931.

No cash was used in investing activity for the three months ended March 31, 2021.

Net cash provided by financing activities for the three months ended March 31, 2021 was $20,000 related to proceeds from a note payable with a shareholder.

Currently, we do not expect our financing activities to be a significant source of cash in 2021.

Off Balance Sheet Arrangements

As of March 31, 2021, we had no material off-balance sheet arrangements.

In the normal course of business, we may be confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by accounting principles generally accepted in the United States, an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements. After consultation with legal counsel, we do not anticipate that liabilities arising out of currently pending or threatened lawsuits and claims will have a material adverse effect on our financial position, results of operations or cash flows.

Potential Impacts of the COVID-19 Pandemic on Our Business and Operations

In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in each of the areas in which we operate. The COVID-19 (coronavirus) outbreak has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place” and other governmental regulations, reduced business and consumer spending due to both job losses and reduced investing activity, among many other effects attributable to the COVID-19 (coronavirus), and there continue to be many unknowns. While to date we have not been required to stop operating, management has utilized virtual meetings and will likely not return to an office setting. The Company’s operations may have been impacted by the COVID-19 shutdown; however, our operating efforts have continued. We continue to monitor the impact of the COVID-19 (coronavirus) outbreak closely. The extent to which the COVID-19 (coronavirus) outbreak will impact our ability to obtain financing or future financial results is uncertain.

Critical Accounting Estimates and New Accounting Pronouncements

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made, and changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition.

Recent Accounting Pronouncements

ASU 2020-06 Debt – Debt with Conversion and Other Options and Derivatives and Hedging

-20-

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our Interim Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the Company’s principal executive and financial officers, have conducted an evaluation of the design and effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Our CEO and CFO believe that as of March 31, 2021, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. The conclusion was due to the presence of the following material weaknesses in disclosure controls and procedures due to our small size and limited resources: (i) inadequate segregation of duties and effective risk assessment; (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both U.S. GAAP and SEC Guidelines; (iii) inadequate security and restricted access to computer systems including insufficient disaster recovery plans; and (iv) no written whistleblower policy.

Our CEO and CFO plan to review and implement appropriate disclosure controls and procedures to remediate these material weaknesses, including (i) appointing additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopting sufficient written policies and procedures for accounting and financial reporting and a whistle blower policy; and (iii) implementing sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery plan.

Changes in Internal Controls over Financial Reporting

There have been no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2021, that have materially affected, or is reasonably likely to materially affect, our internal over financial reporting.

-21-

Table of Contents

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are unable to predict the outcome of any such matters or the ultimate legal and financial liability, and at this time cannot reasonably estimate the possible loss or range of loss and accordingly have not accrued a related liability.

The 50% amount as well as the first monthly installment for each plaintiff was paid and we are in default for the remaining 5 monthly payments.

ITEM 1A. RISK FACTORS.

A smaller reporting company is not required to provide the information required by this Item. For our most recent risk factors, please consult our Annual Report on Form 10-K/A filed April 23, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES OR USE OF PROCEEDS.

10,605,240 common shares issued in settlement of accounts payable and accrued expenses.

2,383,841 common shares issued in settlement of convertible notes with a related party.

10,345,538 common shares issued in connection with equity awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

-22-

Table of Contents

ITEM 6. EXHIBITS.

Exhibit<br><br><br>Number	Description of Exhibit
31.1	Certification<br>of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as<br>adopted pursuant to Section 302 of the Sarbanes-Oxley Act of<br>2002
31.2	Certification<br>of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as<br>adopted pursuant to Section 302 of the Sarbanes-Oxley Act of<br>2002
32.1	Certification<br>of Chief Executive Officer and Chief Financial Officer pursuant to<br>18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the<br>Sarbanes-Oxley Act of 2002
101	Materials<br>from the Company’s Quarterly Report on Form 10-Q for the<br>quarter ended March 31, 2021 formatted in Extensible Business<br>Reporting Language (XBRL)

-23-

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Exactus, Inc.
May 27,<br>2021	/s/<br>Daniel Albertis
	Daniel<br>Albertis
	Principal Executive Officer
/s/<br>John Price
---
John<br>Price
Principal Financial and Accounting Officer

-24-

exdi_ex311

Exhibit 31.1

CERTIFICATIONS

I, Daniel Alberttis, certify that;

1.	I have<br>reviewed this quarterly report on Form 10-Q/A for the quarter ended<br>March 31, 2021 of Exactus, Inc. (the<br>“registrant”);
2.	Based<br>on my knowledge, this report does not contain any untrue statement<br>of a material fact or omit to state a material fact necessary to<br>make the statements made, in light of the circumstances under which<br>such statements were made, not misleading with respect to the<br>period covered by this report;
---	---
3.	Based<br>on my knowledge, the financial statements, and other financial<br>information included in this report, fairly present in all material<br>respects the financial condition, results of operations and cash<br>flows of the registrant as of, and for, the periods presented in<br>this report;
---	---
4.	The<br>registrant’s other certifying officer and I are responsible<br>for establishing and maintaining disclosure controls and procedures<br>(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and<br>internal control over financial reporting (as defined in Exchange<br>Act Rules 13a-15(f) and 15d-15(f)) for the registrant and<br>have:
---	---
a.	Designed<br>such disclosure controls and procedures, or caused such disclosure<br>controls and procedures to be designed under our supervision, to<br>ensure that material information relating to the registrant,<br>including its consolidated subsidiaries, is made known to us by<br>others within those entities, particularly during the period in<br>which this report is being prepared;
---	---
b.	Designed<br>such internal control over financial reporting, or caused such<br>internal control over financial reporting to be designed under our<br>supervision, to provide reasonable assurance regarding the<br>reliability of financial reporting and the preparation of financial<br>statements for external purposes in accordance with generally<br>accepted accounting principles;
---	---
c.	Evaluated<br>the effectiveness of the registrant’s disclosure controls and<br>procedures and presented in this report our conclusions about the<br>effectiveness of the disclosure controls and procedures, as of the<br>end of the period covered by this report based on such evaluation;<br>and
---	---
d.	Disclosed<br>in this report any change in the registrant’s internal<br>control over financial reporting that occurred during the<br>registrant’s most recent fiscal quarter (the registrant's<br>fourth fiscal quarter in the case of an annual report) that has<br>materially affected, or is reasonably likely to materially affect,<br>the registrant’s internal control over financial reporting;<br>and
---	---
5.	The<br>registrant’s other certifying officer and I have disclosed,<br>based on our most recent evaluation of internal control over<br>financial reporting, to the registrant’s auditors and the<br>audit committee of the registrant’s board of directors (or<br>persons performing the equivalent functions):
---	---
a.	All<br>significant deficiencies and material weaknesses in the design or<br>operation of internal control over financial reporting which are<br>reasonably likely to adversely affect the registrant’s<br>ability to record, process, summarize and report financial<br>information; and
---	---
b.	Any<br>fraud, whether or not material, that involves management or other<br>employees who have a significant role in the registrant’s<br>internal control over financial reporting.
---	---

Date: May 27, 2021

/s/ Daniel Alberttis

By: Daniel Alberttis

Title: Principal Executive Officer

exdi_ex321

Exhibit 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

In connection with the quarterly Report of Exactus, Inc. (the “Company”) on Form 10-Q/A for the quarter ended March 31, 2021 filed with the Securities and Exchange Commission (the “Report”), I, Daniel Alberttis, Interim Principal Executive Officer, and I, John Price, Principal Accounting and Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

By:	/s/ Daniel<br>Alberttis
Name:	Daniel<br>Alberttis
Title:	Principal<br>Executive Officer
Date:	Date:<br>May 27, 2021
By:	/s/ John Price
Name:	John<br>Price
Title:	Principal<br>Financial and Accounting Officer
Date:	Date:<br>May 27, 2021

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Principal Financial Officer

exdi_ex312

Exhibit 31.2

CERTIFICATIONS

I, John Price, certify that;

1.	I have<br>reviewed this quarterly report on Form 10-Q/A for the quarter ended<br>March 31, 2021 of Exactus, Inc. (the<br>“registrant”);
2.	Based<br>on my knowledge, this report does not contain any untrue statement<br>of a material fact or omit to state a material fact necessary to<br>make the statements made, in light of the circumstances under which<br>such statements were made, not misleading with respect to the<br>period covered by this report;
---	---
3.	Based<br>on my knowledge, the financial statements, and other financial<br>information included in this report, fairly present in all material<br>respects the financial condition, results of operations and cash<br>flows of the registrant as of, and for, the periods presented in<br>this report;
---	---
4.	The<br>registrant’s other certifying officer and I are responsible<br>for establishing and maintaining disclosure controls and procedures<br>(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and<br>internal control over financial reporting (as defined in Exchange<br>Act Rules 13a-15(f) and 15d-15(f)) for the registrant and<br>have:
---	---
a.	Designed<br>such disclosure controls and procedures, or caused such disclosure<br>controls and procedures to be designed under our supervision, to<br>ensure that material information relating to the registrant,<br>including its consolidated subsidiaries, is made known to us by<br>others within those entities, particularly during the period in<br>which this report is being prepared;
---	---
b.	Designed<br>such internal control over financial reporting, or caused such<br>internal control over financial reporting to be designed under our<br>supervision, to provide reasonable assurance regarding the<br>reliability of financial reporting and the preparation of financial<br>statements for external purposes in accordance with generally<br>accepted accounting principles;
---	---
c.	Evaluated<br>the effectiveness of the registrant’s disclosure controls and<br>procedures and presented in this report our conclusions about the<br>effectiveness of the disclosure controls and procedures, as of the<br>end of the period covered by this report based on such evaluation;<br>and
---	---
d.	Disclosed<br>in this report any change in the registrant’s internal<br>control over financial reporting that occurred during the<br>registrant’s most recent fiscal quarter (the registrant's<br>fourth fiscal quarter in the case of an annual report) that has<br>materially affected, or is reasonably likely to materially affect,<br>the registrant’s internal control over financial reporting;<br>and
---	---
5.	The<br>registrant’s other certifying officer and I have disclosed,<br>based on our most recent evaluation of internal control over<br>financial reporting, to the registrant’s auditors and the<br>audit committee of the registrant’s board of directors (or<br>persons performing the equivalent functions):
---	---
a.	All<br>significant deficiencies and material weaknesses in the design or<br>operation of internal control over financial reporting which are<br>reasonably likely to adversely affect the registrant’s<br>ability to record, process, summarize and report financial<br>information; and
---	---
b.	Any<br>fraud, whether or not material, that involves management or other<br>employees who have a significant role in the registrant’s<br>internal control over financial reporting.
---	---

Date: May 27, 2021

/s/ John Price

By: John Price

Title: Principal Financial and Accounting Officer