UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 20142015

¨Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________.

Commission File Number Number: 000-54277

BANJO & MATILDA, INC.

(Exact name of registrant as specified in its charter)

Nevada		27-1519178
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

76 William1221 2^nd Street

Paddington NSW 2021 #300

AustraliaSanta Monica CA 90401

(Address of principal executive offices and zip code)

+61 2 8069-2665(855) 245-1613 

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes xo No ¨x

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨o	Accelerated filer	¨o
Non-accelerated filer	¨o	Smaller reporting company	x
(Do not check if a smaller reporting 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 x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of December 31, 2014,2016, the Registrant had outstanding 34,140,64458,823,116 shares of common stock.

BANJO & MATILDA, INC.

FORM 10-Q

TABLE OF CONTENTS

			Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS				3
PART I – FINANCIAL INFORMATION				4
Item 1.	Financial statements				4
	CONDENSED CONSOLIDATED BALANCE SHEETS			5	F-1
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS			6	F-2
	CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS			7	F-3
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			8	F-4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
	5
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			7
Item 4.	Controls and Procedures			7
PART II – OTHER INFORMATION
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			27
Item 4.	Controls and Procedures			27
PART II – OTHER INFORMATION			28
Item 1A.1.	Risk FactorsLegal Proceedings			28
	8
Item 1A.	Risk Factors			8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			8
Item 3.	Defaults Upon Senior Securities			8
Item 4.	Mine Safety Disclosures			8
Item 5.	Other Information			8
Item 6.	Exhibits			9
Item 2.SIGNATURES		Unregistered Sales of Securities			28
	10
Item 6.	Exhibits			29
SIGNATURES				30

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain statements of a forward-looking nature. Such forward-looking statements, including but not limited to statements regarding projected growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond the control of the Company. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to those set forth herein and in our Annual Report on Form 10-K filed on October 14, 2014.10-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by the federal securities laws, we undertake no obligation to update forward-looking information. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this Report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

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PART I – FINANCIAL INFORMATION

Item 1. Financial statements

BANJO & MATILDA, INC. AND SUBSIDIARYSUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 20142015

(UNAUDITED)

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets			5F-1
Condensed Consolidated Statements of Operations and Comprehensive Loss			6	F-2
Condensed Consolidated Statements of Cash Flows			7	F-3
Notes to Condensed Consolidated Financial Statements			8	F-4

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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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BANJO & MATILDA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2014 AND 2013

(UNAUDITED)

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2015 AND 2014
(UNAUDITED)
		December 31, 2015				December 31, 2014
Net loss		$	(402,724	)		$	(216,323	)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation			1,185				2,003
Amortization			3,371				4,286
Effect of exchange rate changes on cash and cash equivalents			-				23,619
AR allowance			873				-
Shares issued in exchange for services			-				14,878
Debt discount amortization			36,187				-
Amortization of deferred finance fee			7,851				-
(Increase) / decrease in assets:
Trade receivables			16,808				(296,032	)
Inventory			40,962				(151,707	)
Deposit on Purchases			186,434				-
Other assets			(65,433	)			6,429
Other receivable			66,952				23,529
Increase/ (decrease) in current liabilities:
Trade payables and other liabilities			5,203				247,716
Accrued interest			58,350				81,265
Deposits payable			-				(2,408	)
Net cash provided by (used in) operating activities			(43,982	)			(262,745	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(2,334	)			(2,764	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock			-				44,770
Net proceeds (payments) on related party loan			268,970				(120,385	)
Net loan proceeds			(340,886	)			(38,205	)
Net trade financing			(130,151	)			357,094
Net cash provided by (used in) financing activities			(202,067	)			243,274
Net increase (decrease) in cash and cash equivalents			(248,383	)			(22,235	)
Cash and cash equivalents at the beginning of the period		$	11,132			$	33,367
Cash and cash equivalents at the end of the period		$	(237,251	)		$	11,132
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments		$	-			$	-
Interest payments		$	64,953			$	229,033
SUPPLEMENTAL DISCLOSURES FOR NON CASH:
FINANCING AND INVESTING ACTIVITIES
Debt converted to equity		$	27,123			$	97,800

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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BANJO & MATILDA, INC. AND SUBSIDIARYSUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014

Note 1 – BASIS OF PRESENTATION AND ORGANIZATION

The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“US GAAP”) and with the instructions to Form 10-Q.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore, the unaudited condensed interim consolidated financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on the Form 10-K for the fiscal year ended June 30, 2014. Current and future financial statements may not be directly comparable to the Company’s historical financial statements. However, except as disclosed herein, there has been no material changes in the information disclosedAll currencies represented in the notes to the financial statements for the year ended June 30, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The unauditedcondensed consolidated financial statements should be readare in conjunctionUnited States Dollars (USD) unless specified as AUD (Australian Dollars).

Banjo and Matilda, Inc. was incorporated in Nevada on December 18, 2009 under the name Eastern World Group, Inc. On September 24, 2013, its name was changed to Banjo & Matilda, Inc.

On November 14, 2013, Banjo & Matilda, Inc., entered into a Share Exchange Agreement (the "Exchange Agreement") with Banjo & Matilda, Pty Ltd., a corporation formed under the financial statements includedlaws of Australia (the "Company") and the shareholders of the Company. Pursuant to the Exchange Agreement, at the closing of the transaction contemplated thereunder (the "Transaction"), the Company became a wholly-owned subsidiary of Banjo & Matilda, Inc.

Banjo & Matilda Pty Ltd. was incorporated under the laws of Australia on May 27, 2009 and manufactures and sells cashmere fashion. Headquartered at Bondi Beach, the Aussie lifestyle of sun, sand and surf resonates innately with this label and its philosophy of low maintenance, style and comfort.

Banjo & Matilda USA, Inc. was incorporated in the Form10-K. InState of Delaware on October 14, 2013 and is owned 100% by Banjo & Matilda, Inc.

The ultra-soft cashmere staples, pairing simplicity with cool sophistication has rapidly gained loyal customers worldwide positioning the opinionlabel as the 'go-to' for contemporary cashmere products.

Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance, rather than a business combination. That is, the share exchange is equivalent to the issuance of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating resultsstock by Banjo & Matilda Pty Ltd. for the three and six months ended December 31, 2014 are not necessarily indicativenet monetary assets of the results that may be expected for the year ending June 30, 2015.

When used in these notes, the terms "Company," "we," "our," or "us" mean Banjo & Matilda, Inc. accompanied by a recapitalization, and its subsidiary.is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under share reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal acquirer, Banjo & Matilda, Inc. are those of the legal acquiree, Banjo & Matilda Pty Ltd., which is considered to be the accounting acquirer. Share and per share amounts stated have been retroactively adjusted to reflect the merger.

As a result of the exchange agreement, the reorganization was treated as an acquisition by the accounting acquiree that is being accounted for as a recapitalization and as a reverse merger by the legal acquirer for accounting purposes. Pursuant to the recapitalization, all capital stock shares and amounts and per share data have been retroactively restated. Accordingly, the financial statements include the following:

	(1)	The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the legal acquirer at fair value.
	(2)	The statements of operations include the operations of the accounting acquirer for the period presented and the operations of the legal acquirer from the date of the merger.

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States of America ("US GAAP").

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Principles of Consolidation

The consolidated financial statements include the accounts of Banjo & Matilda, Inc. ("Banjo" or "the Company") and its wholly owned subsidiaries Banjo & Matilda Pty Ltd. and Banjo & Matilda USA, Inc., collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.

Exchange Gain (Loss)

During the three and six monthssix-month period ended December 31, 20142015, the transactions of the Company were denominated in US Dollars. Some transactions were denominated in AUD and 2013,British pounds for the sales made outside US and for rent paid for the Australian store. Such transactions were converted to US$ on the date of transaction and the exchange gains or losses were recorded in the statement of operations. During the six-month period ended December 31, 2014, the transactions of the Company were denominated in foreign currency and were recorded in Australian dollar (AUD) at the rates of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.

Foreign Currency Translation and Comprehensive Income (Loss)

TheDuring the six-month period ended December 31, 2015, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US$ on the date of settlement and the exchange gains and losses were recorded in the statement of operations. No change was recorded in the comprehensive income (loss). During the three-month period ended September 30, 2014, the accounts of the Company were maintained, and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’sstockholder's equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’shareholders' equity. There were no significant fluctuations in the exchange rate for the conversion of AUD to USD after the balance sheet date.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

Reportable Segment

The Company has one reportable segment. The Company’sCompany's activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.

Liquidity Matters

Based upon its current projection of revenue, management believes that its current cash position and available financing provide sufficient resources and operating flexibility through at least the next twelve months. However, there can be no assurance that projected revenue growth and improvement in operating results will occur or that the Company will successfully implement its plans. In the event cash flow from operations is not sufficient, additional sources of financing will be required in order to maintain the Company’s current operations. Whereas management believes it will have access to other financing sources, no assurance can be given that such additional sources of financing will be available on acceptable terms, on a timely basis or at all.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

 

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Cost of Sales

Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), shipping, importation duties and charges, third party royalties, and product sampling.

Operating Overhead Expense

Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services, and meetings and travel.

Income Taxes

The Company utilizes the liability methodFASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of accounting for income tax. Under the liability method, deferred income tax assets and liabilities are provided based onfor the difference betweenexpected future tax consequences of events that were included in the financial statements andor tax basisreturns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities measured by the currentand their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates in effect forapplicable to the yearsperiods in which thesethe differences are expected to reverse.affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company has adopted accounting standardsfollows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the accounting for uncertain income taxes. These standards provide guidance fortaxing authorities, while others are subject to uncertainty about the accounting and disclosure about uncertain tax positions taken. Management believes that allmerits of the positionsposition taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in its federal and states income tax returns arethe financial statements in the period during which, based on all available evidence, management believes it is more likely than not tothat the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.

At December 31, 20142015 and 2013,2014, the Company had not taken any significant uncertain tax positions on its tax returns for 2013periods ended December 31, 2015 and prior years or in computing its tax provision for 2014.2015. Management has considered its tax positions and believes that all of the positions taken by the Company in its Federal and State tax returns are more likely than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities from the period ended June 30, 2012 to the present, generally for three years after they are filed.

The Company has been behind in filing its payroll tax returns and sales tax returns. The Company has recorded $1,580 as penalties for the late payment of taxes in the accompanying financials.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base across many markets, predominantly Australia, United States of America, United Kingdom, Europe and the Middle East. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company’sCompany's Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.

 

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Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’sCompany's management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’sCompany's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’sCompany's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Equivalents

Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At December 31, 20142015 and June 30, 2014,2015, the Company had $11,132$114,285 and $33,367$362,668 in cash in Australia and not covered by insurance.in the United States. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Allowance for Doubtful Accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. There were noThe allowances for doubtful accounts as of December 31, 20142015 and June 30, 2014.2015 are $147,870 and $140,870 respectively.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of December 31, 20142015 and June 30, 2014, inventory only consisted2015, the Company had outstanding balances of the following:

Fixed AssetsFinished Goods Inventory of $133,830 and $174,792 respectively.

Fixed assets areProperty, Plant & Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years.

As of December 31, 20142015 and June 30, 2014, fixed assets2015, Plant and Equipment consisted of the following:

Depreciation was $1,311 and $2,180 for three months ended December 31, 2014 and 2013, respectively.

		December 31, 2015				June 30, 2015
Property, plant & equipment		$	31,378			$	29,044
Accumulated depreciation		$	(18,090	)		$	(16,905	)
		$	13,288			$	12,139

Depreciation was $1,185 and $2,003 and $3,527 for six monthsthe three-month periods ended December 31, 2015 and 2014, respectively. Depreciation was $605 and 2013,$1,311 for the three-month periods ended December 31, 2015 and 2014, respectively.

Fair Value of Financial Instruments

For certain of the Company’sCompany's financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair"Fair Value Measurements and Disclosures,”" requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial"Financial Instruments,”" defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing"Distinguishing Liabilities from Equity,”" and ASC 815.

As of December 31, 20142015 and June 30, 2014,2015, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Earnings Per Share (EPS)

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

The following table sets forthfor the computation of basic and diluted earnings per share for three and six monthsmonth periods ended December 31, 20142015 and 2013:

Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the three and six months ended December 31, 2014 and 2013, basic and diluted loss per share are the same since the calculation of diluted per share amounts would result in an anti-dilutive calculation.2014:

		Three month periods ended								Six month periods ended
		December 31, 2015				December 31, 2014				December 31, 2015				December 31, 2014
Basic and diluted
Net loss		$	(149,366	)		$	(78,632	)		$	(402,724	)		$	(216,323	)
Net loss per share
Basic		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.01	)
Diluted		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.01	)
Weighted average number of shares outstanding:
Basic & diluted			58,823,116				31,790,918				58,722,023				29,493,137

Intangible Assets

The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.

Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 10 years. No events or changes in circumstances indicate that impairment existed as of December 31, 2014.2015.

Going Concern 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company reported accumulated deficit of $3,504,729 as of December 31, 2015. The Company also incurred net losses of $402,724 and $216,323 for the six-month periods ended December 31, 2015 and 2014, respectively and had negative working capital for the six-month periods ended December 31, 2015 and 2014. To date, these losses and deficiencies have been financed principally through the loans from related parties and from third parties.

In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next 12 months. To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations, we intend to do so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any future financing will involve substantial dilution to existing investors.

Subsequent to the period ended December 31, 2015, the Company entered into an equity line funding agreement with Spider Investments, LLC to sell up to $1,500,000 of our common stock, subject to certain terms and conditions some of which are out of our control, including the (i) filing and obtaining effectiveness of a registration statement registering the issuance of our shares of common stock under the Act to be issued pursuant to the equity line and (ii) certain volume and other trading conditions of our common stock. The Company plans to file the registration statement and to obtain effectiveness thereof as soon as practicable. 

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Recently Issued Accounting Pronouncements

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which changes how deferred taxes are classified on the balance sheet and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. The Company is currently evaluating the impact the adoption of this standard would have on its financial condition, results of operations and cash flows.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods with that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

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In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “Statement of Cash Flows.” This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company does not expect the adoption of this standard to have a significant effect on its consolidated financial statements.

There have beenwere no other new accounting pronouncements during the three monthssix-month period ended December 31, 20142015 that the Company believeswe believe would have a material impact on itsour financial position or results of operations.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.

Note 3 – GOING CONCERNTRADE RECEIVABLES

As reflectedTrade receivables consist principally of accounts receivable from sales to small to medium sized businesses, principally in Australia, Europe and the accompanyingUnited States. Trade receivables are recorded at the invoiced amount and net of allowances for doubtful accounts. The allowance for doubtful accounts represents management's estimate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. The assessment includes actually incurred historical data as well as current economic conditions. Account balances are written off against the allowance when management determines the receivable is uncollectible.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity or parent entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial statements,difficulties of the Company had an accumulated deficitdebtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of $1,313,606the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Trade receivables that are past their normal payment terms are overdue and once 60 days past due are considered delinquent. Minimum payment terms vary by product. The maximum payment term for all products is 90 days. All trade receivables that are overdue are individually assessed for impairment.

The allowances for doubtful accounts as of December 31, 2014.

While the Company is attempting to improve operations2015 and generate profits, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business planJune 30, 2015 are $147,870 and generate profits provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.$140,870 respectively.

Note 4 – OTHER ASSETS

Other assets consist of the following as of December 31, 2014 and June 30, 2014:

Note 5 – OTHER RECEIVABLE

Other receivable consist of the following as of December 31, 2014 and June 30, 2014:

Note 6 – INTANGIBLE ASSETS

Intangible assets consist of the following as of December 31, 20142015 and June 30, 2014:2015:

The intangible assets are amortized over 1 to 10 years. Amortization expense was $1,709$3,371 and $1,096$4,286 for the three monthssix-month periods ended December 31, 2015 and 2014 and 2013 respectively.respectively Amortization expense was $4,286$1,685 and $2,980$1,709 for the six monthsthree-month periods ended December 31, 20142015 and 20132014 respectively.

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Amortization for the Company’s intangible assets over the next five years from December 31, 2014 is estimated to be:

Note 75 – TRADE AND OTHER PAYABLES

As of December 31, 20142015 and June 30, 2014,2015, trade and other payable are comprised of the following:

Note 86 – TRADE FINANCING

The Company has a trade financing agreement with a financial institution in Australia with a maximum limit of AUD $150,000 at an interest rate of 20.95% per annum. The amount is to be paid through application of its EMDG grant and up to 25% of the Company's store sales in Australia. All of the amounts referenced are in Australian dollars. As of December 31, 20142015 and June 30, 2014,2015, the Company had outstanding balances of $125,464USD $89,950 and $146,202,$112,436, respectively.

On August 14, 2014, the Company entered into a new trade finance agreement with an entity in the United States with a total maximum facility of $1,500,000 based on $1,000,000 towards sales invoiced and $500,000 towards purchase order financing at interest rates of 2% per month and 7.75% per year, respectively.financing. As of December 31, 2014,2015 and June 30, 2015, the Company had an outstanding balancesbalance of $374,867.$559,552 and $646,078, respectively.

On November 20, 2014, the Company entered into a new retail trade finance agreement with an entity in Australia for AUD $75,000 with 100 equal payments of AUD$871.80AUD $871.80 daily. As of December 31, 2014,September 30, 2015 and June 30, 2015, the Company had outstanding balances of AUD $73,923 or USD $60,292.$0 and USD $21,139 (AUD $27,500), respectively.

Note 97 – LOANS

In November 2013, the Company entered into a short term loan arrangement totalling AUD $100,000 with a shareholder of the Company. Terms of the note were interest rate at 15% per annum or .0329% per day due 30 days from the loan date. The short term note was converted into a 30 day callable convertible note in January 2014.

In December 2013, the Company entered into a short termshort-term loan arrangement in the amount of $100,000 with an individual. Terms of the note require an interest payment of $5,000 on the repayment date, 30 days after the note date. If not repaid at that time, interest will accrue at the rate of $166 per day until the note is repaid. The outstanding balance as of December 31, 2015 and as of June 30, 2015 was $100,000 and $100,000 respectively. During the six-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $30,046 and $7,386, respectively, on the note. During the three-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $14,940 and $14,772, respectively, on the note.

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In JanuaryMay 2014 and July 2014, the Company entered into two convertible loan agreements in the amount of $72,800 each. Interest accrued at the rate of 8% per annum. Loan and accrued interest were due in February 2015 and April 2015. The loans may be converted into common stock of the Company at any time by the election of the lender at a predetermined conversion price. During the quarter ended March 31, 2015, $72,800 was converted into 2,402,141 shares and $20,000 was converted into 943,396 shares. The remaining loan balance plus accrued interest was repaid during the quarter ended March 31, 2015. The outstanding balance as of December 31, 2015 and as of June 30, 2015 was $0.

From May 2014 to September 2015, the Company entered into several convertible loan agreements with a lender aggregating in the amount of $121,500. The notes bear interest at 6% per annum and are due and payable six months from the date of each note. The loans may be converted into common stock at any time by the election of the lender after a period of six months at a predetermined conversion price. The outstanding balance as of December 31, 2015 and as of June 30, 2015 was $131,500 and $121,500 respectively. The Company accrued interest of $3,945 and $0 during the three-month periods ended December 31, 2015 and 2014, respectively. The Company accrued interest of $2,122 and $0 during the three-month periods ended December 31, 2015 and 2014, respectively.

In December 2014, the Company entered into a convertible loan agreement totalingin the amount of $10,000 AUD $250,000with an individual in Australia. The note was repaid in full in July 2015.

In June 2015, the Company entered into a secured promissory note in the amount of $500,000 with a Delaware statutory trust. The note bears interest at the rate of 18% per annum and is due or before July 1, 2017. The note has various covenants attached including one in which all credit card receipts are to be swept into an account which will fund payments on the note that are not in excess of the minimum quarterly payments required. As a condition of the note, an affiliate of the lender was granted a warrant to purchase 6,000,000 shares of the common stock of Banjo & Matilda, Inc. at a price of $.08 in whole or in part. The outstanding balance as of December 31, 2015, net of related discount, was $415,208. The Company determined that the fair value of the warrants using the Black – Scholes model with the variable listed below:

	·	Volatility: 329%
	·	Risk free rate of return: 0.67%
	·	Expected term: 2.04 years

In connection with the issuance of the above notes, the Company recorded a note discount of $115,274. The Company amortized $28,470 and $0, of the note discount during the six-month periods ended December 31, 2015 and 2014, respectively. The Company amortized $14,235 and $0, of the note discount during the three-month periods ended December 31, 2015 and 2014, respectively. The Company recorded an interest of $36,721 and $0, on the note during the six-month periods ended December 31, 2015 and 2014, respectively. The Company recorded an interest of $14,622 and $0, on the note during the three-month periods ended December 31, 2015 and 2014, respectively.

Subsequent to the period, on February 5, 2016, the Company signed an amendment to the secured promissory note extending the maturity date by one year to July 17, 2018.

Related Party Payable

The Company had several note agreements with a shareholder ofaggregating to AUD $370,000 plus interest. The notes had interest rates varying from 6% to 15% per annum. In March 2015, the Company.outstanding balance and accrued interest was refinanced by a AUD526,272 convertible note. The Convertible Note bears interest at the rate of 9%18% per annum and is due on the first anniversaryor before April 30, 2017. The interest portion of the datenote shall be paid weekly starting in April 2015. Principle payments of issuance, January 12, 2015.$9,929 AUD weekly are to commence in April 2016. All or any portion of the principal amount of the Convertible Note and all accrued interest is convertible at the option of the holder into common stock of the Company at a conversion price of thirtyfive cents ($0.30)0.05) per share, provided that if the Volume Weighted Average Price (VWAP) for thesubject to various standard provisions. The outstanding balance as of December 31, 2015 and June 30, days immediately preceding the receipt2015, net of a conversion notice is less than sixty cents ($.60) per share, the conversion price shall be reduced to twenty cents ($.20) per share.related discount, was USD $379,591 and $217,855, respectively. The Company is currently re-negotiatingdetermined the termsfair value of this loan.

In Maythe convertible note of $80,909 using the intrinsic value method. The Company recorded an amortization of the debt discount of $7,717 and $0, during the six-month period ended December 31, 2015 and 2014, respectively. The Company recorded an amortization of the debt discount of $3,858 and $0, during the three-month period ended December 31, 2015 and 2014, respectively. During the six-month periods ended December 31, 2015 and 2014, the Company entered into a convertible loan agreement inrecorded an interest of $34,227 and $0, respectively, on the amount of $72,800 with a corporation in New York. Interest is to accrue atnote. During the rate of 8% per annum. Loanthree-month periods ended December 31, 2015 and accrued interest is due on December 1, 2014. The loan may be converted into common stock of the Company at any time by the election of the lender at a predetermined conversion price. On December 1, 2014, $12,000 was converted into 133,185 shares or $0.0901 per share.

In June 2014, the Company entered into a loan agreement inrecorded an interest of $17,049 and $0, respectively, on the amount of AUD$100,000 with a shareholder of the Company. The note bears interest at 6% per month and is due and payable in July 2014. The loan was repaid in the amount of AUD $80,000 and the balance of AUD $20,000 was extended to December 31, 2014. The Company is currently re-negotiating the terms of this loan.note.

In July 2014 the Company entered into a second convertible loan agreement in the amount of $72,800 with a corporation in New York. Interest is to accrue at the rate of 8% per annum. Loan and accrued interest is due in April 2015. The loan may be converted into common stock of the Company at any time by the election of the lender at a predetermined conversion price.

Related Party Payable

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The Company has liabilities payable in the amount of $22,427$143,422 and $123,082$217,855 to shareholders and officers of the Company as of December 31, 20142015 and June 30, 2014,2015, respectively. Interest expenseThe note bears interest at the rate of 3% per annum and was due on theseor before June 30, 2014. The outstanding balance, including accrued interest, may be converted into common shares of Banjo & Matilda, Inc. at a pre-determined rate. The Company has granted the Lenders a security interest in the intellectual property of the Borrower.

Scheduled principal payments on loans are as follow;

Year ending December 31,		Loan 1				Loan 2				Loan 3				Loan 4				Loan 5				Total
2016		$	100,000			$	131,806			$	9,107			$	274,786			$	143,422			$	659,121
2017		$	-			$	-			$	490,893			$	129,759			$	-			$	620,652
		$	100,000			$	131,806			$	500,000			$	404,545			$	143,422			$	1,279,773