Hemp Inc (OTCMKTS:HEMP) Announces First Product From Processing Facility
Early in the morning yesterday Hemp Inc (OTCMKTS:HEMP) issued a new PR that unlike the rest of the recent press releases of the company managed to drive investors into a buying frenzy. The hype was so strong that by the time of the closing bell the stock of the company had climbed all the way up to $0.052 for a daily gain of nearly 31%. The traded volume of 17 million shares more than doubled the monthly average of $7.19 million shares.
So let’s see what was the announcement that propelled the stock up the chart – HEMP informed investors that its wholly-owned subsidiary, Industrial Hemp Manufacturing, LLC, is set to release its first product called SpillSuck, an environmentally friendly absorbent that can be used for oil, chemical, and other liquid spills. In the same PR HEMP also announced that their next product is going to be DrillWall, a loss circulation material (LCM).
At first glance the PR is extremely positive but as always taking an in-depth look is strongly advisable. Doing so will reveal that HEMP‘s decorticating plant is still not yet fully operational and with the company no longer giving any estimates for its completion investors will just have to wait and see exactly when will everything be ready. In the meantime the amount of SpillSuck that is available seems to be rather limited – HEMP has 25 thousand pounds in the final stages of packaging at the moment and expects to have another 100 thousand in the next 2-3 weeks. In the 2-3 weeks after that, however, they expect to get only 50 thousand pounds ready for market delivery. Investors should also note that yesterday’s PR didn’t mention any orders or sales for the product.
Still, maybe now HEMP will be able to report some more encouraging financial results from their operations. After all, the last quarter of 2015 was nothing short of a disaster with the company generating less than $2 thousand in revenues. As for the whole 2015 the annual report revealed the following numbers:
• $60 thousand cash
• $755 thousand total current assets
• $168 thousand total current liabilities
• $113 thousand annual revenues
• $8.8 million net loss
Apart from the dismal financials investors should also take into account the dilution of the common stock. After performing a 1-for-10 reverse split HEMP had around 320 million outstanding shares at the end of June 2015. By the end of December that number had almost reached 460 million, an increase of nearly 50%.
HEMP have demonstrated numerous times that they can make huge hype-induced moves up the chart but maintaining the price gains has been rather difficult. Don’t underestimate the volatility of the stock and do thorough due diligence before committing to any trades.
