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Item 3. Legal Proceedings

2026-04-15 compared with 2025-04-15 · 127 added, 59 removed, 2 unchanged (99% of the section changed)

LEGAL PROCEEDINGS

as disclosed below, there are no material pending legal proceedings as defined by Item 103 of Regulation S-K, to which we are a party

or of which any of our property is the subject, other than ordinary routine litigation incidental to the Company’s business.

are no proceedings in which any of the directors, officers or affiliates of the Company, or any registered or beneficial holder of more

than 5% of the Company’s voting securities, is an adverse party or has a material interest adverse to that of the Company.

On December 6, 2023, Xeriant, Inc.

(“Xeriant”) filed a

complaint against Legacy XTI, along with two unnamed companies and five unnamed persons, in the United States District Court for the Southern

District of New York.

On January 31, 2024, Xeriant filed an amended complaint, which added us as a defendant.

On February 2, 2024, the

Court ordered Xeriant to show cause as to why the amended complaint should not be dismissed without prejudice for lack of subject matter

jurisdiction.

On February 29, 2024, Xeriant filed a second amended complaint, which removed us and one of the unnamed companies as defendants.

The second amended complaint alleges that Legacy XTI, through multiple breaches and fraudulent actions, has caused substantial harm to

Xeriant and has prevented it from obtaining compensation owed to it under various agreements entered into between Xeriant and Legacy XTI,

including but not limited to a joint venture agreement, a cross-patent license agreement, an operating agreement, and a letter agreement.

In particular, Xeriant contends that Legacy XTI gained substantial advantages from the intellectual property, expertise, and capital deployed

by Xeriant in the design and development of Legacy XTI’s TriFan 600 airplane yet has excluded Xeriant from the transaction involving

the TriFan 600 technology in its merger with us, which has resulted in a breach of the Letter Agreement, in addition to the other aforementioned

Xeriant, in the second amended complaint, asserts the following causes of action:

(1) breach of contract;

(2) intentional

(3) fraudulent concealment;

(4) quantum meruit;

(5) unjust enrichment;

(6) unfair competition/deceptive business practices;

(7) misappropriation of confidential information, and seeks damages in excess of $500 million, injunctive relief enjoining us from engaging

in any further misconduct, the imposition of a royalty obligation, and such other relief as deemed appropriate by the court.

13, 2024, Legacy XTI moved for partial dismissal of the second amended complaint.

On January 14, 2025, the Court denied Legacy XTI’s

motion to dismiss the complaint.

On January 28, 2025, Legacy XTI filed an answer to the second amended complaint.

On January 28, 2025,

Legacy XTI filed an amended answer and counterclaims against Xeriant.

The counterclaims assert that Xeriant (1) breached the joint venture

agreement by failing to pay $4,600,000 to fund development of the TriFan 600 technology, and (2) breached its fiduciary duty to XTI by

engaging in bad faith, coercion, and self-dealing, including by appropriating material information for its own use and concealing from

Legacy XTI the identity of a potential strategic partner.

On March 18, 2025, Xeriant moved for dismissal of Legacy XTI’s counterclaims.

The case is in its early stages of discovery, and we are unable to estimate the likelihood or magnitude of a potential adverse judgment.

Legacy XTI nevertheless denies the allegations of wrongdoing contained in the second amended complaint and is vigorously defending against

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 alleges that the Company is bound by the

Agreement even though it did not sign the Agreement, which the Company denies.

Chardan further alleges that Aircraft and the Company

breached the Agreement by not making certain payments to Chardan.

Chardan also seeks to recover unspecified amounts relating to an alleged

right of first refusal to perform banking services in connection with certain offerings of its securities that the Company supposedly

did not honor.

The Company filed a petition in the U.S.

District Court for the Southern District of New York seeking to stay the Arbitration

to the extent that it has been asserted against the Company.

On or about January 21, 2025, the Court entered a final judgement that:

(a) enjoins Chardan from prosecuting the arbitration against the Company and (b) declares that the Company has no contractual or other

duty to arbitrate with Chardan.

The Aircraft subsidiary remains as a party to the arbitration and intends to defend against the arbitration

Except as disclosed below,

there are no material pending legal proceedings as defined by Item 103 of Regulation S-K, to which we are a party or of which any of our

property is the subject, other than ordinary routine litigation incidental to the Company’s business.

There are no proceedings in

which any of the directors, officers or affiliates of the Company, or any registered or beneficial holder of more than 5% of the Company’s

voting securities, is an adverse party or has a material interest adverse to that of the Company.

On December 6, 2023,

Xeriant, Inc.

(“Xeriant”) filed a complaint in the United States District Court for the Southern District of New York

(the “S.D.N.Y.”) against Legacy XTI, two unnamed entities, and five unnamed individuals.

On January 31, 2024, Xeriant

filed an amended complaint adding the Company as a defendant.

On February 29, 2024, Xeriant filed a second amended complaint,

removing the Company and one of the unnamed entities as defendants.

The second amended complaint alleges that Legacy XTI breached

several agreements with Xeriant, including a Joint Venture Agreement dated May 31, 2021, a cross-patent license agreement, an

operating agreement, and a letter dated May 17, 2022, which Xeriant claims arose from its introduction of Legacy XTI to a

Nasdaq-listed company as a potential acquirer.

Xeriant further alleges that it provided intellectual property, expertise, and

capital in connection with Legacy XTI’s TriFan 600 aircraft and was improperly excluded from a subsequent transaction

involving the TriFan 600 technology as part of Legacy XTI’s merger with the Company.

Xeriant asserts causes of action for

breach of contract, fraud, unjust enrichment, and misappropriation of confidential information, and seeks damages in excess of $500

million, along with injunctive and other equitable relief.

On March 13, 2024, Legacy XTI moved to dismiss portions of the second

amended complaint.

denied 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.

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.

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.

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.

9, 2025, Xeriant filed a Third Amended Complaint, voluntarily non-suiting five counts from the prior complaint and revising its

damages demand from $500 million to an unspecified amount.

On December 23, 2025, Legacy XTI filed its Answer, Affirmative Defenses,

and Counterclaims in response to the Third Amended Complaint.

Discovery remains ongoing.

The outcome of the litigation cannot

presently be predicted, and any adverse determination could have a material impact on the Company.

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 its prior allegations.

Auctus contends that Legacy XTI is contractually obligated to repay nearly $9 million in

principal and accrued interest, based on Legacy XTI’s entry into a loan agreement with Legacy Inpixon in March 2023 and its

subsequent merger with Legacy Inpixon in March 2024.

On June 25, 2025, Legacy XTI filed a motion to dismiss or, in the alternative,

to stay the proceedings pending resolution of the Xeriant litigation.

Legacy XTI’s motion 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

(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.

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 Legacy 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.

nonetheless directed the parties to update it regarding the outcome of the federal case to the extent it may be dispositive of

overlapping issues.

On November 21, 2025, Legacy XTI filed its Answer and Affirmative Defenses to the Complaint.

The parties are

engaged in discovery.

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.

In February 2026, the State of Texas filed a petition in the District

Court of Collin County, Texas, against Anzu Robotics, LLC (“Anzu”) alleging that Anzu violated the Texas Deceptive Trade Practices-Consumer

Protection Act (the “DTPA”) in connection with the marketing and sale of its drone products.

The State contends, among other

things, that Anzu misrepresented certain characteristics, origins, and security features of its products and failed to disclose certain

alleged material facts relating to the products’ development and components and Anzu’s alleged business relationship with

The State seeks temporary and permanent injunctive relief, civil penalties of up to $10,000 per violation of the DTPA and up to an

additional $250,000 if the conduct was calculated to deprive a consumer age 65 or older of money or property, and attorneys’ fees

The Company is engaged in discussions with the Texas Attorney General to attempt to resolve the matter cooperatively.

The Company cannot at this time predict the outcome of this matter or reasonably estimate a range of potential loss, if any.

MINE SAFETY DISCLOSURES

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings