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LOANS

6 Months Ended

Dec. 31, 2017

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 balance as of December 31, 2017 and June 30, 2017 was $100,000. During the six month period ended December 31, 2017 and 2016, the Company recorded interest expense of $30,544 and $30,212, respectively, on the note. As of December 31, 2017 and June 30, 2017, the accrued interest recorded is $201,748 and $171,204, respectively, on the note.

From May 2014 to June 2017, the Company entered into several convertible loan agreements with a lender aggregating in the amount of $162,500. The notes bear interest at 6% per year 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, 2017 and June 30, 2017 was $36,500. On April 15, 2017, the Company issued 2,227,700 at $0.05 per share in exchange for $95,000 in principle and $16,385 in accrued interest. The remaining loan balance has been in default. There was no penalty or interest rates increase due to the default. The accrued interest is $3,313 and $2,209 as of December 31, 2017 and June 30, 2017, respectively.

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 December 31, 2017 and June 30, 2017 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

In connection with the issuance of the above notes, the Company recorded a note discount of $115,274. The Company amortized $25,068 and $25,068 of the note discount during the six month periods ended December 31, 2017 and 2016, respectively. The Company recorded interest of $55,452 and $45,000 on the note during the six month periods ended December 31, 2017 and 2016, respectively. As of December 31, 2017 and June 30, 2017, accrued interest balance is $114,548 and $59,096, respectively. The loan is in default and bears interest at the rate of 22% per year.

From August 2016 to February 2017, the Company entered into several convertible loan agreements with a lender aggregating in the amount of $60,125. The notes bear interest at 6% per year and are due and payable six months from the date of each note. The convertible loan agreements are in default as of February 2017. There was no penalty or interest rates increase due to the default. 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, 2017 and June 30, 2017 was $60,125. The accrued interest is $4,048 and $2,096 as of December 31, 2017 and June 30, 2017, respectively.

Related Party Payable

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 convertible note. The Convertible Note bears interest at the rate of 18% per annum and was 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 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 December 31, 2017 and June 30, 2017, net of related discount, was USD $387,328. The interest rate increased from 18% per annum to 22% per annum due to the loan default as of September 30, 2015. 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 $7,717, during the six month periods ended December 31, 2017 and 2016, respectively. The debt discount is fully amortized as of June 30, 2017. During the six month periods ended December 31, 2017 and 2016, the Company recorded interest of $42,956 and $42,606, respectively, on the note. Accrued interest as of December 31, 2017 and June 30, 2017 is $187,701 and $144,745 respectively.

The Company has liabilities payable in the amount of $170,626 to shareholders and officers of the Company as of December 31, 2017 and June 30, 2017. 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 pre-determined 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. The accrued interest is $70,660 and $57,260 as of December 31, 2017 and June 30, 2017, respectively.

Scheduled principal payments on loans are as follows;

Year ending June 30,	Loan 1		Loan 2		Loan 3		Loan 4		Loan 5		Loan 6		Total
2018	$	100,000	$	36,500	$	500,000	$	60,125	$	387,328	$	170,626	$	1,254,579
	$	100,000	$	36,500	$	500,000	$	60,125	$	387,328	$	170,626	$	1,254,579