UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



[X]
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act

of
1934 for the Fiscal Year Ended June 30, 2017



|[  ] | Transition
    Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to ________
|---- | -------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                            

Commission
File Number: 000-55609



Rocky
Mountain High Brands, Inc.

(Exact
name of registrant as specified in its charter)



|Nevada                                                                                                                                |                                                                                                                               | 90-0895673                                                  
|------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------
|(State
    or other jurisdiction of  incorporation or organization)                                                                   |                                                                                                                               | (I.R.S.
        Employer
        Identification
        No.)
|                                                                                                                                     
|9101
                    LBJ Freeway, Suite 200, Dallas, TX 75243
        (Address
        of principal executive offices) (Zip code)
|                                                                                                                                     
|(800)-260-9062
        (Registrant’s
        telephone number, including area code)                                                  
|                                                                                                                                     
|                                                                                                                                      | Securities
                                         registered under Section 12(b) of the Act:
        Not
        Applicable
|                                                                                                                                      | None
        (Title
        of each class)                                                                                    | N/A
        (Name
        of Exchange on which registered)  
|                                                                                                                                      |                                                                                                                               |                                                             



Securities
registered pursuant to Section 12(g) of the Act:



Common
Stock, $0.001 par value

(Title
of class)



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[ ] No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes
[ ] No [X]



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes
[ X ] No [ ]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes
[x]
No [ ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [X ]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.



Large
accelerated filer [ ]	Accelerated filer [ ]



Non-accelerated
filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]





State the aggregate market
value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal quarter. Approximately $24,827,241 as of December 31, 2016, using the closing price of $0.044
per share.



Indicate the number of shares
outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 793,266,046 of as of
October 10, 2017.







1


Table of Contents












|                                             
|---------------------------------------------
|TABLE
                            OF CONTENTS



PART
I



|                                     | Page
|------------------------------------ | ----
|Item
    1.  Business                | 3   
|Item
    1A. Risk Factors            | 9   
|Item
    2. Properties               | 9   
|Item
    3. Legal Proceedings        | 10  
|Item
    4.  Mine Safety Disclosures | 11  
|                                     |     
|PART
    II                         



|Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 11
|-------------------------------------------------------------------------------------------------------------------- | --
|Item 6.  Selected Financial Data                                                                                     | 13
|Item
    7. Management’s Discussion and Analysis of Financial Condition and Results of Operations                    | 13
|Item
    7A.  Quantitative and Qualitative Disclosures about Market Risk                                             | 24
|Item
    8. Financial Statements and Supplementary Data                                                              | 24
|Item
    9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                    | 25
|Item
    9A. Controls and Procedures                                                                                 | 25
|Item
    9B. Other Information                                                                                       | 26
|                                                                                                                     |   
|PART
    III                                                                                                        
|                                                                                                                     |   
|Item
    10.  Directors, Executive Officers and Corporate Governance                                                 | 26
|Item
    11.  Executive Compensation                                                                                 | 30
|Item
    12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters         | 33
|Item
    13. Certain Relationships and Related Transactions, and Director                                            | 34
|Item
    14. Principal Accounting Fees and Services                                                                  | 35
|                                                                                                                     |   
|PART
    IV                                                                                                         
|Item
    15. Exhibits, Financial Statement Schedules                                                                 | 36





2


Table of Contents






PART
I

When
used in this Annual Report, unless otherwise indicated, the terms “the Company,” “RMHB,” “we,”
“us” and “our” refers to Rocky Mountain High Brands, Inc. and/or its subsidiaries. All references in this
report to “$” or “dollars” are to United States dollars, unless specifically stated otherwise.

Forward-Looking
Statements

This
Annual Report contains forward-looking statements that reflect our current views about future events. We use the words “anticipate,”
“assume,” “believe,” “estimate,” “expect,” “will,” “intend,”
“may,” “plan,” “project,” “should,” “could,” “seek,” “designed,”
“potential,” “forecast,” “target,” “objective,” “goal,” or the negatives
of such terms or other similar expressions. These statements relate to future events or our future financial performance and involve
known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.



Item
1. Business



Overview



Rocky
Mountain High Brands, Inc. is a Nevada corporation. RMHB currently operates through its parent company, three wholly-owned subsidiaries
and one minority-owned subsidiary, which the Company controls. All subsidiaries are consolidated for financial reporting purposes:



•Rocky
Mountain High Brands, Inc., an active Nevada corporation (Parent)



•Eagle
Spirit Land & Water Company, an active Oklahoma corporation (Subsidiary)



•Rocky
Mountain High Water Company, LLC, an active Delaware limited liability company (Subsidiary-consolidated beginning November 12,
2016)



• 	Rocky
Mountain High Clothing Company, Inc., an inactive Texas Corporation (Subsidiary)



• 	Smarterita,
LLC, an inactive Texas limited liability company (Subsidiary)





3


Table of Contents




RMHB
is a consumer goods company specializing in brand development of health conscious, hemp-infused food and beverage products. The
Company currently markets a lineup of five naturally flavored hemp-infused beverages (Citrus Energy, Black Tea, Mango Energy and
Lemonade) and a low-calorie hemp-infused Coconut Lime Energy drink. The Company also offers hemp-infused 2oz. Mango Energy Shots
and Mixed Berry Energy Shots. In August 2016 the Company launched Eagle Spirit Spring Water, a line of naturally high alkaline
spring water.



After
developing the beverage products, RMHB completed its first production run in February of 2015. Since then RMHB has had production
runs for hemp-infused beverages totaling over 3,900,000 cans. Each beverage contains approximately 50mg (our first production
run) to 100mg of hempseed extract and all-natural ingredients. The hemp-infused products are shelf stable (no refrigeration necessary)
with a shelf life of twoyears.



During
fiscal year 2017, the Company also produced energy shots and Relaxation Brownies.



In
September 2016, the Company bottled its first high alkaline spring water, Eagle Spirit Spring Water and has completed several
production runs since, including approximately 110,000 16.9 oz. bottles and 1,800 2.64-gallon (10-liter) “Bag in a Box.”



In
March and April 2017, the Company completed additional production runs of its more popular hemp-infused beverages, Citrus Energy
and Mango Energy.



In
August 2017, the Company sold its remaining inventory of Smarterita wine-based beverages. There are currently no plans to resume
production of this alcoholic beverage.



Corporate
History



Rocky
Mountain High Brands Inc. 10/23/2014 to present – Articles of Amendment filed with the State of

Nevada



f/k/a
Totally Hemp Crazy Inc. 07/17/2014 to 10/23/2014 – Articles of Amendment filed with the State of

Nevada



f/k/a
Republic of Texas Brands Incorporated 11/2011 to 07/17/2014 – Articles of Amendment filed with the State of

Nevada



f/k/a
Legends Food Corporation 05/2011 to 11/2011 – Articles of Amendment filed with the State of Nevada



f/k/a
Precious Metals Exchange Corp. – Articles of Amendment filed with the State of Nevada on December 23, 2008



f/k/a
Stealth Industries, Inc. – Articles of Amendment filed with the State of Minnesota on October 25, 1999 (name change). Articles
of Incorporation filed with the State of Nevada on October 30, 2000 (Change of Domicile; Merger with Stealth Industries, Inc.
(Minnesota)



f/k/a
Assisted Living Corporation – Articles of Amendment filed with the State of Minnesota on November 3, 1993 (name change)



f/k/a
Electric Reel Corporation of America, Inc. -- Articles of Incorporation filed with the State of Minnesota on August 15, 1968



Acquisitions



Rocky
Mountain High Water Company LLC



In
July 2016, the Company entered into a business alliance with Poafpybitty Family, LLC to launch Eagle Spirit Spring Water, a line
of purified, high-alkaline spring water sourced from Native American tribal land in Oklahoma.



4


Table of Contents




The
agreement calls for the Company to pay a royalty on each gallon of water collected at the spring. Production of filtered spring
water filled bottles commenced in August 2016 and sales began in October 2016.



In
consideration for the 20-year water and surface rights, and a related 10-year renewal option, the Company paid Poafpybitty Family,
LLC cash payments of $22,500 and issued a warrant for 500,000 shares of the Company’s common stock exercisable at $.03 per
share over a three-year period beginning July 27, 2016.



The
agreement grants the Company an exclusive right to develop land adjacent to the spring for commercial purposes as agreed to by
both parties. Additionally, the Company has agreed to grow hemp for experimental or commercial purposes on the land within three
years.



On
November 12, 2016, the agreement with the Poafpybitty Family was amended to give the Company a controlling voting interest of
75% of RMHW, while the Poafpybitty Family received 51% of the equity interest. The amended agreement is being accounted for as
a step-acquisition, with the resulting goodwill of $49,911 included in other assets. The Company is obtaining an outside valuation
of the rights to use the land and obtain the water described in the agreement. Beginning November 12, 2016, the operations of
RMHW are consolidated in the financial statements of RMHB.



Investments



On
July 17, 2015, the Company acquired all of the assets of Dollar Shots Club, LLC. The purpose of the acquisition was to acquire
formulas developed by Dollar Shots Club, LLC for inclusion in the Company’s hemp-based energy shots, which were being developed
at the time.



The
Company issued 2,000,000 shares of its common stock to seven individuals who owned 100% of membership units in Dollar Shots Club,
LLC.  The investment in Dollar Shots Club, LLC was recorded on the Company’s books at a price of $166,000, which was
based on the closing price of the Company’s common stock on the day the stock was issued.   The assets purchased
included the trademark and other intellectual property of the LLC, inventory, all websites and ecommerce sites, goodwill, formulas
and all other general intangibles (the “assets”).



On
September 18, 2015, the Company sold these assets to Dollar Shots Club, Inc. in exchange for 5,000,000 shares of Dollar Shots
Club, Inc. common stock. The Company retained the rights to the formulas to the shots so that it could develop a similar hemp-infused
energy version of them to be sold under Rocky Mountain High Brands. To the best of the Company’s knowledge, there is no
relationship between the Dollar Shots Club entities. The Company fully impaired this investment during the year ended June 30,
2016.



Trademarks
Related to Our Business



• 	
Rocky Mountain High Energy Drink

• 	
Smarterita

• 	
Totally Hemp Crazy

• 	
Blue Leaf

• 	
Rock the Road Trip

• 	
Eagle Sprint







Current
Product Offerings



Under
its Rocky Mountain High Brands name, the Company currently markets a lineup of five hemp-infused 16 oz. beverages including:



| | • | Naturally
                                         Flavored Citrus Energy Drink - A citrus energy drink that contains 100mg hempseed extract
                                         and is complemented with ginseng and guarana extract, caffeine and other ingredients
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Naturally
                                         Flavored Mango Energy Drink - A mango energy drink that contains 100mg hempseed extract
                                         and is complemented with ginseng and guarana extract, caffeine and other ingredients.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





5


Table of Contents






| | • | Low
                                         Calorie Coconut Energy Lime - A low-calorie coconut lime energy drink that contains 100mg
                                         hempseed extract and is complemented with ginseng and guarana extract, caffeine and other
                                         ingredients.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Naturally
                                         Flavored Lemonade - A lemonade drink that contains 100mg hempseed extract and is complemented
                                         with ginseng extract and other ingredients.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Naturally
                                         Flavored Black Tea - A black tea drink that contains 100mg hempseed extract and is complemented
                                         with black tea and ginseng extract and other ingredients.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Company is also currently marketing a two-flavor lineup of energy shots.



The
Company plans to sell its remaining inventory of these products during the first half of fiscal year 2018. In order to execute
this plan, the Company will offer larger discounts to distributors and retailers and higher commissions to its broker network,
likely resulting in lower gross profit margins for the first and second quarter of 2018.



Our
Eagle Spirit Land and Water Company currently markets its naturally high alkaline spring water in two sizes: a 16.9 oz. plastic
bottle sold in cases of 24 and a 2.64-gallon (10-liter) Bag in a Box.



Strategic
Update and Planned Product Offerings



The
Company has recently updated its long-term strategic plan. Management’s goal is to become the category leader in the hemp-infused
beverage market, a segment of the functional beverage market. Functional beverages, or beverages that convey health benefits,
are the fastest growing segment within the beverage market.



The
Company is developing four newly reformulated, sugar-free, non-energy, hemp-infused beverage flavors. In addition to the new formulas,
the beverages will feature 12 oz. cans, an all-new look and will replace all current hemp-infused beverage offerings. Two of the
four beverage flavors will be carbonated. Flavor choices will be similar to past offerings. Management plans to begin production
on the new beverages in February 2018. Marketing will focus on the health benefits of hemp, including Omega-3 and Omega-6 fatty
acids, amino acids, and natural, plant-based fiber.



The
Company is also reviewing its other product offerings, but there are no immediate plans to produce additional Relaxation Brownies
or energy shots.



The
Board of Directors is currently evaluating its plans with regard to the Eagle Spirit Water business.



The
Company also plans to hire a Vice President of Sales and a Director of Marketing during fiscal year 2018.



Sales
Channels



The
Company depends upon a network of brokers and distributors to represent its product in the market. During its first year of operation,
the Company signed twenty-four distributors across the country. For the year ended June 30, 2017, the Company’s two largest
distributors accounted for 50% and 7% of sales, respectively.



The
various distribution channels differ in costs, customer relationships, complexity and the resources required to operate the channel.
We strategically build sales distribution channels to match and reinforce the goals and objectives of our marketing plan. To increase
competitiveness and sales, we have a specific sales strategy in order to maximize revenues that includes the following:



Direct
Selling



We
utilize direct sales to retailers, which eliminates the delays and additional expense of a standard distribution channel. In this
way we are better able to preserve more revenue, and protect capital under the control of the company. Direct selling to certain
segments supports our marketing plan that has identified, researched and segmented certain final customers.



6


Table of Contents




We
utilize Amazon and our two proprietary websites – www.liverockymountainhigh.com and www.eaglespiritspringwater.com –
to sell directly to consumers.



Wholesale
Distribution



Another
sales channel includes wholesale distribution. This method is designed for our potential customers who are widely dispersed. Wholesale
distribution leaves the selling to wholesalers and retailers specialized in retail sales, which enables us to focus on production.
Product is sold to distributors under a variety of terms from cash to credit terms.



Beverage
Brokers



Beverage
brokers develop local, regional, and national product campaigns with attention to long-term sustainable success. They assist in
matching brands with the needs of an evolving market. Scheduling appointments, making presentations, securing product approval,
and shelf resets, have added greatly to the time line from ship to shelf, making the role of the beverage broker all the more
important. Beverage brokers represent a cost-efficient method of doing business for our drink brands. A commission-based beverage
broker is a variable cost directly tied to the volume sold.



The
Company is re-assessing its go-to-market strategy. Specifically, channels of distribution and distributor and broker agreements
are being reviewed. Going forward, management plans to focus on key domestic markets.



Outsourced
Production and Storage Services



In
May 2016, the Company executed a one-year agreement with MBA Beverage to coordinate the manufacturing of our hemp-infused beverage
products. MBA Beverage acted as our outsourced supply-chain management and coordinated every aspect of the manufacturing process.
The contract expired in May 2017. We have not executed a new contract with MBA Beverage or any other outsourced production coordinator.



Blues
City Brewery, LLC (“Blues City”) in Memphis, Tennessee, a subsidiary of City Brewing Company, LLC, has completed all
of beverage production and canning to-date. Blues City is an FDA registered facility that is audited annually to ensure compliance
with FDA GMP (Good Manufacturing Practices) for food safety. MBA Beverage schedules beverage production with Blues City. Upon
completion of the production, the Company stores finished product at Blues City, awaiting sale to our distributor network. The
Company does not contract with Blues City directly.



Sovereign
Flavors of Santa Ana, California collaborates with the Company for product formulation under an informal agreement. The Company
owns the propriety formulas to our products.



Our
naturally high alkaline spring water is cold-filtered and packaged by a third-party water processor, Water Event Pure Water Solutions
(“Water Event”).



Regulatory
Requirements



We
are subject to numerous federal, state, local, and foreign laws and regulations, including those relating to:



| | • | The
                                         production of beverages and other related products;
| | - | ------------------------------------------------------------------------------------------------

| | • | The
                                         preparation and sale of beverage;
| | - | ------------------------------------------------------------------------------

| | • | Environmental
                                         protection;
| | - | ------------------------------------------------------------------

| | • | Interstate
                                         commerce and taxation laws; and
| | - | -----------------------------------------------------------------------------------

| | • | Workplace
                                         and safety conditions, minimum wage and other labor requirements
| | - | -------------------------------------------------------------------------------------------------------------------





7


Table of Contents






Since
our hemp-based products are derived from industrial hemp containing a tetrahydrocannabinol (“THC”) level of 0.3% or
less, they are not subject to the Controlled Substances Act. The express language of the federal Controlled Substances Act (“CSA”)
provides that hemp stalk, fiber, oil, and sterilized seed are not controlled as marijuana. Thus, products containing industrial
hemp – defined as the cannabis sativaplant containing a THC level of 0.3% or less - have been sold legally in every
state in the U.S. for decades. In 2004, the U.S. Court of Appeals invalidated U.S. Drug Enforcement Administration (“DEA”)
regulations that would have banned the manufacture and sale of edible products made from hemp seed and oil. Hemp Industries
Ass’n v. Drug Enforcement Administration,357 F.2d 1012 (9th Cir. 2004). For this reason, U.S. companies
may import hemp stalk, fiber, seed and oil, to trade in it, and to use it in the manufacture of products. The Company purchases
imported hemp seed extract and uses it in the manufacture of its products. The Company does not have plans to grow marijuana,
distribute marijuana or infuse our food or beverage products with marijuana, as defined in the Controlled Substance Act.



Our
beverage products are not subject to direct FDA approval as the FDA does not perform review testing or approval of food, beverages
or dietary supplements. The FDA requires that we manufacture our products in commercial manufacturing facilities that are annually
audited to ensure that they pass inspection based on Good Manufacturing Practices for food safety.



Possession
of hemp in the United States is legal, including possession of the sterilized seed, hemp seed oil, hemp seed flour, hemp seed
cake, hulled hemp seeds, hemp clothing, hemp fabrics, hemp fuel or any other product made from industrial hemp. Because the industrial
hemp plant is the same species as marijuana, until recently, it has been illegal for U.S. farmers to grow the plant itself. However,
in the federal Agricultural Act of 2014, Congress specifically exempted from the CSA cultivation of industrial hemp under agricultural
pilot programs authorized by state law.



Employees
and Independent Contractors



The
Company currently has five officers and two non-officer employees. The Company uses independent contractors, when necessary, to
support operational or back-office functions.



Implications
of Emerging Growth Company Status



As
a company with less than $1 billion in revenue in our last fiscal year, we are defined as an “emerging growth company”
under the Jumpstart Our Business Startups (“JOBS”) Act.  We will retain “emerging growth company”
status until the earliest of:





| | • | The
    last day of the fiscal year during which our annual revenues are equal to or exceed $1 billion;
| | - | -------------------------------------------------------------------------------------------------------



| | • | The
    last day of the fiscal year following the fifth anniversary of our first sale of common stock pursuant to a registration statement
    filed under the Securities Act of 1933, as amended, which we refer to in this document as the Securities Act;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | • | The
    date on which we have issued more than $1 billion in nonconvertible debt in a previous three-year period; or
| | - | --------------------------------------------------------------------------------------------------------------------





| | • | The
    date on which we qualify as a large accelerated filer under Rule 12b-2 adopted under the Securities Exchange Act of 1934,
    as amended (the “Exchange Act”) (i.e., an issuer with a public float of $700 million that has been filing reports
    with the U.S. Securities and Exchange Commission (“SEC”) under the Exchange Act for at least 12 months).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | As
    an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise
    applicable generally to SEC reporting companies.  For so long as we remain an emerging growth company we will not
    be required to:
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Have
    an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Wall Street
    Reform and Consumer Protection Act of 2002;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Comply
    with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation
    or a supplement to the auditor’s report providing additional information about the audit and the financial statements
    (i.e., an auditor discussion and analysis);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Submit
    certain executive compensation matters to stockholder non-binding advisory votes;
| | - | --------------------------------------------------------------------------------------------



| | • | Submit
    for stockholder approval golden parachute payments not previously approved;
| | - | --------------------------------------------------------------------------------------



| | • | Disclose
    certain executive compensation related items, as we will be subject to the scaled disclosure requirements of a smaller reporting
    company with respect to executive compensation disclosure; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Present
    more than two years of audited financial statements and two years of selected financial data in a registration statement for
    our initial public offering of our securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8


Table of Contents




Pursuant
to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting
standards under Section 102(b)(2) of The JOBS Act.  This election allows us to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private
companies.  As a result, our financial statements may not be comparable to companies that comply with public company
effective dates.  Section 107 of the JOBS Act provides that our decision to opt into the extended transition period
for complying with new or revised accounting standards is irrevocable.



Because
the worldwide market value of our common stock held by non-affiliates, or public float, is below $75 million, we are also a “smaller
reporting company” as defined under the Exchange Act.  Some of the foregoing reduced disclosure and other requirements
are also available to us because we are a smaller reporting company and may continue to be available to us even after we are no
longer an emerging growth company under the JOBS Act but remain a smaller reporting company under the Exchange Act.  As
a smaller reporting company we are not required to:



|• | Have
    an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and
|- | -------------------------------------------------------------------------------------------------------------------------------------



|• | Present
    more than two years of audited financial statements in our registration statements and annual reports on Form 10-K and present
    any selected financial data in such registration statements and annual reports.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item
1A. Risk Factors.

Smaller
reporting companies are not required to provide the information required by this item. Please see our Registration Statement on
Form 10/A filed September 29, 2016 to review our current risk factors.



Item
2. Properties

At
present, we do not own any real property.  As of June 30, 2017, we leased approximately 7,000 square feet of office
space at 9101 LBJ Freeway, Suite 200, Dallas, Texas 75243. Our lease period began on September 1, 2016 and terminates on August
31, 2019. Payments under the lease are as follows:



|Lease
    Period      | Base
    Rent (monthly)
|--------------------- | -----------------------
|9/1/2016 to 8/31/2017 | $7,715.00              
|9/1/2017 to 8/31/2018 | $7,972.17              
|9/1/2018 to 8/31/2019 | $8,229.33              



In
connection with the new lease, we also purchased used office furniture from the landlord and financed this purchase with a note
payable in the amount of $40,122 with an interest rate of 0% and monthly payments of $1,114 over thirty-six monthly installments.



The
Company leases the following warehouse space on a month-to-month basis:



| | • | Water
                                         Event, Carrollton, Texas – we currently lease space for both hemp-infused beverages
                                         and spring water. The Company also stores small quantities of ice barrels and other packaging
                                         at this location.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Blues
                                         City Brewery, Memphis, Tennessee – we currently lease space for hemp-infused beverages.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



Our
monthly rents at both locations vary depending on how much inventory is stored. Inventory levels fluctuate based on production
and sales.



The
Company is currently evaluating its growth requirements and researching alternatives to lower its recurring expenses for warehouse
space.





9


Table of Contents




Item
3. Legal Proceedings



Claims
Against Donna Rayburn



RMHB
and Rayburn entered into a convertible promissory note dated February 2, 2015 for the original principal amount of $165,000 (with
a $5,000 original issue discount). On August 29. 2015, RMHB paid to Rayburn $197,774, representing return of principal and interested
earned during the life of the loan. On February 19, 2016, Rayburn issued an additional demand of interest and penalties totaling
$99,488. Rayburn has charged $137,262 in interest and penalties on a $160,000 loan for one year and 17 days for an effective annual
interest rate of 85.77%. As additional consideration for the note, RMHB was required to issue a warrant to Rayburn for 10,000,000
of common stock.



RMHB
has claims against Rayburn for violation of Florida Usury Laws. RMHB will seek a cancellation of the note and additional monetary
recovery in the total amount paid to Rayburn, plus additional recovery for all usurious interest charged. RMHB will also seek
to void the warrant for 10,000,000 shares of common stock, which was issued under a voidable note. The amount which RMHB will
seek from Rayburn is in excess of $300,000.



Arbitration
Claim of Roy J. Meadows Against Rocky Mountain High Brands, Inc. (RMHB) dated February 24, 2016

Meadows
claims a breach of an exchange agreement dated November 3, 2015. RMHB has denied the breach. Meadows has demanded that RMHB remove
him as a Control Person under RMHB’s OTC Markets Disclosure Statement as of December 31, 2015 filed on January 29, 2016.
Meadows has rejected the interest payment under the exchange agreement dated January 30, 2016. He has not given an explanation
of his rejection. Meadows also demands the exchange of the Series C Preferred back to the original $1,500,000 convertible note.



Meadows
has initiated arbitration claiming notice of an Arbitration Claim against RMHB. RMHB has objected to this claim, as well as to
the arbitration process itself. Meadows seeks damages of $2,947,094. He has further demanded that RMHB comply with an Agreement
dated November 16, 2015 which is a part of the litigation described in the disclosure above. This agreement, which was a requirement
of Meadows to execute the Exchange Agreement, requires the Company to issue warrants for common stock of 110,760,000 for not redeeming
the Series C Preferred Shares by March 24, 2016.



On
April 4, 2016, RMHB engaged the law firm of Allred Wilcox & Hartley PLLC to act as counsel in defending these claims.



As
a result of the arbitration, RMHB filed suit in Florida, Eighteenth Judicial Circuit Court of Seminole County, Florida, Rocky
Mountain High Brands, Inc. v. Roy Meadows, David Meadows et al, Case No. 2016-CA-000958-15-W.



The
Company filed suit for an injunction against continuation of the Meadows Arbitration. The Meadows Arbitration hearing currently
has no date for commencement of the Arbitration hearing. Shortly after the suspension of the Arbitration hearing, on April 20,
2016, false, malicious, and defamatory allegations were asserted by the Shareholder Alert inappropriately released by the Law
Office of A.A. McClanahan, Meadow’s attorney.



The
Company has filed in the Seminole Suit a Motion for Leave To Amend its current suit to add claims against Meadows for usury, cancellation
of warrants and defamation as a result of the Shareholder Alert press release.



The
Company is investigating facts surrounding Meadows and others and may amend its Florida lawsuit to seek more than $20 Million
in damages and disgorgement of Meadows and Rayburn profits on questionable trading activities.



The
Amended Suit will deal with the following:



RMHB
has asserted usury claims in connection with $1,500,000 demand convertible note referenced below in the section pertaining to
the Meadows Arbitration Claim. RMHB seeks unspecified monetary damages in connection with the Meadows Note, and further seeks
cancellation of warrants for 41,454,851 and 13,641,974 shares of common stock issued to Meadows in connection with the Meadows
Note and cancellation of the Meadows Note.



10


Table of Contents






During the six
months ended December 31, 2015, the Company issued 68,220,350 shares of common stock for the conversion of $104,220 of
convertible debt to Roy Meadows and Trinexus, Inc. prior to executing the exchange agreement to Series C preferred
stock.





RMHB
believes that as a result of Meadows’ actions in this suit, the Arbitration is effectively waived and that the Court in
Seminole County, Florida will resolve this matter.



Meadows
has filed a counter claim in this suit for the damages he asserted in the arbitration claim. He has also filed for relief under
elderly laws of Florida.



192ndJudicial District Court of Dallas County Texas, filed February 16, 201, DC-17-02058. Rocky Mountain High Brands, Inc.
v. Dewmar International BMC, Inc. RMHB filed suit against Dewmar for breach of contract and for an accounting. RMHB is in the
process of obtaining a default judgment against Dewmar for its failure to file an answer to the suit.



134thJudicial District Court of Dallas County, Texas, filed April 28, 2017. Rocky Mountain High Brands, Inc. v Lyonpride
Music, LLC. RMHB filed suit against Lyonpride for fraud and for declaratory relief with respect to a contract between the parties.
RMHB seeks monetary damages against said Defendant.



134thJudicial District Court of Dallas County, Texas. Filed June 26, 2017. Rocky Mountain High Brands, Inc. v Statewide Beverage
Company, Inc. RMHB has filed suit for breach of contract, common law fraud and declaratory relief.



Los
Angeles Superior Court, BC669367, filed July 24, 2017. Statewide Beverage Company, Inc. v. Rocky Mountain High Brands, Inc.
Statewide filed a breach of contract claim, dealing with the same fact issues in the above case of RMHB v Statewide. RMHB still
has not been served in this case.



Item
4. Mine Safety Disclosures



Not
applicable.

PART
II

Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Unregistered
Sales of Equity Securities and Use of Proceeds

|Date       |  | Name |                                | Shares Issued |  | Issue Price |  | Description |   | Exemption
|---------- |  | ---- | ------------------------------ | ------------- |  | ----------- |  | ----------- | - | ---------
|11/3/2016  |  |      | Crackerjack Classic LLC        |               |  | 750,000     |  |             | $ | 0.0067   
|11/11/2016 |  |      | Universal Consulting LLC       |               |  | 4,870,130   |  |             |   | 0.0010   
|11/30/2016 |  |      | Michael R Welch                |               |  | 2,500,000   |  |             |   | 0.0100   
|11/30/2016 |  |      | Universal Consulting LLC       |               |  | 1,012,055   |  |             |   | 0.0100   
|11/30/2016 |  |      | Universal Consulting LLC       |               |  | 5,099,727   |  |             |   | 0.0100   
|11/30/2016 |  |      | Ken Radcliffe                  |               |  | 1,023,014   |  |             |   | 0.0100   
|11/30/2016 |  |      | Dennis Radcliffe               |               |  | 10,933,699  |  |             |   | 0.0010   
|11/30/2016 |  |      | Jerome Grisaffi                |               |  | 3,776,196   |  |             |   | 0.0100   
|11/30/2016 |  |      | Christian Vega                 |               |  | 1,538,122   |  |             |   | 0.0100   
|11/30/2016 |  |      | La Dolce Vida Trust            |               |  | 5,968,298   |  |             |   | 0.0100   
|11/30/2016 |  |      | Charles Smith                  |               |  | 1,547,591   |  |             |   | 0.0100   
|11/30/2016 |  |      | ClubsCorp, Inc.                |               |  | 20,000      |  |             |   | 0.0010   
|11/30/2016 |  |      | Allred, Wilcox & Hartley PLLC  |               |  | 502,375     |  |             |   | 0.0300   
|12/2/2016  |  |      | Jesse Guzman                   |               |  | 2,000,000   |  |             |   | 0.0170   
|12/7/2016  |  |      | Joshua Shipkowski              |               |  | 500,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Christian Vega                 |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Kathy Fernandez                |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | JoAnn Flaherty                 |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Nicholas Grisaffi              |               |  | 300,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Charles Smith                  |               |  | 2,500,000   |  |             |   | 0.0348   
|12/7/2016  |  |      | David Seeberger                |               |  | 700,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Jens Mielke                    |               |  | 700,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Robert Smith                   |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Rick Depp                      |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Michael Welch                  |               |  | 755,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Jerome Grisaffi                |               |  | 700,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Winton Morrison                |               |  | 350,000     |  |             |   | 0.0348   
|12/7/2016  |  |      | Jerry Grisaffi                 |               |  | 3,069,736   |  |             |   | 0.0348   
|12/7/2016  |  |      | Jens Mielke                    |               |  | 1,135,353   |  |             |   | 0.0348   
|12/8/2016  |  |      | Tomas Gonzalez                 |               |  | 500,000     |  |             |   | 0.0170   
|12/9/2016  |  |      | Alain Salem                    |               |  | 5,000,000   |  |             |   | 0.0100   
|12/13/2016 |  |      | Michael Welch                  |               |  | 562,800     |  |             |   | 0.0100   
|12/13/2016 |  |      | John Stote                     |               |  | 325,000     |  |             |   | 0.0200   
|12/15/2016 |  |      | Eagle Manufacturing Solutions  |               |  | 1,445,588   |  |             |   | 0.0170   
|12/15/2016 |  |      | Eason L Wright                 |               |  | 1,239,706   |  |             |   | 0.0170   
|12/22/2016 |  |      | 1910625 Alberta Limited        |               |  | 6,800,000   |  |             |   | 0.0500   
|12/28/2016 |  |      | Thomas Morrow                  |               |  | 250,000     |  |             |   | 0.0200   
|12/30/2016 |  |      | Stephen Harris                 |               |  | 75,000      |  |             |   | 0.0373   
|12/30/2016 |  |      | Stacy Thornburg                |               |  | 75,000      |  |             |   | 0.0373   
|12/30/2016 |  |      | Lilly Li                       |               |  | 5,000,000   |  |             |   | 0.0010   
|1/3/2017   |  |      | Louis G. Walz                  |               |  | 588,236     |  |             |   | 0.0170   
|1/3/2017   |  |      | Ruth Kerico                    |               |  | 500,000     |  |             |   | 0.0200   
|1/3/2017   |  |      | Bruce Wunsch                   |               |  | 100,000     |  |             |   | 0.0170   
|1/3/2017   |  |      | Eagle Manufacturing Solutions  |               |  | 491,176     |  |             |   | 0.0170   
|1/3/2017   |  |      | Patricia Ann Wright            |               |  | 150,000     |  |             |   | 0.0170   
|1/3/2017   |  |      | Eason Wright                   |               |  | 500,000     |  |             |   | 0.0170   
|1/3/2017   |  |      | John Jay Saldi                 |               |  | 100,000     |  |             |   | 0.0170   
|1/3/2017   |  |      | Earl Pontillo                  |               |  | 250,000     |  |             |   | 0.0200   
|1/3/2017   |  |      | Ann M. Wieringa                |               |  | 900,000     |  |             |   | 0.0170   
|1/4/2017   |  |      | Ann M. Wieringa                |               |  | 900,000     |  |             |   | 0.0300   
|1/4/2017   |  |      | Vista Capital Investments      |               |  | 10,000,000  |  |             |   | 0.0200   
|1/6/2017   |  |      | Eagle Manufacturing Solutions  |               |  | 1,588,236   |  |             |   | 0.0170   
|1/6/2017   |  |      | Leroy Wheeler                  |               |  | 185,185     |  |             |   | 0.0270   
|1/6/2017   |  |      | David Economon                 |               |  | 200,000     |  |             |   | 0.0170   
|1/6/2017   |  |      | Robert & Kimberly Payne        |               |  | 200,000     |  |             |   | 0.0250   
|1/6/2017   |  |      | Tammie L. Borders              |               |  | 200,000     |  |             |   | 0.0250   
|1/6/2017   |  |      | Fred and Linda Borders         |               |  | 600,000     |  |             |   | 0.0250   
|1/12/2017  |  |      | ValueCorp Trading Company      |               |  | 1,000,000   |  |             |   | 0.0200   
|1/17/2017  |  |      | John R Anderson                |               |  | 166,667     |  |             |   | 0.0300   
|1/17/2017  |  |      | Muleshoe Ranch                 |               |  | 166,667     |  |             |   | 0.0300   
|1/17/2017  |  |      | Steve Gill (Shelving Exchange) |               |  | 166,667     |  |             |   | 0.0300   
|1/18/2017  |  |      | David Economon                 |               |  | 350,000     |  |             |   | 0.0200   
|1/20/2017  |  |      | Howard Bruckner                |               |  | 200,000     |  |             |   | 0.0500   
|1/20/2017  |  |      | Brooks Goodson                 |               |  | 300,000     |  |             |   | 0.0500   
|1/20/2017  |  |      | Robert & Kimberly Payne        |               |  | 100,000     |  |             |   | 0.0500   
|1/23/2017  |  |      | Ronnie Neu                     |               |  | 555,556     |  |             |   | 0.0270   
|1/23/2017  |  |      | Patricia Ann Wright            |               |  | 285,714     |  |             |   | 0.0350   
|1/23/2017  |  |      | Crackerjack Classic LLC        |               |  | 1,500,000   |  |             |   | 0.0010   
|1/24/2017  |  |      | Arthur Rezac                   |               |  | 100,000     |  |             |   | 0.0500   
|1/27/2017  |  |      | Patrick Dennehy                |               |  | 100,000     |  |             |   | 0.0500   
|2/1/2017   |  |      | William Penz                   |               |  | 200,000     |  |             |   | 0.0500   
|2/15/2017  |  |      | Yael Moyal                     |               |  | 2,571,429   |  |             |   | 0.0350   
|2/17/2017  |  |      | Richard B Main                 |               |  | 222,222     |  |             |   | 0.0450   
|2/22/2017  |  |      | Lily Li                        |               |  | 10,000,000  |  |             |   | 0.1150   
|2/24/2017  |  |      | Thomas O. Layman               |               |  | 200,000     |  |             |   | 0.0500   
|2/27/2017  |  |      | Allred, Wilcox, & Hartley PLLC |               |  | 181,600     |  |             |   | 0.0840   
|2/27/2017  |  |      | Yeal Moyal                     |               |  | 1,285,714   |  |             |   | 0.0350   
|2/27/2017  |  |      | Kathy Fernandez                |               |  | 100,000     |  |             |   | 0.0200   
|2/27/2017  |  |      | Mark Ussery                    |               |  | 100,000     |  |             |   | 0.1100   
|2/27/2017  |  |      | Terry Niedecken                |               |  | 100,000     |  |             |   | 0.1100   
|3/1/2017   |  |      | Kathy Fernandez                |               |  | 505,096     |  |             |   | 0.0100   
|3/27/2017  |  |      | EPIC Group One                 |               |  | 11,000,000  |  |             |   | 0.0850   
|3/31/2017  |  |      | Jens Mielke                    |               |  | 357,143     |  |             |   | 0.0420   
|3/31/2017  |  |      | Michael Welch                  |               |  | 206,044     |  |             |   | 0.0420   
|3/31/2017  |  |      | David Seeberger                |               |  | 137,363     |  |             |   | 0.0420   
|4/7/2017   |  |      | Small Cap Voice                |               |  | 300,000     |  |             |   | 0.0877   
|6/29/2017  |  |      | Morris Rafi                    |               |  | 1,534,089   |  |             |   | 0.0349   
|8/23/2017  |  |      | Universal Consulting LLC       |               |  | 3,147,288   |  |             |   | 0.0100   
|9/15/2017  |  |      | Homie Doroodian                |               |  | 3,093,640   |  |             |   | 0.0177   



11


Table of Contents


Market
Information

Our
common stock is quoted on the OTCQB tier of the OTC Markets Group quotation system (www.otcmarkets.com) under the trading
ticker “RMHB.”  The following tables set forth the range of high and low prices for our common stock for
the two most recent fiscal years, as reported on the OTC Market Group’s quotation system. These quotations reflect inter-dealer
prices, without retail markup, markdown, or commission and may not necessarily represent actual transactions.



|                    | High Sale | Low Sale
|------------------- | --------- | --------
|Fiscal  Quarters    | Price     | Price   
|                    |           |         
|First Quarter 2016  | $0.10     | $0.00   
|Second Quarter 2016 | $0.20     | $0.10   
|Third Quarter 2016  | $0.10     | $0.06   
|Fourth Quarter 2016 | $0.10     | $0.03   
|First Quarter 2017  | $0.04     | $0.03   
|Second Quarter 2017 | $0.07     | $0.03   
|Third Quarter 2017  | $0.15     | $0.04   
|Fourth Quarter 2017 | $0.10     | $0.07   



On October 10, 2017, the last
sales price per share of our common stock was $0.0297.



Penny
Stock

The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature
and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of
the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation
of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or
in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type
size and format, as the SEC shall require by rule or regulation.

The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.

These
disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may
have difficulty selling our securities.

Holders
of Our Common Stock

As
of October,9 2017, there were approximately 17,700 holders of record of our common stock .



Dividends

There
are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

1.
we would not be able to pay our debts as they become due in the usual course of business, or;



12


Table of Contents




2.
our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights
of shareholders who have preferential rights superior to those receiving the distribution.



We
have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Securities
Authorized for Issuance under Equity Compensation Plans



On
March 17, 2017, our Board of Directors approved the Rocky Mountain High Brands, Inc. 2017 Incentive Plan (the “2017 Incentive
Plan”). The purpose of the Incentive Plan is to provide a means for the Company to continue to attract, motivate and retain
management, key employees, consultants and other independent contractors, and to provide these individuals with greater incentive
for their service to the Company by linking their interests in the Company’s success with those of the Company and its shareholders.
The Plan provides that up to a maximum of 35,000,000 shares of the Company’s common stock (subject to adjustment) are available
for issuance under the Plan. The Board of Directors awards these shares at its sole discretion.



Also
on March 31, 2017, certain of our officers and directors returned a total of 25,041,732 shares of common stock to treasury for
cancellation. On that same date, we granted to each of these officers and directors an equivalent number of restricted shares
of common stock under our 2017 Incentive Plan. The restricted shares so granted may not be transferred, sold, or encumbered until
six (6) months from the date of issue.



In
April and June 2017, a Board member was granted 7,000,000 and 13,000,000 options to purchase common stock, respectively. In May
2017 another Board member was granted 7,000,000 options. An additional 350,000 options were granted to a consultant to the Company
in April 2017. All options were granted through the 2017 Incentive Plan.



On
July 14, 2017 the Board of Directors increased the authorized shares in the 2017 Incentive Plan to 65,000,000.



Item
6. Selected Financial Data

A
smaller reporting company is not required to provide the information required by this Item.

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking
Statements



This
document contains certain forward-looking statements as defined by federal securities laws.  For this purpose, forward-
looking statements are any statements contained herein that are not statements of historical fact and include, but are not limited
to, those preceded by or that include the words, “estimate,” “could,” “should,” “would,”
“likely,” “may,” “will,” “plan,” “intend,” “believes,”
“expects,” “anticipates,” “projected,” or similar expressions.  Those statements
are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from
those contemplated by such statements.  The forward-looking information is based on various factors and was derived
using numerous assumptions.  For these statements, we claim the protection of the “bespeaks caution” doctrine.
Such forward-looking statements include, but are not limited to:



| | • | Statements
                                         regarding our anticipated financial and operating results, including increases in and
                                         anticipated sources of revenues;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Predictions
                                         regarding the outcome of pending legal proceedings and the impact on us of pending legal
                                         proceedings;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Statements
                                         regarding anticipated changes in expenses;
| | - | ----------------------------------------------------------------------------------------------

| | • | Statements
                                         regarding our goals, intensions, plans and expectations, including selling and marketing
                                         plans generally, the introduction of new products, and markets and locations we intend
                                         to target in the future
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Statements
                                         regarding expanded business opportunities in FY 2018;
| | - | ---------------------------------------------------------------------------------------------------------

| | • | Our
                                         expectation that we will sell securities on our balance sheet;
| | - | -----------------------------------------------------------------------------------------------------------

| | • | Our
                                         expectation regarding repayment of loans;
| | - | --------------------------------------------------------------------------------------

| | • | Expected
                                         uses of cash in FY2018; and
| | - | -----------------------------------------------------------------------------

| | • | Statements
                                         with respect to having adequate liquidity
| | - | ---------------------------------------------------------------------------------------------



13


Table of Contents






The
following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations
expressed in the forward-looking statements:



| | • | Negative
                                         changes in public sentiment towards acceptance of the use of hemp- and CBD-infused drinks
                                         and other products;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Other
                                         regulatory developments that could limit the market for our products;
| | - | --------------------------------------------------------------------------------------------------------------------

| | • | Our
                                         ability to successfully integrate acquired entities;
| | - | -------------------------------------------------------------------------------------------------

| | • | Competitive
                                         developments, including the possibility of new entrants into our primary markets;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | • | The
                                         loss of key personnel; and
| | - | -----------------------------------------------------------------------

| | • | Other
                                         risks discussed in this document
| | - | -------------------------------------------------------------------------------



Overview



The
Company generates revenue from finished product sales to distributors (resellers), retailers and consumers. The wholesale market
for the Company’s products includes all retailers in the convenience and grocery store channels as well as a number of specialty
retail niche markets including health food, “smoke shop,” and novelty stores. Additionally, the Company has an online
retail presence on Amazon.com and via our Company websites.



Results
of Operations



Year
Ended June 30, 2017 Compared to Year Ended June 30, 2016



Financial
Summary



The
Company’s sales for the year ended June 30, 2017 were $401,974 compared to $1,075,476 for the year ended June 30, 2016.



The
Company’s net loss for the year ended June 30, 2017 was $9,276,251 compared to net income of $2,325,726 for the year ended
June 30, 2016.



Sales



For
the year ended June 30, 2017, sales were $401,974 compared to $1,075,476 for the year ended June 30, 2016, a decrease of $673,502
or 63%. The sales decrease was driven by the lack of funding for inventory production, direct sales support, and advertising and
promotion of the Company’s products, as well as a restructuring of our outside broker agreements, and product returns. In
the year ended June 30, 2017 sales consisted of approximately 80% distributor sales and 20% online sales, compared to 93% distributor
sales and 7% online sales for the year ended June 30, 2016.



Cost
of Sales





For the year ended
June 30, 2017, cost of sales was $251,920 or 63% of sales, versus $1,134,636 or 105% of sales for the year ended June 30,
2016, a decrease of $882,716 or 78 %. In 2017 the Company recorded inventory obsolescence expense of $100,998 compared to
$725,718 in 2016, resulting in a lower cost of sales percentage. In 2017 the obsolescence expense was comprised of a $72,161
write-off of the remaining “mountain can” packaging and a $28,837 write-off of the Company’s expired
brownie inventory. In 2016 the obsolescence expense related primarily to expiring hemp-infused beverage product.







14


Table of Contents




Operating
Expenses



For
the year ended June 30, 2017, operating expenses were $7,265,097 or 1,807% of sales, compared to $3,649,412 or 339% of sales for
the year ended June 30, 2016, an increase of $3,615,685 or 99%. Areas in which the Company experienced material changes in operating
expenses are discussed below.



General
and Administrative



For
the year ended June 30, 2017, general and administrative expenses were $5,751,464 or 1,431% of sales, compared to $2,142,984 or
199% of sales for the year ended June 30, 2016, an increase of $3,608,480 or 168%. The increase in general and administrative
expenses in 2017 was driven by an increase in officer and employee compensation, including approximately $1,439,096 in stock option-related
compensation to two new outside Board Directors in the fourth quarter of fiscal year 2017, rent and storage expenses, and expenses
related to the startup of the Eagle Spirit Water brand.



Advertising
and Marketing



For
the year ended June 30, 2017, advertising and marketing expenses were $1,513,633 or 377% of sales, compared to $1,340,428 or 125%
of sales for the year ended June 30, 2016, an increase of $173,205 or 13%. The increase in advertising and marketing expenses
in 2017 was due to increased promotional spending, broker commissions, promotions contractors, and advertising and promotional
expenses related to the startup of the Eagle Spirit water brand.



Impairment



For
the year ended June 30, 2016, the Company recorded an impairment expense of $166,000 related to its investment in Dollar Shots
Club. This represented a 100% impairment on this investment. There was no impairment recorded during the year ended June 30, 2017.



Other
(Income) Expense



Interest
Expense



For
the year ended June 30, 2017, interest expense was $1,044,431, compared to $203,496 for the year ended June 30, 2016, an increase
of $573,907 or 282%. The increase in interest expense, which includes the amortization of the discount on convertible debt and
interest on Series C Preferred Stock, was due to increased debt in 2017.



Debt
Inducement Expense



During
the year ended June 30, 2016, the Company recorded debt inducement expense of $3,887,618. In order to induce the holder of certain
convertible debt to convert his note, he was issued warrants to purchase 41,454,851 shares of common stock at a reduced price.
There was no debt inducement expense in 2017.



Loss
on Extinguishment of Debt



During
the year ended June 30, 2016, the Company recorded a loss of $945,838 on the extinguishment of debt related to the settlement
of convertible debt. There was no extinguishment of debt in 2017.





Gain on Change in Redemption
Value of Series C Preferred Stock



For the year ended June 30,
2017, the Company recorded a gain of $834,242 on the change in the redemption value of the Series C Preferred stock. The redemption
value of the Series C Preferred stock is determined based on a formula in the Company’s amended Articles of Incorporation.
There was no change in the redemption value during the year ended June 30, 2016.





Gain
on Change in Fair Value of Derivative Liability



For
the year ended June 30, 2017, the Company recorded a loss on the change in fair value of derivative liability of $1,951,019 compared
to a gain of $11,071,250 for the year ended June 30, 2016. In 2017 the loss resulted from the increase in the price of the Company’s
underlying stock, which is used to calculate the fair value of the related derivative liability, over the period from July 1,
2016 to June 30, 2017. The gain in 2016 resulted from a decrease in the price of the Company’s stock during the year ended
June 30, 2016 and the related decrease in the derivative liability.





15


Table of Contents




Income
Taxes



For
the years ended June 30, 2017 and 2016, the Company recorded no income tax benefit due to a full valuation allowance provided
on deferred tax assets resulting from net operating losses.



Liquidity
and Capital Resources





As of June 30, 2017, we
had current assets of $1,153,976, consisting of cash of $91,675, accounts receivable (net) of $63,268, inventory of $224,695,
and prepaid expenses and other current assets of $774,338. As of June 30, 2017, we had current liabilities of $8,583,643,
consisting of accounts payable and accrued liabilities of $441,188, related party convertible notes payable (net) of $266,247,
convertible notes payable (net) of $733,253, other notes payable of $26,130, redemption value of Series C Preferred stock of
$1,661,424, accrued interest of $382,820, and derivative liability of $5,072,579. During the year ended June 30, 2017, the
Company received proceeds of $991,350 related to private offering stock sales of 65,667,587 shares of common stock. Sales
prices ranged from $.001 to $.05 per share.





Cash
flows from operating activities



Net
cash used in operating activities during the years ended June 30, 2017 and 2016 was $1,902,790 and $1,779,167, respectively. In
both years the Company used funds for inventory production, sales and promotions, and administrative expenses. The increase in
cash used in operating activities during the year ended June 30, 2017 was a result of increased officer and employee compensation,
rent and storage expenses, and expenses related to the startup of the Eagle Spirit Water brand.



Cash
flows from investing activities



Net
cash used in investing activities during the years ended June 30, 2017 and 2016 was $89,870 and $119,042, respectively. In 2017
the Company invested in the startup of the Eagle Spirit Water brands as well as delivery vehicles and computer equipment. During
2016 the Company’s investment primarily related to the acquisition of several delivery vehicles.



Cash
flows from financing activities





Net cash provided by financing
activities during the years ended June 30, 2017 and 2016 was $1,982,080 and $1,904,738, respectively. In both years, over 50% of
the net cash provided by financing activities was from the proceeds of sales of common stock with the remainder coming from net
proceeds of notes payable. In 2017 the Company received proceeds of $991,350 from the issuance of common stock, compared to $1,282,406
in 2016.





Material
Indebtedness



As
of June 30, 2017 and 2016 the Company’s outstanding debt totaled $1,634,580 and $895,832, respectively. The increase in
debt during 2017 was to fund the Company’s operations, including inventory production and the startup of the Eagle Spirit
Water brand.



Recently,
our operations have been funded primarily through the issuance of convertible promissory notes, which are convertible to common
stock at fixed prices ranging from $0.001 to $0.024, or at a specified percentage discount off market prices. Discounts are generally
50% and based on a contracted look-back period. Interest rates on our notes payable range from 6% to 8%. Our ability to successfully
execute our business plan is contingent upon us obtaining additional financing and/or upon realizing sales revenue sufficient
to fund our ongoing expenses. Until we are able to sustain our ongoing operations through sales revenue, we intend to fund operations
through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital,
or other cash requirements.



The
Company has the following formal funding arrangement:



| | • | Eagle
                                         Equities, LLC – On July 28, 2017 we executed an agreement with Eagle Equities,
                                         LLC (“Eagle Equities”) to sell up to $500,000 in convertible notes to Eagle
                                         Equities. On that same date, we issued a 12-month, convertible
note bearing interest at 8% to Eagle Equities in exchange for funding $220,000, net of fees. The note is convertible to common
stock at a 45% discount to market based on a look-back formula. The Company has the ability to obtain additional funding of $220,000
by issuing another convertible note to Eagle Equities eight months from the date of the original note.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16


Table of Contents






During
2011 and 2012, the Company entered into a series of convertible notes with six lenders aggregating $110,000. These were one-year
terms notes at 12% interest and convertible to Common Stock at a conversion price of $.05 per share. As a part of the Bankruptcy
Reorganization Plan confirmed in July 2014, the accrued interest on these notes was forgiven and the notes became zero interest
bearing notes. As of December 31, 2016, the principal balance on these notes was $30,000.



In
2012, the Company entered into a $40,000 Convertible Note Payable with an individual. The notes matured one-year from the date
of issuance, bear interest at 12% per annum, and is convertible into shares of Common Stock at $.001. In 2015, the lender sold
and re-assigned $17,500 of this note. The new note holders converted the $17,500 of principal into 17,500,000 shares of Common
Stock. During the six months ended December 31, 2016, the holder converted the remaining principal balance of $22,500 to 25,000,000
shares of common stock.



On
March 25, 2015, the Company entered into an amended and restated convertible promissory note with Roy Meadows, which amended two
previously issued notes dated February 5, 2013 and July 17, 2014. According to the terms of the note, the Company may borrow up
to an aggregate of $1,500,000. The note bears interest at 12% per annum, and the holder may demand repayment of any portion of
the note after one year from the effective date of the note. The note is convertible in whole or in part at a conversion price
per share equal to the lesser of $.001 per share, or at an 80% discount to the average of the five lowest bid prices during the
thirty trading days prior to the date of the conversion notice. Mr. Meadows is limited in his conversions whereby he may not at
any time own more than 9.99% of the Company’s outstanding common stock. Mr. Meadows may, at his option, file a UCC-1 financing
statement against all assets of the Company and have a guarantee and security agreement with the principal controlling for majority
shareholders of the Company. On November 16, 2015, the debt holder converted $1,107,606 of principal and accrued interest into
1,107,607 shares of Preferred C Shares of the Company. Each Series C Preferred Share can be converted to 50 Shares of Common Stock.



In
connection with the conversion, and as an inducement for the debt holder to convert, the Company issued him two warrants to purchase
a total of 55,096,825 shares of the Company’s common stock at an exercise price per share of the lesser of $.005 or an eighty
percent discount to the average of the five lowest bid prices during the 30 trading days prior to the date of exercise. The warrant
may be exercised, in whole or in part, beginning on the date which is the earlier of six months from the Company becoming a Reporting
Company (as defined in the warrant) or one year from the date of issuance. The warrant is for a period of 3 years, and contains
customary anti-dilution provisions.



In
October 2015, the Company entered into a $500,000 note payable at 12% simple interest for a one-year period with Roy Meadows.
The note is convertible upon maturity if not paid by the company prior thereto at $0.02 per share and a 25,000,000 share maximum.There is an option to renew with a fee of 10% principle and accrued interest.



Our
prior disclosures indicating that Mr. Meadows was an affiliate of the Company were made in error. We affirm that Mr. Meadows is
not, and never has been, an “affiliate” of the Company within the meaning of Rule 144(a)(1) or otherwise.





The
Company has determined that the conversion feature embedded in the notes referred to above, that contain a potential variable
conversion amount, constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with
a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note
is recorded immediately to interest expense at inception. The discounts related to the above notes were completely amortized as
of June 30 and December 31, 2016 on the accompanying balance sheet.



Future
Liquidity Requirements





The anticipated operational shortfall
for the next twelve months is approximately$2,000,000. The
Company plans to utilize the Eagle Equities agreement to partially fund our operating needs and anticipates securing an equity
financing arrangement or line of credit to meet its additional needs over the next 12 to 24 months. This would finance inventory
production, advertising and marketing, and other working capital needs.





17


Table of Contents




We
anticipate that initial funds raised will be through debt financing with additional capital raised through the sale of restricted
securities through an offering memorandum, the structure of which has yet to be determined.



Plans
for Meeting Debt Obligations and Reaching Profitability



Going
forward, the Company intends to fund its operations and meet its debt obligations through:



| | • | Generating
    revenue through our sales and marketing efforts in our day-to-day operations.
| | - | --------------------------------------------------------------------------------------------



| | • | Selling
    common stock and debt directly to accredited investors.
| | - | -------------------------------------------------------------------
| |   |                                                                    

We
project increased sales revenue in fiscal year 2018 as we execute our updated strategy, which includes updating our can design
and formulas.



We
intend to retain our future earnings in order to reinvest in the development and growth of our business and, therefore, do not
intend to pay dividends on our common stock for the foreseeable future.



Going
forward, the Company intends to achieve profitability by:



| | 1. | Updating
                                         and maintaining its long-term strategic plan
| | -- | ----------------------------------------------------------------------------------------------



The
Company has recently updated its long-term strategic plan. Management’s goal is to become the category leader in the hemp-infused
beverage market, a segment of the functional beverage market. Functional beverages, or beverages that convey health benefits,
are the fastest growing segment within the beverage market.



| | 2. | Focusing
                                         on core products
| | -- | ------------------------------------------------------------------



The
Company is developing four newly reformulated, sugar-free, non-energy, hemp-infused beverage flavors. In addition to the new formulas,
the beverages will feature 12 oz. cans, an all-new look and will replace all current hemp-infused beverage offerings. Two of the
four beverage flavors will be carbonated. Flavor choices will be similar to past offerings. Management plans to begin production
on the new beverages in January 2018. Marketing will focus on the health benefits of hemp, including Omega-3 and Omega-6 fatty
acids, amino acids, and natural, plant-based fiber.



The
Company is also reviewing its other product offerings, but there are no immediate plans to produce additional Relaxation Brownies
or energy shots.



The
Board of Directors is currently evaluating its plans with regard to the Eagle Spirit Water business.



| | 3. | Revising
                                         its go-to-market strategy
| | -- | ---------------------------------------------------------------------------



The
Company is re-assessing its go-to-market strategy. Specifically, channels of distribution and distributor and broker agreements
are being reviewed.



| | 4. | Concentrating
                                         on key markets
| | -- | ---------------------------------------------------------------------



Management
plans to focus on key domestic markets.



| | 5. | Re-building
                                         its team of senior executives
| | -- | ----------------------------------------------------------------------------------



The
Company plans to hire a Vice President of Sales and a Director of Marketing during fiscal year 2018. These executives will be
key to the successful roll-out of the Company’s newly reformulated products and key market strategy.



18


Table of Contents




Off-Balance
Sheet Arrangements



As
of June 30, 2017, there were no off-balance sheet arrangements



Going
Concern





The Company has a shareholders’
deficit of $7,304,278, an accumulated deficit of $26,154,633 as of June 30, 2017, and has generated operating losses since inception.
These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The Company’s
continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue raising capital
from third parties.



On February 28, 2017,
LSW Holdings, LLC (“LSW”) purchased all outstanding shares of Series A Preferred Stock from our former controlling
shareholder. Our Vice President of International Sales is the Managing Member of LSW. Both parties to the agreement assured management
that the purchase agreement requires LSW to provide the Company sufficient capital to move forward with its expansion plans. Management
has recently obtained the executed agreement and determined that agreement contains no such requirement. As a result, management
is actively pursuing other funding arrangements with outside investors and creditors.





Critical
Accounting Policies



In
December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management
Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the
portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
We do not believe that the following accounting policies currently fit this definition:

Use
of Estimates



The
preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external
conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors
could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company
re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.



Cash



The
Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or
less to be cash equivalents.



Revenue
Recognition



The
Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.”
It records revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the
customer is fixed or determinable and collectability of the revenue is reasonably assured. The Company has not experienced any
significant returns from customers and accordingly, in management’s opinion, no reserve for returns has been provided. Payments
received prior to shipment of goods are recorded as deferred revenue.



Accounts
Receivable and Allowance for Doubtful Accounts Receivable



The
Company has a policy of reserving for uncollectible accounts based on the best estimate of the amount of probable credit losses
in our existing accounts receivable. We extend credit to customers based on an evaluation of their financial condition and other
factors. The Company generally does not require collateral or other security to support accounts receivable and perform ongoing
credit evaluations of customers and maintain an allowance for potential bad debts if required.



It
is determined whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates
the customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the
best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable
to the amount expected to be collected. These specific allowances
are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total
amount of the allowance. The Company may also record a general allowance as necessary.



19


Table of Contents






Direct
write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivables or otherwise evaluate
other circumstances that indicate the collectability of receivables.



Inventories



Inventories,
which consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in,
first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business,
less estimated costs to complete and dispose of the product.



If
the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the
period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments
are recorded in cost of sales in the Company's statements of operations.



Fair
Value Measurements



The
Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value
as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair
value measurements.



The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature
of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective
yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances
of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.



ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:



- Level
1 — quoted prices in active markets for identical assets or liabilities.
- Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.
- Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions).



The
derivative liability, which relates to the conversion feature of convertible debt and common stock warrants and options, is classified
as a Level 3 liability, and is the only financial liability measure at fair value on a recurring basis.



20


Table of Contents






The
change in the Level 3 financial instruments is as follows:





|Balance,
    June 30, 2015                        |  | $ | 11,504,057    | 
|------------------------------------------------- |  | - | ------------- | 
|Issued
    during the year ended June 30, 2016    |  |   | 3,887,618     | 
|Converted
    during the year ended June 30, 2016 |  | $ | ($2,102,681)  | 
|Change
    in fair value recognized in operations |  | $ | ($11,071,250) | 
|Balance,
    June 30, 2016                        |  | $ | $2,217,744    | 
|                                                  |  |   |               | 
|Issued
    during the year ended June 30, 2017    |  | $ | 1,383,650     | 
|Exercises/Conversions                             |  | $ | (479,834)     | 
|Change
    in fair value recognized in operations |  | $ | 1,951,019     | 
|Balance,
    June 30, 2017                        |  | $ | 5,072,579     | 



The
estimated fair value of the derivative instruments were valued using the Black-Scholes option pricing model, using the following
assumptions as of June 30, 2017 and June 30, 2016:



|                            | 2017                | 2016               
|--------------------------- | ------------------- | -------------------
|Estimated
    Dividends     | None                | None               
|Expected
    Volatility     | 114%                | 45%                
|Risk
    Free Interest Rate | .84%                | .12%               
|Expected
    Term           | .1
    to 2.0 years | .1
    to 5.5 years



Property
and Equipment



Property
and equipment is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the
useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed
as incurred.



Impairment
of Long-Lived Assets



The
Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate the carrying value
of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future
cash flow and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use
of the asset plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the
asset. When the Company identifies an impairment, it reduces the carrying amount of the asset to its estimated fair value
based on a discounted cash flow approach or, when available and appropriate, to comparable market values. The
Company recorded an impairment charge of $166,000 during the year ended June 30, 2016. No impairment charge was recorded
during the year ended June 30, 2017.



Share-Based
Payments



Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values, in accordance with FASB ASC Topic 718. That expense is recognized over the period during which an
employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting
period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented.



The
Company issued restricted stock to consultants and employees for various services. Cost for these transactions are measured at
the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the
counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.





21


Table of Contents




Convertible
Instruments



The
Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives
and Hedging Activities.” Applicable GAAP requires companies to bifurcate conversion options from their host instruments
and account for them as freestanding derivative financial instruments according to certain criteria. The criteria include circumstances
in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related
to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded
derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported
in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be
considered a derivative instrument.



Preferred
Stock





We apply the guidance
enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement
of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured
at fair value. We classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely
within our control, as temporary equity. At all other times, we classified our preferred shares in stockholders’ equity.
Our preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features
not within our control. Accordingly, unless otherwise noted, all issuances of preferred stock are presented as a component of consolidated
stockholders’ equity (deficit).





Advertising



Advertising
and marketing expenses are charged to operations as incurred.



Income
Taxes



The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.”
Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year
and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the
enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available
positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.



ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition. The Company has no material uncertain tax positions.



Recently
Issued Accounting Pronouncements

Unless
otherwise noted, we have elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(1) of the JOBS Act.  This allows us to delay the adoption of new or revised accounting standards
that have different effective dates for public and private companies until those standards apply to private companies.  As
a result of our election, our financial statements may not be comparable with other public companies.



In August 2014, the FASB
issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements—Going Concern(Subtopic 205-40),
(ASU No. 2014-15), which requires management to assess an entity’s ability to continue as a going concern by incorporating
and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition
of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements
are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of
consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not
alleviated. ASU No. 2014-15 is effective for the Company beginning July 1, 2017.





22


Table of Contents






In
May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP
and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts
with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services
equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional
disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments. ASU 2014-09 allows for adoption either on a full retrospective basis to each prior reporting
period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized
at the date of initial application, which will be effective for the Company beginning July 1, 2019. The Company is currently evaluating
the impact of ASU 2014-09, including the transition method, on its consolidated financial statements.



In
November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The
amendments in this update simplify the presentation of deferred income taxes and require that deferred tax liabilities and assets
be classified as noncurrent in a consolidated statement of financial position. These amendments may be applied either prospectively
to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments will be effective for the
Company beginning July 1, 2018. If the Company chooses retrospective application, the impact of ASU 2015-17 would not be material
to the consolidated financial statements.



In
February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use
asset, representing their right to use the underlying asset for the lease term, and a lease liability for all leases with terms
greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing
and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for the Company beginning July 1, 2020. The Company
is currently evaluating the impact that ASU 2016-02 will have on its consolidated financial statements.



In
March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting.
The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income
tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for the Company beginning
July 1, 2018 and will require us to prospectively recognize excess tax benefits and tax deficiencies in the consolidated statement
of income when the awards vest or are settled. Additionally, the guidance requires excess tax benefits to be presented as an operating
activity in the statement of cash flows rather than as a financing activity. The Company is currently evaluating the impact of
ASU 2016-09 on its consolidated financial statements.



In
June 2016, the FASB issued ASU 2016-13, Financial Instruments-Measurement of Credit Losses on Financial Instruments, which
requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company
beginning July 1, 2021 and the Company is currently evaluating the impact that ASU 2016-13 will have on its consolidated financial
statements.





In
January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which clarifies
the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should
be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is required to be applied prospectively and
will be effective for the Company beginning July 1, 2019. The impact on our consolidated financial statements will depend on the
facts and circumstances of any specific future transactions.



23


Table of Contents






Item
7A. Quantitative and Qualitative Disclosures About Market Risk

A
smaller reporting company is not required to provide the information required by this Item.

Item
8. Financial Statements and Supplementary Data

Index
to Financial Statements Required by Article 8 of Regulation S-X:

Audited
Financial Statements:



|F-1 | Report     of Paritz & Company, P.A., Independent Registered Public Accounting Firm            
|--- | -----------------------------------------------------------------------------------------------
|F-2 | Consolidated
    Balance Sheets as of June 30, 2017 and 2016                                   
|F-3 | Consolidated
    Statements of Operations for the years ended June 30, 2017 and 2016           
|F-4 | Consolidated
    Statements of Cash Flows for the years ended June 30, 2017 and 2016           
|F-5 | Consolidated
    Statements of Shareholder’s Deficit for the years ended June 30, 2017 and 2016
|F-6 | Notes
    to Consolidated Financial Statements.                                                





24


Table of Contents






| | Paritz                       | & Company, P.A | 15 Warren Street, Suite 25
        Hackensack, New Jersey 07601
        (201) 342-7753
        Fax: (201) 342-7598
        E-Mail: PARITZ@paritz.com
| | ---------------------------- | -------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |                              |                |                                                                                                                                                     
| | Certified Public Accountants







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors and Stockholders

Rocky
Mountain High Brands, Inc.





We have audited the accompanying
consolidated balance sheets of Rocky Mountain High Brands, Inc as of June 30, 2017 and 2016 and the related consolidated statements
of operations, shareholders’ deficit and cash flows for the years ended June 30, 2017 and 2016. These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audits.





We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.





In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of Rocky Mountain High
Brands, Inc.as of June 30, 2017 and 2016, and the consolidated results of its operations and cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States of America.



The accompanying consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As discussed in Note 3 to the financial statements the Company has a shareholders’
deficit of $7,304,278, an accumulated deficit of $26,154,633 at June 30, 2017, and has generated operating losses since inception.
These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.







/S/Paritz
& Company, P.A.



Hackensack,
New Jersey

October
11, 2017





F-1


Table of Contents




Rocky
Mountain High Brands, Inc.

Consolidated
Balance Sheets





|                                                                                                                                                                                                                                                                                  |  |   | June 30, 2017 |   |  |   | June 30, 2016 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------------- | - |  | - | ------------- | -
|CURRENT ASSETS                                                                                                                                                                                                                                                                    |  |   |               |   |  |   |               |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|Cash                                                                                                                                                                                                                                                                              |  | $ | 91,675        |   |  | $ | 102,255       |  
|Accounts Receivable, net of allowance of $138,373 and $60,163, respectively                                                                                                                                                                                                       |  |   | 63,268        |   |  |   | 20,377        |  
|Inventory                                                                                                                                                                                                                                                                         |  |   | 224,695       |   |  |   | 290,368       |  
|Prepaid Expenses and Other Current Assets                                                                                                                                                                                                                                         |  |   | 774,338       |   |  |   | 1,716,551     |  
|TOTAL CURRENT ASSETS                                                                                                                                                                                                                                                              |  |   | 1,153,976     |   |  |   | 2,129,551     |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|Property and Equipment, net                                                                                                                                                                                                                                                       |  |   | 48,133        |   |  |   | 92,208        |  
|Other Assets                                                                                                                                                                                                                                                                      |  |   | 77,256        |   |  |   | 33,230        |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|TOTAL ASSETS                                                                                                                                                                                                                                                                      |  | $ | 1,279,365     |   |  | $ | 2,254,989     |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                                                                                                                                                                             |  |   |               |   |  |   |               |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|CURRENT LIABILITIES                                                                                                                                                                                                                                                               |  |   |               |   |  |   |               |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|Accounts Payable and
    Accrued Liabilities                                                                                                                                                                                                                                      |  | $ | 441,190       |   |  | $ | 337,866       |  
|Related Party Convertible
    Notes Payable, net of debt discount                                                                                                                                                                                                                 |  |   | 266,247       |   |  |   | 20,730        |  
|Convertible Notes
    Payable, net of debt discount                                                                                                                                                                                                                               |  |   | 733,253       |   |  |   | 597,500       |  
|Note Payable-Other                                                                                                                                                                                                                                                                |  |   | 26,130        |   |  |   | -             |  
|Redemption Value of
    Series C Preferred Stock                                                                                                                                                                                                                                  |  |   | 1,661,424     |   |  |   | 2,495,666     |  
|Accrued Interest                                                                                                                                                                                                                                                                  |  |   | 382,820       |   |  |   | 58,399        |  
|Deferred Revenue                                                                                                                                                                                                                                                                  |  |   | -             |   |  |   | 500,000       |  
|Derivative Liability                                                                                                                                                                                                                                                              |  |   | 5,072,579     |   |  |   | 2,217,744     |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                                                                                         |  |   | 8,583,643     |   |  |   | 6,227,905     |  
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|SHAREHOLDERS’
    DEFICIT                                                                                                                                                                                                                                                         |  |   |               |   |  |   |               |  
|Preferred Stock -
    Series A - Par Value of $.001  1,000,000 shares authorized;  1,000,000 shares issued and outstanding as of
    June 30, 2017 and 30, 2016                                                                                                                   |  |   | 1,000         |   |  |   | 1,000         |  
|Preferred Stock -
    Series B - Par Value of $.001  5,000,000 shares authorized as of June 30, 2017 and June 30, 2016                                                                                                                                                            |  |   | -             |   |  |   | -             |  
|Preferred Stock -
    Series C - Par Value of $.001  2,000,000 shares authorized; (1,107,607 Classified as a liability as of June 30,
    2017 and June 30, 2016)                                                                                                                 |  |   |               |   |  |   |               |  
|Preferred Stock -
    Series D - Par Value of $.001  2,000,000 shares authorized; no shares issued and outstanding                                                                                                                                                                |  |   | -             |   |  |   | -             |  
|Common Stock - Par
    Value of $.001  950,000,000 shares authorized as of June 30, 2017; 786,525,118 shares issued and outstanding as
    of June 30, 2017; 800,000,000 shares authorized as of June 30, 2016; 537,989,764 shares issued and outstanding as of June
    30, 2016 |  |   | 786,525       |   |  |   | 537,990       |  
|Additional Paid In
    Capital                                                                                                                                                                                                                                                    |  |   | 18,062,830    |   |  |   | 12,366,476    |  
|Accumulated Deficit                                                                                                                                                                                                                                                               |  |   | (26,154,633   | ) |  |   | (16,878,382   | )
|TOTAL SHAREHOLDERS’
    DEFICIT                                                                                                                                                                                                                                                   |  |   | (7,304,278    | ) |  |   | (3,972,916    | )
|                                                                                                                                                                                                                                                                                  |  |   |               |   |  |   |               |  
|TOTAL LIABILITIES
    AND SHAREHOLDERS’ DEFICIT                                                                                                                                                                                                                                   |  | $ | 1,279,365     |   |  | $ | 2,254,989     |  



The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements.



F-2


Table of Contents






Rocky
Mountain High Brands, Inc.

Consolidated
Statements of Operations



|                                                                   |  | Year
    Ended   
|------------------------------------------------------------------ |  | -----------------
|                                                                   |  | June
    30, 2017
|                                                                   |  |                  
|Sales                                                              |  | $                
|                                                                   |  |                  
|Cost of Sales                                                      |  |                  
|Inventory Obsolescence                                             |  |                  
|                                                                   |  |                  
|Gross Profit (Loss)                                                |  |                  
|                                                                   |  |                  
|Operating Expenses                                                 |  |                  
|General and Administrative                                         |  |                  
|Advertising and Marketing                                          |  |                  
|Impairment                                                         |  |                  
|Total Operating
    Expenses                                       |  |                  
|                                                                   |  |                  
|Loss from Operations                                               |  |                  
|                                                                   |  |                  
|Other (Income)
    Expenses:                                       |  |                  
|Interest Expense                                                   |  |                  
|Debt Inducement Expense                                            |  |                  
|Loss on Extinguishment
    of Debt                                 |  |                  
|Gain on Change in
    Redemption Value of Series C Preferred Stock |  |                  
|(Gain) Loss on Change
    in Fair Value of Derivative Liability    |  |                  
|Total Other (Income)
    Expenses:                                 |  |                  
|                                                                   |  |                  
|Income (Loss) Before
    Income Tax Provision                      |  |                  
|                                                                   |  |                  
|Income Tax Provision                                               |  |                  
|                                                                   |  |                  
|Net Income (Loss)                                                  |  | $                
|                                                                   |  |                  
|Net Income (Loss)
    per Common Share - Basic and Diluted         |  | $                
|                                                                   |  |                  
|Weighted Average Shares
    Outstanding                            |  |                  





The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements.





F-3


Table of Contents




Rocky
Mountain High Brands, Inc.

Consolidated
Statements of Cash Flows





|                                                                                |  | Year
    Ended   
|------------------------------------------------------------------------------- |  | -----------------
|                                                                                |  | June
    30, 2017
|Operating Activities:                                                           |  |                  
|Net Income
    (Loss)                                                           |  | $                
|Adjustments to
    reconcile net loss to net cash used in operating activities: |  |                  
|Stock-based
    compensation                                                    |  |                  
|Stock-based
    payments to vendors                                             |  |                  
|Warrants
    issued for services rendered                                       |  |                  
|Non-cash
    interest expense                                                   |  |                  
|Impairment
    expense                                                          |  |                  
|Gain on change in
    redemption value of Series C Preferred stock              |  |                  
|(Gain) Loss
    on change in fair value of derivative liability                 |  |                  
|Loss on
    extinguishment of debt                                              |  |                  
|Warrants
    issued for debt inducement                                         |  |                  
|Bad debt
    expense                                                            |  |                  
|Loss on
    disposal of equipment                                               |  |                  
|Depreciation
    expense                                                        |  |                  
|Inventory
    write-off                                                         |  |                  
|Changes in operating
    assets and liabilities:                                |  |                  
|Accounts
    receivable                                                         |  |                  
|Inventory                                                                       |  |                  
|Prepaid
    expenses                                                            |  |                  
|Other
    assets                                                                |  |                  
|Accounts
    payable and accrued liabilities                                    |  |                  
|Deferred
    revenue                                                            |  |                  
|NET CASH USED IN
    OPERATING ACTIVITIES                                       |  |                  
|                                                                                |  |                  
|Investing Activities:                                                           |  |                  
|Investment
    in Rocky Mountain High Water Company                             |  |                  
|Investment
    in product development                                           |  |                  
|Acquisition
    of property and equipment                                       |  |                  
|NET CASH USED IN
    INVESTING ACTIVITIES                                       |  |                  
|                                                                                |  |                  
|Financing Activities:                                                           |  |                  
|Proceeds
    from issuance of convertible notes                                 |  |                  
|Proceeds
    from issuance of related party convertible notes                   |  |                  
|Repayment
    of convertible notes                                              |  |                  
|Repayment
    of related party convertible notes                                |  |                  
|Proceeds
    from issuance of note payable-other                                |  |                  
|Repayment
    of note payable-other                                             |  |                  
|Proceeds
    from issuance of common stock                                      |  |                  
|                                                                                |  |                  
|NET CASH PROVIDED
    BY FINANCING ACTIVITIES                                   |  |                  
|                                                                                |  |                  
|INCREASE (DECREASE)
    IN CASH                                                 |  |                  
|                                                                                |  |                  
|CASH - BEGINNING
    OF YEAR                                                    |  |                  
|                                                                                |  |                  
|CASH - END OF YEAR                                                              |  | $                
|                                                                                |  |                  
|Supplemental disclosure
    of non-cash financing and investing activities:     |  |                  
|Common
    stock issued for conversion of debt                                  |  | $                
|Common
    stock issued for acquisition                                         |  | $                
|Debt and
    accrued interest converted for common stock                        |  | $                
|Common
    stock issued as part of a legal settlement                           |  | $                
|Derivative
    liability incurred for debt discount                             |  | $                
|Beneficial
    conversion feature recognized as debt discount                   |  | $                
|Series
    C preferred stock issued for conversion of debt                      |  | $                
|Conversion
    of debt to common stock                                          |  | $                
|Derivative
    liability relieved upon conversion of related debt               |  | $                



The Accompanying Notes are an
Integral Part of the Consolidated Financial Statements.



F-4


Table of Contents






Rocky
Mountain High Brands, Inc.

Consolidated
Statements of Shareholders’ Deficit



|                                                                         |  |  | Common Stock |   |  |   | Preferred Stock A |   |  |  | Preferred Stock C |  |  |   |        |  |  |  | Accumulated |  |  |   | Equity/ | 
|------------------------------------------------------------------------ |  |  | ------------ | - |  | - | ----------------- | - |  |  | ----------------- |  |  | - | ------ |  |  |  | ----------- |  |  | - | ------- | 
|                                                                         |  |  | Shares       |   |  |   | Amount            |   |  |  | Shares            |  |  |   | Amount |  |  |  | Shares      |  |  |   | Amount  | 
|Balance - June 30, 2015                                                  |  |  | 400,356,154  |   |  | $ | 400,356           |   |  |  | 1,000,000         |  |  | $ | 1,000  |  |  |  | —           |  |  | $ | —       | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued for acquisition                                            |  |  | 2,000,000    |   |  |   | 2,000             |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued for services rendered                                      |  |  | 5,107,143    |   |  |   | 5,107             |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued upon conversion of convertible notes                       |  |  | 103,005,455  |   |  |   | 103,005           |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Issuance of common stock for cash                                        |  |  | 38,521,012   |   |  |   | 38,521            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Return of employee shares as part of settlement agreements               |  |  | (11,000,000  | ) |  |   | (11,000           | ) |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Warrants issued for compensation                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Beneficial conversion feature on convertible related party notes payable |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Gain on extinguishment of related party convertible notes                |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Net income for the year ended June 30, 2016                              |  |  | —            |   |  |   | —                 |   |  |  | —                 |  |  |   | —      |  |  |  | —           |  |  |   | —       | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Balance - June 30, 2016                                                  |  |  | 537,989,764  |   |  | $ | 537,990           |   |  |  | 1,000,000         |  |  | $ | 1,000  |  |  |  |             |  |  | $ |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Issuance of common stock for cash                                        |  |  | 65,667,587   |   |  |   | 65,668            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued for services rendered                                      |  |  | 28,724,139   |   |  |   | 28,724            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued for compensation                                           |  |  | 22,634,107   |   |  |   | 22,634            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued upon conversion of convertible notes                       |  |  | 77,800,687   |   |  |   | 77,801            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Cashless warrant exercise                                                |  |  | 46,908,834   |   |  |   | 46,909            |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Shares issued as part of legal settlement                                |  |  | 6,800,000    |   |  |   | 6,800             |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Stock option issued for services rendered                                |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Beneficial conversion feature on convertible notes payable               |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Net loss  for the
    year ended June 30, 2017                           |  |  | —            |   |  |   | —                 |   |  |  | —                 |  |  |   | —      |  |  |  | —           |  |  |   | —       | 
|                                                                         |  |  |              |   |  |   |                   |   |  |  |                   |  |  |   |        |  |  |  |             |  |  |   |         | 
|Balance - June 30, 2017                                                  |  |  | 786,525,118  |   |  | $ | 786,525           |   |  |  | 1,000,000         |  |  | $ | 1,000  |  |  |  |             |  |  | $ | –       | 





The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements.



F-5


Table of Contents






Rocky
Mountain High Brands, Inc.

Notes
to Consolidated Financial Statements



NOTE
1 – General



Rocky
Mountain High Brands, Inc. (“RMHB” or the “Company”) was incorporated under the laws of the State of Nevada.
On July 17, 2014, the Company changed its name from Republic of Texas Brands Incorporated to Totally Hemp Crazy, Inc and on October
23, 2015, the Company changed its name to Rocky Mountain High Brands, Inc.



RMHB
has developed and is currently selling in the marketplace a lineup of five hemp-infused beverages and 2oz. energy shots through
its nationwide distributor network and online. Effective June 30, 2016, the Company entered into a business alliance with Poafpybitty
Family, LLC to launch Eagle Spirit Spring Water, a line of purified, high-alkaline spring water sourced from Native American tribal
land in Oklahoma.

On
December 16, 2013 the Company filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Northern District
of Texas, Dallas Division, Case Number 13-36434-bjh-11. In early 2013, the Company sought to acquire a barbeque company and sought
to raise capital and entered into an agreement with Empire Capital LLC (“Empire”) to assist in the raising of capital
for the acquisition. By late 2013, the acquisition had fallen through due to the inability to obtain the needed financing. Empire
then sued the Company claiming it was owed approximately $200,000 for its services on behalf of the Company along with additional
damages. The Company disputed the claims, and filed the Chapter 11 bankruptcy to restructure its current indebtedness and to provide
a framework for moving forward. On May 22, 2014 the Company filed its Disclosure Statement and Plan of Reorganization, and on
July 2, 2014 a hearing was held and the Plan of Reorganization was confirmed by written order of the Bankruptcy Court dated July
11, 2014.





In the Plan of Reorganization,
the Company’s shareholders and controlling shareholder through the Series A Preferred Shares were not diluted, thus control
of the Company remained the same as before, during and after the confirmed Plan of Reorganization. Therefore, “Fresh Start”
Accounting described in ACS 852-10-45-19 did not apply to the Company.





NOTE
2 – Summary of Significant Accounting Policies



Principles
of Consolidation





The consolidated financial
statements have been prepared in accordance with generally accepted accounting principles in the United States. The consolidated
financial statements include the accounts of the Company, its wholly-owned and controlled subsidiaries. All intercompany balances
and transactions have been eliminated.







F-6


Table of Contents




Use
of Estimates



The
preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external
conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors
could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company
re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.



Cash



The
Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or
less to be cash equivalents.



Revenue
Recognition



The
Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.”
It records revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the
customer is fixed or determinable and collectability of the revenue is reasonably assured. The Company has not experienced any
significant returns from customers and accordingly, in management’s opinion, no reserve for returns has been provided. Payments
received prior to shipment of goods are recorded as deferred revenue.



Accounts
Receivable and Allowance for Doubtful Accounts Receivable



The
Company has a policy of reserving for uncollectible accounts based on the best estimate of the amount of probable credit losses
in our existing accounts receivable. We extend credit to customers based on an evaluation of their financial condition and other
factors. The Company generally does not require collateral or other security to support accounts receivable and perform ongoing
credit evaluations of customers and maintain an allowance for potential bad debts if required.



It
is determined whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates
the customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the
best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable
to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received.
The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance
as necessary.



Direct
write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivables or otherwise evaluate
other circumstances that indicate the collectability of receivables.



Inventories



Inventories,
which consist only of the Company’s finished products held for resale, are stated at the lower of cost, determined using
the first-in, first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course
of business, less estimated costs to dispose of the product.



If
the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the
period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments
are recorded in cost of sales in the Company’s statements of operations.



Fair
Value Measurements



The
Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value
as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair
value measurements.



F-7


Table of Contents




The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature
of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective
yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances
of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.



ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:



- Level
1 — quoted prices in active markets for identical assets or liabilities.
- Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.
- Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions).



The
derivative liability, which relates to the conversion feature of convertible debt and common stock warrants and options, is classified
as a Level 3 liability, and is the only financial liability measure at fair value on a recurring basis.



The
change in the Level 3 financial instruments is as follows:



|Balance, June 30, 2015                        |  | $ | 11,504,057  |  
|--------------------------------------------- |  | - | ----------- | -
|Issued during the year ended June 30, 2016    |  |   | 3,887,618   |  
|Converted during the year ended June 30, 2016 |  | $ | (2,102,681  | )
|Change in fair value recognized in operations |  | $ | (11,071,250 | )
|Balance, June 30, 2016                        |  | $ | 2,217,744   |  



|Issued during the year ended June 30, 2017    |  | $ | 1,383,650 |  
|--------------------------------------------- |  | - | --------- | -
|Exercises/Conversions                         |  | $ | (479,834  | )
|Change in fair value recognized in operations |  | $ | 1,951,019 |  
|Balance, June 30, 2017                        |  | $ | 5,072,579 |  



The
estimated fair value of the derivative instruments were valued using the Black-Scholes option pricing model, using the following
assumptions as of June 30, 2017 and June 30, 2016:



|                        |  | 2017 |                 | 2016
|----------------------- |  | ---- | --------------- | ----
|Estimated Dividends     |  | None |                 | None
|Expected Volatility     |  |      | 114%            |     
|Risk Free Interest Rate |  |      | .84%            |     
|Expected Term           |  |      | .1 to 2.0 years |     



Property
and Equipment



Property
and equipment is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the
useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed
as incurred.



Impairment
of Long-Lived Assets



The
Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of
an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flow
and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset
plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the
Company identifies an impairment, it reduces the carrying amount of the
asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market
values.



F-8


Table of Contents






Share-based
Payments



Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values, in accordance with FASB ASC Topic 718. That expense is recognized over the period during which an
employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting
period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented.



The
Company issued restricted stock to consultants and employees for various services. Cost for these transactions are measured at
the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the
counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.



Convertible
Instruments



The
Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives
and Hedging Activities.” Applicable GAAP requires companies to bifurcate conversion options from their host instruments
and account for them as freestanding derivative financial instruments according to certain criteria. The criteria include circumstances
in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related
to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded
derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported
in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be
considered a derivative instrument.



Preferred
Stock





We apply the guidance
enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement
of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured
at fair value. We classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely
within our control, as temporary equity. At all other times, we classified our preferred shares in stockholders’ equity.
Our preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features
not within our control. Accordingly, unless otherwise noted, all issuances of preferred stock are presented as a component of consolidated
stockholders’ equity (deficit).





Advertising
and Marketing



Advertising
and marketing expenses are charged to operations as incurred.



Income
Taxes



The
Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.”
Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year
and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the
enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available
positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.



F-9


Table of Contents




ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition. The Company has no material uncertain tax positions.



Recent
Accounting Pronouncements



Unless
otherwise noted, we have elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(1) of the JOBS Act.  This allows us to delay the adoption of new or revised accounting standards
that have different effective dates for public and private companies until those standards apply to private companies.  As
a result of our election, our financial statements may not be comparable with other public companies.





In August 2014, the FASB
issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements—Going Concern(Subtopic 205-40),
(ASU No. 2014-15), which requires management to assess an entity’s ability to continue as a going concern by incorporating
and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition
of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements
are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of
consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not
alleviated. ASU No. 2014-15 is effective for the Company beginning July 1, 2017.





In
May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP
and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts
with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services
equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional
disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments. ASU 2014-09 allows for adoption either on a full retrospective basis to each prior reporting
period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized
at the date of initial application, which will be effective for the Company beginning July 1, 2019. The Company is currently evaluating
the impact of ASU 2014-09, including the transition method, on its consolidated financial statements.



In
November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The
amendments in this update simplify the presentation of deferred income taxes and require that deferred tax liabilities and assets
be classified as noncurrent in a consolidated statement of financial position. These amendments may be applied either prospectively
to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments will be effective for the
Company beginning July 1, 2018. If the Company chooses retrospective application, the impact of ASU 2015-17 would not be material
to the consolidated financial statements.



In
February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use
asset, representing their right to use the underlying asset for the lease term, and a lease liability for all leases with terms
greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing
and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for the Company beginning July 1, 2020. The Company
is currently evaluating the impact that ASU 2016-02 will have on its consolidated financial statements.



In
March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting.
The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income
tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for the Company beginning
July 1, 2018 and will require us to prospectively recognize excess tax benefits and tax deficiencies in the consolidated statement
of income when the awards vest or are settled. Additionally, the guidance requires excess tax benefits to be presented as an operating
activity in the statement of cash flows rather than as a financing activity. The Company is currently evaluating the impact of
ASU 2016-09
on its consolidated financial statements.



F-10


Table of Contents






In
June 2016, the FASB issued ASU 2016-13, Financial Instruments-Measurement of Credit Losses on Financial Instruments, which
requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company
beginning July 1, 2021 and the Company is currently evaluating the impact that ASU 2016-13 will have on its consolidated financial
statements.



In
January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which clarifies
the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should
be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is required to be applied prospectively and
will be effective for the Company beginning July 1, 2019. The impact on our consolidated financial statements will depend on the
facts and circumstances of any specific future transactions.





NOTE
3 – Going Concern





The accompanying financial
statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has a shareholders’ deficit of $7,304,278, an accumulated deficit of $26,154,633
as of June 30, 2017, and has generated operating losses since inception. These factors, among others, raise substantial doubt about
the ability of the Company to continue as a going concern. The Company’s continuation as a going concern is dependent upon
its ability to generate revenues and its ability to continue raising capital from third parties.





On
February 28, 2017, LSW Holdings, LLC (“LSW”) purchased all outstanding shares of Series A Preferred Stock from our
former controlling shareholder. Our Vice President of International Sales is the Managing Member of LSW. Both parties to the agreement
assured management that the purchase agreement requires LSW to provide the Company sufficient capital to move forward with its
expansion plans. Management has recently obtained the executed agreement and determined that agreement contains no such requirement.
As a result, management is actively pursuing other funding arrangements with outside investors and creditors.



NOTE
4 – Inventory



As
of June 30, 2017 and 2016 inventory consisted of the following:



|                            |  | June 30, 2017 |         | June 30, 2016
|--------------------------- |  | ------------- | ------- | -------------
|Finished inventory          |  | $             | 216,711 |              
|Raw materials and packaging |  |               | 7,984   |              
|Total                       |  | $             | 224,695 |              



NOTE
5 – Prepaid Expenses and Other Current Assets



As
of June 30, 2017 and 2016 prepaid expenses and other current assets consisted of the following:



F-11


Table of Contents




|                                          |  | 2017 |         | 2016
|----------------------------------------- |  | ---- | ------- | ----
|Prepaid officers’ compensation            |  | $    | 521,916 |     
|Prepaid directors’ compensation           |  |      | 206,090 |     
|Prepaid marketing expenses                |  |      | 19,250  |     
|Other prepaid expenses and current assets |  |      | 27,082  |     
|Total                                     |  | $    | 774,338 |     



NOTE
6 – Property and Equipment



As
of June 30, 2017 and 2016 property and equipment consisted of the following:



|                                |  | June 30, 2017 |        | June 30, 2016
|------------------------------- |  | ------------- | ------ | -------------
|Vehicles                        |  | $             | 29,598 |              
|Furniture and equipment         |  |               | 41,042 |              
|Personal computers              |  |               | 3,315  |              
|                                |  |               | 73,955 |              
|Less:  accumulated depreciation |  |               | 25,822 |              
|Total                           |  | $             | 48,133 |              



NOTE
7 – Investments



On
September 18, 2015, the Company, through a series of transactions acquired 5,000,000 shares of Dollar Shots Club, Inc. (“DSC”)
in exchange for 2,000,000 shares of common stock. The shares of DSC are being carried on the accompanying balance sheet based
on the value of the shares of stock given in exchange for the investment. The Company is accounting for the investment on the
cost basis of accounting being that the shares represent approximately 5% of the total outstanding shares of DSC and the Company
does not have any significant influence in DSC.



As
of June 30, 2016, the Company concluded that the investment was impaired and recorded an impairment on this investment of $166,000.



NOTE
8 – Convertible Notes Payable



As
of June 30, 2017 and 2016, the Company’s convertible notes payable consisted of the following:



|                          |  | Interest Rates |  | Term |             | June 30, 2017 |  | June 30, 2016
|------------------------- |  | -------------- |  | ---- | ----------- | ------------- |  | -------------
|Convertible notes payable |  | 6% - 12%       |  |      | 0 - 2 years |               |  |              
|Discount                  |  |                |  |      |             |               |  |              
|Total                     |  |                |  |      |             |               |  |              



The
convertible notes are convertible to shares of the Company’s common stock at prices ranging from $.01 to 50% of market price.
For the years ended June 30, 2017 and 2016, interest expense on these notes, including amortization of the discount, was $172,594
and $26,762, respectively.



The
Company has determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion
amount constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with a corresponding
discount recorded to the associated debt. The excess of the derivative value over the face amount of the note is recorded immediately
to interest expense at inception. The Company recorded $222,127 and $0 of interest expense for the years ended June 30, 2017 and
2016, respectively, at the inception of the notes relating to the excess of derivative value over the face of the notes.





F-12


Table of Contents




NOTE 9 – Related Party Notes
Payable



As
of June 30, 2017 and 2016, the Company’s related party convertible notes payable consisted of the following:



|                                        |  | Interest Rate |    | Term |  | March 31, 2017 |  | June 30, 2016
|--------------------------------------- |  | ------------- | -- | ---- |  | -------------- |  | -------------
|Related party convertible notes payable |  |               | 6% |      |  | 0 - 1 year     |  |              
|Discount                                |  |               |    |      |  |                |  |              
|Total                                   |  |               |    |      |  |                |  |              



The
related party convertible notes are convertible to shares of the Company’s common stock at prices ranging from $.01 to 50%
of market price. For the years ended June 30, 2017 and 2016, interest expense on these notes, including amortization of the discount,
was $337,852 and $16,308, respectively.



As
of June 30, 2017, Jerry Grisaffi, our former Chairman of the Board, held two notes payable with principal amounts of $200,150
and $184,300. The $200,150 note, which is due on December 19, 2017, converts at 50% of the average of the 3 lowest bid prices
of the common stock during the 10 days prior to the conversion. The $184,300 note, which has been renewed through December 30,
2017, is convertible at $.01 with an anti-dilutive clause that becomes effective with any dilution of the Company’s common
stock greater than 1% of the shares outstanding at the time of split. Both notes accrue interest at 6%.

During
the year ended June 30, 2017 the Company made two (nonconvertible) notes payable to Mr. Grisaffi in connection with loans and
previously recorded as deferred compensation. The Company repaid $25,000 on these notes during the fourth quarter of 2017. The
remaining balance of principal and interest was converted to the $200,150 convertible note payable. Prior to conversion, interest
expense on the notes was $2,939 for the year ended June 30, 2017.



The
Company has determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion
amount constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability, with a corresponding
discount recorded to the associated debt. The excess of the derivative value over the face amount of the note is recorded immediately
to interest expense at inception. The Company recorded $44,901 and $0 of interest expense for the years ended June 30, 2017 and
2016, respectively, at the inception of the notes relating to the excess of derivative value over the face of the notes.



NOTE
10 – Note Payable-Other



On
September 1, 2016, the Company purchased used office furniture and equipment from its landlord. The Company executed a note payable
in the amount of $40,122 at an interest rate of 0% and with monthly payments of $1,115. The Company imputed interest on the note
and recorded a discounted note balance of $36,634 on September 1, 2016. The term of the note is three years. The balance on the
note was $26,130 on June 30, 2017. For the year ended June 30, 2017, interest expense on this note was $1,755.



NOTE
11 – Deferred Revenue



In
June 2015, the Company entered into an exclusive manufacture and supply agreement with Rodney Peterson (an unrelated third party)
or his designee, Rocky Mountain High Canada, Inc. (RMHC) for distribution rights to RMHC. Under the agreement, RMHC was required
to pay the Company $500,000 before June 30, 2015 and submit an additional $150,000 prior to a production run of 1,000,000 cans
of product covered under the agreement. The Company received $200,000 on July 29, 2015 and $300,000 on August 28, 2015, which
was recorded as deferred revenue as of June 30, 2016. The additional $150,000 was not received. The Company filed a breach of
contract lawsuit with the objective of recovering outstanding obligations. During the year ended June 30, 2017 the Company settled
the case with RMHC and issued 6,800,000 shares of common stock in exchange for the $500,000 already received.



NOTE
12 – Shareholders’ Deficit



F-13


Table of Contents




Common
Stock



During
the year ended June 30, 2017 the Company issued 248,535,354 shares of common stock, including 77,800,687 for convertible notes
payable conversions, 46,908,834 for warrant exercises, 29,724,139 for services rendered, 21,634,107 for compensation, 6,800,000
as part of a legal settlement, and 65,667,587 for cash. During the year ended June 30, 2016 the Company issued 101,495,350 shares
of common stock for convertible notes payable conversions, the acquisition of Dollar Shots Club, cash purchases, and services
rendered.



On
December 29, 2016 the Company executed a securities purchase agreement for the sale of 1,000,000 shares of its common stock. The
agreement includes a “true-up” provision whereby the Company must provide the purchaser additional shares of common
stock if the stock price is below a predetermined level six months from the date of the agreement. In accordance with this provision,
the Company was also required to reserve 10,000,000 shares of common stock in the event that the true-up provision is triggered.
The shares will be released if the provision is not triggered six months from the date of the agreement. The fair value of the
true-up calculation was $67,000 at inception of the agreement and $11,000 as of March 31, 2017. The true-up provision expired
on June 29, 2017 with no additional shares being issued.



On
March 14, 2017, the Board of Directors and holders of a majority of the voting capital stock of the Company approved an amendment
to the Company’s Articles of Incorporation to increase its authorized shares of common stock from 800,000,000 to 950,000,000.
The Board of Directors fixed March 14, 2017 as the record date for determining the holders of its voting capital stock entitled
to notice of these actions and receipt of this Information Statement. The increase in the authorization was effective June 7,
2017.



On
March 17, 2017, our Board of Directors approved the Rocky Mountain High Brands, Inc. 2017 Incentive Plan (the “2017 Incentive
Plan”). The purpose of the Incentive Plan is to provide a means for the Company to continue to attract, motivate and retain
management, key employees, consultants and other independent contractors, and to provide these individuals with greater incentive
for their service to the Company by linking their interests in the Company’s success with those of the Company and its shareholders.
The Plan provides that up to a maximum of 35,000,000 shares of the Company’s common stock (subject to adjustment) are available
for issuance under the Plan. The Board of Directors awards these shares at its sole discretion.



Also
on March 31, 2017, certain of the Company’s officers and directors returned a total of 25,041,732 shares of common stock
to treasury for cancellation. On that same date, these officers and directors were granted an equivalent number of restricted
shares of common stock under our 2017 Incentive Plan. The restricted shares so granted may not be transferred, sold, or encumbered
until six (6) months from the date of issue.



In
April and June 2017, a Board member was granted 7,000,000 and 13,000,000 options to purchase common stock, respectively. In May
2017 another Board member was granted 7,000,000 options. An additional 350,000 options were granted to a consultant to the Company
in April 2017. All options were granted through the 2017 Incentive Plan.



On
July 14, 2017 the Board of Directors increased the authorized shares in the 2017 Incentive Plan to 65,000,000.



Preferred Stock



On
March 14, 2017, the Board of Directors and holders of a majority of the voting capital stock of the Company approved
an amendment to the Company’s Articles of Incorporation to increase its authorized shares of preferred stock
from 10,000,000 to 20,000,000 of which 10,000,000 have been specifically designated to a series of preferred stock and
10,000,000 remain undesignated. The Board of Directors fixed March 14, 2017 as the record date for determining the holders of its voting
capital stock entitled to notice of these actions and receipt of this Information Statement. The increase in the
authorization was effective June 7, 2017.





Series A Preferred Stock







The
Company has 1,000,000 shares of Series A Preferred stock authorized and outstanding as of June 30, 2017 and 2016.



On
March 13, 2017, our Board of Directors approved a Certificate of Designation for our Series A Preferred stock. This document revises
and restates the rights, preferences and features of our Series A Preferred stock, which consists of 1,000,000 shares, all of
which are issued and outstanding. Holders of our Series A Preferred stock were formerly entitled to cast 400 votes for every share
held, and shares of Series A Preferred stock were convertible to common stock at a rate of 100 shares of common stock for every
share of Series A Preferred stock. Following the filing of the Certificate of Designation, holders of Series A Preferred stock
were entitled to cast 1,200 votes for every share held, and shares of Series A Convertible Preferred stock were convertible to
common stock at a rate of 1,200 shares of common stock for every share of Series A Preferred stock.



F-14


Table of Contents






On
July 5, 2017, the Company amended the Certificate of Designation for our Series A Preferred stock. The amendment changes the conversion
ratio of our Series A Preferred stock from 1,200 shares of common stock for every share of Series A Preferred stock to 100 shares
of common stock for every share of Series A Preferred stock. The amendment was approved by our board directors and the holder
of our Series A Preferred stock.



On
July 24, 2017, the Company’s Board of Directors approved an amendment to the Certificate of Designation for the Series A
Preferred stock that changed the voting rights back to 400 votes for every share of Series A Preferred stock.



Series
B Preferred Stock



The
Company has 5,000,000 shares of Series B Preferred stock authorized and none outstanding as of June 30, 2017 and 2016.



Series
C Preferred Stock



The
Company amended its Articles of Incorporation on November 13, 2015 to create a Series C Preferred stock, which are 12% interest
bearing, cumulative, exchangeable, non-voting, convertible preferred stock of the Company. Each Series C Preferred share has a
par value of $.001 and is convertible to 50 shares of common stock.



On
November 16, 2015, the holder of a convertible note aggregating $1,107,607 of principal and accrued interest, agreed to a dollar
for dollar exchange for same number of Preferred C shares. As of June 30, 2017 and 2016 there were 1,107,607 shares of Series
C Preferred shares outstanding.





The redemption value of
the Series C Preferred stock has been reclassified to current liabilities in accordance with the agreement executed between the
Company and the holder of the shares.



Series
D Preferred Stock



The
Company amended its Articles of Incorporation on March 21, 2016 to create the Series D Preferred stock class, a non-voting, non-interest
bearing convertible preferred stock with a par value of $.001. Each Series D preferred share is convertible to 100 shares of common
stock. As of June 30, 2017 and 2016, there are no Series D preferred shares outstanding.



Warrants



During
the year ended June 30, 2017 the Company granted 9,725,000 warrants to purchase common stock and 47,008,834 were exercised. During
the year ended June 30, 2016 the Company granted 39,000,000 warrants to purchase common stock and 3,658,914 were exercised. As
of June 30, 2017 and 2016, there were 56,934,325 and 94,218,159 warrants outstanding.



Options



During
the fourth quarter of 2017, the Company issued 27,000,000 options to purchase common stock to two new directors. The options have
an exercise price ranging from $.035 and $.045 and vested immediately. The Company recognized $1,459,134 as compensation expense.
The Company also granted 350,000 options to a vendor at an exercise price of $.045. None of these options had been exercised as
of June 30, 2017. There were no options granted or outstanding during fiscal year 2016. The options were valued using the Black-Scholes
model using an expected volatility of 114%, expected terms of 2 years, a risk-free interest rate of .84%, and no estimated dividends.



F-15


Table of Contents




NOTE
12 – Concentrations



During
the year ended June 30, 2017, the Company’s two largest customers accounted for approximately 50% and 7% of sales, respectively.
During the year ended June 30, 2016, the Company’s two largest customers accounted for approximately 27% and 26% of sales,
respectively.



NOTE
13 – Income Taxes



The
reconciliation of income tax benefit at the U.S. statutory rate of 34% to the Company’s effective rate for the periods presented
is as follows:



|                                         |  | 2017 |        | 2016
|---------------------------------------- |  | ---- | ------ | ----
|U.S federal statutory rate               |  |      | (34%)  |     
|State income tax, net of federal benefit |  |      | (0.0%) |     
|Increase in valuation allowance          |  |      | 34%    |     
|Income tax provision (benefit)           |  |      | 0.0%   |     





The
tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of June 30, 2017 and
2016 consisted of the following:



|                           |  | 2017 |             | 2016
|-------------------------- |  | ---- | ----------- | ----
|Deferred Tax Assets        |  |      |             |     
|Net Operating Losses       |  | $    | 4,482,000   |     
|Less:  Valuation Allowance |  | $    | (4,482,000) |     
|Deferred Tax Assets – Net  |  |      | —           |     



As
of June 30, 2017, the Company had approximately $13,184,000 of federal and state net operating loss carryovers (“NOLs”),
which begin to expire in 2027. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382
should there be a greater than 50% ownership change as determined under regulations.



In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs
for every period because it is more likely than not that all of the deferred tax asset will not be realized.



NOTE
14 – Commitments



Office
Lease



The
Company has a three-year lease for corporate office space. The lease commenced on September 1, 2016 with monthly payments of $7,715
in year one, $7,972 in year two, and $8,229 in year three. The lease is being accounted for on a straight-line basis over its
term.



Other
Leases



The
Company rents storage space from various third parties on a month-to-month basis.



Employee
Agreements



The
Company has entered into employment agreements with the following Board members and officers:



In
2013, the Company entered into a ten-year employment agreement with Jerry Grisaffi, Chairman of the Board of Directors. Under
the agreement, the Company agreed to compensate Mr. Grisaffi at a rate of $125,000 per year and to bonus obligations based on
the profitability of the Company. The Company issued 1,000,000 shares of Preferred



F-16


Table of Contents




Series
A stock to Mr. Grisaffi under the terms of the agreement. Mr. Grisaffi sold all of his shares of Preferred A stock in 2017 and
resigned from the Company’s Board of Directors effective June 30, 2017.



In
2014, the Company entered into a five-year employment agreement with  David M. Seeberger, Vice President – Legal.
Under the agreement, weagreed to compensate Mr. Seeberger at a rate of $120,000
per year and to bonus obligations based on the profitability of the Company. We also agreed to grant Mr. Seeberger an option to
purchase 2,000,000 shares of common stock for par value at any time after January 1, 2015.



In
January 2016, the Company entered into a five-year employment agreement with Michael Welch, then Chief Financial Officer. Under
the agreement, weagreed to compensate Mr. Welch at a rate of $120,000 per year and
to pay a bonus based on the profitability of the Company. Mr. Welch also became Chief Executive Officer on March 1, 2016. His
salary was increased to $150,000 per year. In addition, Mr. Welch received 10,000,000 warrants for common stock at a price of
$.001 on January 4, 2016.



NOTE
15 – Legal Proceedings



Claims
Against Donna Rayburn



RMHB
and Rayburn entered into a convertible promissory note dated February 2, 2015 for the original principal amount of $165,000 (with
a $5,000 original issue discount). On August 29. 2015, RMHB paid to Rayburn $197,774, representing return of principal and interested
earned during the life of the loan. On February 19, 2016, Rayburn issued an additional demand of interest and penalties totaling
$99,488. Rayburn has charged $137,262 in interest and penalties on a $160,000 loan for one year and 17 days for an effective annual
interest rate of 85.77%. As additional consideration for the note, RMHB was required to issue a warrant to Rayburn for 10,000,000
of common stock.



RMHB
has claims against Rayburn for violation of Florida Usury Laws. RMHB will seek a cancellation of the note and additional monetary
recovery in the total amount paid to Rayburn, plus additional recovery for all usurious interest charged. RMHB will also seek
to void the warrant for 10,000,000 shares of common stock, which was issued under a voidable note. The amount which RMHB will
seek from Rayburn is in excess of $300,000.



Arbitration
Claim of Roy J. Meadows Against Rocky Mountain High Brands, Inc. (RMHB) dated February 24, 2016

Meadows claims a breach of an exchange agreement dated November 3, 2015. RMHB has denied the breach. Meadows
has demanded that RMHB remove him as a Control Person under RMHB’s OTC Markets Disclosure Statement as of December 31, 2015
filed on January 29, 2016. Meadows has rejected the interest payment under the exchange agreement dated January 30, 2016. He has
not given an explanation of his rejection. Meadows also demands the exchange of the Series C Preferred back to the original $1,500,000
convertible note.



Meadows
has initiated arbitration claiming notice of an Arbitration Claim against RMHB. RMHB has objected to this claim, as well as to
the arbitration process itself. Meadows seeks damages of $2,947,094. He has further demanded that RMHB comply with an Agreement
dated November 16, 2015 which is a part of the litigation described in the disclosure above. This agreement, which was a requirement
of Meadows to execute the Exchange Agreement, requires the Company to issue warrants for common stock of 110,760,000 for not redeeming
the Series C Preferred Shares by March 24, 2016.



On
April 4, 2016, RMHB engaged the law firm of Allred Wilcox & Hartley PLLC to act as counsel in defending these claims.



As
a result of the arbitration, RMHB filed suit in Florida, Eighteenth Judicial Circuit Court of Seminole County, Florida, Rocky
Mountain High Brands, Inc. v. Roy Meadows, David Meadows et al, Case No. 2016-CA-000958-15-W.



The
Company filed suit for an injunction against continuation of the Meadows Arbitration. The Meadows Arbitration hearing currently
has no date for commencement of the Arbitration hearing. Shortly after the suspension of the Arbitration hearing, on April 20,
2016, false, malicious, and defamatory allegations were asserted by the Shareholder Alert inappropriately released by the Law
Office of A.A. McClanahan, Meadow’s attorney.



F-17


Table of Contents




The
Company has filed in the Seminole Suit a Motion for Leave To Amend its current suit to add claims against Meadows for usury, cancellation
of warrants and defamation as a result of the Shareholder Alert press release.



The
Company is investigating facts surrounding Meadows and others and may amend its Florida lawsuit to seek more than $20 Million
in damages and disgorgement of Meadows and Rayburn profits on questionable trading activities.



The
Amended Suit will deal with the following:



RMHB
has asserted usury claims in connection with $1,500,000 demand convertible note referenced below in the section pertaining to
the Meadows Arbitration Claim. RMHB seeks unspecified monetary damages in connection with the Meadows Note, and further seeks
cancellation of warrants for 41,454,851 and 13,641,974 shares of common stock issued to Meadows in connection with the Meadows
Note and cancellation of the Meadows Note.





During the six
months ended December 31, 2015, the Company issued 68,220,350 shares of common stock for the conversion of $104,220 of
convertible debt to Roy Meadows and Trinexus, Inc. prior to executing the exchange agreement to Series C preferred stock.





RMHB
believes that as a result of Meadows’ actions in this suit, the Arbitration is effectively waived and that the Court in
Seminole County, Florida will resolve this matter.



Meadows
has filed a counter claim in this suit for the damages he asserted in the arbitration claim. He has also filed for relief under
elderly laws of Florida.



192ndJudicial District Court of Dallas County Texas, filed February 16, 201, DC-17-02058. Rocky Mountain High Brands, Inc.
v. Dewmar International BMC, Inc. RMHB filed suit against Dewmar for breach of contract and for an accounting. RMHB is in the
process of obtaining a default judgment against Dewmar for its failure to file an answer to the suit.



134thJudicial District Court of Dallas County, Texas, filed April 28, 2017. Rocky Mountain High Brands, Inc. v Lyonpride
Music, LLC. RMHB filed suit against Lyonpride for fraud and for declaratory relief with respect to a contract between the parties.
RMHB seeks monetary damages against said Defendant.



134thJudicial District Court of Dallas County, Texas. Filed June 26, 2017. Rocky Mountain High Brands, Inc. v Statewide Beverage
Company, Inc. RMHB has filed suit for breach of contract, common law fraud and declaratory relief.



Los
Angeles Superior Court, BC669367, filed July 24, 2017. Statewide Beverage Company, Inc. v. Rocky Mountain High Brands, Inc.
Statewide filed a breach of contract claim, dealing with the same fact issues in the above case of RMHB v Statewide. RMHB still
has not been served in this case.



NOTE
16 – Acquisitions



Rocky
Mountain High Water Company LLC



In
July 2016, the Company entered into a business alliance with Poafpybitty Family, LLC to launch Eagle Spirit Spring Water, a line
of purified, high-alkaline spring water sourced from Native American tribal land in Oklahoma. The agreement calls for the Company
to pay a royalty on each gallon of water collected at the spring. Production of filtered spring water filled bottles commenced
in August 2016 and sales began in October 2016.



F-18


Table of Contents




In
consideration for the 20-year water and surface rights, and a related 10-year renewal option, the Company paid Poafpybitty Family,
LLC cash payments of $22,500 and issued a warrant for 500,000 shares of the Company’s common stock exercisable at $.03 per
share over a three-year period beginning July 27, 2016.



The
agreement grants the Company an exclusive right to develop land adjacent to the spring for commercial purposes as agreed to by
both parties. Additionally, the Company has agreed to grow hemp for experimental or commercial purposes on the land within three
years.



On
November 12, 2016, the agreement with the Poafpybitty Family was amended to give the Company a controlling voting interest of
75% of RMHW, while the Poafpybitty Family received 51% of the equity interest. The amended agreement is being accounted for as
a step-acquisition, with the resulting goodwill of $49,911 included in other assets. The Company is obtaining an outside valuation
of the rights to use the land and obtain the water described in the agreement. Beginning November 12, 2016, the operations of
RMHW are consolidated in the financial statements of RMHB.



NOTE
17 – Subsequent Events



Between
July 1 and September 27. 2017, the Company issued 6,740,928 shares of common stock. Of these shares, 6,240,928 were for debt conversions
and 500,000 were cash purchases.



On
July 28, 2017, we executed an agreement with Eagle Equities, LLC (“Eagle Equities”) to sell up to $500,000 in convertible
notes to Eagle Equities. On that same date, we issued a 12-month, convertible note bearing interest at 8% to Eagle Equities in
exchange for funding $220,000, net of fees. The note is convertible to common stock at a 45% discount to market based on a look-back
formula. The Company has the ability to obtain additional funding of $220,000 by issuing another convertible note to Eagle Equities
eight months from the date of the original note.



On
September 19, 2017, the Board of Directors approved a new Series E Preferred stock. Holders of Series E Preferred stock are entitled
to cast 2,000 votes per share of Series E Preferred stock on any proposal to increase our authorized capital stock, with no other
voting rights. Upon effectiveness of an increase in our authorized capital stock, all shares of Series E Preferred stock will
convert to common stock on a 1 for 1 basis. On the same day, the Board granted our Chairman 789,474 shares of Series E Preferred
stock as payment for his deferred compensation.



Also
on September 19, 2017, the Board of Directors and holders of a majority of the voting capital stock of the Company, approved an
amendment to the Company’s Articles of Incorporation to increase its authorized shares of common stock to 4,000,000,000.
The increase is expected to be effective in October 2017.



F-19


Table of Contents






Item
9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

No
events occurred requiring disclosure under Item 307 and 308 of Regulation S-K during the fiscal year ended June 30, 2017.



Item
9A. Controls and Procedures

As
required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our
disclosure controls and procedures as of the end of the fiscal year ended June 30, 2017. This evaluation was carried out under
the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures
include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed
under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer
and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based
upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure
controls and procedures were ineffective as of the end of the period covered by this annual report.

Management’s
Report on Internal Control over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial
reporting as of June 30, 2017 based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of June 30,
2017, our internal control over financial reporting was not effective. Our management identified the following material weaknesses
in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate
segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and
financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We
plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered
by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2018: (i) appoint additional
qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written
policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent
upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing
such funds, remediation efforts may be adversely affected in a material manner.

This
annual report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection
Act.

25


Table of Contents




Item
9B. Other Information

None.

PART
III

Item
10. Directors, Executive Officers and Corporate Governance

The
following table sets forth, as of September 27, 2017, the name, age and positions of our executive officers and directors.



|NAME                | AGE | POSITION                                                        
|------------------- | --- | ----------------------------------------------------------------
|Michael
    Welch   | 63  | Chairman
    of the Board, President and Chief Executive Officer
|                    |     |                                                                 
|Jens
    Mielke     | 51  | Chief
    Financial Officer                                     
|                    |     |                                                                 
|David
    Seeberger | 61  | Director
    and Vice President, Legal                          
|                    |     |                                                                 
|Charles
    Smith   | 60  | Director
    and Chief Operating Officer                        
|                    |     |                                                                 
|Winton
    Morrison | 79  | Director                                                        



The
business background and certain other information about our directors and executive officers is set forth below:



MICHAEL
WELCH – CHAIRMAN OF THE BOARD, PRESIDENT, AND CHIEF EXECUTIVE OFFICER



Michael
Welch joined the Company in January 2016 as Chief Financial Officer. He was appointed President and Chief Executive Officer in
February 2016. In September 2017 Mr. Welch was appointed Chairman of the Board of Directors.



Mr.
Welch brings more than thirty years of executive and financial management experience to the Rocky Mountain High Brands team. Prior
to joining RMHB, Mr. Welch served as CFO Managing Partner for Aventine Hill Partners, a professional services firm from July 2014
to December 2015. Mr. Welch served as Chief Financial Officer and Consultant for multiple small cap companies in Dallas, Texas
from June 2011 to June 2014. Mr. Welch was the Chief Financial Officer and one of the founders of Stephan Pyles Concepts, a Dallas-based,
privately-held restaurant holding company from February 2005 to May 2011.



In
the late 90’s, Mr. Welch was part of the founders group of Resources Global Professionals (RGP), a publicly-traded, international
consulting firm that was initially owned by Deloitte. Prior to his involvement with RGP, for more than ten years Mr. Welch was
employed by Landmark Land Company, a publicly traded multi-state real estate developer and operator of golf and tennis resorts
and hotels, commercial and residential real estate, life insurance, mortgage and savings and loans. His positions included Chief
Operating Officer, Vice President of Management Systems, and Controller. Mr. Welch also served as Chief Financial Officer of Oak
Tree Savings Bank, a subsidiary of Landmark Land Company and a statewide savings and loan based in New Orleans, LA.



Mr.
Welch is an alumnus of the audit staff at Deloitte and joined the firm immediately after earning a Bachelor of Business Administration
from the University of Oklahoma. Mr. Welch is a Louisiana CPA (inactive status) and has recently completed a term on a not-for-profit
board. Mr. Welch currently serves on an Advisory Board for a privately held services company with which he directed a management-led
buyout from the founder of the company.



JENS
MIELKE – CHIEF FINANCIAL OFFICER



Jens
Mielke joined the Company in August 2016 as Chief Financial Officer.



Mr.
Mielke has over 28 years’ experience in accounting and finance leadership positions. Prior to joining RMHB, Mr. Mielke was
National Partner, Technical Accounting for Aventine Hill Partners, a Texas-based professional services firm. He founded and led
that firm’s Technical Accounting Group where he provided technical accounting and finance services to public and private
clients. Prior to Aventine Hill, Mr. Mielke was Chief Financial Officer for a high-growth, publicly-traded retailer, but spent
the majority of his career at Deloitte where he was audit partner in the firm’s Dallas office. He also previously served
as senior financial analyst at PepsiCo’s corporate headquarters in Purchase, NY. His experience includes working with public
and private companies in strategic management, accounting, financial reporting, Sarbanes-Oxley compliance, investor relations,
initial and secondary public offerings, mergers, acquisitions and divestitures, process improvement and systems implementations.



Mr.
Mielke received his Master and Bachelor of Business Administration degrees from Southern Methodist University. He has been a Certified
Public Accountant in the State of Texas since 1991. He serves on the Board of Directors of the Dallas Chapter of Financial Executives
International.



CHARLES
SMITH – DIRECTOR, CHIEF OPERATING OFFICER, AND PRESIDENT OF EAGLE SPIRIT LAND AND WATER COMPANY



Charles
(Chuck) Smith joined the Company in February 2016 as a Director and Chief Operating Officer. In November 2016, Mr. Smith was also
appointed President of Eagle Spirit Land & Water Company.



26


Table of Contents




Within
the last six years, Mr. Smith has served in several key strategic roles entailing a wide-range of corporate governance. During
the time period from 2007 to 2014, Mr. Smith served as a Managing Partner and Managing Member of San Carlos Associates, a multi-million-dollar
investment entity located in Dallas, Texas. In addition, until the properties recently sold in 2011, Mr. Smith served as a former
Managing Partner and Managing member to several investment partnerships in Midland and El Paso, Texas, with indicated values that
exceed $30 million. These properties included Cornerstone Village and Villa De Madison. Similarly, Mr. Smith currently retains
a partnership interest and maintains a consulting relationship at Sawyers Mill in Arlington, Texas – an entity that he has
maintained a relationship with since the early 1990’s.



Mr.
Smith graduated with honors from University of Texas at Dallas with a Bachelor's Degree in Economics and Finance. He has been
an active participant in real estate investment opportunities for almost 35 years.



DAVID
SEEBERGER – DIRECTOR AND VICE PRESIDENT, LEGAL



David
Seeberger joined the Company in March 2016 as Vice President, Legal. In September 2017 Mr. Seeberger was appointed to the Board
of Directors.



Mr.
Seeberger received his B.A. from Grinnell College in Grinnell, Iowa and earned his J.D. from the University of Toledo - College
of Law in Toledo, Ohio. Mr. Seeberger is admitted to practice before the Supreme Court of Texas and the United States District
Courts for the Northern and Eastern Districts of Texas. He has also practiced in other State and Federal Courts on a pro hoc basis.
Mr. Seeberger is also admitted to practice before the Securities and Exchange Commission (SEC).



Mr.
Seeberger’s legal experience spans in excess of twenty-five years of professional practice within the Dallas, Texas area.
Mr. Seeberger has been privileged to associate with and has been a partner in various small law firms throughout his legal career
– for the past decade, Mr. Seeberger has been in private practice, and maintains membership in the State Bar of Texas and
the Dallas Bar Association.



Mr.
Seeberger’s career has included all areas of corporate and small business - due diligence, corporate and business litigation
as well as the areas associated therewith, including general legal counsel for corporate, real estate and commercial bankruptcy
proceedings and corporate turnaround efforts. Mr. Seeberger is an AV Preeminent rated attorney resulting from the AV Preeminent-Peer
Review Rating as conducted by Martindale-Hubbell. Mr. Seeberger has been engaged, contracted with, or employed by RMHB since 2012.



WINTON
MORRISON – INDEPENDENT DIRECTOR



Winton
“Win” Morrison joined the Company in February 2016 as a Director.



Mr.
Morrison is Principal Broker and Owner of Win Morrison Realty. Mr. Morrison spent many years as an IBM executive, based in the
former IBM Kingston facility. He operated his own retail business for a time (the Snowflake Ski Shop), and also worked as an antique
dealer for most of his adult life. Mr. Morrison opened the Kingston office of Win Morrison Realty in 1982. Win Morrison Realty
now has five offices to serve the region. Currently, the company is actively pursuing expansion into other locations within other
parts of the region.



Term
of Office



Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until
removed by the Board.



Family
Relationships



There
are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become
directors or executive officers.



27


Table of Contents




Involvement
in Certain Legal Proceedings



To
the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director,
executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to that time other than the Chapter
11 bankruptcy proceeding of the Company in 2013 - 2014; (2) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and
(4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

On
December 16, 2013 the Company filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Northern District
of Texas, Dallas Division, Case Number 13-36434-bjh-11. In early 2013, the Company sought to acquire a barbeque company and sought
to raise capital and entered into an agreement with Empire Capital LLC (“Empire”) to assist in the raising of capital
for the acquisition. By late 2013, the acquisition had fallen through due to the inability to obtain the needed financing. Empire
then sued the Company claiming it was owed approximately $200,000 for its services on behalf of the Company along with additional
damages. The Company disputed the claims, and filed the Chapter 11 bankruptcy to restructure its current indebtedness and to provide
a framework for moving forward. On May 22, 2014 the Company filed its Disclosure Statement and Plan of Reorganization, and on
July 2, 2014 a hearing was held and the Plan of Reorganization was confirmed by written order of the Bankruptcy Court dated July
11, 2014.

The
material terms of the Order Confirming Debtor’s Plan of Reorganization (the “Bankruptcy Order”) are contained
within the Amended Plan of Reorganization (the “Plan”). The Plan was a consensual plan, in that a majority of all
creditors in all classes and the equity holders voting voted to accept the Plan. The fundamental material terms of the Plan relate
to the allowance or disallowance of claims and treatment of allowed claims and classes of claims, and then to the means for execution
of the Plan.

The
Plan created five classes of creditors. The Plan contained a separate and distinct obligation of the Company for each of the classes
of creditors. The treatment of the Company’s obligation for each class was set forth in Article 5 of the Plan. The Class
1 Claimants consisted of allowed administrative claims, and were to be paid in full on the effective date of the Plan. The only
Class 1 Claimant was the Debtor’s attorney, who was paid in full after Court approval of his fee application. Class 2 Claimants
consisted of allowed non-insider general unsecured claims. Those Class 2 Claimants were to be paid in full on their claims by
receiving 5% of their allowed claim on the effective date of the Plan, and the remainder in 60 equal monthly payments. The Class
3 Claimants consisted of allowed insider general unsecured claims. The Class 3 Claimants consisted of three claimants and their
claims were resolved by the issuance of stock of the Debtor. Class 4 Claimants consisted of the allowed claims of the Empire Group,
as defined in Class 4. The Class 4 Claimants consisted of four claimants and their claims were resolved by the settlement of pending
bankruptcy and non-bankruptcy litigation and other matters with the Class 4 Claimants, which included the return of shares of
Debtor’s stock to treasury by one claimant of that Class and the issuance of other shares and delivery of a payment of $50,000.00
to another claimant of that Class. Class 5 Claimants consisted of allowed equity interest holders, and those claimants retained
their shares of stock in the Debtor.

The
means for execution of the Plan are set forth in Article 6 of the Plan, which contains the matters to be addressed by the Company,
primarily those dealing with the obligations to the classes of creditors.



Committees
of the Board



Until
further determination by the Board, the full Board of Directors will undertake the duties of the Audit Committee, Compensation
Committee, and Nominating Committee.





28


Table of Contents








Audit
Committee



We
do not have a separately designated standing audit committee. The entire Board of Directors performs the functions of an audit
committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed
by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent
accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit
with the independent accountants, reviews with management and the independent accountants our annual operating results, considers
the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid
to the independent auditor and the performance of the independent auditor. Our Board of Directors, which performs the functions
of an audit committee, does not have a member who would qualify as an “audit committee financial expert” within the
definition of Item 407(d)(5)(ii) of Regulation S-K. We believe that, at our current size and stage of development, the addition
of a special audit committee financial expert to the Board is not necessary.



Nominating
Committee



Our
Board of Directors does not maintain a nominating committee. As a result, no written charter governs the director nomination process.
Our size and the size of our Board, at this time, do not require a separate nominating committee.

When
evaluating director nominees, our directors consider the following factors:



|• | The
    appropriate size of our Board of Directors;                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | Our
    needs with respect to the particular talents and experience of our directors;                                                                                                                                                                            
|• | The
    knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light
    of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
|• | Experience
    in political affairs;                                                                                                                                                                                                                             
|• | Experience
    with accounting rules and practices; and                                                                                                                                                                                                          
|• | The
    desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members.                                                                                                                          



Our
goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional
experience. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.



Other
than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other
factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first
evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience
that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of
the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board
then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board
are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify
qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees,
although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not typically consider
shareholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our
best interests.



Code
of Conduct



In
August 2017 the Company adopted a Code of Conduct for all directors, officers, employees, and contractors.



29


Table of Contents




Item
11. Executive Compensation

Compensation
Discussion and Analysis

In
2013, the Company entered into a ten-year employment agreement with Jerry Grisaffi, Chairman of the Board of Directors. Under
the agreement, we agreed to compensate Mr. Grisaffi at a rate of $125,000 per year and to a bonus of $30,000 annually, or a greater
amount as approved by the Company's Board of Directors. We also issued 10,000,000 shares of Series A preferred stock, 1,000,000
shares of Series B preferred stock, and 1,500,000,000 shares of restricted common stock to Mr. Grisaffi under the terms of the
agreement. In June 2017, the Company and Mr. Grisaffi entered into a Indemnification and Release Agreement whereby both parties
agreed to mutually release each other from the terms of Mr. Grisaffi’s employment agreement.



In
2014, the Company entered into a five-year employment agreement with David M. Seeberger, Vice President – Legal. Under the
agreement, weagreed to compensate Mr. Seeberger at a rate of $120,000 per year and
to bonus obligations based on the profitability of the Company. We also agreed to grant Mr. Seeberger an option to purchase 2,000,000
shares of common stock for par value at any time after January 1, 2015.



In
January 2016, the Company entered into a five-year employment agreement with Michael Welch, Chief Financial Officer. Under the
agreement, weagreed to compensate Mr. Welch at a rate of $120,000 per year and to
pay a bonus based on the profitability of the Company. Mr. Welch also became Chief Executive Officer on March 1, 2016. His salary
was increased to $150,000 per year. In addition, Mr. Welch received 10,000,000 warrants for common stock at a price of $.001 on
January 4, 2016 that were exercisable on July 25, 2016.



Summary
Compensation Table



The
following table sets forth the compensation earned by Executive Officers during the last two fiscal years:





|Name
    and Principal Position                                                    |  | Year |      | Salary |  | Bonus |         | Stock
    Awards |  | Warrant
    Awards |   | Non-Equity
    Incentive Plan Compensation |  | Non-Qualified
    Deferred Compensation Earnings |           | All
    Other Compensation |  | Total
|---------------------------------------------------------------------------------- |  | ---- | ---- | ------ |  | ----- | ------- | ---------------- |  | ------------------ | - | ------------------------------------------ |  | ------------------------------------------------ | --------- | -------------------------- |  | -----
|                                                                                   |  |      |      |        |  |       |         |                  |  |                    |   |                                            |  |                                                  |           |                            |  |      
|                                                                                   |  |      |      |        |  |       |         |                  |  |                    |   |                                            |  |                                                  |           |                            |  |      
|Michael
    Welch, President and CEO (1)                                           |  |      | 2017 |        |  | $     | 150,000 |                  |  | $                  | — |                                            |  | $                                                | 26,274    |                            |  | $    
|                                                                                   |  |      | 2016 |        |  |       | 68,540  |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|Jens Mielke, Chief
    Financial Officer (2)                                       |  |      | 2017 |        |  |       | 98,077  |                  |  |                    | — |                                            |  |                                                  | 24,360    |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|Charles Smith, Chief
    Operating Officer (3)                                     |  |      | 2017 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | 87,000    |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|David Seeberger, Vice
    President Legal (4)                                      |  |      | 2017 |        |  |       | 120,000 |                  |  |                    | — |                                            |  |                                                  | 24,360    |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | 38,473  |                  |  |                    | — |                                            |  |                                                  |           |                            |  |      
|Lily Li, Vice President
    of International Sales (5)                             |  |      | 2017 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | 1,150,000 |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|Jerry Grisaffi, Founder,
    Former Secretary and Former Chairman of the Board (6) |  |      | 2017 |        |  |       | 12,946  |                  |  |                    | — |                                            |  |                                                  | 131,187   |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | 36,923  |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|Andrew Newsom, Former
    VP Strategy (7)                                          |  |      | 2017 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      
|                                                                                   |  |      | 2016 |        |  |       | —       |                  |  |                    | — |                                            |  |                                                  | —         |                            |  |      







30


Table of Contents








Narrative
Disclosure to the Summary Compensation Table



The
Company paid its officers as 1099 Contractors during the first two quarters of 2016 due to the shortage of operating cash in the
company during those time periods. All officers were converted to payroll during the third quarter of fiscal year 2016.



| | 1. | Michael
                                         Welch was employed as a 1099 contractor in December 2015 and received compensation of
                                         $10,000. Mr. Welch initially joined the Company as Chief Financial Officer on January
                                         1, 2016 at a salary of $120,000 per year and also became President and Chief Executive
                                         Officer on March 1, 2016 and also served as Chief Financial Officer until August 22,
                                         2016. His salary was increased to $150,000 per year. In addition, Mr. Welch received
                                         10,000,000 warrants with an anti-dilution clause and a cashless exercise option for common
                                         stock at a strike price of $.001 on January 4, 2016 which were exercised on July 25,
                                         2016 for 10,434,419 shares of common stock. On February 25, 2017, Mr. Welch agreed to
                                         take 60% of his base salary in shares of common stock. During fiscal year 2017, Mr. Welch
                                         was granted an additional 755,000 shares of common stock as compensation.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Jens
                                         Mielke joined the Company as Chief Financial Officer on August 22, 2016 at a salary of
                                         $120,000 per year. At that time, Mr. Mielke agreed to take 50% of his base salary in
                                         shares of common stock. Prior to joining the Company as an officer in August 2016, Mr.
                                         Mielke earned $1,892 as a 1099 contractor in July and August 2017. During fiscal year
                                         2017, Mr. Mielke was granted an additional 700,000 shares of common stock as compensation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Charles
                                         (Chuck) Smith is an investor in the Company, and is a member of the Board of Directors
                                         and is Chief Operating Officer. He has agreed to forego a salary until the Company is
                                         fully-funded. Mr. Smith was awarded 7,000,000 warrants with an anti-dilution clause and
                                         a cashless exercise option for common stock at a strike price of $.001 on February 28,
                                         2016 for his service on the Board of Directors. His options were exercised on July 29,
                                         2016 for 7,216,500 shares of common stock, which is included in the Director Compensation
                                         Table. During fiscal year 2017, Mr. Smith was granted 2,500,000 shares of common stock
                                         as compensation.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | David
                                         Seeberger’s contract specifies that he receive compensation at the rate of $120,000
                                         per year once the Company is fully-funded and Mr. Seeberger was awarded 2,000,000 shares
                                         of the Company’s common stock on August 21, 2014 valued at $33,200 at the time
                                         of issuance. Since the Company has not yet received fully-funded status, he was paid
                                         $62,915 in fiscal year 2016 as a 1099 contractor. The Company added Mr. Seeberger to
                                         its payroll as of March 1, 2016 at a salary of $120,000 per year. In addition, Mr. Seeberger
                                         received 6,000,000 warrants with an anti-dilution clause and a cashless exercise option
                                         for common stock at a strike price of $.001 on January 4, 2016, which were exercised
                                         on July 29, 2016 for 6,282,771 shares of common stock. On February 25, 2017, Mr. Seeberger
                                         agreed to take 50% of his base salary in shares of common stock. During fiscal year 2017,
                                         Mr. Seeberger was granted an additional 700,000 shares of common stock as compensation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | Lily
                                         Li was appointed Executive Vice President on December 20, 2016. She agreed to forego
                                         a salary, but received compensation via common stock grants. In December 2016, Ms. Li
                                         exercised 5,000,000 warrants that had been granted to her prior to her employment with
                                         the Company. In February 2017 Ms. Li was granted 10,000,000 shares of common stock as
                                         compensation.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | Jerry
                                         Grisaffi’s employment contract called for compensation at $125,000 per year. In
                                         fiscal year 2016 he received $59,423 and in fiscal year 2017 he received $12,946 before
                                         he agreed to suspend his salary. In the Indemnification and Release Agreement executed
                                         by Mr. Grisaffi and the Company, he agreed to forego $112,054
related to fiscal year 2017 unpaid compensation. Mr. Grisaffi resigned from the Company on June 30, 2017.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



31


Table of Contents






| | 7. | Andrew
                                         Newsom was employed by the Company as a 1099 contractor in fiscal year 2016 and earned
                                         $10,080. In addition, Mr. Newsom received 4,000,000 warrants with an anti-dilution clause
                                         and a cashless exercise option for common stock at a strike price of $.001 on January
                                         4, 2016 that were exercised on July 29, 2016 for 4,188,514 shares of common stock. Mr.
                                         Newsom ended his contract with the Company in April 2016.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Outstanding
Equity Awards at June 30, 2017 Table



The
table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive
officer as of June 30, 2017:





OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END



|Name                                                                        |  |  | Number
                                         of Securities Underlying Unexercised Options Warrants (#) Exercisable |  |  |  | Number
                                         of Securities Underlying Unexercised Options Warrants (#) Unexercisable |  |  |  | Equity
                                         Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Warrants
                                         (#) |  |  |  | Warrant
                                         Exercise  Price  ($) |  |  |  | Warrant
                                         Expiry Date |  |  |  | Number
                                         of Shares or Units of Stock That Have Not Vested  (#) |  |  |  | Market
                                         Value of Shares or Units of Stock That Have Not Vested ($) |  |  |  | Equity
                                         Incentive  Plan Awards:  Number of Unearned  Shares, Units
                                         or Other Rights That Have Not Vested  (#) |  |  |  | Equity
                                         Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights
                                         That Have Not  Vested (#) | 
|--------------------------------------------------------------------------- |  |  | --------------------------------------------------------------------------------------------------------------------- |  |  |  | ----------------------------------------------------------------------------------------------------------------------- |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --------------------------------------------------------------------- |  |  |  | ------------------------------------------------------------ |  |  |  | ----------------------------------------------------------------------------------------------------- |  |  |  | ---------------------------------------------------------------------------------------------------------- |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|David Seeberger, Director and VP Legal
                                 (1) |  |  | —                                                                                                                     |  |  |  | —                                                                                                                       |  |  |  | —                                                                                                                                                                                 |  |  |  | —                                                                     |  |  |  | —                                                            |  |  |  | —                                                                                                     |  |  |  | —                                                                                                          |  |  |  | —                                                                                                                                                                                             |  |  |  | —                                                                                                                                                                                                          | 





Narrative
Disclosure to the Outstanding Equity Awards Table



| | 1. | David
                                         Seeberger’s employment contract calls for him to be granted 2,000,000 options for
                                         shares of common stock at par value any time after January 1, 2015. Mr. Seeberger has
                                         not yet been granted those options. If granted, these options would have had a value
                                         of $139,000 as of June 30, 2017.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



32


Table of Contents


Compensation
                                         of Directors Table



The
table below summarizes all compensation paid to our directors during the year ended June 30, 2017:



|                  |  | Fees
    Earned or Paid in Cash |        | Stock
    Awards |  | Option
    Awards |         | Non-Equity
    Incentive Plan Compensation |  | Non-Qualified
    Deferred Compensation Earnings |           | All
    Other Compensation |  | Total
|----------------- |  | ------------------------------- | ------ | ---------------- |  | ----------------- | ------- | ------------------------------------------ |  | ------------------------------------------------ | --------- | -------------------------- |  | -----
|                  |  |                                 |        |                  |  |                   |         |                                            |  |                                                  |           |                            |  |      
|                  |  |                                 |        |                  |  |                   |         |                                            |  |                                                  |           |                            |  |      
|Name              |  |                                 |        |                  |  |                   |         |                                            |  |                                                  |           |                            |  |      
|                  |  |                                 |        |                  |  |                   |         |                                            |  |                                                  |           |                            |  |      
|Charles
    Smith |  | $                               | —      |                  |  | $                 | 87,000  |                                            |  | $                                                | —         |                            |  | $    
|Jerry Grisaffi    |  |                                 | 12,946 |                  |  |                   | 131,187 |                                            |  |                                                  | —         |                            |  |      
|Winton Morrison   |  |                                 | —      |                  |  |                   | 12,180  |                                            |  |                                                  | —         |                            |  |      
|Gerry David       |  |                                 | 16,000 |                  |  |                   | —       |                                            |  |                                                  | 1,098,316 |                            |  |      
|Kevin Harrington  |  |                                 | —      |                  |  |                   | —       |                                            |  |                                                  | 340,777   |                            |  |      





Narrative
Disclosure to the Director Compensation Table





Both Charles Smith and
Winton Morrison became Board Members in February 2016 and are not included in this table. As Board members, the Company agreed
to issue each of them 7,000,000 warrants with an anti-dilution clause and a cashless exercise option for common stock at a strike
price of $.001 and exercisable for a five-year period after a one year holding period. Both Mr. Smith and Mr. Morrison exercised
their warrants on July 29, 2016 in exchange for 7,216,500 shares of common stock.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The
following table sets forth, as of September 27, 2017, the beneficial ownership of the Company’s capital stock by each executive
officer and director, by each person known to beneficially own more than 5% of our common stock and by the executive officers
and directors as a group. The table gives effect to the Series E Preferred stock approved by the Board of Directors on September
19, 2017 and the issuance of 789,744 shares of Series E Preferred stock issued to our Chairman of the Board on the same day. Except
as otherwise indicated, all shares are owned directly and the percentage shown is based on 793,266,046 shares of common stock
issued and outstanding.





|Title of class                                            | Name and address of beneficial owner(1)                                        | Amount of
        beneficial ownership | Percent of class(2) | Percent of Voting Power –All Other Actions(3) | Percent of Voting Power – Actions to Increase Authorized Stock(4)
|--------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------- | ------------------- | --------------------------------------------- | -----------------------------------------------------------------
|Current Executive Officers & Directors:                   |                                                                                |                                       
|Common Stock                                              | Michael R. Welch(5)
        10626 Cox Lane
        Dallas, TX 75229            | 17,648,097                             | 1.97%               | 1.41%                                         | 57.56%                                                           
|Common Stock                                              | Jens R. Mielke
        4403 Vandelia St.
        Dallas, TX 75219              | 2,250,250                              | 0.25%               | 0.19%                                         | 0.08%                                                            
|Common Stock                                              | Charles Smith
        479 Medina Dr.
        Highland Village, TX 75077        | 11,964,901                             | 1.34%               | 1.00%                                         | 0.43%                                                            
|Common Stock                                              | David M. Seeberger
        1252 N. Selva
        Dallas, TX 75218              | 14,845,074                             | 1.66%               | 1.24%                                         | 0.54%                                                            
|Common Stock                                              | Winton Morrison
        277 Driftwood Rd., SE
        St. Petersburg, FL 33705 | 9,629,000                              | 1.08%               | 0.81%                                         | 0.35%                                                            
|Common Stock                                              | Lily Li(6)
        4858 Route 32
        Catskill, NY 12414                    | 116,000,000                            | 12.97%              | 34.86%                                        | 15.01%                                                           
|Common Stock Total of All Current Directors and Officers: | 172,337,322                                                                    | 19.27%                                 | 39.51%              | 73.97%                                       
|                                                          |                                                                                |                                        |                     |                                              
|More than 5% Beneficial Owners                            |                                                                                |                                        |                     |                                              
|Series A Preferred Stock                                  | LSW Holdings, LLC(7)                                                           | 1,000,000                              | 100%                | 33.52%                                        | 14.43%                                                           
|Series E Preferred Stock                                  | Michael Welch                                                                  | 789,474                                | 100%                | 0%                                            | 56.96%                                                           





33


Table of Contents




(1)As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting
of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct
the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial
ownership" of any security that such person has the right to acquire within 60 days after such date.

(2)Based on 793,266,046 shares of common stock issued and outstanding as of September 19, 2017, together with 100,000,000 shares
of common stock issuable upon conversion of Series A Preferred Stock and 789,474 shares of common stock issuable upon conversion
of Series E Preferred Stock (894,055,520 shares total).

(3)Based on a total of 1,193,266,046 possible votes, consisting of: (i) 793,266,046 shares of common stock issued and outstanding
as of September 19, 2017; and (ii) 1,000,000 shares of Series A Preferred Stock, which are entitled to vote together with the
holders of our common stock on all matters submitted to shareholders at a rate of 400 votes for each share held.



(4)Based on a total of 2,772,214,046 possible votes, consisting of: (i) 793,266,046 shares of common stock issued and outstanding
as of September 19, 2017; (ii) 1,000,000 shares of Series A Preferred Stock, which are entitled to vote together with the holders
of our common stock on all matters submitted to shareholders at a rate of 400 votes for each share held; and (iii) 789,474 shares
of Series E Preferred Stock, which are entitled to cast 2,000 votes on any proposal to increase our authorized capital stock,
with no other voting rights



(5)Beneficial ownership for Michael Welch includes 16,858,623 shares of common stock, and 789,474 shares of Series E Preferred
Stock, which are convertible to common stock on a 1 for 1 basis, and which are entitled to cast 2,000 votes on any proposal to
increase our authorized capital stock, with no other voting rights.



(6)Beneficial ownership for Lily Li includes 16,000,000 shares of common stock, and 1,000,000 shares of Series A Preferred
Stock, which are convertible to common stock on a 1 for 100 basis and are entitled to vote together with the holders of our common
stock on all matters submitted to shareholders at a rate of 400 votes for each share held.



(7)Lily Li is the Managing Member of LSW Holdings, LLC, and, in that capacity, she has the authority to direct voting and investment
decisions with regard to its shares of capital stock.



Item
13. Certain Relationships and Related Transactions, and Director Independence

Except
as described below, there have been no transactions or presently proposed transactions since our incorporation to which we have
been a participant in which: (1) the amount involved exceeded or will exceed the lesser of: (i) $120,000, or (ii) one percent
of the average of our total assets at year-end for the last two completed fiscal years; and (2) any of our directors or executive
officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, more
than 5% of any class of our voting securities, nor any members of the immediate family (including spouse, parents, children, siblings,
and in-laws) of any of the foregoing persons, has any material interest, direct or indirect:



34


Table of Contents




| | 1. | In
    2013, we entered into a ten-year employment agreement with Jerry Grisaffi, Chairman of the Board of Directors. Under the agreement,
    we agreed to compensate Mr. Grisaffi at a rate of $125,000 per year and to bonus obligations based on the profitability of
    the company. We issued 1,000,000 shares of Preferred Series A stock to Mr. Grisaffi under the terms of the agreement.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | In
    2014, we entered into a five-year employment agreement with Thomas Shuman, our former President. Under the agreement, we agreed
    to compensate Mr. Shuman at a rate of $120,000 per year and to bonus obligations based on the profitability of the company.
    We issued 21,000,000 shares of common stock and warrants to purchase 20,000,000 shares of common stock, exercisable in June
    2015 to Mr. Shuman under the terms of the agreement.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | On
    February 15, 2016, the Company terminated its employment agreement with Mr. Shuman. As a part of the settlement with Mr. Shuman,
    the Company agreed to pay him $30,000 over a three-month period commencing on March 15, 2016. In turn, Mr. Shuman agreed to
    the cancellation of his warrants to purchase 20,000,000 shares of common stock and returned to the Company 10,000,000 shares
    of common stock.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | 4. | In January 2016, the Company entered into
a five-year employment agreement with Michael Welch, then Chief Financial Officer. Under the agreement, we agreed to compensate
Mr. Welch at a rate of $120,000 per year and to pay a bonus based on the profitability of the Company. Mr. Welch also became Chief
Executive Officer on March 1, 2016. His salary was increased to $150,000 per year. In addition, Mr. Welch received 10,000,000 warrants
for common stock at a price of $.001 on January 4, 2016. During fiscal year 2017, Mr. Welch was granted an additional 755,000 shares
of common stock as compensation.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | In July 2014, the Company entered into
a five-year employment agreement with David M. Seeberger, Vice President – Legal. Under the agreement, weagreed to compensate Mr. Seeberger at a rate of $120,000 per year and to bonus obligations based on the profitability of
the Company. We also agreed to grant Mr. Seeberger an option to purchase 2,000,000 shares of common stock for par value at any
time after January 1, 2015. During fiscal year 2017, Mr. Seeberger was granted an additional 700,000 shares of common stock as
compensation.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | As
    of June 30, 2017 and 2016, the Company had notes payable to our former Chairman of the Board and shareholder Jerry Grisaffi
    $384,450 and $11,000, respectively. Accrued interest on these notes as of June 30, 2017 was $8,291. There was no accrued interest
    as of June 30, 2016.  Two notes comprise the total amount of $384,450 as of June 30, 2017.  One note in
    the amount of $184,300 relates to Mr. Grisaffi’s deferred compensation in fiscal years 2015 and 2016.  The
    other note in the amount of $200,150 relates to advances Mr. Grisaffi made to the Company.  Both notes bear interest
    at 6% and are convertible to common stock at prices ranging from $.01 to 50% of market.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | 7. | In June 2017, Mr, Grisaffi resigned from the Board of Directors. In
connection with his resignation, the Company and Mr. Grisaffi entered into a Indemnification and Release Agreement whereby both
parties agreed to mutually release each other from the terms of Mr. Grisaffi’s employment agreement.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | On May 19, 2017 the Company made a convertible
promissory note to LSW Holdings, LLC (“LSW”). Lily Li, our Executive Vice President is Managing Member of LSW. The
principal amount of the note is $79,000 with a term of six months. The note bears interest at 6% annually and is convertible to
the Company’s common stock at 50% of market price, as defined in the note. On July 11, 2017 the Company made another convertible
promissory note to LSW. The principal amount of the note is $100,000 with a term of six months. The note bears interest at 6% annually
and is convertible to the Company’s common stock at 50% of market price, as defined in the note.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





We
are not a “listed issuer” within the meaning of Item 407 of Regulation S-K and there are no applicable listing standards
for determining the independence of our directors. Applying the definition of independence set forth in Rule 4200(a)(15) of The
NASDAQ Stock Market, Inc., we have one independent director, Winton Morrison.



Item
14. Principal Accountant Fees and Services



The
following table presents the aggregate fees billed for each of the last two fiscal years by the Company’s independent registered
public accounting firm, Paritz & Company, P.A., in connection with the audit of the Company’s consolidated financial
statements and other professional services rendered.



|Year Ended: |               | Audit Services |  | Audit Related Fees |        | Tax Fees |  | Other Fees
|----------- | ------------- | -------------- |  | ------------------ | ------ | -------- |  | ----------
|            | June 30, 2017 |                |  | $                  | 40,500 |          |  | $         
|            | June 30, 2016 |                |  | $                  | 38,000 |          |  | $         







Audit
fees represent the professional services rendered for the audit of the Company’s annual financial statements and the review
of the Company’s financial statements included in quarterly reports, along with services normally provided by the accounting
firm in connection with statutory and regulatory filings or other engagements. Audit-related fees represent professional services
rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit
or review of the Company’s consolidated financial statements that are not reported under audit fees.



Tax
fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning. All other
fees represent fees billed for products and services provided by the accounting firm, other than the services reported for the
other categories.



35


Table of Contents




PART
IV



Item
15. Exhibits, Financial Statements Schedules





(a)
Financial Statements and Schedules

The
following financial statements and schedules listed below are included in this Form 10-K.

| | 3.1   | Articles of Incorporation, as Amended(1)                                                                                                                                      
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                               
| | 3.2   | By-laws, as Amended(1)                                                                                                                                                        
| |       |                                                                                                                                                                               
| | 3.3   | Certificate of Designation for Series A Preferred Stock(3)                                                                                                                    
| |       |                                                                                                                                                                               
| | 3.4   | Certificate of Amendment to Certificate of Designation for Series A Preferred Stock(6)                                                                                        
| |       |                                                                                                                                                                               
| | 3.5   | Second Certificate of Amendment to Certificate of Designation for Series A Preferred Stock(7)                                                                                 
| |       |                                                                                                                                                                               
| | 3.6   | Certificate of Designation for Series E Preferred Stock(8)                                                                                                                    
| |       |                                                                                                                                                                               
| | 10.1  | Demand and Convertible Note issued to Roy Meadows dated March 25, 2015*                                                                                                       
| |       |                                                                                                                                                                               
| | 10.2  | Convertible Promissory Note issued to Roy Meadows dated October 13, 2015(1)                                                                                                   
| |       |                                                                                                                                                                               
| | 10.3  | Convertible Promissory Note issued to Donna Rayburn dated February 2, 2015(1)                                                                                                 
| |       |                                                                                                                                                                               
| | 10.4  | Warrant issued to Roy Meadows dated October 30, 2015(1)                                                                                                                       
| |       |                                                                                                                                                                               
| | 10.5  | Warrant issued to Roy Meadows dated July 2, 2014(1)                                                                                                                           
| |       |                                                                                                                                                                               
| | 10.6  | Warrant issued to Donna Rayburn dated February 2, 2015(1)                                                                                                                     
| |       |                                                                                                                                                                               
| | 10.7  | Employment Agreement with Michael Welch(1)                                                                                                                                    
| |       |                                                                                                                                                                               
| | 10.8  | Employment Agreement with Jerry Grisaffi(1)                                                                                                                                   
| |       |                                                                                                                                                                               
| | 10.9  | Employment Agreement with David M. Seeberger(1)                                                                                                                               
| |       |                                                                                                                                                                               
| | 10.10 | Service Agreement for offices at 9101 LBJ Freeway, Suite 200, Dallas, TX(1)                                                                                                   
| |       |                                                                                                                                                                               
| | 10.11 | Exclusive Distributorship Agreement with EpicGroup One, LLC(1)                                                                                                                
| |       |                                                                                                                                                                               
| | 10.12 | Distributorship Agreement with M&S Up North Distributing (Colorado) (1)                                                                                                       
| |       |                                                                                                                                                                               
| | 10.13 | Distributorship Agreement with M&S Up North Distributing (Iowa) (1)                                                                                                           
| |       |                                                                                                                                                                               
| | 10.14 | Distributorship Agreement with M&S Up North Distributing (Wisconsin) (1)                                                                                                      
| |       |                                                                                                                                                                               
| | 10.15 | Distributorship Agreement with North Texas Mountain Valley Water Corporation(1)                                                                                               
| |       |                                                                                                                                                                               
| | 10.16 | Distributorship Agreement with Dr. Pepper-Royal Crown Bottling Company(1)                                                                                                     
| |       |                                                                                                                                                                               
| | 10.17 | Distributorship Agreement with Vega Bros. Sales and Distribution, LLC(1)                                                                                                      
| |       |                                                                                                                                                                               
| | 10.18 | Product Consulting Agreement with MBA Beverage Group, Inc. (1)                                                                                                                
| |       |                                                                                                                                                                               
| | 10.19 | Sales Brokerage Services Agreement with Function Brands, LLC(1)                                                                                                               
| |       |                                                                                                                                                                               
| | 10.20 | Exclusive Manufacture and Supply Agreement with Rodney Peterson(1)                                                                                                            
| |       |                                                                                                                                                                               
| | 10.21 | Engagement Letter with Carter, Terry, and Co. (1)                                                                                                                             
| |       |                                                                                                                                                                               
| | 10.22 | Statement of Work and Work Order with Upstart Food Brands(1)                                                                                                                  
| |       |                                                                                                                                                                               
| | 10.23 | Distribution Agreement with North Texas Mountain Valley Water Corporation(2)                                                                                                  
| |       |                                                                                                                                                                               
| | 10.24 | Distribution Agreement with North Texas Mountain Valley Water Corporation(2)                                                                                                  
| |       |                                                                                                                                                                               
| | 10.25 | Water Purchase Agreement(2)                                                                                                                                                   
| |       |                                                                                                                                                                               
| | 10.26 | Operating and Management Agreement(2)                                                                                                                                         
| |       |                                                                                                                                                                               
| | 10.27 | Membership Interest Purchase Agreement(2)                                                                                                                                     
| |       |                                                                                                                                                                               
| | 10.28 | Rocky Mountain High Brands, Inc. 2017 Incentive Plan(4)                                                                                                                       
| |       |                                                                                                                                                                               
| | 10.29 | Consulting Agreement with Gerry David(5)                                                                                                                                      
| |       |                                                                                                                                                                               
| | 10.30 | Consulting Agreement with Kevin Harrington(5)                                                                                                                                 
| |       |                                                                                                                                                                               
| | 10.31 | First Amended Operating and Management Agreement of Rocky Mountain High Water Company, LLC*                                                                                   
| |       |                                                                                                                                                                               
| | 10.32 | Indemnification and Release Agreement with Jerry Grisaffi*                                                                                                                    
| |       |                                                                                                                                                                               
| | 10.33 | LyonPride Music Sponsorship/Promo/Marketing Agreement with Rocky Mountain High Brands, Inc.*                                                                                  
| |       |                                                                                                                                                                               
| | 10.34 | Vista Capital Investments, LLC Convertible Note dated May 10, 2017*                                                                                                           
| |       |                                                                                                                                                                               
| | 10.35 | Lucas Hoppel Convertible Note dated June 29, 2017*                                                                                                                            
| |       |                                                                                                                                                                               
| | 10.36 | LSW Holdings, LLC Convertible Promissory Note dated July 11, 2017*                                                                                                            
| |       |                                                                                                                                                                               
| | 10.37 | Eagle Equities, LLC - Securities Purchase Agreement and Convertible Redeemable Notes Payable*                                                                                 
| |       |                                                                                                                                                                               
| | 21.1  | List of Subsidiaries(1)                                                                                                                                                       
| |       |                                                                                                                                                                               
| | 31.1  | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*  
| |       |                                                                                                                                                                               
| | 31.2  | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*  
| |       |                                                                                                                                                                               
| | 32.1  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
| |       |                                                                                                                                                                               
| | 101   | Materials from the Company’s Annual Report on Form 10-K for the year ended June 30, 2017 formatted in Extensible Business Reporting Language (XBRL)*                          







#Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed”
or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or deemed
“furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and
otherwise is not subject to liability under these sections.



36


Table of Contents




SIGNATURES

In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Rock
Mountain High Brands, Inc.

By:
/s/ Michael Welch
Michael Welch
Chairman of the Board of Directors,

President
and Chief Executive Officer
October 11, 2017



In
accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:

By:
/s/ Michael Welch
Michael Welch
Chairman of the Board of Directors,

President
and Chief Executive Officer
October 11, 2017





By:
/s/ Jens Mielke
Jens Mielke
Chief Financial Officer and Principal Accounting Officer
October 11, 2017



By:
/s/ David SeebergerDavid SeebergerDirector and Vice President. LegalOctober 11, 2017



By:
/s/ Charles Smith
Charles Smith
Director and Chief Operating Officer
October 11, 2017



By:
/s/ Winton Morrison
Winton Morrison
Director
October 11, 2017







37