Hemp Inc (OTCMKTS:HEMP) Falls Back Down
When two days ago Hemp Inc (OTCMKTS:HEMP) issued a new video update about the progress of the reassembly of their Temafa decortication line it had an immediate effect on the stock of the company and it surged to a close 10.8% in the green at $0.0123. On the very next day, however, the ticker returned to sliding downwards wiping almost all of the gains and returning to $0.0112 per share.
It seems that the excitement didn’t last for long but that shouldn’t come as a surprise – HEMP has been unable to get investors hyped up for quite a while. Since the start of February when the stock was sitting above $0.035 it has lost over 70% of its value and is currently sitting precariously close to the 52-week low of $0.01.
HEMP bought the Temafa line more than a year ago but the actual reassembly began at the end of May, this year, and it is going to take some more time. According to the video update the electrical wiring will take approximately 60 days to be completed. At the same time the financials of the company are getting more and more depressing. On May 21 HEMP filed the quarterly report for the period ended March 31 and it contained some rather underwhelming numbers. Unfortunately on June 16 a restated quarterly was filed and it showed an even uglier picture:
• $632 thousand cash
• $2.3 million total current assets
• $2.27 million total current liabilities
• $6223 revenues
• $23,104 gross loss
• $1.08 million net loss
The current assets may seem respectable but you should keep in mind that nearly half of them, or $1.18 million to be precise, actually consist of securities kept for sale.
The dilution of the common stock is another cause for alarm. As of March 31 HEMP had surpassed 2.7 billion outstanding shares out of the 3 billion authorized. That is why the company decided to free up some more room for future issuances by increasing the authorized amount to 5.5 BILLION.
And there are plenty of preferred and preferred K shares that could be turned into common shares. Not to mention that according to the financial report HEMP owes its CEO more than $2 million and if the past history of the company is any indication that amount is going to be reduced through the issuance of more preferred K shares each of which can be turned into 10 common shares.
Despite its massive share price decline HEMP still commands a market cap of more than $30 million, number that seems rather disconnected from the underlying fundamentals of the company. On top of that, as we’ve been warning you on numerous occasions in our articles, even when the Temafa decortication line becomes operational it will be used to process kenaf due to the fact that hemp is not legalized in North Carolina where HEMP’s facility is located.
