Company: XTIA
Filing Date: 2025-06-03
Form Type: DRS
Source: 0001213900-25-050156
Chunk: 26

Company: XTI Aerospace, Inc.
Filing Date: 2025-06-03
Form: DRS
Chunk 26
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”) in the principal
amount of $250,000.00 held by Streeterville was partitioned into a new secured promissory note (the “February 2025 Note”)
in the same form and amount as the May 2024 Note, with the Company and Streeterville subsequently agreeing to exchange the February 2025
Note for 59,832 shares of Company common stock with an effective price of $4.21 per share. Aircraft has not yet responded to the ASOC.
Aircraft has indicated to the Company that Aircraft intends to defend against the ASOC vigorously.

Regardless of the merits of
any particular claim, responding to such actions could divert time, resources and management’s attention away from our business
operations, and we may incur significant expenses in defending these lawsuits or other similar lawsuits. The results of litigation and
other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse
monetary damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial condition, operating
results and cash flows. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult
to compete effectively or to obtain adequate insurance in the future.

Furthermore, while we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject
to various exclusions as well as deductibles and caps on amounts of coverage. Even if we believe a claim is covered by insurance, insurers
may dispute our entitlement to coverage for a variety of potential reasons, which may affect the timing and, if the insurers prevail,
the amount of our available insurance coverage for a particular claim.

We may also be required to
initiate expensive litigation or other proceedings to protect our business interests. There is a risk that we will not be successful or
otherwise be able to satisfactorily resolve such claims or litigation. Litigation and other legal claims are subject to inherent uncertainties.
Those uncertainties include, but are not limited to, litigation costs and attorneys’ fees, unpredictable judicial or jury decisions
and the differing laws and judicial proclivities regarding damage awards among the states in which we operate. Unexpected outcomes in
such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such proceedings, could have
a material adverse effect on our business, financial condition, results of operations and cash flows. Our current financial status may
increase our default and litigation risks and