# Xeriant, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Xeriant, Inc.](/companies/xeri.md) (CIK 1481504)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 15:36 ET
- Period: 2024-09-30
- Accession: 0001477932-24-007198
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1481504/000147793224007198/xeri_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1481504/000147793224007198/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $26.6k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$358.8k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $61.6k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$372.2k | us-gaap:NetIncomeLoss |
| Operating cash flow | 3 months, 2024-07-01 to 2024-09-30 | −$353.1k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Current assets | at 2024-09-30 | $320.0k | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $354.8k | us-gaap:Assets |
| Total liabilities | at 2024-09-30 | $8.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | −$5.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 18,171 characters.

*The following discussion of our financial condition and results of operations should be read in conjunction with the audited and unaudited consolidated 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’s audited consolidated financials for the year ended June 30, 2024. The unaudited condensed consolidated statements of operations for the three months ended September 30, 2024 and 2023 are compared in the sections below.

### Executive Summary

Xeriant, is dedicated to the discovery, development and commercialization of advanced materials and technology related to next generation air and spacecraft, which can be successfully integrated and commercialized for deployment across multiple industrial sectors. The Company seeks to partner with and acquire strategic interests in visionary companies that accelerate this mission. Xeriant’s advanced materials line will be marketed under the DUREVER™ brand, and includes NEXBOARD™, an eco-friendly, patent-pending composite building panel made from plastic and cellulose waste and a proprietary flame retardant, primarily designed to be a replacement for traditional building materials such as drywall, plywood, OSB, MDF, MgO board and other materials used in construction.

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#### Joint Venture with XTI Aircraft

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 joint venture with XTI (the “XTI JV”), named Eco-Aero, LLC, with the purpose of completing the preliminary design review (“PDR”) of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, eVTOL fixed wing aircraft. Under the Agreement, Xeriant would contribute capital, technology, and strategic business relationships, and XTI contributed intellectual property licensing rights and know-how. XTI and the Company each owned 50 percent of the XTI JV and would be managed by a management committee consisting of five members, three appointed by Xeriant and two by XTI. The Company invested approximately $5.5 million into the joint venture after borrowing the funds from Auctus Fund LLC (“Auctus”) through a Senior Secured Promissory Note, through an introduction from Maxim Group, LLC, the Company’s investment banker at the time. The borrowed funds from Auctus were intended to be a bridge loan that would be resolved through an IPO (Initial Public Offering) and uplist to Nasdaq in a merger with XTI, which did not occur because XTI refused to move forward with the merger. The PDR was completed during the first quarter of 2022 according to XTI.

On May 17, 2022, after failed merger negotiations, the Company entered into a confidential Letter Agreement with XTI whereby Xeriant would receive compensation for introducing Inpixon, a Nasdaq-listed company, to XTI for a combination or any other transaction. Should a combination or any other transaction occur, the compensation due to Xeriant would include a six percent (6%) fully diluted interest in XTI upon dissolution of its Joint Venture with Xeriant, and XTI would assume Xeriant’s obligations under its Senior Secured Note with Auctus.

On June 5, 2023, after suspecting that the obligations under the Letter Agreement were possibly being evaded, the Company transmitted a formal demand letter to XTI requesting compliance with the provisions outlined in the Letter Agreement, and in accordance with section 8 of the JV Agreement with XTI.

On July 25, 2023, Inpixon filed an 8-K announcing that they had signed an Agreement of Plan and Merger with XTI. Despite the Company’s pivotal role in facilitating this merger, as memorialized in a formal agreement, XTI repeatedly publicly disclaimed any obligation to compensate Xeriant.

On December 6, 2023, the Company initiated legal proceedings against XTI. See *Litigation* section below for a summary of the related legal proceedings.

#### Stock Sales

None.

#### Convertible Notes Issued

None.

#### Litigation

On October 19, 2023, Xeriant filed a complaint in the United States Southern District of New York (Case no.1:23-cv-09200) against Auctus Fund LLC, to invalidate allegedly illegally designed contractual agreements, including contesting the enforceability of the related note and amendments, and to set aside improper and unlawful securities transactions effectuated in violation of Section 15(a)(1) of the Exchange Act (15 U.S.C. § 78o(a)(1)) by the Defendant, alleging breaches of fiduciary duty and related claims. On February 9, 2024, the case was dismissed. The Company filed a Notice of Civil Appeal on March 13, 2024, primarily based on public welfare because of the pending litigation between the SEC and Auctus Fund Management, LLC, which complaint was filed on June 1, 2023. On June 19, 2024, the Company filed an appeal in the United States Court of Appeals for the Second Circuit (Case no. 24-682-cv), which is still pending. The foregoing descriptions of the legal actions do not purport to be complete and are subject in their entirety by the full text of the court filings.

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On December 6, 2023, the Company initiated legal proceedings against XTI Aircraft Company in the Federal District Court for the Southern District of New York (Case no. 1:23-cv-10656-JPO), along with other unnamed defendants, seeking to enforce the terms of the Letter Agreement, and alleging fraudulent acts, deceptive maneuvers and intentional breaches, seeking a range of remedies. These include the recovery of losses, expenses, attorneys’ fees, punitive damages and a compensatory damage award exceeding $500 million. The legal action aims to address the alleged misconduct comprehensively and to protect the Company’s interests in the face of XTI’s actions. The foregoing description of the legal action does not purport to be complete and is subject in its entirety by the full text of the complaint, a copy of which was filed in an 8-K on December 12, 2023, Exhibit 99.1. On February 29, 2024, the Company filed a Second Amended Complaint against XTI, along with other unnamed defendants, on February 29, 2024, and on March 13, 2024, XTI filed a partial Motion to Dismiss. On April 10, 2024, the Company filed a Memorandum of Law in Opposition to XTI’s Motion to Dismiss the Company’s Second Amended Complaint and is waiting for the court to rule on the matter.

There is no pending litigation against the Company and to our knowledge no litigation is contemplated or threatened. To our knowledge, none of our directors, officers, 5% shareholders or affiliates are party to any legal proceedings that would have a material adverse effect on our business, financial condition, or operating results.

### Three Months Ended September 30, 2024, Results of Operations Compared with Three Months Ended September 30, 2023

| Operating expenses: | For the three months ended September 30, 2024 | September 30, 2023 | $ |
| --- | ---: | ---: | ---: |
| Consulting and advisory fees | $88,983 | $51,695 | $37,288 |
| Related party consulting fees | 123,000 | 97,500 | 25,500 |
| General and administrative expenses | 56,445 | 52,399 | 4,046 |
| Professional fees | 63,806 | 90,314 | (26,508) |
| Research and development expense | 26,561 | 26,982 | (421) |
| Total operating expenses | 358,795 | 318,890 | 39,905 |
| Operating loss | (358,795) | (318,890) | 39,905 |
| Other expenses: |  |  |  |
| Amortization of debt discount | (16,802) | - | (16,802) |
| Interest expense | (61,617) | (20,674) | (40,943) |
| Gain on extinguishment of debt | 64,992 | - | 64,992 |
| Change in fair value of convertible bridge loans | - | (2,448) | 2,448 |
| Total other (expense) | (13,427) | (23,122) | 9,695 |
| Net loss | $(372,222) | $(342,012) | $(30,210) |

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#### Consulting and advisory fees

Total consulting and advisory expenses were $88,983 and $51,695 for the three months ended September 30, 2024 and 2023, respectively. In the prior period, there were increased expenses due to stock issuances for services relating to advisory agreements.

#### Related Party Consulting Fees

Total related party consulting fees were $123,000 and $97,500 for the three months ended September 30, 2024 and 2023, respectively. The related party consulting fees for the three months ended September 30, 2024, consisted of (i) $55,000 to Ancient Investments, LLC, (ii) $23,000 for AMP Web Services, LLC, (iii) $30,000 to Edward DeFeudis, and (iv) $15,000 for Keystone Business Development Partners, LLC. The related party consulting fees for the three months ended September 30, 2023, consisted of (i) $57,500 to Ancient Investments, LLC, a company owned by Keith Duffy, CEO and Scott Duffy, Executive Director of Operations, (ii) $14,000 for AMP Web Services, LLC, a company owned by Pablo Lavigna, CIO, (iii) $21,000 to Edward DeFeudis, Director, and (iv) $5,000 for Keystone Business Development Partners, LLC, a company owned by Brian Carey, CFO. In the prior period, there were decreased expenses relating to reduced available funds. Related party consulting fees are paid to Company management to their respective entities for managerial and consulting services relating to Company operations.

#### General and administrative expenses

Total general and administrative expenses were $56,445 and $52,399 for the three months ended September 30, 2024 and 2023, respectively. The primary reason for the increase was there were increased expenses related to our subsidiary BlueGreen Composites, LLC. Expenses for BlueGreen Composites, LLC, relate to research, testing and business development costs for the Company’s advanced materials operations.

#### Professional Fees

Total professional fees were $63,806 and $90,314 for the three months ended September 30, 2024 and 2023, respectively. The primary reason for the decrease was there were higher auditing fees and legal costs associated with a patent in the prior period.

#### Research and Development Expenses

Total research and development expenses were $26,561 and $26,982 for the three months ended September 30 2024 and 2023, respectively. The difference between the periods were de minimis.

#### Other (Expenses)

Total other expenses consist of interest expense related to convertible notes, amortization of debt discount, gain on extinguishment of debt and change in fair value of the convertible bridge loans. Total other expenses were $13,427 for the three months ended September 30, 2024, compared to $23,122 for the three months ended September 30, 2023. The increase was primarily due to increased interest expense related to additional convertible notes offset by gain on loss on extinguishment of debt.

#### Net loss

Total net loss was $372,222 for the three months ended September 30, 2024, compared to $342,012 for the three months ended September 30, 2023. The increase was primarily related to increased consulting and advisory fees, increased related party consulting fees, and increased interest expense.

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### Liquidity and Capital Resources

The Company’s condensed consolidated 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. On September 30, 2024, and June 30, 2024, the Company had $300,002 and $653,117 in cash, respectively, and $8,532,513 and $8,661,248 in negative working capital, respectively. On September 30, 2024, the principal balance of the Auctus Senior Secured Promissory Note was $5,850,000. The Note matured on March 15, 2023, and the company has been in discussions with Auctus to resolve the liability. For the three months ended September 30, 2024 and 2023, the Company had a net loss of $372,222 and $342,012, 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 unaudited condensed consolidated 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 unaudited condensed consolidated 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. To implement its business plan, the Company must raise sufficient funds in the form of equity, debt, or a combination thereof. Until the Company develops profitable operations, it is dependent upon management continually raising funds.

During the three months ended September 30, 2024, the Company’s operating activities used $353,095 of net cash used compared to using $308,127 of net cash used in our operating activities during the three months ended September 30, 2023. This difference primarily related to stock issued for services in the current period. During the three months ended September 30, 2024, our investing activities were $0 compared to $139,947 of net cash used in our investing activities during the three months ended September 30, 2023. This difference related to cash issued for notes receivable during the three months September 30, 2023. During the three months ended September 30, 2024, our financing activities were $0 compared to $411,000 of net cash added in our financing activities during the three months ended September 30, 2023. This difference related to the issuance of convertible notes during the three months ended September 30, 2023.

### Funding Strategy

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 and develop breakthrough technologies or business interests in those companies that have developed these technologies. We plan on issuing an offering document to obtain funding for certain acquisitions that are in the discussion stages.

### 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

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments which affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities (see Note 2, Summary of Significant Accounting Policies, contained in the notes to the Company’s unaudited condensed consolidated financial statements for the three months ended September 30, 2024 and 2023 contained in this filing). On an ongoing basis, we evaluate our estimates. The Company bases our estimates on historical experience and on various other assumptions which we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities which are not readily apparent from other sources. Actual results may differ from these estimates based upon different assumptions or conditions; however, we believe that our estimates are reasonable.

Management is aware that certain changes in accounting estimates employed in generating financial statements can have the effect of making the Company look more or less profitable than it actually is. Management does not believe that the Company has made any such changes in accounting estimates.

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## Controls and procedures

As filed, 1,610 characters.

### 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 September 30, 2024, 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 their evaluation of our disclosure controls and procedures, they concluded that at September 30, 2024, our disclosure controls and procedures are effective.

### 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 September 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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## Risk factors

As filed, 157 characters.

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.

Filed Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001477932-24-007198. Last ingested by Listed: Oct 24, 2026, 15:08 ET. No prices; not investment advice.