Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 146

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 8
Chunk 146
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claims. The case is in its early stages of discovery. Legacy
XTI denies the allegations of wrongdoing contained in the second amended complaint and is vigorously defending against the lawsuit.

In connection with the Xeriant Matter, on June
12, 2024, we received a letter from counsel for Auctus Fund, LLC (“Auctus”), dated April 3, 2024, claiming that, pursuant
to the above-referenced May 17 letter by and between Xeriant and Legacy XTI, as a result of the XTI Merger and Legacy XTI’s entry
into a promissory note agreement with Legacy Inpixon in March 2023, XTI Aerospace and Legacy XTI may have assumed Xeriant’s obligations
under that certain Senior Secured Promissory Note in the principal amount of $6,050,000 issued by Xeriant to Auctus, including the obligation
to repay Auctus all principal and accrued and unpaid interest thereunder, which Auctus claims was $8,435,008.81 as of April 3, 2024. In
July 2024, Legacy XTI responded to such letter and indicated that it believes that the May 17 letter is invalid and unenforceable on several
bases. It further explained that even if it were valid and enforceable, Legacy XTI does not believe such letter resulted in, or otherwise
triggered, the assumption of obligations of Xeriant under the Senior Secured Promissory Note or any other obligation on the part of Legacy
XTI. There have been no further developments on this matter. We are unable to make a reasonable estimate of a potential loss, if any,
on this matter. To the extent suits or actions are commenced with respect to this matter, we intend to vigorously defend against any and
all claims.

35

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On or about August 1, 2024, Chardan Capital Markets
LLC (“Chardan”) commenced an arbitration (the “Arbitration”) before FINRA against the Company and its subsidiary,
XTI Aircraft Company (“Aircraft”).  Aircraft and Chardan are parties to an engagement letter agreement (the “Agreement”). 
In the Arbitration, Chardan originally alleged that the Company was bound by the Agreement even though it