Xeriant Grapples with Legal Battles, Soaring Debt Amidst Green Tech Push

TL;DR

**XERI is a high-risk bet, drowning in legal fees and debt while trying to launch a green product with no clear path to funding or profitability.**

AI Summary

XERIANT, INC. (XERI) reported a challenging fiscal year ended June 30, 2025, marked by significant legal disputes and financial liabilities, despite strategic efforts in advanced materials and aerospace. The company's revenue figures were not explicitly detailed, but its financial health was severely impacted by a $6,050,000 convertible note payable to Auctus Fund LLC, which included $5,142,500 in actual funding and a $907,500 original issue discount. This note led to a loss on extinguishment of $3,570,366 in fiscal year 2023 due to the First Amendment and an additional $689,621 loss from the Second Amendment. As of June 30, 2025, the balance of accrued interest on this note reached $6,543,546, recorded in accounts payable and accrued liabilities. Key business changes include the termination of the Eco-Aero, LLC joint venture with XTI Aircraft Company on May 31, 2023, and subsequent legal proceedings initiated by Xeriant against XTI on December 6, 2023, and against Auctus on October 19, 2023, regarding alleged evasion of compensation and contested stock conversions. The company is developing NEXBOARD, an eco-friendly composite construction panel, and has filed a non-provisional U.S. patent application for its multilayered fire-resistant polymer composite on April 1, 2024. Strategic outlook involves potential green bond issuances to finance manufacturing facilities for NEXBOARD, though no engagement agreement has been finalized.

Why It Matters

Xeriant's ongoing legal battles with XTI Aircraft and Auctus Fund LLC, coupled with a substantial $6.5 million accrued interest liability, create significant uncertainty for investors. The company's pivot to eco-friendly advanced materials like NEXBOARD offers a potential growth avenue, but its ability to secure financing for manufacturing facilities through 'green bond issuances' remains speculative without a firm engagement. This precarious financial position and reliance on litigation outcomes could deter new investment and impact employee morale, while competitive pressures in both aerospace and construction materials demand robust capital and operational stability, which Xeriant currently lacks.

Risk Assessment

Risk Level: high — The company faces substantial financial risk, evidenced by a $6,543,546 accrued interest balance on a convertible note as of June 30, 2025, and ongoing litigation against both XTI Aircraft and Auctus Fund LLC. The conversion of $200,115 and $227,067 in interest into 20,011,500 and 22,706,700 shares of common stock, respectively, by Auctus, which Xeriant is contesting, highlights significant financial and legal instability.

Analyst Insight

Investors should exercise extreme caution and consider avoiding XERIANT (XERI) given the high financial liabilities, ongoing legal disputes, and the speculative nature of its advanced materials commercialization without secured manufacturing capital. Await clear resolution of litigation and concrete financing for NEXBOARD production before considering any position.

Financial Highlights

debt To Equity

Not Disclosed

revenue

Not Disclosed

operating Margin

Not Disclosed

total Assets

Not Disclosed

total Debt

$6,050,000

net Income

Not Disclosed

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

Not Disclosed

revenue Growth

Not Disclosed

Key Numbers

• $6.05M — Convertible Note Principal (Issued to Auctus Fund LLC on October 27, 2021, with $5.14M funded.)
• $6.54M — Accrued Interest (Balance on Auctus note as of June 30, 2025, recorded in liabilities.)
• $4.26M — Total Extinguishment Loss (Combined loss from two amendments to Auctus note in fiscal year 2023.)
• 749.05M — Shares Outstanding (As of October 2, 2025, indicating potential dilution from convertible debt.)
• 6% — XTI Merger Compensation (Percentage of XTI fully diluted pre-merger shares Xeriant claims.)
• $11.6M — Market Value (Non-affiliates) (As of December 31, 2024, reflecting the company's small market capitalization.)

Key Players & Entities

• XERIANT, INC. (company) — registrant
• Auctus Fund LLC (company) — senior secured promissory note holder and litigant
• XTI Aircraft Company (company) — joint venture partner and litigant
• Maxim Group, LLC (company) — former investment banker
• Inpixon (company) — Nasdaq-listed company involved in XTI merger
• $6,050,000 (dollar_amount) — principal of convertible note payable to Auctus
• $6,543,546 (dollar_amount) — accrued interest balance on Auctus note as of June 30, 2025
• $3,570,366 (dollar_amount) — loss on extinguishment from First Amendment of Auctus note
• $689,621 (dollar_amount) — loss on extinguishment from Second Amendment of Auctus note
• 749,053,035 (dollar_amount) — outstanding shares of common stock as of October 2, 2025

FAQ

Risk Factors

• Auctus Fund LLC Convertible Note Disputes [high — legal]: Xeriant faces significant legal challenges stemming from a $6,050,000 convertible note with Auctus Fund LLC. The note incurred substantial losses on extinguishment ($3,570,366 in FY2023 due to the First Amendment and $689,621 from the Second Amendment) and accrued $6,543,546 in interest by June 30, 2025. Xeriant initiated legal action against Auctus on October 19, 2023, alleging evasion of compensation and contested stock conversions.
• XTI Aircraft Company Joint Venture Dispute [high — legal]: The termination of the Eco-Aero, LLC joint venture with XTI Aircraft Company on May 31, 2023, has led to legal proceedings. Xeriant filed a lawsuit against XTI on December 6, 2023, claiming XTI evaded compensation related to the joint venture and a potential merger. This ongoing litigation introduces significant uncertainty and potential financial exposure.
• High Debt and Accrued Interest Burden [high — financial]: The company's financial condition is severely strained by the Auctus convertible note, which, including accrued interest of $6,543,546 as of June 30, 2025, represents a substantial liability. The original issue discount of $907,500 and significant extinguishment losses highlight the costly nature of this financing.
• Dependence on NEXBOARD Commercialization [medium — operational]: The company's future success hinges on the successful development and commercialization of its NEXBOARD composite construction panel. While a patent application has been filed, the company has not yet finalized any engagement agreements for potential green bond issuances to finance manufacturing, indicating execution risk.
• Potential Dilution from Convertible Debt [medium — financial]: With 749.05 million shares outstanding as of October 2, 2025, the company faces significant risk of dilution from outstanding convertible notes. The terms of these notes, particularly if converted, could substantially increase the number of shares, negatively impacting existing shareholders.
• Limited Market Capitalization [low — market]: The company's market value was $11.6 million as of December 31, 2024, indicating a small market capitalization. This can limit access to capital markets and make the company more susceptible to market volatility and takeover attempts.

Industry Context

Xeriant operates in the advanced materials and aerospace sectors. The advanced materials segment, particularly with its NEXBOARD product, targets the construction industry's need for eco-friendly alternatives to traditional materials like drywall and plywood. The aerospace segment, through its past involvement with eVTOL aircraft development, touches upon a rapidly evolving area of aviation focused on electric and autonomous flight.

Regulatory Implications

The company's financial distress, highlighted by significant debt and ongoing legal disputes, could attract scrutiny from regulatory bodies. Furthermore, the development and commercialization of new materials like NEXBOARD may be subject to building codes and environmental regulations, requiring compliance and certifications.

What Investors Should Do

1. Monitor legal proceedings closely
2. Assess NEXBOARD commercialization progress
3. Evaluate debt structure and potential dilution
4. Scrutinize cash burn and funding needs

Key Dates

• 2021-05-31: Formation of Eco-Aero, LLC Joint Venture with XTI Aircraft Company — Established a partnership to develop XTI's eVTOL aircraft, involving significant investment and borrowing from Auctus Fund LLC.
• 2021-10-27: Issuance of Convertible Note to Auctus Fund LLC — Secured $5.14 million in funding, but with a $907,500 original issue discount, setting the stage for future financial complications.
• 2023-05-31: Termination of Eco-Aero, LLC Joint Venture — Ended the partnership with XTI Aircraft Company, leading to subsequent legal disputes.
• 2023-10-19: Xeriant initiates legal action against Auctus Fund LLC — Alleged evasion of compensation and contested stock conversions, highlighting severe disagreements over the convertible note.
• 2023-12-06: Xeriant initiates legal action against XTI Aircraft Company — Claimed evasion of compensation related to the terminated joint venture and a potential merger, indicating ongoing litigation.
• 2024-04-01: Filing of non-provisional U.S. patent application for NEXBOARD composite panel — Marks a key step in protecting intellectual property for its advanced materials product, NEXBOARD.

Glossary

Convertible Note

A debt instrument that can be converted into equity (stock) of the issuing company under certain conditions. (Xeriant has a significant convertible note with Auctus Fund LLC, which has led to substantial losses and accrued interest, impacting its financial health and potentially causing dilution.)

Original Issue Discount (OID)

The difference between the face value of a debt instrument and the lower price at which it is issued. It is treated as interest income over the life of the note. (The $907,500 OID on the Auctus note represents a significant cost of financing for Xeriant.)

Loss on Extinguishment

A loss recognized when a company repays or retires debt before its maturity date, often due to unfavorable terms or refinancing. (Xeriant recorded substantial losses on extinguishment related to amendments of the Auctus note, indicating costly debt restructuring.)

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task. (The Eco-Aero, LLC joint venture with XTI Aircraft Company was a key strategic initiative that ultimately led to legal disputes after its termination.)

eVTOL

Electric Vertical Take-Off and Landing aircraft, a type of aircraft that can hover, take off, and land vertically. (Xeriant's involvement in the Eco-Aero joint venture was focused on the development of an eVTOL aircraft, a growing segment in the aerospace industry.)

Composite Construction Panel

A building material made from a combination of different materials, often designed for specific properties like strength, durability, or environmental friendliness. (NEXBOARD is Xeriant's proprietary composite construction panel, representing a key product in its advanced materials business line.)

Year-Over-Year Comparison

Information regarding year-over-year comparisons for key financial metrics such as revenue, net income, and margins is not available in the provided text. However, the filing highlights a significant increase in accrued interest on the Auctus convertible note, reaching $6,543,546 as of June 30, 2025, indicating a worsening financial burden. New risks related to ongoing legal disputes with both Auctus Fund LLC and XTI Aircraft Company have emerged, significantly impacting the company's operational and financial outlook compared to previous periods.

Key Financial Figures

• $0.00001 — ction 12(g) of the Act: Common Stock, $0.00001 par value Indicate by check mark if t
• $5.5 million — XTI. The Company invested approximately $5.5 million into the joint venture after borrowing
• $300,000 — th Inpixon on March 10, 2023, receiving $300,000 in funding, which was a compensation tr
• $6,050,000 — yable with Auctus with the principal of $6,050,000, consisting of $5,142,500, which was th
• $5,142,500 — principal of $6,050,000, consisting of $5,142,500, which was the actual amount funded, pl
• $907,500 — riginal issue discount in the amount of $907,500 for interest on the unpaid principal am
• $433,550 — due and payable. The closing costs were $433,550, which included $308,550 in fees paid t
• $308,550 — ing costs were $433,550, which included $308,550 in fees paid to Maxim and professional
• $0.1187 — a conversion price of the lesser of (i) $0.1187 or (ii) 75% of the offering price per s
• $0.09 — (the "Warrant") at an exercise price of $0.09 per share and 5-year term; (ii) make a
• $100,000 — prepayment of the Note in the amount of $100,000; and (iii) cause a director of the Comp
• $50,000 — i) make two pre-payment installments of $50,000 on January 15, 2023, and February 15, 2
• $3,570,366 — s on an extinguishment in the amount of $3,570,366 for the year ended June 30, 2023. The C
• $689,621 — s on an extinguishment in the amount of $689,621 for the year ended June 30, 2023. On O
• $1,070,729 — ded June 30, 2024, the Company recorded $1,070,729 in default interest related to the note

Filing Documents

• xeri_10k.htm (10-K) — 1229KB
• xeri_ex311.htm (EX-31.1) — 10KB
• xeri_ex312.htm (EX-31.2) — 10KB
• xeri_ex321.htm (EX-32.1) — 4KB
• xeri_ex322.htm (EX-32.2) — 4KB
• xeri_10kimg4.jpg (GRAPHIC) — 7KB
• xeri_10kimg3.jpg (GRAPHIC) — 3KB
• 0001477932-25-007303.txt ( ) — 4744KB
• xeri-20250630.xsd (EX-101.SCH) — 51KB
• xeri-20250630_lab.xml (EX-101.LAB) — 289KB
• xeri-20250630_cal.xml (EX-101.CAL) — 44KB
• xeri-20250630_pre.xml (EX-101.PRE) — 233KB
• xeri-20250630_def.xml (EX-101.DEF) — 130KB
• xeri_10k_htm.xml (XML) — 570KB

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

Management's Discussion and Analysis of Financial Condition and Results of Operations. 29 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data. 35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 36 Item 9A.

Controls and Procedures

Controls and Procedures. 36 Item 9B. Other Information. 37 Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 37 PART III. Item 10. Directors, Executive Officers and Corporate Governance. 38 Item 11.

Executive Compensation

Executive Compensation. 41 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 43 Item 13. Certain Relationships and Related Transactions, and Director Independence. 44 Item 14. Principal Accounting Fees and Services. 44 PART IV. Item 15. Exhibits, Financial Statement Schedules. 46 Item 16 Form 10-K Summary 46 2 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this "Report") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends," and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions, and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described in Item 1A of this Report under the caption "Risk Factors" and elsewhere in this Report, including the exhibits hereto. All forward-looking statements are only estimates of future results, and actual results may differ materially from expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, or expectations contemplated by us will

Business

Item 1. Business Xeriant, Inc. (the "Company") is dedicated to the discovery, development and commercialization of disruptive technologies in advanced materials and aerospace which can be successfully integrated and commercialized for deployment across multiple industrial sectors. The Company seeks to partner with and acquire strategic interests in visionary companies that accelerate this mission. Xeriant's advanced materials line , when available, will be marketed under the DUREVER brand, and includes NEXBOARD, an eco-friendly, patent-pending composite construction panel made from plastic and fiber waste, designed to replace products such as drywall, plywood, OSB, MDF, MgO board and other materials used in construction. Corporate History Formation of Company The Company was originally incorporated in Nevada on December 18, 2009, under the name Eastern World Solutions, Inc. The name was 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. Share Exchange with American Aviation Technologies On April 16, 2019, the Company 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) and unmanned aerial vehicles (UAVs). On June 28, 2019, the Company 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 the Company. Joint Venture with XTI Aircraft Effective May 31, 2021, the Company entered into a Joint Venture with XTI Aircraft Company ("XTI"), named Eco-Aero, LLC, with the purpose of completing the preliminary design review ("PDR") of XTI's eVTOL fixed wing aircraft. XTI and the Company each own 50 percent of th

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