HempAmericana Archives - Green Market Report

Debra BorchardtDecember 21, 2021
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12min280

How does one make $11 million when the company records less than $10,000 in revenue for a year? Apparently by pumping and dumping the stock says the SEC (Securities and Exchange Commission). The SEC is opposing an attempt by HempAmericana (OTC: HMPQ) to have its complaint dismissed. 

Hemp Americana

HempAmericana was incorporated in 2014 with a factory and equipment aimed at processing, bottling, and selling products made of industrial hemp, including CBD oil. Since its incorporation, HempAmericana has never been profitable. From 2017 through May 2020, HempAmericana generated a mere $9,727 in revenues. Salvador E. Rosillo is HempAmericana’s CEO. The complaint alleges that almost a third of the company’s money was used for stock promotion – not for actually growing the business. 

The company reported that for the year ended in February 2021, it had revenues of $7,793 and expenses of $478,064, leaving a net loss of $551,291. For the quarter ending in May, the company had revenues of $300 and the quarter ending in August had no revenues and just $12,000 in cash. 

SEC Complaint

In August 2021, The SEC accused GPL Ventures and GPL Management of acting as unregistered dealers by privately acquiring large blocks of stock in approximately 140 microcap issuers and publicly selling those blocks into the market for their own account, generating gross proceeds of at least $81 million. The most lucrative of the penny stocks was HempAmericana which generated a profit of $11 million.

The GPL defendants are accused of secretly funding promotional activity in  penny stocks in a scheme known as “scalping.” Scalping is when someone buys shares of a stock for his or her own benefit before recommending that stock to others and doesn’t say anything during that recommendation of plans to sell them. The action is then followed by selling the shares once they rise after the recommendation. It’s also called a pump and dump scheme. The SEC accuses the GPL Defendants of buying and selling large blocks of HempAmericana securities from 2017 through at least late 2019. 

The SEC complaint alleges that HempAmericana, through Rosillo sold shares to Alexander Dillon, Cosmin Panait, GPL Ventures LLC, and GPL Management LLC on the condition that HempAmericana then pays a portion of the proceeds from those sales to stock promoters in order to tout the company’s stock. The filing stated, “HempAmericana then issued stock to the GPL Defendants under Regulation A—an exemption from the requirement that securities offerings be registered—and indeed provided a significant portion of the proceeds to stock promoters or their intermediaries. The GPL Defendants sold (or “dumped”) the stock at a profit once the promoters had touted the stock and “pumped” up its volume and price. As Rosillo knew, the GPL Defendants would not purchase more HempAmericana stock each time until they had sold their prior holdings. This practice took place over the course of three years, through multiple issuances of shares, and was never disclosed to other investors in the company.” 

Dillon and Panait co-own and control GPL Ventures and GPL Management, through which they invest in microcap companies. Dillon previously held a Series 7 securities license and was briefly employed at a registered broker-dealer from April 2013 to July 2013. Panait is a Romanian citizen.

Stock Promoters

Seaside Advisors, LLC and Lawrence B. Adams were hired to promote the HempAmericana stock. They didn’t disclose that the GPL Defendants funded the promotions, and they are accused of failing to disclose that the GPL Defendants intended to sell HempAmericana stock at the same time that Seaside and Adams were paying promoters to recommend that investors purchase the stock. Adams owns Seaside and is also the CEO of a microcap issuer, Image Protect Inc. (ticker OTC: IMTL).

The SEC alleges that the GPL Defendants repeatedly bought HempAmericana stock at a discount and then sold with HempAmericana sending a portion of its resulting stock sale proceeds to Seaside. Once HempAmericana sent stock proceeds to Seaside, Seaside used the proceeds to pay a professional stock promoter. That stock promoter hired other promoters to tout the stock. The GPL Defendants would sell their HempAmericana stock during the promotional campaigns.

For example, in August 2017, when the GPL Defendants purchased 16 million shares of stock for $80,000, the funds went to a HempAmericana escrow account from which Dillon then provided instructions for $50,000 to be sent to HempAmericana and $30,000 to be sent to Seaside. Overall, of the $7.4 million in stock purchase proceeds that the GPL Defendants paid to HempAmericana during the scheme, HempAmericana paid $2.18 million to Seaside, and Seaside in turn forwarded nearly 60% of the amount it received to an unnamed individual hired to promote the stock. 

The unnamed individual then is accused of using two kinds of promoters. First, he hired people whom he understood to have email lists or social media mechanisms that would enable them to get buyers into the stock, apparently with the promise of buying cheaper stock in advance of the promotion. Second, he hired people who would in turn pay others to engage in more traditional promotional activity during the “pump” of HempAmericana’s stock price (before the GPL Defendants “dumped” their stock).  

The complaint stated, “As an example of how the scheme unfolded, in January 2018, the GPL Defendants purchased $170,000 of HempAmericana stock. $70,000 of the sales proceeds went to Seaside, and $55,000 of that amount went to Individual A, who in turn paid an entity, “Entity A.” Later that month, another entity, “Entity B,” put out email blasts promoting HempAmericana stock and disclosing that it was compensated by Entity A, which was described as a non-affiliated third party. The promotion’s disclaimer said that Entity B did not own any shares in HempAmericana and made no reference to anyone intending to sell shares into the promotion. Individual A’s hiring of such intermediaries further insulated the GPL Defendants (and HempAmericana) from any apparent connection to the promotional campaign.”

OTC Skull & Crossbones

While the SEC case didn’t mention the stock promoters, back in 2018 when the OTC placed a warning on the stock, that information was disclosed. At the time, the company had paid $71,000 to OTC Tip Reporter and $71,000 to Stock Prophet to promote the company through the end of 2017. Buzz Stocks was also paid $71,000 for the same time period. In addition to these outlets, Epicstockpicks.com was compensated $20,000 cash via bank wire by a third party, Awarness Consulting Network LLC for a one-day HempAmericana Inc. promotion.

The list of promotions continues…….PennyStockGeneral.com was compensated $3,000 via electronic transfer from a non-affiliated third party for the profile of HMPQ. ShiznitStocks.com was compensated $3,000 via electronic transfer from a non-affiliated third party for the profile of HMPQ. ValueStockPick.com is a web property owned by Brilliant Innovators and was also compensated $6,000 cash via bank wire by a Sand Stone Marketing LLC  to conduct investor relations advertising and marketing for HMPQ. This is not the complete list of promotions.

HempAmericana Asks For Dismissal

In September GPL Ventures LLC, GPL Management LLC and its co-owners Alexander Dillon and Cosmin Panait agreed to a preliminary injunction and asset freeze, without admitting or denying the SEC’s claims.  Then last month Hemp Americana and GPL Ventures said they wanted the case dismissed and filed separate motions.

“By attempting to expand the definition of ‘dealer’ to include private investors without customers, the SEC is engaging in a regulation-by-enforcement effort that threatens to capture literally thousands of day traders, hedge fund managers, family offices, or other traditional private investors who are active in their trading activities,” GPL argued. The defendants claimed that they did disclose in the offering that 20% of the funds raised would go towards sales and marketing and that the SEC is quibbling over the actual amount being 29%. However, the SEC says there’s a big difference between Sales & Marketing expenses versus stock promotion. 

The defendants argued, “If the SEC wants to quibble about this alleged discrepancy, it should get its math correct. The SEC alleges that GPL purchased, in total, $7.4 million of HempAmericana stock; that HempAmericana paid Seaside $2.18 million; and that “nearly sixty percent” of that $2.18 million—i.e., nearly $1.308 million—was actually used to fund the promotional campaign. But $1.308 million represents less than eighteen percent of the stock proceeds received from GPL, not twenty-nine percent.”

“The only alleged conduct in this ‘scheme’ attributed to HempAmericana or Rosillo is the retention of a consultant to engage in a stock promotion campaign — a fact it publicly disclosed, though it was under no obligation to do so,” HempAmericana and Rosillo both argued in their filings. They say they never saw the promotional materials or had any input into the stock promotion and so they aren’t guilty of stock promotion. 

They went on to argue that “if there was pumping, there was no dumping.” 

 


Debra BorchardtApril 5, 2018
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4min30

Here are today’s cannabis industry financial news briefs for April 5, 2018.

On The Website:

High Times Holding Corp.

Long-time cannabis lifestyle publisher High Times announced the acquisition of Green Rush Daily. Terms of the deal were not released, but it was previously noted that it was an all-stock transaction. High Times said that Green Rush Daily would continue to operate independently, but would be considered part of the High Times stable of brands like the Cannabis Cup.

According to the High Times Preliminary Prospectus, on August 31, 2017, THC entered into an online sales representative agreement with Green Rush Daily Inc. “Under the terms of the agreement Green Rush appointed Trans-High as Green Rush’s exclusive sales representative with respect to: (a) all advertisements to be sold or otherwise offered to third-party advertisers on the Green Rush websites, and (b) all advertisements for display to retail and wholesale channels on the websites. All fees received from advertisers on the Green Rush website are to be split 70% to THC and 30% to Green Rush. In a related development, THC entered into a three-year employment agreement with Scott McGovern, the owner of Green Rush, under which Mr. McGovern became Senior Vice President of Publishing of the THC Group.

Canopy Growth Corporation

Canopy Growth Corporation (TWMJF) and Canopy Rivers Corporation announced today that they have executed a strategic agreement with LiveWell Foods Canada Inc., a vertically integrated cannabis company. Under the agreement, Canopy Growth and Canopy Rivers will assist in the development and commercialization of LiveWell’s two cannabis cultivation facilities, located in Ottawa, Ontario, and Litchfield, Quebec.

In Other News:

Airware Labs Corporation 

Airware Labs Corporation (AIRW) announced that the company voted to officially change its name to Item 9 Labs Corp., reflecting the company’s new business direction. Airware has filed its plans for this proposed name change with FINRA (Financial Industry and Regulatory Authority) and has requested a new ticker symbol that better suits the company’s new name..

Airware Labs recently acquired BSSD Group an Arizona company doing business as Item 9 Labs, which was completed on March 21, 2018. In conjunction with the acquisition, Airware closed on a material definitive financing agreement in the principal amount of $1 million. The new symbol is under review and will be forthcoming upon confirmation from FINRA.

Green Spirit Industries Inc.

Green Spirit Industries (GSRX) announced that it has acquired The Green Room, a cannabis dispensary business located in Point Arena, Mendocino County, California.  The business is licensed under the name Green Spirit Mendocino, LLC, and will continue to do business as The Green Room.

HempAmericana, Inc.

HempAmericana, Inc. (HMPQ) announced that it has filed permits to become a licensed grower in the State of Maine. The company is scheduled to close on a property tailored to the cultivation of genetically superior CBD-rich hemp stock for its extraction, processing, and production operations based in nearby Augusta, Maine. Locking in permits now will allow for timely ramping of full-scale CBD Oil production this quarter.


Debra BorchardtJanuary 29, 2018
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5min301

HempAmericana Inc. (HMPQ) got the skull and crossbones flag after being flagged by the OTC Markets Group for unusual trading activity, potentially among other factors, and labeled with the Caveat Emptor classification. A true penny stock, the shares shot from one cent to three cents in one day. The company has reported no revenue but is valued at $42 million according to the OTC Marketplace.

The company’s CEO Salvador Rosillo sent a letter to shareholders saying, “We understand that this is a safety measure taken by the OTC designed as a reaction to specific markers including but not limited to remarkable stock price behavior, and its intentions are to protect the investing public. We fully support all practices that safeguard the interests of investors and protect the integrity of our public markets.”

He went on to say, “While we are excited by the recent increase in liquidity and interest by an apparent range of new investors in shares of HMPQ stock, potentially including larger financial institutions, we are aware of no explanation for the dramatic rise in interest and liquidity beyond that of simply an increasing recognition of the Company’s efforts to drive future value for shareholders. We have been actively pursuing a range of grass-roots marketing pathways, including magazines and similar outlets, to drive further value to shareholders as part of a robust effort to drive growth for the Company.”

Paid Promotions

The company has paid $71,000 to OTC Tip Reporter and $71,000 to Stock Prophet to promote the company through the end of 2017. Buzz Stocks was also paid $71,000 for the same time period. In addition to these outlets, Epicstockpicks.com was compensated $20,000 cash via bank wire by a third party, Awarness Consulting Network LLC for a one-day HempAmericana Inc. promotion.

The list of promotions continues…….PennyStockGeneral.com was compensated $3,000 via electronic transfer from a non-affiliated third party for the profile of HMPQ. ShiznitStocks.com was compensated $3,000 via electronic transfer from a non-affiliated third party for the profile of HMPQ. ValueStockPick.com is a web property owned by Brilliant Innovators and was also compensated $6,000 cash via bank wire by a Sand Stone Marketing LLC  to conduct investor relations advertising and marketing for HMPQ. This is not the complete list of promotions.

CEO Response

Rosillo continued, “We will be in close communication with the OTC Markets Group going forward, and stand ready to provide any aid necessary in assisting them with any questions that may arise due to our increase in liquidly.

 

Several days ago, we issued a press release announcing final construction activities at the facility, with major equipment deliveries on schedule and expected in coming days. This includes the delivery of our new 200-liter supercritical CO2 CBD extraction machine – the highest-capacity state-of-the-art CBD extraction machine produced by the manufacturer. Full-capacity production is scheduled to start shortly thereafter.

As it happens, our timing apparently could not be better. Growth in the CBD oil space is now widely projected to outpace that of the broader cannabis-related market segment, which is itself widely projected to outpace nearly every other sector on the planet over the next six quarters.

We will continue to remain passionately committed to realizing our vision of becoming the leading high-capacity CBD oil producer in business today. Further updates will be forthcoming shortly.”

The OTC Position

OTC Markets Group monitors for potential promotional activity relating to securities trading on our markets. We review for anonymous paid promotions, possible connections to bad actors, and evaluate the promotions potential impact on trading.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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