Hemp Inc (OTCMKTS:HEMP) Hits New 52-Week Lows, Increases Authorizes Shares
The stock of Hemp Inc (OTCMKTS:HEMP) has been sliding down the chart for quite a while and it seems that the downwards trend will be extremely hard to be reversed. Even the news that the German engineer from Temafa finally arrived at HEMP’s facility in North Carolina and the reassembly of their decortication line of equipment could be started failed to create any sort of excitement among investors.
Yesterday’s trading was no different – HEMP opened at $0.0155, tried to remain in the green but failed and slid down to a new 52-week record low of $0.15. Thanks to a last minute surge the stock managed to avoid a more severe correction and closed the day less than a percent in the red.
The risks around the stock seem to only be growing bigger. Let’s start with the latest financial report that covers the first quarter of the year. According to it HEMP finished the period with:
• $630 thousand cash
• $2.47 million total current assets
• $1.3 million total current liabilities
• $6223 sales !!!
• $979 thousand net loss
Such numbers can hardly justify even the current market cap of the company of $42 million. Not to mention that for the period HEMP actually incurred a gross loss of $21 thousand. This means that in order to generate the $6223 in sales they had costs of goods sold of $28 thousand.
The problems don’t end there though. We have been warning you about the ballooning outstanding shares of the company from nearly the first article we wrote about HEMP. Last year around 900 million shares were issued. As of March 31 HEMP had 2.74 BILLION outstanding shares out of the 3 BILLION authorized.
The issuance is unlikely to stop any time soon thanks to the 153 million preferred K shares that can be converted into common shares at a 1:10 ratio and the 108 million preferred shares each of which can be turned into 2.5 common shares. With the authorized shares quickly being reached it was no wonder that HEMP decided to increase them. According to this filing the A/S count now stands at 5.5 BILLION.
The possibility of an eventual reverse split, the fact that the decortication line will be used to process kenaf as hemp is not legalized in North Carolina and the disproportionately high market cap could continue to depress HEMP down the chart.
