UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~December~~March 31, ~~2016~~2022

☐	¨ 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

~~BANJO & MATILDA, INC~~.XERIANT, INC.
(Exact name of registrant as specified in its charter).

Nevada
27-1519178
(State or other jurisdiction of
of incorporation or organization)
(I.R.S. ~~employer~~Employer
~~identification number)~~Identification No.)
Innovation Centre #1
3998 FAU Boulevard, Suite 309
Boca Raton, Florida
33431
(Address of principal executive offices)
(Zip code)

~~1221 2~~^nd ~~Street #300~~

~~Santa Monica CA 90401~~

~~(Address of principal executive offices and zip code)~~

~~(855) 245-1613~~

(Registrant’s telephone number, including area ~~code)~~code: (561) 491-9595

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol

Name of exchange

on which registered

N/A

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 o ☒ No x☐

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 x ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting ~~company.~~company, and an “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
o☐
Accelerated filer
o☐
Non-accelerated ~~filer~~Filer
o☒
Smaller reporting company
x☒
~~(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 13(a) 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 o ☐ No x☒

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 15, 2017,~~May 16, 2022, the Registrant had outstanding ~~58,823,116~~365,239,001 shares of common stock.

~~BANJO & MATILDA, INC.~~

~~FORM 10-Q~~

XERIANT, INC.

FORM 10-Q

TABLE OF CONTENTS

Page
~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS~~Special Note regarding Forward-looking Statements
3
PART I – ~~FINANCIAL INFORMATION~~Financial Information
Item 1.
Condensed Consolidated Financial ~~statements~~Statements (Unaudited)
4
~~CONDENSED CONSOLIDATED BALANCE SHEETS~~
~~F-1~~
~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS~~
~~F-2~~
~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~
~~F-3~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~F-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
10
6
Item 4.
Controls and Procedures
610
PART II – ~~OTHER INFORMATION~~Other Information
Item 1.
Legal Proceedings
711
Item 1A.
Risk Factors
711
Item 2.
Unregistered Sales of Equity Securities
711
Item 3.
Defaults Upon Senior Securities
711
Item 4.
Mine Safety Disclosures
711
Item 5.
Other Information
711
Item 6.
Exhibits
812
~~SIGNATURES~~Signatures
913

2

Table of Contents

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

~~BANJO & MATILDA,~~XERIANT, INC. ~~AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~DECEMBER~~MARCH 31, ~~2016~~2022

(UNAUDITED)

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and June 30, 2021
F-1
Condensed Consolidated Statements of Operations for the three and ~~Comprehensive Loss~~nine months ended March 31, 2022 and 2021 (Unaudited)
F-2
Condensed Consolidated Statements of Stockholder’s Equity for the three and nine months ended March 31, 2022 and 2021 (Unaudited)
F-3
Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2021 (Unaudited)
~~F-3~~
F-5
Notes to Unaudited Condensed Consolidated Financial Statements
~~F-4~~F-6

4

Table of Contents

~~BANJO & MATILDA~~XERIANT, INC. ~~AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,

June 30,

2016

2016

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$ 28,564

$ 11,056

Trade receivables, net

-

2,870

Inventory, net

129,272

102,427

Deposit on purchases

-

1,153

Other assets

5,500

-

TOTAL CURRENT ASSETS

163,336

117,506

NON-CURRENT ASSETS

Intangible assets, net

34,898

38,269

Deferred financing costs, net

24,709

31,407

Property, plant and equipment, net

10,023

11,976

TOTAL NON-CURRENT ASSETS

69,629

81,652

TOTAL ASSETS

$ 232,966

$ 199,157

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES

Trade and other payables

$ 1,077,935

$ 1,008,772

Deposit payable

4,621

4,621

Trade financing

196,119

249,720

Accrued interest

370,885

236,398

Loans payable

689,269

306,092

Loan from related parties

181,737

183,269

Convertible loan from related parties (net of related discount)

377,724

370,008

TOTAL CURRENT LIABILITIES

2,898,290

2,358,880

NON-CURRENT LIABILITIES

Loans payable (net of related discount) (net of current portion)

171,903

325,137

TOTAL LIABILITIES

3,070,193

2,684,017

STOCKHOLDERS' DEFICIT

Preferred stock, $0.00001 par value, 100,000,000 shares authorized

and 1,000,000 shares issued and outstanding, respectively

10

10

Common stock, $0.00001 par value, 100,000,000 shares authorized and

58,823,116 and 58,823,116 shares issued and outstanding, respectively

588

588

Additional paid in capital

1,632,517

1,632,517

Other accumulated comprehensive gain

100,007

100,007

Accumulated deficit

(4,570,349 )

(4,217,982 )
TOTAL STOCKHOLDERS' DEFICIT

(2,837,226 )

(2,484,860 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$ 232,966

$ 199,157

	As of March 31, 2022			As of June 30, 2021
Assets	(Unaudited)
Current assets
Cash	$	1,693,495		$	962,540
Deposits		12,546			12,546
Prepaids		1,790			1,234
Total current assets		1,707,831			976,320
Property & equipment, net		19,658
Operating lease right-of-use asset		138,963			169,209
Total assets	$	1,866,452		$	1,145,529

Liabilities & stockholders' deficit
Current liabilities
Accounts payable and accrued liabilities	$	33,962		$	73,224
Accrued liabilities, related party		30,000			25,000
Convertible notes payable, net of discount		2,319,738			158,196
Lease liability, current		34,785			42,643
Total current liabilities		2,418,485			299,063

Lease liability, long-term		117,585			141,160
Total liabilities		2,536,070			440,223

Commitments and contingencies (Note 9)

Stockholders' deficit
Series A Preferred stock, $0.00001 par value; 100,000,000 authorized; 3,500,000 designated; 781,132 and 793,279 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively		8			8
Series B Preferred stock, $0.00001 par value; 100,000,000 authorized; 1,000,000 designated; 1,000,000 issued and outstanding at March 31, 2022 and June 30, 2021, respectively		10			10
Common stock, $0.00001 par value; 5,000,000,000 shares authorized; 363,778,386 and 292,815,960 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively		3,633			2,925
Common stock to be issued		97,900			51,090
Additional paid in capital		15,494,788			4,138,194
Accumulated deficit		(12,826,977	)		(3,270,235	)
Total Xeriant stockholder's deficit		2,769,362			921,992
Non-controlling interest		(3,438,980	)		(216,686	)
Total stockholders' deficit		(669,618	)		705,306
Total liabilities and stockholders' deficit	$	1,866,452		$	1,145,529

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

F-1
Table of Contents

~~BANJO & MATILDA, INC. AND SUBSIDIARIES~~XERIANT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE (LOSS) INCOME~~

~~FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 2016 AND 2015~~(UNAUDITED)

~~(UNAUDITED)~~

Three month periods ended

Six month periods ended

December 31,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Revenue

$ 159,115

$ 732,063

$ 360,042

$ 1,612,367

Cost of sales

46,417

517,152

143,747

1,088,959

Gross profit

112,698

214,911

216,295

523,408

Payroll and employee related expenses

123,879

131,688

246,362

393,653

Operating expense

20,818

42,725

40,922

105,445

Marketing expense

17,136

23,501

34,917

91,921

Samples & design expense

6,055

7,466

7,761

44,069

Occupancy expenses

11,461

23,350

26,058

36,715

Depreciation and amortization expense

2,662

2,291

5,324

4,556

Finance Charges

18,450

12,299

27,258

27,680

Corporate and public company expense

7,125

40,898

14,547

73,285

207,587

284,219

403,150

777,324

Loss from operations

(94,889 )

(69,307 )

(186,855 )

(253,916 )

Other Income (Expense)

Interest income

-

-

Other income

3,390

(9,846 )

4,077

2,832

Amortization of debt discount

(16,393 )

(18,093 )

(32,785 )

(36,187 )
Interest expense

(68,966 )

(52,120 )

(136,804 )

(115,453 )
Total Other Expense

(81,969 )

(80,059 )

(165,512 )

(148,808 )

Loss before income tax

(176,858 )

(149,367 )

(352,367 )

(402,724 )

Provision for income taxes

-

-

-

-

Net loss

(176,858 )

(149,367 )

(352,367 )

(402,724 )

Other comprehensive income

Foreign currency translation

-

-

-

-

Comprehensive loss

$ (176,858 ) $ (149,367 )

$ (352,367 ) $ (402,724 )

Net loss per share

Basic

$ (0.00 ) $ (0.00 )

$ (0.01 ) $ (0.01 )
Diluted

$ (0.00 ) $ (0.00 )

$ (0.01 ) $ (0.01 )

Weighted average number of shares outstanding:

Basic

58,823,116

58,823,116

58,823,116

58,722,023

Diluted

58,823,116

58,823,116

58,823,116

58,722,023

	For the three months ended						For the nine months ended
	March 31, 2022			March 31, 2021			March 31, 2022			March 31, 2021

Operating expenses:
Sales and marketing expense	$	25,771		$	0		$	670,989		$	1,000,000
General and administrative expenses		799,521			141,897			3,120,772			242,445
Professional fees		102,646			32,160			234,671			67,397
Related party consulting fees		135,500			54,500			348,925			132,500
Research and development expense		7,587			0			5,207,806			0
Total operating expenses		1,071,025			228,557			9,583,163			1,442,342

Operating loss		(1,071,025	)		(228,557	)		(9,583,163	)		(1,442,342	)

Other expenses:
Amortization of debt discount		(1,598,683	)		(103,225	)		(3,012,642	)		(215,635	)
Amortization of debt discount, related party		0			0			0			(5,000	)
Financing fees		0			0			(43,750	)		0
Interest expense		(134,927	)		(2,661	)		(138,941	)		(4,857	)
Interest expense, related party		0			0			0			(76	)
Gain on forgiveness of accounts payable		0			0			0			0
Loss on settlement of debt		(3	)		0			(536	)		(186,954	)
Total other (expense)		(1,733,613	)		(105,886	)		(3,195,869	)		(412,522	)

Net loss attributable:
Non-controlling interest		(7,425	)		0			(3,222,294	)		0
Common stockholders		(2,797,213	)		0			(9,556,738	)		0
Net loss	$	(2,804,638	)	$	(334,443	)	$	(12,779,032	)	$	(1,854,864	)

Net loss per common share - basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.04	)	$	(0.01	)

Weighted average number of common shares outstanding - basic and diluted		362,872,609			234,451,953			339,759,839			176,685,459

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

F-2
Table of Contents

XERIANT, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022

(UNAUDITED)

~~BANJO & MATILDA, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2016 AND 2015~~

~~(UNAUDITED)~~

December 31,
2016

December 31,
2015

Net loss

$ (352,367 )

$ (402,724 )
Adjustments to reconcile net loss to net cash

used in operating activities:

Depreciation

1,953

1,185

Amortization

3,371

3,371

AR allowance

(8,772 )

873

Debt discount amortization

32,785

36,187

Amortization of deferred finance fee

7,851

7,851

(Increase) / decrease in assets:

-

Trade receivables

11,642

16,808

Inventory

(26,845 )

40,962

Deposit on Purchases

1,153

356,651

Other assets

(5,500 )

(235,650 )
Other receivable

-

66,952

Deferred financing costs

(1,153 )

-

Increase/ (decrease) in current liabilities:

Trade payables and other liabilities

69,162

5,202

Accrued interest

134,487

58,350

Net cash used in operating activities

(132,233 )

(43,983 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

-

(2,334 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds (net payments) on related party loan

(1,532 )

268,971

Proceeds from loan payables

-

(340,886 )
Net proceeds (net payments) on loan payables

204,875

-

Net trade financing

(53,601 )

(130,151 )
Net cash provided by (used in) financing activities

149,742

(202,066 )

Net increase (decrease) in cash and cash equivalents

17,508

(248,383 )

Cash and cash equivalents at the beginning of the period

$ 11,056

$ 362,668

Cash and cash equivalents at the end of the period

$ 28,564

$ 114,285

SUPPLEMENTAL DISCLOSURES:

Cash paid during the year for:

Income tax payments

$ -

$ -

Interest payments

$ 12,082

$ 64,953

SUPPLEMENTAL DISCLOSURES FOR NON CASH:

FINANCING AND INVESTING ACTIVITIES

Debt converted to equity

$ -

$ 27,123

	Series A Preferred Stock					Series B Preferred Stock				Common Stock				Additional Paid in			Common stock			Accumulated			Non-Controlling
	Shares			Amount		Shares		Amount		Shares		Amount		Capital			to be issued			Deficit			Interest			Total
Balance June 30, 2021		788,270			8		1,000,000		10		292,815,960		2,925		4,138,194			51,090			(3,270,235	)		(216,686	)		705,306

Issuance of common stock committed in prior period		-			-		-		0		400,000		4		47,996			(48,000	)		0			0			0

Sale of common stock		-			0		-		0		7,500,000		75		499,925			1,168,500			0			0			1,668,500

Shares issued as equity kicker		-			0		-		0		250,000		3		43,750			0			0			0			43,753

Exercise of warrants		-			0		-		0		4,185,000		41		125,509			3,000			0			0			128,550

Conversion of Series A Preferred to Common Stock		(4,000	)		0		-		0		4,000,000		40		(40	)		0			0			0			0

Conversion of convertible notes and accrued interest		-			0		-		0		10,598,544		106		176,054			(3,090	)		0			-			173,070

Stock issued for services		-			0		-		0		2,825,000		27		449,173			91,900			0			0			541,100

Stock option compensation		-			0		-		0		-		0		1,060,324			0			0			0			1,060,324

Fair value of beneficial conversion feature associated with convertible debt		-			0		-		0		-		0		250,000			0			0			0			250,000

Net Loss		-			0		-		0		-		0		0			0			(3,270,099	)		(1,177,816	)		(4,447,915	)

Balance September 30, 2021		784,270		$	8		1,000,000	$	10		322,574,504	$	3,221	$	6,790,885		$	1,263,400		$	(6,540,334	)	$	(1,394,502	)	$	122,688

Issuance of common stock committed in prior period		-			0		-		0		23,266,666		233		1,162,267			(1,162,500	)		0			0			0.33

Sale of common stock		-			0		-		0		8,200,000		82		409,918			0			0			0			410,000

Exercise of warrants		-			0		-		0		123,600		1		2,999			(3,000	)		0			0			0

Conversion of Series A Preferred to Common Stock		(3,138	)		0		-		0		3,138,000		31		(31	)		0			0			0			0

Conversion of convertible notes and accrued interest		-			0		-		0		-		0		0			250,000			0			0			250,000

Stock issued for services		-			0		-		0		900,000		9		116,095			0			0			0			116,104

Stock option compensation		-			0		-		0		-		0		827,221			0			0			0			827,221

Fair value of warrants associated with convertible debt		-			0		-		0		-		0		2,777,081			0			0			0			2,777,081

Fair value of beneficial conversion feature associated with convertible debt		-			0		-		0		-		0		2,365,419			0			0			0			2,365,419

Net Loss		-			0		-		0		-		0		0			0			(3,489,430	)		(2,037,053	)		(5,526,483	)

Balance December 31, 2021		781,132		$	8		1,000,000	$	10		358,202,770	$	3,577	$	14,451,855		$	347,900		$	(10,029,764	)	$	(3,431,555	)	$	1,342,031

Issuance of common stock committed in prior period		-			0		-		0		4,229,680		42		253,707			(250,000	)		0			0			3,749

Conversion of Series A Preferred to Common Stock		-			0		-		0		-		0		0			0			0			0			0

Inducement of conversion - interest expense		-			0		-		0		845,936		8		134,918			0			0			0			134,927

Stock option compensation		-			0		-		0		0		0		574,563			0			0			0			574,563

Stock issued for services		-			0		-		0		500,000		5		79,745			0			0			0			79,750

Net Loss		-			0		-		0		-		0		0			0			(2,797,213	)		(7,425	)		(2,804,638	)

Balance March 31, 2022		781,132		$	8		1,000,000	$	10		363,778,386		3,633	$	15,494,788		0	97,900		$	(12,826,977	)	$	(3,438,980	)	$	(669,618	)

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

F-3
Table of Contents

XERIANT, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022

(UNAUDITED

	Preferred Stock					Common Stock				Additional Paid in			Common stock			Accumulated
	Shares			Amount		Shares		Amount		Capital			to be issued			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		-			-		-		-		0						(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		-			0		3,400,000		34		50,966			0			0			51,000

Conversion of convertible notes and accrued interest		-			0		-		0		0			78,714			0			78,714

Issuance of warrants with convertible notes		-			0		-		0		6,388			0			0			6,388

Fair value of beneficial conversion feature associated with convertible debt		-			0		-		0		6,612			0			0			6,612

Stock issued for services		-			0		20,300,000		203		1,012,997			0			0			1,013,200

Issuance of warrants for services		-			0		-		0		13,909			0			0			13,909

Net Loss		-			0		-		0		0			0			(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	)

Sale of common stock		-			0		9,991,667		100		1,198,900			298,000			0			1,497,000

Shares reclassed from common stock to be issued		-			0		19,595,442		195		129,660			(129,859	)		0			(4	)

Conversion of convertible notes and accrued interest		-			0		4,557,943		46		23,810			0			0			23,856

Issuance of warrants with convertible notes		-			0		-		0		75,097			0			0			75,097

Fair value of beneficial conversion feature associated with convertible debt		-			0		-		0		122,453			0			0			122,453

Stock issued for services		-			0		150,000		2		62,048			0			0			62,050

Issuance of warrants for services		-			0		-		0		24,422			0			0			24,422

Net Loss		-			0		-		0		0			0			(344,596	)		(344,596	)

Balance March 31, 2021		3,074,279		$	31		283,875,576	$	2,836	$	3,757,824		$	298,000		$	(2,649,336	)	$	1,409,355

~~BANJO & MATILDA, INC. AND SUBSIDIARIES~~

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

F-4

Table of Contents

XERIANT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine months ended
	March 31, 2022			March 31, 2021

Cash Flows from Operating Activities
Net Loss	$	(12,779,032	)	$	(1,854,864	)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and Amortization		332			0
Stock compensation expense		2,462,108			1,113,583
Stock issued for services		736,954			-
Financing fees		178,676			0
Loss on settlement of debt		0			186,954
Amortization of Debt Discount		3,012,642			215,635
Amortization of Debt Discount, Related Party		0			5,000
Changes in operating assets & liabilities
Operating lease right of use asset		30,246			93
Lease liabilities		(31,433	)		0
Deposits and prepaids		(556	)		(62,458	)
Accounts payable and accrued liabilities		(35,513	)		25,880
Accrued liability, related party		5,000			0
Accrued expenses		5,520			0
Net cash used by operating activities		(6,415,055	)		(370,177	)

Cash Flows from Investing Activities
Purchase of property and equipment		(19,990	)		0
Net cash used in financing activities		(19,990	)		0

Cash Flows from Financing Activities
Sale of common stock		2,078,500			1,548,000
Cash from exercise of warrants		128,550			0
Proceeds from convertible notes payable		4,958,950			289,850
Net cash provided by financing activities		7,166,000			1,837,850

Increase in Cash		730,955			1,467,673

Cash at beginning of period		962,540			38,893

Cash at end of period	$	1,693,495		$	1,506,566

Supplemental Cash Flow Information
Cash paid for interest	$	0		$	0
Cash paid for income taxes	$	0		$	0

Non-cash investing and financing activities:
Conversion of convertible notes payable and accrued interest	$	440,995		$	130,410
Warrants issued with convertible notes payable	$	2,894,974		$	117,892
Beneficial conversion feature arising from convertible notes payable	$	2,787,376		$	171,958

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

F-5

Table of Contents

XERIANT, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021

~~Note~~NOTE 1 ~~– BASIS~~- ORGANIZATION AND NATURE OF ~~PRESENTATION AND ORGANIZATION~~BUSINESS

~~All currencies represented in~~Xeriant, Inc. (“Xeriant” or the ~~notes~~“Company”) is an aerospace company dedicated to the ~~condensed consolidated financial statements are~~emerging aviation market called Advanced Air Mobility (AAM), the transition to eco-friendly, on demand flight, making air transportation more accessible and a greater part of our daily lives. Xeriant is focused on the acquisition, development, and proliferation of next generation hybrid-electric and fully electric aircraft with vertical takeoff and landing (eVTOL) capabilities, performance enhancing aerospace technologies and advanced materials, as well as critical support infrastructure. Xeriant is located at the Research Park at Florida Atlantic University in ~~United States Dollars (USD) unless specified as AUD (Australian Dollars).~~

~~Banjo~~Boca Raton, Florida adjacent to the Boca Raton Airport, and ~~Matilda, Inc.~~trades on OTC Markets under the stock symbol, XERI. The Company was incorporated in Nevada on December 18, ~~2009 under the name Eastern World Group, Inc. On September 24, 2013, its name was changed to Banjo & Matilda, Inc.~~2009.

On ~~November 14, 2013, Banjo & Matilda, Inc.,~~April 16, 2019, the Company and the members of American Aviation Technologies, LLC (“AAT”) entered into a Share Exchange Agreement ~~(the "Exchange Agreement"~~(“Agreement”) ~~with Banjo & Matilda, Pty Ltd., a corporation formed under~~. The agreement, which became effective on September 30, 2019, was pursuant to which the ~~laws of Australia (the "Company") and the shareholders~~Company acquired 100% of the ~~Company. Pursuant to the Exchange Agreement, at the closing of the transaction contemplated thereunder (the "Transaction"), the Company became a wholly-owned subsidiary of Banjo & Matilda, Inc.~~

~~Banjo & Matilda Pty Ltd. was incorporated under the laws of Australia on May 27, 2009~~issued and manufactures and sells cashmere fashion. Headquartered at Bondi Beach, the Aussie lifestyle of sun, sand and surf resonates innately with this label and its philosophy of low maintenance, style and comfort.

~~Banjo & Matilda USA, Inc. was incorporated~~outstanding membership units in ~~the State of Delaware on October 14, 2013 and is owned 100% by Banjo & Matilda, Inc.~~

~~The ultra-soft cashmere staples, pairing simplicity with cool sophistication has rapidly gained loyal customers worldwide positioning the label as the 'go-to'~~exchange for ~~contemporary cashmere products.~~

Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance, rather than a business combination. That is, the share exchange is equivalent to the issuance of ~~stock by Banjo & Matilda Pty Ltd. for the net monetary assets~~shares of the Banjo & Matilda, Inc. accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under share reverse takeover accounting, the post reverse acquisition comparative historical financial statementsCompany’s Series A Preferred Stock constituting 86.39% of the ~~legal acquirer, Banjo & Matilda, Inc. are those~~total voting power of the ~~legal acquiree, Banjo & Matilda Pty Ltd., which is considered~~Company’s capital stock to be outstanding upon closing, after giving effect to the ~~accounting acquirer. Share~~consummation of concurrent debt settlement and ~~per share amounts stated have been retroactively adjusted to reflect~~other capital stock issuances but before the ~~merger.~~

issuance of shares of capital stock for investor relations purposes. As a result of the ~~exchange agreement,~~Exchange Agreement, AAT became a wholly owned subsidiary of the reorganization was treated as an acquisition by the accounting acquiree that is being accounted for as a recapitalization and as a reverse merger by the legal acquirer for accounting purposes. Pursuant to the recapitalization, all capital stock shares and amounts and per share data have been retroactively restated. Accordingly, the financial statements include the following:Company.

~~(1)~~
~~The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the legal acquirer at fair value.~~
~~(2)~~
~~The statements of operations include the operations of the accounting acquirer for the period presented and the operations of the legal acquirer from the date of the merger.~~
On June 22, 2020, the name of the Company was changed to Xeriant, Inc. in the State of Nevada and subsequently approved by FINRA effective July 30, 2020 for the name and symbol change (XERI).

~~Note~~On May 27, 2021, the Company entered into a Joint Venture Agreement with XTI Aircraft Company, to form a new company, called Eco-Aero, LLC, for purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff and landing (eVTOL) fixed wing aircraft.

NOTE 2 –- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The ~~accompanying~~unaudited condensed consolidated financial statements ~~were~~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 ~~conformity~~accordance with generally accepted accounting principles in the United States (“GAAP”). Results for the interim periods presented are not necessarily indicative of ~~America ("US GAAP").~~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 ~~Banjo & Matilda, Inc. ("Banjo" or "the Company") and its wholly owned subsidiaries Banjo & Matilda Pty Ltd. and Banjo & Matilda USA,~~Xeriant, Inc., ~~collectively referred to as the Company.~~American Aviation Technologies, LLC, and Eco-Aero, LLC. 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.

~~F-4~~
~~Table of Contents~~

~~Exchange Gain (Loss)~~

During the six-month periods ended December 31, 2016 and 2015, the transactions of the Company were denominated in US Dollars. Some transactions were denominated in AUD and British pounds for the sales made outside US and for rent paid for the Australian store. Such transactions were converted to US$ on the date of transaction and the exchange gains or losses were recorded in the statement of operations.

~~Foreign Currency Translation and Comprehensive Income (Loss)~~

During the six-month period ended December 31, 2016 ad 2015, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US$ on the date of settlement and the exchange gains and losses were recorded in the statement of operations. No change was recorded in the comprehensive income (loss).

Use of Estimates

The preparation of financial statements in conformity with ~~US GAAP~~accounting principles generally accepted in the United States of America requires management to make ~~certain~~ 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 ~~those~~these estimates. ~~Significant estimates include collectability~~

F-6

Table of Contents

Fair Value Measurements and Fair Value of ~~accounts receivable, accounts payable, sales returns~~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 ~~recoverability~~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 ~~long-term~~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 March 31, 2022 and June 30, 2021 there are no deferred tax assets.

~~Reportable Segment~~Going concern

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 March 31, 2022 and June 30, 2021, the Company had $1,693,495 and $962,540 in cash and $(710,654) and $677,257 in working capital, respectively. For the nine months ended March 31, 2022 and 2021, the Company had a net loss of $12,779,032 and $1,854,864, 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.

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 March 31, 2022 and June 30, 2021 there are no accounts receivable.

F-7

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.

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 $7,587 and $0 for the three months ended March 31, 2022 and 2021, respectively. The Company incurred research and development expenses of $5,207,806 and $0 for the nine months ended March 31, 2022 and 2021, respectively.

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 $3,690 and $0 for the three months ended March 31, 2022 and 2021, respectively. The Company recorded advertising expenses in the amount of $168,403 and $0 for the nine months ended March 31, 2022 and 2021, respectively. These expenses are included within sales in marketing expenses in the statements of operations.

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 three and nine months ended March 31, 2022 and 2021, respectively.

F-8

Table of Contents

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 one reportable segment. The Company's activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.

~~Revenue Recognition~~

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowancesadopted FASB ASC 740-10, Accounting for ~~returns and any taxes collected from customers and subsequently remitted to governmental authorities.~~

~~Cost of Sales~~

Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), shipping, importation duties and charges, third party royalties, and product sampling.

~~Operating Overhead Expense~~

~~Operating overhead expense consists primarily of payroll and benefit related costs, rent, depreciation and amortization, professional services, and meetings and travel.~~

~~Income Taxes~~

~~The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740,~~ Income Taxes, which requires ~~recognition of deferred~~an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities ~~for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes~~ are ~~recognized for the tax consequences in future years of~~computed annually from differences between the financial statement and tax ~~bases~~basis of assets and liabilities ~~and their financial reporting~~that will result in taxable or deductible amounts ~~at each period end~~in the future based on enacted tax laws and ~~statutory tax~~ 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 ~~follows FASB Interpretation No. 48,~~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 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for ~~Uncertainty~~certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in ~~Income Taxes, (codified~~an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in ~~FASB ASC Topic 740). When tax returns~~an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The adoption of ASU 2020-06 is expect to have material impact on the Company’s financial statements.

The Company has implemented all new accounting pronouncements that are ~~filed, it~~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.

NOTE 3 - JOINT VENTURE

On May 31, 2021, the Company entered into a Joint Venture Agreement (the “Agreement”) with XTI Aircraft Company (“XTI”), a Delaware corporation, to form a new company, called Eco-Aero, LLC (the “JV”), a Delaware limited liability company, with the purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff, and landing (eVTOL) fixed wing aircraft. Under the Agreement, Xeriant is ~~likely that some positions taken would be sustained upon examination~~contributing capital, technology, and strategic business relationships, and XTI is contributing intellectual property licensing rights and know-how. XTI and the Company each own 50 percent of the JV. The JV is managed by a management committee consisting of five members, three appointed by the ~~taxing authorities, while others~~Company and two by XTI. The Agreement was effective on June 4, 2021, with an initial deposit of $1 million into the JV. Xeriant’s financial commitment is $10 million, contributed over a period of less than one year, as required by the aircraft development timeline and budget.

The Company analyzed the transaction under ASC 810 Consolidation, to determine if the joint venture classifies as a Variable Interest Entity (“VIE”). The Joint Venture qualifies as a VIE based on the fact the JV does not have sufficient equity to operate without financial support from Xeriant. According to ASC 810-25-38, a reporting entity shall consolidate a VIE when that reporting entity has a variable interest (or combination of variable interests) that provides the reporting entity with a controlling financial interest on the basis of the provisions in paragraphs 810-10-25-38A through 25-38J. The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. According to the JV operating agreement, the ownership interests are ~~subject~~50/50. However, the agreement provides for a Management Committee of five members. Three of the five members are from Xeriant. Additionally, Xeriant has the right to ~~uncertainty about~~invest $10,000,000 into the JV. As such, Xeriant has substantial capital at risk. Based on these two factors, the conclusion is that Xeriant is the primary beneficiary of the VIE. Accordingly, Xeriant has consolidated the VIE.

NOTE 4 - CONCENTRATION OF CREDIT RISKS

The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully insured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions. On March 31, 2022, the Company had $1,443,495 in excess of FDIC insurance.

F-9

Table of Contents

NOTE 5 - OPERATING LEASE RIGHT-OF-USE ASSET AND OPERATING LEASE LIABILITY

The Company leases 2,911 square feet of office space located in the Research Park at Florida Atlantic University, Innovation Centre 1, 3998 FAU Boulevard, Suite 309, 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 were abated. Due to the COVID-19 pandemic, the Company decided to have all employees work from home and intends to build out the office space by the end of 2021 to allow employees to work from the office in January of 2022. The following table illustrates the base rent amounts over the term of the lease:

	Base
Rent Periods	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:

	March 31,
	2022
Office lease	$	220,448
Less: accumulated amortization		(81,485	)
Right-of-use asset, net	$	138,963

Operating lease liability is summarized below:

	March 31, 2022
Office lease	$	152,370
Less: current portion		(34,785	)
Long term portion		117,585

Maturity of the lease liability is as follows:

Fiscal year ending June 30, 2022	$	14,804
Fiscal year ending June 30, 2023		60,392
Fiscal year ending June 30, 2024		62,201
Fiscal year ending June 30, 2025		37,112
		174,508
Present value discount		(22,138	)
Lease liability	$	152,370

F-10

Table of Contents

NOTE 6 - CONVERTIBLE NOTES PAYABLE

The carrying value of convertible notes payable, net of discount, as of March 31, 2022 and June 30, 2021 was $2,319,738 and $158,196, respectively, as summarized below:

The following table illustrates the carrying values for the convertible notes payable as of March 31, 2022 and June 30, 2021:

	March 31,			June 30,
Convertible Notes Payable	2022			2021
Convertible notes payable issued January 5, 2021 (6% interest)	$	0		$	25,000
Convertible notes payable issued January 11, 2021 (6% interest)		0			142,550
Convertible notes payable issued August 9, 2021 (6% interest)		0			0
Convertible notes payable issued August 10, 2021 (6% interest)		0			0
Convertible notes payable issued October 27, 2021 (0% interest) – Auctus Fund LLC		6,050,000			-
Total face value		6,050,000			167,550
Less unamortized discount		(3,730,262	)		(9,354	)
Carrying value	$	2,319,738		$	158,196

Between September 27, 2019 and August 10, 2021, the Company issued convertible notes payable with an aggregate face value of $892,300, of which $342,950 were issued by our subsidiary AAT. The notes have a coupon rate of 6% and maturity dates between 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. In the event the holder does not elect to convert the note prior to maturity, the note will automatically convert to common stock. Of the $892,300, $342,950 is convertible at $.0033 per share, $87,000 is convertible at $0.025 per share, $180,550 is convertible at $.03 per share, $31,800 is convertible at $0.003 per share, and the remaining $250,000 is convertible at $.06 per share. All these convertible notes payable have been converted as of March 31, 2021 and $167,550 principal balance remaining as of June 30, 2021.

The Company evaluated these notes 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.

In connection with the notes, the Company issued warrants indexed to an aggregate 8,848,333 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 $156,225.

Auctus Fund, LLC

On October 27, 2021, the Company issued a convertible note payable with Auctus Fund, LLC (the “Auctus Note”) with the principal sum of $6,050,000, which amount is the $5,142,500 actual amount of the purchase price, hereof plus an original issue discount in the amount of $907,500 and to pay interest on the unpaid principal amount hereof at the rate of zero percent per annum from the issue date until the note becomes due and payable, and $433,550 for professional fees in completing the transactions. The note has a maturity date of twelve 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 lesser of (i) $0.1187 or (ii) 75% of the offering price per share divided by the number of shares of common stock. The Auctus Note is secured by the grant of a first priority security interest in the assets of the Company.

In connection with the notes, the Company issued warrants indexed to an aggregate 50,968,828 shares of common stock. The warrants have a term of five years and an exercise price of $0.1187. The warrants were recorded at fair value of $2,777,081 to additional-paid-in-capital in accordance with ASC 815-10 based upon the allocation of the debt proceeds. The Company estimated the fair value of the warrants using a Black-Scholes option-pricing model, which is based, in part, upon subjective assumptions including but not limited to stock price volatility, the expected life of the warrants, the risk-free interest rate and the fair value of the common stock underlying the warrants. The Company estimates the volatility of its stock based on the average of three similar size public companies peer group historical volatility that is in line with the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon bond for a maturity similar to the expected remaining life of the warrants. The expected remaining life of the warrants is assumed to be equivalent to their remaining contractual term.

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 $2,365,419 conversion feature in additional paid-in capital. The BCF resulted in a debt discount and are amortized over the life of the note.

For the nine months ended March 31, 2022, the Company recorded $3,730,262 amortization of debt discount related to the Auctus Note.

The Company is in communication with Auctus Fund, LLC and is actively working on strategies to extinguish, extend or restructure the Senior Secured Promissory Note. No assurance can be made as to the results of such actions.

For the nine months ended March 31, 2022 and 2021, the Company recorded $3,012,642 and $215,635 in amortization of debt discount related to the notes. For the nine months ended March 31, 2022 and 2021, the Company recorded $4,014 and $2,196 in interest expense related to the notes, respectively.

F-11

Table of Contents

NOTE 7 - RELATED PARTY TRANSACTIONS

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 $0.025 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 $0.025 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 $0.025. 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 nine months ended March 31, 2022 and 2021, the Company recorded $0 and $5,000 in amortization of debt discount related to the note. For the nine months ended March 31, 2022 and 2021, the Company recorded $0 and $76 in interest expense related to the note, respectively.

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.

F-12

Table of Contents

Consulting fees

During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $134,000 and $66,000 respectively, in consulting fees to Ancient Investments, LLC, a Company owned by the Company’s CEO, Keith Duffy and the Company’s Executive Director of Corporate Operations, Scott Duffy. As of March 31, 2022 and June 30, 2021, $15,000 and $0 was recorded in accrued liabilities related to Ancient Investments, LLC, respectively.

During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $92,000 and $0 respectively, in consulting fees to Edward DeFeudis, a Director of the Company. As of March 31, 2022 and June 30, 2021, $10,000 and $0 was recorded in accrued liabilities related to Edward DeFeudis, respectively.

During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $65,000 and $32,500 respectively, in consulting fees to AMP Web Services, a Company owned by the Company’s CIO, Pablo Lavigna. As of March 31, 2022 and June 30, 2021, $7,000 and $0 was recorded in accrued liabilities related to AMP Web Services, respectively.

During the nine months ended March 31, 2022 and March 31, 2021, the Company recorded $22,500 and $22,500 respectively, in consulting fees to Keystone Business Development Partners, a Company owned by the Company’s CFO, Brian Carey. As of March 31, 2022 and June 30, 2021, $0 and $25,000 was recorded in accrued liabilities related to Keystone Business Development Partners, respectively.

NOTE 8 - 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.

Joint Venture

In connection with the Eco-Aero, LLC Joint Venture, discussed in Note 3, the Company has the right to invest $10,000,000 into the joint venture.

Financial Advisory Agreements

On August 10, 2021, the Company entered into an Advisory Agreement with a firm to assist the Company with fundraising activities. In connection with the agreement, the Company has the following commitments:

	·	to issue 500,000 shares payable at the date of the agreement, 500,000 shares payable three months from the date of the agreement, 500,000 shares payable nine months from the date of the agreement.

	·	Pay a financing fee of 1.5% of gross proceeds received by the Company up to $100,000,000; a financing fee of 1.25% of gross proceeds received by the Company from $100,000,000-$200,000,000, and a financing fee of 1% of gross proceeds received by the Company over $200,000,000

	·	M&A fee of 1.5% of the value of a business or asset sold up to $50,000,000; an M&A fee of 1.25% of value of a business or asset sold from $50,000,000-$100,000,000, an M&A fee of 1% of value of a business or asset sold from $100,000,000-$200,000,000, and an M&A fee of 0.5% of value of a business or asset sold over $200,000,000

During the nine months ended March 31, 2022, the Company issued the initial 500,000 shares, second tranche of 500,000 shares, and the remaining 500,000 shares.

On August 19, 2021, the Company entered into an Advisory Agreement with a firm to assist the Company with fundraising activities. In connection with the agreement, the Company has the following commitments:

	·	Issue 2,225,000 common shares payable at the date of the agreement, and 2,225,000 common shares payable upon an uplisting of the Company’s common stock to a national exchange.

	·	Pay a cash fee of seven percent 7% of the amount of capital raised, invested or committed; and deliver a warrant (the “Agent Warrant”) to purchase shares of the Common Stock equal to seven percent (7%) of the number of shares of Common Stock underlying the securities issued in the Financing.

	·	Pay a cash fee for entering into a transaction including, without limitation, a merger, acquisition or sale of stock or assets equal to one and one half percent (1.5%), or in the event a transaction is consummated with a party that was in communication with the Company prior to the date of this contract, then the fee shall equal one half percent (0.5%).

During the nine months ended March 31, 2022, the Company issued the initial 2,225,000 shares.

F-13

Table of Contents

Litigation

On September 1, 2021, Xeriant Inc. brought a cause of action in the Southern District of Florida against a former shareholder for claims, including but not limited to, breach of contract, misrepresentation, and asserting claims to recoup monetary and in-kind distributions made to the shareholder by the Company. The defendant submitted an affirmative defense and counterclaim on October 29, 2021.

Board of Advisors Agreements

The Company has entered into advisor agreements with various advisory board members. The agreements provide for the following:

On October 27, 2020, the Company agreed to issue 300,000 common shares immediately, 2-year cashless warrants to purchase 300,000 common shares at the current price, and $2,500 per meeting paid 50% in cash and 50% in common shares.

On January 18, 2021, the Company agreed to issue 50,000 common shares, two-year cashless warrants to purchase 25,000 common shares at the current price, and $2,500 per meeting paid in cash, common shares, or a combination.

On January 22, 2021, the Company agreed to issue 50,000 common shares, two-year cashless warrants to purchase 25,000 common shares at the current price, and $2,500 per meeting paid in cash, common shares, or a combination.

On March 7, 2021 the Company paid an advisor $2,500 and issued 50,000 common shares.

On July 1, 2021, the Company agreed to issue 100,000 common shares, and $2,500 per meeting paid in cash, common shares, or a combination, an additional bonus of $25,000 paid in common shares issued at the end of each year of service, an option to purchase 5,000,000 common shares at $0.12 per share, vesting quarterly over 24 months, and for each of the following three years (beginning July 1, 2022), an option to purchase an additional 1,000,000 common shares per year thereafter at a 25% discount to the average market price for the preceding 10 trading days.

On July 6, 2021, provided an option to purchase 5,000,000 common shares at $0.12 per share, vesting quarterly over 24 months, a bonus of 250,000 common shares issued upon a strategic partnership with a major airline, $2,500 per formal meeting paid in common shares, and an additional bonus of $25,000 paid in common shares issued at the end of each year of service.

On July 28, 2021, the Company agreed to issue 250,000 common shares immediately, an option to purchase 5,000,000 common shares at $0.12 per share, vesting quarterly over 24 months, a bonus of 5,000,000 common shares for bringing in a strategic partner that significantly strengthens the Company’s market position, ~~taken~~$2,500 per formal meeting paid in cash, common shares or a combination, and an additional bonus of $25,000 paid in common shares issued at the end of each year of service

On August 9, 2021, the Company agreed to issue 50,000 common shares, $2,500 per meeting paid in cash, common shares, or a combination, and an additional bonus of $25,000 paid in common shares issued at the end of each year of service.

On August 20, 2021, the Company agreed to issue 100,000 common shares, and $2,500 per meeting paid in cash, common shares, or a combination, an additional bonus of $25,000 paid in common shares issued at the end of each year of service, an option to purchase 4,000,000 common shares at $0.12 per share, vesting quarterly over 24 months.

F-14

Table of Contents

NOTE 9 - EQUITY

Common Stock

As of March 31, 2022 and June 30, 2021, the Company had 5,000,000,000 shares of common stock authorized with a par value of $0.00001. There were 363,778,386 and 292,815,960 shares issued and outstanding as of March 31, 2022 and June 30, 2021, respectively.

During the three months ended September 30, 2021, the Company issued 400,000 shares of common stock related to a subscription agreement from the previous fiscal year, which were previously recorded in common stock to be issued at $48,000.

During the three months ended September 30, 2021, the Company sold 2,500,000 shares of common stock for aggregate proceeds of $250,000, or $0.10 per share.\

During the three months ended September 30, 2021, the Company sold 5,000,000 shares of common stock for aggregate proceeds of $250,000, or $0.05 per share.

In connection with one of the subscription agreements, the Company issued 250,000 shares as an equity kicker valued at $43,750, which has been expensed as a financing costs.

During the three months ended September 30, 2021, the Company issued 4,185,000 shares of common stock as a result of warrant exercises in the aggregate proceeds of $125,550.

During the three months ended September 30, 2021, the Company issued 4,000,000 shares of common stock in exchange for the conversion of 4,000 shares of Series A Preferred Stock.

During the three months ended September 30, 2021, the Company issued 10,598,544 shares of common stock for the conversion of $167,550 in principal and $4,985 in accrued interest. This resulted in a loss on extinguishment of debt in the amount of $535.

During the three months ended September 30, 2021, the Company issued 2,825,000 shares of common stock for services, valued at $449,200.

During the three months ended December 31, 2021, the Company sold 8,200,000 shares of common stock for aggregate proceeds of $410,000, or $0.05 per share.

During the three months ended December 31, 2021, the Company issued 23,266,667 shares of common stock for aggregate proceeds of $1,162,500, or $0.05 per share for the sale of common shares that has not been issued in the quarter ended September 30, 2021.

During the three months ended December 31, 2021, the Company issued 4,305,000 shares of common stock for the $3,000 exercise of warrants in the quarter ended September 30, 2021.

During the three months ended December 31, 2021, the Company issued 3,138,000 shares of common stock in exchange for the conversion of 3,318 shares of Series A Preferred Stock.

During the three months ended December 31, 2021, the Company issued 900,000 shares of common stock for services, valued at $116,105.

During the three months ended March 31, 2022, the Company issued 500,000 shares of common stock for services, valued at $79,750.

During the three months ended March 31, 2022, the Company issued 4,229,680 shares of common stock for the conversion of $250,000 principal balance of convertible notes payable and $3,749 accrued interest that has not been issued in the quarter ended December 31, 2021.

During the three months ended March 31, 2022, the Company issued 845,936 shares of common stock in exchange for the inducement to the convertible notes holders to convert at fair value of $134,927.

Common Stock to be Issued

During the three months ended September 30, 2021, the Company sold 200,000 shares of common stock for aggregate proceeds of $6,000, or $0.03 per share. As of March 31, 2022, these shares are categorized in common stock to be issued.

During the three months ended September 30, 2021, the Company agreed to pay a consultant 250,000 shares in exchange to $45,500 in services. As of March 31, 2022, these shares are categorized in common stock to be issued.

During the three months ended September 30, 2021, the Company agreed to issue advisory board members 250,000 shares in exchange for $46,400 in services. 200,000 shares vest on a quarterly basis over one year and 50,000 shares vest completely after a year. As of March 31, 2022, these shares are categorized in common stock to be issued.

F-15

Table of Contents

Series A 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 1,000 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.

As of As of March 31, 2022 and June 30, 2021, the Company has 780,132 and 788,270 shares of Series A Preferred Stock issued and outstanding, respectively.

On February 15, 2021, in accordance with Florida Law and conversations with counsel, the Board of Directors of the Company rescinded 990,000 Series A Preferred Shares, which represented all preferred shares issued to one of the shareholders in the Share Exchange between American Aviation Technologies, LLC and Xeriant, Inc. entered into on April 19, 2019, due to breach of contract.

During March of 2021, the remaining former members of American Aviation Technologies, LLC agreed to allow the Company to rescind an aggregate of 1,250,001 of their 1,760,000 Series A Preferred Shares issued pursuant to the Share Exchange between American Aviation Technologies, LLC and Xeriant, Inc., as a result of said breach. As a result of the cancellation, the Company reduced the investment in AAT by the value of these preferred shares.

During the nine months ended March 31, 2022, the Company issued 4,138,000 shares of common stock in exchange for the conversion of 4,138 shares of Series A Preferred Stock.

Series B Preferred Stock

On March 25, 2021, the Certificate of Designation for the Series B Preferred was recorded by the State of Nevada. There are 100,000,000 shares authorized as preferred stock, of which 1,000,000 are designated as Series B Preferred Stock having a par value of $0.00001 per share. The Series B preferred stock is not convertible, does not have any voting rights and no liquidation preference.

F-16

Table of Contents

Stock Options

In connection with certain advisory board compensation agreements, the Company issued an aggregate 19,000,000 options at an exercise price of $0.12 per share in July and August 2021. These options vest quarterly over twenty-four months and have a term of three years. The grant date fair value was $3,543,787. The Company recorded compensation expense in the amount of $2,462,108 for these options for the nine months ended March 31, 2022. As of March 31, 2022, there was $1,125,008 of total unrecognized compensation cost related to non vested portion of options granted.

As of March 31, 2022, there are 19,000,000 options outstanding, of which 4,750,000 are exercisable. The weighted average remaining term is 2.31 years.

Options

A summary of the Company’s stock options activity is as follows:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2021		0	$	-
Granted		19,000,000		0.12
Exercised		-		-
Canceled		-		-
Outstanding at March 31, 2022		19,000,000	$	0.12		2.3	$	-
Vested and expected to vest at March 31, 2022		4,750,000	$	0.12		2.3	$	-
Exercisable at March 31, 2022		4,750,000	$	0.12		2.3	$	-

Significant inputs and results arising from the Black-Scholes process are as follows for the options:

Quoted market price on valuation date	$0.169 - $0.23
Exercise prices		$0.12
Range of expected term	1.55 Years – 2.49 Years
Range of market volatility:
Range of equivalent volatility	215.12% - 275.73		%
Range of interest rates	0.20% - 0.47		%

Warrants

As of March 31, 2022 and June 30, 2021, the Company had 55,512,161 and 8,848,333 warrants outstanding, respectively. The warrants were issued in connection with the Convertible Notes (See Note 6). The warrants have a term of two to five years and an exercise price range from $0.1187 to $0.025. 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 $2,933,305. During the nine months ended March 31, 2022, holders of warrants exercised warrants for 4,308,600 shares of common stock for aggregate proceeds of $128,550. As of March 31, 2022, the weighted average remaining useful life of the warrants was 0.83.

A summary of the Company’s stock warrants activity is as follows:

	Number of Options (in thousands)			Weighted- Average Exercise Price		Weighted- Average Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2021		8,848,333		$	0.03		0.94		-
Granted		50,968,828			0.1187		4.6		-
Exercised		(4,305,000	)		0
Canceled		-			0
Outstanding at March 31, 2022		55,512,161		$	0.111		4.3	$	-
Vested and expected to vest at March 31, 2022		55,512,161		$	0.111		4.3	$	-
Exercisable at March 31, 2022		55,512,161		$	0.111		4.3	$	-

NOTE 10 - NON-CONTROLLING INTEREST

AAT membership unit adjustment

On May 12, 2021, on further advice of counsel and in good faith, the Company returned 3,600,000 membership units of American Aviation Technologies, LLC to a former shareholder, which was his consideration provided in the Share Exchange between American Aviation Technologies, LLC and Xeriant, Inc. As a result, this former shareholder was restored to his original shareholding position ~~that would be ultimately sustained. The benefit~~in American Aviation Technologies, LLC.

AAT Subsidiary

On May 12, 2021, the Company’s position in American Aviation Technologies, LLC was reduced to 64%, and therefore the subsidiary is now classified as majority owned.

F-17

Table of Contents

NOTE 11 - SUBSEQUENT EVENTS

Joint Venture

Effective April 2, 2022 (the “Effective Date”), the Company entered into a Joint Venture Agreement (the “Joint Venture Agreement”) with Movychem s.r.o., a Slovakian limited liability company (“Movychem”) setting forth the terms for the establishment of a ~~tax position is recognized~~joint venture (the “Joint Venture”) to develop applications and commercialize a series of flame retardant products in the form of polymer gels, powders, liquids and pellets derived from technology developed by Movychem under the name Retacell™. The Joint Venture is organized as a Florida limited liability company under the name Ebenberg, LLC and is owned 50% by each of the Company and Movychem.

The management and control of the Joint Venture is exclusively vested in a management committee (the “Management Committee”) which consists of five members two of whom are appointed by the Company, two of whom are appointed by Movychem and one of whom (the “Independent Member”) is appointed by mutual agreement of the parties. The Independent Member serves for a period of six months for the first two terms with each of the subsequent terms to be for a period of 12 months.

For its capital contribution to the Joint Venture, pursuant to a Patent and Exclusive License and Assignment Agreement (the “Patent Agreement”), Movychem is transferring to the Joint Venture all of its interest to the know-how and intellectual property relating to Retacell exclusive of all patents, and the Company is contributing the amount of $2,600,000 payable (a) $600,000 at the rate of $25,000 per month over a 24 month period and (b) $2,000,000 within five business days of a closing of a financing in which the Company receives net proceeds of at least $3,000,000 but in no event later than six months from the Effective Date. At such time as the Company makes its $2,000,000 payment (and assuming the Company is current with its then monthly capital contributions), pursuant to the Patent Agreement, Movychem will transfer all of its rights, title and interest to all of the patents related to Retacell for an amount equal to aggregate cash contributions of the Company to the Joint Venture plus 40% of all royalty payments received by the Joint Venture for the licensing of Retacell products. Pending assignment of the patents to the Joint Venture, pursuant to the Patent Agreement, Movychem has granted to the Joint Venture an exclusive worldwide license under the patents.

Concurrently with the execution of the Joint Venture Agreement, the Joint Venture has entered into a Services Agreement (the “Services Agreement”) with the Company pursuant to which the Company will provide to the Joint Venture technical services related to the exploitation of the Retacell intellectual property and corporate, marketing. business development, communications and administrative services as requested by the Joint Venture in exchange for 40% of all royalty payments received by the Joint Venture for the licensing of Retacell products.

Under the Joint Venture Agreement, the Company has agreed to grant to certain individuals affiliated with Movychem five-year warrants (the “Warrants”) to purchase an aggregate of 170,000,000 shares of the Company’s common stock at an exercise price of $0.01 per share with vesting depending on the satisfaction of various milestones as described therein.

The Joint Venture Agreement grants to Movychem the right to dissolve the Joint Venture in the event that the Company fails to make any of its capital contributions in which case the Joint Venture will be required to grant back to Movychem all joint venture intellectual property and the assignment to Movychem of any outstanding licenses. Additionally, the Services Agreement will be amended to provide that the 40% of royalties to be paid by to the Company will be limited to licensees who were first introduced to the Joint Venture or Movychem, as the case may be.

Board of Directors

On May 12, 2022, Michael Harper and Lisa Ruth completed their one-year term serving as directors of the Company and have resigned from the board. Their resignations were anticipated and not as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

F-18

Table of Contents

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 ~~period~~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, 2021. The unaudited statements of operations for the six months ended March 31, 2022 and 2021 are compared in the sections below.

Brief Corporate History

Xeriant is an aerospace technology and advanced materials holding and operating company focused on Advanced Air Mobility (“AAM”) and the transition to green aerospace. The Company plans to source and acquire complementary and strategic interests in visionary companies developing, integrating, and commercializing critical breakthrough technologies which enhance performance, increase safety, and enable and support more efficient, autonomous, and sustainable flight operations, including electrically powered passenger and cargo transport aircraft capable of vertical takeoff and landing. 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 Solutions, Inc. The name changed to Banjo & Matilda, Inc. on September 24, 2013. On June 22, 2020, the Company changed its name from Banjo & Matilda, Inc. to Xeriant, Inc. in the State of Nevada and subsequently approved by FINRA effective July 30, 2020 for the name and symbol change (XERI).

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.

On June 22, 2020, the name was changed from Banjo & Matilda, Inc. to Xeriant, Inc.

On May 31, 2021, the Company entered into a Joint Venture Agreement (the “Agreement”) with XTI Aircraft Company (“XTI”) to form a new company, called Eco-Aero, LLC (the “JV”), with the purpose of completing the preliminary design of XTI’s TriFan 600, a 5-passenger plus pilot, hybrid electric, vertical takeoff, and landing (eVTOL) fixed wing aircraft. Under the Agreement, Xeriant is contributing capital, technology, and strategic business relationships, and XTI is contributing intellectual property licensing rights and know-how. XTI and the Company each own 50 percent of the JV.

Effective April 2, 2022, the Company entered into a Joint Venture with Movychem s.r.o., a Slovakian limited liability company (“Movychem”), called Ebenberg, LLC, setting forth the terms for the establishment of a joint venture (the “JV”) to develop applications and commercialize a series of flame retardant products in the form of polymer gels, powders, liquids and pellets derived from technology developed by Movychem under the name Retacell™. The JV is organized as a Florida limited liability and is owned 50% by each of the Company and Movychem. The transaction is further described herein under Subsequent Events.

Table of Contents

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Results of Operations

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

	For the three months ended
	March 31, 2022			March 31, 2021			$			%
Operating expenses:
Sales and marketing expense	$	25,771		$	0		$	25,771			100	%
General and administrative expenses		799,521			141,897			657,624			463.45	%
Professional fees		102,646			32,160			70,486			219.17	%
Related party consulting fees		135,500			54,500			81,000			148.62	%
Research and development expense		7,587			-			7,587			100	%
Total operating expenses		1,071,025			228,557			842,468			368.60	%

Loss from operations		(1,071,025	)		(228,557	)		842,468			369.00	%

Other income (expense):
Amortization of debt discount		(1,598,683	)		(103,225	)		1,495,458			1,448.74	%
Amortization of debt discount, related party		-			-			-		-		%
Interest expense		(134,927	)		(2,661	)		132,266			4970.54	%
Interest expense, related parties		-			-			-		-		%
Gain on forgiveness of accounts payable		-			-			-		-		%
Loss on settlement of debt		(3	)		-			(3	)		100	%
Total other income (expense)		(1,733,613	)		(105,886	)		(1,627,727	)		1537.24	%

Net loss	$	(2,804,638	)		(334,433	)		(2,470,195	)		738.60	%

Sales and Marketing Expense

Sales and marketing expense was $25,771 for the three months ended March 31, 2022 compared to $0 for the three months ended March 31, 2021 for investor relations to create market awareness of the Company.

General and Administrative Expenses

Total general and administrative expenses were $799,521 for the three months ended March 31, 2022 compared to $141,897 for the three months ended March 31, 2021. The increase of $657,624 primarily relates to options granted valued at $574,563 for advisory board services.

Professional Fees

Total professional fees were $102,646 for the three months ended March 31, 2022 compared to $32,160 for the three months ended March 31, 2022. The increase of $70,486 primary relates to legal fees paid.

Table of Contents

Related Party Consulting Fees

Total related party consulting fees were $135,500 for the three months ended March 31, 2022 compared to $54,500 for the three months ended March 31, 2022. The increase of $81,000 was primarily related to additional related party consulting expenses coupled with an increase in the pay of existing related party.

Research and Development Expenses

Total research and development expenses were $7,587 for the three months ended March 31, 2022 compared to $0 for the three months ended March 31, 2021. The research and development costs were related to the development of an aircraft through our Eco-Aero joint venture.

Other Expenses

Total other income (expenses) was ($1,733,613) for the three months ended March 31, 2022 compared to ($105,886) for the three months ended March 31, 2021. Total other expenses consist of interest expense on debt, amortization of debt and loss on settlement of debt. The increase of $1,627,727 was primarily related the Company recording amortization of debt discount during ~~which, based on all available evidence, management believes it is more likely than not that~~ the ~~position will be sustained upon examination, including~~three months ended March 31, 2022 in the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of ~~tax benefit that is more than 50 percent likely~~$1,598,683.

Net loss

Total net loss was $2,804,638 for the three months ended March 31, 2022 compared to $2,804,638 for the three months ended March 31, 2021. The increase of ~~being realized upon~~$2,470,195 was primarily due to the reasons above.

Nine months ended March 31, 2022 compared to the nine months ended March 31, 2021

	For the nine months ended
	March 31, 2022			March 31, 2021			$			%
Operating expenses:
Sales and marketing expense	$	670,989		$	1,000,000		$	(329,011	)		32.9	%
General and administrative expenses		3,120,772			242,445			2,878,327			2,028.50	%
Professional fees		234,671			67,397			167,274			520.1	%
Related party consulting fees		348,925			132,500			216,425			397.1	%
Research and development expense		5,207,806			-			5,207,806			100	%
Total operating expenses		9,583,163			1,442,342			8,140,821			3,561.8	%

Loss from operations		(9,583,163	)		(1,442,342	)		8,140,821			3,561.8	%

Other income (expense):
Amortization of debt discount		(3,012,642	)		(215,635	)		2,797,007			2,709.6	%
Amortization of debt discount, related party		-			(5,000	)		5,000			100	%
Financing fees		(43,750	)		-			(43,750	)		100	%
Interest expense		(138,941	)		(4,857	)		(134,084	)		5,038.9	%
Interest expense, related parties		-			(76	)		76			100	%
Loss on settlement of debt		(536	)		(186,954	)		186,418			100	%
Total other income (expense)		(3,195,869	)		(412,522	)		2,783,347			2,628.6	%

Net loss	$	(12,779,032	)		(1,854,864	)		10,924,168			3,266.4	%

Table of Contents

Sales and Marketing Expense

Sales and marketing expense was $670,989 for the nine months ended March 31, 2022 compared to $1,000,000 for the nine months ended March 31, 2021.

General and Administrative Expenses

Total general and administrative expenses were $3,120,772 for the nine months ended March 31, 2022 compared to $242,445 for the nine months ended March 31, 2021. The increase of $2,878,327 primarily relates to options granted valued at $1,993,524 for advisory board services and $736,954 from stock issued for services.

Professional Fees

Total professional fees were $234,671 for the nine months ended March 31, 2022 compared to $67,397 for the nine months ended March 31, 2021. The increase of $167,274 primary relates to legal fees paid.

Related Party Consulting Fees

Total related party consulting fees were $348,925 for the nine months ended March 31, 2022 compared to $132,500 for the nine months ended March 31, 2021. The increase of $216,425 was primarily related to additional related party expenses coupled with an increase in the pay of existing related party.

Research and Development Expenses

Total research and development expenses were $5,207,806 for the nine months ended March 31, 2022 compared to $0 for the nine months ended March 31, 2021. The research and development costs were related to the development of an aircraft through our Eco-Aero joint venture.

Other Expenses

Total other income (expenses) was ($3,195,869) for the nine months ended March 31, 2022 compared to ($412,522) for the nine months ended March 31, 2021. Total other expenses consist of interest expense on debt, amortization of debt and loss on settlement of debt. The increase of $2,783,347 was primarily related the Company recording amortization of debt discount during the nine months ended March 31, 2022 in the amount of $3,012,642.

Net loss

Total net loss was $12,779,032 for the nine months ended March 31, 2022 compared to $1,854,864 for nine months ended March 31, 2021. The increase of $10,924,168 was primarily due to the above reasons.

Liquidity and Capital Resources

Operating Activities

Cash used in operations of $6,415,055 during the nine months ended March 31, 2022 was primarily resulted from the increase cash used in operations resulted from increased expenditures on sales and marketing and on R&D. The Company has a net loss of $12,779,032 during the nine months ended March 31, 2021 and offset by non-cash expenses such as stock compensation expense of $2,462,108, stock issued for services of $736,954, and amortization of debt discounts of $3,012,642.

Cash used in operations of $162,557 during the nine months ended March 31, 2021 was primarily a result of our $1,520,421 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.

Investing Activities

Net cash used in investing activities for the nine months ended March 31, 2022 was $19,990, which consisted of purchase of new equipment.

Financing Activities

Net cash provided by financing activities for the nine months ended March 31, 2022 was $7,166,000, which consisted of proceeds from the sale of common stock of $2,078,500, cash in the amount of $128,550 from the exercise of warrants, and issuance of convertible debt of $4,958,950.

Net cash provided by financing activities for the nine months ended March 31, 2021 was $143,300, which consisted of proceeds from the sale of common stock of $51,000 and issuance of convertible debt of $92,300.

Table of Contents

The Company’s financial statements are prepared using the generally accepted accounting principles applicable ~~taxing authority.~~to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At March 31, 2022 and June 30, 2021, the Company had $1,639,495 and $962,540 in cash and $(710,654) and $677,257 in working capital, respectively. For the nine months ended March 31, 2022 and 2021, the Company had a net loss of $12,779,032 and $1,854,864, 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 ~~benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits~~recorded asset amounts shown in the accompanying balance sheets ~~along with~~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 ~~associated interest and penalties that would be payable~~adjustments relating to the ~~taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified~~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 has granted a first priority security interest ~~expense and penalties are classified~~ in ~~selling, general and administrative expenses~~its asset to Auctus Fund, LLC to secure a convertible note in the ~~statements~~principal amount of ~~income.~~$6,050,000 which is due on October 27, 2022. The Company’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.

~~F-5~~
~~Table of Contents~~
Commitments for Capital Expenditures

~~At December 31, 2016 and 2015,~~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 companies with revenue 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. There is no assurance that the Company will be able to obtain such funding and/or working capital. To the extent that funding is not ~~taken any significant uncertain tax positions on~~available, the Company will be required to scale back or discontinue its ~~tax returns for periods ended December 31, 2016 and prior years or in computing its tax provision for 2016. Management has considered its tax positions and believes that all~~business plan. Even if the Company is able to obtain financing, it may contain undue restrictions of the ~~positions taken by~~Company’s operations, or there may be substantial dilution for our shareholders in the ~~Company~~case of equity financing or convertible debt financing.

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 ~~its Federal and State tax returns are more likely than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities~~interest rates or foreign currency exchange rates, or that may otherwise arise from ~~the period ended June 30, 2013 to the present, generally for three years after they are filed.~~transactions in derivatives.

The ~~Company has been behind~~preparation of financial statements in ~~filing its payroll tax returns and sales tax returns. The Company has recorded $2,180 as penalties for the late payment of taxes~~conformity with accounting principles generally accepted in the ~~accompanying financials.~~

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base across many markets, predominantly Australia, United States of America ~~United Kingdom, Europe~~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 ~~Middle East.~~reported amounts of revenues and expenses during the reporting period. The ~~Company controls credit risk related~~most significant assumptions and estimates relate to ~~accounts receivable through credit approvals, credit limits~~the valuation of beneficial conversion features and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.warrants associated with convertible debt. Actual results could differ from these estimates.

~~Risks and Uncertainties~~

Table of Contents

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

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. ~~The Company's~~Our management, ~~and~~in consultation with its legal counsel ~~assess~~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 ~~the Company~~us or unasserted claims that may result in such proceedings, ~~the Company's~~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.~~

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 ~~the Company's~~our financial statements. If the assessment indicates ~~that~~ a ~~potential~~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 ~~to be~~ remote ~~by management~~ are generally not disclosed unless they involve guarantees, in which case the ~~guarantee~~guarantees would be disclosed.

~~Cash and Equivalents~~

~~Cash and equivalents include cash in hand and cash in demand deposits, certificates~~On September 1, 2021, Xeriant Inc. brought a cause of ~~deposit and all highly liquid debt instruments with original maturities of three months or less. At December 31, 2016 and June 30, 2016, the Company had $28,564 and $11,056 in cash in Australia and~~action in the ~~United States. The Company has~~Southern District of Florida against a former shareholder for claims, including but not ~~experienced any losses in such accounts~~limited to, breach of contract, misrepresentation, and ~~believes it is not exposed~~asserting claims to ~~any risks on its cash in bank accounts.~~

~~Allowance for Doubtful Accounts~~

~~The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable~~recoup monetary and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. The allowances for doubtful accounts as of December 31, 2016 and June 30, 2016 are $139,098 and $147,870 respectively.

~~F-6~~
~~Table of Contents~~

~~Inventory~~

~~Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is~~in-kind distributions made to ~~write down inventories to market value, if lower. As of December 31,2016 and June 30, 2016,~~ the Company had outstanding balances of Finished Goods Inventory in hand of $69,530 and $102,427 respectively. As of December 31,2016 and June 30, 2016, the Company had outstanding balances of Inventory in transit of $77,000 and $0 respectively.

~~The inventory reserve balance as of December 31, 2016 and June 30, 2016, was approximately $17,000 and $17,000, respectively.~~

~~Property, Plant & Equipment~~

Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years.

~~As of December 31, 2016 and June 30, 2016, Plant and Equipment consisted of the following:~~

December 31

June 30

2016

2016

Property, plant & equipment

$ 31,378

$ 31,378

Accumulated depreciation

$ (21,355 )

$ (19,402 )

$ 10,023

$ 11,976

Depreciation was $1,953 and $1,185 for the three-month periods ended December 31, 2016 and 2015, respectively. Depreciation was $976 and $605 for the three-month periods ended December 31, 2016 and 2015, respectively.

~~Fair Value of Financial Instruments~~

For certain of the Company's financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, "Fair Value Measurements and Disclosures," requires disclosure of the fair value of financial instruments heldshareholder by the Company. ~~ASC Topic 825, "Financial Instruments," defines fair value,~~The defendant submitted an affirmative defense and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:counterclaim on October 29, 2021.

~~Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.~~

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

~~Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.~~

~~The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, "Distinguishing Liabilities from Equity," and ASC 815.~~

~~As of December 31, 2016 and June 30, 2016, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.~~

~~F-7~~
~~Table of Contents~~

~~Earnings Per Share (EPS)~~

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

~~The following table sets for the computation of basic and diluted earnings per share for three and six month periods ended December 31, 2016 and 2015:~~

Three month periods ended

Six month periods ended

December 31,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Basic and diluted

Net loss

$ (176,858 )

$ (149,367 )

$ (352,367 )

$ (402,724 )

Net loss per share

Basic

$ (0.00 )

$ (0.00 )

$ (0.01 )

$ (0.01 )
Diluted

$ (0.00 )

$ (0.00 )

$ (0.01 )

$ (0.01 )

Weighted average number of shares outstanding:

Basic & diluted

58,823,116

58,823,116

58,823,116

58,722,023

~~Intangible Assets~~

~~The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.~~

Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 10 years. No events or changes in circumstances indicate that impairment existed as of December 31, 2016.

~~Going Concern~~

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company reported accumulated deficit of $4,570,349 as of December 31, 2016. The Company also incurred net losses of $352,367 and $402,724 for the six-month periods ended December 31, 2016 and 2015, respectively and had negative working capital for the six-month periods ended December 31, 2016 and 2015. To date, these losses and deficiencies have been financed principally through the loans from related parties and from third parties.

In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital. We anticipate that we will have to raise additional capital to fund operations over the next 12 months. To the extent that we are required to raise additional funds to acquire properties, and to cover costs of operations, we intend to do so through additional offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any future financing will involve substantial dilution to existing investors.

Subsequent to the period ended December 31, 2016, the Company entered into an equity line funding agreement with Spider Investments, LLC to sell up to $1,500,000 of our common stock, subject to certain terms and conditions some of which are out of our control, including the (i) filing and obtaining effectiveness of a registration statement registering the issuance of our shares of common stock under the Act to be issued pursuant to the equity line and (ii) certain volume and other trading conditions of our common stock. The Company plans to file the registration statement and to obtain effectiveness thereof as soon as practicable.

~~Recently Issued Accounting Pronouncements~~

In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which changes how deferred taxes are classified on the balance sheet and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

~~F-8~~
~~Table of Contents~~

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. The Company is currently evaluating the impact the adoption of this standard would have on its financial condition, results of operations and cash flows.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are intended to address implementation issues and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, which will be our interim period beginning January 1, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods with that reporting period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, regarding ASC Topic 230 “Statement of Cash Flows.” This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company does not expect the adoption of this standard to have a significant effect on its consolidated financial statements.

There were no other new accounting pronouncements during the three-month period ended September 30, 2015 that we believe would have a material impact on our financial position or results of operations.

~~Reclassification~~

~~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.~~

~~Note 3 – TRADE RECEIVABLES~~

Trade receivables consist principally of accounts receivable from sales to small to medium sized businesses, principally in Australia, Europe and the United States. Trade receivables are recorded at the invoiced amount and net of allowances for doubtful accounts. The allowance for doubtful accounts represents management's estimate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. The assessment includes actually incurred historical data as well as current economic conditions. Account balances are written off against the allowance when management determines the receivable is uncollectible.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity or parent entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Trade receivables that are past their normal payment terms are overdue and once 60 days past due are considered delinquent. Minimum payment terms vary by product. The maximum payment term for all products is 90 days. All trade receivables that are overdue are individually assessed for impairment.

~~The allowances for doubtful accounts as of December 31, 2016 and June 30, 2016 are $139,098 and $147,870 respectively.~~

~~F-9~~
~~Table of Contents~~

~~Note 4 – INTANGIBLE ASSETS~~

~~Intangible assets consist of the following as of December 31, 2016 and June 30, 2016:~~

December 31

June 30

2016

2016

Website

$ 60,781

$ 60,781

Accumulated amortization

$ (25,883 )

$ (22,512 )

$ 34,898

$ 38,269

The intangible assets are amortized over 1 to 10 years. Amortization expense was $3,371 and $3,371 for the six-month periods ended December 31, 2016 and 2015 respectively Amortization expense was $1,685 and $1,685 for the three-month periods ended December 31, 2016 and 2015 respectively.

~~Note 5 – TRADE AND OTHER PAYABLES~~

~~As of December 31, 2016 and June 30, 2016, trade and other payable are comprised of the following:~~

December 31

June 30

2016

2016

Trade payable

$ 592,826

$ 593,009

Officer compensation

$ 94,986

$ 83,739

Payroll payable

$ 73,210

$ 29,616

Payroll taxes

$ 158,518

$ 158,518

Employee benefits

$ 91,201

$ 88,097

Other liabilities

$ 65,983

$ 55,793

$ 1,076,724

$ 1,008,772

~~Note 6 – TRADE FINANCING~~

The Company has a trade financing agreement with a financial institution in Australia with a maximum limit of AUD $150,000 at an interest rate of 20.95% per annum. The Company reached a settlement with its obligation with the entity in the amount of AUD $165,523. The amount is to be paid through application of its EMDG grant and up to 25% of the Company's store sales in Australia. All of the amounts referenced are in Australian dollars. As of December 31, 2016 and June 30, 2016, the Company had outstanding balances of USD $65,923 and $72,936, respectively.

On August 14, 2014 the Company entered into a trade finance agreement with an entity in the United States with a total maximum facility of $1,500,000 based on $1,000,000 towards sales invoiced and $500,000 towards purchase order financing. As of December 31, 2016 and June 30, 2016, the Company had an outstanding balance of $135,992 and $176,783, respectively.

On November 2, 2016, the Company entered into a merchant agreement with a capital funding group for a purchase price of $35,000 and purchased amount of $47,250. The Company is amortizing the excess of purchase amount over the purchase price, over the term of the financing of 21 months. Pursuant to the agreement, the Company cannot obtain future financing by selling receivables without consent from the lender. The Merchant holds a security interest in all accounts and proceeds. During the six-month period ended December 31, 2016, the Company amortized interest of $1,167.

~~F-10~~
~~Table of Contents~~

On November 3, 2016, the Company entered into a payments rights purchase and sale agreement for $72,500. The financing has a purchase price of $50,000 with the purchased amount of $72,500. The Company is amortizing the excess of purchased amount over purchase price, over the term of the financing of six months. The Company has to make daily payments of $575.40 to the lender. During the six-month period ended December 31, 2016, the Company amortized $7,500 of the excess purchased amount, as interest expense, in the accompanying financials.

On November 29, 2016, the Company entered into a consignment agreement. It is a platform for funding advance inventory production. This facility allowed the Company to fund manufacturing with a consignment facility which pegs repayment to the sales of inventory. During the period ended December 31, 2016, the Company raised $114,888 for a purchase price of $133,341.51. The difference of $15,508.71 is being amortized over the period of financing of seven months. During the three-month period ended December 31, 2016, the Company recorded an interest expense of $2,216.

~~Note 7 –LOANS~~

In December 2013, the company entered into a short-term loan arrangement in the amount of $100,000 with an individual. Terms of the note require interest payment of $5,000 on the repayment date, 30 days after the note date. If not repaid at that time, interest will accrue at the rate of $166 per day until the note is repaid. The outstanding balance as of December 31, 2016 and as of June 30, 2016 was $100,000 and $100,000 respectively. During the six-month periods ended December 31, 2016 and 2015, the Company recorded an interest of $30,212 and $30,046, respectively, on the note. During the three-month periods ended December 31, 2016 and 2015, the Company recorded an interest of $15,106 and $14,940, respectively, on the note.

From May 2014 to December 2016, the Company entered into several convertible loan agreements with a lender aggregating in the amount of $162,500. The notes bear interest at 6% per annum and are due and payable six months from the date of each note. The loans may be converted into common stock at any time by the election of the lender after a period of six months at 20% discount to the market price. However, the notes have a floor to the conversion price of $0.05 per share for the old notes and a floor of $0.03 per share for the new notes. As of December 31, 2016, the Company had no beneficial conversion feature to be recorded on the notes. The outstanding balance as of December 31, 2016 and as of June 30, 2016 was $162,500 and $131,500 respectively. The Company accrued interest of $4,875 and $3,945 during the three-month periods ended December 31, 2016 and 2015, respectively. The Company accrued interest of $2,566 and $2,122 during the three-month periods ended December 31, 2016 and 2015, respectively.

In June 2015, the Company entered into a secured promissory note in the amount of $500,000 with a Delaware statutory trust. The note bears interest at the rate of 18% per annum and was due or before July 1, 2017. The note has various covenants attached including one in which all credit card receipts are to be swept into an account which will fund payments on the note that are not in excess of the minimum quarterly payments required. As a condition of the note, an affiliate of the lender was granted a warrant to purchase 6,000,000 shares of the common stock of the Company at a price of $.08 in whole or in part. The outstanding balance as of June 30, 2016 was $500,000.

On February 5, 2016, The Company signed an amendment to the secured promissory note extending the maturity date by one year to July 17, 2018. The amendment changed the terms of the credit card receipts used to fund payments required by the note. The amendment also cancelled the warrants to purchase 6,000,000 shares at a price of $0.08. New warrants were granted to purchase 6,000,000 shares at $0.05 per share and to purchase 2,000,000 shares at $0.02 per share. The Company determined the fair value of the warrants using the Black – Scholes model and recorded the additional value of $41,467 for the modified warrants. The variables used for the Black –Scholes model are as listed below:

·
~~Volatility: 123%~~
·
~~Risk free rate of return: 1.26%~~
·
~~Expected term: 5 years~~

In connection with the issuance of the above notes, the Company recorded a note discount of $115,274. The Company amortized $25,068 and $28,470, of the note discount during the six-month periods ended December 31, 2016 and 2015, respectively. The Company amortized $12,534 and $14,235, of the note discount during the three-month periods ended December 31, 2016 and 2015, respectively. The Company recorded an interest of $45,000 and $36,721, on the note during the six-month periods ended December 31, 2016 and 2015, respectively. The Company recorded an interest of $22,500 and $14,722, on the note during the three-month periods ended December 31, 2016 and 2015, respectively.

~~F-11~~
~~Table of Contents~~

~~Related Party Payable~~

The Company has a convertible note agreement with a shareholder for $526,272. The Convertible Note bears interest at the rate of 18% per annum and is due on or before April 30, 2017. The interest portion of the note shall be paid weekly starting in April 2015. All or any portion of the principal amount of the Convertible Note and all accrued interest is convertible at the option of the holder into common stock of the Company at a conversion price of five cents ($0.05) per share, subject to various standard provisions. The outstanding balance as of December 31, 2016 and June 30, 2016, net of related discount, was USD $377,724 and $370,008, respectively. The Company determined the fair value of the convertible note of $80,909 using the intrinsic value method. The Company recorded an amortization of the debt discount of $7,717 and $7,717, during the six-month period ended December 31, 2016 and 2015, respectively. The Company recorded an amortization of the debt discount of $3,858 and $3,858, during the three-month period ended December 31, 2016 and 2015, respectively. During the six-month periods ended December 31, 2016 and 2015, the Company recorded an interest of $42,606 and $34,227, respectively, on the note. During the three-month periods ended December 31, 2016 and 2015, the Company recorded an interest of $21,303 and $17,049, respectively, on the note.

The Company has liabilities payable in the amount of $181,737 and $183,269 to shareholders and officers of the Company as of December 31, 2016 and June 30, 2016, respectively. The note bears interest at the rate of 3% per annum and was due on or before June 30, 2014. The outstanding balance, including accrued interest, may be converted into common shares of Banjo & Matilda, Inc. at a pre-determined rate. The Company has granted the Lenders a security interest in the intellectual property of the Borrower.

~~Scheduled principal payments on loans are as follow;~~

Year ending December 31,

Loan 1

Loan 2

Loan 3

Loan 4

Loan 5

Total

2017

$ 100,000

$ 162,500

$ 340,619

$ 387,328

$ 181,737

$ 1,172,184

2018

$ -

$ -

$ 159,381

$ -

$ -

$ 159,381

$ 100,000

$ 162,500

$ 500,000

$ 387,328

$ 181,737

$ 1,331,565

~~Note 8 – COMMITMENTS~~

The Company leases commercial space in Sydney, Australia that serves as its flagship as well as a retail store. We lease approximately 2,500 square feet of space pursuant to a three-year lease agreement which expired in October 2014. After expiration, the lease converted to a month-to-month basis. The annual rent for the premises is AUD $57,200.

~~The Company also leases space on an as needed basis in Santa Monica, California that serves as its corporate headquarters.~~

For the six-month periods ended December 31, 2016 and 2015 the aggregate rental expense was $26,058 and $36,715, respectively. For the three-month periods ended December 31, 2016 and 2015 the aggregate rental expense was $11,461 and $23,350, respectively.

~~Note 9 – INCOME TAXES~~

Based on the available information and other factors, management believes it is more likely than not that the net deferred tax assets at, December 31, 2016 and June 30, 2016 will not be fully realizable. Accordingly, management has recorded a full valuation allowance against its net deferred tax assets at, December 31, 2016 and June 30, 2016. At December 31, 2016 and June 30, 2016, the Company had federal net operating loss carry-forwards of approximately $3,934,000 and $3,664,000, respectively, expiring beginning in 2032.

~~Deferred tax assets consist of the following components:~~

December 31,

June 30,

2016

2016

Net loss carryforward

$ 1,176,000

$ 1,095,000

Valuation allowance

$ (1,176,000 )

$ (1,095,000 )
Total deferred tax assets

$ -

$ -

~~F-12~~
~~Table of Contents~~

~~Note 10 – STOCKHOLDERS' EQUITY~~

~~Common Stock~~

~~During the year ended June 30, 2015, the Company agreed to issue 55,200 shares of the Company stock for $13,800 or $0.25 per share to an individual investor.~~

During the year ended June 30, 2015, on October 28, 2014, the Company agreed to issue 5,833,333 shares of the Company stock to the original shareholders of Banjo & Matilda Pty Ltd related to the merger and reorganization based on the original agreement.

During the year ended June 30, 2015, the Company agreed to issue 92,593 shares of common stock to an individual for compensation from Banjo Australia. The shares were valued at $15,339 or approximately $0.17 per share.

~~During the year ended June 30, 2015, the Company issued 25,000 shares of common stock to an individual in exchange for interest expense. The shares were valued at $5,000 or $.25 per share.~~

~~During the year ended June 30, 2015, the Company agreed to convert $92,800 of convertible debt for 3,345,537 shares of common stock at prices from $0.02 to $0.0901 per share to a corporate investor.~~

~~During the year ended June 30, 2015, the Company agreed to issue 400,000 shares of the Company stock for $60,000 or $0.15 per share to a company for consulting services.~~

~~During the year ended June 30, 2015, the Company issued 21,039,970 shares of the Company stock for $450,799 or approximately $0.02 per share to five investors.~~

During the fiscal year ended June 30, 2015, the Company voided 475,000 shares of the Company stock for the value of $95,000. The shares were originally considered converted from debt when they were in fact not converted. The debt is still outstanding.

~~During the year ended June 30, 2016, the Company issued 500,000 shares of the Company’s common stock for settlement of an outstanding vendor balance amounting to USD $27,123.~~

~~Note 11 – RELATED PARTY TRANSACTIONS~~

During the six-month period ended December 31, 2016 and 2015, the Company paid $0 and $14,076 as compensation to the mother of the CEO. During the six-month period ended December 31, 2016 and 2015, the Company accrued interest of $14,111 and $14,149, respectively, on a loan owed to the CEO of the Company.

~~Note 12 – SUBSEQUENT EVENTS~~

The Company has entered into an equity line funding agreement with Spider Investments, LLC to sell up to $1,500,000 of our common stock, subject to certain terms and conditions some of which are out of our control, including the (i) filing and obtaining effectiveness of a registration statement registering the issuance of our shares of common stock under the Act to be issued pursuant to the equity line and (ii) certain volume and other trading conditions of our common stock. The Company plans to file the registration statement within 30 days from the date hereof and to obtain effectiveness thereof as soon as practicable.

~~F-13~~
~~Table of Contents~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The following discussion and analysis of our Company’s financial condition and results of operations should be read in conjunction with our unaudited financial statements and the related notes included elsewhere in this report and with the financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements.

~~Results of Operations~~

The following discussion of the results of operations constitutes management’s view of the factors that affected the financial and operating performance for the six months ended December 31, 2016 and 2015. 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.

During the six-month period ended December 31, 2016 and 2015, the transactions of the Company were denominated in US Dollars. All the transactions which were denominated in other currencies were converted to US$ on the date of settlement and the exchange gains and losses were recorded in the statement of operations. No change was recorded in the comprehensive income (loss).

After a strategic review of the Company’s operating performance and long term strategy in June 2015, management decided to exit from the Company’s wholesale sales channel and business in favor of pursuing a higher value and longer term growth, direct to consumer digital vertical brand business model. In September 2015, the Company began to exit from its wholesale sales channel in-line with this strategy. As a digital vertical brand (DVB), the Company can generate higher gross margins by selling directly to consumers online by not having to accommodate the retailer wholesale mark-up. This additional gross margin from eliminating lower margin wholesale sales allows the Company to improve its overall operating margins and have greater flexibility and control over its retail pricing for its products, improving the customer value proposition and brand adoption. The Company can also build a more sustainable and higher growth revenue stream, and at the same time reduce operating overheads by eliminating fixed and variable expenses associated with operating a wholesale business model, among other significant benefits associated with a digitally centric business model. In addition, DVB’s are generally considered superior in value to traditional wholesale focused brands. Typical recent private investment valuations of DVB’s have been transacted at a valuation of 3-4 x annual sales versus less than 1 x annual sales for traditional brands (1). By pursuing a DVB strategy, the Company’s sales will temporarily reduce during the remainder of 2016 and 2017 due to the elimination of low-margin wholesale sales. While there will be been a short-term reduction in sales, the Company believes the superior DVB business model will generate and sustain greater value for shareholders moving forward.

Because of the business model improvements, EBITDA improved 9% from a loss of $215,377 in the December 2016 quarter to a loss of $195,766 in the December 2016 quarter, while Gross margin improved from 29% to 70%, underscoring the value of the new vertical digital business model showing a more than a 100% improvement in Gross Margin and an improvement in profitability on just 23% of total sales for the comparative period.

The Company recorded revenue of $159,115 during the three-months ended December 31, 2016 compared to $732,063 for the same period during the prior fiscal year, and $360,042 during the six-months ended December 31, 2016 compared to $1,612,367 for the same period during the prior fiscal year, primarily because of the reduction in wholesale sales.

By eliminating low-margin wholesale sales, Gross Margins increased to 71% in the December 2016 quarter from 29% for the same period during the prior fiscal year, and increased to 60% during the six-months ended December 31, 2016 from 32% for the same period during the prior fiscal year. Gross profit decreased to $112,698 for the three months ended December 31, 2016 from $214,911 in the same period in the prior year due to lower overall sales driven by the elimination of wholesale sales in-line with the Company’s new business model. Gross profit decreased to $216,295 for the six months ended December 31, 2016 from $523,408 in the same period in the prior year due to lower overall sales driven by the elimination of wholesale sales in-line with the Company’s new business model.

Due to changing the Company’s business model and exiting the wholesale business, related wholesale expenses were eliminated. SG&A consisting of payroll, selling, marketing and design, e-commerce, retail overhead expenses, administrative (including public Company costs) and occupancy were $189,137 for the for the three months ended December 31, 2016 compared to $271,920 for the same period during the prior fiscal year, and $375,892 for the six months ended December 31, 2016 compared to $749,645 for the same period during the prior fiscal year

~~Net loss was $325,367 for the six-month period ended December 31, 2016, compared with $402,724 for the prior year period.~~

~~(1) Note: Based on data obtained from PitchBook and Crunchbase as well as Management discussions with other DVB’s~~

5
~~Table of Contents~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

We had a working capital deficit of $2,734,954 as of December 31, 2016. We will continue to borrow to acquire inventory and fund sales. The rates at which we can acquire funds will directly impact our ability to operate profitably and generate positive cash flow. In addition to relying upon debt, we will seek to raise equity to support our efforts to grow. There is no assurance that debt or equity financing will be available to us on acceptable terms, if at all, and, in all events, the sale of equity or instruments convertible into equity will dilute the interests of our current shareholders. 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 could cause us to cease operations.

During the six months ended December 31, 2016, net cash of $132,233 was used in our operating activities compared with $43,983 of net cash used in our operating activities during the six months ended December 31, 2015. During the six months ended December 31, 2016, net cash provided by financing activities was $149,742 compared with $202,066 of net cash used in financing activities during the six months ended December 31, 2015.

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market ~~Risk~~Risk.

~~Not applicable as the Company is~~As a smaller reporting ~~company.~~company, the Company has elected not to provide the disclosure required by this item.

Item 4. Controls and ~~Procedures~~Procedures.

a) Disclosure Controls and Procedures

~~We maintain “disclosure~~Our management is responsible for maintaining disclosure controls and procedures~~” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”),~~ that are designed to ensure that information required to be disclosed ~~by us~~ in the reports that ~~we file~~the Registrant files or ~~submit~~submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in ~~Securities and Exchange Commission~~the SEC’s rules and ~~forms,~~forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to ~~our~~the Registrant’s management, including ~~our~~its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required ~~disclosure. In designing~~financial and ~~evaluating~~other required disclosures.

At December 31, 2021, an evaluation of the effectiveness of our disclosure controls and procedures ~~management recognized that disclosure controls~~(as defined in Rules 13(a)-15(e) and ~~procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives~~15(d)-15(e) of the ~~disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management~~Exchange Act) was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

~~At the end of the period covered by this report we~~ carried out ~~an evaluation,~~ under the supervision and with the participation of Keith Duffy our Chief Executive Officer and Brian Carey our Chief Financial ~~Officer, Brendan Macpherson, of the effectiveness of the design and operation~~Officer. Based on his evaluation of our disclosure controls and procedures. This evaluation included an evaluation of our financial controls. Since our Chief Executive Officer also serves as our Chief Financial Officer and we do not have financial and accounting personnel thoroughly familiar with U.S. GAAP and U.S. securities laws and regulations, we have a deficiency in our financial controls. This deficiency in our financial controls and procedures, ~~constitutes a deficiency in~~he concluded that at March 31, 2022, our disclosure controls and procedures ~~in that our disclosure controls and procedures were~~are not effective due to ~~ensure that information required to be disclosed by us~~material weaknesses in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principalinternal controls over financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. This deficiency will not be considered remediated until we hire accounting personnel with the requisite knowledge and experience concerning U.S. GAAP and the U.S. securities laws.reporting discussed directly below.

b) Changes in Internal Control ~~over~~Over Financial Reporting

There ~~have~~has been no ~~changes~~change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the ~~quarterly period covered by this report~~Company’s most recent fiscal quarter ended March 31, 2022, that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, the Company’s internal control over financial reporting.

6
10

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.

Table of Contents

Item 6. Exhibits

The following exhibits are filed ~~herewith:~~herewith

Exhibit
Number
Document
10.1
Joint Venture Agreement dated as of April 2, 2022 between Xeriant Inc. and Movychem S.R.O.
10.2
Patent and Exclusive License Agreement between Movychem S.R.O. and
10.3
Services Agreement dated as of April 2, 2022 between Xertiant, Inc.
31.1
~~Certifications~~Certification of the principal executive officer ~~and~~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.
31.2
Certification of the 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~~Certification 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.
32.2
Certification of the 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
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

8
12

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.

~~BANJO & MATILDA,~~XERIANT, INC.
Date: ~~March 3, 2017~~May 16, 2022
By:
/s/ ~~Brendan Macpherson~~Keith Duffy
~~Brendan Macpherson~~Keith Duffy
Chief Executive Officer ~~and~~
(Principal Executive)

Date: May 16, 2022

By:

/s/ Brian Carey

Brian Carey

Chief Financial Officer

~~(Principal Executive and Financial Officer)~~

Nevada		27-1519178
(State or other jurisdiction of of incorporation or organization)		(I.R.S. ~~employer~~Employer ~~identification number)~~Identification No.)

Innovation Centre #1 3998 FAU Boulevard, Suite 309 Boca Raton, Florida		33431
(Address of principal executive offices)		(Zip code)

Large accelerated filer	o☐	Accelerated filer	o☐
Non-accelerated ~~filer~~Filer	o☒	Smaller reporting company	x☒
~~(Do not check if a smaller reporting company)~~Emerging growth company	☐

		Page

~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS~~Special Note regarding Forward-looking Statements			3

PART I – ~~FINANCIAL INFORMATION~~Financial Information

Item 1.	Condensed Consolidated Financial ~~statements~~Statements (Unaudited)		4
	~~CONDENSED CONSOLIDATED BALANCE SHEETS~~		~~F-1~~
	~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS~~		~~F-2~~
	~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~		~~F-3~~
	~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~		~~F-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		10	6
Item 4.	Controls and Procedures		610

PART II – ~~OTHER INFORMATION~~Other Information

Item 1.	Legal Proceedings		711
Item 1A.	Risk Factors		711
Item 2.	Unregistered Sales of Equity Securities		711
Item 3.	Defaults Upon Senior Securities		711
Item 4.	Mine Safety Disclosures		711
Item 5.	Other Information		711
Item 6.	Exhibits		812

~~SIGNATURES~~Signatures			913

Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and June 30, 2021	F-1

Condensed Consolidated Statements of Operations for the three and ~~Comprehensive Loss~~nine months ended March 31, 2022 and 2021 (Unaudited)	F-2

Condensed Consolidated Statements of Stockholder’s Equity for the three and nine months ended March 31, 2022 and 2021 (Unaudited)	F-3

Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2021 (Unaudited)	~~F-3~~	F-5

Notes to Unaudited Condensed Consolidated Financial Statements	~~F-4~~F-6

	December 31,			June 30,
	2016			2016
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	28,564		$	11,056
Trade receivables, net		-			2,870
Inventory, net		129,272			102,427
Deposit on purchases		-			1,153
Other assets		5,500			-
TOTAL CURRENT ASSETS		163,336			117,506

NON-CURRENT ASSETS
Intangible assets, net		34,898			38,269
Deferred financing costs, net		24,709			31,407
Property, plant and equipment, net		10,023			11,976
TOTAL NON-CURRENT ASSETS		69,629			81,652

TOTAL ASSETS	$	232,966		$	199,157

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Trade and other payables	$	1,077,935		$	1,008,772
Deposit payable		4,621			4,621
Trade financing		196,119			249,720
Accrued interest		370,885			236,398
Loans payable		689,269			306,092
Loan from related parties		181,737			183,269
Convertible loan from related parties (net of related discount)		377,724			370,008
TOTAL CURRENT LIABILITIES		2,898,290			2,358,880

NON-CURRENT LIABILITIES
Loans payable (net of related discount) (net of current portion)		171,903			325,137

TOTAL LIABILITIES		3,070,193			2,684,017

STOCKHOLDERS' DEFICIT
Preferred stock, $0.00001 par value, 100,000,000 shares authorized
and 1,000,000 shares issued and outstanding, respectively		10			10
Common stock, $0.00001 par value, 100,000,000 shares authorized and
58,823,116 and 58,823,116 shares issued and outstanding, respectively		588			588
Additional paid in capital		1,632,517			1,632,517
Other accumulated comprehensive gain		100,007			100,007
Accumulated deficit		(4,570,349	)		(4,217,982	)
TOTAL STOCKHOLDERS' DEFICIT		(2,837,226	)		(2,484,860	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	232,966		$	199,157

	Three month periods ended						Six month periods ended
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015

Revenue	$	159,115		$	732,063		$	360,042		$	1,612,367
Cost of sales		46,417			517,152			143,747			1,088,959
Gross profit		112,698			214,911			216,295			523,408

Payroll and employee related expenses		123,879			131,688			246,362			393,653
Operating expense		20,818			42,725			40,922			105,445
Marketing expense		17,136			23,501			34,917			91,921
Samples & design expense		6,055			7,466			7,761			44,069
Occupancy expenses		11,461			23,350			26,058			36,715
Depreciation and amortization expense		2,662			2,291			5,324			4,556
Finance Charges		18,450			12,299			27,258			27,680
Corporate and public company expense		7,125			40,898			14,547			73,285
		207,587			284,219			403,150			777,324
Loss from operations		(94,889	)		(69,307	)		(186,855	)		(253,916	)

Other Income (Expense)
Interest income								-			-
Other income		3,390			(9,846	)		4,077			2,832
Amortization of debt discount		(16,393	)		(18,093	)		(32,785	)		(36,187	)
Interest expense		(68,966	)		(52,120	)		(136,804	)		(115,453	)
Total Other Expense		(81,969	)		(80,059	)		(165,512	)		(148,808	)

Loss before income tax		(176,858	)		(149,367	)		(352,367	)		(402,724	)

Provision for income taxes		-			-			-			-

Net loss		(176,858	)		(149,367	)		(352,367	)		(402,724	)

Other comprehensive income
Foreign currency translation		-			-			-			-

Comprehensive loss	$	(176,858	)	$	(149,367	)	$	(352,367	)	$	(402,724	)

Net loss per share
Basic	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding:
Basic		58,823,116			58,823,116			58,823,116			58,722,023
Diluted		58,823,116			58,823,116			58,823,116			58,722,023

	December 31, 2016			December 31, 2015

Net loss	$	(352,367	)	$	(402,724	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation		1,953			1,185
Amortization		3,371			3,371
AR allowance		(8,772	)		873
Debt discount amortization		32,785			36,187
Amortization of deferred finance fee		7,851			7,851
(Increase) / decrease in assets:					-
Trade receivables		11,642			16,808
Inventory		(26,845	)		40,962
Deposit on Purchases		1,153			356,651
Other assets		(5,500	)		(235,650	)
Other receivable		-			66,952
Deferred financing costs		(1,153	)		-
Increase/ (decrease) in current liabilities:
Trade payables and other liabilities		69,162			5,202
Accrued interest		134,487			58,350
Net cash used in operating activities		(132,233	)		(43,983	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(2,334	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (net payments) on related party loan		(1,532	)		268,971
Proceeds from loan payables		-			(340,886	)
Net proceeds (net payments) on loan payables		204,875			-
Net trade financing		(53,601	)		(130,151	)
Net cash provided by (used in) financing activities		149,742			(202,066	)

Net increase (decrease) in cash and cash equivalents		17,508			(248,383	)

Cash and cash equivalents at the beginning of the period	$	11,056		$	362,668

Cash and cash equivalents at the end of the period	$	28,564		$	114,285

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	-		$	-
Interest payments	$	12,082		$	64,953

SUPPLEMENTAL DISCLOSURES FOR NON CASH:
FINANCING AND INVESTING ACTIVITIES
Debt converted to equity	$	-		$	27,123

	~~(1)~~	~~The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the legal acquirer at fair value.~~

	~~(2)~~	~~The statements of operations include the operations of the accounting acquirer for the period presented and the operations of the legal acquirer from the date of the merger.~~

	December 31			June 30
	2016			2016
Property, plant & equipment	$	31,378		$	31,378
Accumulated depreciation	$	(21,355	)	$	(19,402	)
	$	10,023		$	11,976

	·	~~Volatility: 123%~~
	·	~~Risk free rate of return: 1.26%~~
	·	~~Expected term: 5 years~~

Year ending December 31,	Loan 1		Loan 2		Loan 3		Loan 4		Loan 5		Total
2017	$	100,000	$	162,500	$	340,619	$	387,328	$	181,737	$	1,172,184
2018	$	-	$	-	$	159,381	$	-	$	-	$	159,381
	$	100,000	$	162,500	$	500,000	$	387,328	$	181,737	$	1,331,565

Exhibit Number		Document

10.1		Joint Venture Agreement dated as of April 2, 2022 between Xeriant Inc. and Movychem S.R.O.

10.2		Patent and Exclusive License Agreement between Movychem S.R.O. and

10.3		Services Agreement dated as of April 2, 2022 between Xertiant, Inc.

31.1		~~Certifications~~Certification of the principal executive officer ~~and~~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.

31.2		Certification of the 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~~Certification 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.

32.2		Certification of the 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		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

	~~BANJO & MATILDA,~~XERIANT, INC.

Date: ~~March 3, 2017~~May 16, 2022	By:	/s/ ~~Brendan Macpherson~~Keith Duffy
		~~Brendan Macpherson~~Keith Duffy Chief Executive Officer ~~and~~ (Principal Executive)