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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Xeriant, Inc.    XERI

XERIANT, INC.

(XERI)
  Report
End-of-day quote. End-of-day quote OTC Bulletin Board - Other OTC - 10/19
0.047 USD   +8.05%
09/30XERIANT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)
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XERIANT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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09/30/2020 | 11:37am EDT

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.



Financial Results


The following discussion of the results of operations constitutes management's review of the factors that affected the financial and operating performance for the fiscal years ended June 30, 2020 and 2019. This discussion should be read in conjunction with the financial statements and notes thereto contained elsewhere in this report. The Company has a June 30 fiscal year end.




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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).

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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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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Fiscal Year 2020 Results of Operations Compared with Fiscal Year 2019



                                                        From
                                                      Inception
                                  For the Year       (August 6,
                                   Ended June       2018) through
                                    30, 2020        June 30, 2019         $              %

Operating expenses:
General and administrative
expenses                          $      94,013$      11,682$   82,331           705 %
Professional fees                       137,250            64,311         72,939           113 %
Related party consulting fees           125,100                 -        125,100           100 %
Research and development
expense                                   6,376             8,384         (2,008 )         -24 %
Total operating expenses                362,739            84,377        278,362           330 %

Loss from operations                   (362,739 )         (84,377 )     (278,362 )         330 %

Other income (expense):
Amortization of debt discount          (324,034 )               -       (324,034 )         100 %
Amortization of debt discount,
related parties                         (27,242 )               -        (27,242 )         100 %
Interest expense                         (9,722 )               -         (9,722 )         100 %
Interest expense, related
parties                                  (3,983 )            (378 )       (3,605 )         954 %
Gain on forgiveness of accounts
payable                                  28,156                 -         28,156           100 %
Total other income (expense)           (336,825 )            (378 )     (336,447 )       89007 %

Net loss                          $    (699,564 )$     (84,755 )$ (614,809 )         725 %



General and administrative expenses

Total general and administrative expenses were $94,013 for the year ended June 30, 2020 compared to $11,682 for the period from inception (August 6, 2018) through June 30, 2019. The increase of 705% was primarily due to an increase in consulting fees for new business development and incurring rent for new office space.




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Professional Fees



Total professional fees were $137,250 for the year ended June 30, 2020 compared to $64,311 for the period from inception (August 6, 2018) through June 30, 2019. The increase of 113% was due was due to incurring engineering, legal and accounting fees. The accounting and legal fees were primarily related to fulfilling financial reporting requirements.

Related Party Consulting Fees

Total related party consulting fees were $125,100 for the year ended June 30, 2020 compared to $0 for the period from inception (August 6, 2018) through June 30, 2019. The consulting fees consisted of (i) $73,400 paid to Ancient Investments, LLC, a company owned by Keith Duffy, CEO and Scott Duffy, Executive Director of Operations, (ii) $44,700 paid to AMP Web services, a company owned by Pablo Lavigna, CTO and (iii) $7,000 paid to Keystone Business Development Partners, a company owned by Brian Carey, CFO. The increase of 100% was due to services beginning in the current fiscal year.

Research and Development Expenses

Total research and development expenses were $6,376 for the year ended June 30, 2020 compared to $8,384 for the period from inception (August 6, 2018) through June 30, 2019. The research and development fees were paid to an inventor to work on the Vertical Take-Off and Landing ("VTOL") Halo Aircraft Technology. The decrease of 24% was due to the fact that most of the contract fees were incurred in the prior period.




Other Income (Expenses)



Total other expenses consist of amortization of debt discount related to convertible notes, interest expense related to convertible notes and gain on forgiveness of accounts payable. Total other income (expenses) were $336,825 for the year ended June 30, 2020 compared to $378 for the period from inception (August 6, 2018) through June 30, 2019. The increase was due to the issuance of new debt.




Net loss



Total net loss was $699,564 for the year ended June 30, 2020 compared to $84,755 for the period from inception (August 6, 2018) through June 30, 2019. The increase of 725% was due to increased professional fees primarily for fulfilling financial reporting requirements, office rent and expenses related to new debt.

Liquidity and Capital Resources

As of June 30, 2020, we had a cash balance of $38,893 and negative working capital of $53,532. Our net loss of $699,564 in the year ended June 30, 2020 was mostly funded by proceeds raised from financings. We will need to raise working capital (or refinance existing short-term debt to long-term debt) to fund operations. Future equity financings may be dilutive to our stockholders. Alternative forms of future financings may include preferences or rights superior to our common stock. Debt financings may involve a pledge of assets and will rank senior to our common stock. We have historically financed our operations through best-efforts private equity and debt financings. We do not have any credit or equity facilities available with financial institutions, stockholders or third-party investors, and will continue to rely on best efforts financings. The failure to raise sufficient capital will likely cause us to cease operations.

During the fiscal year 2020, our operating activities used $349,586 of net cash compared to using $82,171 of net cash flow in our operating activities during fiscal year 2019. This difference primarily resulted from the increase of operations.




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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).



Critical Accounting Policies



Basis of Presentation


The consolidated financial statements, which include the accounts of the Company and American Aviation Technologies, LLC, its subsidiary, are prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements, which include the accounts of the Company and its wholly-owned subsidiary, and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Financial Statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and presented in US dollars. The fiscal year end is June 30.



Principles of Consolidation


The consolidated financial statements include the accounts of Xeriant, Inc. and American Aviation Technologies, LLC. All significant intercompany balances and transactions have been eliminated.



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 (i) the valuation of beneficial conversion features associated with convertible debt and (ii) our incremental borrowing rate, estimated to be 10%, used to calculate the present value of our lease payments. 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.




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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.



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 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 June 30, 2020 and 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 year ended June 30, 2020 and for the period from inception (August 6, 2018) through June 30, 2019, the Company has no revenue.




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Convertible Debentures


If the conversion features of conventional convertible debt provide for a rate of conversion that is below market value at issuance, this feature is characterized as a beneficial conversion feature ("BCF"). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 "Debt with Conversion and Other Options." In those circumstances, the convertible debt is recorded net of the discount related to the BCF, and the Company amortizes the discount to interest expense, over the life of the debt. During the year ended June 30, 2020, the Company recorded a BCF in the amount of $379,693.

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 $6,376 for the year ended June 30, 2020 and $8,384 for the period from inception (August 6, 2018) through June 30, 2019.

Advertising, Marketing and Public Relations

The Company expenses advertising and marketing costs as they are incurred. The Company recorded advertising expenses in the amount of $1,211 for the year ended June 30, 2020 and $4,882 for the period from inception (August 6, 2018) through June 30, 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 for the year ended June 30, 2020 and $4,882 for the period from inception (August 6, 2018) through June 30, 2019.



Income Taxes


The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our consolidated federal tax return and any state tax returns are not currently under examination.

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.




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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 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.

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.

© Edgar Online, source Glimpses


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09/30XERIANT : Management's Discussion and Analysis of Financial Condition and Result..
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Financials (USD)
Sales 2020 - - -
Net income 2020 -0,70 M - -
Net Debt 2020 0,20 M - -
P/E ratio 2020 -3,42x
Yield 2020 -
Capitalization 3,27 M 3,27 M -
EV / Sales 2019 -
EV / Sales 2020 -
Nbr of Employees -
Free-Float 45,9%
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Managers
NameTitle
Keith F. Duffy Chairman & Chief Executive Officer
Scott M. Duffy Executive Director-Operations
Brian Carey Chief Financial Officer
Pablo Lavigna Chief Technology Officer
Edward C. DeFeudis Director
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