PAO Group, Inc. (OTC Pink: PAOG) has faced down the logistical challenges of the past eighteen months and is on the verge of becoming a revenue-generating company with what could become best-in-class CBD-based nutraceuticals. And as expected, its stock followed suit, surging by 101% since the start of September. Since its October update, shares jumped by roughly 41%, closing last week at their highest level since June of this year.
The better news is that its nutraceutical shipments are expected to continue. That could mean that its shares can continue to run. Also bullish is that shares of its distribution partner North American Cannabis Holdings (USOTC: USMJ) are also rising, closing at their highest levels since July. Simply put, both companies have positioned themselves well heading into Q4 of 2021. Even better, while investors are responding well to recent news, 2022 could be the breakout period for both. Hence, positioning matters.
For PAOG, becoming a commercial-stage company is indeed a catalyst.
PAOG Puts Its Nutraceuticals Into The Market
Moreover, expect more to come. PAOG is developing CBD pharmaceutical and nutraceuticals from a position of strength, leveraging its intellectual property associated with a patented cannabis extraction method. And at a time when the market has exploded into a current $5.2 billion opportunity, owning IP can be as valuable as actually getting products to market. That’s even more important going forward, with companies wanting in looking for a way to capitalize on an expected market surge to $16.4 billion in the next six years. Thus, owning the IP to a compelling extraction process could be PAOG’s way to cash in on the massive growth.
Still, last week’s update raised the interest in PAOG stock considerably after it announced positioning PAOG’s first line of CBD nutraceuticals to reach the market. According to its update, those revenues are expected to hit this year, with PAOG planning to announce specifics about its first CBD nutraceutical product launch once USMJ finalizes its processes ahead of sales and distribution. That’s likely to happen in the next few weeks. Hence, PAOG’s 100% jump since September may be a prelude to better things to come.
The more excellent news is that PAOG has set itself up to benefit from a diversified business plan, tapping into multiple opportunities by capitalizing on an impressive asset portfolio.
A Broad Strategy To Maximize Potential
And despite a global economy straddled by COVID-19, PAOG kept its momentum. In fact, despite the logistical challenges, the company engaged a partnership with Puration, Inc. (OTC Pink: PURA) to collectively market for multiple hemp growers and processors under a single brand name – Farmersville Hemp. They intend to recruit processing and cultivation partners to establish an industrial hemp brand cooperative under the Farmersville Hemp Brand name. PAOG and PURA describe its plan as similar to Sun-Maid Raisins, which collectively markets for growers all selling under one brand name. Thus, the strategy could combine the interests of many smaller players to compete against the industry giants. In doing so, they can potentially secure a sizable share of their targeted markets and enjoy accretive cost synergies in the process.
The dynamics of the deal offer a win-win proposition. Further, PAOG is working with PURA to build a CBD extraction lab on PURA’s 70-acre property in Farmersville, Texas. Progress is being made, with ground broken on the property to house multiple buildings where PURA will facilitate hands-on marketing for a wide variety of products derived from hemp.
While more details on how PAOG can benefit are imminent, what is known is that hemp is a valuable commodity and is currently used in pharmaceuticals, clothing, fuel, and plastics – to name just a few. According to some sources, at least 25,000 consumer products can be made from hemp.
Thus, from an investor’s perspective, PAOG’s partnership with PURA can be a bonus to its targeted mission, which is maximizing market penetration for its CBD-based nutraceuticals products and creating what they expect will generate substantial revenues as soon as this quarter.
Advancing its CBD-Based Products
The strategy is playing out as it should. In Q3 of this year, PAOG offered a detailed update highlighting its latest developments to commercialize its CBD-based nutraceutical product line. The best part of that update was PAOG’s confirmation that its potentially market-changing CBD-based nutraceuticals will be commercially available by the end of 2021. News last week affirms the company is indeed on pace to deliver.
Moreover, the nutraceuticals about to hit the markets are impressive. In fact, each provides effective relief for chronic health issues.
RespRX could lead the initial charge. RespRx utilizes CBD-based therapeutics to treat the symptoms of chronic obstructive pulmonary disease (COPD). Its promise as a treatment lay in studies conducted as early as 2015 that showed CBD had an inherent ability to open the bronchial passages. That discovery could prove transformational to patients and to PAOG.
Better still, additional marketing hurdles are likely cleared from CBD being well-tolerated and lacking the often severe side effects associated with current standards of care. The treatment has produced enough encouraging data to suggest that CBD-based alternatives have enormous potential to become a preferred treatment method for COPD. And, with RespRX, PAOG thinks it has the right product at the right time.
The more excellent news is that PAOG’s RespRX is already proving it has best-in-class potential. The CBD-based compound is derived from a patented process of extracting cannabidiol – “METHOD AND APPARATUS FOR PROCESSING HERBACEOUS PLANT MATERIALS INCLUDING THE CANNABIS PLANT” (US Patent No. 9,199,960) – and produces an extract said to rival the quality of one of the industry’s pioneers, GW Pharma, which was purchased by Jazz Pharmaceuticals (NASDAQ: JAZZ) for $7.2 billion earlier this year. That deal proves that Big Pharma has its head in the game.
And while GW Pharma did have an FDA-approved drug and an impressive extraction process, PAOG also has its assets. Moreover, for CBD-based nutraceuticals, no FDA approval is required. And from an extraction perspective, as noted, PAOG is competitive. So, PAOG can be attractive as well.
Now, with Jazz potentially starting a bidding war in the sector, PAOG could benefit too from having its own set of best-in-industry assets. Moreover, its IP could generate revenue streams through potential third-party agreements, which could be used to fund additional product development. Still, there’s more to like.
While RespRx is its lead program, its other CBD nutraceutical program may actually beat it to the market. That one, too, brings substantial market opportunities.
Targeting Massive Opportunities in the CBD Sector
A big win could come through its CBD RELAX-RX, which targets patient treatment in the $15 billion anxiety and depression market. Its promise stems from the increasing number of patients opting for CBD-based treatments over pharmaceuticals to treat the often debilitating symptoms of depression and anxiety. PAOG believes that its CBD RELAX-RX, specially formulated for this application, can provide a best-in-class solution, and its patented extraction process backs up that claim.
While the nutraceuticals can deliver massive rewards, so can PAOG’s other interests and partnerships. EVERx CBD-Sports water is one example.
EVERx CBD Sports Water Adds Value
PAOG is also advancing its interest in what could become a staple in its revenue-generating arsenal, EVERx CBD Sports Water. In a second deal with Puration, Inc., that product is already generating revenues, with sales expecting to surpass $1 million before the pandemic virtually closing down the markets. However, as normalcy returns to the markets, updates from that interest could surprise to the upside.
It should, with EVERx CBD water taking advantage of market trends that show a rise in CBD sales and a decrease in soda consumption. EVERx CBD Sports Water capitalizes upon both of these trends, and better still, the planned addition of a sugar-free variety should enhance the offering and accelerate the brand’s expansion across store shelves nationwide.
The best news of all is that PAOG’s CBD-based products and nutraceuticals are expected to begin generating revenues this year. That’s pretty much confirmed. But the better part is that they are expected to be high-margin sales. And if PAOG stays on course to get its products to market in the next two months, expect PAOG’s share price to respond favorably. In fact, it could jump exponentially from its sub-penny levels.
A Potential Surge In Q3 And Q4
Indeed, PAOG has put the pieces together to start its rally. And with at least one revenue-generating catalyst in sight and another potentially right behind, PAOG looks to be in its best position ever to deliver tremendous shareholder value. And with news on multiple fronts imminent, the remainder of Q4 could be a transformational period for PAOG.
Moreover, growth would likely extend well into next year, especially with fully developed nutraceutical products and partnerships already set to accelerate their initiatives as pandemic-related obstacles become much less intrusive.
Even better, while its CBD Nutraceuticals program gets the bulk of the attention, its other interests are compelling as well. Thus, an investment in PAOG offers a diversification of sorts, with the company not reliant on any single product to control its revenue-generating destiny. Still, several contributions are expected, and when they hit the markets together, the value proposition will be nothing short of compelling.
Hence, consideration in PAOG is more than timely; it’s actionable. And while its 100% increase since last month is impressive, it’s likely a drop in the bucket to what its commercialized nutraceutical line can inspire. Considering that potential, interest in its shares may be wise sooner rather than later.
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