UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from __________ to __________.
Commission File Number:
(Exact name of registrant as specified in its charter). |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading symbol |
| Name of exchange on which registered |
N/A |
| N/A |
| N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition 13(a) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 16, 2022, the Registrant had outstanding
XERIANT, INC.
FORM 10-Q
TABLE OF CONTENTS
| Page | ||||
| |||||
| 3 |
| |||
|
| ||||
| |||||
| 4 |
| |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 5 |
| ||
10 |
| ||||
10 | |||||
| |||||
| 11 |
| |||
| 11 |
| |||
| 11 |
| |||
| 11 |
| |||
| 11 |
| |||
| 11 |
| |||
| 12 |
| |||
| |||||
| 13 | ||||
2 |
| Table of Contents |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains certain statements of a forward-looking nature. Such forward-looking statements, including but not limited to statements regarding projected growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond the control of the Company. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to those set forth herein and in our Annual Report on Form 10-K.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by the federal securities laws, we undertake no obligation to update forward-looking information. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this Report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
3 |
| Table of Contents |
PART I – FINANCIAL INFORMATION
Item 1. Financial statements
XERIANT, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and June 30, 2021 |
| F-1 |
| |
|
| |||
| F-2 |
| ||
|
|
|
|
|
| F-3 |
| ||
|
|
|
|
|
|
| F-5 |
| |
|
|
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
| F-6 |
4 |
| Table of Contents |
XERIANT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| As of March 31, 2022 |
|
| As of June 30, 2021 |
| ||
Assets |
| (Unaudited) |
|
|
| |||
Current assets |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Deposits |
|
|
|
|
|
| ||
Prepaids |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
Property equipment, net |
|
|
|
|
|
|
| |
Operating lease right-of-use asset |
|
|
|
|
|
| ||
Total assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Liabilities stockholders' deficit |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Accrued liabilities, related party |
|
|
|
|
|
| ||
Convertible notes payable, net of discount |
|
|
|
|
|
| ||
Lease liability, current |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Lease liability, long-term |
|
|
|
|
|
| ||
Total liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit |
|
|
|
|
|
|
|
|
Series A Preferred stock, $ |
|
|
|
|
|
| ||
Series B Preferred stock, $ |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
| ||
Common stock to be issued |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total Xeriant stockholder's deficit |
|
|
|
|
|
| ||
Non-controlling interest |
|
| ( | ) |
|
| ( | ) |
Total stockholders' deficit |
|
| ( | ) |
|
|
| |
Total liabilities and stockholders' deficit |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-1 |
| Table of Contents |
XERIANT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
| For the three months ended |
|
| For the nine months ended |
| ||||||||||
|
| March 31, 2022 |
|
| March 31, 2021 |
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing expense |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Related party consulting fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Amortization of debt discount, related party |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Financing fees |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Interest expense |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Interest expense, related party |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Gain on forgiveness of accounts payable |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss on settlement of debt |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) | |
Total other (expense) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Common stockholders |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
| Table of Contents |
XERIANT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022
(UNAUDITED)
|
| Series A Preferred Stock |
|
|
Series B Preferred Stock |
|
| Common Stock |
|
| Additional Paid in |
|
|
Common stock |
|
| Accumulated |
|
| Non-Controlling |
|
|
|
| ||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| to be issued |
|
| Deficit |
|
| Interest |
|
| Total |
| |||||||||||
Balance June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock committed in prior period |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued as equity kicker |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series A Preferred to Common Stock |
|
| ( | ) |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and accrued interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| - |
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of beneficial conversion feature associated with convertible debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock committed in prior period |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
| 0.33 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series A Preferred to Common Stock |
|
| ( | ) |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and accrued interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of warrants associated with convertible debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of beneficial conversion feature associated with convertible debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock committed in prior period |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series A Preferred to Common Stock |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inducement of conversion - interest expense |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
|
|
|
| $ |
|
| 0 |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
| Table of Contents |
XERIANT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022
(UNAUDITED
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid in |
|
| Common stock |
|
| Accumulated |
|
|
|
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| to be issued |
|
| Deficit |
|
| Total |
| ||||||||
Balance June 30, 2020 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from common stock to be issued |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and accrued interest |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series A Preferred to Common Stock |
|
| ( | ) |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants with convertible notes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of beneficial conversion feature associated with convertible debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and accrued interest |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants with convertible notes |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of beneficial conversion feature associated with convertible debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2020 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from common stock to be issued |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible notes and accrued interest |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants with convertible notes |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of beneficial conversion feature associated with convertible debt |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants for services |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
| Table of Contents |
XERIANT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| For the Nine months ended |
| |||||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
|
|
|
|
|
| ||
| Cash Flows from Operating Activities |
|
|
|
|
|
| ||
| Net Loss |
| $ | ( | ) |
| $ | ( | ) |
| Adjustments to reconcile net loss to net |
|
|
|
|
|
|
|
|
| cash used by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and Amortization |
|
|
|
|
|
| ||
| Stock compensation expense |
|
|
|
|
|
| ||
| Stock issued for services |
|
|
|
|
| - |
| |
| Financing fees |
|
|
|
|
|
| ||
| Loss on settlement of debt |
|
|
|
|
|
| ||
| Amortization of Debt Discount |
|
|
|
|
|
| ||
| Amortization of Debt Discount, Related Party |
|
|
|
|
|
| ||
| Changes in operating assets liabilities |
|
|
|
|
|
|
|
|
| Operating lease right of use asset |
|
|
|
|
|
| ||
| Lease liabilities |
|
| ( | ) |
|
|
| |
| Deposits and prepaids |
|
| ( | ) |
|
| ( | ) |
| Accounts payable and accrued liabilities |
|
| ( | ) |
|
|
| |
| Accrued liability, related party |
|
|
|
|
|
| ||
| Accrued expenses |
|
|
|
|
|
| ||
| Net cash used by operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
| Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
| Purchase of property and equipment |
|
| ( | ) |
|
|
| |
| Net cash used in financing activities |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
| Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Sale of common stock |
|
|
|
|
|
| ||
Cash from exercise of warrants |
|
|
|
|
|
| ||
Proceeds from convertible notes payable |
|
|
|
|
|
| ||
| Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Increase in Cash |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Cash at beginning of period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| Cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Conversion of convertible notes payable and accrued interest |
| $ |
|
| $ |
| ||
Warrants issued with convertible notes payable |
| $ |
|
| $ |
| ||
Beneficial conversion feature arising from convertible notes payable |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
| Table of Contents |
XERIANT, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Xeriant, Inc. (“Xeriant” or the “Company”) is an aerospace company dedicated to the emerging aviation market called Advanced Air Mobility (AAM), the transition to eco-friendly, on demand flight, making air transportation more accessible and a greater part of our daily lives. Xeriant is focused on the acquisition, development, and proliferation of next generation hybrid-electric and fully electric aircraft with vertical takeoff and landing (eVTOL) capabilities, performance enhancing aerospace technologies and advanced materials, as well as critical support infrastructure. Xeriant is located at the Research Park at Florida Atlantic University in Boca Raton, Florida adjacent to the Boca Raton Airport, and trades on OTC Markets under the stock symbol, XERI. The Company was incorporated in Nevada on December 18, 2009.
On April 16, 2019, the Company and the members of American Aviation Technologies, LLC (“AAT”) entered into a Share Exchange Agreement (“Agreement”). The agreement, which became effective on September 30, 2019, was pursuant to which the Company acquired
On June 22, 2020, the name of the Company was changed to Xeriant, Inc. in the State of Nevada and subsequently approved by FINRA effective July 30, 2020 for the name and symbol change (XERI).
On May 27, 2021, the Company entered into a Joint Venture Agreement with XTI Aircraft Company, to form a new company, called Eco-Aero, LLC, for purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff and landing (eVTOL) fixed wing aircraft.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the unaudited consolidated condensed financial statements have been included. Such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. These financial statements should be read in conjunction with the company’s latest annual financial statements.
Principles of Consolidation
The condensed consolidated unaudited financial statements include the accounts of Xeriant, Inc., American Aviation Technologies, LLC, and Eco-Aero, LLC. 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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. The most significant assumptions and estimates relate to the valuation of beneficial conversion features and warrants associated with convertible debt. Actual results could differ from these estimates.
| F-6 |
| Table of Contents |
Fair Value Measurements and Fair Value of Financial Instruments
The Company adopted ASC Topic 820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3: Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The estimated fair value of certain financial instruments, including all current liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Deferred Taxes
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.
Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. As of March 31, 2022 and June 30, 2021 there are no deferred tax assets.
Going concern
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 March 31, 2022 and June 30, 2021, the Company had $
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company has no cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
The Company monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The allowance for doubtful accounts is estimated based on an assessment of the Company’s ability to collect on customer accounts receivable. There is judgment involved with estimating the allowance for doubtful accounts and if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against revenues. The Company writes-off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues its collection. The allowance for doubtful accounts is created by forming a credit balance which is deducted from the total receivables balance in the balance sheet. As of March 31, 2022 and June 30, 2021 there are no accounts receivable.
| F-7 |
| Table of Contents |
Convertible Debentures
If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt.
Fair Value of Financial Instruments
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
Research and Development Expenses
Expenditures for research and development are expensed as incurred. The Company incurred research and development expenses of $
Advertising, Marketing and Public Relations
The Company expenses advertising and marketing costs as they are incurred. The Company recorded advertising expenses in the amount of $
Offering Costs
Costs incurred in connection with raising capital by the issuance of common stock are recorded as contra equity and deducted from the capital raised. There were no offering costs for the three and nine months ended March 31, 2022 and 2021, respectively.
| F-8 |
| Table of Contents |
Income Taxes
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is
The Company has adopted FASB ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and 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.
Recent Accounting Pronouncements
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.
In February 2016, FASB issued ASC 842 that requires lessees to recognize lease assets and corresponding lease liabilities on the balance sheet for all leases with terms of more than 12 months. The update, which supersedes existing lease guidance, will continue to classify leases as either finance or operating, with the classification determining the pattern of expense recognition in the income statement.
The ASU will be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted, and is applicable on a modified retrospective basis with various optional practical expedients. The Company has assessed the impact of this standard. The Company entered into a new lease agreement commencing on November 1, 2019 and implemented this guidance on November 1, 2019.
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The adoption of ASU 2020-06 is expect to have material impact on the Company’s financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - JOINT VENTURE
On May 31, 2021, the Company entered into a Joint Venture Agreement (the “Agreement”) with XTI Aircraft Company (“XTI”), a Delaware corporation, to form a new company, called Eco-Aero, LLC (the “JV”), a Delaware limited liability company, with the purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff, and landing (eVTOL) fixed wing aircraft. Under the Agreement, Xeriant is contributing capital, technology, and strategic business relationships, and XTI is contributing intellectual property licensing rights and know-how. XTI and the Company each own
The Company analyzed the transaction under ASC 810 Consolidation, to determine if the joint venture classifies as a Variable Interest Entity (“VIE”). The Joint Venture qualifies as a VIE based on the fact the JV does not have sufficient equity to operate without financial support from Xeriant. According to ASC 810-25-38, a reporting entity shall consolidate a VIE when that reporting entity has a variable interest (or combination of variable interests) that provides the reporting entity with a controlling financial interest on the basis of the provisions in paragraphs 810-10-25-38A through 25-38J. The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. According to the JV operating agreement, the ownership interests are 50/50. However, the agreement provides for a Management Committee of five members. Three of the five members are from Xeriant. Additionally, Xeriant has the right to invest $
NOTE 4 - CONCENTRATION OF CREDIT RISKS
The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully insured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions. On March 31, 2022, the Company had $
| F-9 |
| Table of Contents |
NOTE 5 - OPERATING LEASE RIGHT-OF-USE ASSET AND OPERATING LEASE LIABILITY
|
| Base |
| |
Rent Periods |
| Rent |
| |
February 1, 2020 to October 1, 2020 |
| $ |
| |
November 1, 2020 to October 1, 2021 |
| $ |
| |
November 1, 2021 to October 1, 2022 |
| $ |
| |
November 1, 2021 to October 1, 2022 |
| $ |
| |
November 1, 2023 to October 1, 2024 |
| $ |
| |
November 1, 2024 to January 1, 2025 |
| $ |
| |
Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be
Right-of-use asset is summarized below:
|
| March 31, |
| |
|
| 2022 |
| |
Office lease |
| $ |
| |
Less: accumulated amortization |
|
| ( | ) |
Right-of-use asset, net |
| $ |
| |
Operating lease liability is summarized below:
|
| March 31, 2022 |
| |
Office lease |
| $ |
| |
Less: current portion |
|
| ( | ) |
Long term portion |
|
|
| |
Maturity of the lease liability is as follows:
Fiscal year ending June 30, 2022 |
| $ |
| |
Fiscal year ending June 30, 2023 |
|
|
| |
Fiscal year ending June 30, 2024 |
|
|
| |
Fiscal year ending June 30, 2025 |
|
|
| |
|
|
|
| |
Present value discount |
|
| ( | ) |
Lease liability |
| $ |
|
| F-10 |
| Table of Contents |
NOTE 6 - CONVERTIBLE NOTES PAYABLE
The carrying value of convertible notes payable, net of discount, as of March 31, 2022 and June 30, 2021 was $
The following table illustrates the carrying values for the convertible notes payable as of March 31, 2022 and June 30, 2021:
|
| March 31, |
|
| June 30, |
| ||
Convertible Notes Payable |
| 2022 |
|
| 2021 |
| ||
Convertible notes payable issued January 5, 2021 (6% interest) |
| $ |
|
| $ |
| ||
Convertible notes payable issued January 11, 2021 (6% interest) |
|
|
|
|
|
| ||
Convertible notes payable issued August 9, 2021 (6% interest) |
|
|
|
|
|
| ||
Convertible notes payable issued August 10, 2021 (6% interest) |
|
|
|
|
|
| ||
Convertible notes payable issued October 27, 2021 (0% interest) – Auctus Fund LLC |
|
|
|
|
| - |
| |
Total face value |
|
|
|
|
|
| ||
Less unamortized discount |
|
| ( | ) |
|
| ( | ) |
Carrying value |
| $ |
|
| $ |
| ||
Between September 27, 2019 and August 10, 2021, the Company issued convertible notes payable with an aggregate face value of $
The Company evaluated these notes 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. None of the embedded terms required bifurcation and liability classification. However, the Company was required to determine if the debt contained a beneficial conversion feature (“BCF”), which is based on the intrinsic value on the date of issuance.
In connection with the notes, the Company issued warrants indexed to an aggregate
Auctus Fund, LLC
On October 27, 2021, the Company issued a convertible note payable with Auctus Fund, LLC (the “Auctus Note”) with the principal sum of $
In connection with the notes, the Company issued warrants indexed to an aggregate
The Company was required to determine if the debt contained a beneficial conversion feature (“BCF”), which is based on the intrinsic value on the date of issuance. The Company recorded $
For the nine months ended March 31, 2022, the Company recorded $
The Company is in communication with Auctus Fund, LLC and is actively working on strategies to extinguish, extend or restructure the Senior Secured Promissory Note. No assurance can be made as to the results of such actions.
For the nine months ended March 31, 2022 and 2021, the Company recorded $
| F-11 |
| Table of Contents |
NOTE 7 - RELATED PARTY TRANSACTIONS
Convertible notes
On August 25, 2020, the Company issued a convertible note payable with a face value of $
The Company evaluated the agreement 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. None of the embedded terms required bifurcation and liability classification.
In connection with the note, the Company issued warrants indexed to an aggregate
The Company was required to determine if the debt contained a beneficial conversion feature (“BCF”), which is based on the intrinsic value on the date of issuance. After the allocation of $
For the nine months ended March 31, 2022 and 2021, the Company recorded $
On November 25, 2020, Keystone Business Development Partners converted $
| F-12 |
| Table of Contents |
Consulting fees
During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $
During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $
During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $
During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $
NOTE 8 - COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.
Joint Venture
In connection with the Eco-Aero, LLC Joint Venture, discussed in Note 3, the Company has the right to invest $
Financial Advisory Agreements
On August 10, 2021, the Company entered into an Advisory Agreement with a firm to assist the Company with fundraising activities. In connection with the agreement, the Company has the following commitments:
| · | to issue |
|
|
|
| · | |
|
|
|
| · |
During the nine months ended March 31, 2022, the Company issued the initial
On August 19, 2021, the Company entered into an Advisory Agreement with a firm to assist the Company with fundraising activities. In connection with the agreement, the Company has the following commitments:
| · | Issue |
|
|
|
| · | Pay a cash fee of seven percent |
|
|
|
| · | Pay a cash fee for entering into a transaction including, without limitation, a merger, acquisition or sale of stock or assets equal to one and one half percent (1.5%), or in the event a transaction is consummated with a party that was in communication with the Company prior to the date of this contract, then the fee shall equal one half percent (0.5%). |
During the nine months ended March 31, 2022, the Company issued the initial
| F-13 |
| Table of Contents |
Litigation
On September 1, 2021, Xeriant Inc. brought a cause of action in the Southern District of Florida against a former shareholder for claims, including but not limited to, breach of contract, misrepresentation, and asserting claims to recoup monetary and in-kind distributions made to the shareholder by the Company. The defendant submitted an affirmative defense and counterclaim on October 29, 2021.
Board of Advisors Agreements
The Company has entered into advisor agreements with various advisory board members. The agreements provide for the following:
On October 27, 2020, the Company agreed to issue
On January 18, 2021, the Company agreed to issue
On January 22, 2021, the Company agreed to issue
On March 7, 2021 the Company paid an advisor $
On July 1, 2021, the Company agreed to issue
On July 6, 2021, provided an option to purchase
On July 28, 2021, the Company agreed to issue
On August 9, 2021, the Company agreed to issue
On August 20, 2021, the Company agreed to issue
| F-14 |
| Table of Contents |
NOTE 9 - EQUITY
Common Stock
As of March 31, 2022 and June 30, 2021, the Company had
During the three months ended September 30, 2021, the Company issued
During the three months ended September 30, 2021, the Company sold
During the three months ended September 30, 2021, the Company sold
In connection with one of the subscription agreements, the Company issued
During the three months ended September 30, 2021, the Company issued
During the three months ended September 30, 2021, the Company issued
During the three months ended September 30, 2021, the Company issued
During the three months ended September 30, 2021, the Company issued
During the three months ended December 31, 2021, the Company sold
During the three months ended December 31, 2021, the Company issued
During the three months ended December 31, 2021, the Company issued
During the three months ended December 31, 2021, the Company issued
During the three months ended December 31, 2021, the Company issued
During the three months ended March 31, 2022, the Company issued
During the three months ended March 31, 2022, the Company issued
During the three months ended March 31, 2022, the Company issued
Common Stock to be Issued
During the three months ended September 30, 2021, the Company sold
During the three months ended September 30, 2021, the Company agreed to pay a consultant 250,000 shares in exchange to $
During the three months ended September 30, 2021, the Company agreed to issue advisory board members
| F-15 |
| Table of Contents |
Series A Preferred Stock
There are
| · | Voting: The preferred shares shall be entitled to 1,000 votes to every one share of common stock. |
|
|
|
| · | Dividends: The Series A Preferred Stockholders are treated the same as the Common Stock holders except at the dividend on each share of Series A Convertible Preferred Stock is equal to the amount of the dividend declared and paid on each share of Common Stock multiplied by the Conversion Rate. |
|
|
|
| · | Conversion: Each share of Series A Preferred Stock is convertible, at the option of the holder thereof, at any time into shares of Common Stock on a 1:1,000 basis. |
|
|
|
| · | The shares of Series A Preferred Stock are redeemable at the option of the Corporation at any time after September 30, 2022 upon not less than 30 days written notice to the holders. It is not mandatorily redeemable. |
As of As of March 31, 2022 and June 30, 2021, the Company has
On February 15, 2021, in accordance with Florida Law and conversations with counsel, the Board of Directors of the Company rescinded
During March of 2021, the remaining former members of American Aviation Technologies, LLC agreed to allow the Company to rescind an aggregate of
During the nine months ended March 31, 2022, the Company issued
Series B Preferred Stock
On March 25, 2021, the Certificate of Designation for the Series B Preferred was recorded by the State of Nevada. There are
| F-16 |
| Table of Contents |
Stock Options
In connection with certain advisory board compensation agreements, the Company issued an aggregate
As of March 31, 2022, there are 19,000,000 options outstanding, of which
Options
A summary of the Company’s stock options activity is as follows:
|
| Number of Options |
|
| Weighted- Average Exercise Price |
|
| Weighted- Average Contractual Term (in years) |
|
| Aggregate Intrinsic Value |
| ||||
Outstanding at June 30, 2021 |
|
|
|
| $ | - |
|
|
|
|
|
|
| |||
Granted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exercised |
|
| - |
|
|
| - |
|
|
|
|
|
|
| ||
Canceled |
|
| - |
|
|
| - |
|
|
|
|
|
|
| ||
Outstanding at March 31, 2022 |
|
| 19,000,000 |
|
| $ | 0.12 |
|
|
|
|
| $ | - |
| |
Vested and expected to vest at March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ | - |
| |||
Exercisable at March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ | - |
| |||
Significant inputs and results arising from the Black-Scholes process are as follows for the options:
Quoted market price on valuation date |
| $ |
| |
Exercise prices |
| $ |
| |
Range of expected term |
|
| ||
Range of market volatility: |
|
|
|
|
Range of equivalent volatility |
| % | ||
Range of interest rates |
| % | ||
Warrants
As of March 31, 2022 and June 30, 2021, the Company had
A summary of the Company’s stock warrants activity is as follows:
|
| Number of Options (in thousands) |
|
| Weighted- Average Exercise Price |
|
| Weighted- Average Contractual Term (in years) |
|
| Aggregate Intrinsic Value |
| ||||
Outstanding at June 30, 2021 |
|
|
|
| $ |
|
|
|
|
|
| - |
| |||
Granted |
|
|
|
|
|
|
|
|
|
|
| - |
| |||
Exercised |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| |
Canceled |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| |
Outstanding at March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ | - |
| |||
Vested and expected to vest at March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ | - |
| |||
Exercisable at March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ | - |
| |||
NOTE 10 - NON-CONTROLLING INTEREST
AAT membership unit adjustment
On May 12, 2021, on further advice of counsel and in good faith, the Company returned
AAT Subsidiary
On May 12, 2021, the Company’s position in American Aviation Technologies, LLC was reduced to
| F-17 |
| Table of Contents |
NOTE 11 - SUBSEQUENT EVENTS
Joint Venture
Effective April 2, 2022 (the “Effective Date”), the Company entered into a Joint Venture Agreement (the “Joint Venture Agreement”) with Movychem s.r.o., a Slovakian limited liability company (“Movychem”) setting forth the terms for the establishment of a joint venture (the “Joint Venture”) to develop applications and commercialize a series of flame retardant products in the form of polymer gels, powders, liquids and pellets derived from technology developed by Movychem under the name Retacell™. The Joint Venture is organized as a Florida limited liability company under the name Ebenberg, LLC and is owned
The management and control of the Joint Venture is exclusively vested in a management committee (the “Management Committee”) which consists of five members two of whom are appointed by the Company, two of whom are appointed by Movychem and one of whom (the “Independent Member”) is appointed by mutual agreement of the parties. The Independent Member serves for a period of six months for the first two terms with each of the subsequent terms to be for a period of 12 months.
For its capital contribution to the Joint Venture, pursuant to a Patent and Exclusive License and Assignment Agreement (the “Patent Agreement”), Movychem is transferring to the Joint Venture all of its interest to the know-how and intellectual property relating to Retacell exclusive of all patents, and the Company is contributing the amount of $
Concurrently with the execution of the Joint Venture Agreement, the Joint Venture has entered into a Services Agreement (the “Services Agreement”) with the Company pursuant to which the Company will provide to the Joint Venture technical services related to the exploitation of the Retacell intellectual property and corporate, marketing. business development, communications and administrative services as requested by the Joint Venture in exchange for
Under the Joint Venture Agreement, the Company has agreed to grant to certain individuals affiliated with Movychem five-year warrants (the “Warrants”) to purchase an aggregate of
The Joint Venture Agreement grants to Movychem the right to dissolve the Joint Venture in the event that the Company fails to make any of its capital contributions in which case the Joint Venture will be required to grant back to Movychem all joint venture intellectual property and the assignment to Movychem of any outstanding licenses. Additionally, the Services Agreement will be amended to provide that the
Board of Directors
On May 12, 2022, Michael Harper and Lisa Ruth completed their one-year term serving as directors of the Company and have resigned from the board. Their resignations were anticipated and not as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
| F-18 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2021. The unaudited statements of operations for the six months ended March 31, 2022 and 2021 are compared in the sections below.
Brief Corporate History
Xeriant is an aerospace technology and advanced materials holding and operating company focused on Advanced Air Mobility (“AAM”) and the transition to green aerospace. The Company plans to source and acquire complementary and strategic interests in visionary companies developing, integrating, and commercializing critical breakthrough technologies which enhance performance, increase safety, and enable and support more efficient, autonomous, and sustainable flight operations, including electrically powered passenger and cargo transport aircraft capable of vertical takeoff and landing. The Company is located at the Research Park at Florida Atlantic University in Boca Raton, Florida.
The Company was originally incorporated in Nevada on December 18, 2009 under the name Eastern World Solutions, Inc. The name changed to Banjo Matilda, Inc. on September 24, 2013. On June 22, 2020, the Company changed its name from Banjo Matilda, Inc. to Xeriant, Inc. in the State of Nevada and subsequently approved by FINRA effective July 30, 2020 for the name and symbol change (XERI).
On April 16, 2019, the Company entered into a Share Exchange Agreement with American Aviation Technologies, LLC (“AAT”), an aircraft design and development company focused on the emerging segment of the aviation industry of autonomous and semi-autonomous vertical take-off and landing (VTOL) and unmanned aerial vehicles (UAVs).
On June 28, 2019, the Company spun out two wholly owned subsidiaries: Banjo Matilda (USA), Inc. and Banjo Matilda Australia Pty LTD.
On September 30, 2019, the acquisition of AAT closed, and AAT became a wholly owned subsidiary of the Company.
On June 22, 2020, the name was changed from Banjo Matilda, Inc. to Xeriant, Inc.
On May 31, 2021, the Company entered into a Joint Venture Agreement (the “Agreement”) with XTI Aircraft Company (“XTI”) to form a new company, called Eco-Aero, LLC (the “JV”), with the purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff, and landing (eVTOL) fixed wing aircraft. Under the Agreement, Xeriant is contributing capital, technology, and strategic business relationships, and XTI is contributing intellectual property licensing rights and know-how. XTI and the Company each own 50 percent of the JV.
Effective April 2, 2022, the Company entered into a Joint Venture with Movychem s.r.o., a Slovakian limited liability company (“Movychem”), called Ebenberg, LLC, setting forth the terms for the establishment of a joint venture (the “JV”) to develop applications and commercialize a series of flame retardant products in the form of polymer gels, powders, liquids and pellets derived from technology developed by Movychem under the name Retacell™. The JV is organized as a Florida limited liability and is owned 50% by each of the Company and Movychem. The transaction is further described herein under Subsequent Events.
| 5 |
| Table of Contents |
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Results of Operations
Three months ended March 31, 2022 compared to the three months ended March 31, 2021
|
| For the three months ended |
|
|
|
| ||||||||||
|
| March 31, 2022 |
|
| March 31, 2021 |
|
| $ |
|
| % |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing expense |
| $ | 25,771 |
|
| $ | 0 |
|
| $ | 25,771 |
|
|
| 100 | % |
General and administrative expenses |
|
| 799,521 |
|
|
| 141,897 |
|
|
| 657,624 |
|
|
| 463.45 | % |
Professional fees |
|
| 102,646 |
|
|
| 32,160 |
|
|
| 70,486 |
|
|
| 219.17 | % |
Related party consulting fees |
|
| 135,500 |
|
|
| 54,500 |
|
|
| 81,000 |
|
|
| 148.62 | % |
Research and development expense |
|
| 7,587 |
|
|
| - |
|
|
| 7,587 |
|
|
| 100 | % |
Total operating expenses |
|
| 1,071,025 |
|
|
| 228,557 |
|
|
| 842,468 |
|
|
| 368.60 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| (1,071,025 | ) |
|
| (228,557 | ) |
|
| 842,468 |
|
|
| 369.00 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
| (1,598,683 | ) |
|
| (103,225 | ) |
|
| 1,495,458 |
|
|
| 1,448.74 | % |
Amortization of debt discount, related party |
|
| - |
|
|
| - |
|
|
| - |
|
| - | % | |
Interest expense |
|
| (134,927 | ) |
|
| (2,661 | ) |
|
| 132,266 |
|
|
| 4970.54 | % |
Interest expense, related parties |
|
| - |
|
|
| - |
|
|
| - |
|
| - | % | |
Gain on forgiveness of accounts payable |
|
| - |
|
|
| - |
|
|
| - |
|
| - | % | |
Loss on settlement of debt |
|
| (3 | ) |
|
| - |
|
|
| (3 | ) |
|
| 100 | % |
Total other income (expense) |
|
| (1,733,613 | ) |
|
| (105,886 | ) |
|
| (1,627,727 | ) |
|
| 1537.24 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (2,804,638 | ) |
|
| (334,433 | ) |
|
| (2,470,195 | ) |
|
| 738.60 | % |
Sales and Marketing Expense
Sales and marketing expense was $25,771 for the three months ended March 31, 2022 compared to $0 for the three months ended March 31, 2021 for investor relations to create market awareness of the Company.
General and Administrative Expenses
Total general and administrative expenses were $799,521 for the three months ended March 31, 2022 compared to $141,897 for the three months ended March 31, 2021. The increase of $657,624 primarily relates to options granted valued at $574,563 for advisory board services.
Professional Fees
Total professional fees were $102,646 for the three months ended March 31, 2022 compared to $32,160 for the three months ended March 31, 2022. The increase of $70,486 primary relates to legal fees paid.
| 6 |
| Table of Contents |
Related Party Consulting Fees
Total related party consulting fees were $135,500 for the three months ended March 31, 2022 compared to $54,500 for the three months ended March 31, 2022. The increase of $81,000 was primarily related to additional related party consulting expenses coupled with an increase in the pay of existing related party.
Research and Development Expenses
Total research and development expenses were $7,587 for the three months ended March 31, 2022 compared to $0 for the three months ended March 31, 2021. The research and development costs were related to the development of an aircraft through our Eco-Aero joint venture.
Other Expenses
Total other income (expenses) was ($1,733,613) for the three months ended March 31, 2022 compared to ($105,886) for the three months ended March 31, 2021. Total other expenses consist of interest expense on debt, amortization of debt and loss on settlement of debt. The increase of $1,627,727 was primarily related the Company recording amortization of debt discount during the three months ended March 31, 2022 in the amount of $1,598,683.
Net loss
Total net loss was $2,804,638 for the three months ended March 31, 2022 compared to $2,804,638 for the three months ended March 31, 2021. The increase of $2,470,195 was primarily due to the reasons above.
Nine months ended March 31, 2022 compared to the nine months ended March 31, 2021
|
| For the nine months ended |
|
|
|
| ||||||||||
|
| March 31, 2022 |
|
| March 31, 2021 |
|
| $ |
|
| % |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales and marketing expense |
| $ | 670,989 |
|
| $ | 1,000,000 |
|
| $ | (329,011 | ) |
|
| 32.9 | % |
General and administrative expenses |
|
| 3,120,772 |
|
|
| 242,445 |
|
|
| 2,878,327 |
|
|
| 2,028.50 | % |
Professional fees |
|
| 234,671 |
|
|
| 67,397 |
|
|
| 167,274 |
|
|
| 520.1 | % |
Related party consulting fees |
|
| 348,925 |
|
|
| 132,500 |
|
|
| 216,425 |
|
|
| 397.1 | % |
Research and development expense |
|
| 5,207,806 |
|
|
| - |
|
|
| 5,207,806 |
|
|
| 100 | % |
Total operating expenses |
|
| 9,583,163 |
|
|
| 1,442,342 |
|
|
| 8,140,821 |
|
|
| 3,561.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| (9,583,163 | ) |
|
| (1,442,342 | ) |
|
| 8,140,821 |
|
|
| 3,561.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
| (3,012,642 | ) |
|
| (215,635 | ) |
|
| 2,797,007 |
|
|
| 2,709.6 | % |
Amortization of debt discount, related party |
|
| - |
|
|
| (5,000 | ) |
|
| 5,000 |
|
|
| 100 | % |
Financing fees |
|
| (43,750 | ) |
|
| - |
|
|
| (43,750 | ) |
|
| 100 | % |
Interest expense |
|
| (138,941 | ) |
|
| (4,857 | ) |
|
| (134,084 | ) |
|
| 5,038.9 | % |
Interest expense, related parties |
|
| - |
|
|
| (76 | ) |
|
| 76 |
|
|
| 100 | % |
Loss on settlement of debt |
|
| (536 | ) |
|
| (186,954 | ) |
|
| 186,418 |
|
|
| 100 | % |
Total other income (expense) |
|
| (3,195,869 | ) |
|
| (412,522 | ) |
|
| 2,783,347 |
|
|
| 2,628.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (12,779,032 | ) |
|
| (1,854,864 | ) |
|
| 10,924,168 |
|
|
| 3,266.4 | % |
| 7 |
| Table of Contents |
Sales and Marketing Expense
Sales and marketing expense was $670,989 for the nine months ended March 31, 2022 compared to $1,000,000 for the nine months ended March 31, 2021.
General and Administrative Expenses
Total general and administrative expenses were $3,120,772 for the nine months ended March 31, 2022 compared to $242,445 for the nine months ended March 31, 2021. The increase of $2,878,327 primarily relates to options granted valued at $1,993,524 for advisory board services and $736,954 from stock issued for services.
Professional Fees
Total professional fees were $234,671 for the nine months ended March 31, 2022 compared to $67,397 for the nine months ended March 31, 2021. The increase of $167,274 primary relates to legal fees paid.
Related Party Consulting Fees
Total related party consulting fees were $348,925 for the nine months ended March 31, 2022 compared to $132,500 for the nine months ended March 31, 2021. The increase of $216,425 was primarily related to additional related party expenses coupled with an increase in the pay of existing related party.
Research and Development Expenses
Total research and development expenses were $5,207,806 for the nine months ended March 31, 2022 compared to $0 for the nine months ended March 31, 2021. The research and development costs were related to the development of an aircraft through our Eco-Aero joint venture.
Other Expenses
Total other income (expenses) was ($3,195,869) for the nine months ended March 31, 2022 compared to ($412,522) for the nine months ended March 31, 2021. Total other expenses consist of interest expense on debt, amortization of debt and loss on settlement of debt. The increase of $2,783,347 was primarily related the Company recording amortization of debt discount during the nine months ended March 31, 2022 in the amount of $3,012,642.
Net loss
Total net loss was $12,779,032 for the nine months ended March 31, 2022 compared to $1,854,864 for nine months ended March 31, 2021. The increase of $10,924,168 was primarily due to the above reasons.
Liquidity and Capital Resources
Operating Activities
Cash used in operations of $6,415,055 during the nine months ended March 31, 2022 was primarily resulted from the increase cash used in operations resulted from increased expenditures on sales and marketing and on RD. The Company has a net loss of $12,779,032 during the nine months ended March 31, 2021 and offset by non-cash expenses such as stock compensation expense of $2,462,108, stock issued for services of $736,954, and amortization of debt discounts of $3,012,642.
Cash used in operations of $162,557 during the nine months ended March 31, 2021 was primarily a result of our $1,520,421 net loss reconciled with our net non-cash expenses relating to amortization of debt discount and our changes in operating assets and liabilities relating to accounts payable and accrued liabilities.
Investing Activities
Net cash used in investing activities for the nine months ended March 31, 2022 was $19,990, which consisted of purchase of new equipment.
Financing Activities
Net cash provided by financing activities for the nine months ended March 31, 2022 was $7,166,000, which consisted of proceeds from the sale of common stock of $2,078,500, cash in the amount of $128,550 from the exercise of warrants, and issuance of convertible debt of $4,958,950.
Net cash provided by financing activities for the nine months ended March 31, 2021 was $143,300, which consisted of proceeds from the sale of common stock of $51,000 and issuance of convertible debt of $92,300.
| 8 |
| Table of Contents |
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 March 31, 2022 and June 30, 2021, the Company had $1,639,495 and $962,540 in cash and $(710,654) and $677,257 in working capital, respectively. For the nine months ended March 31, 2022 and 2021, the Company had a net loss of $12,779,032 and $1,854,864, respectively. Continued losses may adversely affect the liquidity of the Company in the future. Therefore, the factors noted above raise substantial doubt about our ability to continue as a going concern. The recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company has granted a first priority security interest in its asset to Auctus Fund, LLC to secure a convertible note in the principal amount of $6,050,000 which is due on October 27, 2022. The Company’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.
Commitments for Capital Expenditures
To date, our operations have been funded primarily through private investors. Some of these investors have verbally committed additional funding for the Company, as needed. We have had a number of discussions with broker-dealers regarding the funding required to execute the Company’s business plan, which is to acquire companies with revenue and develop breakthrough technologies or business interests in those companies that have developed these technologies. We are in the process of issuing an offering document to obtain the funding for certain acquisitions that are in the discussion stages. There is no assurance that the Company will be able to obtain such funding and/or working capital. To the extent that funding is not available, the Company will be required to scale back or discontinue its business plan. Even if the Company is able to obtain financing, it may contain undue restrictions of the Company’s operations, or there may be substantial dilution for our shareholders in the case of equity financing or convertible debt financing.
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).
Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. The most significant assumptions and estimates relate to the valuation of beneficial conversion features and warrants associated with convertible debt. Actual results could differ from these estimates.
| 9 |
| Table of Contents |
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with 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 therein. 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 our financial statements. If the assessment indicates a potentially 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 remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
On September 1, 2021, Xeriant Inc. brought a cause of action in the Southern District of Florida against a former shareholder for claims, including but not limited to, breach of contract, misrepresentation, and asserting claims to recoup monetary and in-kind distributions made to the shareholder by the Company. The defendant submitted an affirmative defense and counterclaim on October 29, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Registrant files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Registrant’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.
At December 31, 2021, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act) was carried out under the supervision and with the participation of Keith Duffy our Chief Executive Officer and Brian Carey our Chief Financial Officer. Based on his evaluation of our disclosure controls and procedures, he concluded that at March 31, 2022, our disclosure controls and procedures are not effective due to material weaknesses in our internal controls over financial reporting discussed directly below.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the Company’s most recent fiscal quarter ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 10 |
| Table of Contents |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
On September 1, 2021, Xeriant Inc. brought a cause of action in the Southern District of Florida against a former shareholder for claims, including but not limited to, breach of contract, misrepresentation, and asserting claims to recoup monetary and in-kind distributions made to the shareholder by the Company. The defendant submitted an affirmative defense and counterclaim on October 29, 2021.
Item 1A. Risk Factors
Our business is subject to numerous risks and uncertainties including but not limited to those discussed in “Risk Factors” in our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
| 11 |
| Table of Contents |
Item 6. Exhibits
The following exhibits are filed herewith
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Document |
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 12 |
| Table of Contents |
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| XERIANT, INC. | ||
|
|
| |
Date: May 16, 2022 | By: | /s/ Keith Duffy | |
| Keith Duffy Chief Executive Officer (Principal Executive) | ||
Date: May 16, 2022 | By: | /s/ Brian Carey | |
| Brian Carey Chief Financial Officer |
| 13 |