Hemp Inc (HEMP)

[worldisfullofDerps]

Found the diluter

36. Defendants’ dealer business was very lucrative. The following are examples of
transactions in which Defendants acquired convertible notes from penny stock issuers, exercised
their conversion rights, and sold the resulting newly-issued stock into the market for a significant
profit:
a. (“HEMP”)
i. On March 31, 2015, Defendant Iliad entered into a securities
purchase agreement with Hemp Inc., a company whose stock was
listed for trading on the over-the-counter market (OTCMKTS,
“HEMP”). According to HEMP’s public filings, HEMP’s business
is to provide products and services to the medical and recreational
marijuana industries and to provide products made from industrial
hemp.
ii. Under Iliad’s securities purchase agreement with HEMP, Iliad
agreed to purchase a convertible note in the amount of $680,000
issued by HEMP. Under the securities purchase agreement, Iliad’s
purchase price for the convertible note was $500,000, after an
origination discount and transaction expenses were set off against
the principal amount of the note. Iliad made a $375,000 payment
on March 31, 2015 and an approximately $125,575 payment on
April 20, 2015.
iii. Pursuant to the terms of the convertible note that Iliad acquired
under the securities purchase agreement with HEMP, Defendants
converted the amounts that HEMP owed under the agreement on
three occasions between May 23, 2016 and August 15, 2016. In so
doing, Defendants received a total of over 56 million newly-issued
HEMP shares.
iv. Pursuant to the favorable terms that Defendants negotiated, the
conversion price for these HEMP shares was 40% less than the
average of the two lowest closing prices for HEMP stock in the 20
trading days preceding each conversion. The terms that
Defendants negotiated allowed them to spend significantly less
money to acquire the shares than they would have paid on the open
market.
v. Defendants sold the shares shortly after the shares from each
conversion were deposited into their accounts, generating net
profits of $1,083,410, most of which were attributable to the
discounted acquisition prices that they negotiated.