Hemp Inc (HEMP)

[Det_Robert_Thorne]

2015 Revenue: $113K, Loss: $8.8M, 457.6M OS

This edited version of the orginal post shows the correct revenue for the first nine months of 2015, which was $111.6K, not the $113.6 shown in the first version. -- DRT

The 2015 report was filed late this afternoon (Pacific Daylight Time), and in some ways, it's worse than even I expected.

http://www.otcmarkets.com/financialReportViewer?symbol=HEMP&id=153160

FY 2015 Revenue was $113.2K, which might seem okay, but for the first nine months of the year, HEMP had revenues of $111.6K, which means that the 4Q/15 revenue was $1.6K, far less than the $100K I thought that HEMP could hit. This means that Carolina Canna Distributors, which Perlowin trumpeted to great fanfare when he issued the PR about signing them as a distributor in August, 2016, hasn't purchased any product to restock its shelves. This distribution agreement looks to be a failure.

HEMP reported a 2015 Net Loss from operations of nearly $7.7M, with most of this loss ($6.3M) being share-based compensation. I'll leave it to the reader (for now) to figure out who got the shares.

Add in the other expenses of $1.1M, and we're looking at a 2015 net loss of $8.8M.

At the end of 2015, the OS was 457.6M shares, an increase of 59M shares (14.8%) from 3Q/15. Since at the end of 2014 there were 274.6M (reverse-split adjusted shares,) the share count increased by 66.6%, or 183M shares, during 2015.

Of course, that's not all, because 45.2M Preferred K shares were issued for debt (exchanged for a "subscription" in 3Q/15). Those 45.2M shares were credited against $2.442M of subscriptions, AKA debt, so each Preferred K share cost $0.054, which means that when they're eventually converted at 10 commons for one Preferred (or 452M shares), the equivalent price per share of the common will be $0.0054, or less than 12% of HEMP's 12/31/15 closing price of $0.046.

In a nutshell, 4Q/15 revenues were far worse than I expected, the loss was much bigger than expected, and while the increase in the number of common share wasn't as big as I expected, the 452M coming from the eventual Pref K conversion more than made up for it.

Finally, it looks like Bruce lent the company another $2M during the quarter, but just before it ended, he converted the debt into more "stock subscriptions", so that it doesn't show up as a liability on the balance sheet. In addition, via the changes in the Paid-in Captial category on the balance sheet, it looks like HEMP spent $10.7M on the decorticator plant this year.