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 December 31, 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 February 16, 2021, 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)

 

4

 

Item 2.

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

 

5

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

15

 

Item 4.

Controls and Procedures

15

 

PART II – Other Information

Item 1.

Legal Proceedings

 

16

 

Item 1A.

Risk Factors

 

16

 

Item 2.

Unregistered Sales of Equity Securities

 

16

 

Item 3.

Defaults Upon Senior Securities

 

16

 

Item 4.

Mine Safety Disclosures

 

16

 

Item 5.

Other Information

 

16

 

Item 6.

Exhibits

 

17

 

 

Signatures

 

18

 

 

2

 

    

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

DECEMBER 31, 2020

(UNAUDITED)

 

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Condensed Consolidated Balance Sheets as of December 31, 2020 (Unaudited) and June 30, 2020

 

F-1

 

 

 

Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2020 and 2019 (Unaudited)

 

F-2

 

 

 

 

 

 

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

 

F-3

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

F-6

  

 

4

 

   

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

As of

December 31,

2020

 

 

As of

June 30,

2020

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$ 19,636

 

 

$ 38,893

 

Deposits and prepaids

 

 

13,622

 

 

 

13,893

 

Total current assets

 

 

33,258

 

 

 

52,786

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use asset

 

 

188,124

 

 

 

206,111

 

Total assets

 

$ 221,382

 

 

$ 258,897

 

 

 

 

 

 

 

 

 

 

Liabilities & stockholders' deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 26,783

 

 

$ 27,621

 

Accrued liabilities, related party

 

 

19,500

 

 

 

9,000

 

Convertible notes payable, net of discount

 

 

22,995

 

 

 

32,734

 

Lease liability, current

 

 

39,722

 

 

 

36,963

 

Total current liabilities

 

 

109,000

 

 

 

106,318

 

 

 

 

 

 

 

 

 

 

Lease liability, long-term

 

 

163,305

 

 

 

183,803

 

Total liabilities

 

 

272,305

 

 

 

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 December 31, 2020 and June 30, 2020, respectively

 

 

31

 

 

 

31

 

Common stock, $0.00001 par value; 100,000,000 shares authorized; 249,580,524 and 69,584,149 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively

 

 

2,493

 

 

 

696

 

Common stock to be issued

 

 

129,859

 

 

 

372,397

 

Additional paid in capital

 

 

2,121,434

 

 

 

379,971

 

Accumulated deficit

 

 

(2,304,740 )

 

 

(784,319 )

Total stockholders' deficit

 

 

(50,923 )

 

 

(31,224 )

Total liabilities and stockholders' deficit

 

$ 221,382

 

 

$ 258,897

 

 

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

 

 
F-1

Table of Contents

   

XERIANT, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

three months

ended

 

 

For the

three months

ended

 

 

For the

six months

ended

 

 

For the

six months

ended

 

 

 

December 31,

2020

 

 

December 31,

2019

 

 

December 31,

2020

 

 

December 31,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expense

 

$ 1,027,109

 

 

$ -

 

 

$ 1,027,109

 

 

$ -

 

General and administrative expenses

 

 

37,469

 

 

 

38,126

 

 

 

73,439

 

 

 

38,960

 

Professional fees

 

 

14,637

 

 

 

85,433

 

 

 

35,237

 

 

 

95,993

 

Related party consulting fees

 

 

41,500

 

 

 

-

 

 

 

78,000

 

 

 

-

 

Research and development expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,339

 

Total operating expenses

 

 

1,120,715

 

 

 

123,559

 

 

 

1,213,785

 

 

 

141,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,120,715 )

 

 

(123,559 )

 

 

(1,213,785 )

 

 

(141,292 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

(66,449 )

 

 

(133,952 )

 

 

(112,410 )

 

 

(133,952 )

Amortization of debt discount, related party

 

 

(3,044 )

 

 

(14,265 )

 

 

(5,000 )

 

 

(14,265 )

Interest expense

 

 

(1,139 )

 

 

(2,862 )

 

 

(2,196 )

 

 

(4,064 )

Interest expense, related party

 

 

(46

 

 

(2,393 )

 

 

(76 )

 

 

(2,623 )

Loss on settlement of debt

 

 

-

 

 

 

-

 

 

 

(186,954 )

 

 

-

 

Total other (expense)

 

 

(72,634

)

 

 

(153,472 )

 

 

(306,636 )

 

 

(154,904 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (1,193,349

)

 

$ (277,031 )

 

$ (1,520,421 )

 

$ (296,196 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted

 

$ (0.01

)

 

$ (0.00 )

 

$ (0.01 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

234,451,953

 

 

 

69,584,149

 

 

 

176,685,459

 

 

 

69,584,149

 

   

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 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

(UNAUDITED)

FOR THE SIX MONTHS ENDED DECEMBER 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

Common stock

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid in

Capital

 

 

to be

issued

 

 

Accumulated

Deficit

 

 

Total

 

Balance June 30, 2020

 

 

3,113,637

 

 

$ 31

 

 

 

69,584,149

 

 

$ 696

 

 

$ 379,971

 

 

$ 372,397

 

 

$ (784,319 )

 

$ (31,224 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares reclassed from common stock to be issued

 

 

-

 

 

 

-

 

 

 

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 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrants with convertible notes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36,407

 

 

 

-

 

 

 

-

 

 

 

36,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of beneficial conversion feature associated with convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

42,893

 

 

 

-

 

 

 

-

 

 

 

42,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sale of common stock

 

 

-

 

 

 

-

 

 

 

3,400,000

 

 

 

34

 

 

 

50,966

 

 

 

-

 

 

 

-

 

 

 

51,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible notes and accrued interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,714

 

 

 

-

 

 

 

78,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrants with convertible notes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,388

 

 

 

-

 

 

 

-

 

 

 

6,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of beneficial conversion feature associated with convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,612

 

 

 

-

 

 

 

-

 

 

 

6,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

20,300,000

 

 

 

203

 

 

 

1,012,997

 

 

 

-

 

 

 

-

 

 

 

1,013,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrants for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,909

 

 

 

-

 

 

 

-

 

 

 

13,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,193,349 )

 

 

(1,193,349 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2020

 

 

3,074,279

 

 

$ 31

 

 

 

249,580,524

 

 

$ 2,493

 

 

$ 2,121,434

 

 

$ 129,859

 

 

$ (2,304,740 )

 

$ (50,923 )

 

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

(UNAUDITED)

FOR THE SIX MONTHS ENDED DECEMBER 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid in

Capital

 

 

Accumulated

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

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,166 )

 

 

(19,166 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance September 30, 2019

 

 

3,113,637

 

 

 

31

 

 

 

69,584,149

 

 

 

696

 

 

 

278

 

 

 

(103,922 )

 

 

(102,917 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of beneficial conversion feature associated with convertible debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

318,543

 

 

 

-

 

 

 

318,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(277,031 )

 

 

(277,031 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2019

 

 

3,113,637

 

 

$ 31

 

 

 

69,584,149

 

 

$ 696

 

 

$ 318,821

 

 

 

(380,952 )

 

$ (61,404 )

 

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 STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

For the six

months ended December 31,

2020

 

 

For the six

months ended December 31,

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net Loss

 

$ (1,520,421 )

 

$ (296,196 )

Adjustments to reconcile net loss to net

 

 

 

 

 

 

 

 

cash used by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,027,109

 

 

 

-

 

Amortization of debt discount

 

 

112,410

 

 

 

133,952

 

Amortization of debt discount, related party

 

 

5,000

 

 

 

14,265

 

Loss on settlement of debt

 

 

186,954

 

 

 

 

 

Operating lease right of use asset

 

 

247

 

 

 

-

 

Changes in operating assets & liabilities

 

 

 

 

 

 

 

 

Deposits and prepaids

 

 

271

 

 

 

(7,709 )

Accounts payable and accrued liabilities

 

 

25,873

 

 

 

3,685

 

Accrued expenses, related parties

 

 

-

 

 

 

1,501

 

Net cash used by operating activities

 

 

(162,557 )

 

 

(150,502 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Sale of common stock

 

 

51,000

 

 

 

-

 

Proceeds from convertible notes payable

 

 

92,300

 

 

 

291,300

 

Proceeds from convertible notes payable, related party

 

 

-

 

 

 

33,000

 

Net cash provided by financing activities

 

 

143,300

 

 

 

324,300

 

 

 

 

 

 

 

 

 

 

Increase in Cash

 

 

(19,257 )

 

 

173,798

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

38,893

 

 

 

3,029

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$ 19,636

 

 

$ 176,827

 

 

 

 

 

 

 

 

 

 

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

 

$ 129,859

 

 

$ -

 

Warrants issued with convertible notes payable

 

$ 42,795

 

 

$ -

 

Beneficial conversion feature arising from convertible notes payable

 

$ 49,505

 

 

$ -

 

 

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

  

 
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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.   

 

 
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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 Xeriant’s “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 company’s 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.

 

 
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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 December 31, 2020 and June 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 December 31, 2020 and June 30, 2020 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 six months ended December 31, 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 six months ended December 31, 2020, the Company recorded a BCF in the amount of $49,505.

 

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 six months ended December 31, 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 six months ended December 31, 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 six months ended December 31, 2020 and 2019.

 

 
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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:

 

Rent Periods

 

Base 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:

 

 

 

December 31,

2020

 

Office lease

 

$ 220,448

 

Less: accumulated amortization

 

 

(32,324 )

Right-of-use asset, net

 

$ 188,124

 

 

Operating lease liability is summarized below:

 

 

 

December 31,

2020

 

Office lease

 

$ 203,027

 

Less: current portion

 

 

(39,722 )

Long term portion

 

 

163,305

 

 

Maturity of the lease liability is as follows:

 

 

 

Fiscal year ending June 30, 2021

 

$ 28,739

 

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

 

 

 

 

247,079

 

Present value discount

 

 

(44,052 )

Lease liability

 

$ 203,027

 

 

 
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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 December 31, 2020 and June 30, 2020 was $22,995 and $32,734, respectively, as summarized below.

 

 

 

December 31,

 

 

June 30,

 

Convertible Notes Payable

 

2020

 

 

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

 

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

 

 

-

 

 

 

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 October 5, 2020 (6% interest)

 

 

10,000

 

 

 

-

 

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

 

 

3,000

 

 

 

-

 

Total face value

 

 

26,300

 

 

 

61,150

 

Less unamortized discount

 

 

(3,305 )

 

 

(28,416 )

Carrying value

 

$ 22,995

 

 

$ 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 November 10, 2020, holders of the convertible notes converted $344,450 in principal and $10,336 in accrued interest into 107,510,927 shares of common stock. As of December 31, 2020, 90,919,829 shares have been issued. The remaining 16,591,097 is recorded in common stock to be issued.

 

Notes issued between August 10, 2020 and December 2, 2020

 

Between August 10, 2020 and December 2, 2020, the Company issued convertible notes payable with an aggregate face value of $82,000 with a coupon rate of 6%. The notes have a maturity date of three and six 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 4,280,000 shares of common stock. The warrants have a term of two 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 $42,795.

 

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 $42,795 to the warrants, the remaining $44,205 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 six months ended December 31, 2020, the Company recorded $112,410 and $0 in amortization of debt discount related to the notes. For the six months ended December 31, 2020 and 2019, the Company recorded $2,196 and $4,064 in interest expense related to the notes, respectively.

  

 
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NOTE 6 –RELATED PARTY TRANSACTIONS

 

Consulting fees

 

During the six months ended December 31, 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, $36,000 for consulting services.

 

During the six months ended December 31, 2020, the Company paid AMP Web Services, a Company owned by the Company’s CTO, Pablo Lavigna, $22,500 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 December 31, 2020, $4,500 due for December services is recorded in accrued liabilities, related party.

 

During the six months ended December 31, 2020, the Company owed $15,000 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.

 

Convertible notes

 

On August 25, 2020, the Company issued a convertible note payable with a face value of $5,000 with a coupon rate of 6% to Keystone Business Development Partners, a Company owned by the Company’s CFO, Brian Carey. 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.

 

The Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. None of the embedded terms required bifurcation and liability classification.

 

In connection with the note, the Company issued warrants indexed to an aggregate 200,000 shares of common stock. The warrants have a term of two 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 relative fair value of $2,461.

 

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 $2,461 to the warrants, the remaining $2,539 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.

 

For the six months ended December 31, 2020, the Company recorded $5,000 in amortization of debt discount related to the note. For the six months ended December 31, 2020, the Company recorded $76 in interest expense related to the note.

 

On November 25, 2020, Keystone Business Development Partners converted $5,000 in principal and $76 in accrued interest into 203,024 shares of common stock. As of December 31, 2020, the shares are recorded in common stock to be issued.

 

 
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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 December 31, 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 six months ended December 31, 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 six months ended December 31, 2020, certain holders of preferred stock converted 39,358 shares into 39,358,000 shares of common stock.

 

On October 30, 2020, the Company issued 300,000 shares of common stock to an advisory board member for services. The shares were valued at $13,200 or $0.044 per share.

 

On November 17, 2020, the Company sold 1,700,000 shares of common for $25,500, or $0.015 per share.

 

On November 24, 2020, the Company sold 1,700,000 shares of common for $25,500, or $0.015 per share.

 

On December 1, 2020, the Company issued 2,000,000 shares of common stock for investment relation services valued at $100,000, or $0.05 per share.

 

On December 1, 2020, the Company issued 18,000,000 shares of common stock for investment relation services valued at $900,000, or $0.05 per share.

 

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.

   

During the six months ended December 31, 2020, certain holders of preferred stock converted 39,358 shares into 39,358,000 shares of common stock.

 

 
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As of December 31, 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 December 31, 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 December 31, 2020 and June 30, 2020, the Company had $19,636 and $38,893 in cash and $75,742 and $53,532 in negative working capital, respectively. For the six months ended December 31, 2020 and 2019, the Company had a net loss of $1,520,421 and $296,196, 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 notes

 

Between January 4, 2021 and January 19, 2021, the Company issued convertible notes payable with an aggregate face value of $197,550 with a coupon rate of 6%. The notes have maturity dates between three and six months. Of the $197,550 in notes, $180,550 of the notes provide the holder with the option to convert the principal balance and any accrued interest to common stock of the Company at a conversion price of $.03 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 $.03 per share. The remaining $17,000 of the notes provide the holder with 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. In connection with the notes, the Company issued warrants indexed to 5,018,333 shares of common stock with an exercise price of $0.03 per share and a time to expiration of 3 years.

 

Conversion of notes

 

Subsequent to December 31, 2020, holders converted $23,000 in principal and $853 in accrued interest into 3,664,944 shares of common stock.

 

Other

 

On January 29, 2021, the Company issued 50,000 shares of common stock to an advisory board member for services. The shares were valued at $25,500 or $0.51 per share. In connection with the board services agreement, the member also received 25,000 warrants with a two-year term.

 

 
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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 six months ended December 31, 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.

 

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).

 

 
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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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Table of Contents

   

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 December 31, 2020 and June 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 December 31, 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 six months ended December 31, 2020 and 2019, the Company had no revenue.

 

 
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Table of Contents

   

Convertible Debentures

 

If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature ("BCF"). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 "Debt with Conversion and Other Options." In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt. During the six months ended December 31, 2020, the Company recorded a BCF in the amount of $49,505.

 

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 six months ended December 31, 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 six months ended December 31, 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 six months ended December 31, 2020 and 2019.

  

 
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Table of Contents

   

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 December 31, 2020 compared to the three months ended December 31, 2019

 

 

 

For the three

months ended December 31,

2020

 

 

For the three

months ended December 31,

2019

 

 

$

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expense

 

$ 1,027,109

 

 

$ -

 

 

$ 1,027,109

 

 

 

100 %

General and administrative expenses

 

 

37,469

 

 

 

38,126

 

 

 

(657 )

 

 

-2 %

Professional fees

 

 

14,637

 

 

 

85,433

 

 

 

(70,796 )

 

 

-83 %

Related party consulting fees

 

 

41,500

 

 

 

-

 

 

 

41,500

 

 

 

100 %

Total operating expenses

 

 

1,120,715

 

 

 

123,559

 

 

 

997,156

 

 

 

807 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,120,715 )

 

 

(123,559 )

 

 

(997,156 )

 

 

807 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

(68,405 )

 

 

(133,952 )

 

 

65,547

 

 

 

100 %

Amortization of debt discount, related party

 

 

(3,044 )

 

 

(14,265 )

 

 

11,221

 

 

 

200 %

Interest expense

 

 

(1,139 )

 

 

(2,862 )

 

 

1,723

 

 

 

-60 %

Interest expense, related parties

 

 

(46 )

 

 

(2,393 )

 

 

2,347

 

 

 

-98 %

Total other income (expense)

 

 

(72,634 )

 

 

(153,472 )

 

 

80,838

 

 

 

-53 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (1,193,349 )

 

$ (277,031 )

 

$ (916,318 )

 

 

331 %

   

Sales and Marketing Expense

 

Sales and marketing expense was $1,027,109 for the three months ended December 31, 2020 compared to $0 for the three months ended December 31, 2019. During the three months ended December 31, 2020, the Company issued 20,000,000 shares valued at $1,000,000 for investor relation services, 300,000 shares valued at $13,200 for advisory board services, and warrants issued to 300,000 shares valued at $13,909 for advisory board services.

 

General and Administrative Expenses

 

Total general and administrative expenses were $37,469 for the three months ended December 31, 2020 compared to $38,126 for the three months ended December 31, 2019.

 

Professional Fees

 

Total professional fees were $14,637 for the three months ended December 31, 2020 compared to $85,433 for the three months ended December 31, 2019. The decrease of $70,796 was primarily due to higher engineering and legal fees incurring in the prior period compared to the current period.

 

 
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Related Party Consulting Fees

 

Total related party consulting fees were $41,500 for the three months ended December 31, 2020 compared to $0 for the three months ended December 31, 2019. The increase of $41,500 was because fees incurred by related parties didn’t begin until the quarter ended December 31, 2019.

 

Other Expenses

 

Total other expenses were $72,634 for the three months ended December 31, 2020 compared to $153,472 for the three months ended December 31, 2019. Total other expenses consist of interest expense on debt and amortization of debt. The decrease of $80,838 was related to due to higher amortization of debt discount in the prior period.

 

Net loss

 

Total net loss was $1,193,349 for the three months ended December 31, 2020 compared to $277,031 for the three months ended December 31, 2019. The increase of $916,318 was primarily due to the Company issuing stock for advisory board services valued at $1,000,000.

      

Six months ended December 31, 2020 compared to the six months ended December 31, 2019

 

 

 

For the six

months ended December 31,

2020

 

 

For the six

months ended December 31,

2019

 

 

$

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expense

 

$ 1,027,109

 

 

$ -

 

 

$ 1,027,109

 

 

 

100 %

General and administrative expenses

 

 

73,439

 

 

 

38,960

 

 

 

34,479

 

 

 

88 %

Professional fees

 

 

35,237

 

 

 

95,993

 

 

 

(60,756 )

 

 

-63 %

Related party consulting fees

 

 

78,000

 

 

 

-

 

 

 

78,000

 

 

 

100 %

Research and development expense

 

 

-

 

 

 

6,339

 

 

 

(6,339 )

 

 

-100 %

Total operating expenses

 

 

1,213,785

 

 

 

141,292

 

 

 

1,072,493

 

 

 

100 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,213,785 )

 

 

(141,292 )

 

 

(1,072,493 )

 

 

759 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

 

(112,410 )

 

 

(133,952 )

 

 

21,542

 

 

 

100 %

Amortization of debt discount, related party

 

 

(5,000 )

 

 

(14,265 )

 

 

9,265

 

 

 

200 %

Interest expense

 

 

(2,196 )

 

 

(4,064 )

 

 

1,868

 

 

 

-46 %

Interest expense, related parties

 

 

(76 )

 

 

(2,623 )

 

 

2,547

 

 

 

-97 %

Gain on forgiveness of accounts payable

 

 

(186,954 )

 

 

-

 

 

 

(186,954 )

 

 

100 %

Total other income (expense)

 

 

(306,636 )

 

 

(154,904 )

 

 

(151,732 )

 

 

98 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (1,520,421 )

 

$ (296,196 )

 

$ (1,224,225 )

 

 

413 %

   

 
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Sales and Marketing Expense

 

Sales and marketing expense was $1,027,109 for the six months ended December 31, 2020 compared to $0 for the six months ended December 31, 2019. During the six months ended December 31, 2020, the Company issued 20,000,000 shares valued at $1,000,000 for investor relation services, 300,000 shares valued at $13,200 for advisory board services, and warrants issued to 300,000 shares valued at $13,909 for advisory board services.

 

General and Administrative Expenses

 

Total general and administrative expenses were $73,439 for the six months ended December 31, 2020 compared to $38,960 for the six months ended December 31, 2019. The increase of $34,479 was primarily due to the increase in operations compared to the prior period.

    

Professional Fees

 

Total professional fees were $35,237 for the six months ended December 31, 2020 compared to $95,433 for the six months ended December 31, 2019. The decrease of $60,756 was primarily due to higher engineering and legal fees incurring in the prior period compared to the current period.

 

Related Party Consulting Fees

 

Total related party consulting fees were $78,000 for the six months ended December 31, 2020 compared to $0 for the six months ended December 31, 2019. The increase of $78,000 was because fees incurred by related parties didn’t begin until the quarter ended December 31, 2019.

 

Research and Development Expenses

 

Total research and development expenses were $0 for the six months ended December 31, 2020 compared to $6,339 for the six months ended December 31, 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 $306,636 for the six months ended December 31, 2020 compared to $154,904 for the six months ended December 31, 2019. Total other expenses consist of interest expense on debt, amortization of debt discount and loss on settlement of debt. The increase of $151,732 was primarily related to the $186,955 recorded on loss on settlement of debt.

 

Net loss

 

Total net loss was $1,520,421 for the six months ended December 31, 2020 compared to $296,196 for the six months ended December 31, 2019. The increase of $1,224,225 was primarily due to the Company issuing stock for advisory board services valued at $1,000,000.

 

 
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Operating Activities

 

Cash used in operations of $162,557 during the six months ended December 31, 2020 was primarily a result of our $1,520,421 net loss reconciled with our net non-cash expenses relating to stock compensation, 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 $150,502 during the six months ended December 31, 2019 was primarily a result of our $296,196 net loss reconciled with our net non-cash expenses relating to amortization of debt discount and our changes in operating assets and liabilities relating to accounts payable and accrued liabilities.

 

Financing Activities

 

Net cash provided by financing activities for the three months ended December 31, 2020 was $143,300, which consisted of proceeds from the sale of common stock of $51,000 and issuance of convertible debt of $92,300. Net cash provided by financing activities for the six months ended December 31, 2019 was $324,300, which consisted of proceeds from the issuance of convertible debt in the amount of $291,300 and from the issuance of convertible debt, related party in the amount of $33,000.

  

Liquidity and Capital Resources

   

As of December 31, 2020 and June 30, 2020, we had a cash balance of $19,636 and $38,893 and negative working capital of $75,742 and $53,352, respectively. Our net loss of $1,520,421 in the six months ended December 31, 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.

 

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.

 

 
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Table of Contents

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

    

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

   

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

 

Item 4.   Controls and Procedures.

 

Disclosure Controls and Procedures

 

Our management is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Registrant files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Registrant's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.

 

At December 31, 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 December 31, 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 December 31, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
15

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.

 

 
16

Table of Contents

   

Item 6. Exhibits

 

The following exhibits are filed herewith:

 

Exhibit

Number

 

Document

 

 

 

31.1

 

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

 

 

 

32.1

 

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

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation

 

 
17

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: February 16, 2021

By:

/s/ Keith Duffy

 

 

 

Keith Duffy

Chief Executive Officer

(Principal Executive)

 

 

Date: February 16, 2021

By:

/s/ Brian Carey

 

 

 

Brian Carey

Chief Financial Officer

 

 

 
18

 

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