Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 456

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part II, Item 1A
Chunk 456
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 asserts that Auctus’ complaint should
be dismissed: (i) for lack of standing, because Auctus is neither a party to, nor a third-party beneficiary of, the May 17 letter; (ii)
for failure of a condition precedent, because no obligation ever arose in that the alleged triggering condition—a business combination
involving Legacy XTI and Legacy Inpixon did not occur within the required one-year time frame; (iii) for lack of valid assignment, because
Xeriant’s unilateral assignment of debt to Legacy XTI is void because the underlying Note prohibits assignment without Auctus’s
prior written consent, which is not alleged. On August 5, 2025, Auctus filed a response arguing that it was an intended third-party beneficiary
of the May 17 letter, that the anti-assignment clause does not bar its claims, and that the request for a stay is unwarranted because
the Xeriant litigation involves different parties and broader claims. XTI believes it has strong counterarguments and will file a reply
in further support of its motion to dismiss or stay. The litigation remains in the early stages of discovery. The Company believes that
the claims asserted by Auctus are without merit and intends to vigorously defend against the lawsuit. As of the date of this filing, the
Company is unable to predict the outcome of this matter or determine the likelihood or magnitude of a potential loss, if any.

Regardless of the merits of
any particular claim, responding to such actions could divert time, resources and management’s attention away from our business
operations, and we may incur significant expenses in defending these lawsuits or other similar lawsuits. The results of litigation and
other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse
monetary damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial condition, operating
results and cash flows. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult
to compete effectively or to obtain adequate insurance in the future.

Furthermore, while we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject
to various exclusions as well as deductibles and caps on amounts of coverage. Even if we believe a claim is covered by insurance, insurers
may dispute our entitlement to coverage for a variety of potential reasons, which may affect