Hemp Inc (HEMP)

[Det_Robert_Thorne]

There is no hemp to process.

They can simply process everyone's hemp for a cost effective fee (scale, "largest decorticator in America"), but might as well make oils too, with all the hemp they'll be processing.

First of all, they can't process hemp in NC until it is legal to do so, and that won't happen in 2015.

Secondly, the plant can only handle (per year) the hemp from 3000 acres (per the videos,) and even then, the net profit before taxes will probably be less than $2M/year (at the high end). With more than 3B outstanding shares by that time, that will be an EPS of less than $0.0007, and probably closer to $0.0005

That means that right now, people are paying 45X 2016 or 2017 EPS.

For something that might very well be a commodity by then.

And the equipment will be 6 - 7 years old in real time, and beginning to require more maintenance.

Regarding the kenaf, if they don't sell it, then that means that the cost of extracting the fiber becomes a loss to the company.

If they don't process it because there is no market, then the plant just sits there, depreciating while costing money for the mortgage and maintenance/security to watch over it.

So since there won't be any hemp to process for a couple of years, the company will have to find kenaf growers AND kenaf fiber/product customers, unless it wants the plant to sit unused for 2 - 3 years.

As to the oil, sure, that's in the future, and it will require a separate facility, because the process is entirely different.

HEMP will continue to lose money through 2015, and probably for most of 2016 as well.

At $0.03, the stock is well overpriced.