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LOANS

6 Months Ended

Dec. 31, 2015

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 outstanding balance as of December 31, 2015 and as of June 30, 2015 was $100,000 and $100,000 respectively. During the six-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $30,046 and $7,386, respectively, on the note. During the three-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $14,940 and $14,772, respectively, on the note.

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

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

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

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

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

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

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

Related Party Payable

The Company had several note agreements with a shareholder aggregating to AUD $370,000 plus interest. 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 AUD526,272 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. Principle payments of $9,929 AUD weekly are to commence in April 2016. All or any portion of the principal amount of the Convertible Note and all accrued interest is convertible at the option of the holder into common stock of the Company at a conversion price of five cents ($0.05) per share, subject to various standard provisions. The outstanding balance as of December 31, 2015 and June 30, 2015, net of related discount, was USD $379,591 and $217,855, respectively. 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 $7,717 and $0, during the six-month period ended December 31, 2015 and 2014, respectively. The Company recorded an amortization of the debt discount of $3,858 and $0, during the three-month period ended December 31, 2015 and 2014, respectively. During the six-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $34,227 and $0, respectively, on the note. During the three-month periods ended December 31, 2015 and 2014, the Company recorded an interest of $17,049 and $0, respectively, on the note.

The Company has liabilities payable in the amount of $143,422 and $217,855 to shareholders and officers of the Company as of December 31, 2015 and June 30, 2015, respectively. The note bears interest at the rate of 3% 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 pre-determined rate. The Company has granted the Lenders a security interest in the intellectual property of the Borrower.

Scheduled principal payments on loans are as follow;

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