Index: 1) Decorticator: story and status 2) Dimensions of the plant and investment, personal guarantee of Bruce Perlowin 3) Political situation in NC + HB 577 4) Federal Bills HB525 + SB134 5) Hemp: uses and products 6) Kenaf: uses and products 7) Prices comparison between raw fibers 8) Studies about kenaf and hemp 9) Business Developements 10) Next project 11) First sale 12) Specific studies
1) Decorticator : story and status
a) In date March 5th, 2014 Hemp inc. has acquired in auction the biggest decorticator in USA, built by Temafa, and sized for 3000 acres ( 1200 hectares )
Cit:"This opens a huge opportunity for Hemp, Inc. (HEMP) to position itself as the buyer and processor of farmers' harvests. As American farmers begin to grow and cultivate hemp, Hemp, Inc.'s facility will also serve as a place to buy the harvest. With the only decorticating machinery of this size in the United States, Hemp, Inc. can process raw hemp which can be used to make paper, fabric, cellulose plastics, materials used extensively in well drilling to prevent lost circulation, material for toxic spill cleanup; and, highly insulating building products such Hempcrete, to name a few."
Cit:” Due to the similarities of kenaf and hemp, the same equipment can process both raw materials. Appraised as "very good" condition, the decortication equipment was originally purchased for over $10,000,000. The recent purchase made by Hemp, Inc. (HEMP) not only included the machinery, but also included roughly 15 million pounds of raw and processed kenaf which can be sold to the automotive, paper, oil drilling, textile industries and as construction materials.”
Unfortunately, almost 10 millions of the original 15 are lost due the bad conservation, but the remains can produce from 1 to 3 million $ profit, according to :
Cit:” The Temafa decortication line of equipment will now enable the company to process raw hemp for American farmers, when it becomes legal, into two valuable base products (fiber and hurd) that can both yield hundreds of products. The equipment is currently located at a temporary plant in North Carolina , but is now ready to start transporting the machinery into its new facility in North Carolina. The anticipated closing date on Hemp, Inc.'s new facility is August 26, 2014 , at which time all Hemp, Inc.'s machinery should be settled into its permanent home. According to Hemp, Inc. executives, the company has retained the Temafa manufacturing team from Germany to reassemble the decortication line in its new facility in the next month.”
e) (Aug 29, 2014) The decorticator is ready to move:
Cit:”Hemp, Inc.'s new decorticating plant is located just forty (40) miles east of Raleigh, North Carolina. The signing of the closing documents is scheduled for Tuesday, September 2, 2014.”
“Edwards, Inc., a full-service industrial contractor serving the Southeastern part of the United States, has also been on site for the last 60 days assisting with the removal and transportation of the processing machinery.”
“According to executives, the company purchased semi trucks, trailers, forklifts and all other necessary equipment needed to facilitate the move to the new plant.”
- I presume that the trucks, trailers etc will be useful to move the hemp or the kenaf from the producers to the plant and the processed to the buyers.
Cit: “Bruce Perlowin, CEO of Hemp, Inc., said, "We will continue to process and sell the millions of pounds of kenaf we currently have on hand as we wait for North Carolina to follow South Carolina, Kentucky and other states' leads and change their laws on growing hemp. We are also working with another company, which plans to go public in the near future, which was looking for land to grow hemp once North Carolina changed its laws.” "In this case, to be able to generate income in one crop, while we wait for the laws to be changed and the farmers in North Carolina to grow enough hemp to supply our plant, is a perfect migration strategy for us to utilize as we promote the industrial hemp industry."
f) Set 03/14 : The contract has been signed, and the decorticator is moved.
"After months moving from its original location to its current home, the Temafa and Macintosh line of equipment, the mill and the Kenaf is 100% completely moved. Everything is now in its new facility being assembled and organized, as Hemp, Inc. sets up shop."
You can see in this video the real size (22 dec 2014) :
Cit."SPRING HOPE, N.C., Sept. 25, 2014 (GLOBE NEWSWIRE) -- Bruce Perlowin, CEO of Hemp, Inc. (OTC:HEMP) today announced its wholly owned subsidiary, Industrial Hemp Manufacturing, LLC, (IHM) has just purchased and secured its permanent facility for the Temafa decortication line of equipment. Located east of Raleigh at 1436 N. NC Hwy 581 in Spring Hope, NC, the facility encompasses two buildings totaling nearly 70,000 square feet that spans almost 7 acres. The first of this magnitude and caliber in the United States, the newly housed decortication equipment underscores Hemp, Inc.'s long-term commitment to creating economic value and sustainable, green products."
i) After months waiting for authorizations and electrical power connections, March 10, 2015, Hemp, Inc.Gets Green Light From Nash County NC to Reassemble Its Decortication Line.
Cit:”On March 18, 2015 meet with local farmers to make arrangements to get approximately 2,000 acres of Kenaf planted, which would yield over twenty million pounds of Kenaf for use in 2016. The company currently has approximately 4 million pounds of usable Kenaf on hand and is in the last stages of negotiating the purchase of another 10 million pounds of raw Kenaf, located within 20 miles of the company. Once Industrial Hemp is legal in North Carolina, the company plans to convert its inventory of Kenaf to Industrial Hemp for all products.”
m) Temafa's German engineer, Mr. Reiner Busch, arrived at Hemp, Inc.'s decortication plant in Spring Hope, North Carolina and the final rebuilding starts, in kenaf configuration (May 27, 2015)
Cit:” Under the guidance of Mr. Busch, reassembly of Hemp, Inc.'s massive decortication machinery is now aggressively underway. Temafa, the manufacturer of Hemp, Inc.'s decortication line, is a leader in the global blending solutions industry with over 120 years of experience in the manufacturing of fibre opening, cleaning and blending systems.”
Cit:” According to Schmitt, there was a lot of preparatory work that needed to be done, specifically ensuring the electrical foundation was intact. "Duke Energy has completed the process of getting us 3-phase power routed to our facility in Spring Hope, North Carolina. This process involved the installation of several new power poles along a 1 and 1/2 mile stretch of road into Spring Hope, North Carolina. The next step in this process is to install our new transformer in order to get us the 480 volt 3-phase power that we require. This should be completed in the next couple of weeks," said Schmitt. Duke Energy had required Hemp, Inc.'s facility to have an access road on the property to be able to install and maintain the new transformer which is now complete. With everything else in place and Temafa's German engineer, Mr. Busch on location, the final stage of the decortication machinery assemblage has commenced. "With Mr. Busch's expertise in Temafa equipment, we are going through each piece of machinery thoroughly to inspect it and confirm that all necessary repairs were made," continued Schmitt. Temafa's German engineer will guide the reassembly process to ensure maximum efficiency and throughput (the amount of material or items passing through a system or process).” http://www.barchart.com/headlines/story/8289825/hemp-inc-s-decortication-line-now-being-reassembled
n) Progress in decortication facility: video update ( Jul 08, 2015)
The three phases tranformer, the 100HP compressor, the control panel and part of the machinery are installed.
150 acres are planted with a fast growing Chinese Kenaf (standard kenaf is ready for the harvest in 3 or 4 months, I assume that this type will be ready in first part of august )
Cit:” I know we have enough kenaf seed to plant 2,000 acres or more but decided rather then incur a huge bill due to the farmers growing 2,000 or more acres we decided to test this high yield fast growing kenaf we got from China, with 50 acres next to the plant and another 100 acres near by. We still have the seed and it's better to test it first before going too big.
Our Kenaf has grown over 12 inches in the last week. It is now 30 inches tall.”
Hemp inc declared that the cost of all the operation was 2.3 Millions : 1.06 Millions for the decorticator, others for the new warehouse, for the trucks and the trasport of the kenaf
Cit: The CEO's personal guarantee also included personal guarantees for the company's loans. Perlowin is committed to the American farmers and to spearhead a new clean, green American Agricultural and Industrial Revolution based on hemp and hemp products. Cit: The replacement value (the cost to duplicate this today) of the decortication and milling plant, the 70,000 square-foot warehouse (with a 6-inch cement foundation and a refrigerated section), the semi trucks, forklifts and other equipment, and millions of pounds of processed Kenaf exceeds $20,000,000. However, since the plant, Kenaf and the new warehouse and acreage was purchased through the bankruptcy court, the company only paid a fraction of that cost, thereby getting a great deal.”
Cit: On May 12, 2014, the Company purchased decortication equipment for processing kenaf, a fibrous plant used in industrial, commercial, and consumer applications, and for the anticipated future processing of hemp. On August 7, 2014 the Company acquired a 70,000 square-foot North Carolina factory building on 8 acres to house the decortication equipment along rolling stock and forklifts. The Company’s CEO advanced the $17,000 to open escrow on the purchase. The Company borrowed $1,600,000 to finance the purchase of the land, building, equipment and to provide working capital on a long term convertible note payable. The land, building, equipment, and 8,000,000 Preferred K shares are pledged as collateral against the Note. The CEO supplied the 8,000,000 Preferred K shares from his own personal portfolio. The Note further required the Company to issued 5,000,000 Common shares, 10,000,000 five year $0.10 Common stock warrants, and six amortizing payments of $296,667 for a total of $1,760,000 beginning on May 12, 2015. The Note is convertible to Common stock at the election of the Company. The 5,000,000 Common shares issued pursuant to the terms of the Note were recorded as prepaid interest at $286,000, the closing price of the shares. The Company used the Black Scholes method to calculate the derivative cost of the 10,000,000 Common stock warrants at $565,771 and was also recorded as prepaid interest.
3) Political situation in NC
- North Carolina State was one of the greatest hemp producers in US.
The price of US Cotton after the 2008 crisis (80 $ ) raise to 200$ in 2011, then sunk to 86$ in 2014.
Compared to hemp or kenaf, the cotton have higher production cost, requires large use of pesticides, large use of chemical fertilizers and more water.
Then, it’s possible a partial CONVERSION from cotton to HEMP or KENAF.
Cit: ”This (purchase) opens a huge opportunity for Hemp, Inc. (HEMP) to position itself as the buyer and processor of farmers' harvests. As American farmers begin to grow and cultivate hemp, Hemp, Inc.'s facility will also serve as a place to buy the harvest. With the only decorticating machinery of this size in the United States, Hemp, Inc. can process raw hemp which can be used to make paper, fabric, cellulose plastics, materials used extensively in well drilling to prevent lost circulation, material for toxic spill cleanup; and, highly insulating building products such Hempcrete, to name a few.”
Raleigh, NC – A rare treatment that includes cannabidiol oil from hemp plants to treat drug-resistant epilepsy, which is particularly prevalent in children, will now be available in clinical trials in North Carolina thanks to legislation signed into law today by Governor Pat McCrory. Under the provisions of the new law, medical professionals are now able to conduct evidence-based studies exploring the safety and efficacy of treating intractable epilepsy with the hemp plant oil extract. Neurologists affiliated with University of North Carolina at Chapel Hill, Duke, East Carolina and Wake Forest universities are specifically encouraged to undertake the studies in the new law.
Industrial Hemp Farming Act of 2015 Amends the Controlled Substances Act to exclude industrial hemp from the definition of "marihuana." Defines "industrial hemp" to mean the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-nine tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis. Deems Cannabis sativa L. to meet that concentration limit if a person grows or processes it for purposes of making industrial hemp in accordance with state law.
The machinery can be easily converted to process hemp or kenaf, and the hemp is in shortage in US: 4 Million pounds are in stock, and to ensure the production in 2016, Hemp inc signed agreement to get approximately 2,000 acres (800 hectares) of Kenaf cultivated near the plant.
- Retting process of some bast plant fibers and its effect on fiber quality : a review (Economics of growing Hemp and Kenaf 2015 - North Carolina State University)
"Based on comparisons in production, anatomical properties, stem processing fibre quality and prices, kenaf apparently has multiple advantages compared to hemp, jute, and flax in tropical countries as a fibre source. Kenaf yields are greater than the others, hence providing a more cost-effective raw material. Kenaf has the lowest aspect ratio, low density, and relatively high tensile strength among other fibres. The retting method is the predominant challenge in the application of bast fibres. The selection of retting method is most important if the fibres are to be used in textiles. Studies have shown that the most efficient method is by combining chemical and enzymatic retting. The future of bast fibre crops relies mainly on the end uses of the fibres. The long bast fibres offer much more domain of usage and hence offer the highest value, whilst short fibers from the same plants can be used in a limited number of applications."
- "Economics of Kenaf Production in the Lower Rio Grande Valley of Texas (Andrew W. Scott, Jr., and Charles S. Taylor ,1990)
- Economic Considerations for Growing Industrial Hemp: Implications for Kentucky’s Farmers and Agricultural Economy Department of Agricultural Economics, University of Kentucky (july 2013)
In any case, you will find that in Canada the main product were the seeds (p 6,7,8 ...) for lack of fiber processing plants.
"There are many companies interested in using processed hemp, both fiber and seed, but, in Canada for example, far fewer have invested in doing the processing, especially fiber processing."
9) Business developments
a) (Jul 23, 2015) Carolina Canna Distributors, LLC Signs Master Distributor Agreement With Hemp, Inc.
Cit:” Hemp, Inc. (OTC PINK: HEMP) announced today that Carolina Canna Distributors, LLC, a subsidiary of Carolina Hemp Company located in Asheville, NC, has signed a master Distributor Agreement with Hemp, Inc. to exclusively sell Hemp, Inc.'s line of hemp-based cosmeceuticals including shampoos, conditioners, moisturizers, lip balms, skin treatment oils, and candles. Under the terms of the signed Distributor Agreement, Hemp, Inc. "appointed and granted" Carolina Canna Distributors, LLC the exclusive and non-assignable right to sell its product line in North Carolina and non-exclusive right to sell anywhere else in the U.S. and abroad.
This will make Hemp, Inc.'s products visible in over 400 stores in North Carolina.
b) (July 30,2015) Hemp, Inc. Hires VP of Sales for its Decortication Facility
Cit:”Robert (Bob) Hughes is ready to take Hemp, Inc.'s decortication facility, in Spring Hope, NC, to the next level by spearheading an aggressive national and international sales and marketing campaign. Bob has over three decades of experience in founding and building successful companies and over 6 years specializing in the selling of raw, natural fiber.”
Bob Hughes is a specialist in kenaf and industrial hemp market , and in this video presents differents uses of kenaf: automotive, paper and oil industry.
In the video is presented one of the many products obtainable with the kenaf (already legal in NC).
The DrillWall (invented by Bob Hughes) is used in the oil industry, and many Companies have been contacted.
Here the presentation of the previous manufacturer:
Cit: "From protein to fiber to CBDs, our aim is to be the leading processor of processed and raw hemp materials," said Perlowin. There are also plans of building a GMP(*) compliant facility for the extraction of CBDs from hemp. "While we wait for North Carolina to change its law to legalize hemp, revenues will be generated from processing Kenaf for the oil drilling pipes, textile, building automotive and other industries. It's the perfect migration strategy," says Perlowin, to generate revenues from the Kenaf plant and thus keep Hemp, Inc. years ahead in the hemp processing industry. (See p.19)
(*)NOTES: Good Manufacturing Practices (GMP): The same label claim is required on GMP products, but in this case Product “A” requirements will be the same each and every time - meaning the patient gets a consistent product that they can rely on. Good Production Practices (GPP): While products have to have a label claim – i.e. the label needs to list the percentage of THC and CBD – these specifications don’t have to be consistent. This means that Product “A” that a patient receives today could contain a very different THC and CBD value than Product “A” they purchase next month.
11) First sale: 12.000 pounds of raw kenaf and 15.000 pounds of finished kenaf fiber (June 12, 2014)
Cit:” Since purchasing its line of automated decortication equipment and accompanying kenaf, Hemp, Inc. (OTC:HEMP) announced today the first sale of its raw and processed kenaf in the United States. According to Hemp, Inc. executives, a developer in Kingman, Arizona has purchased approximately 12,000 pounds of raw kenaf and approximately 15,000 pounds of finished kenaf fiber for inclusion in the concrete and/or stucco home building materials for their environmentally sound eco-community.”
Cit:"Hemp, Inc. has not only received requests for samples of the kenaf, but has also since received a potential order for 200,000 pounds of kenaf. Other potential buyers of the kenaf are currently testing the kenaf and if it suits their needs, may purchase the entire inventory, according to Hemp, Inc. CEO, Bruce Perlowin. The kenaf is expected to be an easy sell. It has a history of being an important source of bast or cordage fibers used in the manufacturing of rope, bagging and other coarse fiber products."
11) Specific studies:
- Marijuana Production in the United States (2006), By Jon Gettman, Ph.D.
