Hemp Inc (OTCMKTS:HEMP) Is On A Slow Climb
For the past couple of sessions the stock of Hemp Inc (OTCMKTS:HEMP) has been mostly retracing its steps up the chart. The daily gains, however, have not been that impressive – on Friday the stock added a little over 2.5% to its value, sitting at $0.031 at the time of the closing bell.
The company has been trying to get investors excited using every chance it has to mention that its decortication facility in North Carolina is nearing completion. While many of the supporters of HEMP will undoubtedly be glad to learn that the plant might finally become operational after the numerous missed deadlines and serious delays even they might be reluctant to jump back into the stock.
After all, less than a month ago the Securities and Exchange Commission filed charges against HEMP and its CEO Mr. Bruce Perlowin. Among the defendants are also Mr. Perlowin’s brother, Jed Perlowin, as well as one of his friends, Barry Epling. According to the complaint hundreds of millions of unregistered and purportedly unrestricted shares have been sold to public investors.
Despite HEMP‘s propensity for issuing PRs even if they contain little more than fluff so far not only has the company failed to address the SEC charges against it but it hasn’t even mentioned them in an official press release.
Even if you disregard this completely the red flags around the company will remain significant. HEMP may have been able to report nearly $750 thousand in sales for the first quarter of the year but they still finished the period with a net loss of more than $3 million. Not to mention that the lack of any cost of sales may indicate that the revenues came from the various consulting deals of the company. A couple of years ago HEMP reported millions of revenues from consulting services but instead of money the company was paid in billions upon billions of shares.
The dilution of the common stock mustn’t be overlooked, either. Following the reverse split from July 31, 2015, HEMP have issued over 200 million shares and as of March 31, this year, they had 556 million outstanding shares. With 5.5 BILLION authorized shares and a vast amount of preferred, preferred K, and preferred K (P) shares the O/S could continue to grow. Especially if the company needs to raise additional funds in order to pay for its legal expenses.
HEMP is more than likely going to remain a volatile stock in the coming sessions which could allow some traders to walk away with quick gains. Underestimating the risks is not advisable, though, and putting any money on the line should be preceded by extensive research.
In early trading today HEMP is jumping up and down, currently sitting 1.6% in the green at $0.0315 per share.