Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 533

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part II, Item 1
Chunk 533
---
 (the “Interest Rate”).
If interest is not paid as it becomes due, it will be added to the principal. Our failure to pay the principal and interest of each Note
when required will constitute an event of default under the Notes. Upon the occurrence of an event of default (except a Bankruptcy-Related
Event of Default), the lender may declare the entire unpaid balance of principal and accrued but unpaid interest on the Note, and all
other obligations of XTI Drones Holdings under the applicable Note, to be immediately due and payable and/or exercise any other rights
or remedies under any other instrument or applicable law. Upon the occurrence of a Bankruptcy-Related Event of Default, the outstanding
principal amount of the Note together with all accrued and unpaid interest and all other obligations of XTI Drones Holdings under the
Note will become due and payable automatically. Following the occurrence of an event of default, interest will accrue on the outstanding
principal balance of each Note at an annual rate equal to the Interest Rate plus 2.00%. An event of default under the Notes could also
lead to a default under agreements governing our future indebtedness.

We may not have or be able to secure financing
for sufficient funds to satisfy all amounts under the Notes when due. If 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