Saturday, June 25, 2022

Penny Stock Hemp Inc (OTCMKTS:HEMP) In Focus

Hemp Inc (OTCMKTS:HEMP) is a micro-cap stock that continues to lag the broad cannabis space. There are a few reasons for this – first among them has to be a culture of scandal and dilution of shareholders in the recent past, but not far behind is the focus on industrial hemp as a priority over cannabis for recreational or health-related reasons. The company is addressing this second theme to some extent in its latest press release, and may deserve some attention.

The company just announced that it has purchased a legal hemp CBD extraction unit from NuAxon BioScience, manufacturer and the producer of world class, large capacity CO2 Supercritical Extraction equipment. This device will be used by Hemp, Inc. to process raw hemp into cannabinoid (CBD) extracts and oil as part of its strategic business model. We will cover some details in a moment, but a broad framing of the company is useful first.

Hemp Inc (OTCMKTS:HEMP) was founded in 2008. The company’s information is somewhat erratic and difficult to parse through. However, we can get a broad idea of the goals and operations from their materials. But some of this information, particularly with this company, needs to be taken with a grain of salt.

As they frame the message, 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.”

“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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As for our above note on the company’s acquisition of a legal hemp CBD extraction unit, according to NuAxon BioScience, CO2 extraction is “the best method of extracting therapeutic compounds from a plant. When CO2 is captured and compressed it becomes a lipophilic solvent. It is exceptional and efficient at retrieving the oils and fats from plants, some herbal extractions are as concentrated as 250 to 1.” With proprietary “high flow rate pump” reducing processing time to “as low as 90 minutes per batch”, NuAxon’s CO2 Supercritical Extraction unit can deliver a much higher output than competitive brands.

“The speed of extraction, low energy consumption and commercial capacity were 3 key characteristics we were looking for in an extraction unit. After Cliff Perry, CEO of Freedom Leaf, Inc. introduced us to the NuAxon equipment and proven extraction technology, we knew their large capacity CO2 Supercritical Extraction equipment would be the best choice for our CBD extraction process,” said Bruce Perlowin, CEO of Hemp, Inc. ( OTC PINK : HEMP ). Freedom Leaf, Inc. ( OTC PINK : FRLF ) has a Strategic Joint Venture with NuAxon BioScience to sell and distribute their CO2 Supercritical Extraction unit in the United States, Europe and South America.

If this is part of a strategic pivot that includes good execution, the move could conceivably mark a turning point for the company. However, that implies a number of important factors that must be seen as unknowns at present.

Now commanding a market cap of $29M, Hemp Inc has $98K in cash on the books, which stands against about $173K in total current liabilities. The company has pulled in $2.36M in trailing year revs, with large sequential quarterly top line declines over the past three quarters of reported data. As more color becomes clear on the name, we will review the situation and update our take. 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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