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Tuesday, October 20, 2020

The Ups and Downs of Hemp Inc (OTCMKTS:HEMP)

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Hemp Inc (OTCMKTS:HEMP) is a penny play ostensibly in the cannabis-related space. However, its interests are far afield from the pure-play segment that has been such a focus among small and micro-cap stock traders and investors into and following the landmark vote in the US on November 8. For HEMP the story seems to have soured, and the stock’s action reflects this attitude.

Traders will note a continued failure to rebound following the recent decline in share prices. This isn’t surprising since the name was likely boosted by mistaken identity into the November vote by traders unfamiliar with the company’s operations, given that this ticker is often grouped in with true marijuana and cannabis plays. However, once the dust cleared, the stock dropped back down to prior levels, and the trading public was left with a series of late filings and no other news of significance. That doesn’t mean a squeeze of some kind is impossible here – there have been plenty of them in the past – but serious new accumulation seems unlikely at this point without a sign of tangible evolution that the market can really sink its teeth into.

Hemp Inc (OTCMKTS:HEMP) was founded in 2008. According to company information, the company’s long-term goal is “to be the leader in the industrial hemp industry in America”.

The company understands its mission to be a provider of “green solutions that help make the world a better place to live. We support products that are eco-friendly, organic, healthy, and solutions that replace many petroleum-based products.”

The narrative the company spins includes the idea that “In a forward-thinking move, Hemp, Inc.’s wholly owned subsidiary Industrial Hemp Manufacturing, LLC purchased the largest decortication plant in North America, which is located in Spring Hope, North Carolina. The plant is housed in a 70,000,000 square foot warehouse on 9 acres. The company will start producing fiber, loss circulation materials (LCM) and absorbents from kenaf and later from hemp.”

That narrative continues forward to include the concept that “Hemp, Inc. will produce a product for drilling rigs called “lost circulation material” (LCM), which is used for maintaining the seals when drilling for water, oil, gas, and any other liquid or gas. This product alone is capable of producing millions of dollars in revenue, since some of the largest oil companies in the world will be our primary customers.”

“Eventually, the company will produce fiber materials for the paper and fabric industries, and other industries that utilize materials from hemp to make products such as plastics, building materials, health and beauty related products and more.”

Hemp, Inc. has stated that it plans to purchase, acquire and/or joint venture with complimentary companies across various sectors of the hemp industry in an effort to “build a portfolio of synergistic businesses that will bring Hemp, Inc. cash flow, revenues, value, and position us as a leader in the industrial hemp industry.”

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The company has been hinting for a while that an expansion was in the works and management has been trying to drum up excitement.

Bruce Perlowin, CEO of Hemp, Inc. said, “Not only are we excited at the possibility to grow our own 50 acres of hemp in the Spring, we are also partnering with landowners and farmers across North Carolina to grow hemp, such as the 1,500 acres we announced in a previous press release, while we complete the final stage of bringing our multi-purpose industrial hemp facility in North Carolina online. We’ve planted Kenaf successfully. Now we are ready for hemp.”

It will be an important signal to the market if the promise relayed by this type of messaging is paid off by events to come.

Currently trading at a market capitalization of $21.3M, HEMP has about $100k in cash on the books, which must be weighed relative to $173k in total accumulated debt. The company has seen its sales picture deteriorate, and is no longer seeing revenues at this point (they reported a total of $4k in sales over the past two quarters, cumulatively). You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $HEMP stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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