As we claimed in "What's Going on At Pura Naturals Inc. (OTCMKTS:PNAT)", PNAT is an interesting stock from many angles. The company's revenues are growing every year, and the company is receiving financing to sustain this level of growth and support the company's operations. Also, the amount of assets on the balance sheet is quite high. In this update, you will find the business plan shown by the company in a press release, and a new agreement with Mammoth Corporation to finance it. But, first of all, have a look at the price action.SourceRecent DevelopmentsFirst of all, let's check again the background of the company. PNAT sells "cleaning for consumer kitchen and bathroom, with additional products for outdoor hobbies (fishing and boating, spas and pools), pet care, infant care and industrial use currently under development". The company was created in 2005 under the name of Yummieflies.com, Inc. The initial business goal was a different one. The name and the business line were changed in November 2016.Undoubtedly, the most interesting information was put out in the last quarterly report, which was delivered on May 22, 2017. It was around this time when the share price spiked, thus we started reviewing this document immediately. The most relevant is the increase in revenues in 2016.Period EndingMar 31, 2017Dec 31, 2016Sep 30, 2016Jun 30, 2016Total Revenue6776730Cost of Revenue4668550Gross Profit208170SourceThe annual increase in revenues is also remarkable:Period EndingDec 31, 2016Dec 31, 2015Dec 31, 2014Dec 31, 2013Total Revenue40047900Cost of Revenue23319100Gross Profit16728700SourceWhat about the assets and liabilities? As of March 31, 2017, the most remarkable ones are the following. Note the large amount of intangibles, which we will assess later:
Current Assets:
March 2017 December 2016
Cash
$
82,467
$
14,386
Accounts receivable, net
41,167
45,791
Due from related parties
39,390
31,908
Prepaid expenses and other current assets
16,374
15,750
Total current assets
179,398
107,835
Intangible assets, net
830,010
851,719
TOTAL ASSETS
$
1,009,408
$
959,554
SourceOn the other side of the balance sheet, these are the liabilities:
Current Liabilities:
March 2017 December 2016
Accounts payable
$
262,457
$
264,224
Accrued expenses
177,012
196,416
Due to related parties
844,866
763,664
Deferred income
72,808
72,808
Notes payable
10,682
18,068
Convertible note payable, net of discount of $77,735
265
Derivative liability
126,810
Total current liabilities
1,494,900
1,315,180
SourceWe researched a bit more the intangibles and found, hidden in this document, the list of intangibles:
"Intangible assets consist of a license with a related party and amounts paid to obtain trademarks. Intangible assets are being amortized over 120 months." Source
It is difficult to know the real value of the brands and trademarks owned by the company, but the fact that the annual accounts were audited assures that their value is fair. In addition, these assets were obtained from another company, and the company paid for them the amount that is shown in the balance sheet. In the annual report, we found more information about these assets:
"Trademarks we hold are: "Pura Naturals", "Better Clean | Better Planet", "Mighty Soap Sponges", "Tiny Sponge, Mighty Clean", "Pura Naturals Pet" and "Pura Pet". " Source
In our opinion, the press releases that moved the share price most were the following. On May 25, 2017, it noted the acquisition of intellectual property rights from Advanced Innovative Recovery Technologies, Inc. The CEO explained:
"Purchasing the formulas reduces our reliance on AIRTech and now AIRTech supports Pura as a contract manufacturer. Ownership of the formulas enhances Pura's value in the marketplace and strengthens the competitive position Pura has already gained among the largest consumer brands." Source
It was also noted that the company eliminated $800,000 in existing Pura Naturals debt obligations in exchange for stock. This is good news on one side, as the financial risk is reduced, but it may be also worrying, because it increases the share dilution. However, if the company can grow its business, it will offset the dilution. Additionally, on May 24, it was put out that the following new steps, which had been suggested by investors, had been taken to increase growth
"(1) re-focus to a Direct-to-Consumer model, 2) significantly transition our marketing and branding efforts to digital media, (3) address working capital deficiencies, and (4) augment our leadership team with proven sales and marketing strategists" Source
Finally, on April 19, 2017, it was remarked that Mammoth Corporation had secured project financing of up to $10 millions to the company. The CEO explained the transaction as follows:
"The Financing is a long-term strategic partnership that enables PNAT to fund various operational projects." Source
ConclusionWe saw several good points in PNAT this time. First, the company seems to be delivering astonishing revenue growth every quarter as well as on yearly basis. Additionally, the company is growing the amount of intangible assets by acquiring them from other companies. Hence, the company is growing. Finally, the company is able to obtain new project financing. To sum up, try to follow the company's next announcements. The previous ones delivered big returns to early investors. We will be updating updating our subscribers as soon as we know more. For the latest updates on PNAT, sign up below!Disclosure: We have no position in PNAT and have not been compensated for this article.
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