Document and Entity Information
Document and Entity Information - USD ($) | 6 Months Ended | |
Dec. 31, 2017 | Mar. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Rocky Mountain High Brands, Inc. | |
Entity Central Index Key | 1,670,869 | |
Document Type | 10-KT | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 5,000,000 | |
Entity Common Stock, Shares Outstanding | 1,509,175,778 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
CURRENT ASSETS | |||
Cash | $ 16,983 | $ 91,675 | $ 102,255 |
Accounts Receivable, net of allowance of $195,632, $138,373, and $60,163, respectively | 2,844 | 63,268 | 20,377 |
Inventory | 82,312 | 224,695 | 290,368 |
Prepaid Expenses and Other Current Assets | 634,722 | 774,338 | 1,716,551 |
TOTAL CURRENT ASSETS | 736,861 | 1,153,976 | 2,129,551 |
Property and Equipment, net | 35,681 | 48,133 | 92,208 |
Other Assets | 29,093 | 77,256 | 33,230 |
TOTAL ASSETS | 801,635 | 1,279,365 | 2,254,989 |
CURRENT LIABILITIES | |||
Accounts Payable and Accrued Liabilities | 750,807 | 441,190 | 337,866 |
Related Party Convertible Notes Payable, net of debt discount | 174,456 | 266,247 | 20,730 |
Convertible Notes Payable, net of debt discount | 677,698 | 733,253 | 597,500 |
Notes Payable | 549,936 | 26,130 | |
Redemption Value of Series C Preferred Stock | 1,661,424 | 2,495,666 | |
Accrued Interest | 81,248 | 382,820 | 58,399 |
Deferred Revenue | 500,000 | ||
Derivative Liability | 5,609,389 | 5,072,579 | 2,217,744 |
TOTAL CURRENT LIABILITIES | 7,843,534 | 8,583,643 | 6,227,905 |
Preferred Stock - Series A - Par Value of $.001 1,000,000 shares designated; 1,000,000 shares issued and outstanding as of December 31, 2017, June 30, 2017, and June 30, 2016 | 1,000 | 1,000 | 1,000 |
Preferred Stock - Series B - Par Value of $.001 5,000,000 shares designated; No shares issued and outstanding | |||
Preferred Stock - Series C - Par Value of $.001 2,000,000 shares designated; No shares issued and outstanding as of December 31, 2017 (1,107,616 shares 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 designated; No shares issued and outstanding | |||
Common Stock - Par Value of $.001 4,000,000,000 shares authorized, 1,159,706,457 shares issued and outstanding as of December 31, 2017; 950,000,000 shares authorized, 786,525,118 shares issued and outstanding as of June 30, 2017; 800,000,000 shares authorized, 537,989,764 shares issued and outstanding as of June 30, 2016 | 1,159,706 | 786,525 | 537,990 |
Additional Paid-In Capital | 23,459,809 | 18,062,830 | 12,366,476 |
Accumulated Deficit | (31,662,414) | (26,154,633) | (16,878,382) |
TOTAL SHAREHOLDERS' DEFICIT | (7,041,899) | (7,304,278) | (3,972,916) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 801,635 | $ 1,279,365 | $ 2,254,989 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) | Dec. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares |
Stock Transactions, Parenthetical Disclosures [Abstract] | |||
Preferred Stock Series A Par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock Series A shares designated | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred Stock Series A, shares issued | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred Stock Series A, shares outstanding | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred Stock Series B Par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock Series B shares designated | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred Stock Series B shares outstanding | 0 | 0 | 0 |
Preferred Stock Series C Par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock Series C shares designated | 2,000,000 | 2,000,000 | 1,107,607 |
Preferred Stock Series C shares issued | 0 | 0 | 0 |
Preferred Stock Series C shares outstanding | 0 | 0 | 0 |
Preferred Stock Series D shares designated | 2,000,000 | 2,000,000 | 2,000,000 |
Preferred Stock Series D Par value | 0.001 | 0.001 | 0.001 |
Preferred Stock Series D shares outstanding | 0 | 0 | 0 |
Preferred Stock Series E shares designated | 789,474 | ||
Preferred Stock Series E Par value | 0.10% | ||
Preferred Stock Series E shares outstanding | 0 | ||
Common Stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, shares designated | 4,000,000,000 | 950,000,000 | 800,000,000 |
Common Stock, shares issued | 1,159,706,457 | 786,525,118 | 537,989,764 |
Common Stock, shares outstanding | 1,159,706,457 | 786,525,118 | 537,989,764 |
Accounts Receivable, net allowance of | $ | $ 195,632 | $ 138,373 | $ 60,163 |
Statements of Operations
Statements of Operations - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Sales | $ 59,653 | $ 320,338 | $ 401,974 | $ 1,075,476 |
Cost of Sales | 79,933 | 98,639 | 150,922 | 408,918 |
Inventory Obsolescence | 93,110 | 28,837 | 100,998 | 725,718 |
Gross Profit (Loss) | (113,390) | 192,862 | 150,054 | (59,160) |
Operating Expenses | ||||
General and Administrative | 2,567,486 | 1,853,089 | 5,751,464 | 2,142,984 |
Advertising and Marketing | 118,191 | 749,059 | 1,513,633 | 1,340,428 |
Impairment Expense | 59,163 | 166,000 | ||
Total Operating Expenses | 2,744,840 | 2,602,148 | 7,265,097 | 3,649,412 |
Loss from Operations | (2,858,230) | (2,409,286) | (7,115,043) | (3,708,572) |
Interest Expense | 2,054,438 | 398,648 | 1,044,431 | 203,496 |
Debt Inducement Expense | 3,887,618 | |||
Loss (Gain) on Extinguishment of Debt | (1,200,092) | 945,838 | ||
Gain on Redemption Value of Series C Preferred Stock | (834,242) | |||
Loss (Gain) on Change in Fair Value of Derivative Liability | 1,795,205 | 332,759 | 1,951,019 | (11,071,250) |
Total Other (Income) Expenses: | 2,649,551 | 731,407 | 2,161,208 | (6,034,298) |
Income (Loss) Before Income Tax Provision | (5,507,781) | (3,140,693) | (9,276,251) | 2,325,726 |
Income Tax Provision | ||||
Net Income (Loss) | $ (5,507,781) | $ (3,140,693) | $ (9,276,251) | $ 2,325,726 |
Net Income (Loss) per Common Share - Basic and Diluted | $ (0.01) | $ 0 | $ (0.01) | $ 0.01 |
Weighted Average Shares Outstanding | 855,469,994 | 629,289,895 | 699,508,915 | 474,571,836 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||||
Net Income (Loss) | $ (5,507,781) | $ (3,140,693) | $ (9,276,251) | $ 2,325,726 |
Stock-based compensation | $ 468,291 | $ 409,062 | $ 1,917,159 | $ 611,881 |
Stock-based payments to vendors | 465,267 | 1,013,351 | ||
Warrants and options issued for services rendered | $ 180,163 | $ 407,447 | $ 2,074,228 | |
Non-cash interest expense | 2,258,808 | 398,649 | 1,044,431 | 203,496 |
Fees and penalties on debt | 729,929 | |||
Impairment expense | 59,163 | 166,000 | ||
Gain on change in redemption value of Series C Preferred Stock | (834,242) | |||
(Gain) Loss on change in fair value of derivative liability | 1,795,205 | 332,759 | 1,951,019 | (11,071,250) |
(Gain) Loss on extinguishment of debt | (1,200,092) | 945,838 | ||
Warrants issued for debt inducement | 3,887,618 | |||
Bad debt expense | 61,554 | 184,966 | 152,750 | |
Loss on disposal of equipment | 43,221 | 59,133 | ||
Depreciation expense | 13,116 | 18,691 | 30,786 | 22,122 |
Inventory write-down | 93,110 | 28,837 | 100,998 | 725,728 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | (1,131) | (242,052) | (227,857) | (40,926) |
Inventory | 49,273 | 43,260 | (35,325) | (260,625) |
Prepaid expenses | 3,966 | 164,928 | (8,508) | (48,940) |
Other assets | 11,000 | 3,431 | 13,486 | |
Deferred revenue | 470,048 | |||
Accounts payable and accrued liabilities | 171,091 | 284,253 | 103,322 | 144,853 |
NET CASH USED IN OPERATING ACTIVITIES | (836,334) | (789,802) | (1,902,790) | (1,779,167) |
Investment in Rocky Mountain High Water Company | 39,774 | 44,026 | ||
Investment in product development | (19,400) | |||
Acquisition of property and equipment | 1,496 | 36,635 | 45,844 | 99,642 |
Disposal of property and equipment | 832 | |||
NET CASH USED IN INVESTING ACTIVITIES | (664) | (76,409) | (89,870) | (119,042) |
Financing Activities: | ||||
Proceeds from issuance of convertible notes | 220,000 | 330,000 | 700,000 | 500,000 |
Repayment of convertible notes | 165,000 | |||
Proceeds from issuance of related party convertible notes | 100,000 | 100,600 | 289,600 | |
Repayment of related party convertible notes | 25,000 | 31,000 | ||
Proceeds from issuances of notes payable | 440,000 | 35,960 | 35,960 | 318,332 |
Repayment of notes payable | (6,194) | (4,193) | (9,830) | |
Proceeds from issuance of common stock | 8,500 | 456,650 | 991,350 | 1,282,406 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 762,306 | 919,017 | 1,982,080 | 1,904,738 |
DECREASE IN CASH | (74,692) | 52,806 | (10,580) | 6,529 |
CASH - BEGINNING OF PERIOD | 91,675 | 102,255 | 102,255 | 95,726 |
CASH - END OF PERIOD | 16,983 | 155,061 | 91,675 | 102,255 |
Supplemental disclosure of non-cash financing and investing activities: | ||||
Common stock issued for conversion of debt | 3,055,140 | 188,023 | 189,455 | 143,600 |
Common stock issued for acquisition | 166,000 | |||
Debt and accrued interest converted for common stock | 3,889,083 | 442,633 | 504,736 | |
Common stock issued as part of legal settlement | 1,439,975 | 500,000 | 500,000 | |
Derivative liability relieved upon conversion of related debt | 5,276,018 | 318,125 | 352,625 | 2,102,681 |
Derivative liability incurred for debt discount | 4,017,622 | 659,150 | ||
Benefical conversion feature recognized | $ 212,771 | $ 212,771 | ||
Series C Preferred Stock issued for common stock | 2,495,666 | |||
Series C Preferred Stock redeemed for common stock | $ 1,661,424 | |||
Conversion of debt to common stock | $ 1,512,606 | $ 293,532 | $ 348,532 | $ 179,220 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Common Stock | Preferred Stock A | Preferred Stock C | Preferred Stock E | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Balances at Jun. 30, 2015 | 400,356,154 | 1,000,000 | |||||
Amount Balance | $ 400,356 | $ 1,000 | $ 7,625,395 | $ (19,204,108) | $ (11,177,357) | ||
Shares Issued for Aquisitions | 2,000,000 | ||||||
Amount Shares issued for aquisitions | 2,000 | 164,000 | 166,000 | ||||
Shares Issued for services rendered | $ 5,107,143 | $ 3,887,618 | |||||
Amount of Shares for services | 5,107 | 248,959 | 254,066 | ||||
Shares issued upon conversion of convertible notes | 103,005,455 | ||||||
Amount of Shares issued upon Conversion of convertible notes | 103,005 | 1,067,843 | 1,170,848 | ||||
Benefilcial conversion feature of convertible notes | 298,332 | 298,332 | |||||
Return of employee shares as part of settlement agreements | (11,000,000) | ||||||
Amount Return of employee shares as part of settlement agreements | $ (11,000) | $ (148,940) | $ (159,940) | ||||
Issuance of common stock for cash | $ 38,521,012 | ||||||
Amount of shares issued for cash | 38,521 | 1,243,885 | 1,282,406 | ||||
Gain on extinguishment of related party Convertible Debt | $ 622,342 | $ 622,342 | |||||
Warrants issued for compensation | 1,244,661 | 1,244,661 | |||||
Net Income (Loss) | 2,325,726 | 2,325,726 | |||||
Balances at Jun. 30, 2016 | 537,989,764 | 1,000,000 | |||||
Amount Balance | $ 537,990 | $ 1,000 | 12,366,476 | (16,878,382) | (3,972,916) | ||
Balances at Jun. 30, 2016 | 537,989,764 | 1,000,000 | |||||
Amount Balance | $ 537,990 | $ 1,000 | $ 12,366,476 | (16,878,382) | (3,972,916) | ||
Shares Issued for services rendered | $ 15,701,363 | ||||||
Amount of Shares for services | 15,701 | 449,567 | 465,268 | ||||
Shares issued upon conversion of convertible notes | 75,761,502 | ||||||
Amount of Shares issued upon Conversion of convertible notes | 75,762 | 112,261 | 188,023 | ||||
Benefilcial conversion feature of convertible notes | 212,771 | 212,771 | |||||
Shares Issued as part of legal settlement | $ 6,800,000 | ||||||
Amount Shares Issued as part of legal settlement | 6,800 | $ 493,199 | $ 499,999 | ||||
Cashless exercise of Warrants | 45,408,834 | ||||||
Amount cashless exercise of warrants | 45,409 | $ 278,614 | $ 324,023 | ||||
Issuance of common stock for cash | $ 41,485,294 | ||||||
Amount of shares issued for cash | 41,485 | 415,165 | 456,650 | ||||
Shares issued for compensation | 11,933,557 | ||||||
amount issued for compensation | $ 11,934 | $ 399,330 | $ 411,264 | ||||
Net Income (Loss) | (3,140,693) | (3,140,693) | |||||
Balances at Dec. 31, 2016 | 735,080,341 | 1,000,000 | |||||
Amount Balance | $ 735,081 | $ 1,000 | 14,727,383 | (20,019,075) | (4,555,611) | ||
Balances at Jun. 30, 2016 | 537,989,764 | 1,000,000 | |||||
Amount Balance | $ 537,990 | $ 1,000 | $ 12,366,476 | 16,878,382 | (3,972,916) | ||
Shares Issued for services rendered | $ 28,724,139 | ||||||
Amount of Shares for services | 28,724 | 979,903 | 1,008,627 | ||||
Shares issued upon conversion of convertible notes | 77,800,687 | ||||||
Amount of Shares issued upon Conversion of convertible notes | 77,801 | 320,997 | 398,798 | ||||
Benefilcial conversion feature of convertible notes | 212,771 | 212,771 | |||||
Shares Issued as part of legal settlement | $ 6,800,000 | ||||||
Amount Shares Issued as part of legal settlement | 6,800 | $ 493,200 | $ 500,000 | ||||
Cashless exercise of Warrants | 46,908,834 | ||||||
Amount cashless exercise of warrants | 46,909 | $ 311,614 | $ 358,523 | ||||
Issuance of common stock for cash | $ 65,667,587 | ||||||
Amount of shares issued for cash | 65,668 | 925,682 | 991,350 | ||||
Shares issued for compensation | 22,634,107 | ||||||
amount issued for compensation | $ 22,634 | $ 993,052 | $ 1,015,686 | ||||
Stock Options Issued for services renderd | $ 1,459,134 | 1,459,134 | |||||
Net Income (Loss) | $ (9,276,251) | $ (9,276,251) | |||||
Balances at Jun. 30, 2017 | 786,525,118 | 1,000,000 | 18,062,830 | (26,154,633) | (7,304,278) | ||
Amount Balance | $ 786,525 | $ 1,000 | |||||
Balances at Jun. 30, 2017 | 786,525,118 | 1,000,000 | |||||
Amount Balance | $ 786,525 | $ 1,000 | $ 18,062,830 | $ (26,154,633) | $ (7,304,278) | ||
Shares Issued for services rendered | |||||||
Shares issued upon conversion of convertible notes | 321,291,865 | ||||||
Amount of Shares issued upon Conversion of convertible notes | 321,292 | 3,626,114 | 3,947,406 | ||||
Shares Issued as part of legal settlement | $ 45,000,000 | ||||||
Amount Shares Issued as part of legal settlement | 45,000 | $ 1,394,975 | $ 1,439,975 | ||||
Issuance of common stock for cash | $ 500,000 | ||||||
Amount of shares issued for cash | 500 | 8,000 | 8,500 | ||||
Shares issued for compensation | 789,474 | ||||||
amount issued for compensation | $ 789 | $ 14,211 | $ 15,000 | ||||
Stock Options Issued for services renderd | $ 5,600,000 | ||||||
Stock Options issued services rendered amount | $ 5,600 | 174,563 | 180,163 | ||||
Preferred Shares converted to common shares | 789,474 | (789,474) | |||||
amount of preferred shares converted to common shares | $ 789 | $ (789) | |||||
Stock Options to board members and employees | 179,116 | 179,116 | |||||
Net Income (Loss) | (5,507,781) | (5,507,781) | |||||
Balances at Dec. 31, 2017 | 1,159,705,457 | 1,000,000 | |||||
Amount Balance | $ 1,159,706 | $ 1,000 | $ 23,459,809 | $ (31,662,414) | $ (7,041,899) |
General
General | 6 Months Ended |
Dec. 31, 2017 | |
Business | |
Business | 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, 2014, the Company changed its name to Rocky Mountain High Brands, Inc. RMHB currently operates four wholly-owned subsidiaries and one 49% owned subsidiary, which the Company controls. All subsidiaries are consolidated for financial reporting purposes. RMHB is a consumer goods company that specializes in developing, manufacturing, marketing, and distributing high-quality, health conscious, cannabidiol (“CBD”) and hemp- infused products that span various categories including beverage, food, fitness, skin care and more. 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 tinctures, gummies, water soluble drops, capsules, lotions, salves, and E-juice liquids and cartridges. The Company plans to introduce CBD-infused waters and additional HEMPd product offerings during the remainder of 2018. 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 four 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 name Eagle Spirit Spring Water. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2017 | |
Basis of Presentation: | |
Basis of Presentation | 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. 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 from the sale of its products 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 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. 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 Issued during the six months ended December 31, 2017 4,017,623 Converted during the six months ended December 31, 2017 (5,276,018 ) Change in fair value recognized in operations 1,795,205 Balance, December 31, 2017 $ 5,609,389 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, 2017, June 30, 2017, and June 30, 2016: December 31, 2017 June 30, 2017 June 30, 2016 Estimated dividends None None None Expected volatility 165% 114% 45% Risk free interest rate 1.39% .84% .12% Expected term .1 to 4.8 years 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. During the six months ended December 31, 2017 the Company recorded an impairment charge on the goodwill related to the acquisition of Rocky Mountain High Water Company in the amount of $59,163. As of December 31, 2017 the goodwill related to this acquisition is fully impaired. No impairment charges were recorded during the year ended June 30, 2017 or the six months ended December 31, 2016. During the year ended June 30, 2016 the Company recorded a 100% impairment of $166,000 on its investment in Dollar Shots Club when it was determined that the Company would not likely recover its investment. 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 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. 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 May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Measurement of Credit Losses on Financial Instruments In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business |
Going Concern
Going Concern | 6 Months Ended |
Dec. 31, 2017 | |
General: | |
General | 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 $7,041,899, an accumulated deficit of $31,662,414, and a working capital deficit of $7,106,673 as of December 31, 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 October 12, 2017, the Company entered into an Equity Financing Agreement (“EFA”) with GHS Investments, LLC (“GHS”), which provides for GHS to purchase up to $12,000,000 of the Company’s common stock over a 24-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 cash flows until cash flows from operations become consistently positive. |
Inventory
Inventory | 6 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 4 – Inventory As of December 31, 2017, June 30, 2017, and June 30, 2016, inventory consists of the following: December 31, 2017 June 30, 2017 June 30, 2016 Finished inventory $ 77,517 $ 216,711 $ 290,368 Raw materials and packaging 4,795 7,984 — Total $ 82,312 $ 224,695 $ 290,368 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Dec. 31, 2017 | |
Going Concern | |
Prepaid Expenses and Other Current Assets | As of December 31, 2017, June 30, 2017, and June 30, 2016, prepaid expenses and other current assets consists of the following: December 31, 2017 June 30, 2017 June 30, 2016 Prepaid officers’ compensation $ 445,149 $ 521,916 $ 1,334,261 Prepaid directors’ compensation 147,207 206,090 323,855 Prepaid marketing expenses 13,750 19,250 33,000 Other prepaid expenses and current assets 28,616 27,082 25,435 Total $ 634,722 $ 774,338 $ 1,716,551 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Dec. 31, 2017 | |
Property, Plant, and Equipment: | |
Property, Plant and Equipment | As of December 31, 2017, June 30, 2017, and June 30, 2016, property and equipment consists of the following: December 31, 2017 June 30, 2017 June 30, 2016 Vehicles $ 29,598 $ 29,598 $ 112,817 Furniture and equipment 42,538 41,042 343 Personal computers 2,379 3,315 1,170 74,515 73,955 114,330 Less: accumulated depreciation 38,834 25,822 22,122 Total $ 35,681 $ 48,133 $ 92,208 |
Acquisitions
Acquisitions | 6 Months Ended |
Dec. 31, 2017 | |
Acquisition | |
Acquisition | 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. 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 WaterCo, 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 $59,163 included in other assets. During the six months ended December 31, 2017, the Company obtained an outside valuation of the rights to use the land and obtain the water described in the agreement. As a result of that analysis and the continued operating losses by the Company’s spring water business, the Company determined that its investment, including the related goodwill, was fully impaired. The Company recorded an impairment expense of $59,163 as of November 12, 2017. As a result of the step-acquisition, beginning on November 12, 2016 the operations of WaterCo are consolidated in the financial statements of RMHB. |
Investments
Investments | 6 Months Ended |
Dec. 31, 2017 | |
Schedule of Investments [Abstract] | |
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 a 100% impairment on this investment of $166,000 |
Accounts Payable amd Accrued Li
Accounts Payable amd Accrued Liabilities | 6 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable amd Accrued Liabilities | As of December 31, 2017, June 30, 2017, and June 30, 2016, accounts payable and accrued liabilities consists of the following: December 31, 2017 June 30, 2017 June 30, 2016 Accounts payable $ 373,882 $ 231,429 $ 130,368 Accrued compensation 215,026 55,416 — Other accrued expenses 161,899 154,345 207,498 Total $ 750,807 $ 441,190 $ 337,866 |
Related Party Convertible Notes
Related Party Convertible Notes Payable | 6 Months Ended |
Dec. 31, 2017 | |
Related Party | |
Related Party Convertible Notes Payable | As of December 31, 2017, June 30, 2017, and June 30, 2016, the Company’s related party convertible notes payable consists of the following: Interest Rate Term December 31, 2017 June 30, 2017 June 30, 2016 Related party convertible 6% 0 - .1 year $ 179,000 $ 493,450 $ 298,332 Discount (4,544 ) (227,203 ) (277,602) Total $ 174,456 $ 266,247 $ 20,730 As of December 31, 2017, the related party convertible notes represent two notes payable to LSW in the amounts of $79,000 and $100,000. They are convertible to shares of the Company’s common stock at 50% of market price, as defined in the notes payable agreements. 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 no interest expense for the six months ended December 31, 2017 and December 31, 2016 at the inception of the notes relating to the excess of derivative value over the face of the notes. 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. 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 was 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 was 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%. As of December 31, 2017, these notes are reclassified to Convertible Notes Payable as Mr. Grisaffi is no longer a related party. Both of Mr. Grisaffi’s convertible notes payable are subject to a lawsuit brought by the Company against Mr. Grisaffi. For the six months ended December 31, 2017 and December 31, 2016, interest expense on these notes, including amortization of the discount, was $262,613 and $160,089, respectively. 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. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Dec. 31, 2017 | |
Convertible Notes Payable {1} | |
Convertible Notes Payable. | As of December 31, 2017, June 30, 2017, and June 30, 2016, the Company’s convertible notes payable consisted of the following: Interest Rates Term December 31, 2017 June 30, 2017 June 30, 2016 Convertible notes 6% - 10% 0 - 2 years $ 1,026,995 $ 1,115,000 $ 597,500 Discount (349,297 ) (381,747 ) — Total $ 677,698 $ 733,253 $ 597,500 The convertible notes are convertible to shares of the Company’s common stock at $.005 to 50% of the market price, as defined in the agreements. For the six months ended December 31 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 $1,179,140 and $0 of interest expense for the six months ended December 31, 2017 and 2016, respectively, at the inception of the notes relating to the excess of derivative value over the face of the notes. 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. During the six months ended December 31, 2017, the Company recorded a gain on extinguishment of debt of $1,200,092. This gain consists of the gain on the extinguishment of debt related to the legal settlement with a debt holder of $1,811,714, the gain on the assignment and subsequent amendment of a convertible note payable of $333,899, the loss on conversion of certain convertible notes payable involving derivative liabilities into stock, and the loss of $15,256 arising from the amendments of two notes payable with GHS, which eliminated the conversion features of both notes. During the six months ended December 31, 2016 there was no gain or loss on extinguishment of debt. All tangible and intangible assets of the Company are pledged as security. |
Notes Payable
Notes Payable | 6 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable Whitestone Offices | As of December 31, 2017, June 30, 2017, and June 30, 2016, the Company’s notes payable consists of the following: Interest Rates Term December 31, 2017 June 30, 2017 June 30, 2016 Notes 6% - 10% .5 – 1.5 years $ 549,936 $ 26,130 $ — 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 $19,936, $26,130, and $0 on December 31, 2017, June 30, 2017, and June 30, 2016, respectively. For the six months ended December 31, 2017 and 2016, interest expense on this note was $493 and $710, respectively. For the year ended June 30, 2017, interest expense on this note was $1,755. 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 20% discount off market price, as defined in the agreements. The amendments removed the conversion features in the notes, totalling $500,000. 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. Notes Payable also includes two non-interest bearing notes totalling $30,000 that originated prior to the Company’s 2014 bankruptcy proceedings. |
Deferred Revenue
Deferred Revenue | 6 Months Ended |
Dec. 31, 2017 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue Disclosure | 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. |
Shareholders' Deficit
Shareholders' Deficit | 6 Months Ended |
Dec. 31, 2017 | |
Shareholders' Deficiency | |
Shareholders' Deficiency | Common Stock As of June 30, 2016 the Company has 800,000,000 shares of common stock authorized. On March 14, 2017 the Board of Directors and the holders of a majority of the voting capital stock of the Company increased this authorization to 950,000,000 and on September 19, 2017 the authorization was increased to 4,000,000,000 shares. As of December 31, 2017 there are 1,159,706,457 common shares issued and outstanding. During the six months ended December 31, 2017 the Company issued 373,181,339 shares of common stock, including 321,291,865 for convertible notes payable conversions, 45,000,000 as part of a legal settlement, 789,474 for the conversion from Series E Preferred Shares, 5,600,000 for services rendered, and 500,000 for cash. During the six months ended December 31, 2016 the Company issued 197,090,550 shares of common stock for convertible notes payable conversions, warrant exercises, compensation, cash purchases, services rendered, and a legal settlement. 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 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. Initially, the Board authorized 35,000,000 shares of the Company’s common stock to be included in the Plan. The Board of Directors awards these shares at its sole discretion. On July 14, 2017 the Board of Directors increased the authorized shares in the 2017 Incentive Plan to 65,000,000. On December 19, 2017 the Board of Directors increased the authorized shares in the 2017 Incentive Plan to 100,000,000. Preferred Stock As of December 31, 2017 the Company has 20,000,000 shares of Preferred Stock authorized and 10,789,474 designated through the various Series described below. The remaining 9,210,526 remain undesignated. Series A Preferred Stock The Company has 1,000,000 shares of Series A Preferred Stock authorized and outstanding as of December 31, 2017 and June 30, 2017. LSW Holdings LLC (“LSW”), holds all of these shares. LSW’s Managing Member is Lily Li, RMHB’s Executive Vice President. In that capacity, Ms. Li has the authority to direct voting and investment decisions with regard to LSW’s interests in the Company. 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 are now entitled to cast 1,200 votes for every share held, and shares of Series A Convertible Preferred Stock are convertible to common stock at a rate of 1,200 shares of common stock for every share of Series A 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 by 10,000,000. 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 in May 2017. On July 5, 2017, the Company amended the Certificate of Designation for our Series A Preferred Stock. The amendment changed 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 the Company’s Board of Directors and LSW, 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 from 1,200 for every share of Series A Preferred Stock. The Series A Preferred Stock is the subject of the lawsuit filed by the Company, Rocky Mountain High Brands, Inc. f/k/a Republic of Texas Brands, Inc. Plaintiff, vs. Jerry Grisaffi, et al, Series B Preferred Stock The Company has 5,000,000 shares of Series B Preferred Stock authorized and none outstanding as of December 31, 2017 and June 30, 2017. Series C Preferred Stock The Company amended its Articles of Incorporation as of November 13, 2015 to authorize 2,000,000 shares of Series C Preferred Stock, which are 12% interest bearing, cumulative, exchangeable, non-voting, convertible preferred stock of the Company. Each Series C Preferred share is convertible 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 Series C Preferred Stock shares. As of June 30, 2017, there were 1,107,607 shares of Series C Preferred shares outstanding and the related redemption value of these shares was classified as a current liability. On October 6, 2017, the Company and the holder reached a legal settlement whereby the Company agreed to an exchange of the Preferred C Stock back to the originating note payable in accordance with the terms of the Exchange Agreement. The holder then assigned the note to GHS in exchange for $1,000,000 consideration paid to him by GHS. As of December 31, 2017, there are no Series C Preferred Stock shares outstanding. Series D Preferred Stock The Company amended its Articles of Incorporation as of March 21, 2016 to authorize 2,000,000 shares of Series D Preferred Stock, a non-voting, non-interest bearing convertible preferred stock. Each Series C preferred share is convertible to 100 shares of common stock. As of December 31, 2017 and June 30, 2017, there are no Series D preferred shares outstanding. 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 Michael Welch, Chairman of the Board 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 December 31, 2017, there are no shares of Series E Preferred Stock outstanding. Warrants During the six months ended December 31, 2017, the Company granted no common stock warrants and none were exercised. As part of a legal settlement, 55,096,825 warrants were returned to the Company and cancelled on October 6, 2017. During the six months ended December 31, 2016, the Company granted 9,037,500 common stock warrants and 38,026,204 were exercised. As of December 31, 2017 and June 30, 2017, there are 650,000 and 55,746,825 warrants outstanding. 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 six months ended December 31, 2017, the Company issued 39,440,000 options to purchase common stock. The options have an exercise price ranging from $.001 and $.003 and vested immediately. The Company recognized an expense of $203,045 at the grant dates as the options immediately vested. There were no options granted or outstanding during the six months ended December 31, 2016. As of December 31, 2017 and June 30, 2017, there are 67,790,000 and 28,350,000 options outstanding. During the year ended June 30, 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. |
Concentrations
Concentrations | 6 Months Ended |
Dec. 31, 2017 | |
Concentrations | |
Concentrations | During the six months ended December 31, 2017, the Company’s two largest customers each accounted for approximately 6% of sales. During the six months ended December 31, 2016, the Company’s two largest customers accounted for approximately 75% and 1% of sales, respectively. 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | The reconciliation of income tax benefit at the U.S. statutory rate of 34% to the Company’s effective rate for the six months ended December 31, 2017 and 2016 and the years ended June 30, 2017 and 2016 is as follows: Six Months Ended December 31, 2017 Six Months Ended December 31, 2016 Year Ended June 30, 2017 Year Ended June 30, 2016 U.S federal statutory rate (34%) (34%) (34%) (34%) State income tax, net of federal benefit (0.0%) (0.0%) (0.0%) (0.0%) Increase in valuation allowance 34% 34% 34% 34% Income tax provision (benefit) 0.0% 0.0% 0.0% 0.0% The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of December 31, 2017, June 30, 2017 and June 30, 2016 consist of the following: December 31, 2017 June 30, 2017 June 30, 2016 Deferred Tax Assets Net Operating Losses $ 3,360,000 $ 4,482,000 $ 2,227,000 Less: Valuation Allowance $ (3,360,000) $ (4,482,000) $ (2,227,000) Deferred Tax Assets – Net — — — As of December 31, 2017, the Company had approximately $16,000,000 of federal and state net operating loss carryovers (“NOLs”), which begin to expire in 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. 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 for the six months ended December 31, 2017 that is still fully valued against as of December 31, 2017. This expense is attributable to the Company being in a net deferred tax asset position at the time of remeasurement. As the company maintains fully valuation allowance, this amount can be seen on the rate reconciliation as an adjustment to deferred tax asset and corresponding valuation allowance. 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 have recorded no income tax expense during the six months ended December 31, 2017, the period in which the legislation was enacted. 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. |
Commitments
Commitments | 6 Months Ended |
Dec. 31, 2017 | |
Commitments | |
Commitments | Office Leases 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. The related straight-line rent liability is included in Accounts Payable and Accrued Liabilities. 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. Employee Agreements The Company has entered into employment agreements with the following Board members and officers: In 2014, the Company entered into a five-year employment agreement with David M. Seeberger, Vice President and General Counsel. Under the agreement, we In January 2016, the Company entered into a five-year employment agreement with Michael Welch, Chief Financial Officer. Under the agreement, we On December 18, 2017, the Company entered into a five-year employment agreement with John Blackington, Chief Commercialization Officer. The agreement includes base compensation of $140,000 per year, 7,000,000 common stock options, an annual bonus of up to 30%, and discretionary bonuses as approved by the Board of Directors. On February 1, 2018, the Company entered into a three-year employment agreement with Jens Mielke, Chief Financial Officer. The agreement includes base compensation of $140,000 per year and discretionary bonuses as approved by the Board of Directors. On February 1, 2018, the Company entered into a three-year employment agreement with Charles Smith, Chief Operating Officer. The agreement includes base compensation of $120,000 per year and discretionary bonuses as approved by the Board of Directors. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Dec. 31, 2017 | |
Commitments | |
Legal Proceedings | Arbitration Claim of Roy J. Meadows Against Rocky Mountain High Brands, Inc. dated February 24, 2016 On October 6, 2017 the Company executed a Release and Settlement Agreement with Roy Meadows (“Meadows Settlement”) regarding the litigation between the parties. As part of the Meadows Settlement, the Company agreed to issue 45 million shares of the Company’s common stock, including 20 million shares issued immediately and 25 million shares to be issued upon the effectiveness of the Company’s increased common share authorization, which occurred on October 31, 2017. Mr. Meadows is subject to a “leak-out” formula whereby he is limited in the number of shares he can re-sell if the stock price is below $.06 per share. In connection with this settlement, the Company agreed to an exchange of the Preferred C Stock back to the originating note payable in accordance with the terms of the Exchange Agreement. Mr. Meadows assigned the note to GHS Investments, LLC, (“GHS”) an outside investment group, in exchange for $1,000,000 in consideration paid to him by GHS. Mr. Meadows released the Company from all claims and returned 55,096,825 stock warrants. Claims Against Donna Rayburn On October 6, 2017 the Company executed a Release and Settlement Agreement with Donna Rayburn regarding the litigation between the Company and Ms. Rayburn. Ms. Rayburn released the Company from all claims and returned 10 million stock warrants. Rocky Mountain High Brands, Inc. v Lyonpride Music, LLC, United States District Court Northern District of Texas, 3:18-cv-00045-C The Company filed suit against Lyonpride Music, LLC (“Lyonpride”) for fraud and for declaratory relief with respect to a contract between the parties. The Company is seeking monetary damages against Lyonpride. The case is currently in the discovery phase. Los Angeles Superior Court, BC669367, filed July 24, 2017. Statewide Beverage Company, Inc. 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 case is currently in the 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 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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2017 | |
Subsequent Events | |
Subsequent Events. | Between January 1 and March 30, 2018, the Company issued 349,469,321 shares of common stock, including 168,805,244 for convertible notes payable conversions, 10,597,405 for director and employee compensation, 29,096,402 for option exercises, 5,821,256 for services rendered, and 135,149,014 for cash. Between January 1 and March 30, 2018, the Company issued convertible notes payable in the amount of $300,000 and amended two notes payable to GHS in the aggregate amount of $500,000 to include a conversion feature of $.005. Holders of convertible notes payable converted $308,727 of outstanding principal during that same period. On January 5, 2018 the Company entered into a $300,000 secured convertible promissory note with GHS. On January 9, 2018 the Company amended two $250,000 secured promissory notes payable with GHS to include a $.005 conversion feature. On February 9, 2018 the Company received a notice of effectiveness from the Securities and Exchange Commission on its Registration Statement on Form S-1/A. The registration statement registered 250,000,000 shares of common stock for resale by GHS. Subsequent to the effective date, the Company sold 94,826,433 shares of stock to GHS in accordance with the EFA. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies (Policies): | |
Use of Estimates. | 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. 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 from the sale of its products 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 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. 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 Issued during the six months ended December 31, 2017 4,017,623 Converted during the six months ended December 31, 2017 (5,276,018 ) Change in fair value recognized in operations 1,795,205 Balance, December 31, 2017 $ 5,609,389 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, 2017, June 30, 2017, and June 30, 2016: December 31, 2017 June 30, 2017 June 30, 2016 Estimated dividends None None None Expected volatility 165% 114% 45% Risk free interest rate 1.39% .84% .12% Expected term .1 to 4.8 years 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. During the six months ended December 31, 2017 the Company recorded an impairment charge on the goodwill related to the acquisition of Rocky Mountain High Water Company in the amount of $59,163. As of December 31, 2017 the goodwill related to this acquisition is fully impaired. No impairment charges were recorded during the year ended June 30, 2017 or the six months ended December 31, 2016. During the year ended June 30, 2016 the Company recorded a 100% impairment of $166,000 on its investment in Dollar Shots Club when it was determined that the Company would not likely recover its investment. |
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 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 | 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. |
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 May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Measurement of Credit Losses on Financial Instruments In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business |
Significant Accounting Polici27
Significant Accounting Policies (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
change in level 3 | 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 Issued during the six months ended December 31, 2017 4,017,623 Converted during the six months ended December 31, 2017 (5,276,018 ) Change in fair value recognized in operations 1,795,205 Balance, December 31, 2017 $ 5,609,389 |
The estimated fair value of the derivative instruments | December 31, 2017 June 30, 2017 June 30, 2016 Estimated dividends None None None Expected volatility 165% 114% 45% Risk free interest rate 1.39% .84% .12% Expected term .1 to 4.8 years 1 to 2.0 years 1 to 5.5 years |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | December 31, 2017 June 30, 2017 June 30, 2016 Finished inventory $ 77,517 $ 216,711 $ 290,368 Raw materials and packaging 4,795 7,984 — Total $ 82,312 $ 224,695 $ 290,368 |
Prepaid Expenses and Other Cu29
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses | December 31, 2017 June 30, 2017 June 30, 2016 Prepaid officers’ compensation $ 445,149 $ 521,916 $ 1,334,261 Prepaid directors’ compensation 147,207 206,090 323,855 Prepaid marketing expenses 13,750 19,250 33,000 Other prepaid expenses and current assets 28,616 27,082 25,435 Total $ 634,722 $ 774,338 $ 1,716,551 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
[custom:PropertyAndEquipment] | December 31, 2017 June 30, 2017 June 30, 2016 Vehicles $ 29,598 $ 29,598 $ 112,817 Furniture and equipment 42,538 41,042 343 Personal computers 2,379 3,315 1,170 74,515 73,955 114,330 Less: accumulated depreciation 38,834 25,822 22,122 Total $ 35,681 $ 48,133 $ 92,208 |
Accounts Payable amd Accrued 31
Accounts Payable amd Accrued Liabilities (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | December 31, 2017 June 30, 2017 June 30, 2016 Accounts payable $ 373,882 $ 231,429 $ 130,368 Accrued compensation 215,026 55,416 — Other accrued expenses 161,899 154,345 207,498 Total $ 750,807 $ 441,190 $ 337,866 |
Related Party Convertible Not32
Related Party Convertible Notes Payable (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Related Party Convertible Notes Payable | Interest Rate Term December 31, 2017 June 30, 2017 June 30, 2016 Related party convertible 6% 0 - .1 year $ 179,000 $ 493,450 $ 298,332 Discount (4,544 ) (227,203 ) (277,602) Total $ 174,456 $ 266,247 $ 20,730 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Convertible Notes Payable | Interest Rates Term December 31, 2017 June 30, 2017 June 30, 2016 Convertible notes 6% - 10% 0 - 2 years $ 1,026,995 $ 1,115,000 $ 597,500 Discount (349,297 ) (381,747 ) — Total $ 677,698 $ 733,253 $ 597,500 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Interest Rates Term December 31, 2017 June 30, 2017 June 30, 2016 Notes 6% - 10% .5 – 1.5 years $ 549,936 $ 26,130 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Taxes {3} | |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2017 June 30, 2017 June 30, 2016 Deferred Tax Assets Net Operating Losses $ 3,360,000 $ 4,482,000 $ 2,227,000 Less: Valuation Allowance $ (3,360,000) $ (4,482,000) $ (2,227,000) Deferred Tax Assets – Net — — — |
Schedule of reconciliation of income tax benefit | Six Months Ended December 31, 2017 Six Months Ended December 31, 2016 Year Ended June 30, 2017 Year Ended June 30, 2016 U.S federal statutory rate (34%) (34%) (34%) (34%) State income tax, net of federal benefit (0.0%) (0.0%) (0.0%) (0.0%) Increase in valuation allowance 34% 34% 34% 34% Income tax provision (benefit) 0.0% 0.0% 0.0% 0.0% |
General (Details Narrative)
General (Details Narrative) | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Incorporation | Jul. 17, 2014 |
Name Change to Totally Hemp crazy | Oct. 23, 2014 |
Going Concern (Details)
Going Concern (Details) - USD ($) | Jun. 30, 2017 | Feb. 28, 2017 |
Going Concern Details | ||
Shareholders deficit | $ 5,642,854 | |
Accumulated deficit | $ 26,988,875 | |
Option to Purchase Series A Preferred Stock | 10000.00% |
Level 3 Financial Instrument Na
Level 3 Financial Instrument Narrative (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2015 | |
Level 3 Financial Instrument Narrative Details | ||||
Opening Balance of Financial Instrument | $ 5,072,579 | $ 2,217,744 | $ 11,504,057 | |
Stock issued | $ 4,017,623 | 1,383,650 | 2,887,618 | |
Exercises | (479,834) | |||
Change in fair value recognized in operations | 1,795,205 | 1,951,019 | (11,071,250) | |
Closing Balance of Finacial Instrument | 5,609,389 | $ 5,072,579 | ||
Converted During Year | $ (5,276,018) | $ (2,102,681) |
Estimated Fair Value Of Derivat
Estimated Fair Value Of Derivative Instruments Using Black-Scholes Option Pricing Model (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Estimated Fair Value Of Derivative Instruments Using Black-Scholes Option Pricing Model | |||
Estimated Dividends | $ 0 | $ 0 | $ 0 |
Expected Volatility | 165.00% | 114.00% | 45.00% |
Risk Free Interest Rate | 1.39% | 8.40% | 1.20% |
Expected Term in years Minimum | .1 | 1 | 1 |
Expected Term in years Maximum | 4.8 | 2 | 5.5 |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Inventory Disclosure [Abstract] | |||
Finished Inventory | $ 77,517 | $ 216,711 | $ 290,368 |
Raw Materials and Packaging | 4,795 | 7,984 | 0 |
Total Inventory | $ 82,321 | $ 224,695 | $ 290,368 |
Prepaid Expenses and Other Cu41
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Notes to Financial Statements | |||
Prepaid Officers Compensation | $ 445,149 | $ 521,916 | $ 1,334,261 |
Prepaid Directors Compensation | 147,207 | 206,090 | 323,855 |
Prepaid Marketing Expenses | 13,750 | 19,250 | 33,000 |
Other Prepaid Expenses and Current Assets | 28,616 | 27,082 | 25,435 |
Total | $ 634,722 | $ 774,338 | $ 1,716,551 |
Property And Equipment (Details
Property And Equipment (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Property And Equipment Details | |||
Vehicles | $ 29,598 | $ 29,598 | $ 112,817 |
Furniture and Equipment | 42,538 | 41,042 | 343 |
Personal computer book value | 2,379 | 3,315 | 1,170 |
Subtotal | 74,515 | 73,955 | 114,330 |
Less Accumulated Depreciation | 38,834 | 25,822 | 22,122 |
Total | $ 35,681 | $ 48,133 | $ 92,208 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Jul. 27, 2016 | Nov. 16, 2015 |
Acquisition Details | ||
Cash paid for acquisition | $ 22,500 | |
Warrant issued for acquisition | 500,000 | |
Exercise Price of Warrant | 3.00% | |
Agreement amendmed for new voting interest | 75.00% | |
Poafpbybitty interest | 51.00% | |
Goodwill | $ 59,163 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | Sep. 18, 2016 | Jun. 30, 2016 |
Equity Method Investments and Joint Ventures [Abstract] | ||
Shares Acquired | 5,000,000 | |
Common Stock Issued | 2,000,000 | |
Cost Basis For Common Stock Issued | 5.00% | |
Impairment on Investment | $ 166,000 |
Accounts Payable amd Accrued 45
Accounts Payable amd Accrued Liabilities (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Payables and Accruals [Abstract] | |||
Accounts Payable | $ 373,882 | $ 231,429 | $ 130,368 |
Accrued Compensation | 215,026 | 55,416 | |
Other Accrued Expenses | 161,899 | 154,345 | 207,498 |
Total | $ 81,248 | $ 382,820 | $ 58,399 |
Related Party Convertible Not46
Related Party Convertible Notes Payable (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | |
Related Party Details | |||
Related Party Convertible Notes Payable | $ 179,000 | $ 493,450 | $ 298,332 |
Interest Rate | 6.00% | ||
Term Minimum | 0 | ||
Term Maximum | 1 year | ||
Discount | $ (4,544) | (227,203) | |
Total | $ (174,456) | $ 266,247 |
Related Party Notes (Details Na
Related Party Notes (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Notes to Financial Statements | ||||
Note Payable to LSW 1 | $ 79,000 | |||
Note Payable to LSW 2 | 100,000 | |||
Interest Expense | $ 44 | $ 16,308 | ||
Note Payable 1 held by chairman | 200,150 | |||
Note Payable 2 Held by Charmain | $ 184,300 | |||
Conversion Rate | $ 0.50 | |||
Due Date of Note 1 | Dec. 19, 2017 | |||
Due Date of Note 2 | Dec. 30, 2017 | |||
Company Repayment to chairman | $ 25,000 | |||
Conversion of interest | 200,150 | |||
Interest Expense of Notes | 2,939 | |||
Company Intest Expense from Notes | $ 262,613 | $ 160,089 | $ 337,852 | $ 16,308 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | |
Convertible Notes Payable Details | ||||
Convertible Notes Payable | $ 1,026,995 | $ 1,115,000 | $ 597,500 | |
Convertible notes of term in years minimum | 0 | |||
Convertible notes of term in years maximum | 2 | |||
Convertible notes interest rate minimum | 6.00% | |||
Convertible notes interest rate maximum | 12.00% | |||
Discount | $ (349,297) | (381,747) | ||
Total | 677,698 | 733,253 | 597,500 | |
Amortization of the Discount | 543,164 | $ 77,743 | 172,594 | 26,762 |
Interst Expense | $ 1,179,140 | $ 0 | $ 222,127 | $ 0 |
Conversion Rate Minmimum | 1.00% | 1.00% | ||
Conversion Rate Maximum | 50.00% | 50.00% |
Convertible Notes Payable (De49
Convertible Notes Payable (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Notes to Financial Statements | ||||
Interest Expense | $ 1,179,140 | $ 0 | $ 222,127 | $ 0 |
Extinguishment of Debt | 1,200,092 | |||
gain on extinguishment of debt | 1,811,714 | |||
gain on assignment | 333,899 | |||
loss on conversion of notes | 930,265 | |||
Loss from amendments | $ 15,256 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |||
Notes Payable | $ 549,936 | $ 26,130 | |
Interest Rate | 6.00% | ||
Interest Rate Maximum | 10.00% | ||
Term Minimum | 6 months | ||
Term Maximum | 1 year 6 months |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Nov. 30, 2017 | Sep. 01, 2016 | |
Debt Disclosure [Abstract] | |||||
Note Payable | $ 500,000 | $ 40,122 | |||
Interest Rate of Note Payable | 0.00% | ||||
Monthly Payament Amount | $ 1,115 | ||||
Discount | $ 36,634 | ||||
Term of Note Payable | 3 | ||||
Balance on the Note | $ 26,130 | ||||
Interest Expense on Note 1 | $ 493 | $ 710 | |||
Interest Expense on Note 2 | 521 | $ 710 | $ 1,755 | ||
Loss on extinguishment | $ 15,256 | ||||
Interest Bearing Notes | $ 30,000 |
Deferred Revenue (Details)
Deferred Revenue (Details) | Jun. 30, 2017shares | Aug. 28, 2016USD ($) | Jul. 29, 2016USD ($) | Jun. 30, 2016USD ($) |
Deferred Revenue [Abstract] | ||||
RMHC was required to pay the company for distribution rights | $ 500,000 | |||
RMHC was required to submit an additional payment prior to the production run | $ 150,000 | |||
Cans of product covered under the agreement | 1,000,000 | |||
Company received an amount and recorded as deferred revenue | $ 300,000 | $ 200,000 | ||
Shares issued for settlement of case | shares | 6,800,000 | |||
Shares already received | shares | 500,000 |
Common Stock (Details)
Common Stock (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 19, 2017 | Sep. 19, 2017 | Jul. 14, 2017 | Mar. 17, 2017 | Mar. 14, 2017 | Nov. 16, 2015 | |
Common Stock Details | ||||||||||
Shares of Common Stock Authorized | 800,000,000 | 4,000,000,000 | 950,000,000 | |||||||
Common Stock Outstanding | 1,159,706,457 | |||||||||
Shares of Common Stock Issued for Convertible Notes | 373,181,339 | 197,090,550 | 248,535,354 | 101,495,350 | ||||||
Convertible Notes Payable Conversion | 321,291,865 | 77,800,687 | ||||||||
Warrant Exercises | 46,908,834 | 46,908,834 | ||||||||
Services Rendered | 5,600,000 | 29,724,139 | ||||||||
Conversion from Series E | 789,474 | |||||||||
Compensation | 21,634,107 | |||||||||
Legal Settlement | 45,000,000 | 6,800,000 | ||||||||
Shares Issued for Cash | 500,000 | 65,667,587 | ||||||||
Maximum Number of Shares Available for Issuance under Plan | 100,000,000 | 65,000,000 | 35,000,000 | |||||||
Common Stock Before Increase | $ 800,000,000 | |||||||||
Common Stock After Increase | 950,000,000 | |||||||||
Preferred Stock Authorized | 20,000,000 | |||||||||
Preferred Stock Designated | 10,789,474 | |||||||||
Undesignated Preferred Shares | 9,210,526 |
Series A Preferred Stock (Detai
Series A Preferred Stock (Details Narrative) - $ / shares | Dec. 31, 2017 | Jul. 24, 2017 | Jul. 05, 2017 | Jun. 30, 2017 | Mar. 14, 2017 | Mar. 13, 2017 | Jun. 30, 2016 |
Series C Preferred Stock | |||||||
Series A Preferred Stock Outstanding | 1,000,000 | 1,000,000 | 1,000,000 | ||||
Formerly entitled to vote rate | $ 1,200 | $ 1,200 | $ 400 | ||||
Common Stock conversion to preferred stock rate | $ 400 | $ 100 | 100 | ||||
current entitled to vote rate | $ 1,200 | ||||||
Increase in Authorized Preferred | 10,000,000 |
Series B Preferred (Details)
Series B Preferred (Details) - shares | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Jun. 30, 2017 | |
Notes to Financial Statements | ||
Shares Oustanding Series B | 5,000,000 | 5,000,000 |
Series C Preferred Stock (Detai
Series C Preferred Stock (Details) - USD ($) | 6 Months Ended | |||
Dec. 31, 2017 | Jul. 05, 2017 | Jun. 30, 2017 | Nov. 16, 2015 | |
Series C Preferred Stock | ||||
Date Articles of Incorporation Amended | Nov. 13, 2015 | |||
Series C Preferred Authorized | 2,000,000 | |||
Series C Preferred Shares bears interest at a rate per annum | 12.00% | 110760700.00% | ||
Holder converted note and interest in exchange for same number of Preferred C Shares. | $ 1,000,000 | |||
Company issued shares of common stock to acquire assets of Dollar Shots Club | 1,200 | |||
Each Series C Preferred Share can be converted in to Shares of Common Stock | 50 | |||
Shares Outstanding | 1,107,607 |
Series D Preferred Stock (Detai
Series D Preferred Stock (Details) - $ / shares | 6 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2017 | |
Notes to Financial Statements | ||
Date Articles of Incorporation Amended | Mar. 21, 2016 | |
Series D Preferred Authorized | 2,000,000 | |
Series Conversion Rate | $ 100 | |
Shares Oustanding | 0 | 0 |
Series E Preferred Stock (Detai
Series E Preferred Stock (Details Narrative) - $ / shares | 6 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | |
Notes to Financial Statements | ||
Series E Preferred Stock Created | Sep. 19, 2017 | |
Votes per share entiled to cast | $ 2,000 | |
Convertible to Common Stock on basis per share | $ 1 | |
Series E Stock Granted to Chairman | 789,474 | |
Welch Converted Series E | 789,474 | |
Welch Common stock upon conversion | 789,474 |
Warrants and Options (Details)
Warrants and Options (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Oct. 06, 2017 | |
Notes to Financial Statements | ||||
Common Stock Warrants Granted | 9,037,500 | 9,725,000 | 39,000,000 | |
Common Stock Warrants exercised | 38,026,204 | 47,008,834 | 3,658,914 | |
Options Granted to purchase Common stock | 39,440,000 | 27,000,000 | ||
Warrants returned to Company | 55,096,825 | |||
Warrants outstanding | 650,000 | 56,934,325 | 94,218,159 | |
Options Exercise Price Minimum | 0.10% | |||
Options Exercise Price Maximum | 0.30% | |||
Expense Recognized | $ 203,045 | |||
Options outstanding | 67,790,000 | 28,350,000 | ||
Compensation Expense | $ 1,459,134 | |||
Options granted to vendor | 350,000 | |||
Exercise Price of Options to vendor | 4.50% | |||
Expected Volatility | 114.00% | |||
Term | 2 years | |||
risk-free interest rate | 84.00% |
Concentrations (Details)
Concentrations (Details) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Concentrations Details | ||||
Company's two largest customers percent accounted of sales number one | 6.00% | 75.00% | 50.00% | 27.00% |
Company's two largest customers percent accounted of sales number two | 6.00% | 1.00% | 7.00% | 26.00% |
Reconciliation of income tax be
Reconciliation of income tax benefit (Details) | 6 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of income tax benefit Details | ||
U.S federal statutory rate | 34.00% | 34.00% |
State income tax, net of federal benefit | 0.00% | 0.00% |
Increase in valuation allowance | 34.00% | 34.00% |
Income tax provision (benefit) | 0.00% | 0.00% |
Net deferred tax liability (Det
Net deferred tax liability (Details) - USD ($) | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Net deferred tax liability Details | |||
Net Operating Losses | $ 3,360,000 | $ 4,482,000 | $ 2,227,000 |
Less: Valuation Allowance | $ (3,360,000) | $ (4,482,000) | $ (2,227,000) |
Income Tax (Details)
Income Tax (Details) | 6 Months Ended |
Dec. 31, 2017USD ($) | |
Income Tax | |
Company had federal and state net operating loss carryovers | $ 16,000,000 |
Deferred tax expense | $ 2,000,000 |
U.S. corporate income tax rate previous | 34.00% |
U.S. corporate tax rate current | 21.00% |
Commitments (Details)
Commitments (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2017 | Sep. 01, 2016 | |
Commitments Details | ||
Term of Lease | 3 years | |
Monthly Payment Year One | $ 7,715 | |
Monthly Payments Year Two | 7,972 | |
Monthly Payments Year Three | $ 8,229 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | Feb. 01, 2018 | Dec. 18, 2017 | Jan. 01, 2017 | Jan. 01, 2015 | Dec. 31, 2014 |
Commitments Details | |||||
Company agreed to compensate to Employees plus bonus | $ 150,000 | $ 125,000 | $ 120,000 | ||
Company issued shares of Preferred Series A stock to Mr. Grisaffi under the terms of the agreement | 2,000,000 | ||||
Company agreed to compensate Mr. Shuman bonus obligations based on the profitability of the Company | $ 120,000 | ||||
Company issued shares of common stock | 10,000,000 | 1,000,000 | |||
Chief Commercialization Officer Salary per year | $ 140,000 | ||||
Chief Commercialization Officer stock options | 7,000,000 | ||||
Chief Commercialization Officer bonus percentage | 30.00% | ||||
Chief Financial Officer Salary per year | $ 140,000 | ||||
Chief Operating Officer Salary per year | $ 120,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 30, 2018 | Feb. 09, 2018 | Jan. 05, 2018 | |
Accounting Policies [Abstract] | |||
Common Stock Issued | 376,279,238 | ||
Shares issued for Conversions | 196,469,179 | ||
Shares issued for director and employee compensation | 10,597,405 | ||
Shares issued for Cash | 67,162,498 | ||
Shares issued for Options | 29,096,402 | ||
Shares issued for Services | 5,821,256 | ||
Proceeds | $ 1,293,600 | ||
Convertible Notes Issued Amount | 300,000 | ||
Amended Notes Aggregate | $ 500,000 | ||
Conversion Feature | 0.50% | ||
Holder Converted of Notes | $ 308,727 | ||
Prommisory Note with GHS | $ 300,000 | ||
Amended two secured notes | $ 250,000 | ||
Registered Shares on S-1/A | 250,000,000 | ||
Shares sold to GHS | $ 94,826,433 |