Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 239

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 239
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 that motion on January 14, 2025. Legacy XTI filed an answer on January 28,
2025, and subsequently filed an amended answer and counterclaims on February 18, 2025. The amended counterclaims, further amended on April
14, 2025, allege that Xeriant breached the Joint Venture Agreement by failing to make required capital contributions of approximately
$4.6 million and by failing to deliver promised intellectual property and strategic support. Legacy XTI further alleges that Xeriant breached
its fiduciary duty by engaging in coercive and self-dealing conduct, including conditioning a strategic introduction on the issuance of
equity and assumption of debt. Legacy XTI seeks declaratory relief confirming that the joint venture has been terminated, that all intellectual
property related to the TriFan 600 belongs solely to Legacy XTI, and that Xeriant has no rights in the TriFan 600 technology. On April
28, 2025, Xeriant moved to dismiss Legacy XTI’s second amended counterclaims. On September 23, 2025, the S.D.N.Y. denied Xeriant’s
motion, concluding that Legacy XTI plausibly alleged claims against Xeriant 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