10-Q: Xeriant Reports Continued Losses in Q3 2025, Focus Remains on Advanced Materials and Aerospace

Xeriant, Inc. reports ongoing losses for the quarter ended March 31, 2025, while continuing to pursue its strategy in advanced materials and aerospace technologies.

Summary

• Xeriant, Inc. reported a net loss of $1.32 million for the nine months ended March 31, 2025, compared to a net loss of $1.93 million for the same period in 2024.
• The company is focused on developing and commercializing disruptive technologies in advanced materials and aerospace.
• Xeriant's advanced materials line is marketed under the DUREVER brand and includes NEXBOARD, an eco-friendly composite construction panel.
• The company is involved in legal proceedings against Auctus Fund LLC and XTI Aircraft Company.
• Xeriant's management expresses substantial doubt about the company's ability to continue as a going concern.
• The company is seeking to raise capital through the issuance of common stock and debt to fund operations.
• Consulting and advisory fees increased to $266,720 for the nine months ended March 31, 2025, from $193,995 in the prior year.
• Related party consulting fees increased to $364,500 for the nine months ended March 31, 2025, from $264,000 in the prior year.
• General and administrative expenses increased to $304,153 for the nine months ended March 31, 2025, from $193,557 in the prior year.
• Research and development expenses decreased to $56,800 for the nine months ended March 31, 2025, from $147,259 in the prior year.
• The company received $517,000 from the issuance of convertible debt during the nine months ended March 31, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to continued losses, a going concern warning, ongoing legal issues, and reliance on related party transactions. While there are some positive developments, the overall financial health and future prospects of the company are highly uncertain.

Positives

• The net loss decreased by $613,244 from $1,933,003 for the nine months ended March 31, 2024, to $1,319,759 for the nine months ended March 31, 2025.
• The Court agreed with Xeriant's position that its claims against XTI were validly alleged and denied all of XTI's arguments in their entirety.

Negatives

• The company has incurred net losses since inception and has an accumulated deficit of $28,011,467 as of March 31, 2025.
• The company had a working capital deficit of $8,598,180 as of March 31, 2025.
• Management expresses substantial doubt about the company's ability to continue as a going concern.
• The company is involved in ongoing legal proceedings, which can be costly and time-consuming.
• The Auctus Senior Secured Promissory Note matured on March 15, 2023, and remains unresolved.
• XTI filed its answer to Xeriant's Second Amended Complaint adding two counter claims, including breach of fiduciary duty and breach of contract.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital and generating revenue.
• The legal proceedings against Auctus and XTI could have a material adverse effect on the company's financial condition.
• The company's success depends on the successful development and commercialization of its advanced materials and aerospace technologies.
• The company faces competition from other companies in the advanced materials and aerospace industries.
• The company's reliance on related party consulting agreements could create conflicts of interest.

Future Outlook

The company's future outlook is highly uncertain, with management expressing substantial doubt about its ability to continue as a going concern without raising additional capital and generating revenue.

Management Comments

• Management's plans include raising capital through the issuance of common stock and debt to fund operations and, eventually, the generation of revenue through its business.
• Management is aware that certain changes in accounting estimates employed in generating financial statements can have the effect of making the Company look more or less profitable than it actually is.
• Management does not believe that the Company has made any such changes in accounting estimates.

Industry Context

Xeriant operates in the advanced materials and aerospace industries, which are characterized by rapid technological advancements and intense competition. The company's focus on eco-friendly materials aligns with growing environmental concerns and regulatory pressures. The aerospace sector is seeing increased interest in advanced air mobility (AAM) and sustainable aviation technologies, which Xeriant is also targeting.

Comparison to Industry Standards

• It is difficult to compare Xeriant's financial performance directly to industry standards due to its development-stage nature and lack of significant revenue.
• Companies like Nano Dimension (NNDM) in the advanced materials space and Joby Aviation (JOBY) in the AAM sector are examples of publicly traded companies with similar focuses, but they are at different stages of development and have different financial profiles.
• Xeriant's reliance on convertible debt financing is a common strategy for early-stage companies, but it also carries significant risks, as evidenced by the default on the Auctus note.
• The company's legal disputes are also a significant concern, as they can divert resources and damage its reputation.

Legal Proceedings

• Xeriant filed a complaint against Auctus Fund LLC to invalidate allegedly illegally designed contractual agreements.
• Xeriant initiated legal proceedings against XTI Aircraft Company to enforce the terms of the Letter Agreement and alleging fraudulent acts.
• XTI filed its answer to Xeriant's Second Amended Complaint adding two counter claims, including breach of fiduciary duty and breach of contract.

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

• Shareholders face significant risk due to the company's financial condition and legal challenges.
• Employees' job security is uncertain due to the company's going concern warning.
• Customers may be hesitant to purchase products from a company with an uncertain future.
• Suppliers may be reluctant to extend credit to the company.
• Creditors face the risk of not being repaid due to the company's financial difficulties.

Next Steps

• The company needs to raise additional capital to fund its operations and continue its development efforts.
• The company needs to resolve the legal proceedings against Auctus and XTI.
• The company needs to successfully develop and commercialize its advanced materials and aerospace technologies.
• Xeriant is in the process of responding to XTI's Second Amended Answer and Counterclaims.

Key Dates

Keywords

Xeriant, NEXBOARD, advanced materials, aerospace, financial results, legal proceedings, convertible debt, going concern, DUREVER, Auctus, XTI