Hemp Inc (OTCMKTS:HEMP) Surges on News
On Friday the share price of Hemp Inc (OTCMKTS:HEMP) caught a midday boost that sent it to a close 56% in the green. The reason for this massive price move and the volume spike that went with it was the couple of articles going up on Friday, promising industrial hemp legalization in North Carolina by midnight.
HEMP shareholders rushed in to gobble up more shares, excited by the early cheering. The articles explain that if North Carolina’s governor failed to veto the bill in question by midnight, Oct 30, then the proposed changes would become law. There is no major news source confirming that this was indeed the case and all articles were put up in the morning of Oct 30, containing a lot of conditional wording such as “likely”, “could” and derivatives.
In theory, HEMP could benefit significantly from the legalization of industrial hemp in the state of North Carolina. In reality, the chances for this of anything significant happening any time soon are looking rather slim. For starters, here is what HEMP has on its hands to work with in a changed legislative NC landscape:
- $176 thousand in cash
- $2.5 million in current liabilities
- $33 thousand in Q2 sales
- $1.1 million in Q2 net loss
Those figures speak volumes on their own. The trump card HEMP wants to play in NC is the company’s hemp decortication facility HEMP has been assembling in a “cavernous warehouse” (sic) in a small town. Even though investors have been hearing about the ongoing reassembly of the plant for a while now, the newest update informs the facility should start production “within months”, whatever that might mean.
There is of course the issue with HEMP‘s share structure. The company effected a 1-for-10 reverse split on the last day of July. CEO Bruce Perlowin is receiving considerable amounts of Series K preferred shares, each convertible into 10 shares of common stock, and has no compunctions about converting the Series K into common stock, diluting further. The full details on share issuances over HEMP‘s last reported quarter can be seen in the Issuance History chapter of the latest quarterly.
There is no doubt going to be more hyped-up news articles about how North Carolina will be the new capital of industrial hemp and it’s not unlikely that HEMP‘s share price runs even higher in the short term, despite all of the above.
