10-Q: Xeriant Inc. Reports Net Loss Decrease in Q2 2025 Amidst Ongoing Litigation and Advanced Material Development

Xeriant Inc.'s Q2 2025 financial results show a decreased net loss compared to the previous year, driven by reduced expenses and increased related party consulting fees, while the company continues to pursue legal action and develop its advanced materials business.

Summary

• Xeriant Inc. reported a net loss of $789,491 for the six months ended December 31, 2024, compared to a net loss of $1,548,907 for the same period in 2023.
• The decrease in net loss was primarily due to reduced expenses, particularly the absence of Auctus default interest recorded in the prior period.
• Operating expenses increased slightly, with related party consulting fees rising by $76,500, while consulting and advisory fees decreased by $29,225.
• General and administrative expenses increased by $76,818 due to expenses related to the BlueGreen Composites, LLC subsidiary.
• Professional fees decreased by $35,389, and research and development expenses decreased by $53,159.
• The company received $346,000 from the issuance of convertible debt during the six months ended December 31, 2024.
• Xeriant is involved in ongoing litigation against Auctus Fund LLC and XTI Aircraft Company.
• The company is focused on developing and commercializing disruptive technologies in advanced materials and aerospace, including its NEXBOARD composite construction panel.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company has reduced its net loss, it still faces significant financial challenges and uncertainties. The ongoing litigation and dependence on future capital raises add to the risk.

Positives

• The company's net loss decreased significantly compared to the same period last year.
• The company is actively pursuing legal action to protect its interests.
• Xeriant is focused on developing and commercializing innovative technologies in advanced materials and aerospace.
• The company has secured additional funding through the issuance of convertible debt.

Negatives

• The company continues to operate at a net loss.
• The company has a significant working capital deficit of $8,697,454 as of December 31, 2024.
• The Auctus Senior Secured Promissory Note is in default, and the company is in discussions with Auctus to resolve the liability.
• The company's ability to continue as a going concern is dependent on raising additional capital and achieving profitable operations.

Risks

• The company's ability to continue as a going concern is uncertain due to ongoing losses and a working capital deficit.
• The outcome of ongoing litigation against Auctus Fund LLC and XTI Aircraft Company is uncertain.
• The company's success depends on its ability to raise additional capital and achieve profitable operations.
• The company faces risks associated with developing and commercializing new technologies, including obtaining necessary certifications and scaling production.

Future Outlook

The company's future outlook depends on its ability to raise additional capital, obtain financing, and succeed in its future operations, particularly in the development and commercialization of its advanced materials and aerospace technologies.

Industry Context

Xeriant operates in the advanced materials and aerospace industries, which are characterized by rapid technological advancements and evolving market dynamics. The company's focus on eco-friendly materials and advanced air mobility aligns with growing trends in sustainability and transportation. However, the company faces competition from established players and emerging startups in these industries.

Comparison to Industry Standards

• It is difficult to compare Xeriant's financial performance directly to industry standards due to its development-stage nature and limited operating history.
• However, the company's focus on advanced materials and aerospace aligns with industry trends towards sustainability and innovation.
• Companies like DowDuPont and Boeing are established players in these industries, while numerous startups are emerging in the advanced air mobility sector.
• Xeriant's success will depend on its ability to differentiate itself through innovative technologies and strategic partnerships.

Legal Proceedings

• Xeriant filed a complaint against Auctus Fund LLC to invalidate allegedly illegally designed contractual agreements.
• The case was dismissed, but the company filed a Notice of Civil Appeal.
• Xeriant initiated legal proceedings against XTI Aircraft Company to enforce the terms of a Letter Agreement and alleging fraudulent acts.
• The company filed a Second Amended Complaint against XTI, and XTI filed a partial Motion to Dismiss.
• The company filed a Memorandum of Law in Opposition to XTIs Motion to Dismiss the Companys Second Amended Complaint and is waiting for the court to rule on the matter.

Related Party Transactions

• The company recorded consulting fees to Ancient Investments, LLC, a company owned by the company's CEO and Executive Director of Corporate Operations.
• The company recorded consulting fees to Edward DeFeudis, a Director of the company.
• The company recorded consulting fees to AMP Web Services, a company owned by the company's CTO.
• The company recorded consulting fees to Keystone Business Development Partners, a company owned by the company's CFO.

Stakeholder Impact

• The company's financial performance and ongoing litigation could impact shareholders.
• The company's ability to continue as a going concern could affect employees and other stakeholders.
• The development and commercialization of new technologies could benefit customers and the environment.

Next Steps

• The company intends to proceed to take discovery in the litigation against XTI Aircraft Company.
• The company will continue to focus on developing and commercializing its advanced materials and aerospace technologies.
• Management will continue to seek additional funding to support operations and execute its business plan.

Key Dates