Will Hemp Inc (OTCMKTS:HEMP) Continue Rising?
Last Tuesday the stock of Hemp Inc (OTCMKTS:HEMP) dropped down to a close at $0.017 per share. During the session the company registered a new 52-week low of $0.0166. The performance of the ticker since the start of the year has been absolutely atrocious which can be clearly seen from the chart.
Hitting such record lows seems to have attracted some attention from investors and since then HEMP has been bouncing back up the chart. In fact on Friday the buying pressure was so high that it pushed the stock more than 20% higher to a close at $0.0224. The volume for the day of 30 million traded shares was nearly twice the monthly average for HEMP. One question remains though – Is HEMP capable of sustaining this positive move?
The last couple of PRs published by the company talked about the launch of the Kush Cake in conjunction with another pennystock – Dewmar International BMC, Inc. The press articles failed to influence the movement of the ticker and it continued to slide further down the chart. For the last seven days HEMP has been keeping silence.
A possible explanation for the stock’s sudden reversal apart from bouncing from the 52-week lows may be the fact that investors are anticipating some news about HEMP’s decortication line of equipment. Previously the company had announced that a team of German engineers will be arriving by the end of the month and will proceed to reassemble the Temafa decortication machine.
It should be noted that it will still take a couple of months for the line to become operational. Not to mention the fact that until hemp gets legalized in North Carolina the company will be processing kenaf. In the meantime HEMP are continuing to incur losses. The company finished 2014 with a rather depressing balance sheet:
• $243 thousand cash
• $3.5 million total current assets
• $1.4 million total current liabilities
• $7.95 million sales
• $904 thousand net loss
If you are wondering why we called nearly $8 million in annual sales and over $3 million in current assets depressing here is the reason – around $2.5 million of the assets consist of securities held for sale that the company received from its consulting clients during the first half of 2014. As for the revenues, let’s just say that for the last six months of 2014 HEMP generated less than $100 thousand in sales.
Before you decide whether to invest in the company or not you should also take into consideration one more thing – the crushing dilution of the common stock. At the end of 2013 HEMP had around 1.8 BILLION outstanding shares. Twelve months later that number had reached 2.7 BILLION. With a total of another 1.8 billion shares that can be issued through the conversion of preferred and preferred K shares HEMP may soon be forced to increase their 3 billion authorized shares.
