Hemp Inc (HEMP)

[Det_Robert_Thorne]

1Q/16 Rev: $743K (all consulting stock), $3M loss

* Revenue all stock from consulting deal
* The net loss was $3.02M
* The OS is now 556.2M shares, an increase of 21.5%, or 98.6M shares
* Share subscriptions (value of shares due Perlowin) increased to $3.6M from $2.5M at the end of 2015
* Perlowin calls the loan terms of outside loans "draconian"

The 1Q/16 report was filed late this afternoon (Pacific Daylight Time), and it's amusing, to say the least, especially because of Perlowin's comments on the last page of the report.

http://www.otcmarkets.com/financialReportViewer?symbol=HEMP&id=155715

1Q/16 Revenue was $743.4K, which might seem great, but it's most likely the value of stock received for the consulting deals with FUTL and GRCU. There is no cost of sales reported, which means that Carolina Canna Distributors didn't purchase any product to restock its shelves. This distribution agreement looks to be a failure, and in the recent video interview, Perlowin basically says that Hemp is exiting the personal products market. Therefore, the income must come from consulting, not sales of personal products or anything derived from the kenaf inventories at the plant.

According to FUTL's 1Q/16 report, they paid 700K shares to HEMP in either on January 26 (per their report) or February 2, (per HEMP's PR): If we use the Feb 2 date, then at a closing price of $0.40, the FUTL stock was worth $280K of the revenue line.

GRCU hasn't issued its report yet, so I'm not sure how many shares were issued and at what price.

HEMP reported a 1Q/16 Net Loss from operations of $3.02M, with most of this loss ($3.63M) being share-based compensation. I'll leave it to the reader (for now) to figure out who got the shares.

Net loss for 1Q/16 was $3.01M

At the end of 1Q/16, the OS was 556.2M shares, an increase of 98.6M shares (21.5%!!) from 4Q/15.

Finally, it looks like Bruce lent the company more money during 1Q/16, and at the end of the report, he finally describes a little bit of the lender relationship he has with the company:

The President and major shareholder has entered into a series of personal loans and has advanced the loan proceeds to the Company. He has personally guaranteed these loans and has pledged personal assets to collateralize these loans. Loan proceeds have been used by the Company to purchase the property, plant, and equipment located in North Carolina and to fund the ongoing operations of the Company. The terms of the loans are so draconian the President is continuing to be in “technical default” and as such the Lender immediately forecloses on the President’s pledged assets. The advances to the Company classified as Subscriptions Payable as directed by the President. [emphasis added

What I find hilarious about this is that:

1) He's the one who signed the loan deal

2) He has been financing HEMP like this since well before the he bought the decorticator and the building in Spring Hope