v3.26.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2025
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

Note 15 - Commitments and Contingencies

 

Advisory Agreement

 

On May 13, 2025, the Company entered into an advisory agreement with a third-party advisor pursuant to which the Company agreed to pay $85,000 in cash and issue 125,000 shares of restricted common stock in exchange for financial advisory services. The Company paid the cash fee and issued the shares during 2025. A portion of the initial cash fee of $42,500 was subsequently waived and returned to the Company in connection with the closing of the June 2025 public offering.

 

The advisory agreement provided for reimbursement of certain out-of-pocket expenses (subject to a cap of $15,000), a customary 12-month fee tail, a 3% M&A fee with respect to certain transactions introduced by the advisor, and customary indemnification provisions. The agreement had a term of 180 days and expired during 2025.

 

Litigation

 

From time to time, the Company is involved in legal proceedings arising in the ordinary course of business. Except as described below, the Company is not currently a party to any other material legal proceedings.

 

Xeriant Litigation

 

In December 2023, Xeriant, Inc. filed a lawsuit in the United States District Court for the Southern District of New York against Legacy XTI alleging, among other things, breach of contract, fraud, unjust enrichment, and misappropriation of confidential information in connection with agreements relating to the TriFan 600 aircraft and the XTI Merger. Xeriant previously sought damages in excess of $500 million but has since amended its complaint to seek an unspecified amount. Legacy XTI has asserted counterclaims alleging breach of contract, breach of fiduciary duty, and seeking declaratory relief regarding ownership of intellectual property and termination of the joint venture agreement.

 

The litigation is currently in active discovery. The Company believes the claims against Legacy XTI are without merit and intends to vigorously defend against them. The outcome of this matter cannot presently be predicted.

 

Auctus Litigation

 

In May 2025, Auctus Fund, LLC filed a lawsuit in Colorado state court against Legacy XTI alleging breach of contract and asserting that Legacy XTI is obligated to repay approximately $9 million under a promissory note allegedly assumed in connection with a prior letter agreement. Legacy XTI disputes these claims and has asserted affirmative defenses. The case is ongoing.

 

State of Texas Petition Against Anzu Robotics, LLC

 

In February 2026, the State of Texas filed a petition in the District Court of Collin County, Texas, against Anzu Robotics, LLC (“Anzu”), a subsidiary of the Company, alleging violations of the Texas Deceptive Trade Practices–Consumer Protection Act in connection with the marketing and sale of certain drone products. The petition seeks injunctive relief, civil penalties, and attorneys’ fees and costs. The Company is engaged in preliminary 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.

 

Assessment

 

The Company is unable to predict the ultimate outcome of these matters or reasonably estimate the amount of any potential loss, if any. Accordingly, no accrual has been recorded as of December 31, 2025. An adverse outcome in any of these matters could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.