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Thursday, October 29, 2020

What a Move on ROCKY MOUNTAIN HIG COM USD0.001 (OTCMKTS: RMHB)

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ROCKY MOUNTAIN HIG COM USD0.001 (OTCMKTS:RMHB) is a penny play that we have looked at a few times in recent months in the cannabis patch. We noted recently that the company was making an important shift to have a Northeastern expansion of production for the company’s hemp-infused flavored beverages. This was spawned by its agreement with L and H Resort Systems to acquire a former Catskill Mountain resort facility located on a natural spring.

Since then, the company has come out and offered an explanation of its recent move to increase the voting and conversion rights of its Series A Preferred Stock. Basically – and we’ve certainly seen this story before – the company is taking action to shore up its control mechanisms in terms of rights and powers. Those at the center, in effect, are the company. Hence, the company is protecting itself by augmenting the rights associated with its series A tranche, which is the core tranche of the company’s brain trust. This is basically to make sure that its recent merger activity can’t result in a vulnerability at the cap table level, which could lead to confusion about goals and direction for the company as a whole.

ROCKY MOUNTAIN HIG COM USD0.001 (OTCMKTS:RMHB) bills itself as a company that develops, manufactures, markets, and distributes hemp-infused food and beverage products.

The company offers hemp-infused beverages, including energy drinks, black tea, and lemonade; hemp-infused edibles, such as energy bars; and hemp-infused energy shots and coffee shots. It is also developing wine based ready-to-drink cocktails; cannabinoid infused beverages; hemp protein bars and hemp chia seed bars; and hemp infused natural spring water.

Rocky Mountain High specializes in brand development of health conscious, hemp-infused food and beverage products. The Company currently markets a lineup of four naturally flavored hemp-infused beverages and a low-calorie Coconut Lime Energy drink. Rocky Mountain High Brands also offers hemp-infused 2oz. Mango Energy Shots and Mixed Berry Energy Shots, as well as a new Relaxation Brownie. The Company recently launched a naturally high alkaline spring water, Eagle Spirit Spring Water.

RMHB markets its products through brokers, distributors, and retailers. The company was formerly known as Totally Hemp Crazy Inc. and changed its name to Rocky Mountain High Brands, Inc. in October 2015. Rocky Mountain High Brands, Inc. was incorporated in 2000 and is based in Dallas, Texas.

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Last time around, we noted that the company was expanding into the Northeast with its takeover of the former Catskill Mountain resort facility. The company plans to repurpose the resort into a Bottling and Canning Plant for Rocky Mountain High Brands. The company clearly plans to use state and Federal grants to help make the shift economical, meaning that it will be planning on hiring from the region. The point, as we understand it, will be to have a Northeastern expansion of production for the company’s hemp-infused flavored beverages.

That move seems to have spurred the action to augment the security of the powers associated with the series A tranche.

Michael Welch, President and Chief Executive Officer of Rocky Mountain High Brands, Inc., said, “With the recent acquisition by LSW Holdings, LLC of the Company’s Series A Preferred Stock, we have reviewed our equity structure and are making changes to it to both protect the Company and to provide for its future growth. The Series A Preferred Stock is the Control Block for the Company. It has special rights associated with it and is not designed or intended to be converted to Common Stock. Changes to its voting rights and conversion rights were made to ensure that LSW Holdings maintains control of the Company in the event of corporate actions such as a merger/acquisition or hostile takeover.”

Bottom line: this move to shore up the central control mechanisms and the cap table doesn’t seem particularly insidious. We would like to see the technical support re-established around the dime level. But we don’t expect this catalyst to represent a major break in the story.

At this time, carrying a capital value in the market of $67.6M, RMHB has a stash ($155K) of cash on the books, which compares with about $859K in total current liabilities. One should also note that debt has been growing over recent quarters. RMHB is pulling in trailing 12-month revenues of $806K. We will update the story again soon as further details emerge. For continuing coverage on shares of $RMHB 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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