LOANS

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

NOTE 7 - LOANS

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 June 30, 2016 and as of June 30, 2015 was $100,000 and $100,000 respectively. During the years ended June 30, 2016 and 2015, the Company recorded an interest of $60,590 and $57,000, respectively, on the note.

In May 2014, the Company entered into a convertible loan agreement in the amount of $72,800 with an investor. Interest is to accrue at the rate of 8% per annum. Loan and accrued interest is due in February 2015. The loan may be converted into common stock of the Company at any time by the election of the lender at a predetermined conversion price. During the quarter ended March 31, 2015, $72,800 was converted into 2,402,141 shares. The outstanding balance as of June 30, 2016 and as of June 30, 2015 was $0.

In July 2014, the Company entered into a second convertible loan agreement in the amount of $72,800 with an investor. Interest is to accrue at the rate of 8% per annum. Loan and accrued interest is due in April 2015. The loan may be converted into common stock of the Company at any time by the election of the lender at a predetermined conversion price. During the quarter ended March 31, 2015, $20,000 was converted into 943,396 shares. The remaining loan balance plus accrued interest was repaid during the quarter ended March 31, 2015.

In May 2014, the Company entered into a convertible loan agreement in the amount of $50,000 with an investor. The note bears interest at 6% per annum and is due and payable in November 2014. The loan 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 June 30, 2016 and as of June 30, 2015 was $50,000 and $50,000 respectively.

In June 2014, the Company entered into a convertible loan agreement in the amount of $45,000 with an investor. The note bears interest at 6% per annum and is due and payable in December 2014. The loan 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 June 30, 2016 and as of June 30, 2015 was $45,000 and $45,000 respectively.

In August 2014, the Company entered into a convertible loan agreement in the amount of $19,000 with an investor. The note bears interest at 6% per annum and is due and payable in February 2015. The loan 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 June 30, 2016 and as of June 30, 2015 was $19,000 and $19,000 respectively.

In December 2014, the Company entered into a convertible loan agreement in the amount of $7,500 with an investor. The note bears interest at 6% per annum and is due and payable in May 2015. The loan 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 June 30, 2016 and as of June 30, 2015 was $7,500 and $7,500 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.

On October 27, 2015, the Company entered into a convertible loan agreement in the amount of $10,000 with a business firm in Texas. The note bears interest at 6% per annum and is due and payable in six months. The loan 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.

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 June 30, 2015 was $500,000.

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. The amendment changed the terms of the credit card receipts used to fund payments required by the note. The amendment also cancelled the warrants to purchase 6,000,000 shares at a price of $0.08. New warrants were granted to purchase 6,000,000 shares at $0.05 per share and to purchase 2,000,000 shares at $0.02 per share. The Company determined the fair value of the warrants using the Black – Scholes model and recorded the additional value of $41,467 for the modified warrants. The variables used for the Black –Scholes model are as listed below:

· Volatility: 123%

· Risk free rate of return: 1.26%

· Expected term: 5 years

During the year ended June 30, 2016 and 2015, the Company recorded an amortization of the debt discount of $54,459 and $2,012, respectively.

Related Party Payable

The Company has liabilities payable in the amount of $183,269 and $217,855 to shareholders and officers of the Company as of June 30, 2016 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 its intellectual property.

Convertible loan from a related party

In November 2013, the company entered into a short-term loan arrangement totaling AUD $100,000 with a shareholder of the Company. Terms of the note were interest rate at 15% per annum or .0329% per day due 30 days from the loan date. The short-term note was converted into a 30-day callable convertible note in January 2014. The outstanding balance as of June 30, 2014 was $100,000 AUD. In March 2015, the outstanding balance and accrued interest was refinanced by an AUD 526,272 convertible note.

In January 2014, the Company entered into a convertible loan agreement totaling AUD $250,000 with a shareholder of the Company. The Convertible Note bears interest at the rate of 9% per annum and is due on the first anniversary of the date of issuance, January 12, 2015. 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 thirty cents ($0.30) per share, provided that if the Volume Weighted Average Price (VWAP) for the 30 days immediately preceding the receipt of a conversion notice is less than Ninety cents ($.60) per share, the conversion price shall be reduced to twenty cents ($.20) per share. The outstanding balance as of June 30, 2014 was $250,000 AUD. In March 2015, the outstanding balance and accrued interest was refinanced by a $526,272 convertible note.

In June 2014, the Company entered into a loan agreement in the amount of AUD $100,000 with a shareholder of the Company. The note bears interest at 6% per annum and is due and payable in July 2014. The loan was repaid in the amount of AUD $80,000 in July 2014 and the balance of AUD $20,000 was extended to March 31, 2015. The outstanding balance as of June 30, 2014 was $100,000 AUD. In March 2015, the outstanding balance and accrued interest was refinanced by a $526,272 convertible note.

In March 2015, the Company entered into a convertible loan agreement totaling AUD 526,272 with the shareholder consolidating all previous amounts owed by the Company. 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 June 30, 2016 and 2015 was USD $387,329 and $404,545, 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 $15,350 during the year ended June 30, 2016. During the year ended June 30, 2016, the Company recorded an interest of $71,565 on the note.

Scheduled principal payments on loans are as follow;

Year ending June 30,	Loan 1		Loan 2		Loan 3		Loan 4		Misc		Total
2017	$	100,000	$	387,329	$	174,863	$	183,269	$	131,500	$	976,961
2018	$	-	$	-	$	325,137	$	-	$	-	$	325,137
	$	100,000	$	387,329	$	500,000	$	183,269	$	131,500	$	1,302,098