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.

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.

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

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

On November 14, 2013, we entered into a share exchange agreement (the “Exchange Agreement”) with Banjo & Matilda Pty Ltd, (“Banjo & Matilda”) and the shareholders of Banjo & Matilda (“B&M Shareholders”). Pursuant to the Exchange Agreement, 100% of the issued and outstanding capital stock of Banjo & Matilda was acquired, making it a wholly-owned subsidiary. There was no prior relationship between the Company and its affiliates and Banjo & Matilda and its affiliates.

In consideration for the purchase of 100% of the issued and outstanding capital stock of Banjo & Matilda under the Exchange Agreement, we issued B&M Shareholders an aggregate of 24,338,872 restricted shares of common stock of the Company.

On July 1^st2015, the operations of Banjo & Matilda Pty Ltd were transferred to Banjo & Matilda (Australia) Pty Ltd., a wholly owned subsidiary of Banjo & Matilda Inc.

Following the worldwide downturn of the retail clothing business model, in June of 2017, Banjo & Matilda, Inc. began to seek out additional businesses to acquire as subsidiaries to expand and refocus its operations to generate more revenue and profit.

On September 20, 2017, Banjo & Matilda, Inc. entered into a Memorandum of Understanding for the acquisition of Spectrum King, LLC as a wholly-owned subsidiary, a pioneer of full spectrum LED grow lights, specialized in designing, manufacturing and selling high-end LED grow lights for indoor/greenhouse applications with both the Agriculture and Horticulture industries.

On March 19, 2018, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction failed to close.

On April 16, 2019, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with American Aviation Technologies, LLC (“AAT”), an aircraft design and development company focused on the emerging segment of the aviation industry of autonomous and semi-autonomous vertical take-off and landing (VTOL) unmanned aerial vehicles (UAVs).

In June of 2017, Banjo & Matilda, Inc. began to seek out companies to acquire as additional subsidiaries to expand its business lines, and generate more revenue and profit.

On September 20, 2017, Banjo & Matilda, Inc. entered into a Memorandum of Understanding with Spectrum King, LLC.

On March 19, 2018, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction did not close.

On April 16, 2019, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with American Aviation Technologies, LLC

On June 28, 2019, Banjo & Matilda, Inc. spun out two wholly-owned subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD.

On September 30, 2019, the acquisition of American Aviation Technologies, LLC closed and it became a wholly-owned subsidiary of Banjo & Matilda, Inc.

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Banjo & Matilda, Inc. is an aircraft design and development company focused on the emerging segment of the aviation industry of autonomous and semi-autonomous vertical take-off and landing (VTOL) unmanned aerial vehicles (UAVs). This segment of the aviation industry is attracting significant investment in the development of autonomous and semi-autonomous vertical take-off and landing (VTOL) unmanned aerial vehicles (UAVs).

The quintessence of contemporary aeronautical science and engineering, these mostly electric or hybrid-electric aircraft include small remotely controlled UAVs as well as larger passenger and cargo UAVs, which are targeting short-haul, on-demand transport of passengers and freight, called urban aerial mobility (UAM). The feasibility of these more lightweight and efficient aircraft designs is made possible through advances in composite materials, additive manufacturing (3D printing), miniaturization of electronics, computer processing speed, battery power and electromagnetic propulsion.

The UAV has become a viable, low cost alternative in many VTOL applications previously dominated by the helicopter, including aerial photography and videography. Among its advantages in aerial filming are its size, acoustics, low cost of operation, low altitude flying and superior maneuverability. Because of UAVs’ explosive growth over the past few years and the anticipated ubiquity in the future, new regulations are being formulated to allow their safe integration into low altitude civil airspace.

Stakeholders shaping this integration process include aircraft manufacturers, ridesharing companies, governmental regulatory agencies and civil transportation authorities, all of whom are working toward establishing standards and overcoming the variety of issues involved with its implementation. Key technologies impacting the development and implementation of this VTOL aircraft segment for fully autonomous applications include high speed (5G) data transmission and artificial intelligence. Also drawing interest is the development of VTOL and hover capable rotorcraft that can accomplish many of the civilian and military transport functions of a helicopter, but are faster, quieter, less complex to operate and safer on the ground. Helicopters have been around for over 80 years and have been improved significantly with advanced flight control systems but remain extremely complicated to fly and have performance limitations based on their fundamental flight principles. Due to a condition called retreating blade stall, also known as dissymmetry of lift, helicopters have a maximum forward speed of about 250 miles per hour. Additionally, helicopters produce high noise levels, due primarily to rotor blade vortex interaction and vibration, and have high operating costs.

The acquisition of American Aviation Technologies, LLC (“AAT”), which included the “Halo” patent, was undertaken to provide a foundation for the Company’s foray into aerospace industry. The “Halo” patent was issued in October 2019 after AAT had acquired all rights to the Halo aircraft design, including any prospective patents or applications for patents, through an intellectual property assignment by its inventor in 2018. As a scalable and multi-purpose platform, the aircraft’s size and capabilities can be expanded depending on the mission requirements, from a small frame UAV (or drone) to potentially a heavy lift cargo and even passenger transport aircraft, either manned or unmanned. Halo is expected to compete favorably with and exceed the performance of other VTOL aircraft in terms of speed, acoustics, maneuverability, efficiency, duration and safety.

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The Halo platform is essentially a powered lift type of system with characteristics of tiltrotors and tiltwings and differs from rotorcraft such as the helicopter in its lift and forward propulsion mechanisms during horizontal flight, which has several advantages. Powered lift is one of seven main categories of aircraft classifications designated by the U.S. Federal Aviation Administration (FAA) and is defined as “a heavier-than-air aircraft capable of vertical take off and landing (VTOL) and low speed flight that depends principally on engine-driven lift devices or engine thrust for lift during these flight regimes and on non-rotating airfoils for lift during horizontal flight.” In tiltrotors and tiltwings one or more powered rotors are used for both lift and forward propulsion, essentially combining the vertical take off and landing capability of a helicopter with the efficiency, range, speed and cruise altitude of a conventional fixed-wing aircraft. For vertical flight, the rotors are horizontally angled to provide thrust upwards, lifting in the manner that a helicopter rotor operates. As the aircraft gains speed and altitude, the rotors progressively rotate or tilt forward, either moving independently of the wing or integrated and moving with the wing, eventually becoming perpendicular to the fuselage of the aircraft and functioning similar to a propeller in a vertical plane of orientation. Following the transition from vertical to forward flight mode, the airfoil-shaped wing generates the aerodynamic forces for lift and the rotor supplies the thrust. The wing’s greater efficiency, in conjunction with the rotor positioning, assists these aircraft in achieving higher forward speeds than helicopters, which are limited due to retreating blade stall. Tiltrotors and tiltwings are also inherently quieter in forward flight.

The Company is a member and tenant of the Research Park at Florida Atlantic University (FAU) in Boca Raton, Florida, which is part of the university and adjacent to the Boca Raton Airport. FAU is one of the top engineering schools in the state, and part of the National Science Foundation’s Industry/University Cooperative Research Center Program called the Center for Advanced Knowledge Enablement (CAKE). The 70-acre Research Park is home to many technology companies and research-based organizations. FAU recently opened a center for Artificial Intelligence and Connected Assured Autonomy through their College of Engineering and Computer Science, which is applicable to advanced aircraft systems. The Company will collaborate with FAU’s academic team, both faculty and students, through a series of joint research initiatives. The relationship with FAU would also potentially assist with access to grant programs and financing opportunities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed financial statements of the Company and the accompanying notes included in this Quarterly Report are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the unaudited condensed financial statements have been included. Such adjustments are of a normal, recurring nature. The unaudited condensed financial statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. These financial statements should be read in conjunction with the company’s latest annual financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of equity issued for services, valuation of equity associated with convertible debt, the valuation of derivative liabilities, and the valuation of deferred tax assets. Actual results could differ from these estimates.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

Fair Value Measurements and Fair Value of Financial Instruments

The Company adopted ASC Topic 820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3: Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The estimated fair value of certain financial instruments, including all current liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Deferred Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes ("ASC 740-10") for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.

Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. As of September 30, 2019 there are no deferred tax assets.

Cash and Cash Equivalents

For purposes of the Statements of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company has no cash equivalents.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

Accounts Receivable and Allowance for Doubtful Accounts

The Company monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The allowance for doubtful accounts is estimated based on an assessment of the Company's ability to collect on customer accounts receivable. There is judgment involved with estimating the allowance for doubtful accounts and if the financial condition of the Company's customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against revenues. The Company writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection. The allowance for doubtful accounts is created by forming a credit balance which is deducted from the total receivables balance in the balance sheet. As of September 30, 2019 and June, 30, 2019 there are no accounts receivable.

Revenue Recognition

Revenue includes product sales. The Company recognizes revenue from product sales in accordance with Topic 606 "Revenue Recognition in Financial Statements" which considers revenue realized or realizable and earned when all of the following criteria are met:

	(i)	persuasive evidence of an arrangement exists,
	(ii)	the services have been rendered and all required milestones achieved,
	(iii)	the sales price is fixed or determinable, and
	(iv)	Collectability is reasonably assured.

As of September 30, 2019 and June 30, 2019, the Company has no revenue.

Convertible Debentures

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature ("BCF"). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 "Debt with Conversion and Other Options." In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt. As of September 30, 2019 and June 30, 2019 the Company’s convertible instruments do not have any BCFs.

Fair Value of Financial Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10") requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All ~~currencies represented~~other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at fair value.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

Research and Development Expenses

Expenditures for research and development are expensed as incurred. The Company incurred research and development expenses of $6,339 for the three months ended September 30, 2019 and $0 for the period from August 6, 2019 through September 30, 2019.

Advertising, Marketing and Public Relations

The Company expenses advertising and marketing costs as they are incurred. There were no advertising expenses for the three months ended September 30, 2019 and for the period from August 6, 2019 through June 30, 2019.

Offering Costs

Costs incurred in connection with raising capital by the issuance of common stock are recorded as contra equity and deducted from the capital raised. There were no offering costs for the three months ended September 30, 2019 and from inception (August 6, 2018) through September 30, 2018, respectively.

Income Taxes

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our consolidated federal tax return and any state tax returns are not currently under examination.

The Company has adopted FASB ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606. The new revenue recognition standard supersedes all existing revenue recognition guidance. Under this ASU, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2015-14, issued in August 2015, deferred the effective date of ASU 2014-09 to the first quarter of 2018, with early adoption permitted in the first quarter of 2017.

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

On June 20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on August 6, 2018. The adoption of this standard did not have a material impact on the financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – EXCHANGE AGREEMENT

Effective April 18, 2019, Banjo & Matilda, Inc, and American Aviation Technologies, LLC (“AAT”) entered into a Share Exchange Agreement (“Agreement”). The agreement was pursuant to which Banjo acquired 100% of our issued and outstanding membership units in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 86.39% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, the Company will become a wholly owned subsidiary of Banjo.

The Exchange Agreement is subject to the satisfaction of certain conditions as set forth in the Exchange Agreement. At closing, two additional directors will be added, resulting in a total of 4 directors serving post-closing.

Consummation of the Exchange Agreement was effective on September 30, 2019. Pursuant to the Exchange Agreement, the members of AAT received 2,750,000 shares of the Banjo & Matilda, Inc.’s Series A Preferred Stock to the members of AAT in exchange for the 10,000,000 member units.

On September 30, 2019 just prior to the exchange, Banjo issued 170,000 shares of preferred stock as compensation and 193,637 shares of preferred stock in satisfaction of $2,608,224 in liabilities.

NOTE 4 – CONVERTIBLE NOTES PAYABLE

Between March 4, 2019 and September 23, 2019 the Company issued convertible notes payable with an aggregate face value of $68,000 with a coupon rate of 8%. The notes have a maturity date of one year. In the event the Company has been merged into or sold to the public company, Banjo & Matilda, Inc., at any time prior to the Maturity Date the holder has the option to convert the principal balance and any accrued interest at a conversion price of $.0033 per share. For the three months ended September 30, 2019 the Company recorded $917 in interest expense versus $378 for the period from August 6, 2018 through June 30, 2019.

Between September 27, 2019 and September 30, 2019 the Company issued convertible notes payable with an aggregate face value of $153,000 with a coupon rate of 6%. The notes have a maturity date of one year. In the event the Company has been merged into or sold to the public company, Banjo & Matilda, Inc., at any time prior to the Maturity Date the holder has the option to convert the principal balance and any accrued interest at a conversion price of $.0033 per share. For the three months ended September 30, 2019 the Company recorded $46 in interest expense.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

None.

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NOTE 6 – EQUITY

Preferred Stock

There are 100,000,000 shares authorized as preferred stock, of which 3,500,000 are designated as Series A Preferred Stock having a par value of $0.00001 per share. The Series A preferred stock has the following rights:

	·	Voting: The preferred shares shall be entitled to 100 votes to every one share of common stock.

	·	Dividends: The Series A Preferred Stockholders are treated the same as the Common Stock holders except at the dividend on each share of Series A Convertible Preferred Stock is equal to the amount of the dividend declared and paid on each share of Common Stock multiplied by the Conversion Rate.

	·	Conversion: Each share of Series A Preferred Stock is convertible, at the option of the holder thereof, at any time into shares of Common Stock on a 1:1,000 basis.

	·	The shares of Series A Preferred Stock are redeemable at the option of the Corporation at any time after September 30, 2022 upon not less than 30 days written notice to the holders. It is not mandatorily redeemable.

As of September 30, 2019 and June 30, 2019, the Company has 3,113,637 and 0 shares of Series A Preferred Stock issued and outstanding, respectively.

Common Stock

There have been no changes to the common stock for three months ended September 30, 2019. The Company currently has 100,000,000 common shares authorized with a par value of $0.00001 per share. The number of shares outstanding at September 30, 2019 and June 30, 2019 was 69,584,149. The balance of Common Stock at September 30, 2019 and June 30, 2019 was $696.

NOTE 7 – GOING CONCERN MATTERS

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At September 30, 2019 and June 30, 2019, the Company had $169,796 and $3,029 in cash and $102,916 and $33,849 in negative working capital, respectively. For the three months ended September 30, 2019 and from inception (August 6, 2018) through September 30, 2018, the Company had a net loss of $19,165 and $0, respectively. Continued losses may adversely affect the liquidity of the Company in the future. Therefore, the factors noted above raise substantial doubt about our ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.

NOTE 8 – SUBSEQUENT EVENTS

Convertible notes

Subsequent to September 30, 2019, the Company issued additional Convertible Notes aggregating $75,000. The notes have a coupon rate of 6% and a term of six months. The notes are convertible at a fixed price of $0.0033 per share.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the audited and unaudited financial statements and the notes to those statements included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the ~~condensed consolidated financial~~various risk factors identified in this Report that could cause actual results to differ materially from those anticipated in these forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative of such terms or other comparable terminology. 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. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report.

This section of the report should be read together with Footnotes of the Company audited financials for the year ended June 30, 2018. The unaudited statements of operations for the three months ended September 30, 2019 and from inception (August 6, 2018) through September 30, 2019 are compared in ~~United States Dollars (USD) unless specified as AUD (Australian Dollars).~~

the sections below.

General Overview

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 laws 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. (the “Parent”).

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 State of Delaware on October 14, 2013, as a subsidiary, 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 label 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 stock by Banjo & Matilda Pty Ltd. for the net monetary assets of the Banjo & Matilda, Inc. accompanied by a recapitalization, and 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.

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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:

In June of 2017, Banjo & Matilda, Inc. began to seek out companies to acquire as additional subsidiaries to expand its business lines, and generate more revenue and profit.

On September 20, 2017, Banjo & Matilda, Inc. entered into a Memorandum of Understanding with Spectrum King, LLC.

On March 19, 2018, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction did not close.

On April 16, 2019, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with American Aviation Technologies, LLC

On June 28, 2019, Banjo & Matilda, Inc. spun out two wholly-owned subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD.

On September 30, 2019, the acquisition of American Aviation Technologies, LLC closed and it became a wholly-owned subsidiary of Banjo & Matilda, Inc.

~~Going Concern~~

Recent Developments

Spin Out Agreement

Effective June 28, 2019, the Company entered into a Spin Out Agreement with WNPAU Pty Ltd. (“WNPAU”) which is owned by the Company’s former CEO Brendan MacPherson. In connection with the agreement, WNPAU agreed to assume all the assets and liabilities of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD exchange for the return of 1,000,000 shares of Preferred Stock held by Brendan MacPherson and $135,000 of accrued compensation owed to Brendan MacPherson.

Exchange Agreement

Effective April 16, 2019, Banjo & Matilda, Inc and American Aviation Technologies LLC (“AAT”) entered into an Exchange Agreement dated as of March 16, 2019 pursuant to which Banjo shall acquire 100% of the issued and outstanding membership units of AAT in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 86.39% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, AAT will become a wholly owned subsidiary of the Company.

The ~~Company’s~~Exchange Agreement is subject to the satisfaction of certain conditions as set forth in the Exchange Agreement. At Closing, two additional directors will be added, resulting in a total of 4 directors serving post-closing.

AAT is a Florida limited liability company that is an aircraft design and development company dedicated to advancing aeronautical safety and performance through new and innovative concepts.

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Critical Accounting Policies

Basis of Presentation

The unaudited condensed financial statements of the Company and the accompanying notes included in this Quarterly Report are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the unaudited condensed financial statements have been included. Such adjustments are of a normal, recurring nature. The unaudited condensed financial statements, and the accompanying notes, are prepared ~~using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities~~ in the normal course of business. At March 31, 2019 and June 30, 2018, the Company had no cash and $4,455,335 and $4,071,102 in negative working capital, respectively. For the three months ended March 31, 2019 and 2018, the Company had a net loss of $127,379 and $207,723, respectively. For the nine months ended March 31, 2019 and 2018, the Company had a net loss of $384,233 and $667,184, respectively. 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.

~~The accompanying financial statements were prepared in conformity~~accordance with generally accepted accounting principles in the United States ("GAAP"). Results for the interim periods presented are not necessarily indicative of ~~America (“US GAAP”).~~

~~The condensed consolidated unaudited 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~~results that might be expected for the ~~Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.~~entire fiscal year. These financial statements should be read in conjunction with the company’s latest annual financial statements.

~~During the nine months ended March 31, 2019 and 2018, the transactions of the Company were denominated in US Dollars.~~

During the nine months ended March 31, 2019 and 2018, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US dollars 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).

The preparation of financial statements in conformity with ~~US GAAP~~accounting principles generally accepted in the United States of America 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. The most significant assumptions and estimates relate to the valuation of equity issued for services, valuation of equity associated with convertible debt, the valuation of derivative liabilities, and the valuation of deferred tax assets. Actual results could differ from ~~those~~these estimates. ~~Significant estimates include collectability~~

Fair Value Measurements and Fair Value of ~~accounts receivable, accounts payable, sales returns~~Financial Instruments

The Company adopted ASC Topic 820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and ~~recoverability~~establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3: Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The estimated fair value of ~~long-term~~certain financial instruments, including all current liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Deferred Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes ("ASC 740-10") for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.

Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. As of September 30, 2019 there are no deferred tax assets.

~~Revenue~~beneficial conversion feature ("BCF"). A BCF is ~~recognized when~~recorded by the Company as a ~~customer obtains control~~debt discount pursuant to ASC Topic 470-20 "Debt with Conversion and Other Options." In those circumstances, the convertible debt is recorded net of ~~promised goods or services. In addition,~~ the ~~standard~~discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt. As of September 30, 2019 and June 30, 2019 the Company’s convertible instruments do not have any BCFs.

Fair Value of Financial Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10") requires disclosure of the ~~nature, amount, timing, and uncertainty~~fair value of ~~revenue~~certain financial instruments. The carrying value of cash and cash ~~flows arising from contracts with customers. The amount~~equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of ~~revenue that is recorded reflects~~ the ~~consideration that~~short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company ~~expects~~are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to ~~receive in exchange for those goods.~~ fair value has been disclosed.

The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards Board (“FASB”)follows Accounting Standards Codification ~~(“ASC”~~subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") ~~606~~and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at ~~contract~~fair value.

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Research and Development Expenses

Expenditures for research and development are expensed as incurred. The Company incurred research and development expenses of $6,339 for the three months ended September 30, 2019 and $0 for the period from August 6, 2019 through September 30, 2019.

Advertising, Marketing and Public Relations

The Company expenses advertising and marketing costs as they are incurred. There were no advertising expenses for the three months ended September 30, 2019 and for the period from August 6, 2018 (Inception) through September 30, 2018.

Offering Costs

Costs incurred in connection with raising capital by the issuance of common stock are recorded as contra equity and deducted from the capital raised. There were no offering costs for the three months ended September 30, 2019 and from inception ~~the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct.~~ (August 6, 2018) through September 30, 2018, respectively.

Income Taxes

The Company recognizes ~~as revenues~~ the ~~amount~~effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the ~~transaction price~~largest amount that is ~~allocated~~greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to ~~the respective performance obligation when the performance obligation is satisfied or~~unrecognized tax benefits as ~~it is satisfied. Generally, the Company’s performance obligations are transferred to customers at~~ a ~~point in time, typically upon delivery.~~

~~Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), and importation duties and charges.~~

~~Selling expenses consist primarily of shipping and handling costs, relating to the delivery of products to customers, are classified as selling,~~ general and administrative expenses. ~~We had no selling expenses for the nine months ended March 31, 2019~~Our consolidated federal tax return and ~~2018, respectively.~~

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

any state tax returns are not currently under examination.

The Company ~~utilizes Financial~~has adopted FASB ASC 740-10, Accounting ~~Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740,~~for Income Taxes, which requires ~~recognition of deferred~~an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities ~~for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes~~ are ~~recognized for the tax consequences in future years of~~computed annually from differences between the financial statement and tax ~~bases~~basis of assets and liabilities ~~and their financial reporting~~that will result in taxable or deductible amounts ~~at each period end~~in the future based on enacted tax laws and ~~statutory tax~~ rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that 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 operations.

At June 30, 2018, the Company had not taken any significant uncertain tax positions on its tax returns for periods ended June 30, 2018 and prior years or in computing its tax provision for 2016. 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, 2014 to the present, generally for three years after they are filed.

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’s Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.

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’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’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’s consolidated 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 March 31, 2019 and June 30, 2018, the Company had $0 and $0 in cash in Australia and 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.

~~Property, 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 ten years; computer equipment, two to three years; buildings and improvements, five to fifteen years; leasehold improvements, two to ten years; and furniture and equipment, one to five years. Property and equipment is categorized under assets of discontinued operations in the balance sheet. Additionally, depreciation expense would be included under loss from operations of discontinued operations in the statement of operations.

For certain of the Company’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 Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “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 Liabilities from Equity,” and ASC 815.~~

~~Earnings Per Share (EPS)~~

The Company utilize FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive.

~~The following table sets for the computation of basic and diluted earnings per share for the nine months ended March 31, 2019 and 2018:~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606. The new revenue recognition standard supersedes all existing revenue recognition guidance. Under this ASU, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2015-14, issued in August 2015, deferred the effective date of ASU 2014-09 to the first quarter of 2018, with early adoption permitted in the first quarter of 2017.

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

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On June 20, 2018, the FASB issued ASU 2018-07,

Compensation—Stock Compensation

(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on August 6, 2018. The adoption of this standard did not have a material impact on the financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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.

On April 16, 2019, Banjo & Matilda, Inc and American Aviation Technologies LLC (“AAT”) entered into an Exchange Agreement dated as of March 16, 2019 pursuant to which Banjo shall acquire 100% of the issued and outstanding membership units of AAT in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 84.4% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, AAT will become a wholly owned subsidiary of the Company.

The Exchange Agreement is subject to the satisfaction of certain conditions as set forth in the Exchange Agreement. At Closing, two additional directors will be added, resulting in a total of 4 directors serving post-closing.

~~AAT is a Florida limited liability company that is an aircraft design and development company dedicated to advancing aeronautical safety and performance through new and innovative concepts.~~

Upon the effective closing date, certain notes, loans, accrued interest, and related party loans will be converted to series A preferred shares. Additional preferred shares will also be exchanged for accrued expenses. Certain loans and accrued expenses were written up or down during the year ended June 30, 2018 to the value exchanged according to settlement agreements with certain investors and debtors of the Company. An additional $39,179 of trade payables was converted and accrued during the year ended June 30, 2018. $620,225 of trade payables will be converted to 25,095 series A preferred shares ($24,72 per share), $569,991 of accrued interest will be converted to 29,314 series A preferred shares ($19.44 per share), $691,828 of loans payable will be converted to 59,869 series A preferred shares ($11.75 per share), $123,141 of loans from related parties will be converted to 11,917 series A preferred shares ($10.33 per share), $320,730 of convertible loans from related parties will be converted to 18,682 series A preferred shares ( $17.16 per share) and $70,883 of other convertible debt will be converted to 14,296 series A preferred shares ($4.95 per share).

On June 28, 2019, the Company entered into a Spin Out Agreement with WNPAU Pty Ltd. (“WNPAU”), owned by the Company’s former CEO Brendan MacPherson, pursuant to which the Company agreed to sell and assign to WNPAU all the assets of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD in exchange for the assumption of the liabilities of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD.

The operating results for Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD have been presented in the accompanying consolidated statement of operations for the Nine Months ended March 31, 2019 and 2018 as discontinued operations and are summarized below:

~~The assets and liabilities of the discontinued operations at March 31, 2019 and June 30, 2018 are summarized below:~~

~~PROPERTY AND EQUIPMENT~~

~~TRADE AND OTHER PAYABLES~~

On January 7, 2013, the Company entered into a trade financing agreement with a financial institution in Australia with a maximum limit of AUD $200,000 at an interest rate of 20.95% per annum. Upon default of the loan, the Company reached a settlement with its obligation with the entity in the amount of AUD $165,523. Per the settlement, the amount was to be paid through application of its Export Market Development Grant and up to 25% of the Company’s store sales in Australia. As of March 31, 2019, and June 30, 2018, the Company had an outstanding balance of USD $49,454.

On August 14, 2014, the Company entered into a 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. Original term was for 12 months with automatic renewal for each consecutive period thereafter with interest at base rate floor of 3.25% plus 4.5%. In the event of default, an additional 7% interest is added. As of March 31, 2019, and June 30, 2018, the Company had an outstanding balance of $128,468. The Company renewed the loan term indefinitely until full settlement occurs. As of March 31, 2019, and June 30, 2018, the Company had an accrued interest balance of $73,242 and $58,493, respectively. For the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $14,649 and $14,649, respectively.

On November 2, 2016, the Company entered into a merchant agreement with a capital funding group for a purchase price of $35,000 and purchased amount of $47,250. The Company amortized the excess of purchase amount over the purchase price, over the term of the financing of 21 months. Pursuant to the agreement, the Company cannot obtain future financing by selling receivables without consent from the lender. The Merchant holds a security interest in all accounts and proceeds. As of March 31, 2019, and June 30, 2018, the balance owed to the lender amounted to $17,981 and accrued interest of $16,914 and $11,667, respectively. The term has been extended indefinitely until full settlement occurs without penalty. For the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $5,247 and $5,247, respectively.

On November 3, 2016, the Company entered into a payment rights purchase and sale agreement for $72,500 which was due in April 2017. The financing had a purchase price of $50,000 with the purchased amount of $72,500. The Company amortized the excess of the purchased amount over purchase price, over the term of the financing of Nine Months. The Company was required to make daily payments of $575.40 to the lender. As of March 31, 2019, and June 30, 2018, the loan balance owed to the lender of $2,601 is in default. The loan has been charged an interest rate of 16% per annum while in default. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $309 and $312, respectively. As of March 31, 2019 and June 30, 2018, the balance of accrued interest was $5,919 and $5,610, respectively.

On November 29, 2016, the Company entered into a consignment agreement. It is a platform for funding advance inventory production. This facility allowed the Company to fund manufacturing with a consignment facility which pegs repayment to the sales of inventory. During the year ended June 30, 2017, the Company initially raised $21,928 for a purchase price of $26,313. This amount was paid off as of March 31, 2017. The difference of $4,385 was amortized over the period of financing. The Company again raised $114,888 for a purchase price of $133,342 in December 2016 due by December 2017. The difference of $18,454 was amortized over the period of financing. As of March 31, 2019, and June 30, 2018, balance outstanding was $107,370, with $37,573 and $28,007 in accrued interest, respectively. As of March 31, 2019, the loan was in default and charged an interest rate of 12% per annum. During the nine months March 31, 2019 and 2018, the Company recorded interest expense in the amount of $9,566 and $9,672, respectively.

~~NOTE 5 – TRADE AND OTHER PAYABLES~~

The Company entered into a Note Purchase Agreement for $65,000 dated January 4, 2017 with a third party. The amount was due on July 4, 2017 and carries interest at the rate of 18%. As of March 31, 2019, and June 30, 2018, the outstanding loan balance was $56,194 and accrued interest was $23,431 and $14,253, respectively. As of July 18, 2018, the loan maturity date has been extended until full settlement occurs without penalty. Effective with the AAT merger closing described in Note 3, the note holder has agreed to convert all outstanding principal and interest into 3,418,889 shares of common stock effected for the post-reverse split. As of June 30, 2018 the principal and interest related to this note was written down by $126 and $349, respectively, to accurately reflect the value of the conversion.

~~Loan Payable - December 2013~~

In December 2013, the company entered into a short-term loan arrangement in the amount of $100,000 with an individual. Terms of the note require 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 loan has been in default since January 2014 and accruing interest of $166 per day. The outstanding principal balance as of March 31, 2019 and June 30, 2018 was $81,994. As of March 31, 2019 and June 30, 2018, the accrued interest balance was $218,925 and $173,939, respectively. During the nine months March 31, 2019 and 2018, the Company recorded interest expense in the amount of $44,986 and $45,484, respectively. Effective with the AAT merger closing described in Note 3, the note holder has agreed to convert all outstanding principal and interest into 200,358 shares of effected for the post-reverse split. As of June 30, 2018, the principal and interest related to this note was written down by $20,152 and $42,749, respectively, to accurately reflect the value of the conversion.

~~Loan Payable – June 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 was due on 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 the Company at a price of $.08 in whole or in part. The outstanding balance as of March 31, 2019 and June 30, 2018 was $498,882. As of March 31, 2019 and June 30, 2018, the accrued interest balance was $223,159 and $141,671, respectively. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $81,489 and $82,575, respectively. Effective with the AAT merger closing described in Note 3, the note holder has agreed to convert all outstanding principal and interest into 31,086,911 shares of common stock effected for the post-reverse split. As of June 30, 2018, the principal was written down by $1,118 to accurately reflect the value of the conversion.

~~NOTE 8 – CONVERTIBLE NOTES PAYABLE~~

~~Convertible Notes Payable - August 2014 to October 2018~~

~~From August 2014 to October 2018, the Company entered into the following convertible loan agreements with a lender:~~

~~Accounting Considerations~~

~~The Company evaluated the agreements under ASC 815~~

~~Derivatives and Hedging~~

(“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The embedded conversion features contained in the August 9, 2014 and December 12, 2014 were a variable conversion price and resulted in an embedded derivative and thus requiring bifurcation. The embedded conversion options in the remaining notes did not result in embedded derivatives that required bifurcation. Effective March 19, 2018, the note holder agreed to convert all outstanding principal and interest into 42,128 shares of Series A Preferred Stock upon the consummation of a merger. This settlement agreement eliminated the original derivative conversion terms. The note will now convert at a fixed rate plus any accrued interest.

The outstanding balance as of March 31, 2019 and June 30, 2018 was $78,689 and $58,570, respectively. The accrued interest balance was $8,664 and $5,413 as of March 31, 2019 and June 30, 2018, respectively. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $3,251 and $1,644, respectively. As of June 30, 2018 the principal and interest related to this loan was written down by $9,630 and $1,940, respectively, to accurately reflect the value of the conversion.

~~Convertible Notes Payable – October 2015 to May 2018~~

~~The Company evaluated the agreements under ASC 815~~

~~Derivatives and Hedging~~

(“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The embedded conversion feature contained in the May 18, 2018 was a variable conversion price and resulted in an embedded derivative and thus required bifurcation. The embedded conversion options in the remaining notes did not result in embedded derivatives that required bifurcation. Effective March 19, 2018, the note holder agreed to convert all outstanding principal and interest into 29,360 shares of Series A Preferred Stock upon the consummation of a merger. This settlement agreement eliminated the original derivative conversion terms. The note will now convert at a fixed rate plus any accrued interest.

There were no penalty or interest rate increase due to the default of the loans. The outstanding balance as of March 31, 2019 and June 30, 2018 was $84,125 and $84,884, respectively. The accrued interest was $9,640 and $5,892 as of March 31, 2019 and June 30, 2018, respectively. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $3,748 and $2,902, respectively. As of June 30, 2018 the principal and interest related to this loan was increased by $10,758 and $894, respectively, to accurately reflect the value of the conversion.

The Company had several outstanding convertible note agreements with a shareholder aggregating to AUD $370,000. The notes had interest rates varying from 6% to 15% per annum. In March 2015, the outstanding balance and accrued interest was refinanced by a $526,272 AUD convertible note. The Convertible Note bears interest at the rate of 18% per annum and is due on or before April 30, 2017. The interest portion of the note shall be paid weekly starting in April 2015. Principal payments of $9,929 AUD weekly were 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 five cents ($0.05) per share, subject to various standard provisions. The outstanding balance as of March 31, 2019 and June 30, 2018 was USD $320,730. The interest rate increased from 18% per annum to 22% per annum due to the loan default as of April 30, 2017. The Company determined the fair value of the convertible note of $80,909 using the intrinsic value method. The Company recorded an amortization of the debt discount of $0 and $15,432, during the fiscal years ended June 30, 2018 and 2017, respectively. The debt discount is fully amortized as of March 31, 2019 and June 30, 2018. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $52,389 and $63,967, respectively. Accrued interest as of March 31, 2019 and June 30, 2018 was $225,214 and $172,826, respectively. This note and any associated discount and accrued interest will be converted to preferred stock, see Note 10 for additional detail on the equity conversion. As of June 30, 2018 the principal and interest related to this loan was written down by $66,599 and $35,887, respectively, to accurately reflect the value of the conversion.

The Company has loans payable in the amount of $123,141 to shareholders and officers of the Company as of March 31, 2019 and June 30, 2018. The note bears interest at the rate of 15% per annum and was due on or before June 30, 2014. The outstanding balance, including accrued interest, may be converted into common shares of Banjo & Matilda, Inc. at a discount of 10% to last 30 days average share priced rate. The Company has granted the Lenders a security interest in the intellectual property of the Borrower. The remaining loan balance has been in default. There was no penalty or interest rates increase due to the default.

~~Accounting Considerations~~

~~The Company evaluated the agreements under ASC 815~~

~~Derivatives and Hedging~~

(“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The embedded conversion features contained in the August 9, 2014 and December 12, 2014 were a variable conversion price and resulted in an embedded derivative and thus requiring bifurcation. The embedded conversion options in the remaining notes did not result in embedded derivatives that required bifurcation Effective March 19, 2018, the note holder agreed to convert all outstanding principal and interest into 758,672 shares of common stock effected for the post-reverse split. This settlement agreement eliminated the original derivative conversion terms. The note will now convert at a fixed rate plus any accrued interest.

The accrued interest was $69,966 and $55,998 as of March 31, 2019 and June 30, 2018, respectively. During the nine months ended March 31, 2019 and 2018, the Company recorded interest expense in the amount of $13,968 and $20,332, respectively. As of June 30, 2018, the principal and interest related to this loan was written down by $47,485 and $21,594, respectively, to accurately reflect the value of the conversion.

On February 28, 2018, the company entered into 5 separate settlement agreements with current shareholders. These settlement agreements were made to exchange post reverse split shares of common stock to mitigate potential litigation. The settlement agreements require the company to issue common stock for $250,000.

The Company leased commercial space in Sydney, Australia that served as its flagship as well as a retail store. We leased approximately 2,500 square feet of space pursuant to a three-year lease agreement which expired in October 2014. After expiration, the lease converted to a month-to-month basis. The annual rent for the premises was AUD $52,000 and the total lease expense for nine months ended March 31, 2019 and 2018 was $0 and $6,348, respectively. This lease was terminated in September 2017.

Pursuant to an Employment Agreement (the “Agreement”) with the Chief Executive Officer on November 15, 2013, the Company issued 1,000,000 undesignated shares of Preferred Stock each having a par value of $0.00001. The preferred shares shall be entitled to 100 votes to every one share of common stock. The Preferred Shares shall only valid during the term of this Agreement. At the end of the Agreement, November 15, 2016, the shares shall be cancelled and returned to Treasury and the Executive shall have no preferential voting rights. If this Agreement is renewed, the preferred shares remain with the Executives. Effective with the Spin Out Agreement (See Note 13), the 1,000,000 shares of preferred stock were returned to the Company.

There have been no changes to the common stock for the nine months ended March 31, 2019. The number of shares outstanding at March 31, 2019 and June 30, 2018 was 68,584,149. The balance of Common Stock at March 31, 2019 and June 30, 2018 was $695.

~~Convertible Note Agreement~~

The company entered into a convertible note payable with a noteholder in the amount of $9,000 on May 1, 2019 and matures Nine Months from the inception date. Interest rate on this note is 6% and is payable upon maturity or conversion. The noteholder may convert the note to shares of the company’s common stock at a fixed price of $0.01 per share, unless the Note holder covered a portion of the Note at a lower price, in which case the fixed price is the lower price; or the lowest price of any original common stock issued by the Company or exercise price or conversion price of any derivative securities, but not less than $0.0033333 per share.

Effective June 28, 2019, the Company entered into a Spin Out Agreement with WNPAU Pty Ltd. (“WNPAU”) which is owned by the Company’s former CEO Brendan MacPherson. In connection with the agreement, WNPAU agreed to assume all the assets and liabilities of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD in exchange for the return of 1,000,000 shares of Preferred Stock held by Brendan MacPherson and $135,000 of accrued compensation owed to Brendan MacPherson.

~~Convertible Note Agreement~~

The company entered into a convertible note payable with a noteholder in the amount of $14,500 on July 16, 2019 and matures Nine Months from the inception date. Interest rate on this note is 6% and is payable upon maturity or conversion. The noteholder may convert the note to shares of the company’s common stock at a fixed price of $0.01 per share, unless the Note holder covered a portion of the Note at a lower price, in which case the fixed price is the lower price; or the lowest price of any original common stock issued by the Company or exercise price or conversion price of any derivative securities, but not less than $0.0033333 per share.

~~Convertible Note Agreement~~

The company entered into a convertible note payable with a noteholder in the amount of $10,000 on September 24, 2019 and matures Nine Months from the inception date. Interest rate on this note is 6% and is payable upon maturity or conversion. The noteholder may convert the note to shares of the company’s common stock at a fixed price of $0.01 per share, unless the Note holder covered a portion of the Note at a lower price, in which case the fixed price is the lower price; or the lowest price of any original common stock issued by the Company or exercise price or conversion price of any derivative securities, but not less than $0.0033333 per share.

~~Merger Agreement~~

On September 30, 2019 the Share Exchange Agreement between AAT and the Company, whereby the Company agreed to acquire all of the membership units of AAT with AAT becoming a wholly owned subsidiary of the Company was considered effective.

~~Note Conversions~~

~~On September 30, 2019 a noteholder converted $84,125 in principal and $13,740 into 29,360 Series A Preferred Stock in accordance with a settlement agreement reached on March 19, 2018.~~

~~On September 30, 2019 a noteholder converted $127,690 in principal and $12,734 into 42,128 Series A Preferred Stock in accordance with a settlement agreement reached on March 19, 2018.~~

The following discussion of our financial condition and results of operations should be read in conjunction with the audited and unaudited financial statements and the notes to those statements included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the various risk factors identified in this Report that could cause actual results to differ materially from those anticipated in these forward-looking statements.

~~Forward-Looking Statements~~

This Quarterly Report on Form 10-Q contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative of such terms or other comparable terminology. 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. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report.

This section of the report should be read together with Footnotes of the Company audited financials for the year ended June 30, 2018. The unaudited statements of operations for the three and Nine Months ended March 31, 2019 and 2018 are compared in the sections below.

~~General Overview~~

~~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 laws 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. (the “Parent”).

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 State of Delaware on October 14, 2013, as a subsidiary, 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 label 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 stock by Banjo & Matilda Pty Ltd. for the net monetary assets of the Banjo & Matilda, Inc. accompanied by a recapitalization, and 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:

~~In June of 2017, Banjo & Matilda, Inc. began to seek out companies to acquire as additional subsidiaries to expand its business lines, and generate more revenue and profit.~~

~~On September 20, 2017, Banjo & Matilda, Inc. entered into a Memorandum of Understanding with Spectrum King, LLC.~~

~~On March 19, 2018, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction did not close.~~

~~On April 16, 2019, Banjo & Matilda, Inc. entered into a Share Exchange Agreement with American Aviation Technologies, LLC~~

~~On June 28, 2019, Banjo & Matilda, Inc. spun out two wholly-owned subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD.~~

~~On September 30, 2019, the acquisition of American Aviation Technologies, LLC closed and it became a wholly-owned subsidiary of Banjo & Matilda, Inc.~~

~~Recent Developments~~

Effective June 28, 2019, the Company entered into a Spin Out Agreement with WNPAU Pty Ltd. (“WNPAU”) which is owned by the Company’s former CEO Brendan MacPherson. In connection with the agreement, WNPAU agreed to assume all the assets and liabilities of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD exchange for the return of 1,000,000 shares of Preferred Stock held by Brendan MacPherson and $135,000 of accrued compensation owed to Brendan MacPherson.

Effective April 16, 2019, Banjo & Matilda, Inc and American Aviation Technologies LLC (“AAT”) entered into an Exchange Agreement dated as of March 16, 2019 pursuant to which Banjo shall acquire 100% of the issued and outstanding membership units of AAT in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 84.4% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, AAT will become a wholly owned subsidiary of the Company.

The Exchange Agreement is subject to the satisfaction of certain conditions as set forth in the Exchange Agreement. At Closing, two additional directors will be added, resulting in a total of 4 directors serving post-closing.

~~AAT is a Florida limited liability company that is an aircraft design and development company dedicated to advancing aeronautical safety and performance through new and innovative concepts.~~

Upon the effective closing date, certain notes, loans, accrued interest, and related party loans will be converted to series A preferred shares. Additional preferred shares will also be exchanged for accrued expenses. Certain loans and accrued expenses were written up or down during the year ended June 30, 2018 to the value exchanged according to settlement agreements with certain investors and debtors of the Company. An additional $39,179 of trade payables was converted and accrued during the year ended June 30, 2018. $620,225 of trade payables will be converted to 25,095 series A preferred shares ($24.72 per share), $569,991 of accrued interest will be converted to 29,314 series A preferred shares ($19.44 per share), $691,828 of loans payable will be converted to 59,869 series A preferred shares ($11.75 per share), $123,141 of loans from related parties will be converted to 11,917 series A preferred shares ($10.33 per share), $320,730 of convertible loans from related parties will be converted to 18,682 series A preferred shares ($17.16 per share) and $70,883 of other convertible debt will be converted to 14,296 series A preferred shares ($4.95 per share).

~~Critical Accounting Policies~~

The condensed consolidated unaudited 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. These financial statements should be read in conjunction with the company’s latest annual financial statements.

~~During the nine month periods ended March 31, 2019 and 2018, the transactions of the Company were denominated in US Dollars.~~

During the nine month periods ended March 31, 2019 and 2018, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US dollars 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).

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.

Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.

~~Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), and importation duties and charges.~~

Selling expenses consist primarily of shipping and handling costs, relating to the delivery of products to customers, are classified as selling, general and administrative expenses. We had no selling expenses for the Nine Months ended March 31, 2019 and 2018, respectively.

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

The Company utilizes Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. 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 and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that 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 operations.

At June 30, 2018, the Company had not taken any significant uncertain tax positions on its tax returns for periods ended June 30, 2018 and prior years or in computing its tax provision for 2016. 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, 2014 to the present, generally for three years after they are filed.

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’s Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.

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’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’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’s consolidated 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 March 31, 2019 and June 30, 2018, the Company had $0 and $0 in cash in Australia and 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.

~~Property, 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 ten years; computer equipment, two to three years; buildings and improvements, five to fifteen years; leasehold improvements, two to ten years; and furniture and equipment, one to five years. Property and equipment is categorized under assets of discontinued operations in the balance sheet. Additionally, depreciation expense would be included under loss from operations of discontinued operations in the statement of operations.

For certain of the Company’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 Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “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 Liabilities from Equity,” and ASC 815.~~

~~Earnings Per Share (EPS)~~

The Company utilize FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive.

~~The following table sets for the computation of basic and diluted earnings per share for the nine months ended March 31, 2019 and 2018:~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606. The new revenue recognition standard supersedes all existing revenue recognition guidance. Under this ASU, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2015-14, issued in August 2015, deferred the effective date of ASU 2014-09 to the first quarter of 2018, with early adoption permitted in the first quarter of 2017.

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

~~On June 20, 2018, the FASB issued ASU 2018-07,~~

~~Compensation—Stock Compensation~~

(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on August 6, 2018. The adoption of this standard did not have a material impact on the financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

~~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.~~

Financial Results

The following discussion of the results of operations constitutes management’s review of the factors that affected the financial and operating performance for the ~~quarter ending March 31,~~three months ended September 30, 2019 and ~~2018. This~~for the period from August 6, 2018 (Inception) through September 30, 2018.This discussion should be read in conjunction with the financial statements and notes thereto contained elsewhere in this report. The Company has a June 30 fiscal year end.

During the quarters ended March 31, 2019 and 2018, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US Dollars 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). 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’ equity. There were no significant fluctuations in the exchange rate for the conversion of Australian Dollars to US Dollars after the balance sheet date.

Results of Operations

The following information represents our results of operations ~~for~~the three months ended ~~March 31,~~September 30, 2019 and for the period from August 6, 2018 (Inception) through September 30, 2018.

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Three months ended September 30, 2019 compared to the ~~three months ended March 31, 2018.~~

Total ~~operating~~research and development expenses ~~decreased 50%~~increased 100% from ~~$78,621~~$0 to ~~$38,933,~~$6,339 for the three months ended ~~March 31,~~September 30, 2019 compared ~~with~~for the ~~three months ended March 31,~~period from August 6, 2018 (Inception) through September 30, 2018. ~~The reduction in~~There was no operating ~~expense was driven by~~activity for the ~~wind down in operations.~~

August 6, 2018 (Inception) through September 30, 2018.

Professional Fees

Total ~~loss~~professional fees increased 100% from ~~operations of discontinued operations decreased 34% from $162,304~~$0 to ~~$107,656,~~$10,560 for the three months ended ~~March 31,~~September 30, 2019 compared ~~with the three months ended March 31, 2018. The reduction in operating expense was driven by the wind down in operations.~~

~~Net loss was $127,379~~ for the ~~three months ending March 31, 2019 compared~~period from August 6, 2018 (Inception) through September 30, 2018. There was no operating activity for the period from August 6, 2018 (Inception) through September 30, 2018.

Other general and administrative expenses

Total other general and administrative expenses increased 100% from $0 to ~~$207,723~~$834 for the three months ended ~~March 31,~~September 30, 2019 compared for the period from August 6, 2018 (Inception) through September 30, 2018. ~~The reduction in revenue and winding down~~There was no operating activity for the period from August 6, 2018 (Inception) through September 30, 2018.

Other Expenses

Total other expenses, which consisted of ~~operations was~~interest expense on debt, increased 100% from $0 to $1,432 for the ~~driver of the increasing loss.~~

~~Results of Operations~~

~~The following information represents our results of operations for nine~~three months ended ~~March 31,~~September 30, 2019 compared ~~to March 31, 2018.~~

~~Total operating expenses decreased 44% from $244,212 to $136,732,~~ for the ~~nine~~period from August 6, 2018 (Inception) through September 30, 2018. There was no operating activity for the period from August 6, 2018 (Inception) through September 30, 2018.

Net loss

Total net loss increased 100% from $0 to $19,165 for the three months ended ~~March 31,~~September 30, 2019 compared ~~with the nine months ended March 31, 2018. The reduction in operating expense was driven by the wind down in operations.~~

~~Loss from Operations of Discontinued Operations~~

~~Total loss from operations of discontinued operations decreased 86% from $187,635 to $39,621,~~ for the ~~nine months ended March 31, 2019 compared with the nine months ended March 31,~~period from August 6, 2018 (Inception) through September 30, 2018. ~~The reduction in~~There was no operating ~~expense was driven by the wind down in operations.~~

~~Net Loss~~

~~Net loss was $384,233~~activity for the ~~nine months ended March 31, 2019 compared to $667,184 for the nine months ended March 31,~~period from August 6, 2018 (Inception) through September 30, 2018. ~~The reduction in revenue and winding down of operations was the driver of the increasing loss.~~

Current Liquidity and Capital Resources for the ~~Nine Months~~three months ended ~~March 31,~~September 30, 2019 compared to the ~~Nine Months ended December 31, 2017~~

period from August 6, 2018 (Inception) through September 30, 2018

Operating Activities

Cash used in operations of ~~$14,849~~$19,233 during the ~~nine~~three months ended ~~March 31,~~September 30, 2019 was primarily a result of our ~~$256,854~~$19,165 net loss reconciled with our net non-cash expenses relating to ~~prepaid expenses, assets from discontinued operations,~~ accounts payable and accrued ~~liabilities and liabilities of discontinued operations. Cash used in operations of $907 during~~liabilities. There was no operating activity for the ~~nine months ended March 31,~~period from August 6, 2018 was primarily a result of our $459,461 net loss reconciled with our net non-cash expenses relating to prepaid expenses, assets from discontinued operations, accounts payable, accrued liabilities and liabilities of discontinued operations.

(Inception) through September 30, 2018.

Financing Activities

Net cash ~~used in~~provided by financing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2019 was ~~$19,360. Net cash used in financing activities~~$186,000, which consisted of proceeds from the issuance of convertible debt. There was no operating activity for the ~~nine months ended March 31,~~period from August 6, 2018 ~~of $19,360 resulted from net trade financing.~~

(Inception) through September 30, 2018.

Inflation

The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Going Concern

The ~~Company’s~~Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At ~~March 31,~~September 30, 2019 and June 30, ~~2018,~~2019, the Company had no$169,796 and $3,029 in cash and ~~$4,455,335~~$102,916 and ~~$4,071,102~~$33,849 in negative working capital, respectively. For the three months ended ~~March 31,~~September 30, 2019 and from inception (August 6, 2018) through September 30, 2018, the Company had a net loss of ~~$127,379~~$19,165 and ~~$207,723,~~$0, respectively. ~~For~~Continued losses may adversely affect the ~~nine months ended March 31, 2019 and 2018,~~liquidity of the Company ~~had a net loss of $384,233 and $667,184, respectively. To date, these losses and deficiencies have been financed principally through~~in the ~~loans from related parties and from third parties. In view of~~future. Therefore, the ~~matters described, there is~~factors noted above raise substantial doubt ~~as to the Company’s~~about our ability to continue as a going ~~concern without~~concern. The recoverability of a ~~significant infusion~~major portion of ~~capital. We anticipate that we will have~~the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability 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,~~obtain financing and to ~~cover costs of operations, we intend to~~succeed in its future operations. The financial statements do ~~so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that~~not include any ~~such financings would be forthcoming, or as~~adjustments relating to the ~~terms~~recoverability and classification of ~~any such financings. Any future financing will involve substantial dilution~~recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to ~~existing investors.~~

continue as a going concern. The Company’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.

Off-Balance Sheet Arrangements

As of ~~March 31,~~September 30, 2019, there were no off-balance sheet arrangements.

Critical Accounting Policies and Use of Estimates

Quantitative and Qualitative Disclosures about Market Risk

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our significant estimates and assumptions include the fair value of our common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to our deferred tax assets.

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. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with 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 therein. 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 our financial statements. If the assessment indicates a potentially 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 remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

Disclosure Controls and Procedures

T

he Company has established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “

Exchange Act

”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to the Company’s Chief Executive Officer, Keith Duffy, who serves as our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Mr. Duffy, evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of March 31, 2019. Based on his evaluation, Mr. Duffy concluded that the Company’s disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2019.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the Company’s most recent fiscal quarter ended ~~March 31,~~September 30, 2019, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Our business is subject to numerous risks and uncertainties including but not limited to those discussed in “Risk Factors” in our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed herewith:

In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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

Large accelerated filer	☐ o	Accelerated filer	☐ o
Non-accelerated filer	☐ o	Smaller reporting company	☒ x
(Do not check if a smaller reporting company)		Emerging growth company	☐ o

Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2019 (unaudited) and June 30, ~~2018~~2019 (audited)	~~F-2~~	F-1

Condensed Consolidated Statements of Operations for the ~~Three~~three months ended September 30, 2019 (Unaudited) and ~~Nine Months Ended March 31, 2019 and~~from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)	~~F-3~~	F-2

Condensed Consolidated Statements of Stockholder’s ~~Equity (Deficit)~~Deficit for the ~~Three~~three months ended September 30, 2019 (Unaudited) and ~~Nine Months Ended March 31, 2019 and~~from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)	~~F-4~~	F-3

Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended March 31,~~three months ended September 30, 2019 (Unaudited) and from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)	~~F-6~~	F-4

Notes to Condensed Consolidated Financial Statements (unaudited)	~~F-7~~	F-5

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			June 30,
	2019			2018
	(Unaudited)
ASSETS
CURRENT ASSETS
Prepaids	$	-		$	18,500
Assets of discontinued operations		4,499			5,385
TOTAL CURRENT ASSETS		4,499			23,885

TOTAL ASSETS	$	4,449		$	23,885

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Trade and other payables	$	656,885		$	559,759
Settlement Payable		250,000			250,000
Trade financing		56,194			56,194
Accrued interest		483,472			339,059
Accrued interest, related parties		295,181			228,823
Loans payable, net of discount and deferred interest		580,875			580,875
Convertible notes payable		162,814			143,454
Convertible loans from related parties		443,871			443,871
Liabilities of discontinued operations		1,530,542			1,492,952
TOTAL CURRENT LIABILITIES		4,459,834			4,094,987

TOTAL LIABILITIES		4,459,834			4,094,987

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.00001 par value, 100,000,000 shares authorized
and 1,000,000 shares issued and outstanding, respectively		10			10
Common stock, $0.00001 par value, 100,000,000 shares authorized and
69,584,149 shares issued and outstanding, respectively		695			695
Additional paid in capital		1,951,295			1,951,295
Other accumulated comprehensive income		100,007			100,007
Accumulated deficit		(6,507,342	)		(6,123,109	)
TOTAL STOCKHOLDERS’ DEFICIT		(4,455,335	)		(4,071,102	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,499		$	23,885

BANJO & MATILDA INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS

	As of September 30, 2019 (Unaudited)			As of June 30, 2019
Assets
Current assets
Cash	$	169,796		$	3,029
Total current assets		169,796			3,029

Total assets	$	169,796		$	3,029

Liabilities & member's capital
Current liabilities
Accounts payable and accrued liabilities	$	49,948		$	378
Accrued liability, related party		1,764			1,500
Convertible notes payable		153,000			-
Convertible notes payable, related party		68,000			35,000
Total current liabilities		272,712			36,878

Total liabilities		272,712			36,878

Commitments and contingencies (Note 5)

Stockholders' deficit
Series A Preferred stock, $0.00001 par value; 3,500,000 designated; 3,113,368 and 0 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively		31			-
Common stock, $0.00001 par value; 100,000,000 shares authorized; 69,584,149 and 0 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively		696			-
Additional paid in capital		278			50,907
Accumulated deficit		(103,921	)		(84,756	)
Total stockholders' deficit		(102,916	)		(33,849	)
Total liabilities and stockholders' deficit	$	169,796		$	3,029

		~~Page~~

~~Special Note regarding Forward-looking Statements~~			3 Page

Special Note regarding Forward-looking Statements				3

PART I – ~~Financial~~Financial Information

Item 1.	Condensed Consolidated Financial Statements (Unaudited)		~~F-1~~	4
	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2019 (unaudited) and June 30, ~~2018~~2019 (audited)		~~F-2~~	F-1
	Condensed Consolidated Statements of Operations for the ~~Three~~three months ended September 30, 2019 (Unaudited) and ~~Nine Months Ended March 31, 2019 and~~from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)		~~F-3~~	F-2
	Condensed Consolidated Statements of Stockholder’s ~~Equity (Deficit)~~Deficit for the ~~Three~~three months ended September 30, 2019 (Unaudited) and ~~Nine Months Ended March 31, 2019 and~~from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)		~~F-4~~	F-3
	Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended March 31,~~three months ended September 30, 2019 (Unaudited) and from inception (August 6, 2018) through September 30, 2018 ~~(unaudited)~~(Unaudited)		~~F-6~~	F-4
	Notes to Condensed Consolidated Financial Statements (unaudited)		~~F-7~~	F-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		4	5
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		15	14
Item 4.	Controls and Procedures		15

~~PART II – Other Information~~

~~Item 1.~~	~~Legal Proceedings~~		16
~~Item 1A.~~	~~Risk Factors~~		16
~~Item 2.~~	~~Unregistered Sales of Equity Securities~~		16
~~Item 3.~~	~~Defaults Upon Senior Securities~~		16
~~Item 4.~~	~~Mine Safety Disclosures~~		16
~~Item 5.~~	~~Other Information~~		16
~~Item 6.~~	~~Exhibits~~		16 14
			17
~~Signatures~~PART II – Other Information
		18
Item 1.	Legal Proceedings			15
Item 1A.	Risk Factors			15
Item 2.	Unregistered Sales of Equity Securities			15
Item 3.	Defaults Upon Senior Securities			15
Item 4.	Mine Safety Disclosures			15
Item 5.	Other Information			15
Item 6.	Exhibits			16

Signatures				17

BANJO & MATILDA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the Three Months							For the Nine Months
	Ended March 31,						Ended March 31,
	2019			2018				2019			2018

Operating expenses:
Payroll and employee relate d expenses	$	33,750		$	78,621			$	101,250		$	226,962
Operating expense		5,183			0				13,134			0
Corporate and public company expense		0			0				22,348			17,250
Total operating expenses		38,933			78,621				136,732			244,212

Loss from operations		(38,933	)		(78,621	)			(136,732	)		(244,212	)

Other income (expense):
Interest expense, related parties		0			0				(21,791	)		0
Interest expense		(68,723	)		(83,683	)			(186,089	)		(235,337	)
Total other income (expense)		(68,723	)		(83,683	)			(207,880	)		(235,337	)

Loss from continuing operations		(107,656	)		(162,304	)			(344,612	)		(479,549	)

Discontinued operations:
Loss from operations of discontinued operations		(19,723	)		(45,419	)			(39,621	)		(187,635	)
Gain on disposition of discontinued operations		0			0				0			0
		(19,723	)		(45,419	)			(39,621	)		(187,635	)

Net loss	$	(127,379	)	$	(207,723	)		$	(384,233	)	$	(667,184	)

Basic diluted earnings per share on net loss:
Continuing operations		(0.00	)		(0.00	)			(0.00	)		(0.01	)
Discontinued operations		(0.00	)		(0.00	)			(0.00	)		(0.00	)
		(0.00	)		(0.00	)			(0.01	)		(0.01	)

Weighted average shares outstanding		69,584,149			69,584,149				69,584,149			69,584,149

BANJO & MATILDA INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	For the three months ended 9/30/19			From Inception (August 6, 2018) through September 30, 2018

Operating expenses:
Research and development expense	$	6,339		$	-
Professional fees		10,560			-
Other general and administrative expenses		834			-
Total operating expenses		17,733			-

Operating loss		(17,733	)		-

Operating (expenses):
Interest expense		(1,202	)		-
Interest expense, related parties		(230	)		-
Total other (expense)		(1,432	)		-

Net loss	$	(19,165	)	$	-

Net loss per common share - basic and diluted	$	(0.00	)	$	-

Weighted average number of common shares outstanding - basic and diluted		69,584,149			-

BANJO & MATILDA INC., AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited)

	Preferred Stock				Common Stock				Additional Paid in		Comprehensive		Accumulated
	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Total

Balance June 30, 2018		1,000,000	$	10		69,584,149	$	695	$	1,951,295	$	100,007	$	(6,123,109	)	$	(4,071,102	)

Net Loss		0		0		0		0		0		0		(134,183	)		(134,183	)

Balance September 30, 2018		1,000,000		10		69,584,149		695		1,951,295		100,007		(6,257,292	)		(4,205,285	)

Net Loss		0		0		0		0		0		0		(122,671	)		(122,671	)

Balance December 31, 2018		1,000,000		10		69,584,149		695		1,951,295		100,007		(6,379,963	)		(4,327,956	)

Net Loss		0		0		0		0		0		0		(127,379	)		(127,379	)

Balance March 31, 2019		1,000,000	$	10		69,584,149	$	695	$	1,951,295	$	100,007	$	(6,507,342	)	$	(4,455,335	)

BANJO & MATILDA INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FROM THE THREE MONTHS ENDED SEPTEMBER 30, 2019 (Unaudited)

									Additional
	Preferred Stock				Common Stock				Paid in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance July 1, 2019		-	$	-		-	$	-	$	50,907		$	(84,756	)	$	(33,849	)

Effect of reverse merger		3,113,637		31		69,584,149	$	696		(50,629	)		-			(49,902	)

Net Loss		-		-		-		-		-			(19,165	)		(19,165	)

Balance September 30, 2019		3,113,637	$	31		69,584,149	$	696	$	278		$	(103,921	)	$	(102,916	)

BANJO & MATILDA INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	For the three months ended September 30, 2019			From Inception (August 6, 2018) through September 30, 2018

Cash Flows from Operating Activities
Net Loss	$	(19,165	)	$	-
Adjustments to reconcile net loss to net
cash used by operating activities:
Changes in operating assets & liabilities
Accounts payable and accrued expenses		(332	)		-
Accrued expenses, related parties		264			-
Net cash used by operating activities		(19,233	)		-

Cash Flows from Financing Activities
Proceeds from convertible notes payables		153,000			-
Proceeds from convertible notes payable, related party		33,000			-
Net cash provided by financing activities		186,000			-

Increase in Cash		166,767			-

Cash at beginning of period		3,029			-

Cash at end of period	$	169,796		$	-

Supplemental Cash Flow Information
Cash paid for interest	$	-		$	-

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Nine Months Ended
	March 31, 2019			March 31, 2018

Cash Flows from Operating Activities
Net Loss	$	(384,233	)	$	(667,184	)
Adjustments to reconcile net loss to net cash used in operating activities:
Debt discount amortization		-			37,601
Amortization of deferred finance fees		-			11,776
Changes in operating assets & liabilities
Prepaid expenses		18,500			-
Assets of discontinued operations		886			19,764
Trade payables and other liabilities		97,126			111,495
Accrued interest, related parties		144,413			153,658
Accrued interest		66,358			70,607
Liabilities of discontinued operations		37,590			261,376
Net cash used in operating activities		(19,360	)		(907	)

Cash Flows from Financing Activities
Net trade financing		19,360			(3,584	)
Net cash provided by (used in) financing activities		19,360			(3,584	)

Decrease in Cash		-			(4,491	)

Cash at beginning of period		-			4,491

Cash at end of period	$	-		$	-

Supplemental Cash Flow Information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

	(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.

	Nine Months Ended
	March 31,			March 31,
	2019			2018
Basic and diluted
Loss from continuing operations	$	(344,612	)	$	(479,549	)
Loss from operations of discontinued operations		(39,621	)		(187,635	)
Net loss	$	(384,233	)	$	(667,184	)

Net loss per share (basic and diluted)
Continuing operations	$	(0.00	)	$	(0.00	)
Discontinued operations		(0.00	)	$	(0.00	)
	$	(0.00	)	$	(0.00	)

Weighted average number of shares outstanding:
Basic and diluted		69,584,149			69,584,149

	Nine Months Ended March 31,
	2019			2018
Revenue	$	—		$	80,154
Cost of revenue		—			19,699
Gross Profit		—			60,455
Operating expenses		3,415			177,405
Loss from operations		(3,415	)		(116,950	)
Other income (expenses)		(36,206	)		(70,685	)
	$	(39,621	)	$	(187,635	)

Issuance Date	Face Value		Interest Rate			Term	Conversion Terms
August 9, 2014	$	19,000		6	%	Nine Months	20% Discount to Market
December 12, 2014		7,500		6	%	Nine Months	30% Discount to Market
June 22, 2018		31,700		6	%	Nine Months	Fixed Price of .01 Per Share
September 20, 2018		8,006		6	%	Nine Months	Fixed Price of .01 Per Share
October 23, 2018		7,972		6	%	Nine Months	Fixed Price of .01 Per Share
October 23, 2018		4,511		6	%	Nine Months	Fixed Price of .01 Per Share
	$	78,689

	~~(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.~~

	For the Three Months Ended
	March 31, 2019			March 31, 2018			$			%

Operating expenses:
Payroll and employee related expenses		33,750			78,621			(44,871	)		-57	%
Operating expense		5,183			-			5,183			100	%
Corporate and public company expense		-			-			-			100	%
Total operating expenses		38,933			78,621			(39,688	)		-50	%

Loss from operations		(38,933	)		(78,621	)		39,688			-50	%

Other income (expense):
Interest expense, related parties		-			-			-			100	%
Interest expense		(68,723	)		(83,683	)		14,960			-18	%
Total other income (expense)		(68,723	)		(83,683	)		26,232			-31	%

Loss from continuing operations		(107,656	)		(162,304	)		54,648			-34	%

Discontinued operations:
Loss from operations of discontinued operations		(19,723	)		(45,419	)		25,696			-57	%

Net loss	$	(127,379	)	$	(207,723	)	$	80,344			-39	%

	For the three months ended 9/30/19 (Unaudited)			From Inception (August 6, 2018) through September 30, 2018(Unaudited)		$			%

Operating expenses:
Research and development expense	$	6,339		$	-	$	6,339			100	%
Professional fees		10,560			-		10,560			100	%
Other general and administrative expenses		834			-		834			100	%
Total operating expenses		17,733			-		(131,358	)		100	%

Loss from operations		(17,733	)		-		(17,733	)		100	%

Other income (expense):
Interest expense		(1,202	)		-		(1,202	)		100	%
Interest expense, related parties		(230	)		-		(230	)		100	%
Total other income (expense)		(1,432	)		-		26,232			100	%

Net loss	$	(19,165	)	$	-	$	(19,165	)		100	%

Exhibit Number		Document

31.1		Certifications of the principal executive officer and principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications of the principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation

101.DEF		XBRL Taxonomy Extension Definition

101.LAB		XBRL Taxonomy Extension Label

101.PRE		XBRL Taxonomy Extension Presentation

	BANJO & MATILDA, INC.

Date: ~~March 9,~~April 23, 2020	By:	/s/ Keith Duffy
		Keith Duffy Chief Executive Officer and Chief Financial Officer (Principal Executive and Financial Officer)