Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 202

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 202
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 an
intended third-party beneficiary of the May 17 letter, that the anti-assignment clause does not bar its claims, and that the request for
a stay is unwarranted because the Xeriant litigation involves different parties and broader claims.

On September 12, 2025, Legacy XTI filed a Reply
Brief reinforcing that Auctus lacks standing, that no obligation ever arose under the May 17 Letter because no qualifying transaction
occurred within its one-year term, and that any purported transfer of debt is void under the Note’s anti-assignment clause. The
Reply also emphasized that the enforceability of the May 17 Letter is already before the Southern District of New York and urged dismissal
or a stay to avoid inconsistent rulings.

On October 2, 2025, Legacy XTI filed a Notice
of Supplemental Authority submitting the September 23, 2025 Order of the U.S. District Court for the Southern District of New York, which
denied Xeriant’s motion to dismiss Legacy XTI’s counterclaims and held that XTI had plausibly alleged that the May 17 Letter
expired by its terms and is unenforceable. Legacy XTI asserted that the SDNY ruling directly supports dismissal or a stay because it confirms
that the same alleged contract and issues raised by Auctus are already being adjudicated in the federal case.

On November 7, 2025, the court denied Legacy XTI’s
motion to dismiss or, in the alternative, stay the proceedings. The court held that, when viewing the allegations in the light most favorable
to Auctus, the complaint plausibly stated claims for relief under Colorado’s notice-pleading standard. The court further denied
XTI’s alternative request for a stay, reasoning that the parties were not identical to those in the federal action and therefore
comity and judicial economy did not warrant a stay. The court nonetheless directed the parties to update it regarding the outcome of the
federal case to the extent it may be dispositive of overlapping issues. Legacy XTI’s answer to the complaint is due November 21,
2025.

The Company will continue to vigorously defend
against the claims but cannot predict the timing or outcome of the proceedings or estimate any potential exposure.

No accrual has been recorded for the Xeriant and Auctus matters as
at this time, management cannot reasonably estimate the possible loss or range of loss. Should circumstances change, the Company will
record an