What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2025-04-15 compared with 2024-04-16 · 705 added, 18 removed, 2 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock currently trades under the symbol “XTIA” on the Nasdaq Capital Market.

Prior to the XTI Merger, our common stock traded under the symbol "INPX" on the Nasdaq Capital Market.

Holders of Record

According to our transfer agent, as of April 3, 2024, we had approximately 1,960 shareholders of record of our common stock.

This number does not include an indeterminate number of shareholders whose shares are held by brokers in street name.

common stock currently trades under the symbol “XTIA” on the Nasdaq Capital Market.

Prior to the XTI Merger, our common stock

traded under the symbol “INPX” on the Nasdaq Capital Market.

According to our transfer agent, as of April 11, 2025, we had approximately

1,719 shareholders of record of our common stock.

This number does not include an indeterminate number of shareholders whose shares are

held by brokers in street name.

Our stock transfer agent is Computershare Trust Company, N.A., 150 Royall Street, Suite 101, Canton, MA

We have not declared or paid any cash dividends on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, therefore, we do not expect to pay any cash dividends in the foreseeable future.

The decision whether to pay cash dividends on our common stock will be made by our Board, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our Board considers significant.

Holders of Series 4 Convertible Preferred Stock and Series 5 Convertible Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by our Board.

Securities Authorized for Issuance under Equity Compensation Plans

For information required by this item with respect to our equity compensation plans, please see Item 11 of this report.

Recent Sales of Unregistered Equity Securities

Except as disclosed below, during the period covered by this Annual Report on Form 10-K, we have not sold any equity securities that were not registered under the Securities Act that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.

We issued 19,822 shares of common stock (the “Exchange Common Shares”) to the holder of the then outstanding promissory note of the Company issued on July 22, 2022 (the “July 2022 Note”), at a price equal to $10.09 per share, which is the Minimum Price as defined in Nasdaq Listing Rule 5635(d), in connection with the terms and conditions of an Exchange Agreement, dated October 6, 2023, pursuant to which we and the holder agreed to (i) partition a new promissory note in the form of the July 2022 Note in the original principal amount of $200,000 and then cause the outstanding balance of the July 2022 Note to be reduced by $200,000;

and (ii) exchange the partitioned note for the delivery of the Note Exchange Common Shares.

The offer and sale of the Exchange Common Shares was not registered under the Securities Act, in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act, in that (a) the Exchange Common Shares were issued in exchanges for partitioned notes which were other outstanding securities of the Company;

(b) there was no additional consideration of value delivered by the holder in connection with the exchange;

and (c) there were no commissions or other remuneration paid by the Company in connection with the exchange.

We have not declared or paid any cash dividends on our common stock,

and we currently intend to retain future earnings, if any, to finance the expansion of our business, therefore, we do not expect to pay

any cash dividends in the foreseeable future.

The decision whether to pay cash dividends on our common stock will be made by our Board,

in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our

Board considers significant.

Holders of Series 4 Convertible Preferred Stock and Series 5 Convertible Preferred Stock will not be entitled

to receive any dividends, unless and until specifically declared by our Board.

Authorized for Issuance under Equity Compensation Plans

information required by this item with respect to our equity compensation plans, please see Item 11 of this report.

Sales of Unregistered Securities and Use of Proceeds

the period covered by this Annual Report on Form 10-K, we have not sold any equity securities that were not registered under the Securities

Act that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.

of Equity Securities by the Issuer and Affiliated Purchasers

had no share repurchase activity for the three months ended December 31, 2024.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited

financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

In addition to historical information,

this discussion and analysis here and throughout this Annual Report on Form 10-K contains forward-looking statements that involve risks,

uncertainties and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements, due

to a number of factors, including but not limited to, risks described in the section entitled “ Risk Factors.

of Our Business

The Company is primarily an aircraft development company.

also provides real-time location systems (“RTLS”) for the industrial sector, which was Legacy Inpixon’s focus prior

to the closing of the XTI Merger.

Headquartered in Englewood, Colorado, the Company is developing a vertical takeoff and landing (“VTOL”)

airplane that is designed to take off and land like a helicopter and cruise like a fixed-wing business airplane.

We are primarily engaged

in developing the aerodynamic performance and top-level engineering design of the TriFan 600, building and testing a two-thirds scale

unmanned version of the TriFan 600, and seeking funds from investors to enable the Company to advance the detailed design and certification

of the TriFan 600, and to eventually engage in commercial production and sale of the TriFan 600.

Our RTLS solutions leverage

cutting-edge technologies such as IoT, AI, and big data analytics to provide real-time tracking and monitoring of assets, machines, and

people within industrial environments.

With our RTLS solutions, businesses can achieve improved operational efficiency, enhanced safety

and reduced costs.

By having real-time visibility into operations, industrial organizations can make informed, data-driven decisions,

minimize downtime, and ensure compliance with industry regulations.

experienced a net loss from operations of approximately $37.0 million and $7.6 million for the years ended December 31, 2024

and 2023, respectively.

We cannot assure that we will ever earn revenues sufficient to support our operations, or that we will ever be

In order to continue our operations, we have supplemented the revenues we earned with proceeds from the sale of our equity

and proceeds from loans.

March 2025 Underwritten Offering and Debt

On March 28, 2025, we entered into an underwriting agreement with ThinkEquity

LLC (“ThinkEquity”), as the representative of the underwriters named therein, relating to a firm commitment underwritten public

offering (the “March Offering”) of 765,200 shares of common stock, pre-funded warrants (the “Pre-funded Warrants”)

to purchase up to 2,176,000 shares of common stock, and common warrants (the “Common Warrants”) to purchase up to 2,941,200

shares of common stock.

The combined public offering price for each share of common stock, together with one Common Warrant, was $1.36.

The combined public offering price for each Pre-funded Warrant, together with one Common Warrant, was $1.359.

Each share of common stock,

or a Pre-funded Warrant in lieu thereof, was sold together with one Common Warrant.

The March Offering was made pursuant to our registration

statement on Form S-3 (File No 333-279901), filed with the SEC on May 31, 2024, as amended on June 14, 2024 and declared effective on

June 18, 2024 (the “Current Shelf Registration Statement”), the base prospectus included therein, a preliminary prospectus

supplement dated March 27, 2025 and a final prospectus supplement dated March 28, 2025.

The March Offering closed

on March 31, 2025.

We received net proceeds of approximately $3.3 million from the March Offering after deducting the underwriting discounts

and commissions and other expenses payable by us.

We used approximately $2.7 million of the net proceeds from the March Offering to repay

in full all amounts outstanding, including a 115% prepayment penalty, in respect of two secured promissory notes issued by the Company

to Streeterville Capital, LLC on May 1, 2024 and May 24, 2024.

The Pre-funded Warrants were immediately exercisable upon issuance,

have an exercise price of $0.001 per share and may be exercised at any time until all of the Pre-funded Warrants are exercised in full.

The Common Warrants were immediately exercisable upon issuance, have an exercise price of $1.36 per share, and expire on the fifth anniversary

of the date of issuance.

As a result of our failure to timely file a Current Report on Form 8-K, upon the filing of this Annual Report

on Form 10-K, we became ineligible to file new short form registration statements on Form S-3 or to use the Current Shelf Registration

Therefore, we agreed to file a subsequent registration statement covering the issuance of the shares issuable upon exercise

of the Pre-funded Warrants and the Common Warrants within the timeframes set forth in such warrants.

As of April 11, 2025, 1,126,000 Pre-funded

Warrants remained outstanding and unexercised.

As part of its compensation

for serving as representative in connection with the March Offering, we issued ThinkEquity and its designees Representative Warrants to

purchase up to 147,060 shares of common stock.

The Representative Warrants were immediately exercisable upon issuance, have an exercise

price of $1.70 per share and expire on the five-year anniversary of the commencement of sales of the securities issued in the March Offering.

January 2025 Registered Direct Offering

On January 7, 2025, we entered

into a placement agency agreement with ThinkEquity, as placement agent, pursuant to which we agreed to issue and sell directly to various

investors, in a best efforts public offering (the “January Offering”), an aggregate of 1,454,546 shares of common stock at

an offering price of $13.75 per share.

The January Offering closed on January 10, 2025, following the effectiveness of the 1-for-250 reverse

stock split of our outstanding common stock on the same date, which was a condition to the closing of the January Offering.

net proceeds of approximately $18.3 million from the January Offering.

The January Offering was made pursuant to the Current Shelf Registration

Statement, the base prospectus included therein, and a prospectus supplement dated January 7, 2025.

As part of its compensation for acting

as placement agent for the January Offering, we issued ThinkEquity LLC and its designees Placement Agent Warrants to purchase 72,727 shares

of common stock, which were immediately exercisable upon issuance, have an exercise price of $17.1875 per share and expire on the five-year

anniversary of the commencement of sales of the securities issued in the January Offering.

Settlement Agreement

On March 27, 2025 (the “Effective

Date”), XTI Aerospace, Inc.

(the “Company”) entered into a settlement agreement with 3AM Investments LLC (an entity

controlled by Nadir Ali (“Ali”), the Company’s former Chief Executive Officer and a former director of the Company)

(“3AM”), Grafiti Group LLC (“Grafiti Group”) and Ali (the “Settlement Agreement”).

The terms of the

Settlement Agreement include:

Preferred Stock Redemption.

The Company and 3AM entered into that certain securities purchase agreement dated as of March 12, 2024 (the “Series 9 Purchase Agreement”),

pursuant to which 3AM acquired 1,500 shares of the Company’s Series 9 Preferred Stock, of which 1,164.12 shares of Series 9 Preferred

Stock were issued and outstanding as of March 27, 2025 (the “Outstanding Preferred Stock”).

Pursuant to the Settlement Agreement,

on the Effective Date, the Company delivered the aggregate amount of $1,251,651.26 (the “Series 9 Redemption Amount”)

by wire transfer of immediately available funds to an account designated in writing by Ali, for the redemption of the Outstanding Preferred

Following Ali’s receipt of the Series 9 Redemption Amount, Ali no longer held any shares of Series 9 Preferred Stock.

of the date of this report, there are no shares of Series 9 Preferred Stock issued and outstanding.

Termination of Ali Consulting

The Settlement Agreement provides that effective as of the Effective Date, that certain Consulting Agreement, dated

March 12, 2024 by and between the Company and Ali (the “Ali Consulting Agreement”) is terminated, and in lieu of the $2,775,000

(the “Ali Advisory Fees”) that would be owed to Ali pursuant to the terms of the Ali Consulting Agreement as a result of the

termination of such Ali Consulting Agreement prior to the 15 month anniversary of the effective date thereof, the Company agreed

(i) that the aggregate amount of $1,000,000 (the “Grafiti Purchase Amount”) required to be delivered by Grafiti Group pursuant

to that certain Equity Purchase Agreement, dated February 16, 2024, by and among the Company, Grafiti LLC, and Grafiti Group, as amended

(the “Equity Purchase Agreement”), shall be deemed to be satisfied in full and no further amounts shall be payable to the

Company by Grafiti Group or any of its affiliated parties pursuant to the Equity Purchase Agreement;

(ii) to deliver a cash amount of

$60,000 (the “Outstanding Amount”) to Ali by wire transfer of immediately available funds;

and (iii) to deliver $1,500,000

(the “Deferred Amount”) by wire transfer of immediately available funds in three equal installments of $500,000 (“Installment

Amounts”) each on June 30, 2025, September 30, 2025 and December 30, 2025 (the “Deferred Amount Installment Dates”).

Any Installment Amount that is not paid by the applicable due dates will be subject to interest at a rate of 18% per annum.

of the Outstanding Amount and the Deferred Amount in accordance with the terms of the Settlement Agreement, the Ali Advisory Fees shall

be deemed to be satisfied in full and no further amounts shall be payable by the Company to Ali or his affiliated parties pursuant

to the Ali Consulting Agreement.

On March 31, 2025, the Company paid the Outstanding Amount in full.

As of the date of this report, the

Deferred Amount remains outstanding.

Former Management Payments.

to the Settlement Agreement, the Company agreed to pay the Former Management Payments (as defined below) on the earlier of (a) the closing

date of the Company’s next financing transaction and (b) 30 days following the Effective Date of the Settlement Agreement, subject

to certain penalties for late payment.

The “Former Management Payments” comprise (i) an aggregate amount of $803,260.65 (the

“Bonus Plan Payment”) that, as of the Effective Date, remains payable to the recipients of bonuses payable pursuant to that

certain Strategic Transaction Bonus Plan, adopted on July 24, 2023 and as amended (the “Bonus Plan”) together with (ii) an

aggregate amount of $303,372.87 (the “Loundermon Advisory Fee”) that, as of the Effective Date, is payable to Wendy Loundermon,

the Company’s former Chief Financial Officer and a former director of the Company (“Loundermon”), pursuant

to that certain Consulting Agreement, dated March 12, 2024, by and between the Company and Loundermon (the “Loundermon Consulting

On March 31, 2025, the Company

paid all amounts due under the Former Management Payments in full.

Ali Release .

the Effective Date, Ali, on behalf of himself and his former and current affiliated entities, including 3AM, Grafiti LLC and Grafiti Group

(collectively, the “Ali Parties”) agreed to release the Company and each of its former and current subsidiaries, divisions,

affiliates, predecessors, successors, assigns, and its and their respective employees, officers, directors, shareholders, members, partners,

trustees, joint venturers, attorneys, agents, and representatives (collectively, the “XTI Parties”), from and with respect

to any and all claims, demands, causes of action, damages, obligations, liabilities, costs, and expenses of any kind or nature whatsoever

(collectively, “Ali Claims”), arising out of any obligations of the Company with respect to the Ali Consulting Agreement,

the Series 9 Purchase Agreement and the portion of the Bonus Plan relating to Ali, whether known or unknown, foreseen or unforeseen, that

the Ali Parties, or any of them, ever had, now have, or may have against the XTI Parties, or any of them, from the beginning of time through

and including the Completion Date (as defined below).

As used in the Settlement Agreement, the term “Completion Date” means

the date on which the Company has delivered (i) the Series 9 Redemption Amount to Ali by wire transfer of immediately available funds;

(ii) the Deferred Amount to Ali by wire transfer of immediately available funds;

(iii) the Outstanding Amount to Ali by wire transfer

of immediately available funds;

(iv) the Former Management Payments to Loundermon and the recipients of the Bonus Plan Payments by wire

transfer of immediately available funds.

the Effective Date, the XTI Parties agreed to release the Ali Parties from and with respect to any and all claims, demands, causes of

action, damages, obligations, liabilities, costs, and expenses of any kind or nature whatsoever (collectively, “XTI Claims”),

arising out of any obligations of the Ali Parties with respect to any obligation of the Ali Parties in connection with the payment of

the purchase price as set forth in the Equity Purchase Agreement, the Ali Consulting Agreement, the Series 9 Purchase Agreement and the

portion of the Bonus Plan relating to Ali, whether known or unknown, foreseen or unforeseen, that the XTI Parties, or any of them, ever

had, now have, or may have against the Ali Parties, or any of them, from the beginning of time through and including the Completion Date.

Entire Agreement.

Settlement Agreement provides that it supersedes any prior consents or agreements regarding the allocation of financing proceeds for the

payment of any obligations of the Company described in the Settlement Agreement.

with Nasdaq Continued Listing Requirements

February 11, 2025, the Company received a letter from Nasdaq confirming that the Company has regained compliance with the minimum bid

price requirement set forth under Nasdaq Listing Rule 5550(a)(2), and accordingly, the Nasdaq Hearings Panel has determined to continue

the listing of the Company’s common stock on The Nasdaq Stock Market.

Accounting Policies and Estimates

consolidated financial statements are prepared in accordance with U.S.

Generally Accepted Accounting Principles (“GAAP”).

In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about

future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures.

We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes

to be relevant at the time our consolidated financial statements are prepared.

On a regular basis, we review the accounting policies,

assumptions, estimates and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with

However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions

and estimates, and such differences could be material.

significant accounting policies are discussed in Note 3 of the audited consolidated financial statements for the years ended December

31, 2024 and 2023 which are included elsewhere in this Annual Report on Form 10-K.

We believe that the following accounting estimates

are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult,

subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

There have been no changes to estimates during the periods presented in the filing.

Historically changes in management estimates have

not been material.

Company recognizes revenue when control is transferred of the promised products or services to its customers, in an amount that reflects

the consideration the Company expects to be entitled to in exchange for those products or services.

The Company derives revenue from

software as a service, design and implementation services for its Indoor Intelligence systems, and professional services for work performed

in conjunction with its systems.

contracts with customers often include promises to transfer multiple distinct products and services.

Our licenses are sold as perpetual

or term licenses and the arrangements typically contain various combinations of maintenance and professional services, which are accounted

for as separate performance obligations.

In determining how revenue should be recognized, a five-step process is used, which requires

judgment and estimates within the revenue recognition process.

The most critical judgements required in applying Accounting Standards

Codification (“ASC”) 606 Revenue Recognition from Customers , and our revenue recognition policy relate to the determination

of distinct performance obligations.

receive fixed consideration for sales of hardware and software products.

Revenue is recognized

at point in time when the customer has title to the product and risks and rewards of ownership

have transferred.

related to software as a service contract is recognized over time using the output method

(days of software provided) because we are providing continuous access to its service.

and implementation revenue is accounted for using the percentage of completion method.

soon as the outcome of a contract can be estimated reliably, contract revenue is recognized

in the consolidated statement of operations in proportion to the stage of completion of the

Accounting for these contracts involves the use of estimates to determine total

contract costs to be incurred.

● Professional

services revenue under fixed fee contracts is recognized over time using the input method

(direct labor hours) to recognize revenue over the term of the contract.

We have elected

the practical expedient to recognize revenue for the right to invoice because our right to

consideration corresponds directly with the value to the customer of the performance completed

recognize revenue related to Maintenance Services evenly over time using the output method

(days of software provided) because we provide continuous service, and the customer simultaneously

receives and consumes the benefits provided by our performance as the services are performed.

also consider whether an arrangement has any discounts, material rights, or specified future upgrades that may represent additional performance

We offer discounts in the form of prompt payment discounts and rebates for a decrease in service level percentages.

determined that the most likely amount method is most useful for contracts that provides these discounts and rebates as the contracts

have two potential outcomes and a significant reversal in the amount of cumulative revenue recognized is not expected to occur.

have not historically been significant, but we continue to monitor and evaluate these estimates based on historical experience, anticipated

performance, and our best judgment.

Renewals or extensions of licenses are evaluated as distinct licenses (i.e., a distinct good or service),

and revenue attributed to the distinct good or service cannot be recognized until (1) the entity provides the distinct license (or makes

the license available) to the customer and (2) the customer is able to use and benefit from the distinct license.

If any of these judgments

were to change it could cause a material increase or decrease in the amount of revenue we report in a particular period.

of Long-lived and Intangible Assets and Goodwill

periodically review long-lived assets and certain identifiable intangible assets for impairment in accordance with ASC 360, “Property,

Plant, and Equipment.” Goodwill and intangible assets not subject to amortization are reviewed annually for impairment in accordance

with ASC 350, “Intangibles – Goodwill and Other,” or more often if there are indications of possible impairment.

analysis to determine whether or not an asset is impaired requires significant judgments that are dependent on internal forecasts, including

estimated future cash flows, estimates of long-term growth rates for our business, the expected life over which cash flows will be realized

and assumed royalty and discount rates.

Changes in these estimates and assumptions could materially affect the determination of fair

value and any impairment charge.

While the fair value of these assets exceeds their carrying value based on our current estimates and

assumptions, materially different estimates and assumptions in the future in response to changing economic conditions, changes in our

business or for other reasons could result in the recognition of impairment losses.

assets to be held and used, including acquired intangible assets subject to amortization, we initiate our review whenever events or changes

in circumstances indicate that the carrying amount of these assets may not be recoverable.

Recoverability of an asset is measured by

comparison of its carrying amount to the expected future undiscounted cash flows that the asset is expected to generate.

Any impairment

to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value.

Significant management judgment

is required in this process.

intangible assets not subject to amortization such as goodwill, we test for impairment annually, or whenever events or changes in circumstances

indicate that their carrying value may not be recoverable.

In testing goodwill for impairment, we compare the fair value with the carrying

The determination of fair value is based on a discounted cash flow analysis, using inputs and assumptions such as revenue growth

rates, other projected expenses, and discount rates.

If we were to experience a decrease in forecasted future revenues attributable to

the intangible assets, this could indicate a potential impairment.

If the carrying value exceeds the estimated fair value, the goodwill

is considered impaired, and an impairment loss will be recognized in an amount equal to the excess of the carrying value over the fair

value of goodwill.

will perform our annual goodwill impairment test required by ASC 350 as of October 1 st of each year.

In testing goodwill for

impairment, we analyze qualitative factors as stated within ASC 350 to determine if the fair value of our single reporting unit may be

less than the carrying value of the reporting unit.

We have one reporting unit that carries goodwill (Industrial IoT).

If the fair value

of the reporting unit, based on qualitative factors, may be less than the carrying value of the reporting unit, we then perform the goodwill

impairment test required under ASC 350 by comparing the fair value of the reporting unit with the carrying value of the reporting unit

and, if the fair value is less than the carrying value, the amount that the carrying value exceeds fair value represents the amount of

goodwill impairment.

Accordingly, we would recognize an impairment loss in the amount of such excess.

In connection with the XTI

Merger, we recorded approximately $4.8 million in intangible assets which was allocated to various asset groups under our Industrial IoT

reporting unit.

In connection with the XTI Merger, we recorded $12.4 million in goodwill which was allocated to our Industrial IoT reporting

Since the closing date of the XTI Merger on March 12, 2024, the price of our common stock has declined significantly and may continue

to fluctuate in future periods.

A sustained decrease in the price of our common stock is one of the qualitative factors to be considered

as part of an impairment test when evaluating whether events or changes in circumstances may indicate that it is more likely than not

that a potential goodwill impairment exists.

We will continue monitoring the analysis of the qualitative and quantitative factors used

as a basis for the goodwill impairment test during fiscal year 2024 and at the Company’s October 1 st annual testing date.

As of December 31, 2024, management evaluated potential triggers and completed a qualitative assessment and determined in the aggregate,

it is more likely than not, that the fair value of the Goodwill is less than its carrying value.

Management moved to a quantitative assessment

and noted that based on that assessment, the fair value of the Industrial IoT reporting unit is greater than the carrying value of the

reporting unit.

The Company notes that the fair value exceeded the carrying value by 22% as of December 31, 2024.

Therefore, no goodwill

impairment was recognized for the year ended December 31, 2024.

accordance with ASC 740 “Income Taxes” (“ASC 740”), management routinely evaluates the likelihood of the realization

of its income tax benefits and the recognition of its deferred tax assets.

In evaluating the need for any valuation allowance, management

will assess whether it is more likely than not that some portion, or all, of the deferred tax asset may not be realized on a jurisdictional

Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods

in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized.

In performing its analyses,

management considers both positive and negative evidence including historical financial performance, previous earnings patterns, future

earnings forecasts, tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards

within a reasonable timeframe.

To this end, management considered (i) that we have had historical losses in the prior years and cannot

anticipate generating a sufficient level of future profits in order to realize the benefits of our deferred tax asset;

(ii) tax planning

and (iii) the adequacy of future income as of and for the year ended December 31, 2024, based upon certain economic

conditions and historical losses through December 31, 2024.

After consideration of these factors, management deemed it appropriate

to establish a full valuation allowance with respect to the deferred tax assets for XTI Aerospace, Inc., XTI Aircraft Company, Nanotron

GmbH, Intranav GmbH, and Inpixon Holding (UK) Limited.

liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax filings that

do not meet these recognition and measurement standards.

As of December 31, 2024 and 2023, no liability for unrecognized tax benefits

was required to be reported.

The guidance also discusses the classification of related interest and penalties on income taxes.

The Company’s

policy is to record interest and penalties on uncertain tax positions as a component of income tax expense.

No interest or penalties

were recorded during the years ended December 31, 2024 and 2023.

account for business combinations using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired

business are recorded at their fair values at the date of acquisition.

The excess of the purchase price over the estimated fair value

is recorded as goodwill.

Any changes in the estimated fair values of the net assets recorded for acquisitions prior to the finalization

of more detailed analysis, but not to exceed one year from the date of acquisition, will change the amount of the purchase price allocable

Any subsequent changes to any purchase price allocations that are material to our consolidated financial results will be

All acquisition costs are expensed as incurred and in-process research and development costs are recorded at fair value as

an indefinite-lived intangible asset and assessed for impairment thereafter until completion, at which point the asset is amortized over

its expected useful life.

Separately recognized transactions associated with business combinations are generally expensed subsequent

to the acquisition date.

The application of business combination and impairment accounting requires the use of significant estimates

and assumptions.

acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date and are included in

our Consolidated Financial Statements from the acquisition date.

of Results of Operations

We are still working to design, develop and certify the TriFan 600

airplane and thus have not generated revenue from this segment.

We do not expect to begin generating significant revenues until we are

able to complete the design, development, certification, and manufacturing of the airplane.

RTLS products are primarily sold on a license and SaaS mode, which we call “location as a service” or “LaaS.”

In our licensing model, we also typically charge an annual maintenance fee.

The LaaS model is typically for a 3-5 year contract and includes

a license to use, maintenance and hardware upgrades.

The LaaS model generates a recurring revenue stream.

and Development

Research and development activities represent a significant part of

our business.

Our research and development efforts focus on the design and development of (i) our indoor intelligence products, and (ii)

our TriFan 600 airplane, including certain of the systems that will be used in it.

As part of our aircraft development activities, we

continue to work closely with the FAA towards our goal of achieving certification of our TriFan 600 airplane on an efficient timeline.

Research and development expenses consist primarily of costs incurred

in connection with the research and development of the TriFan 600 airplane.

These expenses include:

● employee-related

expenses, including salaries and benefits for personnel engaged in research and development

incurred under agreements with third parties such as consultants and contractors;

and technology-related expenses to support computer-aided design of the aircraft, flight

simulations, and other technology needs of our engineers.

and development costs are expensed as incurred.

We expect our research and development expenses to increase significantly as we increase

staffing to support aircraft engineering and software development, build aircraft prototypes and continue to explore and develop technologies.

We cannot determine with certainty the timing, duration or the costs

necessary to complete the design, development, certification, and manufacturing of our TriFan 600 airplane due to the inherently unpredictable

nature of our research and development activities.

Development timelines, the probability of success, and development costs may differ

materially from expectations.

and Marketing Expenses

and marketing costs include activities such as aircraft reservation procurement, public relations and business opportunity advancement.

These functions mainly generate expenses relating to travel, trade show fees and costs, salaries and benefits.

Sales and marketing expenses

are expensed as incurred.

and Administrative Expenses

and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, corporate and business

development, and administrative functions.

General and administrative expenses also include legal fees relating to patent and corporate

matters, including non-capitalizable transaction costs;

professional fees for accounting, auditing, tax and administrative consulting

insurance costs, facility related expenses including maintenance and allocated expenses for rent and other operating costs.

anticipate that general and administrative expenses will increase substantially in the future as we increase our headcount to support

continued research and development and commercialization of the TriFan 600.

Income (Expense)

expense, net consists primarily of (i) interest relating to convertible and promissory notes payable, (ii) amortization of debt discounts

relating to warrants and stock options issued in conjunction with convertible notes, and (iii) interest income on notes receivable.

loss on debt conversions includes primarily the inducement charges incurred by Legacy XTI when it entered into voluntary note conversion

letter agreements with several note holders during the first quarter of 2024.

Per the letter agreements, principal and accrued

interest under the notes was converted at a reduced conversion price into shares of Legacy XTI common stock immediately prior to the

XTI Merger closing time, which converted into shares of the Company’s common stock upon the closing of the XTI Merger.

accounted for these conversions as an inducement and, as such, recognized a loss related to the fair value of the additional shares issued

compared to the original terms of the convertible notes .

Change in fair value of convertible

notes payable represent the remeasurement of certain Legacy XTI convertible notes to fair value.

These notes were converted to

equity prior to the closing of XTI Merger.

in fair value of warrant liability represents the remeasurement of certain Legacy XTI and Legacy Inpixon outstanding warrants to fair

These outstanding warrants were exchanged for common shares of the Company during the second quarter of 2024.

income (expense), net consists of miscellaneous income and expense items.

of Operations

Ended December 31, 2024 compared to the Year Ended December 31, 2023

The Company determined the previously disclosed XTI Merger should be

accounted for as a reverse acquisition with Legacy XTI being considered the accounting acquirer.

Therefore, the consolidated financial

statements included in this report represent a continuation of the financial statements of Legacy XTI and the results of operations of

the accounting acquired entity, Legacy Inpixon, are included in the consolidated financial statements as of the Closing Date and through

the December 31, 2024 reporting date.

following table sets forth selected consolidated financial data and the percentage of period-over-period change:

the Years Ended

(in thousands, except percentages)

Cost of revenues

Operating expenses

Loss from operations

Other income (expense)

Provision for income

used to calculate dollar and percentage changes are based on numbers in the thousands.

calculations in this item, which may be rounded to the nearest hundred thousand, may not

produce the same results.

** Comparisons

between positive and negative numbers and with a zero are not meaningful.

for the year ended December 31, 2024 were $3.2 million compared to $0.0 million for the comparable period in the prior year.

The revenue amount for the year ended December 31, 2024 represents the results of the revenue-generating Industrial IoT segment

following the XTI Merger closing date of March 12, 2024 through the December 31, 2024 reporting date, whereas the Company was

pre-revenue in 2023.

We expect revenue to increase to approximately $5 million for the fiscal year 2025 driven by the revenue-generating Industrial IoT segment.

of revenues for the year ended December 31, 2024 were $1.3 million compared to $0.0 million for the comparable period in the prior year.

The cost of revenues amount for the year ended December 31, 2024 represents the results of the revenue-generating Industrial IoT segment

following the XTI Merger closing date of March 12, 2024 through the December 31, 2024 reporting date, whereas the Company was pre-revenue

Gross profit for the year ended December 31, 2024 was $1.9 million

compared to $0.0 million for the comparable period in the prior year.

The gross profit amount for year ended December 31, 2024 represents

the results of the revenue-generating Industrial IoT segment following the XTI Merger closing date of March 12, 2024 through the December

31, 2024 reporting date, whereas the Company was pre-revenue in 2023.

The Company’s gross margin percentage for the year ended December

31, 2024 was approximately 59%, a lower percentage than Legacy Inpixon reported in previous fiscal years as the Company’s inventory

value was increased to fair value in March 2024 as part of the purchase price allocation accounting relating to the XTI Merger, resulting

in lower margins being recognized on subsequent hardware sales during 2024.

Operating expenses for the year ended December 31, 2024 were $38.9 million

and $7.6 million for the comparable period ended December 31, 2023.

This increase of approximately $31.3 million was primarily

attributable to (i) the inclusion of $9.0 million of Industrial IoT segment’s operating expenses from the XTI Merger closing date

through the December 31, 2024 reporting date, which included a $2.5 million non-cash impairment of intangible assets, (ii) the recognition

of $6.3 million of nonrecurring transaction bonus expense during the second quarter of 2024 as the bonuses became payable upon the

earlier of the closing of qualifying financings or June 30, 2024, (iii) an increase in nonrecurring merger-related transaction costs of

$4.6 million, (iv) an increase in non-cash stock-based compensation expense of approximately $2.5 million, and (v) an aggregate

increase of approximately $8.9 million due to increases in consulting compensation mainly attributable to consulting arrangements entered

into with prior executives of Legacy Inpixon on March 12, 2024, legal and accounting fees relating to capital raising activities during

2024, and public company-related professional fees as the 2023 historical results reflect the operations of a private company, Legacy

The $2.5 million

non-cash impairment of intangible assets during the year ended December 31, 2024 related to the Industrial IoT segment’s Aware

assets and its Nanotron business.

This impairment was driven by the Company’s strategic decision during Q4 2024 to shift away

from the hardware (Nanotron subsidiary) and Aware business lines and to more of a LaaS business model (Intranav subsidiary).

Income (Expense)

Other income (expense) for

the year ended December 31, 2024 was a gain of $1.4 million compared to a loss of $17.5 million for the comparable period ended December

The gain of $1.4 million for the year ended December 31, 2024 was primarily attributable to the Company recognizing a

gain of approximately $12.9 million relating to the remeasurement of convertible notes payable at fair value and interest income of $0.4

million, which was partially offset by (i) interest expense of approximately $1.1 million, (ii) an increase in the fair value of warrant

liability of approximately $0.3 million, (iii) inducement losses on debt conversions of approximately $6.7 million, (iv) loss on conversion

of the Damon note receivable to equity investment of approximately $2.6 million, and (v) a decrease in fair value of the Damon equity

investment and related warrants of approximately $0.4 million and $0.6 million, respectively, when those assets were re-measured as of

the December 31, 2024 reporting date.

loss of $17.5 million for the year ended December 31, 2023 was due primarily to the modifications of certain Legacy XTI convertible notes.

On November 1, 2023, Legacy XTI and certain convertible noteholders agreed to amend the convertible notes to extend the maturity date

and to revise the conversion terms.

The amendment to the convertible notes was accounted for as an extinguishment of debt and reissuance

of the convertible notes in accordance with ASC 470-50, Debt – Modifications and Extinguishments , due to the addition

of a substantive conversion feature.

As Legacy XTI elected to account for these convertible notes using the fair value option, Legacy

XTI measured the convertible notes at a fair value, which resulted in a loss on extinguishment of approximately $6.6 million.

As of December

31, 2023, Legacy XTI re-measured the convertible notes at fair value resulting in the convertible notes balance being increased by $9.1

million, and therefore an additional loss being recognized of $9.1 million.

for Income Taxes

was an income tax provision of approximately $0.02 million for the year ended December 31, 2024 compared to an income

tax benefit of $0.0 for the comparable period in the prior year.

The income tax provision for the year ended December 31, 2024 is

attributable to minimum state income taxes.

and Capital Resources as of December 31, 2024

current capital resources and operating results as of and through December 31, 2024, consist of:

overall working capital deficit of approximately $8.8 million;

of approximately $4.1 million;

net cash used by operating activities for the year ended December 31,

2024 of approximately $22.3 million.

breakdown of our overall working capital deficit is as follows (in thousands):

cash equivalents

Accounts receivable,

net / accounts and related party payables

Prepaid expenses and

other current assets

Accrued expenses and

other current liabilities

Accrued interest

Customer deposits

Operating lease obligation

Deferred revenue

and other receivables / short-term debt

Obligations and Commitments

Contractual obligations are

cash that we are obligated to pay as part of certain contracts that we have entered during our course of business.

Our contractual obligations

consist of operating lease liabilities and acquisition liabilities that are included in our consolidated balance sheet and vendor commitments

associated with agreements that are legally binding.

As of December 31, 2024, the total obligation for operating leases is approximately

$0.4 million, of which approximately $0.1 million is expected to be paid in the next twelve months.

On March 31, 2025, the Company repaid in full the promissory notes

that were issued to Streeterville Capital, LLC on May 1, 2024 and May 24, 2024.

As of the date of this filing, we owed $65,000 under a

secured promissory note with the SBA which is due in 2050.

See Note 9 of the Notes to Consolidated Financial Statements included

elsewhere in this report.

As of December 31, 2024, we received conditional pre-orders under a

combination of non-binding aircraft purchase agreements, reservation deposit agreements, options and letters of intent for aircraft which

generated approximately $1.4 million of cash from customer deposits.

These funds from customer reservation deposits will not be recorded

as revenue until the orders for our TriFan 600 airplane are delivered, which may not be for many years or at all if we do not deliver

the airplanes.

The deposits prioritize orders when the TriFan 600 airplane becomes available for delivery.

Customers making deposits are

not obligated to purchase any airplanes until they execute a definitive purchase agreement.

Customers may request a return of their refundable

deposit any time up until the execution of a purchase agreement.

Customers’ request for a return of their refundable deposits could

adversely affect our liquidity resources and we may be financially unable to return such deposits.

Consulting Agreement with Prior “Legacy

Inpixon” CEO and Subsequent Settlement Agreement

On March 27, 2025, the Company

entered into a settlement agreement with 3AM Investments LLC (an entity controlled by Nadir Ali (“Ali”), the Company’s

former Chief Executive Officer and a former director of the Company) (“3AM”), Grafiti Group LLC (“Grafiti Group”)

and Ali (the “Settlement Agreement”) pursuant to which the Company agreed to settle certain existing obligations owed to

former management.

As a result of the Settlement Agreement, the Company has an outstanding advisory fee obligation to Ali of $1,500,000

(the “Deferred Amount”) as of the date of this report, which is due in $500,000 installments on June 30, 2025, September

30, 2025, and December 31, 2025.

Upon payment of the Deferred Amount in accordance with the terms of the Settlement Agreement, the Ali

Advisory Fees shall be deemed to be satisfied in full and no further amounts shall be payable by the Company to Ali or his affiliated

parties pursuant to the Ali Consulting Agreement dated March 12, 2024.

See Note 18 of the Notes to Consolidated Financial Statements

included elsewhere in this report for more information about the Ali Consulting Agreement.

See Note 23 of the Notes to Consolidated

Financial Statements included elsewhere in this report for more information about the Settlement Agreement.

and Uncertainties

of December 31, 2024, the Company has a working capital deficit of approximately $8.8 million, and cash and cash equivalents of approximately

$4.1 million.

For the year ended December 31, 2024, the Company had a net loss of approximately $35.6 million.

During the year ended

December 31, 2024, the Company used approximately $22.3 million of cash for operating activities.

There can be no assurances that the Company will ever earn revenues

sufficient to support its operations, or that it will ever be profitable.

In order to continue its operations, the Company has historically

supplemented the revenues it earned with proceeds from the sale of our equity, including through our now expired ATM with Maxim (as discussed

below), and debt securities and proceeds from loans and bank credit lines.

We believe that our current revenue, as supplemented by proceeds

from our financings, including the approximately $21.6 million net proceeds we raised in various public offerings of our securities placed

and underwritten by ThinkEquity LLC during the first quarter of 2025, a portion of which was used to fully repay short-term obligations

including the outstanding Streeterville promissory note balances and remaining Strategic Transaction Bonus liability, along with our ability

to defer or eliminate certain operating expenses that are under our control, will provide us with liquidity to fund our planned operating

needs for at least the next twelve months.

According to our current development schedule, we do not expect to obtain FAA type certification and other necessary regulatory approvals

and commence deliveries of the TriFan 600 until 2030 at the earliest.

Therefore, we intend to raise additional capital through debt or

equity financings as we continue to advance the design and certification of the TriFan 600.

See “ – Recent Events –

March 2025 Underwritten Offering” and “ – Recent Events – January 2025 Registered Direct Offering” for more

information about our recent public offerings of our equity securities.

As a result of our failure

to timely file a Current Report on Form 8-K, upon the filing of this Annual Report on Form 10-K, we became ineligible to use Form S-3

until August 2025 at the earliest.

Our inability to use Form S-3 may significantly impair our ability to raise necessary capital to fund

our operations and execute our strategy.

If we seek to access the capital markets through a registered offering during the period of time

that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before

the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we

may incur increased offering and transaction costs and other considerations.

As discussed in Note 10 of

the “Notes to Consolidated Financial Statements” included in Part I, Item 8 of this report, on July 22, 2022, the Company

entered into an Equity Distribution Agreement with Maxim as sales agent (as amended from time to time, the “Equity Distribution

Agreement”), pursuant to which we could offer and sell, from time to time through Maxim, shares of the Company’s common stock

having an aggregate offering amount of up to approximately $83.3 million under our shelf registration statement on Form S-3 (the “ATM”).

The term of the Equity Distribution Agreement expired on December 31, 2024.

Maxim was entitled to compensation at a fixed commission rate

of 3.0% of the gross sales price per share sold excluding Maxim’s costs and out-of-pocket expenses incurred in connection with its

services, including the fees and out-of-pocket expenses of its legal counsel.

During the three months ended December 31, 2024, the Company

sold 948,484 shares of common stock under the Equity Distribution Agreement at per share prices between approximately $10.02 and $47.57,

resulting in net proceeds to the Company of approximately $12.6 million.

During the year ended December 31, 2024, the Company sold 998,447

shares of common stock under the Equity Distribution Agreement at per share prices between approximately $10.02 and $337.36, resulting

in net proceeds to the Company of approximately $22.2 million.

Since the date of the Equity Distribution Agreement through the date

of this report, the Company sold 1,170,561 shares of common stock at per share prices between approximately $4.10 and $465.56 under the

Equity Distribution Agreement, resulting in gross proceeds of approximately $52.2 million.

and Capital Resources

Company’s net cash flows used in operating, investing and financing activities for the years ended December 31, 2024 and 2023 and

certain balances as of the end of those periods are as follows (in thousands):

the Years Ended

used in operating activities

Net cash provided by

(used in) investing activities

Net cash provided by

financing activities

of foreign exchange rate changes on cash

increase (decrease) in cash and cash equivalents

As of December 31,

As of December

and cash equivalents

capital deficit

Activities for the year ended December 31, 2024

cash used in operating activities during the year ended December 31, 2024 was approximately $22.3 million.

The cash flows

related to the year ended December 31, 2024 consisted of the following (in thousands):

Non-cash income and expenses

change in operating assets and liabilities

cash used in operating activities

non-cash income and expense of approximately $5.8 million consisted primarily of the following (in thousands):

Depreciation and amortization

Amortization of intangible assets

Amortization of right-of-use-asset

Non-cash interest expense, net

Stock-based compensation

Impairment of intangible assets

Loss on conversion of note receivable to equity investment

Unrealized loss on equity investment

Change in fair value of convertible notes payable

Inducement loss on debt conversions

Change in fair value of warrant liability

Total non-cash expenses

net cash used in the change in operating assets and liabilities aggregated approximately $7.5 million and consisted primarily of

the following (in thousands):

in accounts receivable and other receivables

Decrease in inventory,

prepaid expenses and other current assets and other assets

Increase in accounts

payable and related party payables

Increase in accrued liabilities

and other liabilities

Increase in accrued interest

Decrease in deferred

in operating lease obligation

cash used in the changes in operating assets and liabilities

Activities for the year ended December 31, 2023

cash used in operating activities during the years ended December 31, 2023 was approximately $4.2 million.

The cash flows

related to the year ended December 31, 2023 consisted of the following (in thousands):

Non-cash income and expenses

Net change in operating assets and liabilities

Net cash used in operating activities

non-cash income and expense of approximately $18.5 million consisted primarily of the following (in thousands):

Depreciation and amortization

Amortization of intangible assets

Non-cash interest expense, net

Stock-based compensation

Change in fair value of JV obligation

Change in fair value of convertible notes payable

Loss on extinguishment of convertible notes payable

Change in fair value of warrant liability

Total non-cash expenses

net use of cash in the change in operating assets and liabilities aggregated approximately $2.3 million and consisted primarily

of the following (in thousands):

Decrease in accounts receivable and other receivables

Increase in prepaid expenses and other current assets

Increase in accounts payable and related party payables

Increase in accrued liabilities and other liabilities

Increase in accrued interest

Net use of cash in the changes in operating assets and liabilities

from Investing Activities as of December 31, 2024 and 2023

cash flows provided by investing activities during the year ended December 31, 2024 was approximately $2.9 million compared to $0.02 million

for the year ended December 31, 2023.

Cash flows related to investing activities during the year ended December 31, 2024 consist primarily

of the cash assumed from Legacy Inpixon in connection with the XTI Merger.

from Financing Activities as of December 31, 2024 and 2023

cash flows provided by financing activities during the year ended December 31, 2024 was $23.6 million.

During the year ended December

31, 2024, the Company received incoming cash flows of approximately $22.2 million from the ATM, $2.0 million from promissory notes issued

to Streeterville Capital, LLC, and approximately $1.0 million in proceeds from an existing promissory note arrangement with Legacy Inpixon.

During the year ended December 31, 2024, the Company repaid approximately $0.9 million towards outstanding promissory notes and redeemed

approximately $0.8 million of Series 9 preferred stock.

cash flows provided by financing activities during the year ended December 31, 2023 was $4.1 million.

During the year ended December

31, 2023, the Company received proceeds of $0.8 million from the issuance of convertible notes, received $0.2 million in proceeds from

the sale of common stock, and received $3.1 million in proceeds from promissory notes with David Brody and Legacy Inpixon.

Sheet Arrangements

do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts.

We do not engage in trading

activities involving non-exchange traded contracts.

Issued Accounting Standards

a discussion of recently issued accounting pronouncements, please see Note 3 to our financial statements, which are included in this

report beginning on page F-1.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company, we are not required to provide this information.

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 5. Market for Registrant’s Common Equity