Hemp Inc (OTCMKTS:HEMP) Falls Below $0.04

So far the stock of Hemp Inc (OTCMKTS:HEMP) has managed to string together five sessions of losses in a row. The daily corrections have not been that alarming but after sliding down by 1.5% yesterday the stock dropped to a close below 4 cents per share at $0.0394. Despite the regular PRs coming from the company it is clear that investors are having a hard time getting excited about the stock.

And it is not that difficult to see why. On June 9 HEMP announced that they had signed Pazoo, Inc. (OTCMKTS:PZOO) as a new consulting client. The news had absolutely no impact on the performance of the stock and on that day HEMP corrected by close to 2.5%. Opening the last financial report filed by PZOO explains the lack of a positive reaction – as of March 31, 2016, the company had $31 thousand cash, working capital deficit of around $7.1 million, just $7,326 in revenues for the quarter, and a net loss of $4.3 million. Admittedly, this rather depressing balance sheet still means that PZOO are in a better state than the previous consulting client of HEMP – FutureLand Corp. (OTCMKTS:FUTL), who finished the first quarter of the year with negative cash of $5,627, zero revenues, and close to $600 thousand in net loss.

HEMP‘s financial state also raises some rather serious concerns. While the company did report sales of more than $700 thousand for the first quarter of the year the lack of any costs of goods sold could mean that the revenues came from the aforementioned consulting clients. A couple of years ago HEMP registered millions in revenues from consulting services but all they got were billions upon billions of shares from their clients. Not to mention that the company even had troubles collecting all the shares it was owed.

During the first three months of 2016 HEMP also issued 100 million fresh shares bringing their outstanding shares to 556 million as of March 31. Keep in mind that at the end of July, last year, HEMP performed a 1-for-10 reverse split but since then they have been regularly diluting their common stock.

The red flags surrounding HEMP shouldn’t be underestimated in the slightest. No matter how strongly you believe in the potential of the company and its decortication plant, when it eventually gets completed, you should still use caution when putting any amount of money on the line.

In early trading today HEMP is down by another 3.55% trading at $0.038 at the moment.