Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 248

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 248
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 there is an event of default under the Notes, our business, financial
condition and results of operations could be materially and adversely affected. In addition, to the extent we complete capital raises
in an aggregate amount of $40 million or more, we will be required to repay the outstanding balance of each Note, which may reduce our
working capital and impact our ability to operate as planned.

We may incur substantial product liability
claims relating to our products.

As a distributor of drone and electronic products,
and with aircraft and aviation sector companies under increased scrutiny in recent years, claims could be brought against us if use or
misuse of one of the drones we sell causes, or merely appears to have caused, personal injury or death. In addition, defects in our products
may lead to other potential life, health and property risks. Any claims against us, regardless of their merit, could severely harm our
financial condition, strain our management and other resources. We are unable to predict if we will be able to obtain or maintain product
liability insurance for any of our products.

Changes in U.S. and foreign government administrative
policy, including the imposition of or increases in tariffs and changes to existing trade agreements, and other changes to macroeconomic
conditions could have a material adverse effect on global economic conditions and our business, results of operations, prospects and financial
condition.

As a result of changes to U.S. and foreign government
administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, the imposition
of or significant increases in tariffs on goods imported into the U.S., particularly those manufactured in Canada, Mexico, Europe, and
China, and adverse responses by foreign governments to U.S. trade policies, among other possible changes. China is currently a leading
global source of hardware products, including the hardware products that we use. As the implementation of tariffs is ongoing, more tariffs
may be added in the future. These tariffs could have an adverse impact on our business, results of operations, prospects and financial
condition, and if we are unable to pass such price increases through to our customers, it would likely increase our cost of sales and,
as a result, decrease our gross margins, operating income and net income. As of the date of this report, discussions remain ongoing in
respect of certain trade restrictions and tariffs on imports from Canada, China, Mexico and Europe, as well as retaliatory tariffs enacted
in response to such actions. In light of these events, there continues to exist