DALLAS, May 30, 2019 (GLOBE NEWSWIRE) — via OTC PR WIRE — PRESS RELEASE — Puration, Inc. has released a management update that reviews current performance, anticipated future organic performance, insight into the company’s merger and acquisition (M&A) strategy, and the latest on the upcoming stock dividend to be issued to PURA shareholders in conjunction with the spinoff of PURA’s cannabis cultivation operation. The narrative of the presentation is included here in this release in its entirety. The full presentation is available on the company’s website at www.purationinc.com/managment-update.
CBD Likely to Outpace THC In Cannabis Industry and CBD Beverages Lead the Way
A recent Forbes feature on how cannabis is revolutionizing the beverage industry reported that marijuana growth within the newly legalized market has exceeded demand. Some states, the feature reports, have years of inventory. While THC is legal in some states, it cannot be transported across state lines. However, as a result of the 2018 Farm Act, hemp farming is now legal in the U.S., and CBD from hemp is also legal. With CBD being legal, food and beverage producers are now willing to explore opportunities to infuse hemp derived CBD into their products while still in a holding pattern on THC.
The Forbes feature goes on to talk about the impact that cannabis, be it in THC or CBD form, is having on the beverage industry. The global beverage industry is currently a $1 trillion market and beverage innovation is vital to the producers ability to maintain, let alone grow market share. The feature uses the word “transformative” when talking about the impact cannabis will have on the $1 trillion market.
PURA now has years of experience at infusing cannabis into a beverage. It has worked with different extracts and different infusion methods. It has updated formulas to improve flavor and extend shelf life. PURA’s experience is difficult to put on a balance sheet, but definitely has value. Being over $1 million in annual sales is a major milestone and has garnered the attention of more than one substantial beverage industry player. Management believes now is the time to augment the company’s organic growth strategy with an M&A strategy. See the M&A section below to learn more.
Current Performance: $1 Million 2018 Revenue with $4 Million 2019 Target Revenue
The company posted its 2019 Q1 financial report last week demonstrating over a $1 million base annual revenue run rate. The company broke $1 million in sales for the 2018 fiscal year. The company also has a new $1.5 million order to produce private labeled CBD water which is not yet reflected in the company’s financial statement. Demand for the company’s cornerstone beverage product, EVERx CBD Sports Water, has strained the company’s current production capacity, but a second production facility is anticipated to be online by the end of June. From the current better than $1 million annualized revenue run rate and the $1.5 million order, management is targeting $3 million in sales from existing beverage products. PURA has a number of new products in various phases of launching from which management anticipates realizing another $1 million in target revenue making the company’s overall 2019 organic revenue target $4 million. The $4 million target does not include the potential benefit that might be realized through the execution of PURA’s M&A strategy (see more on M&A below). Once the expanded production is in place, management may consider revising its 2019 $4 million revenue target upwards.
PURA has formulated a new THC infused beverage, THC Savor. The company is working on establishing production and distribution relationships in regions where the beverage can be legally produced and sold. The company has also formulated and produced a water designed to enhance the cannabis experience by either consuming the water before or during cannabis use or using the water as a conduit for cannabis smoke. The product is called Telluride Happy Water and has already been sold into a pilot market test.
M&A Roll-Up in Cannabis Beverage Market to Accelerate Market Share Expansion
The non-alcoholic and alcohol segments alike are both targeting cannabis innovation opportunities. The beverage industry is rich with major brand names that control overwhelming market share. However, with THC still not legal on a federal level and the hemp derived CBD federal legalization details not yet percolated down though all state laws, let alone, federal enforcement agencies, the major brand names are just hovering at the moment and not engaging. The major brand names are leaving the playing field open for entrepreneurial companies to grab market share within a timeframe window that won’t stay open forever. Leveraging our success with EVERx CBD Sports Water, we are winning the confidence of investors to back us in the acquisition of other cannabis beverages.
Infusing cannabis into a beverage is not as simple as one might think. The quality of the underlying cannabis is one issue and the quality of the extraction process is another. The infusion formulation is yet another. Clarity and sustainability of the suspension is not a simple task, nor is implementing a flavor neutral extract. PURA now has years of experience involving many trials and many errors. Our years of experience are extended yet further through the years of extraction research and development conducted by our partner Kali-Extracts. PURA holds the sole license for beverage infusion purposes to KALY’s U.S. Cannabis Extraction Process.
Among other courters, PURA’s tires have been kicked by two major brand names. In hindsight, it is the company’s opinion that the interest was in what we had learned about extraction and infusion, and less about our brand and market share. Even at $1 million in annual sales, and even if we achieve our 2019 $4 million target revenue, if a major brand name beverage company could reasonably learn all we know about extraction and infusion, they could almost instantaneously capture more market share than it has taken us years to create. Establishing meaningful and defensible market share is critical to building shareholder value that can sustain through federal legalization of all cannabis plants and extracts. M&A is a logical strategy to pursue in order to improve the potential of building meaningful and defensible market share that can survive the competition from major brand names that will enter the market post federal legalization.
Coming Soon – 1 For 5 Stock Dividend to PURA Shareholders
In October last year, PURA spun off its cannabis cultivation business to Nouveau in exchange for a $1.2 million convertible note issued by NOUV to PURA. The spinoff deal included a commitment that the note would promptly be converted to common shares of NOUV and that those converted shares would be distributed in a stock dividend to the shareholders of PURA. The prerequisites to issuing the dividend were for NOUV to bring its delinquent financial disclosures current and then execute a 1:400 reverse split to support a 1 for 5 dividend distribution of NOUV common stock to PURA shareholders. NOUV has made great strides in the execution of the prerequisites. The delinquent financial statements have been drafted. The operations are making great strides. The company has existing conventional nursery operations and transitional cannabis cultivation operations. NOUV anticipates coming out soon with meaningful revenue targets stemming from its conventional nursery operations and transitional cannabis cultivation operations.
Nevertheless, the updated financial statements have not been published and without the updated financial disclosures being made public, the company cannot promptly pursue the planed reverse split and dividend issue as originally designed at this time. Management speculates that scrutiny on penny stocks market-wide has resulted in increased bureaucracy that has in turn resulted in a backlog of disclosure procedures through historically customary channels. Accordingly, NOUV and PURA have devised a plan to work through the prevailing penny market environment.
NOUV has launched its own disclosure site at www.NOUV-INFO.com. The site has been designed for NOUV to be able to publish its own financial statements making them easily accessible to the public without otherwise making shareholders suffer the current bureaucratic delays resulting from what we speculate as increased scrutiny on penny stocks market-wide. The www.NOUV-INFO.com site currently has all NOUV’s historical disclosures in addition to relative market and capital structure information, news and management information, and an NOUV stock quotation. As mentioned above, the delinquent filings have been drafted and NOUV plans to publish those filings by the end of this week.
While NOUV is pursuing an alternative disclosure strategy to accelerate the company’s overall progress in addition to getting the planned dividend of NOUV stock issued in a dividend distribution to PURA shareholders, management will continue to advance the publication of financial disclosures through historically customary channels.
To further work around what has turned out to be the protracted time required to execute a NOUV reverse stock split, NOUV and PURA have alternatively initiated the declaration of a preferred convertible NOUV stock that is intended for immediate distribution to NOUV shareholders. The preferred stock is to be exchanged for the $1.2 million note. Specifically, the plan is for there to be 120 million preferred shares at a value of $0.01 each totaling the $1.2 million. The preferred shares will bear convertible rights to be exchanged for common stock. Once declared and established, NOUV plans to promptly issue the preferred shares to PURA shareholders in a ratio of 1 NOUV preferred share for every 5 PURA shares held. PURA and NOUV expect to promptly publish specific details on this updated dividend distribution strategy following the publication of the outstanding financial disclosures.