The estimated fair value of the derivative instruments were valued using the Black-Scholes option pricing model, using the following assumptions as of DecemberMarch 31, 2016:2018:

EstimateEstimated Dividends			None
Expected Volatility			1.1	%162.6%
Risk Free Interest Rate			.53	%1.723%
Expected Termterm			.1-.86 .1 to 4.5 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.

Capitalized Software

Direct costs related to software development, including coding, website application development, infrastructure development and graphics development, are capitalized and included in other assets. Amortization is provided for on a straight-line basis over the useful life of the software. Costs related to planning, content development, and operating and maintaining software 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 anassetmaynotberecoverable.TheCompanyassessestherecoverabilityoftheassetsbasedontheundiscountedfuturecashflowandan 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. No impairment charges were recorded during the sixthree months ended DecemberMarch 31, 2016 and2015.2018 and 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 counterpartytoearntheequityinstrumentsisreachedor(ii)thedateatwhichthecounterparty'sperformanceiscounterparty 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 shareholders’ 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) deferredtaxconsequencesoftemporarydifferencesresultingfrommattersthathavebeenrecognizedinanentity’sfinancialstatementsdeferred 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 likelythannotsomeportionorallofthedeferredtaxassetswillnotberealized.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.

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 $2,059,946$985,464 and an accumulated deficit of $20,019,075$33,994,478 as of DecemberMarch 31, 2016,2018 and has generated operating losses since inception. These factors, amongothers,raisesubstantialdoubtabouttheabilityoftheCompanytocontinueasagoingconcern.TheCompany’scontinuationas agoingconcernisdependentuponitsabilitytogeneraterevenuesanditsabilitytocontinueraisingcapitalfromthirdparties.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.

On September 9, 2016,October 12, 2017, the Company its controlling shareholder, andentered into an outside investor group executed a letter of intent granting the investor group the optionEquity Financing Agreement (“EFA”) with GHS Investments, LLC (“GHS”), which provides for GHS to purchase 100%up to $12,000,000 of the Company’s Series A Preferred Stock, which representscommon stock over a controlling interest in the Company. The agreement between the parties requires that the investors provide24-month period based on a contractually agreed upon market discount. In February 2018 the Company began sales of common stock to GHS under the EFA. Management believes the EFA will provide sufficient capital to move forward with its expansion plans. The acquisition is expected to close on or before February 28, 2017.cash flows until cash flows from operations become consistently positive.

NOTE 4 – Inventory

As of March 31, 2018 and December 31, 2016 and June 30, 2016,2017, inventory consisted of the following:

NOTE 5 – Prepaid Expenses and Other Current Assets

As of March 31, 2018 and December 31, 2016 and June 30, 2016,2017, prepaid expenses and other current assets were as follows:

NOTE 6 – Property and Equipment

As of March 31, 2018 and December 31, 2016 and June 30, 2016,2017, property and equipment were as follows:

For the three months ended March 31, 2018 and 2017, depreciation expense was $4,681 and $7,257, respectively.

NOTE 7 – Investments

Dollar Shots Club

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 thesharesofstockgiveninexchangefortheinvestment.TheCompanyisaccountingfortheinvestmentonthecostbasisofaccounting being that the shares represent approximately 5% of the total outstanding shares of DSCAccounts Payable and the Company does not have any significantinfluence inDSC.TheinvestmentinDSCwasfullyimpairedasofJune30,2016.Accrued Liabilities

Rocky Mountain High Water Company LLC

In July 2016,As of March 31, 2018 and December 31, 2017, accounts payable and accrued liabilities consisted of 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.following:

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 plans to obtain 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 8 – Convertible Notes Payable

As of March 31, 2018 and December 31, 2016 and June 30, 2016,2017, the Company’s convertible notes payable were as follows:

For the three months ended DecemberMarch 31, 20162018 and 2015,2017, interest expense on these notes, including amortization of the discount, was $47,460$375,545 and $34,025,$36,744, respectively.

The Company has determined that the conversion feature embedded in certain of 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 no interest expense for the three months ended March 31, 2018 and 2017, respectively, relating to the excess of derivative value over the face amount of convertible notes payable.

The Company recorded $2,432,909 and $0 of interest expense for the three months ended March 31, 2018 and 2017, respectively, at the inception of certain convertible notes payable relating to the excess of the beneficial conversion feature over the face amount of the related convertible notes payable.

NOTE 9 – Notes Payable

As of March 31, 2018 and 2017, the Company’s notes payable were as follows:

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 $1,114. 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.

On November 30, 2017 the Company amended two notes payable to GHS in the aggregate principal amount of $500,000. The notes, which were originally made on October 12 and November 2, 2017 and included conversion prices at a 20% discount off market price, as defined in the agreements. The amendments removed the conversion features in the notes. Upon amendment, the Company recorded a loss on extinguishment of these notes of $15,256. As of December 31, 2017 the notes, which were previously included in Convertible Notes Payable are included in Notes Payable. On January 9, 2018 the notes were again amended to reinstate the conversion feature. These notes are included in Convertible Notes Payable as of March 31, 2018.

For the sixthree months ended DecemberMarch 31, 20162018 and 2015,2017, interest expense on these notes including amortization of the discount, was $77,743$631 and $120,402,$629, respectively.

NOTE 910 – Related Party Convertible Notes Payable

As of DecemberMarch 31, 20162018 and June 30, 2016,2017, the Company’s related party convertible notes payable were as follows:

For the three months ended DecemberMarch 31, 20162018 and 2015,2017, interest expense on these notes, including amortization of the discount, was $77,155

$8,043 and $0, respectively. For the six months ended December 31, 2016 and 2015, interest expense on these notes, including amortization of the discount, was $160,089 and $0,$216,653, respectively.

NOTE 10 – Note Payable-Other

On September 1, 2016, the Company purchased used office furniture and equipment from its landlord. The Company executedhas determined that the conversion feature embedded in certain of the notes referred to above that contain a note payable in thepotential variable conversion amount of $40,122 at an interest rate of 0% and with monthly payments of $1,115. The Company imputed interest onconstitutes a derivative which has been bifurcated from the note and recorded as a discounted note balancederivative liability, with a corresponding discount recorded to the associated debt. The excess of $36,634 on September 1, 2016. The termthe derivative value over the face amount of the note is three years.recorded immediately to interest expense at inception. The balance on the note was $31,767 on December 31, 2016. ForCompany recorded no interest expense for the three and six months ended DecemberMarch 31, 2016, interest expense on this note was $5212018 and $710, respectively.2017, respectively, at the inception of the notes relating to the excess of derivative value over the face of the notes.

NOTE 11 – Shareholders’ Deficit

Common Stock

As of March 31, 2018 the Company has 4,000,000,000 shares of common stock authorized.

During the sixthree months ended DecemberMarch 31, 20162018 the Company issued 197,090,550349,573,488 shares of common stock, including 75,761,502168,805,244 shares for convertible notes payable conversions 45,408,834of $498,784, 135,149,014 shares for warrantcash of $1,293,600, 29,096,402 shares for option exercises 15,701,363and 16,522,828 shares for services rendered 11,933,557 for compensation, 6,800,000 as partwith a value of a legal settlement, and 41,485,294 for cash. During the six months ended December 31, 2015 the$202,833.

Preferred Stock

The Company issued 78,020,350has 20,000,000 shares of commonpreferred stock forconvertible notespayable conversions,theacquisition ofDollarShotsClub,cashpurchases,andservicesrendered.authorized as of March 31, 2018, of which 12,789,474 are specifically designated to a series of preferred stock and 7,210,526 remain undesignated.

On December 29, 2016 theSeries A Preferred Stock

The Company executed a securities purchase agreement for the sale ofhad 1,000,000 shares of Series A Preferred Stock designated and outstanding as of March 31, 2018 and December 31, 2017. LSW Holdings, LLC (“LSW”) is the holder of these shares. Lily Li, who was the Company’s Executive Vice President until April 5, 2018, is the Managing Member of LSW and, in that capacity, has the authority to direct voting and investment decisions with regard to its common stock. holdings in the company.

Series B Preferred Stock

The agreement includes a “true-up” provision whereby the Company must provide the purchaser additionalhas 7,000,000 shares of common stock if the stock price is below a predetermined level six months from the dateSeries B Preferred Stock designated, of the agreement. In accordance with this provision, the Company was also required to reserve 10,000,000 shareswhich none were outstanding as 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.March 31, 2018 and December 31, 2017.

Series C Preferred Stock

The Company amended its Articles of Incorporation as of November 13, 2015 to create a Series C Preferred shares, which are 12% interest bearing,cumulative,exchangeable, non-voting, convertiblepreferredstockoftheCompany.EachSeriesCPreferredsharecan be converted to 50 shares of commonstock.

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 December 31, 2016, there were 1,107,607has 2,000,000 shares of Series C Preferred Stock designated, of which none were outstanding as of March 31, 2018 and December 31, 2017. Series C Preferred Stock is 12% interest bearing, cumulative, exchangeable, non-voting, convertible preferred stock of the Company. Each Series C Preferred share is convertible to 50 shares outstanding.of common stock.

Series D Preferred Stock

The Company amended its Articleshas 2,000,000 shares of IncorporationSeries D Preferred Stock designated, of which none were outstanding as of March 21, 2016 to create the31, 2018 and December 31, 2017. Series D Preferred stock class,Stock is a non-voting, non-interest bearing convertible preferred stock. Each Series CD preferred share is convertible to 100 shares of common stock.

Series E Preferred Stock

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. Series E Preferred Stock is convertible to common stock on a 1:1 basis. On the same day, the Board granted our Chairman 789,474 shares of Series E Preferred stock as payment for his deferred compensation. On October 31, 2017, Mr. Welch converted his 789,474 shares of Series E Preferred Stock to 789,474 shares of common stock. As of March 31, 2018 and December 31, 2016,2017 there arewere no Series D preferred shares outstanding.

Warrants

During the sixthree months ended DecemberMarch 31, 20162018 the Company granted 9,037,500 common stock warrants and 36,526,204 were exercised. During the six months ended December 31, 2015 there were no common stock warrants, none were exercised, and none were cancelled.

Options

During the three months ended March 31, 2018 the Company granted or exercised.no options to purchase common stock, 23,607,193 were exercised, and none were cancelled.

NOTE 12– Concentrations

During the three months ended DecemberMarch 31, 2016,2018 the Company’s two largest customers accounted for approximately 17%28% and 7%12% of sales, respectively. During the sixthree months ended DecemberMarch 31, 2016,2017, the Company’s two largest customers accounted for approximately 75%25% and 1% of sales, respectively. During the three months ended December 31, 2015, the Company’s two largest customers accounted for approximately 51% and 16% of sales, respectively. During the six months ended December 31, 2015, the Company’s two largest customers accounted for approximately 45% and 8%14% of sales, respectively.

NOTE 13 – Income Taxes

The reconciliation of income tax benefit at the U.S. statutory rate of(21% for the three months ended March 31, 2018 and 34% for the three months ended March 31, 2017) to the Company’s effective rate for the periods presented is as follows:

The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of March 31, 2018 and December 31, and June 30, 20162017 are as follows:

As of DecemberMarch 31, 2016,2018 the Company had approximately $9,500,000$17,000,000 of federal and state net operating loss carryovers ("NOLs"(“NOLs”), which begin to expire in 2027.2028. 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.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing but have kept the full valuation allowance. As a result the Company has recorded no income tax expense during the three months ended March 31, 2018.

The Company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 34% to 21%, resulting in a deferred tax expense of approximately $2,000,000 in 2017 that is still fully valued against as of March 31, 2018. This expense is attributable to the Company being in a net deferred tax asset position at the time of remeasurement. The company maintains a full valuation allowance.

On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The deferred tax expense recorded in connection with the remeasurement of deferred tax assets is a provisional amount and a reasonable estimate at December 31, 2017 based upon the best information currently available. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.

NOTE 14 – Commitments

Office LeaseLeases

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.

On January 18, 2018, the RMHC entered into a 12-month office use agreement for office space in Denver, Colorado. Monthly payments are $91.

Other Leases

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

NOTE 15 – Legal Proceedings

Please refer to our AnnualTransition Report on Form 10-K10-KT filed October 4, 2016April 2, 2018 for information regarding our pending legal proceedings. The following represents an update to the items disclosed in that filing:

193rd Judicial District Court of Dallas County Texas. Rocky Mountain High Brands, Inc. (RMHB) FKA Totally Hemp Crazy, Inc. V Rodney Peterson (Peterson) and Rocky Mountain High Canada, Inc. (RMHC), Case #DC-16-01416; Date Filed: February 4, 2016.

This case has been settled as to all claims and counterclaims with the issuance of 6,800,000 shares of RMHB stock.

44th Judicialv Lyonpride Music, LLC, United States District Court Northern District of Dallas County Texas. Rocky Mountain High Brands, Inc. (RMHB) FKA Totally Hemp Crazy, Inc. V Donna Rayburn (Rayburn), Case #DC-16-02131; Date Filed: February 23, 2016.Texas, 3:18-cv-00045-C

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 $197,773.95, representing return of principal and interest earned during the life of the loan. On February 19, 2016, Rayburn issued an additional demand of interest and penalties totaling $99,487.92. Rayburn has charged $137,261.87 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 seeks 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 also seeks to void the warrant for 10,000,000 shares of common stock, which was issued under a voidable note.The amount which RMHB seeks from Rayburn is in excess of $300,000. This casewasnonsuitedandwillbe refiledin the Courts of Orlando, Florida.

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

Meadows claimed a breach of an exchange agreement dated November 3, 2015. RMHB has denied the breach. Meadows invoked arbitration.

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 arbitration is no longer applicable and is a moot issue. On April 20, 2016, false, malicious, and defamatory allegations were asserted by the Shareholder Alert inappropriately released by the LawOfficeofA.A.McClanahan,Meadow’s attorney.

The Company has filed insuit against Lyonpride Music, LLC (“Lyonpride”) for fraud and for declaratory relief with respect to a contract between 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.

parties. The Company is investigating facts surrounding Meadows and others and may amend its Florida lawsuitseeking monetary damages against Lyonpride. The case has been referred to seek more than $20 Million in damages and disgorgement of Meadows and Rayburn profits on questionable trading activities.binding arbitration.

Douglas County DistrictLos Angeles Superior Court, Colorado, Case No. 2015CV030672, Totally Hemp Crazy,BC669367, filed July 24, 2017. Statewide Beverage Company, Inc. et al v. Cannalife USA, Ltd et al.

This case was settled by all parties without any payments by any of the parties to any other party.

101st Judicial District Court of Dallas County, Texas, Case No DC-16-01220. Fanco Global Acquisitions, LLC v Rocky Mountain High Brands, Inc.

Statewide Beverage Company, Inc. filed a breach of contract claim, and the Company has filed counterclaims for breach of contract, common law fraud and declaratory relief. The Court dismissed this lawsuit forcase is currently in the failure of the Plaintiff to prosecute its case.

discovery phase.

Dallas County Texas, Case Number DC-17-15441 filed November 8, 2017. Rocky Mountain High Brands, Inc. f/k/a Republic of Texas Brands, Inc. Plaintiff, vs. Jerry Grisaffi, Joe Radcliffe, LSW Holdings, LLC, Lily Li, Epic Group One, LLC, Kenneth Radcliffe, Dennis Radcliffe, Phil Uhrik, Michael Radcliffe, Frank Izzo, Morgan Albright, John Garrison, BB Winks, LLC, Crackerjack Classic, LLC, and Universal Consulting, LLC.

The Company is seeking the return of Series A Preferred Stock and common stock issued to certain defendants or later obtained by certain other defendants for little or no consideration paid to the Company. The Company alleges among other things that RMHB’s former Chairman of the Board breached his fiduciary duty to the Company by issuing these shares to himself and others. RMHB is also seeking to void the Indemnification and Release Agreement between the parties that was executed in June 2017. The Company is awaiting response from discovery requests at the current time. A trial date has been set for December 2018.

NOTE 16 – Subsequent Events

In February 13, 2017 the Company entered into an agreement in principle with L & H Resort Systems to acquire a former Catskill Mountain resort facility located on a natural spring. The Company plans to repurpose the resort into a bottling and canning plant. The purchase price will be based on an independent valuation of the underlying real estate and will be paid through the issuance of a newly created class of preferred stock.

Between JanuaryApril 1, 20172018 and FebruaryMay 14, 20172018, the Company issued 12,500,00068,970,595 shares of common stock, to fund a new production runof which 62,848,940 were for cash, 4,000,000 were for debt conversions, and operations2,121,655 were for services rendered.

On April 5, 2018 the Company terminated its Executive Vice President, Lily Li.

On May 11, 2018 Jerry Grisaffi, the Company’s former Chairman of the Company.

Board, filed a countersuit in the Company’s lawsuit against Mr. Grisaffi and others, which is described in Note 15 – Legal Proceedings. In the counter suit, Mr. Grisaffi seeks repayment, in cash or stock, of two convertible notes payable plus accrued interest. Those are the same two notes the Company is seeking to void in its lawsuit against Mr Grisaffi. Mr. Grisaffi is also attempting to enforce his indemnification agreement with the Company, which the Company is also seeking to void in its suit. The Company has not yet responded to the countersuit.

Item 2. Management’s Discussion and Analysis or PlanofOperation Forward-LookingStatementsof Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”“may,”“will,” “would,”“willbe,”“willcontinue,”“willlikely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affecteffect on our operations and futureprospectsonaconsolidatedbasisinclude,butarenotlimitedto:changesineconomicconditions,future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should alsobeconsideredinevaluatingforward-lookingstatementsandunduerelianceshouldnotbeplacedonsuchstatements.also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Company Overview and Plan of OperationOverview

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

•            

•            

•            RockyMountain HighWaterCompany,LLC(Subsidiary-consolidated

•            RockyMountain HighClothingCompany,Inc.,aninactiveTexasCorporation(Subsidiary)

•            Smarterita,LLC,aninactiveTexaslimitedliabilitycompany(Subsidiary)

RMHB is a consumer goods brand development company specializingthat specializes in developing, manufacturing, marketing, and distributing high quality,high-quality, health conscious, cannabidiol (“CBD”) and hemp-infused products that span various categories including beverage, food, fitness, skin care and beveragemore. RMHB also markets a naturally high alkaline spring water as part of our brand portfolio.

In March 2018, the Company launched the HEMPd brand with 16 products including tinctures, gummies, water soluble drops, capsules, lotions, salves, and spring water.E-juice liquids and cartridges. The Company currently markets a lineup offive hemp-infused beverages. RMHB is also researchingplans to introduce CBD-infused waters and additional HEMPd product offerings during the developmentremainder of a2018. HEMPd products are marketed through the Company’s Rocky Mountain Hemp Company subsidiary. Customer shipments of HEMPd products began in late March 2018.

The Company continues to market its lineup of products containing Cannabidiol (CBD). The Company’s intention is to be onfour naturally flavored hemp-infused functional beverages (Citrus Energy, Black Tea, Mango Energy and Lemonade) and a low-calorie Coconut Lime Energy drink, as well as hemp-infused 2oz. Mango Energy Shots and Mixed Berry Energy Shots. RMHB also bottles and distributes its naturally high alkaline spring water under the cutting edge of the use of CBD in consumer products while complying with all state and federal laws and regulations. See New ProductPipeline below.name Eagle Spirit Spring Water.

After developing the beverage products, RMHB completedIn September 2016, Eagle Spirit bottled its first production run in February of 2015. Since then RMHBhigh alkaline spring water, Eagle Spirit Spring Water and has hadcompleted several production runs for hemp-infused beverages totaling over 3,700,000 cans. Each beverage containssince, including approximately 100mg of hempseed extract,110,000 16.9 oz. bottles and all of the non-alcoholic beverages will consist of all-natural ingredients. The non-alcoholic products are shelf stable (no refrigeration necessary) with1,800 2.64-gallon (10-liter) “Bag in a shelf life oftwo(2) years. The Wine Based Ready-to-Drink Cocktails contain 12.5% alcohol and are packaged in 375ml, 750ml and 1.5 liter PET bottles. These alcoholic beverages are also shelf stable (no refrigeration necessary) and haveashelflifeof18months.Packagingforourline-upofproductscontainingcannabinoids (CBD)willbedeterminedatalaterdate.Box.”

The CompanyhasalsoproduceditsfirstproductionrunsofEnergyShotsandRelaxationBrownies.Inaddition,inAugust 2016,theCompany bottleditsfirsthighalkalinespringwater,EagleSpiritSpringWater.

Existing Products

The Company has developed a lineup of five hemp-infused beverages that include three energy drinks and a black tea and lemonade:

•         Naturally Flavored Citrus EnergyDrink

•         A citrus energy drink that contains 100mg hempseed extract and is complemented with ginseng and guarana extract, caffeine and otheringredients.

•         Naturally Flavored Mango EnergyDrink

•         A mango energy drink that contains 100mg hempseed extract and is complemented with ginseng and guarana extract, caffeine and otheringredients.

•         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 otheringredients.

•         Naturally FlavoredLemonade

•         A lemonade drink that contains 100mg hempseed extract and is complemented with ginseng extract and other ingredients.

•         Naturally Flavored BlackTea

•         Ablack teadrinkthatcontains100mghempseedextractandiscomplementedwithblackteaandginsengextractand otheringredients.

In 2016, the Company executed a one-year agreement with MBA Beverage to coordinate the manufacturing of our products. MBA Beverage actsasouroutsourcedsupply-chainmanagement andcoordinateseveryaspectofthemanufacturingprocess.MBABeverage also purchases all ingredients that are used in the manufacturing process since it has established relationships with all suppliers. MBA Beverage purchases hemp from Global Essence, Global Essence provides MBA Beverage independent third party testing documentationthatallhempusedinourmanufacturingprocessisTHCfree.

•         BluesCity Brewery,LLC(“BluesCity”)inMemphis,Tennessee,asubsidiaryofCityBrewingCompany,LLC,manufactures and bottles our products. 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. The Company does not contract with Blues City directly. A copy of the MBA Beverage contract is included as an exhibit to this filing.

•         Sovereign Flavors of Santa Ana, California collaborates with the Company for product formulation under an oral agreement. TheCompanyowns theproprietyformulastoourproducts.

•         Upstart Foods Marketing of St. Louis, Missouri and Advertising Arts of Brookfield, Wisconsin provide the packagingdesign. Once any packing design (label) is approved, Ball Metal Beverage Container Corporation or Rexam Beverage Can Company manufactures the cans. Upon completion, the cans are shipped to Blues City. Payments are made in advance to MBA Beverage. MBA Beverage, in turn, makes payments in advance at both manufacturing plants. There are no written contracts, other than with MBA Beverage and Upstart Food Marketing.

•         Upon completion of the production, the Company stores finished product at Blues City, awaiting sale to our distributor network.

•         Product is sold to distributors under a variety of terms from cash upfront to credit terms. Additionally, the Company sells through various onlineoutlets.

New Product Pipeline

•         Cannabinoid“CBD”infusedbeverages (subjecttocompliancewithstateandfederallawsandregulations)

•         HempInfused Beverages-expandflavoroffersandbeverageline

•         Hemp-Infused Natural SpringWater

Cannabinoid “CBD”- infused Beverages

The CBD beverage line is in pre-development stage. Any CBD beverages will be THC-free. Therefore, these products will be 100% legal in all 50 states. Products containing Cannabidiol (CBD) can be a source of essential fatty acids, vitamin E, and trace minerals in addition to containing high amounts of protein. CBD is extracted and separated from specific varieties of cannabis, often known as hemp. Chemically, CBD is one of 85 chemical substances known as cannabinoids, which are all found in the cannabis plant. CBD is the second most abundant compound in hemp, typically representing up to 40% of its extracts. CBD is actually unrelated to the chemical chain that results in tetrahydrocannabinol (THC). They share some characteristics but are created via different paths. The chemical properties of CBD and THC vary widely enough to classify THC as a psychotropic drug strictly controlled by federal authorities, while CBD is considered a legal dietary supplement.

The Company will seek an independent legal opinion to ensure that it remains in compliance with the Controlled Substances Act prior to marketing any products containing CBDs. Both plans are contingent upon appropriate legal vetting.

Hemp-infused Natural Spring Water

Adding hemp-infused natural spring water to our beverage line is in pre-development stage. The Company plans to bottle the water, market and sell it later in fiscal year 2017. Revenue generation should commence in the same quarter.

Expected Changes in Number of Employees, Plant, and Equipment

We do not currently plan to purchase specific additional physical plant and significant equipment within the immediate future. We do not currently have specific plans to change the number of our employees during the next twelve months.

Results of Operations

Three Months Ended DecemberMarch 31, 20162018 Compared to Three Months Ended DecemberMarch 31, 20152017

Financial Summary

The Company’s sales for the three months ended DecemberMarch 31, 20162018 were $24,751$50,909 compared to $313,116$117,814 for the three months ended DecemberMarch 31, 2015. The sales decrease was driven by a decrease in distributor sales in 2016.2017.

The Company’s net loss for the three months ended DecemberMarch 31, 20162018 was $2,410,416$2,332,064 compared to net income of $2,336,289$4,469,320 for the three months ended DecemberMarch 31, 2015.2017.

Sales

For the three months ended DecemberMarch 31, 20162018 sales were $24,751$50,909 compared to $313,116$117,814 for the three months ended DecemberMarch 31, 2015,2017, a decrease of $288,365$66,905 or 92%57%. The sales decrease was driven by management’s focus on closing the LSW Holdings purchasesell-off of the control blockCompany’s current hemp-infused beverage and energy shots inventories in anticipation of the Preferred Series A shares, the lack of inventorylaunch of our more popular flavors to sell, and a restructuring of our brokerage agreements with our outside brokers.new HEMPd brand products. Selling prices per case were lower in 2018 than in 2017. In the three months ended DecemberMarch 31, 20162018 sales consisted of approximately 71%53% online sales, 37% distributor sales, and 29% distributor10% direct to retailer sales, compared to 97%74% distributor sales and 3%26% online sales for the three months ended DecemberMarch 31, 2015.2017.

Cost of Sales

For the three months ended DecemberMarch 31, 2016,2018, cost of sales was $37,456$66,990 or 151%132% of sales, compared to $171,937$56,835 or 55%48% of sales for the three months ended DecemberMarch 31, 2015, a decrease2017, an increase of $134,481$10,155 or 78%18%. Cost of sales increased as a percentage of sales increased in 20162018 as a result of the $28,837 write-offdecreased selling prices of the Company’s expired brownie inventory.our hemp-infused beverages and shots, which in turn reduced margins.

Operating Expenses

For the three months ended DecemberMarch 31, 2016,2018, operating expenses were $1,420,060$1,150,340 or 5,737%2,260% of sales, compared to $526,854$1,932,809 or 168% ofsalesforthethreemonthsendedDecember31,2015.AreasinwhichtheCompanyexperiencedmaterialchangesinoperating1,641% of sales for the three months ended March 31, 2017. Areas in which the Company experienced material changes in operating expenses are discussedbelow.discussed below.

General and Administrative

For the three months ended DecemberMarch 31, 2016,2018, general and administrative expenses were $988,540$1,080,518 or 3994%2,123% of sales, compared to $408,566

$1,248,202 or 131%1,059% of sales for the three months ended DecemberMarch 31, 2015.2017, a decrease of $167,684 or 13%. The increasedecrease in general and administrative expenses in 20162018 was primarily driven by decreases in legal fees and bad debt expense, partially offset by an increase in officer and employee compensation, rent and storage expenses, and expenses related tocorporate salaries as the startupCompany prepared for the introduction of the Eagle Spirit Waterits HEMPd brand.

Advertising and Marketing

For the three months ended DecemberMarch 31, 2016,2018, advertising and marketing expenses were $431,520$69,822 or 1,743%137% of sales, compared to $118,288

$684,607 or 38%581% of sales for the three months ended DecemberMarch 31, 2015.2017, a decrease of $614,785 or 90%. The increasedecrease in advertising and marketing expenses in 20162018 was duea result of management’s decision to increased promotional spending, broker commissions, promotions contractors, anddecrease advertising and promotional expenses related tomarketing expenditures on the startupCompany’s hemp-infused beverages and energy shots in preparation for the launch of the Eagle Spirit waternew HEMPd brand. In 2017 the Company executed a large marketing contract with a third party promoter and issued stock to a distributor in exchange for promotional activity.

Other (Income) Expense

Interest Expense

For the three months ended DecemberMarch 31, 2016,2018, interest expense was $164,129,$2,817,128, compared to $34,025$133,051 for the three months ended DecemberMarch 31, 2015.2017, an increase of $2,684,077. The increase in interest expense, which includes the amortization of the discount on convertible debt, excess of the derivative liability resulting from the excess conversion feature on certain convertible notes payable, and, in 2017, interest on Series C Preferred Stock, was due to increased debt activity in 2016.2018.

GainLoss on the Extinguishment of Debt

DuringFor the three months ended DecemberMarch 31, 2015,2018, the Company recorded a gainnet loss on the extinguishment of debt of $196,500 related to the settlement of convertible debt. There was no gain or loss on extinguishment of debt in 2016.for the three months ended March 31, 2017.

Gain (Loss) on the Change in Fair Value of Derivative Liability

For the three months ended DecemberMarch 31, 2016,2018, the Company recorded a lossgain on the change in fair value of derivative liability of $813,522

$1,847,985 compared to a gainloss of $2,133,647$2,464,439 for the three months ended DecemberMarch 31, 2015.2017. In 20162018 the lossgain resulted from the increasedecrease in the price of the Company’s underlying stock, which is used to calculate the fair value of the related derivative liability, duringfrom the three months ended December 31, 2016. The gain in 2015 resulted from a decrease in the pricebeginning of the Company’s stock.

Income Taxes

Forperiod to the three months ended December 31, 2016 and 2015, the Company recorded no income tax provision due to a full valuation allowance provided on deferred tax assets resulting from net operating losses.

Six Months Ended December 31, 2016 Compared to Six Months Ended December 31, 2015

Financial Summary

The Company’s sales for the six months ended December 31, 2016 were $320,338 compared to $589,687 for the six months ended December 31, 2015. The sales decrease was driven by a decrease in distributor sales in 2016.

The Company’s net loss for the six months ended December 31, 2016 was $3,140,693 compared to net income of $8,565,289 for the six months ended December 31, 2015.

Sales

For the six months ended December 31, 2016 sales were $320,338 compared to $589,687 for the six months ended December 31, 2015, a decrease of $269,349 or 46%. The sales decrease was driven by management’s focus on closing the LSW Holdings purchaseend of the control block of the Preferred Series A shares, the lack of inventory of our more popular flavors to sell, and a restructuring of our brokerage agreements with our outside brokers. During the six months ended December 31, 2016 sales consisted of approximately 91% distributor sales and 9% online sales compared to 96% distributor sales and 4% online sales for the six months ended December 31, 2015.

Cost of Sales

For the six months ended December 31, 2016, cost of sales was $127,476 or 40% of sales, compared to $317,213 or 54% of sales, for the six months ended December 31, 2015, a decrease of $189,737 or 60%. Cost of sales increased as a percentage of sales in 2016 as a result of the $28,837 write-off of the Company’s expired brownie inventory. The overall decrease in 2016 compared to 2015 was a decrease in sales.

Operating Expenses

For the six months ended December 31, 2016, operating expenses were $2,602,148 or 812% of sales, compared to $1,105,597 or 188%ofsalesforthesixmonthsendedDecember31,2015.AreasinwhichtheCompanyexperiencedmaterialchangesinoperating expenses are discussedbelow.

General and Administrative

For the six months ended December 31, 2016, general and administrative expenses were $1,853,089 or 579% of sales, compared to $780,229 or 132% of sales for the six months ended December 31, 2015. The increase in general and administrative expenses in 2016 was driven by an increase in officer and employee compensation, rent and storage expenses, and expenses related to the startup of the Eagle Spirit Water brand.

Advertising and Marketing

For the six months ended December 31, 2016, advertising and marketing expenses were $749,059 or 234% of sales, compared to $325,368 or 55% of sales for the six months ended December 31, 2015. The increase in advertising and marketing expenses in 2016 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.

Other (Income) Expense

Interest Expense

For the six months ended December 31, 2016, interest expense was $398,648, compared to $120,402 for the six months ended December 31, 2015. 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 2016.

Gain on the Extinguishment of Debt

During the six months ended December 31, 2015, the Company recorded a gain on the extinguishment of debt related to the settlement of convertible debt. There was no extinguishment of debt in 2016.

Gain on the Change in Fair Value of Derivative Liability

For the six months ended December 31, 2016, the Company recorded a loss on the change in fair value of derivative liability of $332,759 compared to a gain of $8,896,472 for the six months ended December 31, 2015.period. In 20162017 the loss resulted from the increase in the price of the Company’s underlying stock which is used to calculatefrom the fair valuebeginning of the related derivative liability, duringperiod to the six months ended December 31, 2016. The gain in 2015 resulted from a decrease in the priceend of the Company’s stock.period.

Income Taxes

For the sixthree months ended DecemberMarch 31, 20162018 and 2015,March 31, 2017, the Company recorded no income tax provision due to a full valuation allowance provided on deferred tax assets resulting from net operating losses.

Liquidity and Capital Resources

As of DecemberMarch 31, 2016, we2018, the Company had current assets of $2,187,384,$1,199,510, consisting of cash of $155,061,$580,946, accounts receivable (net) of $262,429,$7,803, inventory of $218,271,$71,160, and prepaid expenses and other current assets of $1,551,623.$539,601. As of DecemberMarch 31, 2016, we 2018,the Companyhad current liabilities of $4,390,696. These consisted$2,269,837, consisting of accounts payable and accrued liabilities of $655,859,$431,937, related party convertible notes payable (net) of $95,483,$179,000, convertible notes payable (net) of $731,434, other$749,208, notes payable of $31,767,$46,895, accrued interest of $236,327,$43,253, and derivative liability of $2,639,826.$819,544. During the sixthree months ended DecemberMarch 31, 2016,2018, the Company received proceeds of $456,650$1,470,000 related to private offering stock salesthe sale of 41,485,294135,149,014 shares of common stock. Sales prices ranged from $.001 to $.05 per share.stock under its Equity Financing Agreement with GHS Investments, LLC.

Cash flows from operating activities

Net cash used in operating activities during the sixthree months ended DecemberMarch 31, 20162018 was $789,802$997,793 compared to $512,002$811,961 during the sixthree months ended DecemberMarch 31, 2015.2017. The change was principally driven by the net lossmanagement’s greater use of stock-based payments to vendors and employees in 2016 as2017 compared to income in 2015 and the increase in accounts receivable during 2016. This was partially offset by the expenditures related to a hemp drink production run in 2015 with no corresponding production run in 2016. Other significant changes in cash from operating activities in the six months ended December 31, 2016 were an increase in accounts payable in 2016 of $284,253 compared to an increase of $131.236 in 2015, and the increase of deferred revenue in 2015 with no corresponding change in 2016. Non-cash gain on change in fair value of derivative liability decreased from $8,896,472 in 2015 to a loss of $332,759 in 2016.2018.

Cash flows from investing activities

Net cash used in investing activities during the sixthree months ended DecemberMarch 31, 20162018 was $76,409$32,270 compared to $40,512$8,809 during the sixthree months ended DecemberMarch 31, 2015. The change was primarily due2017. In 2018 the Company invested in software development for its new HEMPd.com website and acquired $1,050 in equipment compared to the Company’s investment$8,809 in Rocky Mountain High Water Company (prior to consolidation) and furniture and equipment.equipment acquisitions in 2017.

Cash flows from financing activities

Net cash provided by financing activities during the sixthree months ended DecemberMarch 31, 20162018 was $919,017$1,594,026 compared to $557,500$666,167 during the sixthree months ended DecemberMarch 31, 2015.2017. In 2016,2018, proceeds of $330,000$300,000 were from the issuance of convertible notes payable compared to $500,000$0 in 2015. The2017. In 2017 the Company also issued $100,600 inreceived proceeds of $110,000 from the issuance of related party convertible notes payable. There were no proceeds from the issuance of related party convertible notes payable in 2018. In 2018 the Company repaid $175,974 on convertible and a $35,960 note payable for the acquisition of furniture and equipmentrelated party convertible notes payable. There were no repayments in the six months ended December 31, 2016 compared to $0 in 2015. Repayments on debt were $4,193 during the six months ended December 31, 2016 and $176,000 during the six months ended December 31, 2015.2017. In 20162018 there were proceeds of $456,650$1,470,000 from the issuance of common stock compared to $233,500$558,882 in 2015.2017.

Outstanding Material Indebtedness

Recently, ourthe Company’s operations have been funded primarily through the private sales of common stock or the issuance of convertible promissory notes, which are convertible to common stock at fixed prices ranging from $0.001$0.01 to $0.05,$0.024, at discounts to market price ranging from 50%20% to 99%50%, or combinations thereof. Ourabilitytosuccessfullyexecuteourbusinessplaniscontingentuponusobtainingadditionalfinancing and/oruponrealizing sales revenue sufficient to fund our ongoing expenses. Untilweare able to sustain our ongoing operations through sales revenue,weintend 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. We do not have any formal commitments or arrangements for the salesAs of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or atall.

During 2011 and 2012,March 31, 2018 the Company entered into a serieshad total notes payable outstanding 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$975,103 (net 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,theCompanyenteredintoa$40,000ConvertibleNotePayablewithanindividual.Thenotesmaturedone-yearfromthedate 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 commonstock.discount).

On March 25, 2015,October 12, 2017 the Company entered intoexecuted an amended and restated convertible promissory noteEquity Financing Agreement (“EFA”) with Roy Meadows, which amended two previously issued notes dated February 5, 2013 and July 17, 2014. AccordingGHS Investments LLC (“GHS”). Under the agreement, GHS has committed to the terms of the note, the Company may borrowpurchase 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 debtholder 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 debtholder to convert, the Company issued him warrants topurchase 41,454,851 shares$12 million of the Company’s common stock over a 24-month period at an exercisea 20% discount off the market 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 (asas defined in the warrant) or one yearagreement. The agreement contains certain restrictions on the timing of the stock purchases and required the Company to file a registration statement with the Securities and Exchange Commission (“SEC”) to register the common shares issuable under the agreement. On November 1, 2017, the Company filed a Registration Statement on Form S-1 to register 300,000,000 common shares to be resold by GHS. On February 9, 2018 the Company received a Notice of Effectiveness from the date of issuance.SEC on an amended Form S-1 registering 250,000,000 common shares. The warrant is for a period of 3 years, and contains customary anti-dilutionprovisions.

In October 2015,Company began stock sales to GHS on February 13, 2018. Since February 13, 2018 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 sharemaximum.There is an optionhas sold 197,997,954 common shares to renew with a fee of 10% principle and accruedinterest.

GHS under this EFA. The Company has determined thatplans to file another Form S-1 in May 2018 to register additional shares. The Company expects to fund its operational and investing needs through 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 valueEFA 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.next two years.

Future Liquidity Requirements

The anticipated operational shortfall forDuring the next twelve months is $1,200,000. Forwe expect our operational cash shortfall to be approximately $850,000 to $1,500,000, depending on thenext two years, timing, development, advertising, and marketing needs related to our future product rollouts. Our cash needs will be higher in the second quarter of 2018, we anticipateexpect our outside cash needs to lessen with a net operational positive cash flow in the fourth quarter of 2018. We expect our operational cash needs will be between $2,000,000 and $5,000,000. We anticipate raising the required capital through a blank check preferred stock, as authorizedmet by the Company’s Articles of Incorporation. We plan to establish a new class of preferred stock and raise up to $5,000,000 under a Rule 506 subscription agreement.our current funding arrangements with GHS.

Off Balance Sheet Arrangements

As of December 31, 2016, there were no off balance sheet arrangements.

Going Concern

We have experienced recurring losses from operations and to date, we have not been able to produce sufficient sales to become cash flow positive and profitable on a consistent basis. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our costs of operations and/or upon obtaining additional financing. For these reasons, our auditor has raised substantial doubt about our ability to continue as a going concern.

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 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, includingthoseuniquetoitsindustry,andgeneraleconomicconditions.Itispossiblethattheseexternalfactorscouldhaveaneffecton the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimatesatleast quarterlybasedontheseconditionsandrecordadjustmentswhennecessary.

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,weuse 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 asnecessary.

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:

•     Level1 —quotedpricesinactivemarketsforidenticalassetsorliabilities.

•     Level2 —quotedpricesforsimilarassetsandliabilitiesinactivemarketsorinputsthatareobservable.

•     Level3 —inputsthatareunobservable(forexamplecashflowmodelinginputsbasedonassumptions).

The derivative liability in connection with the conversion feature of the convertible debt, classified as a Level 3 liability, is the only financial liability measure at fair value on a recurring basis.

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

The estimated fair value of the derivative instruments were valued using the Black-Scholes option pricing model, using the following assumptions as of December 31, 2016:

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 anassetmaynotberecoverable.TheCompanyassessestherecoverabilityoftheassetsbasedontheundiscountedfuturecashflowand 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. No impairment charges were recorded during the three or six months ended December 31, 2016 and2015.

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.Off Balance Sheet Arrangements

The Company issued restricted stock to consultants and employees for various services. Cost for these transactionsAs of March 31, 2018, there 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 counterpartytoearntheequityinstrumentsisreachedor(ii)thedateatwhichthecounterparty'sperformanceis complete.no off-balance sheet arrangements.

Convertible InstrumentsGoing Concern

The Company evaluateshas a shareholders’ deficit of $985,464 and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivativesan accumulated deficit of $33,994,478 as of March 31, 2018 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)has generated operating losses since inception. These factors, among others, raise substantial doubt about the economic characteristics and risksability 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 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) deferredtaxconsequencesoftemporarydifferencesresultingfrommattersthathavebeenrecognizedinanentity’sfinancialstatements 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 likelythannotsomeportionorallofthedeferredtaxassetswillnotberealized.

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

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. The Company’s continuation as a going concern by incorporatingis dependent upon its ability to generate revenues and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15its ability to continue raising capital.

On October 12, 2017, the Company entered into an Equity Financing Agreement (“EFA”) with GHS Investments, LLC (“GHS”), which provides a definitionfor GHS to purchase up to $12,000,000 of the term substantial doubt and requires an assessment forCompany’s common stock over a 24-month period based on a contractually agreed upon market discount. In February 2018 the Company began sales of one year aftercommon stock to GHS under the date thatEFA. Management believes 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 fiscal years, and interim periods within those years, beginning after December 15, 2016, and early application ispermitted.

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09,Revenue from Contracts with Customers. This guidance requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard alsoEFA will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue andprovide sufficient cash flows arisinguntil cash flows from contracts with customers. The guidance is effective for public company fiscal years beginning after December 15, 2017. The standard allows for either a full retrospective or a modified retrospective transition method. The Company is currently evaluating the impact of this standard, including the transition method, on its consolidated results of operations financial position and cash flows.become consistently positive.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of DecemberMarch 31, 2016.2018. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Michael Welch, and our Chief Financial Officer, Jens Mielke. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of DecemberMarch 31, 2016,2018 our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the quarterthree months ended DecemberMarch 31, 2016.2018.

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.

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 Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controlsandcontrols and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding requireddisclosure.required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company havebeendetected.Theseinherentlimitationsincludetherealitiesthatjudgmentsindecision-makingcanbefaulty,andthathave been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion oftwoor more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changesinconditions,orthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

PART II – OTHER INFORMATION

Item 1. LegalProceedingsLegal Proceedings

Please refer to our AnnualTransition Report on Form 10-K10-KT filed October 4, 2016April 2, 2018 for information regarding our pending legal proceedings. The following represents an update to the items disclosed in that filing:

193rd Judicial District Court of Dallas County Texas. Rocky Mountain High Brands, Inc. (RMHB) FKA Totally Hemp Crazy, Inc. V Rodney Peterson (Peterson) and Rocky Mountain High Canada, Inc. (RMHC), Case #DC-16-01416; Date Filed: February 4, 2016.

This case has been settled as to all claims and counterclaims with the issuance of 6,800,000 shares of RMHB stock.

44th Judicialv Lyonpride Music, LLC, United States District Court Northern District of Dallas County Texas. Rocky Mountain High Brands, Inc. (RMHB) FKA Totally Hemp Crazy, Inc. V Donna Rayburn (Rayburn), Case #DC-16-02131; Date Filed: February 23, 2016.Texas, 3:18-cv-00045-C

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 $197,773.95, representing return of principal and interest earned during the life of the loan. On February 19, 2016, Rayburn issued an additional demand of interest and penalties totaling $99,487.92. Rayburn has charged $137,261.87 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 seeks 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 also seeks to void the warrant for 10,000,000 shares of common stock, which was issued under a voidable note.The amount which RMHB seeks from Rayburn is in excess of $300,000. This casewasnonsuitedandwillbe refiledin the Courts of Orlando, Florida.

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

Meadows claimed a breach of an exchange agreement dated November 3, 2015. RMHB has denied the breach. Meadows invoked arbitration.

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 arbitration is no longer applicable and is a moot issue. On April 20, 2016, false, malicious, and defamatory allegations were asserted by the Shareholder Alert inappropriately released by the LawOfficeofA.A.McClanahan,Meadow’s attorney.

The Company has filed insuit against Lyonpride Music, LLC (“Lyonpride”) for fraud and for declaratory relief with respect to a contract between 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.

parties. The Company is investigating facts surrounding Meadows and others and may amend its Florida lawsuitseeking monetary damages against Lyonpride. The case has been referred to seek more than $20 Million in damages and disgorgement of Meadows and Rayburn profits on questionable trading activities.binding arbitration.

Douglas County DistrictLos Angeles Superior Court, Colorado, Case No. 2015CV030672, Totally Hemp Crazy,BC669367, filed July 24, 2017. Statewide Beverage Company, Inc. et al v. Cannalife USA, Ltd et al.

This case was settled by all parties without any payments by any of the parties to any other party.

101st Judicial District Court of Dallas County, Texas, Case No DC-16-01220. Fanco Global Acquisitions, LLC v Rocky Mountain High Brands, Inc.

Statewide Beverage Company, Inc. filed a breach of contract claim, and the Company has filed counterclaims for breach of contract, common law fraud and declaratory relief. The Court dismissed this lawsuit forcase is currently in the failure of the Plaintiff to prosecute its case.discovery phase.

Dallas County Texas, Case Number DC-17-15441 filed November 8, 2017. Rocky Mountain High Brands, Inc. f/k/a Republic of Texas Brands, Inc. Plaintiff, vs. Jerry Grisaffi, Joe Radcliffe, LSW Holdings, LLC, Lily Li, Epic Group One, LLC, Kenneth Radcliffe, Dennis Radcliffe, Phil Uhrik, Michael Radcliffe, Frank Izzo, Morgan Albright, John Garrison, BB Winks, LLC, Crackerjack Classic, LLC, and Universal Consulting, LLC.

The Company is seeking the return of Series A Preferred Stock and common stock issued to certain defendants or later obtained by certain other defendants for little or no consideration paid to the Company. The Company alleges among other things that RMHB’s former Chairman of the Board breached his fiduciary duty to the Company by issuing these shares to himself and others. RMHB is also seeking to void the Indemnification and Release Agreement between the parties that was executed in June 2017. The Company is awaiting response from discovery requests at the current time. A trial date has been set for December 2018.

Item 1A. Risk Factors

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

Item 2. Unregistered Sales of Equity Securities and Use ofProceedsof Proceeds

The following equity securities were issued between March 30, 2018 and May 15, 2018: