Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 525

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part II, Item 1
Chunk 525
---
 for breach of contract, breach of fiduciary duty, and declaratory
judgment. The S.D.N.Y. found that Legacy XTI had adequately pleaded that Xeriant was obligated to contribute $10 million in funding to
the joint venture and that it acted disloyally by leveraging a potential merger opportunity for its own benefit. Following the S.D.N.Y.’s
September 23, 2025 denial of Xeriant’s motion to dismiss Legacy XTI’s counterclaims, the litigation has advanced into full
discovery. The S.D.N.Y. has since compelled Xeriant to comply with its discovery obligations and warned that continued noncompliance would
result in dismissal of its claims. While the Company continues to believe the allegations against Legacy XTI are meritless, the case remains
in active discovery and subject to close judicial supervision, which may increase litigation costs and extend the duration of the proceedings.
The outcome of the litigation cannot presently be predicted, and any adverse determination could have a material impact on the Company.

53

In connection with the litigation
matter described in the immediately preceding paragraph, on June 12, 2024, the Company received correspondence from legal counsel for
Auctus Fund, LLC (“Auctus”), dated April 3, 2024, asserting that the Company and/or Legacy XTI may have assumed Xeriant’s
obligations under a Senior Secured Promissory Note (the “Note”) issued by Xeriant to Auctus in the original principal amount
of $6,050,000, pursuant to a letter agreement dated May 17, 2022, between Xeriant and Legacy XTI (the “May 17 letter”). Auctus
claimed that the outstanding amount due under the Note, including accrued interest, was $8,435,008.81 as of April 3, 2024. In July 2024,
Legacy XTI responded to Auctus’s claims, asserting that the May 17 letter is invalid and unenforceable on multiple grounds. Legacy
XTI further stated that, even if the May 17 letter were enforceable, it did not create or trigger any obligation for Legacy XTI to assume
Xeriant’s debt under the Note or otherwise. On May 13, 2025, Auctus filed a lawsuit against Legacy XTI in the District Court of
Arapahoe County, Colorado, asserting a single claim for breach of contract based on