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another lawsuit...
:)))
You're reading too much into trivial things!
EXDI owes me money, as they do to multiple other parties. Over the course of 2019 they went through $7-8 mil before we could get an enforceable judgement. Right now they don't have any money to pay anyone.
My wish, and I assume the wish of all other creditors, is for EXDI to revitalize, start making serious money and start paying off its debts. So we have aligned interests with longs here. If they could deliver on their promises, the debts are trivial, and I truly wish they could prosper. However, I don't see good trajectory from what has been disclosed, unfortunately.
That's all, it's a simple dispute over trivial amounts. You should base your investment decisions on the business of the company, not on side-shows.
Cheers!
what’s the business model? No farming. No retail. Distributor? Buying from farms and selling to FoodCos?
How do you value such business? What’s the competitive advantage? Is it sustainable?
I hope there is more substance to it...
in November, which was mid-4Q, they announced orders for $750K.
https://www.globenewswire.com/news-release/2019/11/14/1947599/0/en/Exactus-Inc-Reports-Third-Quarter-2019-Results.html
Now we find out that actual sales in Q4 were ~$130K...but... orders for Q1 are $900K...
Obviously, the way they project and preannounce revenues that never fully materialize raises serious questions.
Are these honest miscalculations or attempt to manipulate share price so that their investors who bought early can exit by selling to "gullible" retail investors?
For this to be a serious business, they need to formulate a clear and viable strategy.
We have not settled our claims with Exactus.
hmm, yes. They deleted this slide very quickly. It was the last slide with the Board of Directors. I saved it just in case. Interesting that they still monitor this message board closely...
Just checked the Exactus website to see if something's new. Interestingly, the Investor Presentation is dated 17 April, 2020:
https://ir.exactusinc.com/presentations
Unfortunately, the actual presentation does not contain any new information, in fact some of it is old and incorrect.
For example, it still lists Steven A. Schwartz as Director of Exactus, even though he resigned, and was indicted for wire fraud in connection with the 1 Capital scam.
https://www.justice.gov/usao-sdfl/pr/former-consultantchief-operating-officer-1-global-capital-llc-pleads-guilty-role-wire
(Just one of Exactus' multiple associations with questionable individuals)
It looks like Exactus is headed towards bankruptcy. I am curious, why they would put a recent date on this old powerpoint, and also who buys shares nowadays. Everyday a few thousand dollars worth of shares are being bought. It is really doubtful that common shareholders will recover anything in bankruptcy, given the pending debts, claims, and accounts payables that the company has disclosed.
Interesting, thanks. There are other reports that I have seen about CBD demand during the pandemics, as well.
This makes EXDI's march towards bankruptcy highly questionable: they should have cash from the inventory monetization. Where has it gone?
$0.08 invited a decent amount of buying. I am still perplexed, and repeat my invitation: if you are buying EXDI, please share with us "why". All I see is a pending bankruptcy, to be honest. Very perplexing what people see to drop $8K here.
Discussion has died on this board, but there is still $2-3K dollar volume trading in the shares per day. It would be interesting if some of the people who buy here (either new investors or existing longs) share their thoughts.
Please, feel invited: what is it that makes you buy EXDI at ~$0.10?
(FWIW, I think this is way too high of a pps)
Given the extreme situation, I felt that it was appropriate to leave neal's posts, even though they were clearly off-topic. The Admin seems to be tolerant as well.
Italy in particular has a very grim confluence of factors:
1. High smoking rates
2. Old population
3. Many people live with their parents.
4. Very close-knit extended families, frequent socializing.
5. High levels of air pollution in the Po valley, where the nastiest outbreaks are.
6. Culture of disregard for rules, enforcement of measures is difficult
7. relaxed lifestyle making the urgent/draconian measures virtually impossible.
8. Kissing when greeting each other...
I don't think U.S. will get hit as hard as Italy.
Good video, thanks.
Testing, testing, testing, testing... PCR NAT (Nucleic Acid Testing).
In early 2000s I invented a technology for multiplex NAT that is more sensitive and better than PCR, and then started a company based on this technology that was recently valued at more than $1.2B ($NSTG). However, the nanostring technology is not suitable for Covid-19, it's strength is in testing multiple nucleic acids simultaneously, the virus is too simple of a target for such a sophisticated technology.
After nanostring I spent years on a new technology that would be much faster, cheaper and simpler than nanostring: perfectly suitable for Covid-19. It's a platform technology, could work on every bug, but since Covid was not known then, the first target I wanted to develop a test for was malaria. Got money from Bill Gates to do that. Got patents and proof-of-principle data. In the meantime, while working on it, I came up with the Fibrilyzer and Matrilyzer concept, so I focused on these two and the "malaria" technology" was left behind at a pre-prototype stage.
Here's the funny story I am getting to: the original patents for the "malaria" tests were also licensed to $EXDI, together with Fibrilyzer and Matrilyzer, as a long-term project. Would have been perfect now, if it was developed: highly accurate and sensitive test within minutes. It's a pity...
Hemptown was well-capitalized and planning an IPO last year. Now this is obviously put on hold. EXDI may be their backdoor to the public markets, via a reverse merger. I don't necessarily think the climate for a reverse merger is particularly good either...
However, sometime down the road, if the industry becomes more mainstream and institutional investors become attracted to it, this could become a viable plan: reverse merger with Hemptown to scale-up, another reverse stock split to get the shares well over $4.00 and then list on NASDAQ to have better financing options. It's ways off, I think, but sounds like a logical pathway, if they can survive in the meantime. (that's a sizeable "if" here..)
Russ, we need official disclosures to answer your questions on valuation.
1. Not all revenue is equal. We know from disclosures that in the 9 months through 09/30/19 EXDI was selling at negative gross margin. If that continues, obviously the more they sell the more money they lose, so the higher the revenue the lower the valuation should be. What is particularly bothersome is that - according to the only official disclosures we have - their COGS were to a related party (Ceed2Med). In other words they were using Public Co. money to purchase inventory from a related party which they would later sell at a gross loss. That's fishy.
But generally we need to know more about the revenue, in order to assess its value.
2. One comp we can use for valuation is CVSI, they just reported 2019 results this week. Their revenue was $53.7M with a gross profit of 65% (that's a gross profit, not a gross loss). Their valuation is $36M or 0.68x of TTM revenue. (I use CVSI because I follow them. If you want to use another comp, you can do the same exercise with them). So accordingly, your $6-8M in revenue should carry a valuation of $4-5.4M. However if you look at gross margins (GM) CVSI is valued at 1.02 x GM. Since EXDI has a negative gross margin, it should have a negative market cap, according to this metrics.
Hopefully, they stop with the questionable practice of transferring money from EXDI to C2M, and do in fact turn some positive margin. What would realistically that could be? Depends on how much revenue is derived from their own grown inventory, relative to resales from C2M and Hemptown. I would assume that wholesale-to-wholesale re-seller would have pretty thin margins, so the more they sell from their own inventory the better. In any case, I'd think that 65% margin is unrealistic, so the valuation should be at lower revenue multiple than CVSI.
My general view is that since all three parties are interrelated (EXDI, C2M, Hemptown) they would probably try to book as much revenue through EXDI as possible, while still getting full economic value to C2M and Hemptown. The reason is that naive investors in the public markets often only look at the headline revenue numbers and their growth, without bothering to look into the quality of revenues. So if EXDI prints high revenues, while Hemptown and C2M still get their money, everyone wins. That would mean, however, that gross margins of the C2M or Hemptown re-sales would be expected to be a wash at best.
3. Total valuation (market cap) is meaningless to most people here, they are interested in prices per share (PPS). In order to know that, we need to know the capital structure of the company, for which again, we need official disclosures. What we know is that at the beginning of February there were ~48M common shares outstanding. Sine then we know that Mr. Du Chesne got another million, but not much else is known. Has there been more common issued? Has any of the Class A,B,C,D,E preferreds been converted? Any shares converted by the Note holder? Then we have to know how the Note factors in the capital structure? How many shares do you attribute to a potential conversion by the Note holder? The Note has a ratchet conversion price, so that number could vary tremendously from 0 (repayment in cash) to n00s of millions of shares, really...
So bottomline is that in the absence of official disclosures it is very hard to put a valuation on EXDI and its shares. In my personal opinion, based on what I know and have researched, I'd say fair value is between $0.002 to $0.02 per share (i.e. less than 2 cents per share). So in my view the stock is overvalued here. However, that assumes that they don't plant in 2020, and their only potential for revenue through q4 of 2021 (next year) is running down the inventory of their 2019 harvest and near margin-less wholesale-to-wholesale resales of C2M and Hemptown products. If they manage to plant in 2020 there may be upside.
So no annual report until May 15. No second or third closing on the Note. No retail development.
The question I have is this: Are they going to plant in 2020? If their core expertise is farming and they don’t farm in 2020, then what’s the game plan?
So, NumberGuy, do you think it goes to $0.00 (i.e. BK)?
Thanks.
K
Neal, I am sorry that you got offended, that was not the intent or the point at all!
The point I was trying to make is this: your stated cost is $0.75, hempspeculator's is $0.50, Xpedian's is $1.00. All three of you had talked to Johnson.
OTOH, the early EXDI investors bought at $0.20. The question was, how many of your (and otherss') certificates were passed from these early investors. That was the whole point I was trying to make.
Regarding the SEC filings, it was obvious in April that the company was waffling on its retail strategy, when they backed out of the HempHealthy deal. That's the genesis of their retail failures that were highlighted here recently by Cane5 and biznesman. However you and hempspeculator did not realize that, even though you were talking to Johnson. That was the issue. I am not certain why both you (now) and hempspeculator (in January) got so passionately offended when this is being brought up.
The stock dropped ~33% on the Monday after the Friday the HempHealthy fail was disclosed in an 8-K. So some people noticed, but you and hempspeculator did not know about it for months after that, even though you were talking to Johnson regularly. You may not be retired (I apologize for calling you retired), but certainly you were being naive.
Also, there are a million other red flags around Johnson and the communication practices of EXDI that he was in charge of. Really!
Cause for concern, for certain.
However, there are only 17 days until the 10-K is due, I'd wait till then before drawing definitive conclusions. If 10-K doesn't get filed, that would be a major alarm bell.
My own research is not far off from what you claim: involvement of shady characters, questionable insider deals, borderline legal communication practices, massive overhead "burn", etc. However, there are also some kernels of productive behavior (i.e. competent farming activity at EOW) and Aloi is legitimate IMO.
Regarding the "friends and family" funding rounds: as has been discussed on these boards, they were done at steep discounts to open-market prices. The question is, how many of these certificates were washed-off in the retail market after the 6-month Rule 144 holding period? Was substantial portion passed at much higher prices to the ultimate bagholders - retired folks like hempspeculator, neal, Xpedian and others who would rather drink Johnson's cool-aid than read SEC filings?
If the early investors were able to get out with a profit, they may have moved on, and not be interested in EXDI's story anymore.
However, IF they are still "in", holding certificates at a loss, and IF EXDI is indeed in serious trouble (we still don't know that for sure, despite the warning signs that are out there), then they may be interested in putting more money to protect their initial investment. However, that latter scenario will likely require reorganization of the company into a viable and legitimate business and addressing all the issues that had led to it being in putative dire straits (again, if they indeed are in dire straits). That was the point about the "friends and family" that I had in mind.
You are correct that investors would probably not be that stupid to invest if nothing changes, only to see their new money disappear again. But I think that there is a productive kernel here that can bear fruit at some point, in an emerging industry, if a company is run as a legitimate business.
So, tigerpac,
You're alluding to EXDI being in a cash crunch, but that is not a given. Granted, it had almost no cash at 09/30/2019, but the plan was to monetize the 2019 harvest in Q4/'19 and Q1/'20. In addition to their own harvested biomass, they had inventory for sale from Ceed2Med from orders placed and paid to C2M earlier in 2019.
In addition, if cash is indeed an issue, they could always go to their "friends and family". See: https://www.globenewswire.com/news-release/2019/05/29/1856602/0/en/Exactus-Inc-to-Present-at-the-9th-Annual-LD-Micro-Invitational.html
"the Company has built a tremendous foundation that includes raising over $4 million through friends and family"
We will have to see: I'm inclined to give the optimists the benefit of the doubt here, but you have been more often right than not. However, if cash turns out to be an issue, there will be serious questions as to "why?","how?", "where?", etc., related to the concerns of whether this is a legitimate business or a scam.
one year anniversary of the reverse split. the price is almost back to where it was pre-split. What's the plan forward?
My view of Aloi (mostly intuitive) is similar: legit. Who else should be running this company, if not him?
CASE NUMBER: 50-2016-CA-013451-XXXX-MB
CASE STYLE: HUGHES, THOMAS P V LUKENS GROUP, LLC
Puzder was CFO and/or President of Lukens and is named as defendant in the amended complaints.
Allegation is Lukens/Puzder allegedly solicited loans from employees and others, without disclosure of the actual state of the company. Lukens Group is now in bankruptcy and the case is stayed, pending the bankruptcy outcome...
Not on this forum, no. All disclosures are voluntary here. Also revealing a poster’s identity is strictly against TOU.
The only consequence here to being evasive and inconsistent is your credibility as a poster.
Right. So the story is:
1. On 1/1/20 you're "IN" based on your Dad's call with Andrew Johnson and some articles and videos, which make you think EXDI will be a "monster".
2. On 1/30/20 you say you wouldn't jump to negative conclusions, because Andrew Johnson bought shares at $0.40.
3. But then you read some messages here from me and tigerpac that drive you "OUT", while making out OK.
That's the story you're sticking with?
So the story is your Dad talked to Andrew and then told you that he "sounds great and very optimistic about what’s ahead"?
And how did you figure that "Exatus has and is positioning itself to be the monster it needs to be to meet the demand"?
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=153077008
Was that also your Dad? Or you figured it out yourself from the public disclosures of a company with a 200-acre farm. Is that the "monster" that will "meet the demand"?
I am just curious, that's all :))
I'm sorry to hear that, mate :))
But why are you listening to me, at all? Listen to your Dad!
:)
What happened to these guys, Andy? No longer on the website...
biznessman,
1. I think you're right on traceability and generally QC. That would be a good way for a small grower to differentiate, not only with end-customers, but with B2B customers as well. Especially, when FDA approves "dietary supplement" status, and the Coca-Colas, Starbucks and other "Big Drink" companies start offering CBD drinks, they will want qualified suppliers.
The U.K. regulatory maybe a good precursor of what is to come in the U.S.: approve as dietary supplement, 70mg daily recommended dose, strict safety/QC requirements. I expect the FDA regulation to be in the same vein...
2. Regarding "Dr. Dre & gang": hahaha, you're so lucky you don't have teenage daughters like me, or you would get slaughtered for comments like this! "Lame", "Old", "Embarrassing"!
Let me explain what the situation is. Exactus has a deal with Cool&Dre, Florida-based performers. They are very different from "Dr.Dre" and "Kool&theGang", who are from our youth, but are pretty much a thing of the past now...
Thanks! I have not seen this.
That's actually a bit disappointing; according to what I have found yields are between 1,500-3,000 lbs per acre:
https://www.quora.com/How-much-CBD-oil-is-produced-per-acre-of-hemp
So 200 acres should yield more than 200K lbs...
Regarding their execution at EOW: it hasn't been disclosed in SEC filings how much biomass was actually harvested, and how their harvest compares to industry benchmarks. So saying they "mastered so well" is probably just a hyperbole. Unless Johnson selectively disclosed biomass metrics to you and/or hempspeculator...
Having said that, I have some circumstantial evidence that EOW is indeed a competent hemp farm. It will be interesting to know exactly how it compares as a grower to the industry. If the harvest is indeed superior to industry comparables, in terms of yield per acre, that may be something they would want to disclose to maybe support the share price. (notwithstanding the issues with monetization of that biomass yield that you and HS have alluded to.)
Neal, I assume you're "concerned" from the price action. However, today of all days you should be actually very positive; it is a very positive day for your investment thesis that the sector requires regulatory action, as both FDA and USDA came out with very positive comments:
https://www.cannalawblog.com/breaking-news-fda-and-usda-start-making-sense-on-hemp-cbd/
The Head of FDA statement in particular is very bullish: acknowledging the strong demand from U.S. consumers and the inappropriateness for FDA to stay in the way.
The sector will be fine (notwithstanding the hiccups along the way), there is money to be made and the good companies will make out fine.
The question is for EXDI: is this a legitimate company or a scam to siphon money from investors? If it is a legitimate business, everyone will do well, IMO. If it is a scam, will the perpetrators be able to hide and disappear? What do you think?
I don’t quite agree re:convertible debt. Sure, toxic spirals from unpaid convertible debt can slowly drain the common equity. But unpaid regular debt can lead to bankruptcy, which wipes out common in a more decisive way.
If a company pays its debts in cash, neither is a big problem. However, if the company is unable to re-pay in cash, then convertible is actually preferable to the default/bankruptcy/reorganization when debts come due and cannot be paid.
Well-timed question, obviously: this week we have two events related to the Note:
a. The first amortization payment is due in the amount of $110,000, payable in cash, or alternatively, in shares.
b. Exactus becomes liable for paying Liquidated Damages to the Note Holders, since their S-1 was not declared effective in the 90 days following the Note issuance.
I know you guys here are more interested in share price, and how it would be effected by the Note payments and liquidated damages being due. (I, on the other hand am more interested in the underlying business.) In my view, it is too early to tell. Without much disclosure on the financial state of the company - what are the revenue streams from the harvest, have they made the Note payment in cash or in shares, etc. - we cannot say much.
If the payment was made in shares, that means dilution. However, without the S-1 being effective the Note holders cannot sell easily and cannot put downward pressure on the share price (for now).
Finally, I have no information on the identity of the Note holder(s), and have no idea whether they are in Brooklyn or not. Maybe you can share whatever info you have.
Cheers,
K
Point taken. Guaranteeing pay for a peripatetic guy at $50K per qtr for two years is risky.
However, as way of perspective, Exactus spent $2,052,677 just in the 3rd quarter on General/Administrative/Professional/Consulting expenses. On such background, this guy wouldn't be the top of my concerns.
Right now their e-commerce site, exactushemp.com, is not on anyone's radar. It can't be found on any aggregated Lists of CBD e-vendors:
https://cbdnerds.com/reviews/cbd-reviews
https://www.austinchronicle.com/daily/events/2020-01-23/50-best-cbd-oil-companies-of-2020/
This kid is bright, personable, former actor... maybe, just maybe, this is the type of person who can generate the buzz and publicity to put their brand on the map. In any case, his compensation is disclosed, the guy is willing to put himself in front of a camera from the get-go, and people have enough information to form opinions of whether he is worth the money or not.
On the other hand, you don't have much transparency on whether the other $2M+ of overhead burn per quarter is spent on productive activities to create value. Frankly, it is highly questionable for a micro-farmer with an obscure website to burn through $2M+ on quarter in overhead...
I am writing a report, which I intend to publish. However, it is not ready, and after it is ready I will give a "first look" to the company. So we're looking at the earliest mid-March for publication, maybe later. Until then, I am not discussing this topic.
I will participate in the other discussions here, if I have something of value to add.
Cheers,
KD
Neal,
1. Questionable Business "Strategy"
2. Inefficient Use of Capital Resources
3. Unfavorable transactions with related parties.
4. Questionable communication practices.
5. Associations with questionable individuals.
Regarding FDA/Congress: yes, that's more or less my take as well. It's about mainstream-ization.
It's not as much as that the "FDA got in the way", it's more that the big chains want affirmative action from FDA/Congress before committing seriously. In the Brightfield projections the mainstream chains get-in a bit later, but they account for a large chunk ($13B) of the $22B projected for 2022. Now this seems pushed back a bit further out.
So, now the situation seems to be that the online/dispensary/enthusiast/early-adopter market is oversupplied and the mainstream market is still not taking off, and growth has stalled as a result. And the idea is that some affirmative action from FDA would help. (there are no barriers or restrictions, just lack of explicit affirmations).
That's not uncommon for emerging industries: adoption is not always smooth and straight, there are hitches and bumps sometimes. It is in times like these that the scams and the "pump-and-dump" schemes leave the scene, while the strong players survive and emerge even stronger, with larger market shares.
The question is, what is EXDI? We hope it is a solid company that will emerge stronger, but I personally have some serious concerns...
OK, will do over the weekend... I was hoping someone would give a concise answer, not give me homework:))
but will read-up over the weekend and report back, I promise..
Have a nice weekend.