UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

þ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, ~~2017~~2018

o☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXHANGE ACT OF 1934

For the Transition Period from ________ to ________

FREESTONE RESOURCES, INC.

(Exact name of registrant as specified in its charter)

NEVADA		000-28753		90-0514308
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

101 W. Ave D. Ennis, TX 75119		75201
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: 214-880-4870

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par value $0.001

Indicate by a check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. ~~Yeso No þ~~

~~Indicate by a check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Securities Exchange Act.~~ Yes o ☐ No þ☒

Indicate by a check mark whether the registrant ~~has~~is ~~(1)~~not ~~filed all reports~~ required to befile ~~filed~~reports bypursuant to Section 13 or Section 15 (d) of the Securities Exchange Act ~~of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) (2) has been subject to such filing requirement for the past 90 days~~. Yes þ☐ ~~Noo~~No ☒

Indicate by check mark whether the registrant has ~~submitted~~(1) ~~electronically~~filed ~~and~~all ~~posted~~reports ~~on its website, if any, every Interactive File~~ required to be ~~submitted~~filed ~~and~~by ~~posted~~Section ~~pursuant~~13 toor ~~Rule~~15(d) ~~405~~ of ~~Regulation~~the ~~S-T~~Securities ~~(§325.405~~Exchange Act of ~~this~~1934 ~~chapter)~~ during the ~~preceding~~past 12 months (or for such shorter period that the registrant was required to ~~submit~~file ~~and~~such ~~post~~reports) (2) has been subject to such ~~files),~~filing requirement for the past 90 days. Yes þ ~~Noo~~☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its website, if ~~disclosure~~any, ofevery ~~delinquent~~Interactive ~~filers~~File required to be submitted and posted pursuant to ~~Item~~ Rule 405 of Regulation S-KT (~~s229~~§325.405 of this chapter) isduring ~~not~~the preceding ~~contained~~12 ~~herein,~~months ~~and~~(or ~~will~~for ~~not~~such beshorter ~~contained,~~period tothat the ~~best of~~ registrant~~'s knowledge,~~ inwas ~~definitive~~required ~~proxy~~to orsubmit ~~information~~and ~~statements~~post ~~incorporated~~such byfiles), ~~reference~~Yes ~~in Part III of this Form 10-K or any amendment~~☒ toNo ~~this Form 10-K [X]~~☐

Indicate by check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☒

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

Large Accelerated Filer o☐ Accelerated Filer o☐ Non-Accelerated Filer o☐ Smaller Reporting Company þ☒ Emerging Growth Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o ☐No þ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Aggregate market value of the voting stock held by non-affiliates of the registrant as of ~~June~~December 3031, 2017: $2,~~874~~959,~~437.~~487

Indicate the number of Shares of outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: As of September 30, ~~2017~~2018, the Registrant had 91 98,~~738~~238,177 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

PART I
Item 1.	Description of Business	5
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	7
Item 2.	Description of Properties
Item 3.	Legal Proceedings	7
Item 4.	Mine Safety Disclosures	7
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6.	Selected Financial Data	8
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	11
Item 8.	Financial Statements and Supplementary Data	11
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	11
Item 9A.	Controls and Procedures	11
Item 9B.	Other Information
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	1213
Item 11.	Executive Compensation	1415
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	1516
Item 13.	Certain Relationship and Related Transactions and Director Independence	16
Item 14.	Principal Accounting Fees and Services	1617
PART IV
Item 15.	Exhibits and Financial Statement Schedules	1618

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995 or by the U.S. Securities and Exchange Commission in its rules, regulations and releases, regarding, among other things, all statements other than statements of historical facts contained in this report, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In addition, our past results of operations do not necessarily indicate our future results.

Other sections of this report may include additional factors which could adversely affect our business and financial performance. New risk factors emerge from time to time and it is not possible for us to anticipate all the relevant risks to our business, and we cannot assess the impact of all such risks on our business or the extent to

which any risk, or combination of risks, may cause actual results to differ materially from those contained in any forward-looking statements. Those factors include, among others, those matters disclosed in this Annual Report on Form 10-K.

Except as otherwise required by applicable laws and regulations, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this report, whether as a result of new information, future events, changed circumstances or any other reason after the date of this report. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act of 1933 provides any protection to us for statements made in this report. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Company Background

Freestone Resources, Inc. (the “Company” or “Freestone”), a Nevada corporation, is an oil and gas technology development company that is actively developing and marketing technologies and solvents designed to benefit various sectors in the oil and gas industry. The Company has re-launched its Petrozene™ solvent after developing a new and improved formula. Petrozene™ is primarily used to dissolve paraffin buildup, and it is primarily used for pipelines, oil storage tanks, oil sludge build up, de-emulsification, well treatment, as a corrosion inhibitor and as a catalyst in opening up formations thereby aiding in oil production.

On June 24, 2015 Freestone purchased 100% of the common stock of C.C. Crawford Retreading Company, Inc. (“CTR”), a Texas corporation. CTR is an Off-The-Road (“OTR”) tire company located in Ennis, Texas, and a wholly owned subsidiary of Freestone. CTR’s primary business is to repair, recycle, dispose of and sell OTR tires, which are used on large, industrial equipment. Freestone made the decision to purchase CTR in order to utilize the CTR facility for the production of Petrozene™ .

On June 24, 2015, the Company formed Freestone Dynamis Energy Products, LLC (“FDEP”) with Dynamis Energy, LLC (“Dynamis”). FDEP was formed in order to operate and manage the specialized pyrolysis process that is used to create Petrozene™ and other byproducts of value. Freestone chose to work with Dynamis based on their extensive engineering and waste-to-energy expertise. Freestone owns a 70% member interest in FDEP.

The acquisition of CTR and the formation of FDEP have allowed Freestone to vertically integrate the Petrozene™ product line. CTR will remain an auxiliary company that will maintain existing operations that complement the efforts of FDEP and Freestone.

Available Information

The Freestone website is www.freestoneresources.com. The Company’s references to the URLs for these websites are intended to be inactive textual references only. The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are filed with the U.S. Securities and Exchange Commission (the “SEC”).

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Products and Services

OTR Tire Services

CTR has been involved in the OTR tire business since 1987. Since its formation, CTR has evolved into a unique company that can handle most of the needs of its customers that require OTR tire services. These services include:

·• Specialized OTR tire repair services quickly and efficiently, and at competitive prices; and

·• Disposal services for OTR tires that can no longer be used or repaired; and

·• A substantial inventory of used OTR tires for sale; and

·• Recycling OTR tires for alternative uses that prevent them from going to landfills.

~~Petrozene™~~5

Freestone purchased CTR in order to use a specialized pyrolysis technology. Pyrolysis, by definition, is the decomposition of organic matter in the absence of oxygen. The Company and FDEP will use this process to convert the OTR tires that have been disposed of into byproducts of value. One of the byproducts from this process is used in the production of Petrozene™~~. The use of pyrolysis allows Freestone and CTR to reduce the amount of tires that would have otherwise been disposed of in landfills.~~

5Freestone purchased CTR in order to use a specialized pyrolysis technology. Pyrolysis, by definition, is the decomposition of organic matter in the absence of oxygen. The Company and FDEP will use this process to convert the OTR tires that have been disposed of into byproducts of value. One of the byproducts from this process is used in the production of Petrozene™. The use of pyrolysis allows Freestone and CTR to reduce the amount of tires that would have otherwise been disposed of in landfills.

Customers

CTR provides services to many international OTR tire dealers. These OTR tire dealers make up a majority of its customer base.

Competition

OTR Tire Services

Several tire processing companies are permitted in the Dallas/Ft. Worth area, but most of them cannot handle OTR tires due to the size of the OTR tires. CTR has its own trucks, forklifts and other equipment that are necessary for the management and processing of OTR tires. CTR also has specialized, on-site shredding equipment to convert the OTR tires into one inch tire pieces that can be sold as a tire derived fuel (“TDF”), or processed in the specialized pyrolysis technology.

CTR is one of the few tire processing facilities that provide other services to its customers. These additional services include the sale of used OTR tires and the repair of OTR tires. CTR’s operations focus on the states of Texas, Oklahoma, Louisiana, New Mexico and Arkansas. Focusing on these specific states allow CTR to provide some of the fastest repair turnarounds in the industry.

Petrozene™

Many oil and gas service companies and petro-chemical companies provide a product that competes with Petrozene™. The Company’s advantage is that Petrozene™ is derived from a readily available waste product, and the pyrolysis process used to create Petrozene™ is extremely cost efficient. Most of the Company’s competitors use synthetically derived chemicals that are extremely expensive to develop and manufacture.

Research and Development

Freestone and its partners are continuously evaluating technologies and processes that can convert waste streams into valuable byproducts. Freestone’s main focus has been the development of byproducts that can be used by the oil and gas industry to increase production and efficiency. The Company’s research has resulted in the relaunch of Petrozene™, and expanding the ways in which Petrozene™ can be utilized. Freestone’s partners and customers have provided valuable feedback that has continued to help create a superior product.

Growth Strategy

Freestone is actively pursuing a strategy of growth through the vertical integration of Petrozene™. The implementation of this strategy allows the Company to reduce variables that could affect growth, performance and the quality of its products. In addition, Freestone and FDEP are providing CTR with another recycling option. This means that more tires will be processed each year, and thus will allow CTR to increase its disposal operations.

Government Approval and Environmental Matters

CTR is registered with the Texas Commission on Environmental Quality (“TCEQ”) as a transporter and scrap tire facility.

Freestone’s and CTR’s operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health. The recent trend in environmental legislation and regulation generally is toward stricter standards, and this trend will likely continue.6

~~The~~Freestone’s and ~~permits~~CTR’s ~~required~~operations ~~for~~and ~~our~~properties ~~operations~~are ~~may be~~ subject to ~~revocation~~extensive and changing federal, ~~modification~~state and ~~renewal~~local bylaws ~~issuing~~and ~~authorities.~~regulations relating ~~Governmental~~to ~~authorities~~environmental ~~have~~protection, including the ~~power~~generation, tostorage, ~~enforce~~handling, ~~their regulations~~emission, transportation and ~~violations~~discharge ~~are~~of ~~subject~~materials into the environment, and relating to ~~fines~~safety orand ~~injunctions~~health. The recent trend in environmental legislation and regulation generally is toward stricter standards, orand ~~both~~this trend will likely continue.

6The permits required for our operations may be subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce their regulations, and violations are subject to fines or injunctions, or both.

On September 6, 2016 CTR received a Notice of Enforcement for Compliance Evaluation Investigation from the TCEQ informing them of potential violations related to its processing permit. On September 6, 2016 FDEP also received a Notice of Enforcement for Compliance Evaluation Investigation informing them of potential violations relating to waste disposal and its permit for pyrolysis process.

CTR’s potential violations related to tires stored in excess of the numbers permitted and noncompliance with fire regulations. CTR has submitted a plan to reduce the number of tires and bring the facility into full compliance with all fire regulations.

FDEP’s potential violations regarded failure to properly classify, track and dispose of hazards waste as well as operating a pyrolysis machine without a separate permit from CTR. FDEP cured the potential hazards waste issue and submitted documentation of such to the TCEQ. FDEP has applied for a separate permit for its pyrolysis operation and is awaiting approval from the TCEQ. As of June 30, ~~2017~~2018, the Company is awaiting approval of the permit

In conjunction with the plan submitted to the TCEQ to bring the tire storage facility into compliance CTR ~~increased~~accrued ~~its~~an environmental and tire disposal ~~accrual~~liability toof $400,000 ~~during the year ended June 30, 2016~~. (See financial statement Note 7). The Company also accrued $48,750 in proposed TCEQ fines and penalties.

~~Intellectual~~On August ~~Property~~22, 2018 the TCEQ approved an Agree Order with CTR to settle the case. Under terms of the agreement the fine was reduced to $3,600 providing CTR reduce it number of scrap tires on hand to 5,000 within 100 days.

~~Freestone is the owner of the Petrozene™~~Intellectual ~~trademark. Freestone does not own any patents at this time.~~Property

~~ITEM~~Freestone is 1Athe owner of the Petrozene™ trademark. ~~RISK~~Freestone ~~FACTORS~~does not own any patents at this time.

~~As a smaller reporting company we are not required~~ITEM ~~to provide the information required by this item~~1A. RISK FACTORS

~~ITEM~~As a ~~1B.~~smaller ~~UNRESOLVED~~reporting ~~STAFF~~company ~~COMMENTS~~we are not required to provide the information required by this item.

~~None~~ITEM 1B. UNRESOLVED STAFF COMMENTS

~~ITEM 2~~None. ~~DESCRIPTION OF PROPERTY~~

~~CTR is located at 101 W. Ave. D, Ennis TX 75119~~ITEM ~~and owns approximately 10~~2.~~141~~ DESCRIPTION ~~acres~~OF ~~with three buildings consisting of 32,800 square feet. During the current year Freestone relocated its corporate offices to the Ennis facilities as a cost saving measure~~PROPERTY

~~ITEM~~CTR is 3located at 101 W. ~~LEGAL~~Ave. ~~PROCEEDINGS~~D, Ennis TX 75119 and owns approximately 10.141 acres with three buildings consisting of 32,800 square feet. During the current year Freestone relocated its corporate offices to the Ennis facilities as a cost saving measure.

~~Freestone and CTR are not subject to any material pending legal proceedings, nor are the companies aware of any material threatened claims against them~~ITEM 3. LEGAL PROCEEDINGS

~~ITEM~~Freestone and 4.CTR ~~MINE~~are ~~SAFETY~~not ~~DISCLOSURES~~subject to any material pending legal proceedings, nor are the companies aware of any material threatened claims against them.

~~None.~~ 7

7ITEM 4. MINE SAFETY DISCLOSURES

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Common Stock is currently quoted on the OTCQB under the symbol “FSNR.”

The following tables set forth the quarterly high and low bid prices for the Common Stock for ~~2017~~2018 and ~~2016~~2017. The prices set forth below represent interdealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.

Fiscal 2018	High		Low
First Quarter	$	0.07	$	0.04
Second Quarter	$	0.08	$	0.05
Third Quarter	$	0.06	$	0.02
Fourth Quarter	$	0.06	$	0.04
Fiscal 2017	High		Low
First Quarter	$	0.13	$	0.05
Second Quarter	$	0.08	$	0.05
Third Quarter	$	0.09	$	0.04
Fourth Quarter	$	0.08	$	0.04
Fiscal 2016	High		Low
First Quarter	$	0. 23	$	0. 18
Second Quarter	$	0. 20	$	0. 10
Third Quarter	$	0. 18	$	0. 09
Fourth Quarter	$	0. 13	$	0. 04

Shareholders

As of June 30, ~~2017~~2018, there were approximately 260 record holders of the Common Stock. This number excludes any estimate by Freestone of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

Dividends

Freestone has not paid cash dividends on any class of common equity since formation and Freestone does not anticipate paying any dividends on its outstanding common stock in the foreseeable future.

Warrants

As of June 30, ~~2017~~2018, the Company had no outstanding stock warrants.

ITEM 6. SELECTED FINANCIAL DATA

As a smaller reporting company we are not required to report selected financial data disclosures as required by item 301 of Regulation S-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

At present, Freestone’s management is focused on the development and vertical integration of the Petrozene™ product line. Freestone continues to look for various solvents, chemicals, and technologies that might fit into Freestone’s petro-chemical line, and continues to seek opportunities in the oil and gas water industry.

Critical Accounting Policies

The Company’s consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions that they believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the periods presented. The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition

Freestone and CTR recognize revenue from the sale of products in accordance with ASC 605. Revenue will be recognized only when all of the following criteria have been met:

·• Persuasive evidence of an arrangement exists; and ·• Ownership and all risks of loss have been transferred to buyer, which is generally upon delivery; and ·• The price is fixed and determinable; and ·• Collectability is reasonably assured.

The three main sources of revenue are recognized as follows:

·• Revenues associated with tire disposals are recognized upon receipt of the tire by CTR; and

·• Revenues associated with tire repairs are invoiced and recognized upon completion of repair and receipt of the tire by the customer; and

·• Revenue associated with used tires and scrap sales are recognized upon delivery of the product to the customer.

Stock Based Compensation

Pursuant to Accounting Standards Codification (“ASC”) 505-50, the guidelines for recording stock issued for services require the fair value of the shares granted be based on the fair value of the services received or the publicly traded share price of the Company’s registered shares on the date the shares were granted (irrespective of the fact that the shares granted were unregistered), whichever is more readily determinable. This position has been further clarified by the issuance of ASC 820. ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Accordingly, the Company elected the application of these guidelines. Freestone has determined that the fair value of all common stock issued for goods or services is more readily determinable based on the publicly traded share price on the date of grant.

Results of Operations for the Year ended June 30, ~~2017~~2018 Compared to the Year ended June 30, ~~2016~~2017

~~Revenues~~Revenue

Revenues for the ~~year~~years ended June 30, ~~2017~~2018 and ~~the~~ ~~year~~2017 ~~ended June 30, 2016~~ were $1,~~079~~163,~~846~~860 and $1,~~098~~079,~~926~~846, respectively. ~~The~~ ~~decrease~~An ~~was~~increase ~~less~~of ~~than 2~~7.8% due primarily to the increase in tipping fees.

Cost of Goods and Gross Profit

~~The~~Cost of ~~Company’s~~Goods ~~gross~~sold ~~margin~~for ~~rose~~the ~~from 1.7~~years %ended toJune ~~22.3%.~~30, ~~This~~2018 iswas ~~primarily~~$904,807 ~~due~~compared to a $~~368~~839,~~000~~007 ~~accrual to tire disposal expense for the cost of bringing CTR~~ in ~~compliance with TCEQ regulations in~~ the prior year. The ~~Company~~7.8% ~~had~~increase ~~previously~~was ~~anticipated~~consistent with ~~using all~~ the ~~tire~~Company’s ~~stock~~increase in ~~the FDEP pyrolysis operation~~sales. ~~Without~~The ~~the accrual the~~ Company’s gross margin ~~was~~remained ~~35.2%~~steady inat ~~the prior year compared to~~ 22.3% ~~this year~~. ~~The decrease was largely due an increase in tipping fee operations from running two trucks full time. Tire repair and used tire margin remain consistent with prior years.~~

~~Operating Expense~~9

~~Total operating expenses the year ended June~~Operating 30, 2017 and the year ended June 30, 2016 were $1,557,977 and $2,388,255, respectively a decrease of $830,278 largely due to a decrease of $822,750 in stock based compensation. Start up costs decreased by $110,583 due to the inactivity of FDEP because of TCEQ permitting issues. Depreciation and selling costs remained consistent with prior years.Expense

9Total operating expenses for the years ended June 30, 2018 and 2017 were $1,267,235 and $1,557,977, respectively. A decrease of 18.7% due to the Company’s implementation of cost savings measures. The primary area of decrease were selling of $64,600 and general and administration of $207,923. The selling decreases were due to cuts in compensation at CTR while the general and administration decrease was primarily a reduction of loan administration costs.

Other Income and Expenses

Other income and expense for the year ended June 30, ~~2017~~2018 and the year ended June 30, ~~2016~~2017 consisted of interest expense of $~~165~~219,~~312~~ 944 and $~~134~~165,~~271~~312 respectively. The increase is reflective of the Company increase in debt used to finance the Company losses.

Net (Loss) Income

Net loss for and the year ended June 30, ~~2017~~ 2018 was $1,~~386~~138,~~947~~132 compared to a net loss for the year ended June 30, ~~2016~~2017 of $21,~~378~~386,~~174~~947. The decrease was ~~due~~primarily toa ~~the~~result ~~decrease~~of ~~in cost primarily~~ the ~~$368,000~~Company’s ~~provision~~decrease ~~for future tire disposal costs~~ in ~~2016~~operating ~~and~~cost ~~the~~detailed ~~reduction of $822,000 in stock compensation~~above.

Liquidity and Capital Resources

The Company has little cash reserves and liquidity to the extent we receive it from operations and through the sale of common stock.

Cash decreased ~~by $25,682~~ from $294,~~791~~109 at June 30, ~~2016~~2017 to $42,~~109~~966 at June 30, ~~2017~~2018.

Net cash used by operating activities was $~~832~~786,~~632~~ 056 for the year ended June 30, ~~2017,~~2018. ~~compared~~The todifference ~~net~~between ~~cash used in operations of $799,397~~ the ~~prior~~Company’s ~~year.~~net loss ~~The~~and ~~amount of~~ cash used ~~remained consistent~~is ~~despite~~ the ~~reduction~~none ofcash expenses ~~and~~of ~~net~~depreciation ~~operating~~and ~~loss~~stock ~~because~~compensation ~~the~~and ~~two~~an ~~primary~~increase ~~areas~~in ofaccrued ~~decrease,~~liabilities from the ~~accrual~~deferral ~~for future~~of ~~tire~~officer’s ~~disposal and stock based compensation are both non-cash expenses~~payroll.

The cash provided by financing activities ~~was~~ totaled $780,613 funded by $~~298~~270,~~537~~058 of cash contributed by the non-controller member to FDEP and ~~a net~~ $~~476~~974,~~413~~816 increase in borrowings ~~primarily~~ from stockholders ~~along~~offset ~~with~~by $25464,~~000~~261 inof ~~proceeds~~payments ~~from~~on ~~the~~term ~~sale of stock~~loans.

Employees

As of June 30, ~~2017~~2018, CTR had 16 full-time employees including 21 leased to FDEP. Freestone’s only employees are its three officers.

Need for Additional Financing

The Company is uncertain of its ability to generate sufficient liquidity from its operations so the need for additional funding may be necessary. The Company may sell stock and/or issue additional debt to raise capital to accelerate our growth.

Going Concern Uncertainties

The accompanying consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of the date of this annual report, there is substantial doubt regarding the Company’s ability to continue as a going concern as we have not generated sufficient cash flows to fund our business operations and loan commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company and our shareholders.

The Company formed FDEP in order to vertically integrate its Petrozene™ product line, and utilize a specialized pyrolysis process in order to produce other byproducts of value that will generate revenue for FDEP. In turn, the ability of FDEP to process large quantities of OTR tires will allow the Company to increase the amount of OTR tires it can dispose of and process, which will generate additional revenue of the Company. Additionally, the Company intends to raise equity or debt financing that will allow the Company to expand its current operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss arising from adverse changes in market rates and foreign exchange rates. The amount of our outstanding debt at any time may fluctuate and we may from time to time be subject to refinancing risk. A hypothetical 100 basis point increase in interest rates would have a material effect on our annual interest expense and on our results of operations or financial condition as we rely on these notes to sustain our operations. Since we do not have transactions in foreign currencies, we do not consider it necessary to hedge against currency risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of Freestone Resources, Inc. and Subsidiaries, together with the Report of Independent Registered Public Accounting Firm ofPinnacle ~~Heaton~~Accountancy &Group ~~Company, PLLC~~of Utah for the year ended June 30, ~~2017~~2018 and ~~2016~~2017, appear on pages 1820 through 3338 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of June 30, ~~2016~~2018. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the annual report on Form 10-K has been made known to them.

For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

~~Management’s Annual Report on Internal Control Over Financial Reporting~~11

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the CompanyManagement’s ~~assets~~Annual ~~that~~Report ~~could~~on ~~have~~Internal aControl ~~material~~Over ~~effect~~Financial ~~on the financial statements.~~Reporting

11Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework) at June 30, ~~2016~~2018. Based on its evaluation, our management concluded that, as of June 30, ~~2017~~2018, our internal control over financial reporting was not effective because of: ~~1) Our reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction; and 2)~~ a lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this annual report.

~~PART III~~12

~~ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE~~PART III

~~The following persons serve as directors and~~ITEM ~~officers~~10. DIRECTORS, ofEXECUTIVE ~~Freestone~~OFFICERS ~~Resources,~~AND ~~Inc.:~~CORPORATE GOVERNANCE

~~Michael~~The following ~~McGhan,~~persons ~~Chief~~serve ~~Executive~~as ~~Officer~~directors and ~~President~~ officers of Freestone Resources, Inc.:

~~Paul E. Babb~~Michael McGhan, Chief ~~Financial~~Executive Officer and President

~~Don~~Paul E. ~~Edwards~~Babb, Chief ~~Investment~~Financial Officer

~~Michael McGhan, age 61, has extensive experience~~Don ~~with operations~~Edwards, sales and management that will be extremely beneficial to Freestone, and the development of the Company’s petrochemical product line. From 1991 to August 2002, Mr. McGhan was a co-founder, President and Chief ~~Executive~~Investment Officer of Hanover Compressor Co. (now Exterran Holdings, Inc.). Hanover became the largest natural gas compression company in the world with approximately 7,000 compression rental units in the field, and annual revenues over $1.1 billion. In August 2004, Mr. McGhan along with his partners co-founded Valerus Compression Services LLP. Mr. McGhan served as co-CEO and ultimately Vice-Chairman of the company until December 2009. Mr. McGhan and his partners built Valerus into one of the world's leading providers of natural gas treatment and compression equipment and services to the global oil and gas industry.

~~Paul~~Michael McGhan, E.age ~~Babb~~63, ~~age~~has 59extensive isexperience awith ~~CPA~~operations, sales and ~~served~~management asthat is extremely beneficial to Freestone, and the development of the Company’s ~~Controller~~petrochemical ~~and~~product ~~Director~~line. ofFrom ~~Financial~~1991 ~~Reporting~~to ~~since~~August ~~July~~2002, ~~2015~~Mr. ~~until~~McGhan ~~his~~was ~~appointment~~a asco-founder, ~~C.F.O.~~President and HeChief ~~received his~~Executive BOfficer of Hanover Compressor Co.S. ~~and~~(now MExterran Holdings, Inc.S). ~~degrees~~Hanover inbecame ~~accounting~~the ~~from~~largest ~~Oklahoma~~natural ~~State~~gas ~~University.~~compression company Hein ~~has~~the ~~over~~world ~~thirty~~with ~~years~~approximately of7,000 ~~financial~~compression ~~reporting~~rental ~~experience~~ units in ~~both~~the ~~industry~~field, and ~~public~~annual ~~accounting~~revenues over $1.1 ~~Prior~~billion. toIn August ~~his~~2004, ~~employment~~Mr. McGhan along with ~~Freestone~~his partners co-founded Valerus Compression Services LLP. Mr. ~~Babb~~McGhan ~~worked~~served as aco-CEO ~~consultant~~and ~~for~~ultimately Vice-Chairman of the ~~Thomas~~company ~~Edwards Group~~until asDecember an2009. ~~audit~~Mr. ~~manager~~McGhan ~~for~~and ~~The~~his ~~Hall~~partners ~~Group~~built ~~CPAs.~~Valerus ~~His~~into ~~previous~~one ~~experience~~of ~~included~~the ~~ten~~world's ~~years~~leading asproviders of ~~controller~~natural ~~for~~gas ~~Mapsco,~~treatment ~~Inc~~and compression equipment and services to the global oil and gas industry.

~~Don~~Paul E. ~~Edwards~~Babb, age ~~66,~~61 is a ~~graduate~~CPA ~~from~~and ~~Texas Christian~~served ~~University~~as ~~with~~the aCompany’s ~~BBA~~Controller ~~degree~~and ~~concentrating~~Director inof ~~Finance~~Financial ~~and~~Reporting ~~Economics.~~since ~~Mr.~~July, ~~Edwards~~2015 ~~started~~ until his ~~business~~appointment ~~career~~as ~~with E~~C. F. ~~Hutton where he was a regional OTC Coordinator~~O. He ~~also~~received ~~ran~~his ~~a trading desk for OTC stocks~~B.S. ~~He later served as President, CFO, CEO~~ and ~~Director~~M.S. ~~for~~degrees ~~four~~in ~~securities~~accounting ~~firms~~from asOklahoma ~~well~~State ~~as a Director for two savings and loans~~University. He has ~~been~~over ~~responsible for managing~~thirty ~~many~~years ~~public~~of ~~and~~financial ~~private~~reporting ~~companies.~~experience Hein ~~has raised startup capital for dozens of~~ both ~~private~~industry and public ~~companies~~accounting. ~~Mr.~~Prior ~~Edwards~~to ~~has vast~~his ~~knowledge~~employment inwith ~~the~~Freestone ~~investment field including fine art~~Mr. HeBabb worked ~~has bought and sold art works of such artists~~ as ~~Charles Russell and Monet. Don was~~ a ~~licensed~~consultant ~~Insurance agent~~ for ~~many~~the ~~years~~Thomas ~~and~~Edwards ~~assisted~~Group inas ~~managing~~an ~~the~~audit ~~West~~manager ~~Texas region~~ for ~~Mass~~The ~~Mutual~~Hall ~~Life Ins.~~Group CoCPAs. ~~Don also has a background in the Oil and Gas Industry.~~ His ~~family~~previous ~~has~~experience ~~run a successful Drilling Co. in West Texas for~~included ~~over~~ten ~~half~~years ~~a century. Mr. Edwards will maintain his position~~ as ~~Chief~~controller ~~Investment Officer of the Company. Mr. Edwards has served as the Chief Investment Officer~~ for ~~the Company for five years. Prior to his employment at the Company~~Mapsco, MrInc. ~~Edwards was self-employed.~~

12Don Edwards, age 67, is a graduate from Texas Christian University with a BBA degree concentrating in Finance and Economics. Mr. Edwards started his business career with E. F. Hutton where he was a regional OTC Coordinator. He also ran a trading desk for OTC stocks. He later served as President, CFO, CEO and Director for four securities firms as well as a Director for two savings and loans. He has been responsible for managing many public and private companies. He has raised startup capital for dozens of both private and public companies. Mr. Edwards has vast knowledge in the investment field including fine art. He has bought and sold art works of such artists as Charles Russell and Monet. Don was a licensed Insurance agent for many years and assisted in managing the West Texas region for Mass Mutual Life Ins. Co. Don also has a background in the Oil and Gas Industry. His family has run a successful drilling company in West Texas for over half a century. Mr. Edwards will maintain his position as Chief Investment Officer of the Company. Mr. Edwards has served as the Chief Investment Officer for the Company for five years. Prior to his employment at the Company, Mr. Edwards was self-employed.

~~Section 16(a) Beneficial~~ Ownership ~~Reporting~~ Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. We believe that as of the date of this report they were all current in their 16(a) reports.

Board of Directors

Our board of directors currently consists of three members. Our directors serve one-year terms. Our board of directors has affirmatively determined that there are currently no independent directors serving on our board.

~~Committees of the Board of Directors~~13

~~Audit~~Committees of ~~Committee~~the Board of Directors

~~We do not have a standing audit committee of~~Audit the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.Committee

~~Governance,~~We do ~~Compensation~~not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and ~~Nominating~~limited operating activities do not warrant the formation of an audit committee ~~Committee~~or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.

~~We do not have a standing governance~~Governance, ~~compensation~~ ~~and~~Compensation ~~nominating committee of the Board of Directors. Management has determined not to establish governance, compensation~~ and ~~nominating committees~~Nominating ~~at present because of our limited resources and limited operations do not warrant such a committee or the expense of doing so.~~Committee

~~Code~~We do not have a standing governance, compensation and nominating committee of ~~Ethics~~the Board of Directors. Management has determined not to establish governance, compensation and nominating committees at present because of our limited resources and limited operations do not warrant such a committee or the expense of doing so.

~~The Company has adopted the following code~~Code of ~~ethics for officers, directors and employees:~~Ethics

·The Company ~~Show~~has ~~respect~~adopted ~~towards~~the ~~others~~following incode ~~the~~of ~~workplace~~ethics for officers, directors and employees:

·• ~~Conduct~~Show ~~all~~respect ~~business~~towards ~~activities~~others in athe ~~fair and ethical manner~~workplace

·• ~~Work~~Conduct ~~dutifully~~all ~~and~~business ~~responsibly~~activities ~~for~~in ~~the~~a ~~Company’s~~fair ~~shareholders~~ and ~~stakeholders~~ethical manner

~~Limitation~~• ofWork ~~Liability~~dutifully ofand ~~Directors~~responsibly for the Company’s shareholders and stakeholders

~~Pursuant to the~~Limitation ~~Nevada General Corporation Law, our Articles~~ of ~~Incorporation~~Liability ~~exclude personal liability for our Directors for monetary damages based upon any violation~~ of ~~their fiduciary duties as~~ Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws.

13Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws.

~~ITEM 11. EXECUTIVE COMPENSATION~~14

~~Compensation~~ITEM 11. EXECUTIVE ~~of Executive Officers~~COMPENSATION

~~The following summary compensation table sets~~Compensation ~~forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended June 30, 2017 and 2016 in all capacities for the accounts~~ of ~~our executives, including the Chief~~ Executive ~~Officer (CEO), Chief Financial Officer (CFO), and Chief Investment Officer (CIO):~~Officers

~~SUMMARY~~The following ~~COMPENSATION~~summary ~~TABLE~~compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended June 30, 2018 and 2017 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Investment Officer (CIO):

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Totals ($)
Michael McGhan,		2017		120,000		0		0		0		0		0		0		120,000
CEO		2016		29,125		0		540,000		0		0		0		0		569,125
Clayton Carter,		2017		0		0		0		0		0		0		0		0
CEO (former)		2016		50,083		0		114,000		0		0		0		0		164,083
Don Edwards,		2017		42,000		0		0		0		0		0		0		42,000
CIO		2016		39,500		0		114,000		0		0		0		0		153,500
Paul Babb, CFO		2017		76,753		0		30,000		0		0		0		0		106,753
		2016		78,672		0		38,250		0		0		0		0		116,922
James Carroll, CFO		2017		0		0		0		0		0		0		0		0
(former)		2016		0		0		9,500		0		0		0		0		9,500

SUMMARY COMPENSATION TABLE

Employment Agreements

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Totals ($)

Michael McGhan,		2018		120,000		0		0		0		0		0		0		120,000
CEO		2017		120,000		0		0		0		0		0		0		120,000
Don Edwards,		2018		46,500		0		0		0		0		0		0		46,500
CIO		2017		42,000		0		0		0		0		0		0		42,000
Paul Babb,		2018		83,333		0		18,750		0		0		0		0		102,086
CFO		2017		76,753		0		30,000		0		0		0		0		106,753

~~On January 7, 2016 Michael McGhan and the Company entered into a two-year employment agreement (“~~Employment ~~Agreement”).~~ The terms of the Employment Agreement include an initial salary of $5,000 per month, which will increase to $10,000 per month after six months, as well as stock-based compensation in the amount of 3,000,000 shares of the Company’s restricted stock pursuant to Rule 144. Subject to Board approval, Mr. McGhan is eligible to receive warrants for up to 2,000,000 shares of the Company’s common stock (the “Warrants”). The Warrants were not issued on the date of the Employment Agreement. The Board is not required to issue the Warrants. If the Warrants are issued to Mr. McGhan during the term of his Employment Agreement, the terms and conditions of the Warrants will be determined by the Board on the date the Warrants are issued. Mr. McGhan will also be eligible to participate in the Company’s employee benefit plan that is generally available to all other employees at the Company.Agreements

OnAs ~~April 1, 2016 Paul Babb and the Company entered into a two-year employment agreement (“Employment Agreement”) to serve as Controller and Director~~ of ~~SEC~~June ~~reporting. The terms of the Employment Agreement include an initial salary of $5~~30,~~250 per~~ ~~month,~~2018 ~~which will increase to $6,667 per month after six months, as well as stock-based compensation in~~ the ~~amount of 1,000,000 shares of the~~ Company’s ~~restricted~~had ~~stock~~no ~~pursuant~~current toemployment ~~Rule 144 to be issued over the life of the contract~~agreements. ~~On May 31, 2016 Mr. Babb was appointed C.F.O.~~

14Payments of officer’s compensation has been limited due to the Company cash flow. As of June 30, 2018, accrued liabilities include $394,611 of officer’s salaries deferred under employment contracts and agreement by the officers.

~~Payments of officer’s compensation~~Compensation ~~has been limited due to the Company cash flow. As~~ of ~~June 30, 2017, accrued liabilities includes $181,789 of officer’s salaries deferred under employment contracts and agreement by the officers.~~Directors

~~Compensation~~Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity

Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. 15

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

As of June 30, ~~2017~~2018, the following persons are known to Freestone to own 5% or more of Freestone's Common Stock, as well as the Company’s officers and directors.

Name and Address of Beneficial Owner, Officer or Director	Amount Beneficially Owned*		Percent of Class
Michael McGhan, President, CEO and Director		65,~~000~~500,000		64.5562	%
Paul E. Babb, Chief Financial Officer and Director		1,~~107~~482,275		1.2167	%
Don Edwards, Chief Investment Officer and Director		6,500,000		7.1007	%
Clayton Carter, Beneficial Owner		7,605,000		8.3027	%
Gerald M. Johnston, Beneficial Owner		12,904,167		14.0903	%

15Directors and Officers as a Group

~~Directors~~101 W. ~~and~~ave ~~Officers as a Group~~d.

~~101~~Ennis, TX ~~W. ave d.~~7119

~~Ennis,~~Gerald M. ~~TX 7119~~Johnston

~~Gerald~~2821 Alliance ~~M. Johnston~~Place

~~2821 Alliance Place~~Suite 1

~~Suite~~Springdale, AR 172764

~~Springdale,~~ITEM 13. CERTAIN ARRELATIONSHIPS ~~72764~~AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE

~~ITEM~~On April 1312, 2016 Paul Babb loaned the company $50,000 under a note due April 12, 2016 bearing interest at 6.5%. ~~CERTAIN~~The ~~RELATIONSHIPS~~note ~~AND~~is ~~RELATED~~convertible into ~~PARTY~~common ~~TRANSACTIONS~~stock ~~AND~~at ~~DIRECTOR~~$.08 ~~INDEPENDENCE~~per share upon maturity. Mr. Babb became the Company’s CFO and a member of the board on May 31, 2016. The due date has subsequently extended to December 31, 2018 and the conversion price changed to $.05 per share.

OnDuring the ~~April~~years ~~12,~~ended ~~2015~~June ~~Paul~~30, ~~Babb~~2018 ~~loaned~~and 2017 the ~~company~~ Company borrowed a total of $501,~~000~~509,919 ~~under~~from a ~~note~~shareholder ~~due~~of ~~April~~the ~~12,~~Company ~~2016~~in ~~bearing~~various increments throughout the period. The note bears interest at 6.5%. ~~The note~~ is convertible into common stock at $.0805 per share. ~~upon~~The due ~~maturity.~~date ~~Mr.~~has ~~Babb~~subsequently ~~became~~been ~~the~~extended ~~Company’s~~to ~~CFO~~December ~~and~~31, a2018 ~~member~~Subsequent ofto yearend the ~~board~~note onholder ~~May~~converted 31$125,000 ~~2016.~~of ~~The~~the ~~terms~~balance to ~~were~~common ~~subsequently~~stock ~~extended to~~at ~~December~~$.05 ~~31,~~a ~~2017~~share ~~and~~for ~~the~~a ~~conversion~~total ~~price~~of ~~changed~~2,500,000 shares. (see note 15 to ~~$.055~~the ~~per~~financial ~~share.~~statements)

~~During~~On December ~~the year ended June 30~~15, ~~2017~~2016 the Company borrowed ~~a total of~~ $~~515~~20,~~013~~000 from aanother shareholder ~~of the Company in various increments throughout the year~~. The ~~note~~ bears interest at 6.5% and is convertible into common stock at $.~~055~~05 per share. ~~Subsequent~~The ~~to year end the notes~~ due date ~~was~~has subsequently been extended to December 31 15, ~~2017~~2018.

~~On December 15, 2016 the Company borrowed $20,000 from another shareholder. This note is Due December 31, 2017, bear interest at 6.5% and is convertible into common stock at $.05 per share.~~16

Due to our limited resources, the Company does not have any independent directors serving on the board of directors.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed for professional services rendered by our auditors, for the audit of our annual financial statements and review of the financial statements included in our Form 10-K and Forms 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended June 30, ~~2017~~2018 and ~~2016~~2017 were $2931,~~679~~395 and $8226,~~800~~679, respectively.

Audit Related Fees

None.

Tax Fees

None

All Other Fees

None.

~~ITEM 15. EXHIBITS AND FINANICAL STATEMENT SCHEDULES~~17

~~(a) The following documents are filed as part of this report:~~ ITEM ~~Included~~15. EXHIBITS inAND ~~Part~~FINANICAL ~~II,~~STATEMENT ~~Item 7 of this report:~~SCHEDULES

~~Report~~(a) The offollowing ~~Independent~~documents ~~Registered~~are ~~Public~~filed ~~Accounting Firm~~as ~~for~~part ~~the~~of ~~years~~this ~~Ended~~report: Included ~~June~~in 30Part II, ~~2017~~Item ~~and~~7 ~~2016~~of this report:

~~Consolidated~~Report of ~~Balance~~Independent ~~Sheets~~Registered Public Accounting Firm for the years Ended June 30, 2018 and 2017

Consolidated Balance ~~Statements of Operations~~Sheets

~~Statement~~Consolidated Statements of ~~Changes in Stockholders’ Equity/(Deficit)~~Operations

~~Consolidated~~Statement of ~~Statements~~Changes ofin ~~Cash~~Stockholders’ ~~Flows~~Equity/(Deficit)

~~Notes to the~~ Consolidated Statements ~~Financial~~of ~~Statements~~Cash Flows

~~(b)~~ Notes ~~Freestone~~to ~~filed~~ the ~~following~~Consolidated ~~Exhibits~~Financial ~~in the year ended June 30, 2017:~~Statements

~~None~~ (b) Freestone filed the following Exhibits in the year ended June 30, 2018:

16None

~~(c) Exhibits~~18

31	Certification
32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CEO and CFO
XBRL

SIGNATURES

31	Certification

32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CEO and CFO

XBRL

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.SIGNATURES

	Freestone Resources, Inc.
Dated: October 4, 2017	By:	/s/ Michael McGhan
		Michael McGhan, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.

	Freestone Resources, Inc.

Dated: October 15, 2018	By:	/s/ Michael McGhan
		Michael McGhan, Chief Executive Officer

Name	Title	Date
By: /s/ Michael McGhan	President, Chief Executive Officer and Director	October 4, 2017
Michael McGhan
By: /s/ Paul E. Babb	Chief Financial Officer, Director	October 4, 2017
Paul E. Babb
By: /s/ Don Edwards	Chief Investment Officer, Director	October 4, 2017
Don Edwards

Name	Title	Date

By: /s/ Michael McGhan	President, Chief Executive Officer and Director	October 15, 2018
Michael McGhan

By: /s/ Paul E. Babb	Chief Financial Officer, Director	October 15, 2018
Paul E. Babb

By: /s/ Don Edwards	Chief Investment Officer, Director	October 15, 2018
Don Edwards

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~19

To The Board of Directors and Stockholders of

Freestone Resources, Inc.

~~We have audited the accompanying~~Opinion ~~consolidated~~on ~~balance sheets of Freestone Resources, Inc. (~~the ~~“Company”)~~Financial as of June 30, 2017 and 2016, and the related statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. Statements

We have ~~conducted~~audited ~~our~~the ~~audits~~accompanying inconsolidated ~~accordance with~~balance ~~the~~sheets ~~standards~~ of ~~the~~Freestone ~~Public~~Resources, ~~Company~~Inc. ~~Accounting Oversight Board~~ (~~United~~the ~~States of America~~“Company”). ~~Those~~as ~~standards~~of ~~require that we~~June ~~plan~~30, 2018 and ~~perform~~2017, ~~the~~and ~~audits to obtain reasonable assurance about whether~~ the related consolidated ~~financial~~ statements ~~are free~~ of ~~material misstatement.~~operations, ~~The~~stockholders’ ~~Company~~equity ~~is not required to have~~(deficit), ~~nor~~and ~~were~~cash weflows for ~~engaged~~each ~~to perform, an audit~~ of ~~its~~the ~~internal~~years ~~control~~in ~~over~~the ~~financial reporting.~~two-year ~~Our~~period ~~audits~~ended ~~included~~June ~~consideration~~30, of2018 ~~internal~~(collectively ~~control~~referred ~~over~~to ~~financial reporting~~ as athe ~~basis~~consolidated ~~for~~financial ~~designing audit procedures~~statements). ~~that~~In ~~are~~our ~~appropriate~~opinion, in the ~~circumstances,~~consolidated ~~but~~financial ~~not~~statements ~~for~~present ~~the~~fairly, ~~purpose~~in ofall ~~expressing~~material anrespects, ~~opinion on~~ the ~~effectiveness~~financial position of the ~~Company’s~~ ~~internal~~Company ~~control~~as ~~over~~of ~~financial~~June ~~reporting. Accordingly~~30, we2018 ~~express~~and no2017, ~~such~~and ~~opinion.~~the Anresults ~~audit~~of ~~also~~its ~~includes~~operations ~~examining,~~and onits acash ~~test basis,~~flows ~~evidence~~for ~~supporting~~each of the ~~amounts~~years ~~and disclosures~~ in the ~~consolidated~~two-yeear period ~~financial~~ended ~~statements~~June 30, ~~assessing~~2018 ~~the accounting principles used~~ and ~~significant~~2017, ~~estimates~~in ~~made~~conformity bywith ~~management,~~accounting asprinciples ~~well~~generally asaccepted ~~evaluating~~in the ~~overall~~United ~~financial~~States ~~statement~~of ~~presentation~~America. ~~We believe that our audits provide a reasonable basis for our opinion.~~

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

~~The accompanying~~ These consolidated financial statements ~~referred~~are tothe ~~above~~responsibility ~~have~~of ~~been prepared assuming~~ the Company’s ~~will continue as a going concern~~management. AsOur ~~discussed~~responsibility inis ~~Note~~to 14express an toopinion on the Company’s consolidated financial statements, ~~the~~based ~~Company~~on ~~has~~our ~~not~~audits. ~~generated~~We ~~sufficient~~are ~~cash~~a ~~flows~~public toaccounting ~~fund~~firm ~~its~~registered with ~~business~~the ~~operations. These~~Public ~~factors~~Company ~~raise~~Accounting ~~substantial~~Oversight ~~doubt~~Board ~~that~~(United ~~the~~States) ~~Company~~(PCAOB) ~~will~~and are required to be ~~able~~independent with respect to the ~~continue~~Company asin aaccordance ~~going~~with ~~concern~~the U.S. ~~The~~federal ~~consolidated~~securities ~~financial statements~~laws doand ~~not~~the ~~include~~applicable ~~any~~rules ~~adjustments~~and ~~that~~regulations ~~might~~of ~~result~~the ~~from~~Securities ~~the~~and Exchange ~~outcome~~Commission ofand ~~this~~the ~~uncertainty~~PCAOB.

~~/s/~~We conducted ~~Heaton~~our &audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, ~~PLLC~~nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Farmington~~Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, ~~Utah~~whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~October~~The accompanying 4consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 15 to the consolidated financial statements, ~~2017~~the Company has not generated sufficient cash flows from operations to fund its business operations. This factor, among others, raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 15. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

18/s/Pinnacle Accountancy Group of Utah

Freestone Resources Inc. and Subsidiaries
Consolidated Balance Sheets
	June 30,			June 30,
	2017			2016
ASSETS
Current Assets
Cash	$	4,109		$	29,791
Accounts receivable, net of allowance for doubtful accounts of
$4,000 and $4,000		155,845			141,134
Inventory		30,538			69,570
Prepaid and Other Assets		44,356			43,497
Total Current Assets		234,848			283,992
Property, plant and equipment, net of accumulated depreciation of
$251,287 and $125,436		1,502,810			1,641,661
TOTAL ASSETS	$	1,737,658		$	1,925,653
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities
Accounts payable	$	66,429		$	86,661
Accrued liabilities		313,710			205,382
Environmental liability		400,000			400,000
Convertible Notes Payable - Related Party		605,013			50,000
Current portion of capital lease obligation		11,920			11,419
Current portion of long-term debt		515,527			1,162,261
Total Current Liabilities		1,912,599			1,915,723
Capital lease obligation, less current portion		25,608			37,523
Long-term debt, less current portion		991,893			50,279
TOTAL LIABILITIES		2,930,100			2,003,525
STOCKHOLDERS' EQUITY/(DEFICIT)
Common stock, $.001 par value, 100,000,000 shares authorized,
91,613,177 and 90,613,177 shares issued and outstanding		91,613			90,613
Additional paid in capital		20,840,503			20,786,503
Accumulated deficit		(22,691,106	)		(21,304,159	)
Total Freestone Resources, Inc. stockholders' deficit		(1,758,990	)		(427,043	)
Non-Controlling Interest		566,548			349,171
Total equity (deficit)		(1,192,442	)		(77,872	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)	$	1,737,658		$	1,925,653
The Accompanying Notes Are An Integral Part of These Consolidated Financial Statements

We have served as the Company’s auditor since 2016

19Farmington, Utah

Freestone Resources Inc. and Subsidiaries
Consolidated Statements of Operations
	Year Ended			Year Ended
	June 30,			June 30,
	2017			2016
REVENUE
Tipping Fee Revenue	$	537,344		$	552,115
Tire Repair Revenue		357,959			370,298
Used Tire Sales		122,742			137,900
Scrap Material Sales		61,801			38,613
Total Revenue		1,079,846			1,098,926
COSTS OF REVENUE
Tipping Fee Operations		271,941			205,799
Tire Repair and Sales		156,043			155,531
Used Tires		57,926			81,629
Tire Disposal		353,097			637,730
Total Cost of Revenue		839,007			1,080,689
GROSS PROFIT		240,839			18,237
OPERATING EXPENSES
Start Up Costs		307,704			418,287
Selling		187,320			199,274
General and Administrative		930,902			1,649,605
Depreciation and Amortization		125,851			118,978
Loss on Sale of Assets		6,200			2,111
Total Operating Expense		1,557,977			2,388,255
INCOME (LOSS) FROM OPERATIONS		(1,317,138	)		(2,370,018	)
OTHER INCOME (EXPENSES)
Interest Expense, net		(165,312	)		(134,271	)
		(165,312	)		(134,271	)
INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST		(1,482,450	)		(2,504,289	)
Loss Attributable to Non-Controlling Interest		95,503			126,115
NET INCOME(LOSS) ATTRIBUTABLE TO FREESTONE	$	(1,386,947	)	$	(2,378,174	)
Basic and diluted income (loss) per share
Net income (loss) per share	$	(0.02	)		(0.03	)
Weighted average shares outstanding		91,273,793			86,963,484
Basic and diluted
The Accompanying Notes Are An Integral Part of These Consolidated Financial Statements

October 15, 2018

Freestone Resources Inc. and Subsidiaries
Statement of Changes in Stockholders' Equity/(Deficit)
Consolidated Balance Sheets
												Non
	June 30,			June 30,
		Common Stock						Paid-In		Accumulated			Controlling
	2018			2017
		Shares			Amount			Capital		Deficit			Interest			Totals
ASSETS
Balance, June 30, 2015		81,088,177		$	81,088		$	19,488,278	$	(18,925,985	)	$	300		$	643,681
Current Assets
Common Stock Issued for Cash		4,600,000			4,600			430,400								435,000
Cash	$	2,966		$	4,109
Common Stock Issued for Services		4,725,000			4,725			848,025								852,750
Accounts receivable, net of allowance for doubtful accounts
Common Stock Issued for O&G Interest		200,000			200			19,800								20,000
of $4,000 and $4,000		139,772			155,845
Members Contributions to LLC													474,986			474,986
Inventory		30,391			30,538
Net Loss										(2,378,174	)					(2,378,174	)
Prepaid and Other Assets		67,065			44,356
Loss Attributable to Non-Controlling Interest													(126,115	)		(126,115	)
Total Current Assets		240,194			234,848
Balance, June 30, 2016		90,613,177			90,613			20,786,503		(21,304,159	)		349,171			(77,872	)
Property, plant and equipment, net of accumulated depreciation
Common Stock Issued for Cash		500,000			500			24,500								25,000
of $349,373 and $242,320		1,359,972			1,502,810
Common Stock Issued for Services		500,000			500			29,500								30,000
TOTAL ASSETS	$	1,600,166		$	1,737,658
Members Contributions to LLC													312,880			312,880
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Net Loss										(1,386,947	)					(1,386,947	)
Current Liabilities
Loss Attributable to Non-Controlling Interest													(95,503	)		(95,503	)
Accounts payable	$	91,286		$	66,429
Balance, June 30, 2017		91,613,177		$	91,613		$	20,840,503	$	(22,691,106	)	$	566,548		$	(1,192,442	)
Accrued liabilities		580,124			310,710
The Accompanying Notes Are An Integral Part of These Consolidated Financial Statements
Environmental liability		400,000			400,000
Convertible Notes Payable - Related Party		1,579,919			605,013
Current portion of capital lease obligation		12,484			11,920
Current portion of long-term debt		339,858			515,527
Total Current Liabilities		3,003,671			1,912,599
Capital lease obligation, less current portion		13,124			25,608
Long-term debt, less current portion		715,131			991,893
TOTAL LIABILITIES		3,731,926			2,930,100
STOCKHOLDERS' EQUITY/(DEFICIT)
Preferred stock, 5,000,000 shares authorized, 0 shares issued
and outstanding		—			—
Common stock, $.001 par value, 100,000,000 shares authorized,
91,988,177 and 91,613,177 shares issued and outstanding		91,988			91,613
Additional paid in capital		20,858,878			20,840,503
Accumulated deficit		(23,829,238	)		(22,691,106	)
Total Freestone Resources, Inc. stockholders' deficit		(2,878,372	)		(1,758,990	)
Non-Controlling Interest		746,612			566,548
Total equity (deficit)		(2,131,760	)		(1,192,442	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)	$	1,600,166		$	1,737,658

21 The Accompanying Notes Are An Integral Part of These Consolidated Financial Statements

Freestone Resources Inc. and Subsidiaries
Consolidated Statements of Cash Flow
	Year Ended			Year Ended
	June 30,			June 30,
	2017			2016
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(1,482,450	)	$	(2,504,289	)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation		125,851			118,978
Loss on Disposal of Assets		6,200			2,111
Bargain Purchase Gain		—			—
Stock Issued for Services		30,000			852,750
Changes in operating assets and liabilities
Decrease in Accounts Receivable		(14,711	)		(42,626	)
Decrease in Inventory		39,032			52,430
Increase in Prepaid Expenses		(859	)		7,654
Increase in Accounts Payable		355,977			580,990
Increase (Decrease) in Accrued Liabilities		108,328			132,605
Net Cash (Used In) Operating Activities		(832,632	)		(799,397	)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets		—			(19,419	)
Proceeds from Sale of Fixed Assets		6,800			—
Net Provided By (Cash Used) in Investing Activities		6,800			(19,419	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from sale of stock		25,000			435,000
Proceeds from Long-Term Debt		5,000			70,000
Proceeds from Convertible Notes Payable - Related Parties		555,013			50,000
Repayment of Debt		(72,186	)		(61,083	)
Capital Lease Payments		(11,414	)		(7,795	)
Cash Contributed to LLC by non-controlling member		298,737			324,113
Net Provided By In Financing Activities		800,150			810,235
Net Decrease in Cash		(25,682	)		(8,581	)
Cash at Beginning of the Period		29,791			38,372
Cash at the End of the Period	$	4,109		$	29,791
Cash Transactions
Total Amount of Interest Paid in Cash	$	81,331		$	10,613
Total Income Taxes Paid in Cash	$	—		$	—
Non Cash financing and Investing Activities
Accrued Interest and Penalities Added to Note Payable	$	362,066		$	—
Note Payable for Fixed Assets	$	—		$	123,899
Note assumed by Buyer in Sale of Vehicle	$	—		$	12,109
Services paid for drectly by non-controlling interest	$	14,143		$	150,873
The Accompanying Notes Are An Integral Part of These Consolidated Financial Statements

Freestone Resources Inc. and Subsidiaries
Consolidated Statements of Operations


	Year Ended			Year Ended
	June 30,			June 30,
	2018			2017

REVENUE
Tipping Fee Revenue	$	642,227		$	537,344
Tire Repair Revenue		370,701			357,959
Used Tire Sales		95,375			122,742
Scrap Material Sales		55,557			61,801
Total Revenue		1,163,860			1,079,846

COSTS OF REVENUE
Tipping Fee Operations		295,055			271,941
Tire Repair and Sales		149,350			156,043
Used Tires		10,266			57,926
Tire Disposal		440,714			353,097
Scrap and Other Costs		9,422			—
Total Cost of Revenue		904,807			839,007

GROSS PROFIT		259,053			240,839

OPERATING EXPENSES
Start Up Costs		282,998			307,704
Selling		122,720			187,320
General and Administrative		722,979			930,902
Depreciation and Amortization		124,755			125,851
Loss on Sale of Assets		13,783			6,200
Total Operating Expense		1,267,235			1,557,977

INCOME (LOSS) FROM OPERATIONS		(1,008,182	)		(1,317,138	)

OTHER INCOME (EXPENSES)
Interest Expense, net		(219,944	)		(165,312	)
		(219,944	)		(165,312	)

INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST		(1,228,126	)		(1,482,450	)

Loss Attributable to Non-Controlling Interest		89,994			95,503

NET INCOME(LOSS) ATTRIBUTABLE TO FREESTONE	$	(1,138,132	)	$	(1,386,947	)

Basic and diluted income (loss) per share
Net income (loss) per share	$	(0.01	)		(0.02	)

Weighted average shares outstanding		91,800,506			91,273,793
Basic and diluted

~~Freestone~~The Accompanying ~~Resources~~Notes ~~Inc.~~Are ~~and~~An ~~Subsidiaries~~Integral Part of These Consolidated Financial Statements

~~Notes to Financial Statements~~22

June 30, 2017 and 2016

Freestone Resources Inc. and Subsidiaries
Statement of Changes in Stockholders' Equity/(Deficit)

										Non
	Common Stock				Paid-In		Accumulated			Controlling
	Shares		Amount		Capital		Deficit			Interest			Totals

Balance, June 30, 2016		90,613,177	$	90,913	$	20,786,503	$	(21,304,159	)	$	349,3171		$	(77,872	)

Common Stock Issued for Cash		500,000		500		24,500								25,000

Common Stock Issued for Services		500,000		500		29,500								30,000

Members Contributions to LLC											312,880			312,880

Net Loss								(1,386,947	)					(1,386,947	)

Loss Attributable to Non-Controlling Interest											(95,503	)		(95,503	)

Balance, June 30, 2017		91,613,177		91,613		20,840,503		(22,691,106	)		566,548			(1,192,442	)

Common Stock Issued for Services		375,000		375		18,375								18,750

Members Contributions to LLC											270,058			270,058

Net Loss								(1,138,132	)					(1,138,132	)

Loss Attributable to Non-Controlling Interest											(89,994	)		(89,994	)

Balance, June 30, 2018		91,988,177	$	91,988	$	20,858,978	$	(23,829,238	)	$	746,612		$	(2,131,760	)

~~NOTE~~The Accompanying 1Notes –Are ~~NATURE~~An OFIntegral ~~ACTIVITIES~~Part ~~AND~~of ~~CONTINUANCE~~These ~~OF BUSINESS~~Consolidated Financial Statements

Freestone Resources, Inc. and subsidiaries (“Freestone” or collectively the “Company”) are an oil and gas technology development company. The Company is located in Dallas, Texas and is incorporated under the laws of the State of Nevada. The Company’s subsidiaries consist of C.C. Crawford Retreading Company, Inc., Freestone Technologies, LLC and Freestone Dynamis Energy Products, LLC.23

The Company’s primary business is the development of new technologies that allow for the utilization of oil and gas resources in an environmentally responsible and cost effective way.

Freestone Resources Inc. and Subsidiaries
Consolidated Statements of Cash Flow

		Year Ended			Year Ended
		June 30,			June 30,
		2018			2017

CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss)		(1,228,126	)	$	(1,482,450	)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation		124,755			125,851
Loss on Disposal of Assets		13,783			6,200
Bad Debt Write-off		45,158			—
Stock Issued for Services		18,750			30,000
Changes in operating assets and liabilities
Decrease in Accounts Receivable		(29,085	)		(14,711	)
Decrease in Inventory		147			39,032
Increase in Prepaid Expenses		(22,709	)		(859	)
Increase in Accounts Payable		24,857			355,977
Increase in Accrued Liabilities		266,414			108,328
Net Cash (Used In) Operating Activities		(786,056	)		(832,632	)

CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets		(6,700	)		—
Proceeds from Sale of Fixed Assets		11,000			6,800
Net Provided By (Cash Used) in Investing Activities		4,300			6,800

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from sale of stock		—			25,000
Proceeds from Long-Term Debt		—			5,000
Proceeds from Convertible Notes Payable - Related Parties		974,816			555,0013
Repayment of Debt		(452,341	)		(72,186	)
Capital Lease Payments		(11,920	)		(11,414	)
Cash Contributed to LLC by non-controlling member		270,058			298,737
Net Provided By In Financing Activities		780,613			800,150

Net Decrease in Cash		(1,143	)		(25,682	)

Cash at Beginning of the Period		4,109			29,791

Cash at the End of the Period	$	2,966		$	4,109

Cash Transactions
Total Amount of Interest Paid in Cash	$	118,905		$	81,331

Total Income Taxes Paid in Cash	$	—		$	—

Non Cash financing and Investing Activities
Accrued Interest and Penalties Added to Note Payable	$	—		$	362,066

Services paid for directly by non-controlling interest	$	12,641		$	14,143

~~C.C. Crawford Retreading Company, Inc. (“CTR”) is an Off-~~ The~~-Road (“OTR”) tire company located in Ennis, Texas and incorporated under the laws of the State of Texas.~~ ~~CTR’s~~Accompanying ~~primary~~Notes ~~business~~Are isAn toIntegral ~~repair,~~Part ~~recycle, dispose~~ of ~~and~~These ~~sell~~Consolidated ~~OTR~~Financial ~~tires, which are used on large, industrial equipment.~~Statements

Freestone Dynamis Energy Products, LLC (“FDEP”) is a joint venture between Dynamis Energy, LLC and the Company. FDEP was established to pursue the production and marketing of Petrozene™. FDEP’s initial operations will utilize a specialized pyrolysis technology in order to process CTR’s feedstock, and begin large scale production of Petrozene™. Freestone owns 70% of FDEP.24

Freestone Resources ~~Technology, LLC~~Inc. isand ~~an inactive subsidiary.~~Subsidiaries

~~NOTE~~Notes to 2Financial ~~– SIGNIFICANT ACCOUNTING POLICIES~~Statements

~~The Company’s management selects accounting~~June ~~principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating~~30, ~~matching~~2018 and timing of revenue and expense. It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.2017

~~The financial statements and notes are representations~~NOTE of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) ~~recorded transactions are~~– ~~valid; 2)~~NATURE ~~valid transactions are recorded; and 3)~~OF ~~transactions are recorded~~ACTIVITIES inAND ~~the~~CONTINUANCE ~~proper period~~OF in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.BUSINESS

~~Basis~~Freestone Resources, Inc. and subsidiaries (“Freestone” or collectively the “Company”) are an oil and gas technology development company. The Company is located in Ennis, Texas and is incorporated under the laws of ~~Presentation:~~the State of Nevada. The Company’s subsidiaries consist of C.C. Crawford Retreading Company, Inc., Freestone Technologies, LLC and Freestone Dynamis Energy Products, LLC.

The Company’s ~~prepares~~primary ~~its~~business ~~financial~~is ~~statements on~~ the ~~accrual~~development ~~basis~~ of ~~accounting. The~~new ~~accompanying~~technologies ~~consolidated~~that ~~financial~~allow ~~statements~~for ~~include~~ the ~~accounts~~ utilization of ~~the~~oil ~~Company~~ and ~~its~~gas ~~subsidiaries,~~resources in ~~all~~an ofenvironmentally ~~which~~responsible ~~have a fiscal year end of June 30. All significant intercompany accounts, balances~~ and ~~transactions~~cost ~~have~~effective ~~been eliminated in the consolidation~~way.

~~The Company consolidates its subsidiaries in~~C.C. ~~accordance~~Crawford ~~with~~Retreading ~~ASC 810~~Company, ~~and~~Inc. ~~specifically~~(“CTR”) ~~ASC~~is ~~810~~an Off-10The-~~15-8~~Road ~~which~~(“OTR”) ~~states,~~tire ~~"[t]he~~company ~~usual~~located ~~condition~~in ~~for~~Ennis, aTexas and ~~controlling~~incorporated ~~financial interest~~under isthe ~~ownership~~laws of athe ~~majority~~State ~~voting~~of ~~interest,~~Texas. ~~and,~~CTR’s ~~therefore,~~primary asbusiness ais ~~general~~to ~~rule ownership by one reporting entity~~repair, ~~directly or indirectly~~recycle, ordispose ~~over 50%~~ of ~~the~~and ~~outstanding~~sell OTR ~~voting~~tires, ~~shares~~which ofare ~~another~~used ~~entity~~on islarge, aindustrial ~~condition pointing toward consolidation~~equipment."

23Freestone Dynamis Energy Products, LLC (“FDEP”) is a joint venture between Dynamis Energy, LLC and the Company. FDEP was established to pursue the production and marketing of Petrozene™. FDEP’s initial operations will utilize a specialized pyrolysis technology in order to process CTR’s feedstock, and begin large scale production of Petrozene™. Freestone owns 70% of FDEP.

~~Use~~Freestone Technology, ofLLC. ~~Estimates:~~is an inactive subsidiary.

~~The preparation of financial statements in~~NOTE ~~conformity~~2 ~~with~~– ~~generally~~SIGNIFICANT ~~accepted~~ACCOUNTING ~~accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.~~POLICIES

~~Recently~~The Company’s ~~Issued~~management ~~Accounting~~selects ~~Pronouncements:~~accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.

The ~~Financial~~financial ~~Accounting~~statements ~~Standards~~and ~~Board~~notes ~~(“FASB”)~~are ~~issued~~representations ~~Accounting~~of ~~Standards~~the ~~Update~~Company’s ~~(“ASU”)~~management ~~No.~~which ~~2014-09, Revenue~~is ~~from~~responsible ~~Contracts~~for ~~with~~their ~~Customers~~integrity and ~~(Topic~~objectivity. Management ~~606)~~further inacknowledges ~~May~~that ~~2014.~~it ~~ASU~~is ~~No.~~solely ~~2014-09~~responsible ~~outlines~~for aadopting ~~single,~~sound ~~comprehensive~~accounting ~~revenue recognition~~practices, ~~model~~establishing ~~for~~and ~~revenue~~maintaining ~~derived~~a ~~from~~system ~~contracts~~of ~~with~~internal ~~customers~~accounting control and itpreventing ~~supersedes~~and ~~the~~detecting ~~most current revenue recognition guidance~~fraud. The ~~This~~Company's ~~includes~~system ~~current~~of ~~guidance~~internal accounting ~~that~~control is ~~industry-specific.~~designed ~~Under~~to ~~ASU No. 2014-09~~assure, anamong ~~entity~~other ~~recognizes~~items, ~~revenue~~that 1) ~~for the transfer of promised~~recorded transactions are ~~goods~~valid; 2) orvalid transactions are ~~services~~recorded; and 3) ~~to customers~~ transactions are recorded in ~~an amount that reflects~~ the ~~consideration~~proper period ~~for~~in ~~which~~a ~~the~~timely manner ~~entity expects~~ to beproduce ~~entitled~~financial statements inwhich ~~exchange~~present fairly ~~for~~the ~~those goods or services. ASU No. 2014-09 is effective for annual reporting periods beginning after December 15~~financial condition, results ~~2017.~~of ~~Earlier adoption~~operations and iscash flows ~~permitted as~~ of ~~annual reporting periods beginning after December 15, 2016. The~~ the Company ~~is still evaluating~~ for the respective periods being ~~impacts it will have on its current revenue recognition policy~~presented.

OnBasis ~~May 10, 2017, the FASB issued ASU 2017-09, which amends the scope~~ of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU No. 2017-09 is effective for annual reporting periods beginning after December 15, 2017. The Company is still evaluating the impacts it will have on its current revenue recognition policy.Presentation:

~~Income~~The Company ~~Taxes:~~prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which have a fiscal year end of June 30. All significant intercompany accounts, balances and transactions have been eliminated in the consolidation.

The Company ~~has~~consolidates ~~adopted~~its subsidiaries in accordance with ASC ~~740~~810, and specifically ASC 810-10, -15-8 which ~~requires~~ ~~the~~states, ~~use~~"[t]he ofusual condition ~~the~~for ~~liability~~a ~~method~~controlling infinancial ~~the~~interest ~~computation~~is ownership of ~~income~~a ~~tax~~majority ~~expense~~voting interest, and, ~~the~~therefore, ~~current~~as ~~and~~a ~~deferred~~general ~~income~~rule ~~taxes payable.~~ownership Aby ~~valuation~~one ~~allowance~~reporting isentity, ~~provided~~directly ~~for~~or ~~the~~indirectly, ~~amount~~or ofover ~~deferred~~50% ~~tax~~of ~~assets~~the ~~that,~~outstanding ~~based~~voting onshares ~~available~~of ~~evidence,~~another ~~are~~entity ~~not~~is ~~expected~~a tocondition bepointing ~~realized~~toward consolidation."

~~Cash:~~25

~~Cash and cash equivalents include cash~~Use ~~in banks and short-term investments with original maturities~~ of three months or less. The Company maintains deposits in a financial institution which provides Federal Deposit Insurance Corporation coverage for interest bearing and non-interest bearing transaction accounts of up to $250,000. At June 30, 2017, none of the Company’s cash was in excess of federally insured limits.Estimates:

~~Revenue~~The preparation ~~Recognition:~~of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

~~CTR recognizes revenue from the sale of products~~Recently inIssued ~~accordance~~Accounting ~~with ASC 605. Revenue will be recognized only when all of the following criteria have been met~~Pronouncements:

• Persuasive evidence of an arrangement exists; and • Ownership and all risks of loss have been transferred to buyer, which is generally upon delivery; and • The price is fixed and determinable; and • Collectability is reasonably assured.Stock compensation

~~The~~In March ~~three~~2016, ~~main~~the ~~sources~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 amending several aspects of ~~revenue~~share-based payment accounting. This guidance requires all excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are ~~recognized~~settled, with prospective application required. The guidance also changes the classification of such tax benefits or tax deficiencies on the statement of cash flows from a financing activity to an operating activity, with retrospective or prospective application allowed. Additionally, the guidance requires the classification of employee taxes paid when an employer withholds shares for tax-withholding purposes as ~~follows:~~a financing activity on the statement of cash flows, with retrospective application required. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. As such, The Company adopted these provisions as of the fiscal year beginning January 1, 2017. There was no material effect of the new provisions on our consolidated financial statements and related disclosures.

•In May ~~Revenues~~2017, ~~associated~~the ~~with~~FASB ~~tire~~issued ~~disposals~~ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09). ASU 2017-09 provides clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update are ~~recognized~~effective ~~upon~~for ~~receipt~~all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. As such, The Company is required to adopt these provisions as of the ~~tire~~fiscal byyear ~~CTR;~~beginning on January 1, 2018. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. We are currently assessing the potential impact of ASU 2017-09 on our consolidated financial statements and results of operations.

~~• Revenues associated with tire repairs are invoiced and recognized upon completion of repair and receipt of the tire by the customer; and~~Leases

•In February ~~Revenue~~2016, ~~associated~~FASB ~~with~~issued ~~used~~ASU ~~tires~~2016-02— Leases (Topic 842). The update is intended to increase transparency and ~~scrap~~comparability among ~~sales~~organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this update are ~~recognized~~effective ~~upon~~for ~~delivery~~fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the ~~product~~amendments in this update is permitted. As such, The Company is required to adopt these provisions as of the ~~customer~~fiscal year beginning on January 1, 2019. The Company is currently evaluating the impact of FASB ASU 2016-02 and expects the adoption thereof will have a material effect on The Company’s presentation of balance sheet assets and liabilities based on the present value of future lease payments,but does not expect a material effect on the presentation of expenses and cash flows.

• Revenue ~~associated with sales of Petrozene is recognize upon delivery to the customer.~~:

24Revenue from Contracts with Customers: In May 2014, ASC 606 was issued related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The standard will be effective for the Company's fiscal year beginning July 1, 2018, including interim reporting periods within that year. The new guidance is not expected to have an impact on the Company's consolidated financial statements. The Company has analyzed the standard and has implement any relevant provisions for the interim periods beginning July 1, 2018.

~~Accounts Receivable:~~26

Accounts Receivable consists of OTR tire repair, disposal, recycling and used tire sales receivables due from customers and are unsecured. The receivables are generally unsecured and such amounts are generally due within 30 to 45 days after the date of the invoice. Accounts receivable are carried at their face amount, less an allowance for doubtful accounts. CTR’s policy is generally not to charge interest on receivables after the invoice becomes past due. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Write offs are recorded at a time when a customer receivable is deemed uncollectible. CTR’s allowance for doubtful accounts was $4,000 and $4,000 as of June 30, 2017 and 2016, respectively.Inventory

~~Shipping~~In July 2015, FASB issued ASU 2015-11— Inventory (Topic 330): “Simplifying the Measurement of Inventory”. The update is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. As such, the Company adopted these provisions beginning on January 1, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The update is part of FASB’s Simplification Initiative, the objective of which is to identify, evaluate, and ~~Handling~~improve ~~Costs~~areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced. Pursuant to the update, an entity should measure inventory at the lower of cost and net realizable value. The amendments in the update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). Adoption of the new guidance did not have an impact on the Company's consolidated financial statements.

~~The Company includes shipping and handling~~Income ~~cost as part of cost of goods sold.~~Taxes:

~~Inventory:~~The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Inventory of the Company is carried at lower of cost or market. The Company’s inventory consists of processed rubber from disposed tires carried at cost of processing, used tires for sale carried at the cost of repairs and tire oil produced from the Company’s pyrolysis operations. As of June 30, 2017 and 2016 inventory consisted ofCash:

	2017		2016
Crum Rubber for Processing	$	8,087	$	8,087
Used Tire for Resale		15,041		49,945
Tire Oil		7,410		11,538
	$	30,538	$	69,570

Cash and cash equivalents include cash in banks and short-term investments with original maturities of three months or less. The Company maintains deposits in a financial institution which provides Federal Deposit Insurance Corporation coverage for interest bearing and non-interest bearing transaction accounts of up to $250,000. At June 30, 2018 and 2017, none of the Company’s cash was in excess of federally insured limits.

~~Property, Plant and Equipment~~Revenue Recognition:

~~Property, Plant and Equipment are carried at~~CTR ~~the~~recognizes ~~cost~~revenue offrom ~~acquisition or construction, and are depreciated over~~ the ~~estimated~~sale ~~useful lives~~ of ~~the~~products ~~assets. Assets acquired~~ in a ~~business~~accordance ~~combination are stated at estimated fair value. Costs associated~~ with ~~repair~~ASC ~~and maintenance are expensed as they are incurred~~605. Revenue ~~Costs~~will ~~associated~~be ~~with~~recognized ~~improvements~~only ~~which~~when ~~extend~~all ~~the life, increase the capacity or improve the efficiency~~ of ~~our property~~ ~~and equipment are capitalized and depreciated over~~ the ~~remaining~~following ~~life~~criteria ofhave ~~the~~been related asset. Gains and losses on dispositions of equipment are in operating income. Depreciation and amortization are provided using the straight-line and accelerated methods over the estimated useful lives of the assets as followsmet:

	Buildings and Improvements		10 - 39 Years
	Machinery and Equipment		7 Years
	Automotive Equipment		5-7 Years
	Office Furniture & Equipment		5 Years
	Collectable Art Work		Not Depreciated

	• Persuasive evidence of an arrangement exists; and
	• Ownership and all risks of loss have been transferred to buyer, which is generally upon delivery; and
	• The price is fixed and determinable; and
	• Collectability is reasonably assured.

~~Impairment~~The three main sources of ~~Long-Lived~~revenue ~~Assets~~are recognized as follows:

~~The~~• ~~Company~~Revenues ~~evaluates,~~associated ~~on a periodic basis, long-lived assets to be held and used for impairment in accordance~~ with ~~the~~tire ~~reporting~~disposals requirements of ASC 360-10. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are ~~present~~recognized orupon ~~other~~receipt ~~factors exist that indicate that the carrying amount~~ of the ~~asset~~tire ~~may~~by ~~not~~CTR; ~~be recoverable, then an estimate of the undiscounted value of expected future operating cash flows is used to determine whether the asset is recoverable~~ and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or discounted future operating cash flows.

25• Revenues associated with tire repairs are invoiced and recognized upon completion of repair and receipt of the tire by the customer; and

~~Stock-Based~~• ~~Compensation:~~Revenue associated with used tires and scrap sales are recognized upon delivery of the product to the customer.

~~The~~• ~~Company~~Revenue ~~accounts~~associated ~~for~~with ~~stock-based~~sales ~~compensation using a fair value based method whereby compensation cost is measured at the grant date based on the value~~ of ~~the~~Petrozene ~~services received and~~ is ~~recognized~~recognize ~~over~~upon ~~the~~delivery ~~service period. The Company uses the Black-Scholes pricing model~~ to ~~calculate~~ the ~~fair value of options and warrants issued~~customer. In calculating this fair value, there are certain assumptions used such as the expected life of the option, risk-free interest rate, dividend yield, volatility and forfeiture rate. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

~~The Company does not have any employee benefit or stock option plans.~~27

~~Fair Value Measurements~~Accounts Receivable:

~~ASC~~Accounts Receivable ~~Topic~~consists ~~820,~~of ~~defines~~OTR ~~fair~~tire ~~value~~repair, ~~establishes~~disposal, recycling and used tire sales receivables due from customers and are unsecured. aThe ~~framework~~receivables ~~for~~are ~~measuring~~generally ~~fair~~unsecured ~~value~~and insuch amounts are generally ~~accepted~~due ~~accounting~~within ~~principles,~~30 ~~and~~to ~~requires~~45 days ~~certain~~after ~~disclosures~~the ~~about~~date ~~fair~~of ~~value measurements~~the invoice. InAccounts receivable ~~general~~are carried at their face amount, ~~fair~~less ~~value~~an ofallowance ~~financial~~for ~~instruments~~doubtful ~~are~~accounts. CTR’s ~~based~~policy ~~upon~~is ~~quoted~~generally not ~~market~~to ~~prices,~~charge ~~where~~interest ~~available~~on receivables after the invoice becomes past due. IfA receivable is considered past due if payments ~~such~~have ~~quoted~~not ~~market~~been ~~prices~~received within agreed upon invoice terms. Write offs are ~~not~~recorded ~~available,~~at ~~fair~~a ~~value~~time when a customer receivable is ~~based~~deemed uncollectible. ~~upon~~CTR’s ~~internally~~allowance ~~developed~~for ~~models~~doubtful ~~that~~accounts ~~primarily~~was ~~use~~$4,000 and $4,000 as ~~inputs~~of June 30, ~~observable~~ ~~market~~2018 ~~based~~and ~~parameters~~2017, respectively. ~~Valuation~~ ~~adjustments~~During the ~~may~~year beended ~~made~~June to30, ~~ensure~~2018 ~~that~~the ~~financial~~Company’s ~~instruments~~joint ~~are~~venture ~~recorded~~wrote off a $45,158 receivable for certain cost associated with atthe ~~fair~~installation ~~value. These~~and ~~adjustments~~operation ~~may~~of ~~include~~the ~~amounts~~venture’s toleased ~~reflect~~pyrolysis ~~counterparty~~machine ~~credit~~from ~~quality~~the ~~and~~lessor of the machine. The Company’s ~~credit~~feel ~~worthiness,~~the ~~among~~costs ~~other~~are ~~things, as~~a ~~well~~valid asreceivable ~~unobservable~~however ~~parameters~~since the original lease has expired and the machine is not currently producing revenue recovery can not be assured.

~~Cash, accounts receivable, accounts payable~~Shipping and ~~other~~Handling ~~accrued expenses and other current assets and liabilities are carried at amounts which reasonably approximate their fair values because of the relatively short maturity of those instruments.~~Costs

~~Emerging~~The Company ~~Growth~~includes ~~Company~~shipping ~~Critical Accounting Policy~~and ~~Disclosure:~~ handling cost as part of cost of goods sold.

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.Inventory:

~~Net~~Inventory of ~~Loss~~the ~~Per~~Company ~~Share~~is carried at lower of cost or market. The Company’s inventory consists of processed rubber from disposed tires carried at cost of processing, used tires for sale carried at the cost of repairs and tire oil produced from the Company’s pyrolysis operations. As of June 30, 2018 and 2017 inventory consisted of:

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon conversion of notes payable to related parties and stock compensation to officers under employment contracts. The dilutive effect of potential common shares is not reflected in diluted earnings per share because we incurred net losses for the years ended June 30, 2017 and 2016, and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive. The total potential common shares include 375,000 for stock compensation and 8,011,823 for convertible debt. The convertible debt is specifically limited to authorized shares available per the note agreements.

	2018		2017
Crum Rubber for Processing	$	---	$	8,087
Used Tire for Resale		11,648		15,041
Petrozene and Tire Oil		18,743		7,410
	$	30,391	$	30,538

~~Reclassifications~~Property, Plant and Equipment:

~~Certain~~Property, Plant ~~accounts~~and inEquipment are carried at the ~~prior~~cost ~~year~~of ~~financial~~acquisition or construction, and are depreciated over the estimated useful lives ~~statements~~of ~~have~~the ~~been~~assets. ~~reclassified~~Assets toacquired ~~conform~~in a business combination are stated at estimated fair value. Costs associated with ~~current~~repair ~~year~~and maintenance ~~presentation~~are expensed as they are incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are in operating income. Depreciation and amortization are provided using the straight-line and accelerated methods over the estimated useful lives of the assets as follows:

	Buildings and Improvements		10 - 39 Years
	Machinery and Equipment		7 Years
	Automotive Equipment		5-7 Years
	Office Furniture & Equipment		5 Years

~~NOTE~~Impairment of 3 Long-Lived ~~FORMATION OF FREESTONE DYNAMIS ENERGY PRODUCTS, LLC.~~Assets:

OnThe Company ~~June~~evaluates, 24on a periodic basis, ~~2015~~long-lived ~~the~~assets ~~Company~~to ~~entered into~~be anheld ~~agreement~~and ~~with~~used ~~Dynamis~~for impairment in ~~order~~accordance towith ~~form~~the reporting requirements of ASC 360-10. The evaluation is based on certain impairment indicators, such as the ~~joint~~nature ~~venture~~of ~~FDEP~~the assets, athe ~~Delaware~~future economic ~~limited~~benefit ~~liability~~of ~~company.~~the ~~Freestone~~assets, ~~determined~~any historical or future profitability measurements, as ell as other external market conditions toor ~~enter~~factors ~~into~~that amay ~~joint~~be ~~venture~~present. ~~with~~If ~~Dynamis~~these ~~based~~impairment onindicators ~~their~~are ~~track~~present ~~record~~or ~~and~~other ~~experience~~factors inexist that indicate that the ~~waste-to-energy~~carrying amount ~~industry~~of the asset may not be recoverable, ~~and~~then ~~their ability~~an toestimate ~~provide~~of the ~~necessary~~undiscounted ~~funding~~value of expected future operating cash flows is used to ~~fully~~determine ~~integrate~~whether the ~~production,~~asset ~~marketing~~is recoverable and ~~sale~~the amount of ~~Petrozene™~~any toimpairment ~~current~~is ~~and future~~measured ~~customers.~~as ~~The~~the ~~terms~~difference ofbetween the carrying ~~joint~~amount ~~venture~~of ~~between~~ the ~~Company~~asset and ~~Dynamis~~its ~~are~~estimated fair value. The fair value is estimated using valuation techniques such as ~~follows:~~market prices for similar assets or discounted future operating cash flows.

~~• Freestone owns a 70% member interest in FDEP for licensing the rights to use Petrozene™ to FDEP; and~~28

~~• Dynamis owns a 30% member interest in FDEP in exchange for providing funding up to $5,000,000 to operate the joint venture, and purchase a continuous~~Stock-~~feed pyrolysis machine capable of producing a product that can be used to produce Petrozene™; and~~Based Compensation:

•The Company ~~FDEP~~accounts ~~will~~for bestock-based ~~leasing~~compensation ~~employees~~using ~~from~~a ~~CTR,~~fair value based method whereby compensation cost is measured at the grant date based on the value of the services received and ~~said~~is ~~employees~~recognized ~~will~~over ~~operate~~the service period. The Company uses the ~~machine~~Black-Scholes pricing model to calculate the fair value of options and warrants issued. In ~~FDEP~~calculating ~~will~~this ~~reimburse~~fair value, ~~CTR~~there ~~for~~are certain assumptions used such as the ~~leased~~expected ~~employees;~~life of the option, risk-free interest rate, dividend yield, volatility and forfeiture rate. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

•The Company ~~FDEP~~does ~~has the right, but~~ not ~~the~~have ~~obligation~~any toemployee ~~purchase~~benefit ~~CTR from Freestone through cash compensation to Freestone, the issuance of additional units in FDEP to Freestone~~ or astock ~~combination~~option ~~of both cash and units in FDEP as mutually agreed upon by FDEP and Freestone; and~~plans.

•Fair Value FDEP will lease a building from CTR in order to operate the specialized pyrolysis technology for payment of either the ad valorem taxes associated with the rented property or $1,000 per month depending on which amount is the greater of the two; andMeasurements:

•ASC Topic ~~Dynamis~~820, ~~will~~defines ~~receive~~fair ~~80%~~value, ofestablishes ~~the~~a ~~distributions~~framework ~~from~~for ~~FDEP~~measuring ~~until~~fair ~~they~~value ~~have~~in ~~reached~~generally aaccepted ~~25%~~accounting ~~initial~~principles, ~~rate~~and requires certain disclosures about fair value measurements. In general, fair value of ~~return~~financial oninstruments ~~funds~~are ~~invested~~based upon ~~into~~quoted ~~the~~market ~~joint~~prices, ~~venture~~where available. If ~~Once~~such ~~the~~quoted ~~25%~~market ~~initial~~prices ~~rate~~are ofnot ~~return~~available, ~~threshold~~fair value is ~~met~~based ~~all~~upon internally ~~distributions~~developed ~~from~~models ~~FDEP~~that ~~will~~primarily beuse, ~~split~~as ~~according~~inputs, observable market based parameters. Valuation adjustments may be made to ~~the~~ensure 70that /financial 30instruments ~~member~~are ~~interest~~recorded ofat ~~FDEP~~fair ~~owned~~value. These byadjustments may include amounts to reflect counterparty credit quality and the Company’s ~~and~~credit ~~Dynamis~~worthiness, among other things, as well as unobservable parameters.

~~On June 24~~Cash, ~~2015 FDEP simultaneously~~ ~~entered~~accounts ~~into a lease agreement with a company that has developed a continuous-feed pyrolysis technology that will be operated by FDEP at the Company’s facility in Ennis~~receivable, ~~Texas.~~accounts ~~FDEP~~payable and ~~the~~other ~~company~~accrued ~~that~~expenses ~~developed~~and ~~the~~other ~~pyrolysis~~current ~~technology~~assets ~~will split the revenues generated from the machine. FDEP will receive 70% of the revenues generated from the machine,~~ and ~~the~~liabilities ~~company~~are ~~providing the~~carried ~~continuous-feed pyrolysis technology will receive 30% of the revenues. This revenue split will remain in place so long as the machine is operating~~ at ~~the Company’s facility in Ennis, Texas. The agreement between the two companies allows FDEP the opportunity~~amounts towhich ~~ensure~~reasonably ~~that~~approximate ~~the~~their ~~technology~~fair ~~continues~~values tobecause ~~operate~~of ~~properly under~~ the ~~strict~~relatively ~~conditions~~short ~~that~~maturity ~~are~~of ~~necessary~~those ~~to produce Petrozene™~~instruments. ~~If the leased pyrolysis machine operates within certain, predefined parameters then FDEP has the right to purchase additional machines.~~

~~During the year ended June 30,~~Emerging ~~2016~~Growth ~~and~~Company ~~2017, Dynamis paid $150,873 and $14,143, respectively for certain engineering and general administrative costs on behalf of FDEP, which are shown on the Statement~~Critical ofAccounting ~~Cash~~Policy Flows as a non-cash financing activity. These payments were treated as capital contributions to the entity by Dynamis. Dynamis also made cash contributions totaling $324,113 and $298,737 to the entity during the year ended June 30, 2016 and 2017, respectively.Disclosure:

~~NOTE~~The Company 4qualifies –as ~~CONCENTRATION~~an OF“emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that ~~CREDIT~~an ~~RISK~~emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.

~~At June 30, 2017 and 2016 two customers~~Net ~~made~~Loss upPer 64% and three customers made up 77% of the Company’s outstanding trade accounts receivable balance, respectively. For the years ending June 30, 2017 and 2016 three customers and two customer accounted for 68% and 60% of the Company’s net revenue, respectively.Share:

27Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon conversion of notes payable to related parties and stock compensation to officers under employment contracts. The dilutive effect of potential common shares is not reflected in diluted earnings per share because we incurred net losses for the years ended June 30, 2018 and 2017, and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive. The total potential common shares include 8,011,823 for convertible debt. The convertible debt is specifically limited to authorized shares available per the note agreements.

~~NOTE 5 – PROPERTY, PLANT AND EQUIPMENT~~29

At June 30, 2017 and 2016 Property, Plant and Equipment was as follows:
		2017		2016
Land	$	360,000	$	360,000
Buildings and Improvements		700,000		700,000
Computers and Office Furniture		8,967		21,967
Automotive Equipment		120,585		120,585
Machinery and Equipment		507,807		507,807
Capital Lease Assets		56,738		56,738
		1,754,097		1,767,097
Less Accumulated Depreciation		251,287		125,436
	$	1,502,810	$	1,641,661

Reclassifications

~~For~~Certain accounts in the prior year ~~ended~~financial ~~June~~statements ~~30,~~have ~~2017~~been ~~and 2016~~reclassified ~~depreciation~~to ~~expense~~conform ~~was~~with ~~$125,851~~current ~~and~~year ~~$118,978, respectively~~presentation.

NOTE 3 6- –FORMATION ~~ENVIRONMENTAL~~OF ~~LIABILITY~~FREESTONE DYNAMIS ENERGY PRODUCTS, LLC.

~~The Company’s tire recycling permit~~On ~~requires~~June ~~the~~24, ~~Company~~2015 ~~to ultimately dispose of all tires accepted for recycling. Tire disposal occurs in~~ the ~~normal course of business however the~~ Company ~~always~~entered ~~has~~into ~~tires~~an ~~stored~~agreement at its facility that have not yet been disposed of. CTR had recorded liabilities totaling $320,000 at June 30, 2014 for estimated costs related to dispose of all tires at its Ennis, Texas facility. The environmental liability was calculated by estimating the costs associated with ~~the~~Dynamis ~~various~~in ~~disposal~~order ~~costs that would be necessary~~ to ~~remove~~form the ~~tires~~ ~~from~~joint ~~the~~venture ~~CTR permitted facility. Upon acquisition of CTR by Freestone the liability was reduced to $32~~FDEP,~~000~~ asa ~~part~~Delaware oflimited ~~the purchase price allocation, and the revaluation of assets and~~ liability ~~to fair market value. The reduction was due to the formation~~ ~~of FDEP~~company. ~~CTR~~Freestone ~~plans~~determined to ~~convert~~enter ~~the majority of the tires~~ into ~~crum rubber, and sell it to FDEP as~~ a ~~feedstock~~joint ~~for~~venture ~~its~~with ~~specialized pyrolysis~~Dynamis ~~operations.~~based ~~The~~on ~~remaining~~their ~~$32,000~~track ~~was~~record anand ~~estimate~~experience ofin ~~cost of disposing of~~ the ~~tires that are not acceptable for use as~~waste-to-energy ~~feedstock. At June 30~~industry, ~~2016,~~and ~~CTR~~their ~~increased~~ability ~~its liability~~ to ~~$400,000~~provide ~~representing~~ the ~~estimated~~necessary ~~disposal~~funding ~~fees on the revised estimate of tires on hand. Although CTR still plans~~ to ~~convert~~fully ~~the~~integrate ~~majority of~~ the ~~tires~~production, inmarketing ~~crum~~and ~~rubber~~sale ~~for use by FDEP the liability was recorded as part~~ of ~~the plan submitted~~ Petrozene™ to ~~the~~current ~~TCEQ~~and tofuture ~~cure potential violations regarding it processing permit~~customers. ~~Since~~The ~~the~~terms ~~plan requires CTR to significantly reduce the numbers~~ of ~~tires on hand within~~ the ~~next~~joint ~~year~~venture ~~and~~between ~~to date FDEP has not been able to demonstrate~~ the ~~capacity~~Company ~~to use the number of tires on hand. The liability is considered short-term~~ and ~~the~~Dynamis ~~balance~~are atas ~~June 30, 2017 was $400,000.~~follows:

~~NOTE~~• 7Freestone –owns ~~CAPITAL~~a ~~LEASE~~70% ~~OBLIGATIONS~~member interest in FDEP for licensing the rights to use Petrozene™ to FDEP; and

~~Capital~~• ~~lease~~Dynamis ~~assets~~owns ofa ~~$56,738~~30% ~~and~~member ~~$56,738 and~~interest ~~accumulated~~in ~~amortization~~FDEP ofin ~~$20,209~~exchange ~~and~~for ~~$8,861~~providing ~~are~~funding ~~included~~up into ~~property~~$5,000,000 ~~plant~~to ~~and~~operate ~~equipment on~~ the ~~balance~~joint ~~sheet at June 30~~venture, ~~2017~~ and ~~2016,~~purchase ~~respectively.~~a ~~For~~continuous-feed ~~the~~pyrolysis ~~year~~machine ~~ended~~capable ~~June~~of ~~30,~~producing ~~2017~~a ~~and~~product ~~2016~~that ~~amortization~~can ~~expense~~be ~~was~~used ~~$11,348~~to ~~and~~produce ~~$8,861,~~Petrozene™; ~~respectively.~~and

At June 30, 2017 and 2016 capital lease obligations were as follows:
			2017			2016
Lease payable bearing interest at 4.95% with monthly payments of $315 maturing August 2019. The lease is secured by equipment.		$	7,758		$	11,069
Lease payable bearing interest at 3.95% with monthly payments of $309 maturing December, 2020. The lease is secured by equipment.			11,934			14,969
Lease payable bearing interest at 4.78% with monthly payments of $489 maturing September, 2020. The lease is secured by equipment.			17,836			22,904
			37,528			48,942
Less current maturities			(11,920	)		(11,419)
		$	28,608		$	37,523
At June 30, 2017 future maturities of capital lease obligations were as follows:
Year Ending June 30:
	2018	$	11,920
	2019	$	12,484
	2020	$	9,839
	2021	$	3,285
		$	37,528

•

FDEP will be leasing employees from CTR, and said employees will operate the machine. FDEP will reimburse CTR for the leased employees; and

28• FDEP has the right, but not the obligation to purchase CTR from Freestone through cash compensation to Freestone, the issuance of additional units in FDEP to Freestone or a combination of both cash and units in FDEP as mutually agreed upon by FDEP and Freestone; and

~~NOTE~~• 8FDEP –will ~~NOTES~~lease ~~PAYABLE~~a building from CTR in order to operate the specialized pyrolysis technology for payment of either the ad valorem taxes associated with the rented property or $1,000 per month depending on which amount is the greater of the two; and

At June 30, 2017 and 2016 notes payable were as follows:
			2017			2016
Note payable to bank bearing interest at 4.5% with monthly payment of $390 maturing September, 2017. The note is secured by an automobile		$	1,162		$	5,676
Note payable to bank bearing interest at 6.5% with monthly payment of $4,892 maturing November, 2017. The note is secured by machinery and equipment			24,139			79,293
Note payable to bank bearing interest at 6.5% with monthly payment of $809 maturing April, 2020. The note is secured by a truck.			25,054			32,853
Note payable to vendor bearing interest at 6.0% with monthly payment of $800 maturing December, 2016. The note is unsecured.			–			4,718
Line of Credit with Bank maximum $75,000 bearing interest at 6.5% due March, 2018. Line is secured by accounts receivable.			75,000			70,000
Note payable to seller in connection with purchase of CTR bearing interest at 12% maturing June, 2020. Note amended to add $360,065 of accrued interest and penalties to principal in February, 2017. Interest only payable until July, 2017. Monthly payment of $45,904 thereafter. Secured by the common stock and assets of CTR			1,382,065			1,020,000
			1,507,420			1,262,540
Less current maturities			(515,527	)		(1,212,261	)
		$	991,893		$	50,279
At June 30, 2017 future maturities of long term debt were as follows:
Year Ending June 30:
	2018	$	515,527
	2019	$	467,387
	2020	$	524,506
		$	1,507,420

•

Dynamis will receive 80% of the distributions from FDEP until they have reached a 25% initial rate of return on funds invested into the joint venture. Once the 25% initial rate of return threshold is met all distributions from FDEP will be split according to the 70 / 30 member interest of FDEP owned by the Company and Dynamis.

29On June 24, 2015 FDEP simultaneously entered into a lease agreement with a company that has developed a continuous-feed pyrolysis technology that will be operated by FDEP at the Company’s facility in Ennis, Texas. FDEP and the company that developed the pyrolysis technology will split the revenues generated from the machine. FDEP will receive 70% of the revenues generated from the machine, and the company providing the continuous-feed pyrolysis technology will receive 30% of the revenues. This revenue split will remain in place so long as the machine is operating at the Company’s facility in Ennis, Texas. The agreement between the two companies allows FDEP the opportunity to ensure that the technology continues to operate properly under the strict conditions that are necessary to produce Petrozene™. If the leased pyrolysis machine operates within certain, predefined parameters then FDEP has the right to purchase additional machines.

~~NOTE~~During the 9year ~~– NOTES~~ended ~~PAYABLE~~June 30, 2018 and 2017, Dynamis paid $12,641 and $14,143, respectively for certain engineering and general administrative –costs ~~RELATED~~on ~~PARTIES~~behalf of FDEP, which are shown on the Statement of Cash Flows as a non-cash financing activity. These payments were treated as capital contributions to the entity by Dynamis. Dynamis also made cash contributions totaling $270,058 and $298,737 to the entity during the year ended June 30, 2018 and 2017, respectively.

At June 30, 2017 and 2016 notes payable to officers and shareholders were as follows:
			6/30/17			6/30/16
Note payable to officer bearing interest at 6.5% due December, 2017. The note is convertible into common stock at $.055 a share at maturity. The note is unsecured.			50,000			50,000
Note payable to stockholder bearing interest at 6.5% due December, 2017. The note is convertible into common stock at $.05 a share at maturity. The note is unsecured.			20,000			–
Note payable to stockholder bearing interest at 6.5% due December, 2017. The note is convertible into common stock at $.055 a share at maturity. The note is unsecured.			535,013			–
			605,013			50,000
Less current maturities			(605,013	)		(50,000	)
		$	–		$	–
At June 30, 2017 future maturities of Notes Payable – Related Parties were as follows:
Year Ending June 30:
	2018	$	605,013
		$	605,013

30NOTE 4 – CONCENTRATION OF CREDIT RISK

~~NOTE~~At June 1030, –2018 ~~ASSET~~and ~~RETIREMENT~~2017 ~~OBLIGATIONS~~two customers made up 67% and two customers made up 64% of the Company’s outstanding trade accounts receivable balance, respectively. For the years ending June 30, 2018 and 2017 two customers and three customers accounted for 59% and 68% of the Company’s net revenue, respectively.

~~Freestone’s asset retirement obligations~~NOTE ~~(“ARO”)~~5 ~~represents~~– ~~the estimated present value of the amount Freestone Resources will incur to plug~~PROPERTY, ~~abandon~~PLANT ~~and~~AND remediate its producing properties at the end of their productive lives, in accordance with applicable state laws. Freestone Resources determines the ARO on its oil and gas properties by calculating the present value of estimated cash flows related to the liability. The asset retirement obligations are recorded as current or non-current liabilities based on the estimated timing of the anticipated cash flows. For the years ending June 30, 2017 and 2016, Freestone Resources recognized no accretion expense. CTR did not have an asset retirement obligation. EQUIPMENT

The following table presents the changes in the asset retirement obligations as of and for the years ended June 30:


At June 30, 2018 and 2017 Property, Plant and Equipment was as follows:

		2018		2017
Land	$	360,000	$	360,000
Buildings and Improvements		706,700		700,000
Automotive Equipment		78,100		120,585
Machinery and Equipment		507,807		507,807
Capital Lease Assets		56,738		56,738
		1,709,345		1,745,130
Less Accumulated Depreciation		349,373		242,320
	$	1,359,972	$	1,502,810

	2017		2016
Asset retirement obligations beginning period	$	—	$	14,470
Accretion expense		—		—
Assumed by Buyer of Property		—		(14,470	)
Asset retirement obligations, end of period	$	—	$	—

For the year ended June 30, 2018 and 2017 depreciation expense was $124,755 and $125,851, respectively.

NOTE 6 11 – ~~EQUITY~~ENVIRONMENTAL LIABILITY

The Company’s istire ~~authorized~~recycling permit requires the Company to ~~issue~~ultimately ~~100,000,000~~dispose of all tires accepted for recycling. Tire ~~common~~disposal ~~shares~~occurs in the normal course of business however the Company always has tires stored at aits ~~par~~facility ~~value~~that have not yet been disposed of. $0The environmental liability was calculated by estimating the costs associated with the various disposal costs that would be necessary to remove the tires from the CTR permitted facility.~~001~~ ~~per~~CTR ~~share~~plans to convert the majority of the tires into crum rubber and sell it to FDEP as a feedstock for its specialized pyrolysis operations. ~~These~~Although ~~shares~~CTR ~~have~~still ~~full~~plans ~~voting~~to ~~rights~~convert the majority of the tires in crum rubber for use by FDEP the liability was recorded as part of the plan submitted to the TCEQ to cure potential violations regarding it processing permit. At ~~June~~Since ~~30,~~the ~~2017~~plan requires CTR to significantly reduce the numbers of tires on hand within the next year and ~~2016~~to ~~there~~date FDEP has not been able to demonstrate the capacity to use the number of tires on hand. ~~were~~The ~~91,613,177~~liability is considered short-term and ~~90,613,177~~the ~~common~~balance ~~shares~~at ~~outstanding~~June 30, ~~respectively~~2018 and 2017 was $400,000.

On July 25, 2015 Company sold 3,500,000 shares at $0.10 per share to provide funding of subsequent costs associated with the acquisition of CTR, as well as general working capital for the Company. This transaction made Gerald M. Johnson a controlling shareholder of the Company. Mr. Johnson also joined the Company’s advisory board. Mr. Johnson is the former CFO of Tyson Foods, Inc.31

~~In July, 2016 the Company sold 500,000~~NOTE ~~shares~~7 of– ~~common~~CAPITAL ~~stock~~LEASE ~~for $25,000 cash.~~OBLIGATIONS

InCapital lease ~~September~~assets of $56,738 ~~2015~~and ~~the~~$56,738 ~~Company~~and ~~issued 1~~accumulated amortization of $31,~~350~~557 and $20,~~000~~209 ~~shares~~are ofincluded ~~common~~in ~~stock~~property, ~~valued~~plant and equipment on the balance sheet at ~~$256~~June 30,~~500~~ to2018 ~~officers~~and of2017, respectively. For the ~~Company~~year ended June 30, 2018 and 2017 amortization expense was $11,348 and $11,348, respectively.

In January, 2016 the Company issued 3,000,000 shares of common stock valued at $540,000 to its new CEO in conjunction with his employment contract. See Note 12.

At June 30, 2018 and 2017 capital lease obligations were as follows:
			2018			2017
Lease payable bearing interest at 4.95% with monthly payments of $315 maturing August 2019. The lease is secured by equipment.		$	4,281		$	7,758
Lease payable bearing interest at 3.95% with monthly payments of $309 maturing December, 2020. The lease is secured by equipment.			8,725			11,934

Lease payable bearing interest at 4.78% with monthly payments of $489 maturing September, 2020. The lease is secured by equipment.			12,602			17,869
			25,608			37,528

Less current maturities			(12,484	)		(11,920)

Capital Lease Obligations, Less Current Maturities		$	13,124		$	28,608

At June 30, 2018 future maturities of capital lease obligations were as follows:

Year Ending June 30:
	2019	$	12,484
	2020	$	9,839
	2021	$	3,285
		$	25,608

~~In January, 2016 the Company issued 100,000 shares of common Stock valued at $18,000 to consultant as compensation for services.~~32

~~In the years ended June 30, 2016 and 2017~~NOTE ~~the~~8 ~~Company~~– ~~issued~~NOTES ~~275,000 and 500,000 shares valued at $38,250 and $30,000 to the CFO as compensation for services under his employment contract..~~PAYABLE

In each case, the certificates representing the shares carry a legend that the shares may not be transferred without compliance with the registration requirements of the Securities Act of 1933 or in reliance upon an exemption therefrom. For each of these transactions, the Company relied upon Section 4(2) of the Securities Act of 1933 as an exemption from the registration requirements of the Act.

At June 30, 2018 and 2017 notes payable were as follows:
		2018			2017
Note payable to bank bearing interest at 4.5% with monthly payment of $390 maturing September, 2017. The note is secured by an automobile	$	--		$	1,162

Note payable to bank bearing interest at 6.5% with monthly payment of $4,892 maturing November, 2017. The note is secured by machinery and equipment		--			24,139
Note payable to bank bearing interest at 6.5% with monthly payment of $809 maturing April, 2020. The note is secured by a truck.		--			25,054
Note payable to bank bearing interest at 7.0% with monthly payment of $3,718 maturing June, 2020. The note is secured by accounts receivable.		79,826			–
Line of Credit with Bank maximum $75,000 bearing interest at 6.5% due March, 2018. Line is secured by accounts receivable.		--			75,000
Note payable to seller in connection with purchase of CTR bearing interest at 12% maturing October, 2020. Note amended to add $360,065 of accrued interest and penalties to principal in February, 2017. Interest only payable until November, 2018. Monthly payment of $45,904 thereafter. Secured by the common stock and assets of CTR		975,163			1,382,065
		1,054,989			1,507,420

Less current maturities		(339,858	)		(515,527	)

Long Term Debt, Less Current Maturities	$	715,131		$	991,893

At June 30, 2018 future maturities of long term debt were as follows:

Year Ending June 30:
2019	$	339,858
2020	$	536,014
2021	$	179,117
	$	1,054,989

~~The Company has not paid any dividends to its shareholders~~33

31NOTE 9 – NOTES PAYABLE – RELATED PARTIES

NOTE 12 – INCOME TAXES

At June 30, 2018 and 2017 notes payable to officers and shareholders were as follows:
			2018			2017
Note payable to officer bearing interest at 6.5% due December, 2018. The note was amended on June 30, 2018 to change the conversion terms from $0.055 a share to $0.05 a share. The note is unsecured.			50,000			50,000
Note payable to stockholder bearing interest at 6.5% due December, 2018. The note is convertible into common stock at $.05 a share. The note is unsecured.			20,000			20,000
Note payable to stockholder bearing interest at 6.5% due December, 2018. The note was amended on June 30, 2018 to change the conversion terms from $0.055 a share to $0.05 a share. The note is unsecured.			1,509,919			535,013
			1,579,919			605,013

Less current maturities			(1,579,919	)		(605,013	)

		$	–		$	–

At June 30, 2018 future maturities of Notes Payable – Related Parties were as follows:

Year Ending June 30:
	2019	$	1,579,919
		$	1,579,919

The Company files a consolidated Federal Income Tax Return. As of June 30, 2017 the Company has a NOL carryforward of approximately $5,600,000. Under IRC Code Sec 382 use of NOL carryforwards may be limited due to CTR acquisition by Freestone.34

~~The Company recognizes the tax~~NOTE ~~effects~~10 of– transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic 740, Income Taxes, to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, non-deductible stock for services and environmental reserves based on the income taxes expected to be payable in future years. Deferred tax benefits related to the NOL carryforward of approximated $1,905,000 are fully reserved by a valuation allowance due to the uncertainly of their realization.EQUITY

~~FDEP~~The Company ~~has~~is aauthorized ~~calendar~~to ~~tax~~issue ~~year~~100,000,000 ~~and~~common ~~files a~~shares ~~separate~~at ~~Form~~a ~~1065~~par ~~partnership~~value ~~return~~of ~~with~~$0.001 ~~income~~per ~~and~~share. ~~loss~~These ~~being~~shares ~~allocated~~have ~~based~~full onvoting ~~distributions and contributions under the~~rights. At ~~partnership~~June ~~agreement.~~30, ~~Freestone~~2018 ~~share~~and of2017 ~~the~~there ~~year~~were ~~ended~~91,988,177 ~~December~~and 3190,613,177 ~~2016~~common ~~loss~~shares ~~is included in the consolidated June 30~~outstanding, ~~2016 return~~respectively.

~~The~~In ~~Company has no tax positions at June 30~~July, ~~2017 and~~ 2016 ~~for which~~ the ~~ultimate~~Company ~~deductibility~~sold is500,000 ~~highly~~shares ~~certain~~of ~~but~~common stock for ~~which~~$25,000 ~~there is uncertainty about the timing of such deductibility~~cash.

~~Freestone’s~~In ~~tax returns for~~ the years ended June 30, 2018 and 2017, ~~2016,~~the ~~2015~~Company ~~and~~issued ~~2014~~375,000 and ~~CTR’s~~500,000 ~~tax~~shares ~~returns~~valued ~~for~~at ~~the~~$18,750 ~~periods~~and ~~ended June~~ $30,000, which was ~~2015~~the ~~and~~fair ~~December~~market 31value of the stock, ~~2014~~to ~~are~~the ~~open~~CFO as compensation for ~~examination~~services under ~~Federal~~his ~~Statute~~employment ~~of Limitations~~contract.

~~The~~In each ~~Company~~case, ~~recognizes~~the ~~interest~~certificates ~~accrued~~representing ~~related~~the toshares ~~unrecognized~~carry a legend that the shares may not be transferred without compliance with ~~tax~~the ~~benefits~~registration inrequirements ~~interest~~of ~~expense~~the ~~and~~Securities ~~penalties~~Act of 1933 or in ~~operating~~reliance ~~expenses~~upon an exemption therefrom. ~~The~~ For each of these transactions, the Company ~~had~~relied noupon ~~accruals~~Section ~~for~~4(2) ~~interest~~of ~~and~~the ~~penalties~~Securities Act of 1933 as an exemption from the registration ~~since~~requirements ~~inception~~of the Act.

AThe ~~reconciliation~~Company ofhas ~~the~~not ~~provision~~paid ~~for~~any ~~income~~dividends ~~tax expense with the expected income tax computed by applying the federal statutory income tax~~ to ~~income~~its ~~before provision for income taxes is as follows:~~shareholders

		Year Ended June 30, 2017			Year Ended June 30, 2016
Income Tax (benefit) computed at Federal statutory tax rate of 34%	$	(498,000	)	$	(809,000	)
Loss allocated to non-controlling interest		108,000			143,000
Non-Deductible Stock Compensation Expense		10,000			290,000
Non-Deductible Travel & Entertainment		—			8,000
Change in valuation allowance		380,000			368,000
Provision For Income Taxes	$	—		$	—

NOTE 11 – MERGER AGREEMENT

~~NOTE~~On November 132, –2017 ~~EMPLOYEE~~the ~~BENEFITS AND~~Company ~~AGREEMENTS~~formed Freestone Dynamis Acquisition, LLC an Idaho limited liability Company.

~~Officer~~On November ~~Agreements~~2, 2017, Freestone entered into an Agreement and Plan of Merger (the “Plan”) with Freestone Dynamis Acquisition, LLC, an Idaho limited liability company and wholly owned subsidiary of the Company (“Merger Sub”), and Dynamis Energy, LLC, an Idaho limited liability company (“Dynamis”). Pursuant to the terms of the Plan, at the Effective Time (as defined in the Plan) thereof: (i) Merger Sub will be merged with and into Dynamis, with the separate existence of Merger Sub to cease and with Dynamis to continue as the surviving entity and as a wholly owned subsidiary of the Company; and (ii) all Units of Dynamis will be exchanged for shares of the Company’s common stock to be paid in accordance with Article II of the Plan (the “Merger”). At the closing of the Merger, it is expected that the members and warrant holders of Dynamis will collectively own or have the right to purchase (through exercising a warrant to purchase Dynamis Units, which the Company will have the right to exchange shares of its common stock in exchange for such Dynamis Units) shares of the Company’s common stock, representing approximately seventy five percent (75%) of the Company’s issued and outstanding shares. The Merger contemplated by the Plan, together with the Rights Offering (as defined below), is intended to qualify as a nontaxable exchange pursuant to Section 351 of the Internal Revenue Code of 1986, as amended.

~~On January 7, 2016, Michael McGhan and the Company entered into a two-year employment agreement (“Employment Agreement”).~~ The ~~terms of the Employment Agreement include an initial salary of $5,000 per month, which will increase to $10,000 per month after~~ ~~six~~closing ~~months, as well as stock-based compensation in the amount~~ of ~~3,000,000 shares of~~ the ~~Company’s~~Merger ~~restricted stock pursuant to Rule 144. Subject to Board approval, Mr. McGhan~~ is ~~eligible~~subject to ~~receive~~numerous ~~warrants~~conditions ~~for up to 2~~including,~~000,000~~ ~~shares~~but ~~of the Company’s common stock (the “Warrants”). The Warrants are~~ not ~~issued~~limited ~~on the date of the Employment Agreement. The Board is not required~~ to ~~issue the Warrants. If the Warrants are issued to Mr. McGhan during the term of his Employment Agreement~~, the terms and conditions of the Warrants will be determined by the Board on the date the Warrants are issued. Mr. McGhan will also be eligible to participate in the Company’s employee benefit plan that is generally available to all other employees at the Company.following:

OnAt ~~April~~or 1,one ~~2016,~~week ~~Paul~~prior ~~Babb~~to ~~and~~the Effective Time, the Company ~~entered~~shall ~~into~~have commenced a ~~two-year~~rights ~~employment~~offering ~~agreement (“Employment Agreement”)~~ to ~~serve~~its asstockholders ~~Controller~~on ~~and~~the ~~Director of SEC reporting. The~~ terms ~~of the Employment Agreement include an initial salary of $5,250~~set ~~per~~forth ~~month, which will increase to $6,667 per month after six months, as well as stock-based compensation~~ in the ~~amount~~Plan ~~of 1,000,000 shares of~~ (the ~~Company’s~~“Rights ~~restricted~~Offering”), ~~stock~~which ~~pursuant~~Rights toOffering ~~Rule~~shall ~~144~~remain toopen befor ~~issued~~a ~~over~~period ~~the life~~ of ~~the~~90 ~~contract. On June 1, 2016 Mr. Babb was appointed CFO.~~days;

32The approval by the Company’s stockholders and the filing with the Nevada Secretary of State of an amendment to the Company’s Articles of Incorporation to increase the number of the Company’s authorized shares of common stock in an amount sufficient to consummate the Merger, the Rights Offering, the Company’s new equity incentive plan and the other transactions contemplated by the Plan;

~~Retirement Plan Contribution:~~ 35

~~During~~The effectiveness of the ~~year~~Company’s ~~ended~~to-be-filed: ~~June~~(i) ~~30,~~Registration ~~2017~~Statement ~~and~~on Form S-3 relating to the registration under the ~~2016~~Securities Act, of the shares of Company ~~contributed~~common ~~$6,185~~stock ~~and~~to ~~$6,815~~be issued in ~~matching~~its ~~contributions~~Rights Offering; and (ii) Registration Statement on Form S-4 relating to the authorization and the registration under the Securities Act of the shares of Company’s ~~IRA~~common ~~plan.~~stock to be issued in the Merger;

~~NOTE~~Dynamis members, 14together –with ~~COMMITMENTS~~Company ~~AND~~stockholders participating in the Rights Offering, shall collectively hold at least 80 percent ~~CONTINGENCIES~~of the total issued and outstanding shares of the Company’s stock (other than stock subject to vesting restrictions); and

~~Freestone has royalty and commission agreements~~The ~~with~~Company’s ~~certain~~stockholders ~~consultants~~shall ~~related~~have toapproved the ~~sale of Petrozene™ for their work in the re-launch of the Petrozene™ product line. These royalty and commission agreements range from 2.5% to 7.5% of the net income the~~ Company’s ~~receives~~new ~~from~~equity ~~Petrozene™ sales,~~incentive ~~and~~plan ~~the agreements also have special royalty provisions for certain customers~~ that ~~expire on April 14, 2030. One of the contracts~~ is ~~with~~contemplated ~~the~~by ~~brother of~~ the ~~former CEO of the Company~~Plan. ~~In case of change of control of the Company the agreement is voided.~~

~~NOTE~~In addition, 15either –party ~~GOING~~may ~~CONCERN~~terminate the Plan at any time prior to closing on certain terms and conditions

As of ~~the~~June ~~date~~30, ~~of this annual report~~2018, ~~there is substantial doubt regarding~~ the ~~Company’s~~two ~~ability~~Companies continue to ~~continue~~work astoward acompleting ~~going~~the ~~concern~~merger. asDynamis weEnergy ~~have~~has ~~not~~encountered ~~generated~~delays ~~sufficient~~in ~~cash~~completing ~~flows~~the torequired ~~fund~~audited ~~our~~financial ~~business~~statements ~~operations~~to ~~and~~comply ~~loan~~with ~~commitments~~SEC requirements. ~~Our~~ ~~future~~Freestone ~~success~~remains ~~and~~committed ~~viability,~~to ~~therefore,~~completing ~~are~~the ~~dependent~~merger ~~upon~~once ~~our~~these ~~ability~~issues toare ~~generate~~resolved. ~~capital~~However, ~~financing. The~~the ~~failure~~Company tois ~~generate~~reviewing ~~sufficient~~all ~~revenues~~options orand ~~raise~~seeking additional capital ~~may~~ ~~have a material and adverse effect upon the Company and our shareholders~~investment.

NOTE 12 16- –INCOME ~~SUBSEQUENT EVENTS~~TAXES

InThe Company ~~July,~~files ~~2017~~a ~~the~~consolidated ~~Company~~Federal ~~extended~~Income ~~its note~~Tax ~~payable~~Return. toAs anof ~~officer~~June ~~for~~30, ~~$50~~2018,~~000~~ ~~and~~the ~~its~~Company ~~note~~has ~~payable to~~ a ~~shareholder~~NOL ~~for~~carryforward of approximately $~~535~~6,~~008 both originally due July 25~~072,000. ~~2017~~Under ~~to both~~IRC ~~being~~Code ~~extended~~Sec to382 ~~having~~use ~~a maturity date~~ of ~~December~~NOL ~~31,~~carryforwards ~~2017.~~may ~~All~~be ~~other~~limited ~~terms~~due ofto ~~the~~CTR ~~notes~~acquisition ~~remained~~by ~~the same~~Freestone.

OnThe Company ~~September~~recognizes ~~30,~~the ~~2017~~tax effects of transactions in the ~~Company~~year ~~issued~~in which such transactions enter into the determination of net ~~125~~income,~~000~~ ~~shares~~regardless of ~~common~~when ~~stock~~reported for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic 740, Income Taxes, to ~~its~~give ~~Chief~~effect ~~Financial~~to ~~Officer~~the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, non-deductible stock for services ~~rendered~~and ~~under~~environmental ~~his~~reserves ~~employment~~based ~~contract~~on the income taxes expected to be payable in future years. Deferred tax benefits related to the NOL carryforwards of approximately $1,275,000 are fully reserved by a valuation allowance due to the uncertainly of their realization.

33On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Act”) was signed into law. Among other provisions, the Act reduced the highest corporate tax rate from 35% to 21%. With the passage of the Act, the Company’s deferred tax assets and liabilities were restated as of the effective date of the law to reflect the new applicable rate. The reduction to the net deferred tax asset was charged to tax expense in the period of the change and offset by a valuation allowance stemming from historical net operating loss carryforwards.

FDEP has a calendar tax year and files a separate Form 1065 partnership return with income and loss being allocated based on distributions and contributions under the partnership agreement. Freestone’s share of the year ended December 31, 2017 loss is included in the consolidated June 30, 2018 return.

The Company has no tax positions at June 30, 2018 and 2017 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

Freestone’s tax returns for the years ended June 30, 2017, 2016, and 2015 and CTR’s tax returns for the periods ended June 30, 2015 are open for examination under Federal Statute of Limitations.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties since inception.

A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax to income before provision for income taxes is as follows:


		Year Ended June 30, 2018			Year Ended June 30, 2017

Income Tax (benefit) computed at Federal statutory tax rate of 21% and 34%	$	(239,000	)	$	(498,000	)

Loss allocated to non-controlling interest		63,000			108,000

Non-Deductible Stock Compensation Expense		4,000			10,000

Change in valuation allowance		(556,175	)		380,000

Impact of rate changes on valuation allowance		728,175			—

Provision For Income Taxes	$	—		$	—

NOTE 13 – EMPLOYEE BENEFITS AND AGREEMENTS

Retirement Plan Contribution:

During the year ended June 30, 2018 and 2017 the Company contributed $8,597 and $6,815 in matching contributions to the Company’s IRA plan.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Freestone has royalty and commission agreements with certain consultants related to the sale of Petrozene™ for their work in the re-launch of the Petrozene™ product line. These royalty and commission agreements range from 2.5% to 7.5% of the net income the Company receives from Petrozene™ sales, and the agreements also have special royalty provisions for certain customers that expire on April 14, 2030. One of the contracts is with the brother of the former CEO of the Company. In case of change of control of the Company the agreement is voided.

NOTE 15 – GOING CONCERN

As of the date of this annual report, there is substantial doubt regarding the Company’s ability to continue as a going concern as we have not generated sufficient cash flows to fund our business operations and loan commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company and our shareholders.

NOTE 16 – SUBSEQUENT EVENTS

On August 15, 2018 the Company issued at total of 2,500,000 shares of stock to a note holder for conversion of $150,000 of debt a $0.05 a share in accordance with the note agreement.

On August 21, 2018 the Company issued 3,750,000 shares of common stock valued at $.04 a share to its Officers as compensation.

On October 9, 2018 the Company filed a Pre 14C Form with the SEC notifying stockholders regarding a resolution to file with the Nevada Secretary of State a Certificate of Change: (i) increasing our authorized shares of common stock from one hundred million (100,000,000) shares having a par value of one mill ($0.001) per share to six hundred million (600,000,000) shares and retaining the par value of $0.001 per share (the “Common Stock Resolution”); and (ii) increasing our authorized shares of preferred stock from five million (5,000,000) shares having a par value of one mill ($0.001) per share to ten million (10,000,000) shares and retaining the par value of $0.001 per share (the “Preferred Stock Resolution”). Under Nevada law the increase can be implemented by a joint resolution passed by the board of directors approved by a simple majority of the outstanding shares The joint resolution included in the Form 14C filing included the approval of ten shareholders representing 51.36% of the outstanding common shares.

Filing Compare · FREESTONE RESOURCES, INC.