Replies to post #74398 on Hemp Inc (HEMP)

[Det_Robert_Thorne]

I think it's due to loan-to-share conversion

I think that these large charges and interest expenses are due to the way Perlowin finances HEMP with loans, while taking repayment in Preferred K shares, which are eventually converted to common shares at a ratio of 10 commons for one Preferred K. The first hit of repayment in Pref Ks hit the operating expenses, while the eventual conversion then is recorded on the interest expense line.

I wrote a little about this a couple of weeks ago:

I think that the $10M+ in stock-based interest has to do with loan or interest payments made a year, or more, ago with Pref and Pref K shares.

Since the repayments are made with Pref and Pref K at discount to the commons, when they're converted into common shares the company has to take a charge for the difference.

Suppose that in Oct, 2015, when HEMP was at about $0.05/share, it cleared $1M of debt by issuing 20M Pref K at $0.05 each.

Then, in 1Q/17, the holder of those Pref K demands that they be converted into common shares at 10 for 1. HEMP has to issue 200M shares now worth about $0.03, which costs the company $6M worth of common shares. Subtract the $1M paid out a year ago, and the difference is a $5M hit to the expense line.

Of course, who received $5M of HEMP common stock in echange for a $1M loan (or $1M of interest).

I'll give you one guess, and it rhymes with Loose Berlopin.

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[hempster]

I have been here since 2009 I could not agree more with you Bruce is making bank and does not care about his share holders going broke at this rate HEMP INC is about to send me to the poor house and I will lose power and internet access ...
Rich get richer while the poor go broke making the rich who they are