Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 337

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 2
Chunk 337
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In addition, while existing FCC equipment authorizations
for previously approved DJI products would remain valid, federal agencies have indicated that continued use of legacy or in-service DJI
equipment may become restricted or phased out over time. Such actions could include procurement bans, limits on participation in government-funded
projects, or heightened data-security and export-control scrutiny. Even absent formal revocation of existing approvals, these measures
could discourage public-sector or enterprise customers from purchasing or deploying DJI-based systems, thereby reducing demand for Drone
Nerds’ products.

Although the NDAA establishes the deadline for
the national-security review, the ongoing federal government shutdown has created uncertainty around whether agencies will complete the
review on time. Many federal departments responsible for technology and security evaluations are operating with reduced staffing or suspended
programs, which may delay interagency coordination and risk assessments. If the review is not completed by the statutory deadline, DJI
and other covered suppliers would be automatically added to the FCC Covered List by operation of law. This outcome—caused indirectly
by administrative delay—could occur even without any final security determination.

If regulatory developments, including delayed
or adverse NDAA determinations, restrict DJI’s market access, Drone Nerds may be forced to renegotiate or terminate this agreement,
seek alternative suppliers, or incur substantial transition costs. Failure to diversify its supply base or mitigate these risks could
materially and adversely affect Drone Nerds’ business, financial condition, and operating results.

The nature of the Drone Nerds business involves
significant risks and uncertainties that may not be covered by insurance or indemnification.

Drone Nerds has developed and sold products and
services in circumstances where insurance or indemnification may not be available, for example, in connection with the collection and
analysis of various types of information. In addition, its products and services raise questions with respect to issues of civil liberties,
intellectual property, trespass, conversion, and similar concepts, which may create legal issues. Indemnification to cover potential claims
or liabilities resulting from the failure of any technologies that we deploy may be available in certain circumstances but not in others.
Currently, the uncrewed aerial systems industry lacks a formative insurance market. We may not be able to maintain insurance to protect
against all operational risks and uncertainties that our customers confront. Substantial claims resulting from an accident, product failure,
or personal injury or property liability arising from our products and services in excess of any indemnity or insurance coverage (or for
which indemnity or insurance