XERIANT, INC.
For the period ended Jun 30, 2026. Filed Sep 28, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 28, 2026
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What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2025-06-30; filed 2025-10-02.
0001477932-25-007303
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-09-28.
0001477932-26-005837
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 97 current paragraphs.
69 unchanged; 7 reworded; 21 added; 38 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
The high capital requirements of building materials manufacturing may require us to seek large-scale financing, including potential green bond financing or similar structured debt instruments, that may not be available on terms acceptable to us or at all.
Current report
Our long-term manufacturing strategy contemplates the potential use of large-scale financing structures, including green bond financing or similar instruments, to fund dedicated NexBoard manufacturing facilities and equipment. Green bond financing is subject to certification requirements, use-of-proceeds restrictions, and ongoing reporting obligations that could restrict our operational flexibility. If market conditions change, interest rates rise materially, investor appetite for green bond instruments declines, or our financial condition or project economics do not meet underwriting standards, we may be unable to complete such financing on acceptable terms or at all. The failure to secure large-scale manufacturing financing when needed could prevent us from scaling production to meet commercial demand, resulting in the loss of customer orders, damage to our market reputation, and material harm to our business and financial condition.
Current report
Our business is substantially concentrated in the building materials industry, and adverse conditions in that industry could materially harm our results of operations.
Current report
A substantial portion of our anticipated revenues and commercial activities is dependent on the construction and building materials industry, and specifically on the market for interior and exterior wall panels, and finishing compounds for residential, commercial, and institutional construction applications. Accordingly, our business is subject to risks specific to that industry, including cyclical downturns in residential and commercial construction activity driven by rising interest rates, declining housing starts, reduced consumer spending, tightening credit conditions, and adverse real estate market conditions. Construction activity is historically one of the most interest-rate-sensitive sectors of the economy, and periods of elevated borrowing costs can suppress new construction starts for sustained periods. In addition, our anticipated customer base, including homebuilders, commercial contractors, institutional facility managers, and building material distributors, is itself subject to economic pressures that could delay or reduce purchasing decisions. Our heavy concentration in a single industry means that we do not have diversified revenue streams that could offset a downturn in building materials demand. If construction activity declines materially, or if our target customer segments reduce capital expenditures or defer purchasing decisions, our revenues, cash flow, and results of operations could be materially and adversely affected.
Current report
Widespread acceptance of NexBoard™ as a replacement for conventional building materials may be slow, uncertain, and more costly than anticipated due to established procurement relationships and resistance to change.
Current report
The construction industry is characterized by deeply entrenched purchasing habits, long-standing supplier relationships, established specification standards, and significant institutional resistance to the adoption of new materials, even when those materials offer demonstrably superior performance characteristics. Builders, contractors, architects, and building owners often default to familiar materials, including drywall, plywood, and OSB, not because those materials are optimal but because they are familiar, widely distributed, and supported by established installation practices, workforce training, and supply chain infrastructure. Gaining acceptance of NexBoard as a substitute for these conventional materials will require extensive education of architects, specifiers, contractors, and building inspectors; investment in training programs for installation crews; inclusion in building codes and specification guides that currently reference only conventional materials; and a sustained period of demonstrated field performance to build market confidence. We may encounter resistance from established industry participants, including drywall manufacturers, distribution networks, and trade organizations, who may have economic interests in maintaining the status quo. Even if NexBoard's technical performance advantages are widely recognized, the transition from awareness to specification to procurement to widespread adoption may take significantly longer and require significantly more marketing and business development investment than we currently anticipate. If we are unable to achieve broad industry acceptance within a commercially reasonable timeframe, our ability to generate revenues and reach profitability could be materially and adversely affected.
Current report
The manufacture of NexBoard™ at commercial scale requires substantial capital investment that we may be unable to raise on acceptable terms or at all.
Current report
The transition from contract manufacturing to dedicated, internally operated manufacturing facilities capable of producing NexBoard at commercial scale requires substantial capital investment in specialized equipment, which may include injection molding tooling and equipment, sheet extrusion equipment, coating systems equipment, and associated production infrastructure. A fully operational, dedicated manufacturing facility capable of meeting anticipated market demand would require capital outlays that significantly exceed our current resources and near-term financing plans. The specialized nature of the equipment required means that off-the-shelf solutions are not available and lead times for custom equipment procurement are extended. If we are unable to raise the capital necessary to fund manufacturing infrastructure on terms that are economically viable, or if equipment procurement, installation, and commissioning encounters delays, cost overruns, or technical challenges, our ability to fulfill commercial orders, meet customer commitments, and scale revenues could be severely impaired. Additionally, the construction of or transition to owned manufacturing facilities will introduce fixed cost structures, lease or mortgage obligations, and employee headcount that could increase our operating losses in the near term before manufacturing scale and revenue growth provide adequate cost coverage.
Current report
Our reliance on contract manufacturing introduces risks of quality control, production capacity, delivery reliability, and confidentiality that are outside of our direct control.
Current report
We depend on contract manufacturing partners for the production of NexBoard This reliance introduces risks that we cannot fully control or mitigate, including the risk that our contract manufacturers may not maintain the quality standards required to produce NexBoard to our specifications, experience capacity constraints that limit our ability to fulfill customer orders, fail to meet delivery timelines that could damage our customer relationships, or, in the case of the termination of a manufacturing relationship, leave us without production capacity for an extended period while we identify and qualify alternative manufacturers. Contract manufacturing relationships are also subject to the risk that the manufacturer could, intentionally or inadvertently, disclose, replicate, or reverse-engineer our proprietary Durazite™ formulation or manufacturing processes, which could compromise our competitive position even if those processes are protected by our U.S. Patent No. 12,679,047. While we believe our patent provides meaningful protection, the risk of trade secret misappropriation in a contract manufacturing environment is inherently difficult to eliminate entirely.
Current report
We face pricing pressure from established, well-capitalized competitors in the construction materials market who benefit from economies of scale, entrenched distribution networks, and lower per-unit production costs.
Current report
Our primary competitors in the construction panel market, manufacturers of gypsum drywall, plywood, OSB, and MDF, include some of the largest building materials companies in the world. These companies benefit from fully depreciated manufacturing facilities, decades of production optimization, established nationwide distribution infrastructure, existing relationships with major homebuilders and commercial contractors, and per-unit production costs that reflect the advantages of very high-volume manufacturing. NexBoard, as a new entrant with a novel material composition and manufacturing process, is unlikely to achieve comparable per-unit costs in the near to medium term, and we may face pricing pressure from incumbent products whose manufacturers are willing to reduce margins to defend their market position. If we are unable to price NexBoard competitively relative to conventional alternatives while still maintaining margins sufficient to support our operations, or if established competitors respond to NexBoard's market entry with aggressive pricing strategies, our commercial prospects and financial condition could be materially and adversely affected.
Current report
Our products may be subject to building code approval processes, certification requirements, and regulatory compliance obligations that could delay or restrict commercialization.
Current report
The construction materials industry is subject to extensive building codes, fire safety regulations, environmental regulations, and product certification requirements at the federal, state, and local levels, including the International Building Code, NFPA standards, EPA and CARB VOC emission standards, and LEED certification requirements. NexBoard has obtained a number of important independent laboratory certifications, including ASTM E84 Class A fire rating and NFPA 286 passage, but there is no assurance that NexBoard will be accepted in all jurisdictions without additional testing, local code approval processes, or product listing by recognized testing laboratories such as UL or ICC-ES. Building inspectors and local authorities having jurisdiction may be unfamiliar with composite polymer panels and may require additional documentation, testing, or approvals before allowing NexBoard to be installed in buildings subject to their oversight. Any delays in obtaining required local approvals, or any failure to obtain or maintain necessary certifications, could restrict our ability to market and sell NexBoard in affected markets and could materially harm our revenues and competitive position.
Current report
Our operations and products may be subject to environmental, health, and safety regulations that could increase our costs or restrict our operations.
Current report
The manufacture of NexBoard incorporates recycled thermoplastics, fire-retardant chemicals, and nanotechnology-enhanced materials that may be subject to environmental, health, and safety regulations at the federal, state, and local levels, including regulations administered by the Environmental Protection Agency, the Occupational Safety and Health Administration, and state environmental agencies. Changes in applicable environmental regulations, including regulations relating to chemical manufacturing, volatile organic compounds, nanomaterial handling and disclosure, and end-of-life product disposal, could require us to modify our manufacturing processes, reformulate our products, or incur additional compliance costs. Although we believe our products are designed to meet or exceed current environmental standards, we cannot predict the nature or timing of future regulatory changes that could affect our products or operations.
Current report
Unauthorized disclosure or reverse engineering of our proprietary fire-retardant formulation could materially compromise our competitive position, even if patent protection is in place.
Current report
Our competitive advantage is substantially dependent on our proprietary fire-retardant formulation, which is incorporated into both NexBoard™ and NexPatch™. While we hold U.S. Patent No. 12,679,047 covering our specialized manufacturing process, novel composition, and layering architecture, the value of that patent protection is limited by our ability to detect and pursue infringement, and by the scope of the patent claims relative to alternative formulations that competitors might develop. Patent protection does not prevent competitors from independently developing alternative materials that achieve similar performance characteristics through different chemical approaches, nor does it prevent the misappropriation of trade secrets and know-how that is not captured within the patent claims. If our proprietary formulation were reverse engineered, disclosed by a former employee, consultant, or contract manufacturer, or independently replicated by a well-resourced competitor, our competitive differentiation could be substantially reduced and our investment in research and development could be significantly devalued. We may not detect such misappropriation until significant commercial harm has already occurred, and the cost and uncertainty of litigation to enforce our rights could be prohibitive.
Current report
Third parties may challenge the validity or enforceability of U.S. Patent No. 12,679,047, and an adverse outcome could materially harm our competitive position and commercial prospects.
Current report
We hold U.S. Patent No. 12,679,047, which we believe provides meaningful protection for key aspects of NexBoard's manufacturing process and composition. However, this patent may be challenged through post-grant proceedings at the U.S. Patent and Trademark Office, including inter partes review and post-grant review, or through invalidity claims raised as defenses in litigation. The outcome of patent validity proceedings is inherently uncertain, and a determination that our patent is invalid, unenforceable, or narrower in scope than we believe could significantly weaken our ability to prevent competitors from manufacturing and selling products that compete directly with NexBoard. In addition, because our patent was issued in connection with a novel and proprietary process, and because the prior art landscape in polymer composites and fire-retardant chemistry is complex, there is a risk that prior art exists of which we are unaware that could be cited against our patent in a validity challenge. Any such challenge, regardless of its ultimate outcome, could require us to expend significant financial and management resources in defense, and could create uncertainty regarding our intellectual property position that negatively affects investor confidence, partnership discussions, and commercial relationships.
Current report
If competitors develop products that design around our patents or independently achieve comparable performance characteristics, our competitive advantages may be diminished.
Removed paragraphs (38)
Previous report
On October 19, 2023, the Company filed a complaint in the United States Southern District of New York (Case no.1:23-cv-09200) against Auctus Fund LLC, to invalidate allegedly illegally designed contractual agreements, including contesting the enforceability of the related note and amendments, and to set aside improper and unlawful securities transactions effectuated in violation of Section 15(a)(1) of the Exchange Act (15 U.S.C. § 78o(a)(1)) by the Defendant, alleging breaches of fiduciary duty and related claims. On February 9, 2024, the case was dismissed. The Company filed a Notice of Civil Appeal on March 13, 2024, primarily based on public welfare because of the pending litigation between the SEC and Auctus Fund Management, LLC, which complaint was filed on June 1, 2023. On June 19, 2024, the Company filed an appeal in the United States Court of Appeals for the Second Circuit (Case no. 24-682-cv). On June 25, 2025, the appellate court affirmed the lower court’s decision. The Company’s counsel is in the process of filing an appeal to the United States Supreme Court to challenge this decision, which went against precedent decisions in other districts. In addition to the pending legal matters, the Company is currently in discussions with Auctus in an attempt to come up with a settlement. The Company’s ongoing lawsuit against XTI Aircraft Company has a connection to the Auctus matter in that the Company’s obligations to Auctus were, according to the Company’s complaint, to be assumed by XTI as provided in a Letter Agreement. The foregoing descriptions of the legal actions do not purport to be complete and are subject in their entirety by the full text of the court filings.
Previous report
There is no assurance that we or our affiliates will be able to accomplish the design and engineering needed to demonstrate that the technologies that are undertaken will perform or operate as planned.
Previous report
Because of unanticipated technological hurdles or the inability to assemble a qualified team to address these challenges, we may not be able to meet the technology development and performance objectives that are needed to be competitive in the various targeted markets.
Previous report
The development timeline for the development of certain technologies could expand.
Previous report
Due to unexpected challenges, the length of time to develop certain technologies may become expanded, causing cost overruns and potentially demanding the infusion of large amounts of capital and other financing, which may not be available. Because of the long timeline, there is also uncertainty regarding the uniqueness or advantages of the technologies at the time they are introduced into the market.
Previous report
Some technologies are still being developed and specific market applications have not been finalized.
Previous report
Because some of the anticipated technologies will be in an early stage of development, there is no certainty as to which market applications will be prioritized and targeted as well as the associated timelines and costs involved when we reach that point of determination after a technology has been proven. There is no assurance that the required selling price of our technologies will be competitive.
Previous report
Most of the targeted technologies will face significant competition from industry leaders or from well-funded entrants in the marketplace. We could face significant competition from companies who have developed or are developing alternative technologies that could render acquired technologies less competitive than planned. Many existing potential competitors are well-established, have or may have longer-standing relationships with customers and potential business partners, have or may have greater name recognition, and have or may have access to substantially greater financial, technical and marketing resources.
Previous report
We are dependent on developing competitively priced, superior-performance, and industry-certified DUREVER™*** and NEXBOARD***™*** products.***
Previous report
A significant part of our projected operations is expected to come from the sale of DUREVER™ products and NEXBOARD™ composite wallboards that are primarily made from recycled materials that use our proprietary eco-friendly industrial flame retardants and nanomaterials. We are in the process of obtaining certification of NEXBOARD for the construction industry and other applications, however, there is no assurance that the required certifications will be obtained.
Previous report
Misappropriation of our intellectual property and proprietary rights could impair our competitive position.
Previous report
Our success will depend to some extent upon our proprietary patented technology. The legal protections available to us can afford only limited protection, and these means of protecting our intellectual property may be inadequate. We rely, and will continue to rely, on patents, trademarks, trade secrets and copyright laws, confidentiality agreements, employment agreements, work for hire agreements, and technical measures to protect its intellectual property. We cannot ensure that the steps taken by it will prevent misappropriation of its technology or that the agreements entered into for that purpose will be enforceable. Effective trademark, service mark, copyright and trade secret protection may not be available in every jurisdiction in which our products and services are made available online. Our intellectual property may be subject to even greater risk in foreign jurisdictions, as the laws of many countries do not protect intellectual property to the same extent as the laws of the United States. As part of its confidentiality procedures, we generally will enter into agreements with our employees and consultants and limit access to our trade secrets and technology. We cannot assure or assume, however, that former employees will not seek to start or enhance other competing products or services to our detriment, our business, results of operations and financial condition. Nevertheless, management believes that the technical and creative skills of its personnel, continued development of its proprietary systems and technology, as well as brand name recognition and development are more essential in establishing and maintaining a competitive market position.
Previous report
Despite efforts to protect our proprietary rights, unauthorized persons may attempt to copy aspects of our products or services or to obtain and use information that we regard as proprietary. Policing unauthorized use of our proprietary rights is difficult and requires constant attention. We may be required to spend significant resources to monitor and police our intellectual property rights. We may not be able to detect infringement and may lose our competitive position in the market before we are able to ascertain any such infringement. In addition, competitors may design around our proprietary technology or develop competing technologies.
Previous report
Intellectual property litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement by us. Other companies, including competitors, may obtain patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or sell its products and services. Any such litigation by or against us, whether the claims are valid or not, could result in our incurring substantial costs and diversion of resources, including the attention of senior management. If we are unsuccessful in such legal proceedings, we could be subjected to significant damages; be required to license technology that is critical to our operations, if a license is available at a cost which we can pay; or be required to develop replacement technologies at substantial cost to us in money and time. Any of these results could materially and adversely affect our business, results of operations and financial condition.
Previous report
We rely on patents and patent applications and various regulatory exclusivities to protect some of our product candidates, and our ability to compete may be limited or eliminated if we are not able to protect our products.
Previous report
The patent positions of companies such as ours are uncertain and involve complex legal and factual questions. We may incur significant expenses in protecting our intellectual property and defending or assessing claims with respect to intellectual property owned by others. Any patent or other infringement litigation by or against us could cause us to incur significant expenses and divert the attention of our management.
Previous report
Others may file patent applications or obtain patents on similar technologies that compete with our products or those of our joint ventures. We cannot predict how broad the claims in any such patents or applications will be and whether they will be allowed. Once claims have been issued, we cannot predict how they will be construed or enforced. We and/or our joint ventures may infringe upon intellectual property rights of others without being aware of it. If another party claims we are infringing their technology, we could have to defend an expensive and time-consuming lawsuit, pay a large sum if we are found to be infringing, or be prohibited from selling or licensing our products unless we obtain a license or redesign our products, which may not be possible.
Previous report
If we infringe the rights of others, we could be prevented from selling products or forced to pay damages.
Previous report
If our products, methods, processes, and other technologies are found to infringe the rights of other parties, we could be required to pay damages or may be required to cease using the technology or to license rights from the prevailing party. Any prevailing party may be unwilling to offer us a license on commercially acceptable terms.
Previous report
Our intellectual property may not be sufficient to protect our products from competition, which may negatively affect our business as well as limit our partnership or acquisition appeal.
Previous report
We may be subject to competition despite the existence of intellectual property we license, or we or our joint ventures own. We can give no assurance that our intellectual property will be sufficient to prevent third parties from designing around the patents we own or license and developing and commercializing competitive products. The existence of competitive products that avoid our intellectual property could materially adversely affect our operating results and financial condition. Furthermore, limitations, or perceived limitations, in our intellectual property may limit the interest of third parties to partner, collaborate or otherwise transact with us if third parties perceive a higher than acceptable risk to commercialization of our products or future products.
Previous report
Our approach involves filing patent applications covering new methods of use and/or new formulations of previously known, studied and/or marketed devices. Although the protection afforded by patents issued from our patent applications may be significant, when looking at our patents’ ability to block competition, the protection offered by our patents may be, to some extent, more limited than the protection provided by patents claiming the composition of matter previously unknown. If a competitor were able to successfully design around any method of use and formulation patents we may have in the future, our business and competitive advantage could be significantly affected.
Previous report
We may elect to sue a third party, or otherwise make a claim, alleging infringement or other violation of patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights that we either own or license. If we do not prevail in enforcing our intellectual property rights in this type of litigation, we may be subject to:
Previous report
A third party may also challenge the validity, enforceability or scope of the intellectual property rights that we license or own; and the result of these challenges may narrow the claim scope of or invalidate patents that are integral to our product candidates in the future. There can be no assurance that we will be able to successfully defend patents we own or licensed in an action against third parties due to the unpredictability of litigation and the high costs associated with intellectual property litigation, amongst other factors.
Previous report
Changes to patent law, for example the Leahy-Smith America Invests Act, AIA or Leahy-Smith Act, of 2011 and the Patent Reform Act of 2009 and other future article of legislation in the U.S., may substantially change the regulations and procedures surrounding patent applications, issuance of patents, prosecution of patents, challenges to patent validity, and patent enforcement. We can give no assurances that our patents and those of our licensor(s) can be defended or will protect us against future intellectual property challenges, particularly as they pertain to changes in patent law and future patent law interpretations.
Previous report
In addition, enforcing and maintaining our intellectual property protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by the U.S. Patent and Trademark Office and courts, and foreign government patent agencies and courts, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Previous report
We may incur substantial costs enforcing our patents, defending against third-party patents, invalidating third-party patents or licensing third-party intellectual property, as a result of litigation or other proceedings relating to patent and other intellectual property rights.
Previous report
We may be unaware of or unfamiliar with prior art and/or interpretations of prior art that could potentially impact the validity or scope of our patents, pending patent applications, or patent applications that we will file. We may have elected, or elect now or in the future, not to maintain or pursue intellectual property rights that, at some point in time, may be considered relevant to or enforceable against a competitor.
Previous report
We take efforts and enter into agreements with employees, consultants, collaborators, and advisors to confirm ownership and chain of title in intellectual property rights. However, an inventorship or ownership dispute could arise that may permit one or more third parties to practice or enforce our intellectual property rights, including possible efforts to enforce rights against us.
Previous report
We may not have rights under some patents or patent applications that may cover technologies that we use in our research, product candidates and particular uses thereof that we seek to develop and commercialize, as well as synthesis of our product candidates. Third parties may own or control these patents and patent applications in the United States and elsewhere. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit. We or our collaborators therefore may choose to seek, or be required to seek, a license from the third-party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product or product candidate or forced to cease some aspect of our business operations, as a result of patent infringement claims, which could harm our business.
Previous report
There has been substantial litigation and other legal proceedings regarding patent and other intellectual property rights in the broad technology industry. Although we are not currently a party to any patent litigation or any other adversarial proceeding, including any interference or derivation proceeding declared or instituted before the United States Patent and Trademark Office, regarding intellectual property rights with respect to our products, product candidates and technology, it is possible that we may become so in the future. We are not currently aware of any actual or potential third-party infringement claim involving our product candidates. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. The outcome of patent litigation is subject to uncertainties that cannot be adequately quantified in advance, including the demeanor and credibility of witnesses and the identity of the adverse party, especially in the aerospace and technology related patent cases that may turn on the testimony of experts as to technical facts upon which experts may reasonably disagree. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. If a patent or other proceeding is resolved against us, we may be enjoined from researching, developing, manufacturing or commercializing our products or product candidates without a license from the other party and we may be held liable for significant damages. We may not be able to obtain any required license on commercially acceptable terms or at all.
Previous report
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.
Previous report
If we are unable to protect our intellectual property rights, our competitors may develop and market products with similar features that may reduce demand for our potential products.
Previous report
The following factors are important to our success:
Previous report
We will be able to protect our intellectual property rights in patents and trade secrets from unauthorized use by third parties only to the extent that such intellectual property rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.
Previous report
Because issues of patentability involve complex legal and factual questions, the issuance, scope and enforceability of patents cannot be predicted with certainty. Patents may be challenged, invalidated, found unenforceable, or circumvented. United States patents and patent applications may be subject to interference and derivation proceedings, United States patents may also be subject to post grant proceedings, including re-examination, derivation,Inter Partes Review and Post Grant Review, in the United States Patent and Trademark Office and foreign patents may be subject to opposition or comparable proceedings in corresponding foreign patent offices, which could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, derivation, post grant and opposition proceedings may be costly. Thus, any patents that we own or license from others may not provide any protection against competitors. Furthermore, an adverse decision in an interference or derivation proceeding can result in a third-party receiving the patent rights sought by us, which in turn could affect our ability to market a potential product to which that patent filing was directed. Our pending patent applications, those that we may file in the future, or those that we may license from third parties may not result in patents being issued. If issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, others may independently develop similar technologies or duplicate any technology that we have developed. Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. For example, compulsory licenses may be required in cases where the patent owner has failed to “work” the invention in that country, or the third-party has patented improvements. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of our patents. Moreover, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which makes it difficult to stop infringement.
Previous report
In addition, our ability to enforce our patent rights depends on our ability to detect infringement. It is difficult to detect infringers who do not advertise or otherwise promote the compositions that are used in their products. Any litigation to enforce or defend our patent rights, even if we prevail, could be costly and time-consuming and would divert the attention of management and key personnel from business operations.
Reworded paragraphs (7)
Previous wording
Currently, there is no revenue being generated and we have significant operating losses that are expected to continue into the foreseeable future. There is no assurance that we will be able to raise the capital that will be required to commence and sustain operations and execute our business plan, which involves raising capital for acquisitions as well as developing and commercializing technologies. We are especially focused on the green construction materials business, namely DUREVER™ building products, which includes a line of composite products primarily made from recycled thermoplastics, reinforcement materials and fire-retardant chemicals for use in walls, ceilings, flooring, framing, siding, roofing, molding and decking. The production of green building materials requires establishing manufacturing operations in the United States, whether through contract manufacturing or setting up our own facilities. Should we be unable to raise sufficient capital required to set up manufacturing facilities to produce NEXBOARDTM products, we would lose the ability to deliver NEXBOARD to interested buyers and incur continued operating losses.
Current wording
Currently, there is no revenue being generated and we have significant operating losses that are expected to continue into the foreseeable future. There is no assurance that we will be able to raise the capital that will be required to commence and sustain operations and execute our business plan, which involves raising capital for acquisitions as well as developing and commercializing technologies. We are especially focused on the green construction materials business, namely DUREVER™ building products, which includes a line of composite products primarily made from recycled thermoplastics, reinforcement materials and fire-retardant chemicals for use in walls, ceilings, flooring, framing, siding, roofing, molding and decking. The production of green building materials requires establishing manufacturing operations in the United States, whether through contract manufacturing or setting up our own facilities. Should we be unable to raise sufficient capital required to set up manufacturing facilities to produce NexBoard TM products, we would lose the ability to deliver NexBoard to interested buyers and incur continued operating losses.
Previous wording
We will need to meet or otherwise resolve the obligations required by the Auctus Fund LLC Senior Secured Note and the Amendment to the Note.
Current wording
We will need to resolve the obligations required by the Auctus Fund LLC Senior Secured Note.
Previous wording
The Company has Senior Secured Promissory Note with Auctus Fund LLC (“Auctus”), which became due and payable on March 15, 2023. At this time, there is no assurance that the Company will work out a favorable resolution of its obligations related to this note. If Auctus elects to enforce the Note, we may lose all or substantially all of our assets. If Auctus elects to convert the note into shares of our Common Stock, our shareholders could experience substantial dilution.
Current wording
The Company has a Senior Secured Promissory Note with Auctus Fund LLC (“Auctus”), which became due and payable on March 15, 2023, after two Amendments. Effective October 29, 2025, Xeriant entered into a Settlement Agreement with Auctus to restructure the Auctus Note and related Xeriant obligations. The Settlement Agreement terms were extended through October 31, 2026. If Auctus elects to convert the note into shares of our Common Stock, our shareholders could experience substantial dilution.
Previous wording
Our recurring operating losses raise substantial doubt about our ability to continue as a going concern. This condition is expected to continue for the foreseeable future until we can produce sufficient revenues to cover our costs as we seek to raise funding and invest in our operations as well as our sales and marketing efforts. Given this financial situation, no assurances can be given that we will be able to raise capital in the future on acceptable terms, or at all. As a result, our independent registered public accounting firm included an explanatory paragraph in its report in our consolidated financial statements for the most recent fiscal years with respect to this uncertainty. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence of investors, partners and employees.
Current wording
Our recurring operating losses raise substantial doubt about our ability to continue as a going concern. This condition is expected to continue for the foreseeable future until we can produce sufficient revenues to cover our costs as we seek to raise funding and invest in our operations as well as our sales and marketing efforts. Given this financial situation, no assurance can be given that we will be able to raise capital in the future on acceptable terms, or at all. As a result, our independent registered public accounting firm included an explanatory paragraph in its report in our consolidated financial statements for the most recent fiscal years with respect to this uncertainty. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence of investors, partners and employees.
Previous wording
We will also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We will seek to protect this information by entering into confidentiality agreements with parties that have access to it, such as strategic partners, collaborators, employees, contractors and consultants. Any of these parties may breach these agreements and disclose our confidential information or our competitors might learn of the information in some other way. If any trade secret, know-how or other technology not protected by a patent were disclosed to, or independently developed by, a competitor, our business, financial condition and results of operations could be materially adversely affected.
Current wording
Our existing patent covers specific aspects of NexBoard's manufacturing process, composition, and layering architecture. It may be possible for competitors, particularly well-resourced building materials manufacturers or chemical companies, to develop composite panel products that achieve performance characteristics similar to NexBoard through alternative polymer matrices, different fire-retardant chemistries, or modified manufacturing processes that do not infringe our patent claims. The construction materials market has a history of rapid product innovation, and if a large, established manufacturer were to develop a competing product with comparable or superior performance, that competitor's existing manufacturing scale, distribution infrastructure, and customer relationships would represent significant competitive advantages over us. We cannot assure that our patent protection will be sufficient to prevent such competitive development or to maintain our current performance-based differentiation over the long term. We will also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We will seek to protect this information by entering into confidentiality agreements with parties that have access to it, such as strategic partners, collaborators, employees, contractors and consultants. Any of these parties may breach these agreements and disclose our confidential information or our competitors might learn of the information in some other way. If any trade secret, know-how or other technology not protected by a patent were disclosed to, or independently developed by, a competitor, our business, financial condition and results of operations could be materially adversely affected.
Previous wording
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee that our products or product candidates, or manufacture or use of our products or product candidates, will not infringe third-party patents. Furthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates or products. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third parties may be better capitalized and have more resources than us. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In that event, we may not have a viable way to get around the patent and may need to halt commercialization of the relevant product candidate(s) or product(s). In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents. In addition, we may be obligated to indemnify our licensors and collaborators against certain intellectual property infringement claims brought by third parties, which could require us to expend additional resources. The aerospace and technology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
Current wording
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee that our products or product candidates, or manufacture or use of our products or product candidates, will not infringe third-party patents. Furthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates or products. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third parties may be better capitalized and have more resources than us. There is a risk that a court could decide that we are infringing the third party’s patents and would order us to cease the activities covered by the patents. In that event, we may not have a viable way to get around the patent and may need to halt commercialization of the relevant product candidate(s) or product(s). In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents. In addition, we may be obligated to indemnify our licensors and collaborators against certain intellectual property infringement claims brought by third parties, which could require us to expend additional resources. The aerospace and technology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
Previous wording
There were 664,996 shares of our Series A Preferred Stock outstanding as of June 30, 2025. Each preferred share is convertible into 1,000 common shares. Once converted, these shares are eligible for resale under Rule 144. The sale, or availability for sale, of the foregoing shares could adversely affect the market price of our common stock or impair our ability to raise capital through future sales of our common stock.
Current wording
There were 547,592 shares of our Series A Preferred Stock outstanding as of June 30, 2026. Each preferred share is convertible into 1,000 common shares. Once converted, these shares are eligible for resale under Rule 144. The sale, or availability for sale, of the foregoing shares could adversely affect the market price of our common stock or impair our ability to raise capital through future sales of our common stock.