Replies to post #74376 on Hemp Inc (HEMP)

[Kroooo]

Glad you said something about Bruce. I was just reading about him. So is he still in charge of HEMP? What came of the investigation? And isn't Hemp already Legal in 30states. I apologize for all the questions and I appreciate you taking the time to answer them

[Det_Robert_Thorne]

Price "low" because of dilution. Actually, HEMP's overvalued.

HEMP's current stock price seems low, but thanks to dilution, it's actually quite overvalued.

In fact where Hemp Inc's processing facility resides, North Carolina's Hemp pilot program started in 2014 but it wasn't until this year that approved North Carolinians were able to start growing it in their fields.

NC Senate bill 313, which legalized industrial hemp farming, didn't pass both NC legislative houses until late-Sept, 2015, and became law on Oct 31, 2015:

http://www.newsobserver.com/news/politics-government/state-politics/article41959365.html

The most notable that a person might identify is an investment fraud ordeal with CEO Bruce Perlowin involving the Penny Pot Boom of 2014. You can google Bruce Perlowin and read more about it.

The SEC brought its case against CEO Perlowin just about one year ago:

https://www.forbes.com/sites/nathanvardi/2016/06/21/sec-charges-king-of-pot-with-investment-fraud/#4080902f3df8

The other main reason the stock is down is because of continual, massive dilution, along with lack of progress on generating revenue.

When Perlowin bought the decortication machinery at a bankruptcy auction in 1Q/14, HEMP had the post-2Q/15 equivalent of 214.4M outstanding shares. It's now approaching 1.9B shares.

That puts HEMP's current market cap at roughly $46M, yet the company isn't generating revenue, and the book value is less than $0.005/share (HEMP's assets minus liabilites divided by 1.9B shares).

Therefore, HEMP is overvalued at $0.024/share.

As to Bruce's current business plan of grinding and milling the kenaf stalks, the original plan was to decorticate the stalks, separate the fiber from the core, sell the fiber, and mill the core to make Drillwall and SpillSuck.

But the decorticator isn't running, and Perlowin has been saying that it would be running in 4-6 months for more than a year (In December, 2015, he said it would be running by 2Q/16). It may never run, based on the rumors of broken, expensive-to-remanufacture, one-off parts.

So he has spent several hundred thousand dollars to buy a grinder to feed the mill, and is now calling grinding and milling of full stalks (i.e., not separating fiber from core) "full operation", which it isn't.

Finally, the company that previously owned the plant, Kenactiv Innovations (AKA, Biotech Mills), was making Drillwall and Spillsuck from Kenaf, and lost $10M in 2012, followed by another $4M in 2013, before filing bankruptcy.

But Kenactiv was privately held, and they didn't have a CEO like Bruce, who could loan the company millions of dollars, then get repaid in stock at one-tenth of the market price.

[JustMyLuck]

Very well said! A few other issues to mention about HEMP, but, otherwise, you are on track with your thoughts.

GO $HEMP