Hemp Inc (HEMP)

[Det_Robert_Thorne]

Decorticator won't save HEMP. Small market for Kenaf?

Right now, though Perlowin/HEMP paid very little for the equipment and 6800 metric tons of raw and processed Kenaf, it is costing the company quite a bit to move and reassemble the equipment, as well as move the Kenaf to the new location.

Per Schmidt, the guy running the plant, it won't be fully operational until 1Q/15, and even then, will only have Kenaf to process until U.S. grown hemp crops reach a reasonable size in several more years.

But then there's the question about the market for the 6800 MT of Kenaf. Frankly, I don't think it is very viable market in the United States.

1) In the six months since HEMP bought the raw and finished Kenaf, only a miniscule portion (a few tons) has been sold as an additive for cement in a Kins Domain hippie community in Arizona.

2) Supposedly, the Kenaf has been in evaluation for months, but no further purchases have been announced.

3) In the following cropped photo taken from those on HEMP's Facebook page, see what appear to be bags of Kenaf seeds from kenafseed.com, which appears to be a defunct website:



Per a whois search, the owner of the domain is a David Mullens, and the address in Dallas, TX, is a high-rise condominium in Dallas:

https://www.who.is/whois/kenafseed.com/

According to his Linkedin page, David Mullens is now focusing on his career as a pilot, but between 2003 and 2005 was the Treasurer of the American Kenaf Society, which also appears to be out of business since 2012, because the link goes to a mahjong site somewhere in Asia, which whois indicates happened in 2012.

http://whois.domaintools.com/kenafsociety.org

Many of the external links on the Wikipedia page for Kenaf are dead, which means that nobody is maintaining it:

http://en.wikipedia.org/wiki/Kenaf

One of the companies mentioned on the Wiki page as a supplier of Kenaf paper, Vision Paper, has no products in stock, and hasn't updated its "Latest News" page since August, 2010:

http://www.visionpaper.com/latest_news.htm

If seed suppliers, associations are out of business, and paper manufacturers aren't using it in the U.S., where is the market?

Is cheap Asian Kenaf taking all the market share?

Who will HEMP sell this stuff to?

If HEMP is able to sell the Kenaf, it will probably be at a significant discount, which will mean small profit margins, even at the reduced "bankruptcy auction" price. After all, the low price at auction likely means that nobody else wanted it.

Finally, here's a portion of a review of the BMW i3, which uses Kenaf for exposed interior parts: [Emphasis added by me]

But as good as the interior design looks, the abundance of "green" and recycled materials puts a damper on the i3's premium feel. The trim level I tested was the Tera, highest of three "world" names that BMW is using to describe the trims (the other two are Mega and Giga). It included full leather seats (available only in brown, as the tanning process for the leather uses olive leaf extract instead of harsher chemicals), a nice premium fabric on the doors made from recycled plastic bottles, and material woven from the fibers of the kenaf plant for much of the dashboard and door trim. Along with some trim parts that have the grained look of a Styrofoam cooler, the kenaf fiber material makes the interior look unfinished, almost as if the car was still in prototype form. It's also rough and unpleasant to the touch, almost like the fiberboard backing under upholstery. Green it may be, but it feels completely out of place in a nearly $45,000 car.

http://blogs.cars.com/kickingtires/2013/11/2014-bmw-i3-first-drive.html

IMO, the decortication facility will be a "money sink" for HEMP for the next few years, but that will be okay, because Bruce will just loan more money to the company and then take shares in return, giving him a greater share of the company, then occasionally give dividends of the stocks of the companies received as consulting payments, of which he -- due to his 50% - 70% ownership, will get most of.