Hemp Inc (HEMP)

[Det_Robert_Thorne]

More than likely, this is now convertible notes

Yes, Perlowin and Eppling may have their stock accounts frozen by the SEC, but I find it interesting that in 4Q/16, HEMP reported a Note payable and accrued interest liability of $8.8M, yet none of it was reported as a "financing activity" in the Cash Flow Statement, and there was zero Notes Payable in the statement for 3Q/16.

There was no explanation in the 4Q filing of this note, other than the following, from page 21:

The Company has continued to use borrowings to fund its business activities through a series of loans with differing terms. the funds advanced against the notes are discounted and the notes bear interest at a stated rate of 12%.

http://www.otcmarkets.com/financialReportViewer?symbol=HEMP&id=171546

Whoever is the noteholder, they are probably using the standard note conversion method of selling naked shares at whatever price they can get, then the next day, are making a conversion demand to HEMP at a discount to the closing price. These shares are then issued directly to the Transfer Agent, which covers the previous day's naked sell.

I've seen other companies allow conversion at at discount of 50% or less, so it doesn't matter what they sell the stock for, because when they convert the next day, they're locking in a 100% profit.

I suspect that when the SEC locked Perlowin and Eppling down, they personally loaned someone $8M+ at a fantastically high interest rate (say 25% - 50%), then HEMP issued them a note at 12% with conversion at a 40% - 50% discount. That person/holding company then converts shares to pay off the HEMP note, then takes a portion of the profits to repay Perlowin and Eppling.