BANJO & MATILDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2017 AND 2016

Three month periods ended

Six month periods ended

December 31,
2017
(Unaudited)

December 31,
2016
(Unaudited)

December 31,
2017
(Unaudited)

December 31,
2016
(Unaudited)

Revenue

$ -

$ 159,115

$ 79,779

$ 360,042

Cost of sales

-

24,838

19,699

90,690

Gross profit

-

134,277

60,080

269,352

Payroll and employee related expenses

113,937

123,880

246,966

246,363

Operating expense

142

20,818

8,971

40,922

Marketing expense

-

17,136

5,143

34,917

Selling expense

-

21,579

7,047

53,057

Samples and design expense

-

6,055

-

7,761

Occupancy expenses

-

11,461

6,348

26,058

Depreciation and amortization expense

541

2,662

1,095

5,324

Finance Charges

9,814

18,450

21,165

27,258

Corporate and public company expense

1,092

7,125

20,451

14,547

Realized currency loss (gain)

1,357

-

1,357

-

126,883

229,166

318,543

456,207

Loss from operations

(126,883 )

(94,889 )

(258,463 )

(186,855 )

Other Income (Expense)

Other Income (Expense)

(879 )

3,390

(1,761 )

4,077

Amortization of debt discount

(12,534 )

(16,393 )

(25,068 )

(32,785 )
Interest expense

(87,472 )

(68,966 )

(174,169 )

(136,804 )
Total Other Expense

(100,885 )

(81,969 )

(200,998 )

(165,512 )

Loss before income tax

(227,768 )

(176,858 )

(459,461 )

(352,367 )

Provision for income taxes

-

-

-

-

Net loss

$ (227,768 )

$ (176,858 )

$ (459,461 )

$ (352,367 )

Net loss per share

Basic

$ (0.00 )

$ (0.00 )

$ (0.01 )

$ (0.01 )
Diluted

$ (0.00 )

$ (0.00 )

$ (0.01 )

$ (0.01 )

Weighted average number of shares outstanding:

Basic

69,584,149

58,823,116

69,584,149

58,823,116

Diluted

69,584,149

58,823,116

69,584,149

58,823,116

NOTE 1 ~~– BASIS~~- ORGANIZATION AND NATURE OF ~~PRESENTATION AND ORGANIZATION~~

BUSINESS

All currencies represented in the notes to the condensed consolidated financial statements are in United States Dollars (USD) unless specified as AUD (Australian Dollars).

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"~~“Exchange Agreement”) with Banjo & Matilda, Pty Ltd., a corporation formed under the laws of Australia (the ~~"Company"~~“Company”) and the shareholders of the Company. Pursuant to the Exchange Agreement, at the closing of the transaction contemplated thereunder (the ~~"Transaction"~~“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'~~‘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.

The ~~accompanying consolidated~~Company’s financial statements ~~have been~~are prepared ~~in conformity with~~using the generally accepted accounting principles applicable to a going concern, which ~~contemplate~~contemplates the ~~continuation~~realization of assets and liquidation of liabilities in the normal course of business. At September 30, 2018 and June 30, 2018, the Company ~~as a going concern. The Company reported accumulated deficit of $5,744,189 as of December 31, 2017. The Company also incurred net losses of $227,768~~had no cash and ~~$459,461 for the for~~$4,210,348 and $4,076,487 in negative working capital, respectively. For the three ~~and six~~ months ended ~~December 31,~~September 30, 2018 and 2017, ~~respectively,~~the Company had a net loss of $134,183 and ~~had negative working capital.~~$231,693, 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~~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.

~~F-5~~
~~Table of Contents~~

The accompanying ~~consolidated~~ financial statements were prepared in conformity with generally accepted accounting principles in the United States of America ("(“US ~~GAAP"~~GAAP”).

The condensed consolidated unaudited financial statements include the accounts of Banjo & Matilda, Inc. ~~("Banjo"~~(“Banjo” or ~~"the Company"~~“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 ~~three~~three-month periods ended September 30, 2018 and ~~six months ended December 31,~~ 2017, ~~and 2016,~~ the transactions of the Company were denominated in US Dollars. Some transactions were denominated in AUD and British pounds for the sales made outside US and for rent paid for the Australian store. Such transactions were converted to US dollars on the date of transaction and the exchange gains or losses were recorded in the consolidated statement of operations. The exchange gains or losses were immaterial for the six months ended December 31, 2017 and 2016.

During the ~~three~~three-month periods ended September 30, 2018 and ~~six months ended December 31,~~ 2017, ~~and 2016,~~ 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 ~~consolidated~~ 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 ~~consolidated~~ 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 ~~persuasive evidence~~a customer obtains control of ~~an arrangement exists, delivery has occurred,~~promised goods or services. In addition, the ~~fee~~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 ~~fixed~~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 ~~determinable,~~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 ~~collectability~~which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is ~~probable. Revenue generally~~allocated to the respective performance obligation when the performance obligation is ~~recognized net of allowances for returns and any taxes collected from~~satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers ~~and subsequently remitted to governmental authorities.~~

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. Selling expenses amounted to $0 and $7,047 for ~~the six month period~~three months ended September 30, 2018 and ~~$0 for the three month period ended December 31,~~ 2017, ~~and $53,057 for the six and $21,579 for the three month periods ended December 31, 2016.~~

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 ~~income.~~

operations.

At June 30, ~~2017 and 2016,~~2018, the Company had not taken any significant uncertain tax positions on its tax returns for periods ended June 30, ~~2017~~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.

The Company has been behind in filing its payroll tax returns and sales tax returns. The Company has recorded $1,761 as penalties and $13,716 as interest for the late payment of taxes in the accompanying financials.

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~~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.

Certain conditions may exist as of the date the ~~consolidated~~ 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~~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~~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.

~~F-7~~
~~Table of Contents~~

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~~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 ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017,~~2018, the Company had $0 and ~~$4,491~~$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.

~~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 December 31, 2017 and June 30, 2017 are $135,956 and $135,956 respectively.

~~Inventory~~

Inventories are valued at the lower of cost (determined on a weighted average basis) or net realizable value. 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 December 31, 2017 and June 30, 2017, the Company had outstanding balances of Finished Goods Inventory of $0 and $18,443 respectively.

~~As of December 31, 2017 and June 30, 2017, a reserve for Estimated Inventory Charges in the amount of $0 and $230 was established.~~

Property, Plant & Equipment

As Property and equipment is categorized under assets of ~~December 31, 2017, and June 30, 2017, Plant and Equipment consisted~~discontinued operations in the balance sheet. Additionally, depreciation expense would be included under loss from operations of discontinued operations in the ~~following:~~

December 31

June 30

2017

2017

Property, plant & equipment

$ 29,456

$ 29,456

Accumulated depreciation

(23,022 )

(21,927 )

$ 6,434

$ 7,529

~~Depreciation was $1,095 and $5,324 for the six months ended December 31, 2017 and 2016, respectively and $541 and $2,662 for the three months ended December 31, 2017 and 2016 respectively.~~

~~F-8~~
~~Table of Contents~~

statement of operations.

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

~~As of December 31, 2017 and June 30, 2017, 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)

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 ~~three months~~three-month periods ended September 30, 2018 and ~~six months ended December 31, 2017 and 2016:~~

Three month periods ended

December 31, 2017

December 31, 2016

Basic and diluted

Net loss

$ (227,768 )

$ (176,858 )

Net loss per share

Basic

$ (0.00 )

$ (0.00 )
Diluted

$ (0.00 )

$ (0.00 )

Weighted average number of shares outstanding:

Basic and diluted

69,584,149

58,823,116

Six month periods ended

December 31, 2017

December 31, 2016

Basic and diluted

Net loss

$ (459,461 )

$ (352,367 )

Net loss per share

Basic

$ (0.01 )

$ (0.01 )
Diluted

$ (0.01 )

$ (0.01 )

Weighted average number of shares outstanding:

Basic and diluted

69,584,149

58,823,116

~~F-9~~
~~Table of Contents~~

2017:

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. ~~The Company is currently evaluating the effect that adopting this new accounting guidance will have on its results of operations, cash flows and financial position.~~

~~In January 2016, The FASB issued ASU No. 2016-01,~~ ~~Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities~~~~(Topic 825)~~. ASU No. 2016-01 revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 requires the change in fair value of many equity investments to be recognized in net income. For non-public companies, ASU 2016-01 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. We are currently evaluating the impact of the adoption of ASU 2016-01 on our consolidated financial statements.

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. We

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 ~~ASU in 2016 and the implementation~~standard did not have a material impact on ~~our~~the financial ~~position or consolidated statement of operations.~~

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815),” which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted. statements.

The Company has ~~elected for early adoption of this guidance during~~implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the ~~fiscal year ended June 30, 2017 on our~~ consolidated financial ~~statements.~~

In August 2017, the FASB issued guidance that eases certain documentation and assessment requirements of hedge effectiveness and modifies the accounting for components excluded from the assessment. Some of the modifications include the ineffectiveness of derivative gain/loss in highly effective cash flow hedge to be recorded in OCI, the change in fair value of derivative to be recorded in the same income statement line as hedged item, and additional disclosures required on the cumulative basis adjustment in fair value hedgesstatements unless otherwise disclosed, and the ~~effect of hedging on financial statement lines for components excluded from the assessment. The amendment also simplifies the application of hedge~~Company does not believe that there are any other new accounting in certain situations to permit new hedging strategies to be eligible for hedge accounting. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020. Early adoption is permitted and the modified retrospective transition method should be applied. We do not expect the adoption of this guidance topronouncements that have been issued that might have a material impact on ~~our consolidated~~its financial ~~statements.~~

~~Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute~~position or results of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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.

~~Note~~

On April 16, 2019, Banjo & Matilda, Inc and American Aviation Technologies LLC (“AAT”) entered into an Exchange Agreement dated as of ~~accounts receivable from sales~~March 16, 2019 pursuant to small to medium sized businesses, principally in Australia, Europe and the United States. Trade receivables are recorded at the invoiced amount and net of allowances for doubtful accounts. The allowance for doubtful accounts represents management's estimatewhich Banjo shall acquire 100% of the ~~amount~~issued and outstanding membership units of ~~probable credit losses~~AAT in ~~existing accounts receivable, as determined from a review~~exchange for the issuance of ~~past due balances~~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 ~~specific account data.~~ 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 ~~assessment includes actually incurred historical data~~Exchange Agreement is subject to the satisfaction of certain conditions as ~~well as current economic conditions. Account balances are~~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.

~~Collectability~~value exchanged according to settlement agreements with certain investors and debtors of the Company. An additional $39,179 of trade ~~receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing~~payables was converted and accrued during the ~~carrying amount directly. A provision for impairment~~year ended June 30, 2018. $620,225 of trade ~~receivables is raised when there is objective evidence that the consolidated entity or parent entity~~payables will ~~not~~ be ~~able~~converted to ~~collect all amounts due according~~25,095 series A preferred shares, $569,991 of accrued interest will be converted to ~~the original terms~~29,314 series A preferred shares, $691,828 of ~~the receivables. Significant financial difficulties~~loans payable will be converted to 59,869 series A preferred shares, $123,141 of ~~the debtor, probability that the debtor~~loans from related parties will ~~enter bankruptcy or financial reorganization~~be converted to 11,917 series A preferred shares, $320,730 of convertible loans from related parties will be converted to 18,682 series A preferred shares and ~~default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may~~$70,883 of other convertible debt will be ~~impaired.~~converted to 14,296 series A preferred shares. The ~~amount of the impairment allowance is the difference between the asset's carrying amount and the present~~shares will be converted at a par value of ~~estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.~~

$0.00001.

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 three months ended September 30, 2018 and 2017 as discontinued operations and are ~~past their normal payment terms are overdue~~summarized below:

The assets and once 60 days past due are considered delinquent. Minimum payment terms vary by product. The maximum payment term for all products is 90 days. All trade receivables that are overdue are individually assessed for impairment.

~~The allowances for doubtful accounts as~~liabilities of ~~December 31, 2017~~the discontinued operations at September 30, 2018 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 September 30, 2018, 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 September 30, 2018, 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 September 30, 2018, and June 30, 2018, the Company had an accrued interest balance of $63,476 and $58,493, respectively.

For the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $4,883 and $4,883, 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 September 30, 2018, and June 30, 2018, the balance owed to the lender amounted to $17,981 and accrued interest of $13,416 and $11,667, respectively. The term has been extended indefinitely until full settlement occurs without penalty. For the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $1,749 and $1,749, 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 six months. The Company was required to make daily payments of $575.40 to the lender. As of September 30, 2018, 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 three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $104 and $312, respectively. As of September 30, 2018 and June 30, 2018, the balance of accrued interest was $5,714 and $5,610, respectively.

~~Note 4~~

NOTE 5 – TRADE AND OTHER PAYABLES

As of ~~December 31, 2017,~~September 30, 2018 and June 30, ~~2017,~~2018, trade and other payable are comprised of the following:

December 31

June 30

2017

2017

Trade payable

$ 607,081

$ 580,322

Cash Overdraft

6,988

0

Officer compensation

203,699

122,225

Payroll payable

230,917

151,824

Payroll taxes

214,627

195,551

Employee benefits

98,826

95,314

Other liabilities

37,054

33,742

$ 1,392,204

$ 1,178,978

~~Note 5~~

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 ~~December 31, 2017,~~September 30, 2018, and June 30, ~~2017,~~2018, the outstanding loan balance was ~~$56,320 and $57,958~~$56,194 and accrued interest was ~~$11,547~~$17,335 and ~~$5,301~~$14,253, respectively. ~~The~~As of July 18, 2018, the loan maturity date has been extended until full settlement occurs without penalty.

~~The Company~~ Effective with the AAT merger closing described in Note 3, the note holder has ~~a trade financing agreement with a financial institution in Australia with a maximum limit~~agreed to convert all outstanding principal and interest into 3,418,889 shares of ~~AUD $150,000 at an~~common stock effected for the post-reverse split. As of June 30, 2018 the principal and interest ~~rate of 20.95% per annum. Upon default~~related to this note was written down by $126 and $349, respectively, to accurately reflect the value of the loan, the Company reached a settlement with its obligation with the entity in the amount of AUD $165,523. The amount is to be paid through application of its Export Market Development Grant and up to 25% of the Company's store sales in Australia. All of the amounts referenced are in Australian dollars. conversion.

As of ~~December 31, 2017,~~September 30, 2018 and June 30, ~~2017, the Company had outstanding balance of USD $51,264 and USD $53,210, respectively.~~

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 term2018, loans payable is 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 December 31, 2017, and June 30, 2017, the Company had an outstanding balance of $128,468 and had renewed the loan term indefinitely until full settlement occurs. As of December 31, 2017, and June 30, 2017, the Company had an accrued interest balance of $48,828 and $39,062, 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 is amortizing the excess of purchase amount over the purchase price, over the termcomprised 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 December 31, 2017 and June 30, 2017, the balance owed to the lender amounted to $17,981 and accrued interest of $8,167 and $4,667, respectively. The term has been extended indefinitely until full settlement occurs without penalty.

On November 3, 2016, the Company entered into a payments rights purchase and sale agreement for $72,500 due in April 2017. The financing has a purchase price of $50,000 with the purchased amount of $72,500. The Company is amortizing the excess of purchased amount over purchase price, over the term of the financing of six months. The Company has to make daily payments of $575.40 to the lender. During the period ended December 31, 2017 there was no amortization of the excess purchased amount, as interest expense, in the accompanying financials. As of December 31, 2017 and June 30, 2017, 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 three month and six month period ended December 31, 2017 the Company recorded interest expense of $105 and $210, respectively. During fiscal year 2019 this load was settled for $6,250.

following:

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 period 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

In December 2013, the ~~Company~~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 ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017~~2018 was ~~$100,000.~~$81,994. As of September 30, 2018 and June 30, 2018, the accrued interest balance was $189,045 and $173,939, respectively. During the ~~six month period~~three months ended ~~December 31,~~September 30, 2018 and 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~~$15,106 and $15,272, respectively. Effective with the AAT merger closing described in Note 3, the note holder has agreed to convert all outstanding principal and interest ~~at 6% per year~~into 200,358 shares of effected for the post-reverse split. As of June 30, 2018, the principal and ~~are due~~interest related to this note was written down by $20,152 and ~~payable six months from~~$42,749, respectively, to accurately reflect the ~~date of each note. The loans may be converted into common stock at any time by the election~~value of the ~~lender after a period of six months at a predetermined conversion price. The outstanding balance as of December 31, 2017 and~~conversion.

Loan Payable – 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.

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 ~~December 31, 2017~~September 30, 2018 and June 30, 2018 was $498,882. As of September 30, 2018 and June 30, 2018, the accrued interest balance was $169,034 and $141,671, respectively. During the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $27,363 and $27,726, 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 ~~$500,000.~~

~~On February 5, 2016, The Company signed an amendment~~written down by $1,118 to accurately reflect 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~~conversion.

NOTE 8 – ~~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. CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable - August 2014 to September 2018

From August ~~2016~~2014 to ~~February 2017,~~September 2018, the Company entered into ~~several~~the following convertible loan agreements with a ~~lender aggregating~~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 ~~amount~~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 ~~$60,125.~~Series A Preferred Stock upon the consummation of a merger. This settlement agreement eliminated the original derivative conversion terms. 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 monthsnote will now convert at a ~~predetermined conversion price.~~ fixed rate plus any accrued interest.

The outstanding balance as of ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017~~2018 was ~~$60,125.~~$66,206 and $58,570, respectively. The accrued interest ~~is $4,048~~balance was $6,403 and ~~$2,096~~$5,413 as of ~~December 31, 2017~~September 30, 2018 and June 30, 2018, respectively. During the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $990 and $552, 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

Accounting Considerations

The Company evaluated the agreements under ASC 815

Derivatives and Hedging

There were no penalty or interest rate increase due to the default of the loans. The outstanding balance as of September 30, 2018 and June 30, 2018 was $84,124 and $84,884, respectively. The accrued interest was $7,151 and $5,892 as of September 30, 2018 and June 30, 2018, respectively. During the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $1,744 and $2,096, 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 ~~was~~is due on or before April 30, 2017. The interest portion of the note shall be paid weekly starting in April 2015. ~~Principle~~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 ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017, net of related discount,~~2018 was USD ~~$387,328.~~$320,730. The interest rate increased from 18% per annum to 22% per annum due to the loan default as of ~~September~~April 30, ~~2015.~~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 ~~$7,717,~~$15,432, during the ~~six month periods~~fiscal years ended ~~December 31,~~June 30, 2018 and 2017, ~~and 2016,~~ respectively. The debt discount is fully amortized as of September 30, 2018 and June 30, ~~2017.~~2018. During the ~~six month periods~~three months ended ~~December 31,~~September 30, 2018 and 2017, ~~and 2016,~~ the Company recorded interest expense in the amount of ~~$42,956~~$17,592 and ~~$42,606, respectively, on the note.~~$21,478, respectively. Accrued interest as of ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017 is $187,701~~2018 was $190,417 and ~~$144,745~~$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 ~~liabilities~~loans payable in the amount of ~~$170,626~~$123,141 to shareholders and officers of the Company as of ~~December 31, 2017~~September 30, 2018 and June 30, ~~2017.~~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 ~~pre-determined~~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

The accrued interest ~~is $70,660~~was $60,689 and ~~$57,260~~$55,998 as of ~~December 31, 2017~~September 30, 2018 and June 30, 2018, respectively. During the three months ended September 30, 2018 and 2017, the Company recorded interest expense in the amount of $4,691 and $6,573, respectively.

~~Scheduled~~ As of June 30, 2018 the 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

~~Note 7~~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 ~~leases~~leased commercial space in Sydney, Australia that ~~serves~~served as its flagship as well as a retail store. We ~~lease~~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 iswas AUD ~~$52,000.~~$52,000 and the total lease expense for three months ended September 30, 2018 and 2017 was $0 and $6,348, respectively. This lease was terminated ~~as of~~in September ~~30,~~ 2017.

The Company also leases space on an as needed basis in Santa Monica, California that serves as its corporate headquarters. We utilize approximately 500 square feet of space pursuant to a month-to-month basis. This lease was terminated as of September 30, 2017.

~~For the six months ended December 31, 2017 and 2016 the aggregate rental expense was $6,329 and $26,058, respectively.~~

~~Note 8~~

NOTE 12 – ~~INCOME TAXES~~

Based on the available information and other factors, management believes it is more likely than not that the net deferred tax assets at, June 30, 2017 and June 30, 2016 will not be fully realizable. Accordingly, management has recorded a full valuation allowance against its net deferred tax assets at December 31, 2017 and June 30, 2017. At December 31, 2017 and June 30, 2017, the Company had federal net operating loss carry-forwards of approximately $5,214,000 and $4,755,000, respectively, expiring beginning in 2032.

~~Deferred tax assets consist of the following components:~~

December 31, 2017

June 30, 2017

Net loss carryforward

$ 1,561,000

$ 1,425,000

Valuation allowance

(1,561,000 )

(1,425,000 )
Total deferred tax assets

$ -

$ -

~~F-13~~
~~Table of Contents~~

~~Note 9 – STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY

Pursuant to an Employment Agreement (the ~~"Agreement"~~“Agreement”) with the Chief Executive Officer on November 15, 2013, ~~The~~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.

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 six 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 price no less than $.0033333 a 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 six 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 price no less than $.0033333 a 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 six 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 price no less than $.0033333 a share.

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.

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 months ended September 30, 2018 and 2017 are compared in the sections below.

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 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.

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.

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 ~~18,~~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, ~~the Company~~AAT will become a wholly owned subsidiary of ~~Banjo.~~

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.

~~The Company~~

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, $569,991 of accrued interest will be converted to 29,314 series A preferred shares, $691,828 of loans payable will be converted to 59,869 series A preferred shares, $123,141 of loans from related parties will be converted to 11,917 series A preferred shares, $320,730 of convertible loans from related parties will be converted to 18,682 series A preferred shares and $70,883 of other convertible debt will be converted to 14,296 series A preferred shares. The shares will be converted at a par value of $0.00001.

Critical Accounting Policies

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.

During the three-month periods ended September 30, 2018 and 2017, the transactions of the Company were denominated in US Dollars.

During the three-month periods ended September 30, 2018 and 2017, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US$ 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.

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

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

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.

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 September 30, 2018 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 ~~Results~~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 ~~Operations~~

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

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 following ~~discussion~~table sets for the computation of ~~our~~basic and diluted earnings per share for the three-month periods ended September 30, 2018 and 2017:

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 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.

or cash flow.

The following discussion of the results of operations constitutes ~~management's~~management’s review of the factors that affected the financial and operating performance for the quarter ending ~~December 31, 2017~~September 30, 2018 and ~~2016.~~2017. 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 ~~December 31,~~September 30, 2018 and 2017, ~~and 2016,~~ 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'~~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.

~~Executive summary~~

~~The December quarter 2017 represented a continuation of the strategic review the company commenced in the September 2017 quarter.~~

While the Company started in 2009 as an e-commerce only brand, it embarked upon a strategic brand building wholesale distribution program in 2013. In 2015 the Company made the decision to exit this distribution channel due to the increasing issues that apparel and luxury goods brands were facing in working with retailers via wholesale. The Company experienced lower margins, carried higher risks and viewed an uncertain future due to the increasing difficulties occurring in the physical retail landscape. In 2016 the Company began to focus fully on its higher value, higher margin, lower risk direct-to-consumer e-commerce centric business model. Over the course of 2016 and 2017 the company failed to raise adequate funds to fund this pivot and scale the business, and as a consequence has had to scale back its operations to conserve capital.

Given the lack of operating capital available to continue to build the Banjo & Matilda brand and e-commerce sales, the company has begun to consider strategic opportunities to deliver value to shareholders. The company has identified several promising opportunities and is carefully pursuing and evaluating these with an intent to activate one of these opportunities as soon as possible.

~~December Quarter 2017~~

Results of Operations ~~Compared with December Quarter 2016~~

~~Revenues~~

~~Sales decreased from $159,115 to $0~~

The following information represents our results of operations for the December 2017 quarter compared with the December quarter in 2016. Cost of sales commensurately decreased from $24,838 to $0. For the six month periods ending December 31 2017 and 2016 sales decreased from $360,042 to $79,779 and cost of sales decreased from $90,690 to $19,699. These fluctuations were caused by the wind down in operations and related decrease in sales due to lack of new inventory.

~~Gross Margins~~

~~Gross margins decreased from $134,277 to $0, for the~~ three months ~~ending December 31,~~ended September 30, 2018 compared to September 30, 2017.

Total operating expenses decreased ~~45%~~144% from ~~$229,166~~$91,421 to ~~$126,883,~~$59,898, for the ~~December 2017~~ quarter ended September 30, 2018 compared with the ~~December 2016 quarter. For the six month periods ending December 31, 2017 and December 31, 2016 total operating expenses decreased 30% from $456,207 to $318,543.~~quarter ended September 30, 2017. The reduction in operating expense was driven by the wind down in operations.

Total loss from operations of discontinued operations decreased 92% from $64,926 to $5,330, for the quarter ended September 30, 2018 compared with the quarter ended September 30, 2017. The reduction in operating expense was driven by the wind down in operations.

Net loss ~~and comprehensive net loss~~ was ~~$227,768~~$134,183 for the three months ending ~~December 31, 2017~~September 30, 2018 compared to ~~$176,858 in~~$231,693 for the three months ending ~~December 31, 2016 and $459,461 and 352,367 for the six month periods ending December 31 2017 and 2016 respectively.~~September 30, 2017. The reduction in revenue and winding down of operations was the driver of the increasing loss.

Current Liquidity and Capital Resources for the three months ended September 30, 2018 compared to the three months ended September 30, 2017

Operating Activities

Cash used in operations of $6,878 during the three months ended September 30, 2018 was primarily a result of our $134,183 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. Cash provided by operations of $6,271 during the three months ended September 30, 2017 was primarily a result of our $231,693 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.

Net cash used in financing activities for the three months ended September 30, 2018 was $6,878. Net cash used in financing activities for the three months ended September 30, 2017 of $3,437 resulted from net trade financing.

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.

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, 2018 and June 30, 2019, the Company had no cash and $4,205,285 and $4,071,102 in negative working capital, respectively. For the three months ended September 30, 2018 and 2017, the Company had a net loss of $134,183 and $231,693, 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.

Off-Balance Sheet Arrangements

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

Quantitative and ~~negative working capital of $3,698,616. Our net loss of $227,768 in~~Qualitative Disclosures about Market Risk

In the quarter ended December 31 2017 was mostly funded by proceeds raised from financings. We will need to raise working capital (or refinance existing short-term debt to long-term debt) to fund operations. Future equity financings may be dilutive to our stockholders. Alternative forms of future financings may include preferences or rights superior to our common stock. Debt financings may involve a pledge of assets and will rank senior to our common stock. We have historically financed our operations through best-efforts private equity and debt financings. We do not have any credit or equity facilities available with financial institutions, stockholders or third party investors, and will continue to rely on best efforts financings. The failure to raise sufficient capital will likely cause us to cease operations.

During the six months ended December 31, 2017, our operating activities used $907 of net cash compared to using $132,234 of net cash flow in our operating activities for the six months ended December 31, 2016. This difference primarily resulted from the cessation of sales and operations.

During the six months ended December 31, 2017, net cash used by financing activities was $3,584 compared with $149,742 of net cash provided by financing activities in the six months ended December 31, 2016. This was due to no additional funding being secured.

~~Commitments for Capital Expenditures~~

~~We do not have substantial commitments for capital expenditures. All~~ordinary course of our ~~products~~business, we are ~~manufactured by third parties, enabling us~~not exposed to ~~scale up operations without acquiring substantial production equipment. Although we will need to increase our design capabilities and augment our sales and administrative staff as we grow,~~market risk of the ~~rate of growth of these expenses should be less than the rate of growth of our revenue. Further, we anticipate~~sort that ~~as we expand our sales, the~~may arise from changes in interest rates ~~fees and other expenses we pay to obtain credit, should be lower than those we incur presently. Of course, any substantial growth~~or foreign currency exchange rates, or that may otherwise arise from transactions in our revenues will require additional equity which, if available, will dilute the interests of our current shareholders. We do anticipate a slight increase in the rate of growth of our operating expenses this year due to, among other factors, the fact that our historical financial statements do not include the expenses associated with being a public company.

~~Off Balance Sheet Items~~

~~We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).~~

~~Critical Accounting Policies~~

~~Use of Estimates~~

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 ~~period covered by the financial statements.~~reporting period. Actual results could differ from those estimates. ~~Significant~~Our significant estimates and assumptions include ~~collectability~~the fair value of ~~accounts receivable, valuation~~our common stock, stock-based compensation, the recoverability and useful lives of ~~inventory, sales return and recoverability of long-term assets.~~

~~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 to be 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 samples.

~~Inventory~~

6
~~Table of Contents~~

~~Allowance for Doubtful Accounts~~

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the 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.

~~Exchange Gain (Loss)~~

During the period ended December 31, 2017 and 2016, the transactions of the Company were denominated in US Dollars. Some transactions were denominated in AUD and British pounds for the sales made outside US and for rent paid for the Australian store. Such transactions were converted to US Dollars on the date of transactionlong-lived assets, and the ~~exchange gains or losses were recorded in the statement~~valuation allowance relating to our deferred tax assets.

Certain conditions may exist as of ~~operations. 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)~~

During the period ended December 31, 2017 and 2016, 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.

~~Recently Issued Accounting Pronouncements~~

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from 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 ~~are available~~more future events occur or fail to ~~be issued. This evaluation should include consideration~~occur. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of ~~conditions and events~~judgment. In assessing loss contingencies related to legal proceedings that are ~~either known~~pending against us or ~~are reasonably knowable at~~unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the ~~date the financial statements are issued~~perceived merits of any legal proceedings or ~~are available to be issued,~~unasserted claims, as well as ~~whether~~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 ~~management’s plans to address~~a material loss has been incurred and the ~~substantial doubt will~~amount of the liability can be ~~implemented and, if so, whether it~~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, ~~that~~but cannot be estimated, then the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The Company is currently evaluating the impactnature of the ~~adoption of this standard on its consolidated financial statements.~~

In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which changes how deferred taxes are classified on the balance sheet and is effective for financial statements issued for annual periods beginning after December 15, 2016,contingent liability, together with ~~early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The Company is currently evaluating the impact~~an estimate of the ~~adoption~~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 ~~standard on its consolidated financial statements.~~

~~In January 2016, the FASB issued ASU 2016-01, “Recognition~~item.

Disclosure Controls and Financial Liabilities” (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

7
~~Table of Contents~~

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. The Company is currently evaluating the impact the adoption of this standard would have on its financial condition, results of operations and cash flows.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods with that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “~~~~Statement of Cash Flows.”~~ This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company does not expect the adoption of this standard to have a significant effect on its consolidated financial statements.

The Company has ~~elected for early adoption of this guidance during the fiscal year ended June 30, 2017 on our consolidated financial statements.~~

~~In August 2017, the FASB issued guidance~~established disclosure controls and procedures that eases certain documentation and assessment requirements of hedge effectiveness and modifies the accounting for components excluded from the assessment. Some of the modifications include the ineffectiveness of derivative gain/loss in highly effective cash flow hedgeare 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, ~~in OCI,~~processed, summarized and reported within the ~~change in fair value of derivative to be recorded~~time periods specified in the ~~same income statement line as hedged item,~~rules and ~~additional disclosures required on the cumulative basis adjustment in fair value hedges and the effect~~forms of hedging on financial statement lines for components excluded from the assessment. The amendment also simplifies the application of hedge accounting in certain situations to permit new hedging strategies to be eligible for hedge accounting. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020. Early adoption is permitted and the modified retrospective transition method should be applied. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

There were no other new accounting pronouncements during the year period ended December 31, 2017 that we believe would have a material impact on our financial position or results of operations. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission ~~did not or are not believed by management~~and, as such, is accumulated and communicated to ~~have a material impact on~~ the Company’s ~~present~~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 September 30, 2018. Based on his evaluation, Mr. Duffy concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2018.

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)

		Page

~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS~~Special Note regarding Forward-looking Statements		3
		3

PART I – ~~FINANCIAL INFORMATION~~Financial Information

~~Item 1.~~	~~Financial statements~~		4
	~~CONSOLIDATED BALANCE SHEETS~~		~~F-1~~
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	~~CONSOLIDATED STATEMENTS OF OPERATIONS~~Condensed Consolidated Balance Sheets as of September 30, 2018 (unaudited) and June 30, 2018 (audited)	F-1	~~F-2~~
	~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~		~~F-3~~
	~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2018 and 2017 (unaudited)	F-2	~~F-4~~
	~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Condensed Consolidated Statements of Stockholder’s Equity (Deficit) for the Three Months Ended September 30, 2018 and 2017 (unaudited)	F-3	~~F-5~~
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2018 and 2017 (unaudited)	F-4
	Notes to Condensed Consolidated Financial Statements (unaudited)	F-5

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

PART II – ~~OTHER INFORMATION~~Other Information

Item 1.	Legal Proceedings	15	9
Item 1A.	Risk Factors	15	9
Item 2.	Unregistered Sales of Equity Securities	15	9
Item 3.	Defaults Upon Senior Securities	15	9
Item 4.	Mine Safety Disclosures	15	9
Item 5.	Other Information	15	9
Item 6.	Exhibits	16	10

~~SIGNATURES~~Signatures		17	11

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

Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2018 and ~~Comprehensive Loss~~2017 (unaudited)	F-2	~~F-2 - F-3~~

Condensed Consolidated Statements of Stockholder’s Equity (Deficit) for the Three Months Ended September 30, 2018 and 2017 (unaudited)	F-3

Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2018 and 2017 (unaudited)	F-4	~~F-4~~

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

BANJO & MATILDA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2017 AND JUNE 30, 2017

	December 31,
	2017 (Unaudited)			June 30, 2017

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	-		$	4,491
Trade receivables, net		501			-
Inventory, net		-			18,443
TOTAL CURRENT ASSETS		501			22,934

NON-CURRENT ASSETS
Property, plant and equipment, net		6,434			7,529
TOTAL NON-CURRENT ASSETS		6,434			7,529

TOTAL ASSETS	$	6,935		$	30,463

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Cash overdraft	$	6,988		$	-
Trade and other payables		1,392,204			1,178,978
Deposit payable		4,621			4,621
Trade financing		364,004			367,588
Accrued interest		709,640			523,257
Loans payable (net of related discount)		663,706			630,786
Loan from related parties		170,626			170,626
Convertible loan from related parties (net of related discount)		387,328			387,328
TOTAL CURRENT LIABILITIES		3,699,117			3,263,184

TOTAL LIABILITIES		3,699,117			3,263,184

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 and 69,584,149 shares issued and outstanding, respectively		695			695
Additional paid in capital		1,951,295			1,951,295
Other accumulated comprehensive gain		100,007			100,007
Accumulated deficit		(5,744,189	)		(5,284,728	)
TOTAL STOCKHOLDERS' DEFICIT		(3,692,182	)		(3,232,721	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	6,935		$	30,463

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

	September 30,				June 30,
	2018				2018
	(Unaudited)
ASSETS
CURRENT ASSETS
Prepaids	$	-			$	18,500
Assets of discontinued operations		12,063				5,385
TOTAL CURRENT ASSETS		12,063				23,885

TOTAL ASSETS	$	12,063			$	23,885

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Trade and other payables	$	597,357			$	559,759
Settlement Payable		250,000				250,000
Trade financing		56,197				56,197
Accrued interest		388,620				339,059
Accrued interest, related parties		251,107				228,823
Loans payable, net of discount and deferred interest		580,875				580,875
Convertible notes payable		150,331				143,453
Convertible loans from related parties		443,871				443,871
Liabilities of discontinued operations		1,498,990				1,492,950
TOTAL CURRENT LIABILITIES		4,217,348				4,094,987

TOTAL LIABILITIES		4,217,348				4,094,987

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.00001 par value, 100,000,000 shares authorized		10				10
and 1,000,000 shares issued and outstanding, respectively
Common stock, $0.00001 par value, 100,000,000 shares authorized and		695				695
69,584,149 shares issued and outstanding, respectively				��
Additional paid in capital		1,951,295				1,951,295
Other accumulated comprehensive income		100,007				100,007
Accumulated deficit		(6,257,292	)			(6,123,109	)
TOTAL STOCKHOLDERS’ DEFICIT		(4,205,285	)			(4,071,102	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	12,063			$	23,885

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2017 AND 2016

	Three month periods ended						Six month periods ended
	December 31, 2017 (Unaudited)			December 31, 2016 (Unaudited)			December 31, 2017 (Unaudited)			December 31, 2016 (Unaudited)

Revenue	$	-		$	159,115		$	79,779		$	360,042
Cost of sales		-			24,838			19,699			90,690
Gross profit		-			134,277			60,080			269,352

Payroll and employee related expenses		113,937			123,880			246,966			246,363
Operating expense		142			20,818			8,971			40,922
Marketing expense		-			17,136			5,143			34,917
Selling expense		-			21,579			7,047			53,057
Samples and design expense		-			6,055			-			7,761
Occupancy expenses		-			11,461			6,348			26,058
Depreciation and amortization expense		541			2,662			1,095			5,324
Finance Charges		9,814			18,450			21,165			27,258
Corporate and public company expense		1,092			7,125			20,451			14,547
Realized currency loss (gain)		1,357			-			1,357			-
		126,883			229,166			318,543			456,207
Loss from operations		(126,883	)		(94,889	)		(258,463	)		(186,855	)

Other Income (Expense)
Other Income (Expense)		(879	)		3,390			(1,761	)		4,077
Amortization of debt discount		(12,534	)		(16,393	)		(25,068	)		(32,785	)
Interest expense		(87,472	)		(68,966	)		(174,169	)		(136,804	)
Total Other Expense		(100,885	)		(81,969	)		(200,998	)		(165,512	)

Loss before income tax		(227,768	)		(176,858	)		(459,461	)		(352,367	)

Provision for income taxes		-			-			-			-

Net loss	$	(227,768	)	$	(176,858	)	$	(459,461	)	$	(352,367	)

Net loss per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding:
Basic		69,584,149			58,823,116			69,584,149			58,823,116
Diluted		69,584,149			58,823,116			69,584,149			58,823,116

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

	For the Three Months Ended
	September 30, 2018			September 30, 2017

Operating expenses:
Payroll and employee related expenses		33,750			74,171
Operating expense		3,800			-
Corporate and public company expense		22,348			17,250
Total operating expenses		59,898			91,421

Loss from operations		(59,898	)		(91,421	)

Other income (expense):
Interest expense, related parties		(22,283	)		-
Interest expense		(46,672	)		(75,346	)
Total other income (expense)		(68,955	)		(75,346	)

Loss from continuing operations		(128,853	)		(166,767	)

Discontinued operations:
Loss from operations of discontinued operations		(5,330	)		(64,926	)

Net loss	$	(134,183	)	$	(231,693	)

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

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

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2017 AND 2016

	Three month periods ended						Six month periods ended
	December 31, 2017 (Unaudited)			December 31, 2016 (Unaudited)			December 31, 2017 (Unaudited)			December 31, 2016 (Unaudited)

Net loss	$	(227,768	)	$	(176,858	)	$	(459,461	)	$	(352,367	)

Other comprehensive income
Foreign currency translation		-			-			-			-
Total other comprehensive income		-			-			-			-

Comprehensive loss	$	(227,768	)	$	(176,858	)	$	(459,461	)	$	(352,367	)

	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		-		-		-		-		-		-		(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	)

BANJO & MATILDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2017 AND 2016

	December 31, 2017 (Unaudited)			December 31, 2016 (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(459,461	)	$	(352,367	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		1,095			1,953
Amortization		-			3,371
AR allowance		-			(8,772	)
Debt discount amortization		25,068			32,785
Amortization of deferred finance fee		7,852			7,851
Changes in operating assets and liabilities:
Trade receivables		(501	)		11,642
Inventory		18,443			(26,845	)
Deposit on Purchases		-			1,153
Other assets		-			(5,500	)
Deferred financing costs		-			(1,153	)
Trade payables and other liabilities		220,214			69,162
Accrued interest		186,383			134,487
Net cash (used in) operating activities		(907	)		(132,234	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (net payments) on related party loan		-			(1,532	)
Net proceeds (net payments) on loan payables		-			204,875
Net trade financing		(3,584	)		(53,601	)
Net cash provided by (used in) financing activities		(3,584	)		149,742

Net (decrease) increase in cash and cash equivalents		(4,491	)		17,508

Cash and cash equivalents at the beginning of the period	$	4,491		$	11,056

Cash and cash equivalents at the end of the period	$	-		$	28,564

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest payments	$	-		$	12,082

	(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.

	December 31			June 30
	2017			2017
Property, plant & equipment	$	29,456		$	29,456
Accumulated depreciation		(23,022	)		(21,927	)
	$	6,434		$	7,529

	Three month periods ended
	December 31, 2017			December 31, 2016
Basic and diluted
Net loss	$	(227,768	)	$	(176,858	)

Net loss per share
Basic	$	(0.00	)	$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)

Weighted average number of shares outstanding:
Basic and diluted		69,584,149			58,823,116

	Six month periods ended
	December 31, 2017			December 31, 2016
Basic and diluted
Net loss	$	(459,461	)	$	(352,367	)

Net loss per share
Basic	$	(0.01	)	$	(0.01	)
Diluted	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding:
Basic and diluted		69,584,149			58,823,116

	Three-month periods ended
	September 30,			September 30,
	2018			2017
Basic and diluted
Loss from continuing operations	$	(128,853	)	$	(166,767	)
Loss from operations of discontinued operations		(5,330	)		(64,926	)
Net loss	$	(134,183	)	$	(231,693	)

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

	Three Months Ended September 30,
	2018			2017
Revenue	$	—		$	79,779
Cost of revenue		—			19,699
Gross Profit		—			60,080
Operating expenses		9,178			100,239
Loss from operations		(9,178	)		(40,159	)
Other income (expenses)		3,848			(24,767	)
	$	(5,330	)	$	(64,926	)

Issuance Date	Face Value		Interest Rate			Term	Conversion Terms
August 9, 2014	$	19,000		6	%	Six Months	20% Discount to Market
December 12, 2014		7,500		6	%	Six Months	30% Discount to Market
June 22, 2018		31,700		6	%	Six Months	Fixed Price of .01 Per Share
September 20, 2018		8,006		6	%	Six Months	Fixed Price of .01 Per Share
	$	66,206

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

	December 31, 2017			June 30, 2017
Net loss carryforward	$	1,561,000		$	1,425,000
Valuation allowance		(1,561,000	)		(1,425,000	)
Total deferred tax assets	$	-		$	-

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: ~~June~~February 26, ~~2019~~ 2020	By:	/s/ ~~Brendan Macpherson~~ Keith Duffy
		~~Brendan Macpherson~~ Keith Duffy Chief Executive Officer and Chief Financial Officer (Principal Executive and Financial Officer)