UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

☒     Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2020

 

☐     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: 000-54277

 

XERIANT, INC.

(Exact name of registrant as specified in its charter).

BANJO & MATILDA, INC.

(Former name of registrant as specified in its charter).

 

Nevada

27-1519178

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Innovation Centre #1

3998 FAU Boulevard, Suite 309

Boca Raton, Florida

33431

(Address of principal executive offices)

(Zip code)

 

Registrant’s telephone number, including area code: (561) 491-9595

 

 

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. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

(Do not check if a 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 period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) 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 ☐     No ☒ 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 13, 2020, the Registrant had outstanding 225,880,524 shares of common stock.

 

 

 

 

XERIANT, INC. AND SUBSIDIARY

FORM 10-Q

TABLE OF CONTENTS

 

 

Page

 

Special Note regarding Forward-looking Statements

3

 

 

PART I – Financial Information

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

F-1

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

4

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

13

 

Item 4.

Controls and Procedures

13

 

PART II – Other Information

 

Item 1.

Legal Proceedings

 

14

 

Item 1A.

Risk Factors

 

14

 

Item 2.

Unregistered Sales of Equity Securities

 

14

 

Item 3.

Defaults Upon Senior Securities

 

14

 

Item 4.

Mine Safety Disclosures

 

14

 

Item 5.

Other Information

 

14

 

Item 6.

Exhibits

 

15

 

 

Signatures

16

   

 
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. AND SUBSIDIARY

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(UNAUDITED)

 

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and June 30, 2020

F-2

 

 

 

Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019 (Unaudited)

 

F-3

 

 

 

 

 

Condensed Consolidated Statements of Stockholder’s Deficit for the three months ended September 30, 2020 (Unaudited) and 2019 (Unaudited)

 

F-4

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

F-7

 

 
F-1

Table of Contents

 

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

As of

September 30, 2020 (Unaudited)

 

 

As of

June 30, 2020

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$ 42,058

 

 

$ 38,893

 

Deposits and prepaids

 

 

13,321

 

 

 

13,893

 

Total current assets

 

 

55,379

 

 

 

52,786

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use asset

 

 

197,228

 

 

 

206,111

 

Total assets

 

$ 252,607

 

 

$ 258,897

 

 

 

 

 

 

 

 

 

 

Liabilities & stockholders’ deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 26,812

 

 

$ 27,621

 

Accrued liabilities, related party

 

 

12,000

 

 

 

9,000

 

Convertible notes payable, net of discount

 

 

29,046

 

 

 

32,734

 

Lease liability, current

 

 

38,320

 

 

 

36,963

 

Total current liabilities

 

 

106,178

 

 

 

106,318

 

 

 

 

 

 

 

 

 

 

Lease liability, long-term

 

 

173,826

 

 

 

183,803

 

Total liabilities

 

 

280,004

 

 

 

290,121

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

Series A Preferred stock, $0.00001 par value; 100,000,000 shares authorized; 3,500,000 designated; 3,074,279 and 3,113,637 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively

 

 

31

 

 

 

31

 

Common stock, $0.00001 par value; 100,000,000 shares authorized; 225,880,524 and 69,584,149 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively

 

 

2,256

 

 

 

696

 

Common stock to be issued

 

 

51,145

 

 

 

372,397

 

Additional paid in capital

 

 

1,030,562

 

 

 

379,971

 

Accumulated deficit

 

 

(1,111,391 )

 

 

(784,319 )

Total stockholders’ deficit

 

 

(27,397 )

 

 

(31,224 )

Total liabilities and stockholders’ deficit

 

$ 252,607

 

 

$ 258,897

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 
F-2

Table of Contents

 

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

For the three

months ended

September 30, 2020

 

 

For thethree

months ended

September 30, 2019

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

General and administrative expenses

 

$ 35,970

 

 

$ 834

 

Professional fees

 

 

20,600

 

 

 

10,560

 

Consulting fees - related party

 

 

36,500

 

 

 

-

 

Research and development expense

 

 

-

 

 

 

6,339

 

Total operating expenses

 

 

93,070

 

 

 

17,733

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(93,070 )

 

 

(17,733 )

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

(45,961 )

 

 

-

 

Interest expense

 

 

(1,087 )

 

 

(1,202 )

Interest expense, related party

 

 

-

 

 

 

(230 )

Loss on settlement of debt

 

 

(186,954 )

 

 

-

 

Total other (expense)

 

 

(234,002 )

 

 

(1,432 )

 

 

 

 

 

 

 

 

 

Net loss

 

$ (327,072 )

 

$ (19,165 )

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

118,378,360

 

 

 

69,584,149

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 
F-3

Table of Contents

 

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

  

 

 

 

 

 

 

Additional

 

 

Common stock

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid in

to be

Accumulated

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

issued

 

 

Deficit

 

 

Total

 

Balance June 30, 2020

 

 

3,113,637

 

 

$ 31

 

 

 

69,584,149

 

 

$ 696

 

 

$ 379,971

 

 

$ 372,397

 

 

$ (784,319 )

 

$ (31,224 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for prior period conversions of principal and interest

 

 

-

 

 

 

-

 

 

 

112,847,466

 

 

 

1,127

 

 

 

371,270

 

 

 

(372,397 )

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible notes and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

51,145

 

 

 

-

 

 

 

51,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series A Preferred to Common Stock

 

 

(39,358 )

 

 

-

 

 

 

39,358,000

 

 

 

393

 

 

 

(393 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Relative fair value of warrants issued with convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36,407

 

 

 

-

 

 

 

-

 

 

 

36,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of beneficial conversion feature associated with convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

42,893

 

 

 

-

 

 

 

-

 

 

 

42,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

4,090,909

 

 

 

40

 

 

 

200,414

 

 

 

-

 

 

 

-

 

 

 

200,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

(327,072 )

 

 

(327,072 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2020

 

 

3,074,279

 

 

$ 31

 

 

 

225,880,524

 

 

$ 2,256

 

 

$ 1,030,562

 

 

$ 51,145

 

 

$ (1,111,391 )

 

$ (27,397 )

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

  

 
F-4

Table of Contents

 

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

  

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

Paid in

Accumulated

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

Balance June 30, 2019

 

 

-

 

 

$ -

 

 

 

-

 

 

$ -

 

 

$ 50,907

 

 

$ (84,756 )

 

$ (33,849 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of reverse merger

 

 

3,113,637

 

 

 

31

 

 

 

69,584,149

 

 

 

696

 

 

 

(50,629 )

 

 

-

 

 

 

(49,902 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,165 )

 

 

(19,165 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2019

 

 

3,113,637

 

 

$ 31

 

 

 

69,584,149

 

 

$ 696

 

 

$ 278

 

 

$ (103,921 )

 

$ (102,916 )

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 
F-5

Table of Contents

 

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the three

months ended September 30, 2020

 

 

For the three

months ended September 30, 2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net Loss

 

$ (327,072 )

 

$ (19,165 )

Adjustments to reconcile net loss to net

 

 

 

 

 

 

 

 

cash used by operating activities:

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

45,961

 

 

 

-

 

Loss on settlement of debt

 

 

186,954

 

 

 

 

 

Operating lease right of use asset

 

 

262

 

 

 

-

 

Changes in operating assets & liabilities

 

 

 

 

 

 

-

 

Prepaid expenses

 

 

572

 

 

 

 

 

Accounts payable and accrued expenses

 

 

17,188

 

 

 

(332 )

Accrued expenses, related parties

 

 

-

 

 

 

264

 

Net cash used by operating activities

 

 

(76,135 )

 

 

(19,233 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from convertible notes payable

 

 

79,300

 

 

 

153,000

 

Proceeds from convertible notes payable, related party

 

 

-

 

 

 

33,000

 

Net cash provided by financing activities

 

 

79,300

 

 

 

186,000

 

 

 

 

 

 

 

 

 

 

Increase in Cash

 

 

3,165

 

 

 

166,767

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

38,893

 

 

 

3,029

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 42,058

 

 

$ 169,796

 

 

 

 

 

 

 

 

 

 

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

 

$ 51,145

 

 

$ -

 

Warrants issued with convertible notes payable

 

$ 36,407

 

 

$ -

 

Beneficial conversion feature arising from convertible notes payable

 

$ 42,893

 

 

$ -

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

  

 
F-6

Table of Contents

  

XERIANT, INC. AND SUBSIDIARY (FORMERLY BANJO & MATILDA, INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

 

Xeriant, Inc. (“Xeriant,” formerly known as “Banjo & Matilda, Inc.,” “Banjo,” “BANJ”) is a holding and operating company focused on acquiring, developing and commercializing technologies with applications in aerospace, including innovative aircraft concepts. 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 Group, Inc. The name changed to Banjo & Matilda, Inc. on September 24, 2013. Effective June 22, 2020 the Company changed its name from Banjo & Matilda, Inc. to Xeriant, Inc.

 

On November 14, 2013, Eastern World Group, Inc. entered into a share exchange agreement (the “Exchange Agreement”) with Banjo & Matilda Pty Ltd, (“Banjo & Matilda”) and the shareholders of Banjo & Matilda (“B&M Shareholders”). Pursuant to the Exchange Agreement, 100% of the issued and outstanding capital stock of Banjo & Matilda was acquired, making it a wholly-owned subsidiary. In consideration for the purchase of 100% of the issued and outstanding capital stock of Xeriant, Inc. (f/k/a Banjo & Matilda) under the Exchange Agreement, the Company issued B&M Shareholders an aggregate of 24,338,872 restricted shares of common stock of the Company.

 

On July 1, 2015, the operations of Banjo & Matilda Pty Ltd were transferred to Banjo & Matilda (Australia) Pty Ltd., a wholly owned subsidiary of Xeriant, Inc. (f/k/a Banjo & Matilda).

 

Following the worldwide downturn of the retail clothing business model, in June of 2017, Xeriant (f/k/a Banjo) began to seek out additional businesses to acquire as subsidiaries to expand and refocus its operations to generate more revenue and profit. In June of 2017, Xeriant (f/k/a Banjo) began to seek out companies to acquire as additional subsidiaries to expand its business lines and generate more revenue and profit.

 

On September 20, 2017, Xeriant (f/k/a Banjo) entered into a Memorandum of Understanding for the acquisition of Spectrum King, LLC as a wholly-owned subsidiary, a pioneer of full spectrum LED grow lights, specialized in designing, manufacturing and selling high-end LED grow lights for indoor/greenhouse applications with both the Agriculture and Horticulture industries.

 

On March 19, 2018, Banjo entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction failed to close.

 

On April 16, 2019, Xeriant (f/k/a Banjo) 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) unmanned aerial vehicles (UAVs).

 

On June 28, 2019, Xeriant (f/k/a Banjo) 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 Xeriant, Inc. (f/k/a Banjo & Matilda, Inc.). On June 22, 2020, the name was changed from Banjo & Matilda, Inc. to Xeriant, Inc. The Company will be referred to as “Xeriant, Inc.” and or “Xeriant” throughout the document.

   

 
F-7

Table of Contents

 

Xeriant is a holding and operating company focused on acquiring, developing and commercializing revolutionary, eco-friendly technologies with applications in aerospace. These include innovative aircraft concepts targeting emerging opportunities within the aviation industry. The Company plans to take an active and disruptive role in the “third wave of aeronautics,” which includes the electrification of aerial transport and the development and integration of specialized aircraft with greatly reduced logistical footprints — allowing them to safely take-off and land significantly closer to (and even on top of) buildings. This will facilitate point-to-point on-demand and scheduled short-haul flights in congested urban environments, called urban air mobility (UAM).

 

Advancements in structural design, propulsion systems, materials, sensors, artificial intelligence (AI), batteries and high-speed connectivity have dramatically enhanced energy efficiency, acoustics, emissions, safety and autonomy, making feasible a broad range of electrically-powered VTOL (vertical takeoff and landing) capable aircraft, and transitioning aviation into a new era. Many of Xeriants nextologies will make personal air travel (for 1-4 passengers) far more affordable — providing safe, practical alternatives to traditional means of travel in a post-pandemic world.

 

Xeriant intends to acquire strategic interests in the most promising of these technological breakthroughs and next-generation aircraft configurations, leveraging the collective expertise of its growing international network of industry partnerships to accelerate the development of economically viable products that address specific market demands. The Company will identify prospective synergies between complementary and related technologies under its umbrella and promote constructive interaction and collaboration.

 

The Company is an OTC Markets publicly company trading under the stock symbol, XERI. As a holding company, Xeriant is positioned to own a portfolio of assets in a number of entities at various stages of maturity, including well-established revenue-generating enterprises. At this time, the Company is in active negotiations with several parties and performing due diligence.

 

The holding and operating company structure has several advantages and will enable the Company to grow rapidly, acquiring its assets primarily through acquisitions, joint ventures, strategic investments and licensing arrangements. As a publicly-traded holding company, Xeriant offers its subsidiary such benefits as providing shareholder liquidity, improved access to capital, higher valuations and lower risk through the shared ownership of a diversified portfolio, while at the same time allowing these entities to maintain independence in their distinct operations to focus on their fields of expertise. Cost savings and efficiencies may be realized from sharing non-operational functions such as finance, legal, tax, marketing, human resources, purchasing power, as well as investor and public relations. In addition, leveraging the breadth of resources in a holding company structure provides increased access to financial markets with more favorable terms, allowing for the ability to invest in large-scale projects. Xeriant is selecting investments and acquisitions based on the potential impact of a companys technology, the strength of its patents and other IP, the quality of its management team, and a demonstrated commitment to its vision with a clear path to profitability.

   

 
F-8

Table of Contents

  

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. and its wholly owned subsidiary American Aviation Technologies, LLC, collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation. These financial statements should be read in conjunction with the company’s latest annual financial statements.

 

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.

 

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.

  

 
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 September 30, 2020 there are no deferred tax assets.

 

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 September 30, 2020 and June 30, 2019 there are no accounts receivable.

 

Revenue Recognition

 

Revenue includes product sales. The Company recognizes revenue from product sales in accordance with Topic 606 “Revenue Recognition in Financial Statements” which considers revenue realized or realizable and earned when all of the following criteria are met:

 

 

(i)

persuasive evidence of an arrangement exists,

 

(ii)

the services have been rendered and all required milestones achieved,

 

(iii)

the sales price is fixed or determinable, and

 

(iv)

Collectability is reasonably assured.

 

For the three months ended September 30, 2020 and 2019, the Company had no revenue.

 

 
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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. During the three months ended September 30, 2020, the Company recorded a BCF in the amount of $42,893.

 

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 $0 and $6,339 for the three months ended September 30, 2020 and 2019, respectively.

 

Advertising, Marketing and Public Relations

 

The Company expenses advertising and marketing costs as they are incurred. There were no advertising costs during the three months ended September 30, 2020 and 2019.

 

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 during the three months ended September 30, 2020 and 2019.

 

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 greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our consolidated federal tax return and any state tax returns are not currently under examination.

 

 
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

 

On June 20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on August 6, 2018. The adoption of this standard did not have a material impact on the 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.

 

 
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NOTE 3 – OPERATING LEASE RIGHT-OF-USE ASSET AND OPERATING LEASE LIABILITY

  

The Company leases 2,911 square feet of office space located at Innovation Centre No. 1, 3998 FAU Boulevard, Boca Raton, Florida. The Company entered into a lease agreement commencing on November 1, 2019 through January 1, 2025 in which the first three months of rent are abated. The following table illustrates the base rent amounts over the term of the lease:

 

 

 

Base

 

Rent Periods

 

Rent

 

February 1, 2020 to October 1, 2020

 

$ 4,367

 

November 1, 2020 to October 1, 2021

 

$ 4,498

 

November 1, 2021 to October 1, 2022

 

$ 4,633

 

November 1, 2021 to October 1, 2022

 

$ 4,771

 

November 1, 2023 to October 1, 2024

 

$ 4,915

 

November 1, 2024 to January 1, 2025

 

$ 5,063

 

 

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 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations. At inception the Company paid prepaid rent in the amount of $4,659, which was netted against the operating lease right-of-use asset balance until it was applied in February 2020.

 

Right-of-use asset is summarized below:

 

 

 

September 30, 2020

 

Office lease

 

$ 220,448

 

Less: accumulated amortization

 

 

(23,220 )

Right-of-use asset, net

 

$ 197,228

 

 

 

 

 

 

Operating lease liability is summarized below:

 

 

 

 

 

 

September 30, 2020

 

Office lease

 

$ 212,146

 

Less: current portion

 

 

(38,320 )

Long term portion

 

 

173,826

 

 

 

 

 

 

Maturity of the lease liability is as follows:

 

 

 

 

Fiscal year ending June 30, 2021

 

$ 42,969

 

Fiscal year ending June 30, 2022

 

 

58,635

 

Fiscal year ending June 30, 2023

 

 

60,392

 

Fiscal year ending June 30, 2024

 

 

62,201

 

Fiscal year ending June 30, 2025

 

 

37,112

 

 

 

 

261,309

 

Present value discount

 

 

(49,163 )

Lease liability

 

$ 212,146

 

  

 
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NOTE 4 – EXCHANGE AGREEMENT

 

On April 18, 2019, Xeriant, Inc. (f/k/a Banjo & Matilda, Inc.), and American Aviation Technologies, LLC entered into a Share Exchange Agreement (“Agreement”). The agreement, which was effective on September 30, 2019, was pursuant to which Banjo acquired 100% of our issued and outstanding membership units in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 86.39% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, the Company became a wholly owned subsidiary of Banjo.

 

The Exchange Agreement was subject to the satisfaction of certain conditions as set forth in the Exchange Agreement.

 

Consummation of the Exchange Agreement was effective on September 30, 2019. Pursuant to the Exchange Agreement, the members of AAT received 2,750,000 shares of the Banjo & Matilda, Inc.’s Series A Preferred Stock to the members of AAT in exchange for the 10,000,000 member units.

 

On September 30, 2019 just prior to the exchange, Banjo issued 170,000 shares of preferred stock as compensation and 193,637 shares of preferred stock in satisfaction of $2,608,224 in liabilities.

 

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

The carrying values of convertible notes payable, net of discount, as of September 30, 2020 and June 30, 2020 was $29,046 and $32,734, respectively, as summarized below.

 

Convertible Notes Payable

 

September 30, 2020

 

 

June 30, 2020

 

Convertible notes payable issued March 2, 2020 (6% interest)

 

$ -

 

 

$ 22,000

 

Convertible notes payable issued March 3, 2020 (6% interest)

 

 

-

 

 

 

10,000

 

Convertible notes payable issued March 7, 2020 (6% interest)

 

 

-

 

 

 

1,650

 

Convertible notes payable issued March 10, 2020 (6% interest)

 

 

-

 

 

 

15,000

 

Convertible notes payable issued April 9, 2020 (6% interest)

 

 

-

 

 

 

1,000

 

Convertible notes payable issued April 23, 2020 (6% interest)

 

 

2,000

 

 

 

2,000

 

Convertible notes payable issued May 11, 2020 (6% interest)

 

 

1,500

 

 

 

1,500

 

Convertible notes payable issued June 29, 2020 (6% interest)

 

 

8,000

 

 

 

8,000

 

Convertible notes payable issued July 3, 2020 (6% interest)

 

 

2,000

 

 

 

-

 

Convertible notes payable issued July 20, 2020 (6% interest)

 

 

3,300

 

 

 

-

 

Convertible notes payable issued August 10, 2020 (6% interest)

 

 

20,000

 

 

 

-

 

Convertible notes payable issued August 25, 2020 (6% interest)

 

 

5,000

 

 

 

-

 

Convertible notes payable issued August 26, 2020 (6% interest)

 

 

5,000

 

 

 

-

 

Convertible notes payable issued September 15, 2020 (6% interest)

 

 

20,000

 

 

 

-

 

Convertible notes payable issued September 23, 2020 (6% interest)

 

 

4,000

 

 

 

-

 

Convertible notes payable issued September 24, 2020 (6% interest)

 

 

20,000

 

 

 

-

 

Total face value

 

 

90,800

 

 

 

61,150

 

Less unamortized discount

 

 

(61,754 )

 

 

(28,416 )

Carrying value

 

$ 29,046

 

 

$ 32,734

 

 

 
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NOTE 5 – CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

Notes issued between September 27, 2019 and July 20, 2020

 

Between September 27, 2019 and July 20, 2020, AAT issued convertible notes payable with an aggregate face value of $357,750 with a coupon rate of 6%. The notes have a maturity date of six months. The agreements provided that in the event AAT is merged into Banjo (“Company”), at any time prior to the Maturity Date, the holder has the option to convert the principal balance and any accrued interest to common stock of the Company at a conversion price of $.0033 per share. In the event the holder does not elect to convert the note prior to maturity, the note will automatically convert to common stock at a price of $.0033 per share.

 

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. 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. The Company recorded a beneficial conversion feature in the amount of $357,750 related to these notes.

 

Between March 27, 2020 and September 10, 2020, holders of the convertible notes converted $340,950 in principal and $10,231 in accrued interest into 106,418,414 shares of common stock. As of September 30, 2020, 90,919,829 shares have been issued. The remaining 15,498,585 is recorded in common stock to be issued.

 

Notes issued between August 10, 2020 and September 24, 2020

 

Between August 10, 2020 and September 24, 2020, the Company issued convertible notes payable with an aggregate face value of $74,000 with a coupon rate of 6%. The notes have a maturity date of three months. The agreements provided the holder has the option to convert the principal balance and any accrued interest to common stock of the Company at a conversion price of $.025 per share. In the event the holder does not elect to convert the note prior to maturity, the note will automatically convert to common stock at a price of $.025 per share.

 

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 notes, the Company issued warrants indexed to an aggregate 2,960,000 shares of common stock. The warrants have a term of three years and an exercise price of $.025. The Company evaluated the warrants under ASC 815 Derivatives and Hedging (“ASC 815”) and determined that they did not require liability classification. The warrants were recorded in additional paid-in capital under their aggregate relative fair value of $36,407.

 

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 $36,407 to the warrants, the remaining $37,593 in proceeds resulted in a beneficial conversion feature recorded in additional paid-in capital. Both the BCF and warrants resulted in a debt discount and are amortized over the life of the note.

 

Amortization of debt discount and interest expense related to all notes

 

For the three months ended September 30, 2020, the Company recorded $45,961 and $0 in amortization of debt discount related to the notes. For the three months ended September 30, 2020 and 2019, the Company recorded $1,087 and $1,202 in interest expense related to the notes, respectively.

 

 
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NOTE 6 –RELATED PARTY TRANSACTIONS

 

During the three months ended September 30, 2020, the Company paid Ancient Investments, LLC, a Company owned by the Company’s CEO, Keith Duffy and the Company’s Executive Director of Corporate Operations, Scott Duffy, $15,500 for consulting services.

 

During the three months ended September 30, 2020, the Company paid AMP Web Services, a Company owned by the Company’s CTO, Pablo Lavigna, $4,500 for consulting services. On August 26, 2020, the Company issued 4,090,909 shares of common stock for payment of $13,500 for services performed in May, June and July 2020. As of September 30, 2020, $4,500 due for September services is recorded in accrued liabilities, related party.

 

During the three months ended September 30, 2020, the Company owed $7,500 to Keystone Business Development Partners, a Company owned by the Company’s CFO, Brian Carey. The amount owed is recorded in accrued liabilities, related party.

 

NOTE 7 – 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. As of September 30, 2020, the Company is not aware of any contingent liabilities that should be reflected in the financial statements.

 

NOTE 8 – EQUITY

 

Common Stock

 

During the three months ended September 30, 2020, the Company issued 112,847,466 shares of common stock for the conversion of $359,300 in principal and $13,097 in accrued interest.

 

On August 26, 2020, the Company issued 4,090,909 shares of common stock for payment of $13,500 for services performed in May, June and July 2020. The shares were valued at $200,454 or $0.049 per share. As of result the Company recorded a loss on settlement in debt in the amount of $186,954.

 

During the three months ended September 30, 2020, certain holders of preferred stock converted 39,358 shares into 39,358,000 shares of common stock.

 

Preferred Stock

 

There are 100,000,000 shares authorized as preferred stock, of which 3,500,000 are designated as Series A Preferred Stock having a par value of $0.00001 per share. The Series A preferred stock has the following rights:

 

 

·

Voting: The preferred shares shall be entitled to 100 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.

 

 
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During the three months ended September 30, 2020, certain holders of preferred stock converted 39,358 shares into 39,358,000 shares of common stock.

 

As of September 30, 2020 and June 30, 2020, the Company has 3,074,279 and 3,113,637 shares of Series A Preferred Stock issued and outstanding, respectively. The balance of Preferred Stock at September 30, 2020 and June 30, 2020 was $31.

 

NOTE 9 – GOING CONCERN MATTERS

 

The Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At September 30, 2020 and June 30, 2020, the Company had $42,058 and $38,893 in cash and $50,799 and $53,532 in negative working capital, respectively. For the three months ended September 30, 2020 and 2019, the Company had a net loss of $327,072 and $19,165, 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’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.

 

NOTE 10 – SUBSEQUENT EVENTS

 

Convertible note

 

On October 5, 2020, the Company issued a convertible note payable with a face value of $10,000 with a coupon rate of 6%. The note has a maturity date of three months. The agreement provides the holder has the option to convert the principal balance and any accrued interest to common stock of the Company at a conversion price of $.025 per share. In the event the holder does not elect to convert the note prior to maturity, the note will automatically convert to common stock at a price of $.025 per share. In connection with the notes, the Company issued warrants indexed to 400,000 shares of common stock.

 

 
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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, 2020. The unaudited statements of operations for the three months ended September 30, 2020 and 2019 are compared in the sections below.

 

Executive summary

 

Xeriant, Inc. (“Xeriant,” formerly known as “Banjo & Matilda, Inc.,” “Banjo,” “BANJ”) is a holding and operating company focused on acquiring, developing and commercializing technologies with applications in aerospace, including innovative aircraft concepts. 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 Group, Inc. The name changed to Banjo & Matilda, Inc. on September 24, 2013. Effective June 22, 2020 the Company changed its name from Banjo & Matilda, Inc. to Xeriant, Inc.

 

On November 14, 2013, Eastern World Group, Inc. entered into a share exchange agreement (the “Exchange Agreement”) with Banjo & Matilda Pty Ltd, (“Banjo & Matilda”) and the shareholders of Banjo & Matilda (“B&M Shareholders”). Pursuant to the Exchange Agreement, 100% of the issued and outstanding capital stock of Banjo & Matilda was acquired, making it a wholly-owned subsidiary. In consideration for the purchase of 100% of the issued and outstanding capital stock of Xeriant, Inc. (f/k/a Banjo & Matilda) under the Exchange Agreement, the Company issued B&M Shareholders an aggregate of 24,338,872 restricted shares of common stock of the Company.

 

 
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On July 1, 2015, the operations of Banjo & Matilda Pty Ltd were transferred to Banjo & Matilda (Australia) Pty Ltd., a wholly owned subsidiary of Xeriant, Inc. (f/k/a Banjo & Matilda).

 

Following the worldwide downturn of the retail clothing business model, in June of 2017, Xeriant (f/k/a Banjo) began to seek out additional businesses to acquire as subsidiaries to expand and refocus its operations to generate more revenue and profit. In June of 2017, Xeriant (f/k/a Banjo) began to seek out companies to acquire as additional subsidiaries to expand its business lines and generate more revenue and profit.

 

On September 20, 2017, Xeriant (f/k/a Banjo) entered into a Memorandum of Understanding for the acquisition of Spectrum King, LLC as a wholly-owned subsidiary, a pioneer of full spectrum LED grow lights, specialized in designing, manufacturing and selling high-end LED grow lights for indoor/greenhouse applications with both the Agriculture and Horticulture industries.

 

On March 19, 2018, Banjo entered into a Share Exchange Agreement with Spectrum King, LLC, however this transaction failed to close.

 

On April 16, 2019, Xeriant (f/k/a Banjo) 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) unmanned aerial vehicles (UAVs).

 

On June 28, 2019, Xeriant (f/k/a Banjo) 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 Xeriant, Inc. (f/k/a Banjo & Matilda, Inc.). On June 22, 2020, the name was changed from Banjo & Matilda, Inc. to Xeriant, Inc. The Company will be referred to as “Xeriant, Inc.” and or “Xeriant” throughout the document.

  

Recent Developments

 

Spin Out Agreement

 

Effective June 28, 2019, the Company entered into a Spin Out Agreement with WNPAU Pty Ltd. (“WNPAU”) which is owned by the Company’s former CEO Brendan MacPherson. In connection with the agreement, WNPAU agreed to assume all the assets and liabilities of the Company’s two subsidiaries: Banjo & Matilda (USA), Inc. and Banjo & Matilda Australia Pty LTD exchange for the return of 1,000,000 shares of Preferred Stock held by Brendan MacPherson and $135,000 of accrued compensation owed to Brendan MacPherson.

 

Exchange Agreement

 

On April 16, 2019, Xeriant, Inc. (f/k/a Banjo & Matilda, Inc (“Banjo”), and American Aviation Technologies, LLC (“AAT”) entered into a Share Exchange Agreement (“Agreement”). The agreement, which was effective on September 30, 2019, was pursuant to which Banjo acquired 100% of our issued and outstanding membership units in exchange for the issuance of Banjo shares of its Series A Preferred Stock constituting 86.39% of the total voting power of Banjo capital stock to be outstanding upon closing, after giving effect to the consummation of concurrent debt settlement and other capital stock issuances but before the issuance of shares of capital stock for investor relations purposes. As a result of the Exchange Agreement, AAT became a wholly owned subsidiary of Banjo.

 

The Exchange Agreement was subject to the satisfaction of certain conditions as set forth in the Exchange Agreement.

 

AAT is a Florida limited liability company that is an aircraft design and development company dedicated to advancing aeronautical safety and performance through new and innovative concepts.

   

 
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Critical 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 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. and its wholly owned subsidiary American Aviation Technologies, LLC, collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation. These financial statements should be read in conjunction with the company’s latest annual financial statements.

 

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.

 

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.

 

 
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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 September 30, 2020 there are no deferred tax assets.

 

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 September 30, 2020 and June 30, 2019 there are no accounts receivable.

 

Revenue Recognition

 

Revenue includes product sales. The Company recognizes revenue from product sales in accordance with Topic 606 “Revenue Recognition in Financial Statements” which considers revenue realized or realizable and earned when all of the following criteria are met:

 

 

(i)

persuasive evidence of an arrangement exists,

 

(ii)

the services have been rendered and all required milestones achieved,

 

(iii)

the sales price is fixed or determinable, and

 

(iv)

Collectability is reasonably assured.

 

For the three months ended September 30, 2020 and 2019, the Company had no revenue.

   

 
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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. During the three months ended September 30, 2020, the Company recorded a BCF in the amount of $42,893.

 

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 $0 and $6,339 for the three months ended September 30, 2020 and 2019, respectively.

 

Advertising, Marketing and Public Relations

 

The Company expenses advertising and marketing costs as they are incurred. There were no advertising costs during the three months ended September 30, 2020 and 2019.

 

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 during the three months ended September 30, 2020 and 2019.

 

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 greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our consolidated federal tax return and any state tax returns are not currently under examination.

 

 
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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. The Company entered into a new lease agreement commencing on November 1, 2019 and implemented this guidance on November 1, 2019.

 

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.

 

On June 20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on August 6, 2018. The adoption of this standard did not have a material impact on the 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.

   

 
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Three months ended September 30, 2020 compared to the three months ended September 30, 2019

 

 

 

For the three

months ended September

30, 2020

 

 

For the three

months ended September

30, 2019

 

 

Change ($)

 

 

Change (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

$ 35,970

 

 

$ 834

 

 

$ 35,136

 

 

4213

%

Professional fees

 

 

20,600

 

 

 

10,560

 

 

 

10,040

 

 

 

95 %

Related party consulting fees

 

 

36,500

 

 

 

0

 

 

 

36,500

 

 

 

100 %

Research and development expense

 

 

0

 

 

 

6,339

 

 

 

(6,339 )

 

 

-100 %

Total operating expenses

 

 

93,070

 

 

 

17,733

 

 

 

75,337

 

 

 

425 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(93,070 )

 

 

(17,733 )

 

 

(75,337 )

 

 

425 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

(45,961 )

 

 

0

 

 

 

(45,961 )

 

 

100 %

Interest expense

 

 

(1,087 )

 

 

(1,202 )

 

 

115

 

 

 

-10 %

Interest expense, related parties

 

 

0

 

 

 

(230 )

 

 

230

 

 

 

-100 %

Loss on settlement of debt

 

 

(186,954 )

 

 

0

 

 

 

(186,954 )

 

 

100 %

Total other income (expense)

 

 

(234,002 )

 

 

(1,432 )

 

 

(232,570 )

 

 

16241 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (327,072 )

 

$ (19,165 )

 

$ (307,908 )

 

1607

%

  

General and Administrative Expenses

 

Total general and administrative expenses were $35,970 for the three months ended September 30, 2020 compared to $834 for the three months ended September 30, 2019. The increase of $35,136 was due to the ramp up of operations including rent expense for a facilities lease and corporate and listing expenses.

 

Professional Fees

 

Total professional fees were $20,600 for the three months ended September 30, 2020 compared to $10,560 for the three months ended September 30, 2019. The increase of $10,040 was primarily due to fees incurred by our auditors in the three months ended September 30, 2020 compared to no fees during the prior period.

 

Related Party Consulting Fees

 

Total related party consulting fees were $36,500 for the three months ended September 30, 2020 compared to $0 for the three months ended September 30, 2019. The increase of $36,500 was because fees incurred by related parties didn’t begin until the quarter ended December 31, 2019.

 

 
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Research and Development Expenses

 

Total research and development expenses were $0 for the three months ended September 30, 2020 compared to $6,339 for the three months ended September 30, 2019. The decrease of 100% was due to the fact there were no research and development projects in the current period.

 

Other Expenses

 

Total other expenses were $234,002 for the three months ended September 30, 2020 compared to $1,432 for the three months ended September 30, 2019. Total other expenses consist of interest expense on debt, amortization of debt discount and loss on settlement of debt. The increase of $232,571 was related to the incurrence of additional debt and the gain of $186,955 recorded on loss on settlement of debt.

 

Net loss

 

Total net loss was $327,072 for the three months ended September 30, 2020 compared to $19,165 for the three months ended September 30, 2019. The increase of $307,908 was primarily due to an increase of operational activities.

 

Operating Activities

 

Cash used in operations of $76,135 during the three months ended September 30, 2020 was primarily a result of our $327,072 net loss reconciled with our net non-cash expenses relating to amortization of debt discount, loss on settlement of debt, and our changes in operating assets and liabilities relating to prepaid expenses and accounts payable and accrued liabilities. Cash used in operations of $19,233 during the three months ended September 30, 2019 was primarily a result of our $19,165 net loss reconciled with our changes in operating assets and liabilities relating to accounts payable and accrued liabilities.

 

Financing Activities

 

Net cash provided by financing activities for the three months ended September 30, 2020 was $79,300, which consisted of proceeds from the issuance of convertible debt. Net cash provided by financing activities for the three months ended September 30, 2019 was $186,000, which consisted of proceeds from the issuance of convertible debt in the amount of $153,000 and from the issuance of convertible debt, related party in the amount of $33,000.

 

Liquidity and Capital Resources

 

As of September 30, 2020, we had a cash balance of $42,058 and negative working capital of $50,799. Our net loss of $327,072 in the three months ended September 30, 2020 was mostly funded by proceeds raised from financings. We will need to raise working capital (or refinance existing short-term debt to long-term debt) to fund operations. Future equity financings may be dilutive to our stockholders. Alternative forms of future financings may include preferences or rights superior to our common stock. Debt financings may involve a pledge of assets and will rank senior to our common stock. We have historically financed our operations through best-efforts private equity and debt financings. We do not have any credit or equity facilities available with financial institutions, stockholders or third-party investors, and will continue to rely on best efforts financings. The failure to raise sufficient capital will likely cause us to cease operations.

 

During the three months ended September 30, 2020, our operating activities used $76,135 of net cash compared to using $19,233 of net cash flow in our operating activities during three months ended September 30, 2019. This difference primarily resulted from the increase of operations.

   

 
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Table of Contents

  

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 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.

 

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.

 

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.

  

 
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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 September 30, 2020, 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 September 30, 2020, 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 September 30, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
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Table of Contents

    

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

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.

  

 
14

Table of Contents

     

Item 6. Exhibits

 

The following exhibits are filed herewith:

 

Exhibit

Number

 

Document

 

31.1

 

Certification of the principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of the principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1

 

Certification of the principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2

 

Certification of the principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS

 

XBRL Instance Document

 

 

101.SCH

 

XBRL Taxonomy Extension Schema

 

101.CAL

 

XBRL Taxonomy Extension Calculation

 

101.DEF

 

XBRL Taxonomy Extension Definition

 

101.LAB

 

XBRL Taxonomy Extension Label

 

101.PRE

 

XBRL Taxonomy Extension Presentation

   

 
15

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: November 13, 2020

By:

/s/ Keith Duffy

 

Keith Duffy

Chief Executive Officer

(Principal Executive)

 

Date: November 13, 2020

By:

/s/ Brian Carey

 

Brian Carey

Chief Financial Officer

 

 
16

 

 

 

 

 

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