Will Hemp Inc (OTCMKTS:HEMPD) Stop Falling?

The stock of Hemp Inc (OTCMKTS:HEMPD) has returned to crashing down the chart registering a loss of 13.3% and closing at $0.073 per share. The company is currently trading at record for the past three years lows.

HEMP’s chart performance has been a total disaster for quite some time but investors suffered an even greater blow when at the end of July the company performed a 1-for-10 reverse split. Initially this boosted the share price of the stock from $0.013 to 13 cents but such price ranges proved to be unsustainable.

It is no wonder that the company is having a hard time getting investors excited. HEMP finished the first quarter of the year with:

• $632 thousand cash
• $2.3 million current assets
• $2.27 million current liabilities
• $6,223 revenue
• $1.08 million net loss

The financial report for the second quarter was supposed to be completed by the middle of the month but HEMP failed to do so and instead, on August 14, submitted a notification of late filing. The company anticipated that the quarterly will be filed within the 5-day extension period but even now the report is still missing. As a result HEMP’s OTCMarkets profile was marked with the OTC PINK Limited Information sign.

Recently the authorized shares of the company got increased from 3 million to 5.5 million not to mention that the reverse split freed even more room for the future issuance of shares. And the possibility of a crushing amount of dilution is very real. In the past any debt the company owed to its CEO was reduced through the issuance of preferred K shares, each of which can be turned into 10 common shares. As of March 31 HEMP owed $2 million to its CEO.

HEMP is currently focused on the reassembly of its Temafa decortication line and at the start of the month they completed Phase One. However, it remains to be seen what impact the processing of kenaf, when the plant eventually gets operational, will have on the balance sheet and if the revenues are going to be substantial enough to offset any dilution of the common stock.