Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 241

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 241
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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.
On September 12, 2025, Legacy XTI filed a Reply Brief reinforcing that Auctus lacks standing, that no obligation ever arose under the
May 17 Letter because no qualifying transaction occurred within its one-year term, and that any purported transfer of debt is void under
the Note’s anti-assignment clause. The Reply also emphasized that the enforceability of the May 17 Letter is already before the
S.D.N.Y. and urged dismissal or a stay to avoid inconsistent rulings. On October 2, 2025, Legacy XTI filed a Notice of Supplemental Authority
submitting the September 23, 2025 Order of the S.D.N.Y., which denied Xeriant’s motion to dismiss Legacy XTI’s counterclaims
and held that Legacy XTI had plausibly alleged that the May 17 Letter expired by its terms and is unenforceable. Legacy XTI asserted that
the S.D.N.Y. ruling directly supports dismissal or a stay because it confirms that the same alleged contract and issues raised by Auctus
are already being adjudicated in the federal case. On November 7, 2025, the court denied Legacy XTI’s motion to dismiss or, in the
alternative, stay the proceedings. The court held that, when viewing the allegations in the light most favorable to Auctus, the complaint
plausibly stated claims for relief under Colorado’s notice-pleading standard. The court further denied XTI’s alternative request
for a stay, reasoning that the parties were not identical to those in the federal action and therefore comity and judicial economy did
not warrant a stay. The court nonetheless directed the parties to update it regarding the outcome of the federal case to the extent it
may be dispositive of overlapping issues. Legacy XTI’s answer to the complaint is due November 21, 2025. The Company will continue
to vigorously defend against the claims but cannot predict the timing or outcome of the proceedings or estimate any potential exposure.

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