| NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying financial statements were
prepared in conformity with generally accepted accounting principles in the United States of America ("US GAAP"). Principles of Consolidation The consolidated financial statements include
the accounts of Banjo & Matilda, Inc. ("Banjo" or "the Company") and its wholly owned subsidiaries Banjo
& Matilda Pty Ltd. and Banjo & Matilda USA, Inc., collectively referred to as the Company. All material intercompany accounts,
transactions and profits were eliminated in consolidation. Exchange Gain (Loss) During the years ended June 30, 2015 and 2014,
the transactions of the Company were denominated in foreign currency and were recorded in Australian dollar (AUD) at the rates
of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange
rates applied when the foreign currency assets and liabilities are settled. Foreign Currency Translation and Comprehensive
Income (Loss) The accounts of the Company were maintained,
and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional
currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder's equity is translated
at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in
foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between
the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements
of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders'
equity. There were no significant fluctuations in the exchange rate for the conversion of AUD to USD after the balance sheet date. Use of Estimates The preparation of financial statements in
conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include
collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets. Reportable Segment The Company has one reportable segment. The
Company's activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant
operating decisions are based on analysis of financial products provided as a single global business. Liquidity Matters Based upon its current projection of revenue,
management believes that its current cash position and available financing provide sufficient resources and operating flexibility
through at least the next twelve months. However, there can be no assurance that projected revenue growth and improvement in operating
results will occur or that the Company will successfully implement its plans. In the event cash flow from operations is not sufficient,
additional sources of financing witl be required in order to maintain the Company's current operations. Whereas management believes
it will have access to other financing sources, no assurance can be given that such additional sources of financing will be available
on acceptable terms, on a timely basis or at all. Revenue Recognition Revenue is recognized when persuasive evidence
of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally
is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. Cost of Sales Cost of sales consists primarily of inventory
costs, as well as warehousing costs (including the cost of warehouse labor), shipping, importation duties and charges, third party
royalties, and product sampling. Operating Overhead Expense Operating overhead expense consists primarily
of payroll and benefit related costs, rent, depreciation and amortization, professional services, and meetings and travel. Income Taxes The Company utilizes 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 follows FASB Interpretation No.
48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that
some positions taken would be sustained upon examination by the 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 income. At June 30, 2015 and 2014, the Company had
not taken any significant uncertain tax positions on its tax returns for period ended June 30, 2014 and prior years or in computing
its tax provision for 2015. Management has considered its tax positions and believes that all of the positions taken by the Company
in its Federal and State tax returns are more likely than not to be sustained upon examination. The Company is subject to examination
by U.S. Federal and State tax authorities from the period ended June 30, 2011 to the present, generally for three years after they
are filed. Concentration of Credit Risk Financial instruments that potentially subject
the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business
activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified
customer base across many markets, predominantly Australia, United States of America, United Kingdom, Europe and the Middle East.
The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures.
The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes
an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk
exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance
facility are guaranteed by the finance company that further mitigates Credit Risk. Risks and Uncertainties The Company is subject to risks from, among
other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements,
rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public
markets. Contingencies Certain conditions may exist as of the date
the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more
future events occur or fail to occur. The Company'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 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 June 30, 2015 and 2014, the Company had $362,668 and $33,367 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. Allowance for Doubtful Accounts The Company maintains reserves for potential
credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts,
customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate
the adequacy of these reserves. The allowances for doubtful accounts as of June 30, 2015 and June 30, 2014 are $140,870 and $0
respectively. Inventory Inventories are valued at the lower of cost
(determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance
is made to write down inventories to market value, if lower. As of June 30, 2015 and June 30, 2014, the Company had outstanding
balances of Finished Goods Inventory of $174,792 and $630,235 respectively. For the period ended June 30, 2015 a reserve
for Estimated Inventory Charges in the amount of $17,258 was established. 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 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements,
two to 10 years; and furniture and equipment, one to five years. As of June 30, 2015 and June 30, 2014, Plant
and Equipment consisted of the following:
June 30, 2015 June 30, 2014
Plant and Equipment $ 29,044 $ 30,352
Accumulated Depreciation (16,905 ) (20,127 )
$ 12,139 $ 10,225 Depreciation was $522 and $5,875 for the years
ended June 30, 2015 and 2014, respectively. Fair Value of Financial Instruments 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. As of June 30, 2015 and 2014, the Company
did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value. Earnings Per Share (EPS) Basic EPS is computed by dividing income available
to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar
to basic net income per share except that the denominator is increased to include the number of additional common shares that would
have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common
shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method
for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed
to be converted into common stock at the beginning of the period (or at the time of issuance, if later). The following table sets for the computation
of basic and diluted earnings per share for years ended June 30, 2015 and 2014:
June 30, 2015 June 30, 2014
Basic and Diluted:
Net (loss) income $ (2,004,722 ) $ (626,742 )
Weighted average number of shares in computing basic and diluted net (loss) income
Basic 40,510,007 24,347,002
Diluted: 40,510,007 24,347,002
Net(loss)income per share Basic and diluted: $ (0.05 ) $ (0.03 ) Intangible Assets The Company records identifiable intangible
assets at fair value on the date of acquisition and evaluates the useful life of each asset. Finite-lived intangible assets primarily consist
of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability
if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful
lives ranging from 1 to 10 years. No events or changes in circumstances indicate that impairment existed as of June 30, 2015. Recently Issued Accounting Pronouncements
There have been no new accounting pronouncements
during the year ended June 30, 2015 that we believe would have a material impact on our financial position or results of operations. Reclassification Certain prior year amounts have been reclassified
for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations
or cash flow. |
