Rocky Mountain High (OTCMKTS:RMHB) Gets A Boost

On the first examination, Rocky Mountain High (OTCMKTS:RMHB) is unlikely to hold any attraction for an investor, particularly due to its grim financial statements. However, the firm has repeatedly proven that its long-term strategy is worth a few years of relative underperformance.With its hiring of well-known and respected industry experts and an announcement of a private label agreement estimated to be one of the largest orders of CBD beverages in the industry.Company ProfileRocky Mountain High Brands, Inc. was established by Jerry Gristafi in 1968, with its head office in Dallas Texas. It is a Dallas-based consumer goods brand development company. It markets a group of hemp infused drink which are naturally flavored, using mango, citrus, lemonade and coconut lime. Rocky Mountain High Brands has for a while specialized in the development, manufacture, marketing, and distribution of these high quality, health conscious, hemp-infused food and beverage products and more recently began offering mixed berry and mango energy shots; and alkaline spring water, using the brand Eagle Spirit Spring Water which already happens to be a naturally high alkaline spring water.For additional information on the company, visit our previous post here.Here is the stock’s price movement over the last year: RMHB Daily ChartNew Line of ProductsRoughly a week ago, Rocky Mountain High Inc. announced that its new, front-line hemp-originated cannabinoids infused product line, HEMPd, which is currently under the leadership of its flagship CBD-infused waters, will launch in March 2018.HEMPd is a diverse hemp-based health and wellness line, it is distinctive in its space and is likely to have a competitive advantage in the market. Its uniqueness stems from its formulation from full plant CBD, its derivation from hemp grown organically in Colorado and its non-detectable amount of THC content.In mitigating possible exposure, the firm acquired the services of an attorney, Jonathan Miller prior to embarking on the cannabidiol product line journey. Jonathan Miller works with the law firm, Frost Brown Todd and was required to prepare an opinion letter to the Board of Directors on the legality of entering into the hemp-derived CBD business.Other DevelopmentsMore recently, the firm reported on some updates from its Chairman and CEO, Michael Welch, on its Master Manufacturing Agreement with CBD Alimentos SA de CV.Mr. Welch explained that back in January, Rocky Mountain had amended the agreement with CBD Alimentos at their request to switch from its functional beverages which contained hemp seed extract to a different formulation of the Rocky Mountain High functional beverages which had water soluble cannabidiol, with a non-discernible level of 0.00% THC (a compound known for inducing the ‘high’ feeling). The agreement is estimated to be worth as much as $7.2 million, a huge amount which is likely to be one of the largest single orders of CBD-infused beverages in the market. Rocky Mountain will be recorded as one of the original firms to mix CBD with a functional beverage inside a can, which confirms the view that the firm is an innovator. Changing to a CBD-infused product from using a hemp-based offering reflects the level of client confidence in Rocky Mountain Inc.’s product quality, flexibility, capabilities, and leadership status.Mr. Welch also added that beyond the CBD-infused beverages, the firm is currently researching other products which can provide value to clients to enhance their portfolio. As shown by the recent product line announcement of HEMPd, the firm plans to evolve into a much more assorted brand in 2018, which will provide it with multiple revenue streams. The private label agreement is a hugely important step in the diversification process, its proper execution is expected to a top priority for the company.Financial AnalysisAfter impressive revenues in 2016, the firm’s performance has tailed off in 2017 dropping by 63% from $1.1 million to $0.4 million. More worrying is the fact that the revenues and gross profits dipped lower than 2015 results.Operating loss recorded was a massive $7.1 million, compared to $3.7 million in 2016 and $4.07 million in 2015.The firm is also very highly levered, with its liabilities the consisting the entirety of its capital. Its low liquidity is also a cause of interest for the firm indicating it may need a fresh capital injection in coming months.ConclusionDespite its grim finances, announcements of new leadership in the person of John Blackington, a former Coca-Cola executive and other experienced heads such as Michelle Kresbach, Gerry David, and Kevin Harrington will bring some confidence to investors.The announcement of a lucrative private label contract is also a boost to its finances and future potential. There is a fair chance that the firm will kick on to greater things from here.We will be updating our subscribers as soon as we know more. For the latest updates on RMHB, sign up below!Disclosure: We have no position in RMHB and have not been compensated for this article.