Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 369

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part II, Item 1A
Chunk 369
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 connection with the litigation
matter described in the immediately preceding paragraph, 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.

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 did not sign the Agreement, which the Company denied.   Chardan further alleged that Aircraft and the Company
breached the Agreement by not making separate payments to Chardan of $200,000, $94,511, $484,044.40 and $174,000.  Ch