# XTI Aerospace, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [XTI Aerospace, Inc.](/companies/xtia.md) (CIK 1529113)
- Form: 10-Q
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 16:56 ET
- Period: 2025-06-30
- Accession: 0001213900-25-076767
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1529113/000121390025076767/ea0250350-10q_xtiaero.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1529113/000121390025076767/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $600.0k | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.1m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $117.0k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $266.0k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $483.0k | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $818.0k | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $1.9m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $3.7m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$11.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$21.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-04-01 to 2025-06-30 | $1.0k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2025-01-01 to 2025-06-30 | $218.0k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $9.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | −$6.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$20.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$33.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$2.93 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$6.41 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$2.93 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$6.41 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 7,121,837 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 5,263,609 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$22.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $103.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $20.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $24.2m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $35.4m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $21.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $22.1m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $65.0k | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2025-06-30 | $12.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 55,755 characters.

*You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q, particularly in Part II, Item 1A, “Risk Factors.”*

### Overview of Our Business

We are primarily an aircraft development company. We also provide real-time location systems (“RTLS”) for the industrial sector.

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 believe our initial configuration, the TriFan 600 airplane, will be one of the first civilian fixed-wing VTOL airplanes that offers the speed and comfort of a business airplane and the range and versatility of VTOL for a wide range of customer applications, including private aviation for business and high net worth individuals, emergency medical services and regional charter air travel, defining a new category of VTOL that we term the “xVTOL.” The TriFan 600 is a seven-occupant airplane intended to provide point-to-point air travel over distances of over 1,000 miles, fly at twice the speed and three times the range of competing helicopters and cruise at altitudes of up to 25,000 feet. Since 2013, we have been engaged primarily 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, generating pre-orders for 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.

We continue to work to optimize our airplane design for both manufacturing and certification. The development of an xVTOL airplane that meets our business requirements demands significant design and development efforts on all facets of the airplane. We believe that by bringing together a mix of talent with VTOL and traditional commercial aerospace backgrounds, we have built a team that enables us to move through the design, development, and certification of our xVTOL airplane with the Federal Aviation Administration (“FAA”) in an efficient manner, thus allowing us to achieve our end goal of bringing to market our airplane as efficiently as possible.

To date, we have not generated any revenue from aircraft sales because we are still designing and developing our xVTOL airplane. Additionally, we are seeking the necessary governmental approvals to bring the airplane into service. To continue funding these efforts, we will need to raise capital for the foreseeable future. The amount and timing of our future capital needs will depend on various factors, including the progress and results of our airplane’s design and development, our manufacturing operations, and our success in obtaining the required FAA certifications and other government approvals. For instance, any significant delays in securing FAA certifications or other government approvals may force us to raise more capital and could postpone our ability to generate revenue from aircraft sales.

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.

We report financial results for two segments: Commercial Aviation and Industrial IoT. For Industrial IoT, we generate revenue from sales of hardware, software licenses and professional services. During the quarter ended December 31, 2024, we began exploring strategic options to wind down and/or sell the hardware portions of our Industrial IoT business segment in order to shift its focus towards the sales of software products. For Commercial Aviation, the segment is pre-revenue as we are currently developing the TriFan 600 airplane.

### Key Factors Affecting Operating Results

We believe that the growth of our business and our future success are dependent upon many factors, including our ability to retain and develop engineering internal and third-party resources, secure strategic partnerships with suppliers, expand the number of customer purchase orders, locate a facility for further aircraft development and testing, expand on that facility or locate to a new facility for commercial production, build-out production assembly lines in a timely manner, develop ancillary service offerings related to the TriFan 600 such as flight training and maintenance products, and secure the needed financing to achieve FAA certification.

While each of these areas presents significant opportunities for us, they also pose material challenges and risks that we must successfully address to achieve FAA certification of the TriFan 600 and further reach our current aircraft delivery forecasts.

### Corporate Strategy Update

Our primary focus is to power what we term the Vertical Economy™ by delivering high-performance xVTOL solutions that scale from aircraft to innovative technologies and infrastructure. We identify seven areas that comprise the Vertical Economy: manned aircraft, unmanned aircraft, power technology, airspace and infrastructure management, artificial intelligence, aircraft advanced materials and next gen manufacturing. The term “xVTOL” is intended to encompass the broad spectrum of vertical lift technologies within the Vertical Economy, including various aircraft types (e.g., electric VTOL, regional VTOL and drones), operational models (manned and unmanned), supporting technologies (e.g., propulsion systems and aerospace-related artificial intelligence technologies) and customer applications. With the TriFan 600 as our flagship commercial aviation product, we are laying the groundwork for an innovative family of versatile aircraft and solutions addressing passenger travel, logistics, autonomous operations and defense missions that we believe will unlock significant growth and market leadership.

Expanding into autonomous, remotely operated drones is key to our strategic focus. By combining drone technology with VTOL innovation, we believe we are positioning the Company to accelerate the development of both unmanned aerial vehicles and VTOL solutions, expand its market presence, and create new revenue-generating opportunities across multiple industries. We will also be opportunistic and may consider other strategic transactions, which may include, but not be limited to, other alternative investment opportunities, such as minority investments and joint ventures. If we make any acquisitions in the future, we expect that we may pay for such acquisitions with cash, equity securities and/or debt in combinations appropriate for each acquisition.

### Recent Events

#### June 2025 Underwritten Offering

On June 24, 2025, the Company entered into an underwriting agreement with ThinkEquity, as the representative of the underwriters named therein, relating to a firm commitment underwritten public offering (the “June Offering”) of 6,231,200 shares of common stock (the “Shares”), pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 2,911,800 shares of common stock, and common warrants (the “Common Warrants”) to purchase up to 9,143,000 shares of common stock. The combined public offering price for each Share, together with one Common Warrant, was $1.75. The combined public offering price for each Pre-funded Warrant, together with one Common Warrant, was $1.749. Each Share, or a Pre-funded Warrant in lieu thereof, was sold together with one Common Warrant. The Company also granted ThinkEquity a 45-day option to purchase, at the public offering price, less the underwriting discounts and commissions, up to 1,371,000 additional shares of Common Stock (and/or Pre-funded Warrants in lieu thereof) and/or up to 1,371,000 additional Common Warrants or any combination thereof, to cover any over-allotments (the “Over-Allotment Option”). ThinkEquity partially exercised the Over-Allotment Option on June 25, 2025 for 1,371,000 additional Common Warrants.

The June Offering closed on June 26, 2025, resulting in net proceeds to the Company, after deducting commissions and expenses, of approximately $14.7 million. Upon closing of the June Offering, the Company issued ThinkEquity warrants (the “Representative’s Warrants”) as compensation to purchase up to 457,150 shares of Common Stock at an exercise price of $2.1875 per share. The Representative’s Warrants were exercisable immediately upon the date of issuance and expire on the five-year anniversary of the commencement of sales of securities in the June Offering.

During July 2025, the Company closed multiple exercises of the Over-Allotment Option. The Over-Allotment Option was exercised in full resulting in the issuance of 1,371,000 shares of common stock, at the public offering price of $1.75 per share, for net proceeds of approximately $2.2 million.

The Company also issued ThinkEquity additional Representative’s Warrants to purchase an aggregate of 68,551 shares of common stock at an exercise price of $2.1875 per share, subject to adjustments, with the same terms as the Representative’s Warrants issued in connection with the initial closing of the June Offering.

#### Settlement Agreement with Chardan

On or about August 1, 2024, Chardan Capital Markets LLC (“Chardan”) commenced an arbitration (the “Arbitration”) before the Financial Industry Regulatory Authority against the Company and its subsidiary, XTI Aircraft Company (“Aircraft”), related to an engagement letter, dated as of June 7, 2022, by and between Chardan and Aircraft, as amended (the “Engagement Letter”). On or about June 13, 2025, Aircraft filed a counterclaim against Chardan for breach of contract.

On July 8, 2025, Chardan, on the one hand, and the Company and Aircraft, on the other hand, entered into a settlement agreement (the “Chardan Settlement Agreement”), pursuant to which the parties agreed to resolve and settle all claims and matters between them. Pursuant to the Chardan Settlement Agreement, simultaneous with the execution thereof, (i) Chardan, the Company and Aircraft entered into a mutual release, pursuant to which, Chardan, on the one hand, and the Company and Aircraft, on the other hand, released each other from all claims against each other, including all claims related to the Arbitration, and (ii) counsel for the parties executed a joint stipulation whereby Chardan and Aircraft agreed to dismiss with prejudice all claims asserted against each other with respect to the Arbitration, which was filed in the Arbitration. None of the parties made any payments in connection with the Chardan Settlement Agreement and, pursuant to the Chardan Settlement Agreement, the parties agreed that none of the parties owes each other any amount or debt. Pursuant to the Chardan Settlement Agreement, the parties also agreed that the Engagement Letter is terminated and is of no further force or effect.

#### Expansion of Corporate Advisory Board

During the six months ended June 30, 2025, the Company expanded its corporate advisory board, which is now comprised of ten advisory board members led by Michael Tapp, who are helping the Company evaluate strategic opportunities to capitalize on the anticipated demand for the TriFan 600.

### TriFan 600 Engineering Update

During the quarter ended June 30, 2025, we continued to advance the development of the TriFan 600. Below are key development milestones that were achieved during the quarter:

- We finalized the Global Finite Element Model (GFEM) for the latest aircraft configuration (C211.2), a foundational engineering step toward validating structural performance as part of the type certification process.
- We selected Triumph Group Inc.’s gear systems, Kamatics Corporation, and Formsprag LLC’s Formsprag Clutch products to support the development efforts of the drivetrain system.
- The FAA formally assigned the Fort Worth Certification Branch Office (CBO) to oversee TriFan 600 certification activities, an administrative step that establishes our primary FAA point of contact as we continue the type certification process.
- Through a collaboration with Oak Ridge National Laboratory, we continued running Computational Fluid Dynamics (CFD) simulations to support refinement of the updated aircraft configuration’s aerodynamic performance as part of the ongoing design and certification process.
- We held a Technical Familiarization (“Tech Fam”) session with the FAA on aircraft structures, an important step in preparing for the detailed compliance reviews required in the type certification process.
- We opened a Prototyping & Innovation Lab at The HIVE in Grand Forks, North Dakota, to test subscale models of the TriFan 600, including “Sparrow” and “Kestrel,” and to advance flight control systems.
- We entered into a non-binding memorandum of understanding with VerdeGo Aero to explore hybrid-electric propulsion solutions for future aircraft variants, which remains subject to the parties’ execution of a definitive agreement.

In parallel, the development team continued to optimize core elements of the TriFan 600 design, including:

- Ducted fan enhancements to improve cruise performance and efficiency,
- Structural design refinements based on updated loads and material analysis,
- Aerodynamic performance enhancements to the wing and tail surfaces,
- Stability and control improvements aligned with certification objectives, and
- Updates to weight and Center of Gravity (CG) assessments.

We maintain active monthly engagement with the FAA, including ongoing support for Tech Fam sessions with agency subject matter experts. These interactions support continued progress in development and help confirm that our approach remains consistent with applicable regulatory requirements.

We remain focused on advancing the TriFan 600 toward certification and commercialization, with Q2 marking notable progress in both engineering development and regulatory engagement activities.

### Critical Accounting Policies and Estimates

Our condensed 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 GAAP. 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.

The significant accounting policies of the Company are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” section of the Company’s annual report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to the Company’s critical accounting policies and estimates except for the valuation of long-lived and intangible assets and goodwill as noted below.

#### Valuation of Long-lived and Intangible Assets and Goodwill.

We periodically review long-lived assets and certain identifiable intangible assets for impairment in accordance with Accounting Standards Codification (“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.

The 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 are less than 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 higher than the amount currently recorded.

For 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.

For 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 value. 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.

We perform our annual goodwill impairment test required by ASC 350 as of October 1st 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 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 $12 million in goodwill which was allocated to our Industrial IoT reporting unit. 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 2025 and at the Company’s October 1st annual testing date. As of June 30, 2025, management evaluated potential triggers and determined there was a triggering event during the six months ended June 30, 2025 relating to the Industrial IoT reporting unit, in the form of a current period operating and cash flow loss, a consistent history of operating losses, and the revenue results for the current period missing forecasted targets due to (i) the sales cycle to close transactions taking longer than anticipated, and (ii) supply chain issues causing delays in our delivery of Nanotron product to customers. As such, the Company completed a qualitative assessment and determined in the aggregate, it is more likely than not, that the fair value of the IoT reporting unit is less than its carrying value. Therefore, a goodwill impairment of $4.05 million was recognized for the three and six months ended June 30, 2025. One of the key factors in the calculation of the impairment amount is the Company’s forecasted financial performance for the IoT reporting unit. If the projected revenues decreased by 10%, the goodwill impairment amount would have increased by $2.9 million.

### Components of Results of Operations

### Revenue

#### Commercial Aviation

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

#### Industrial IoT

Our 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.

### Operating Expenses

#### Research 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 functions;
- expenses incurred under agreements with third parties such as consultants and contractors; and
- software and technology-related expenses to support computer-aided design of the aircraft, flight simulations, and other technology needs of our engineers.

Research 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.

#### Sales and Marketing Expenses

Sales and marketing costs include activities such as aircraft reservation procurement, brand awareness campaigns, 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.

#### General and Administrative Expenses

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

We 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.

### Other (Expense) Income

Interest 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 extinguishment of debt includes (i) prepayment penalties and other expenses incurred during the six months ended June 30, 2025 as the Company fully repaid the Streeterville promissory notes before the maturity date, and (ii) inducement losses on debt conversions incurred by Legacy XTI when it entered into voluntary note conversion letter agreements with several note holders during the first quarter of 2024.

Change in fair value of convertible notes payable represents the remeasurement of certain Legacy XTI convertible notes to fair value. These notes were converted to equity prior to the closing of XTI Merger.

Change in fair value of warrant liability represents the remeasurement of certain outstanding warrants to fair value.

Other consists of miscellaneous income and expense items.

### RESULTS OF OPERATIONS

### Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024

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

*(in thousands, except percentages)*

|  | Three Months Ended June 30, 2025 Amount | 2024 Amount | $% Change\* | Change\* |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $600 | $1,031 | $(431) | (41.8)% |
| Cost of revenues | $117 | $369 | $(252) | (68.3)% |
| Gross profit | $483 | $662 | $(179) | (27.0)% |
| Operating expenses | $11,613 | $14,589 | $(2,976) | (20.4)% |
| Loss from operations | $(11,130) | $(13,927) | $2,797 | (20.1)% |
| Other (expense) income | $(9,719) | $(771) | $(8,948) | 1,160.6% |
| Income tax benefit (provision) | $(9) | $(12) | $3 | (25.0)% |
| Net loss | $(20,858) | $(14,710) | $(6,148) | 41.8% |

\* Amounts used to calculate dollar and percentage changes are based on numbers in the thousands. Accordingly, calculations in this item, which may be rounded to the nearest hundred thousand, may not produce the same results.

### Revenues

The revenue amount for the periods presented represents the results of the revenue-generating Industrial IoT segment. Revenues for the three months ended June 30, 2025 were $0.6 million compared to $1 million for the comparable period in the prior year for a decrease of approximately $0.4 million. This decline in revenue was primarily attributable to supply chain disruptions caused by regional conflict in the Middle East, which impacted our Israeli supplier’s operations and resulted in delays in hardware product deliveries to our customers.

### Cost of Revenues and Gross Profit

Cost of revenues for the three months ended June 30, 2025 was $0.1 million compared to $0.4 million for the comparable period in the prior year for a decrease of approximately $0.3 million. This decline is consistent with the decline in revenues.

Gross profit for the three months ended June 30, 2025 was $0.5 million compared to $0.7 million for the comparable period in the prior year, a decrease of approximately $0.2 million, which is consistent with the decrease in revenue. The gross margin percentage was 80.5% and 64.2% for the three months ended June 30, 2025 and 2024, respectively. The margin increase is due primarily to a shift in sales mix to higher margin software solutions during the second quarter of 2025.

### Operating Expenses

Operating expenses for the three months ended June 30, 2025 were $11.6 million and $14.6 million for the comparable period ended June 30, 2024, a decrease of $3.0 million. Excluding nonrecurring expenses incurred during the three months ended June 30, 2024 including (i) transaction bonus expense of $6.7 million, (ii) advisory compensation expense of $1.3 million, which related to consulting arrangements entered into with prior executives of Legacy Inpixon, and (iii) professional fees of $0.6 million relating to post-XTI Merger integration efforts including regulatory filings triggered by the merger, operating expenses increased by $5.6 million.

This increase of $5.6 million was driven by the Company’s efforts to secure additional financing during the first half of 2025 leading to (i) an increase in sales and marketing expenses of $0.7 million as the Company invested more in brand development and awareness, trade show participation, and business development initiatives and (ii) an increase in research and development expenses of $0.8 million mainly to advance the development of the TriFan 600 airplane. The Company also recognized $4.1 million of goodwill and intangibles impairment during the three months ended June 30, 2025 relating to its Industrial IoT segment.

### Other (Expense) Income

Other (expense) income for the three months ended June 30, 2025 was a loss of $9.7 million compared to a loss of $0.8 million for the comparable period in the prior year.

The loss of $9.7 million for the three months ended June 30, 2025 was primarily attributable to (i) the recognition of a $5.9 million loss related to the change in fair value of a warrant liability, and (ii) $3.8 million of financing costs incurred relating to the issuance of warrants in connection with the June Offering. The loss of $0.8 million for the three months ended June 30, 2024 was primarily attributable to the recognition of a $0.7 million loss related to the change in fair value of a warrant liability.

### Income Tax Benefit (Provision)

The income tax benefit (provision) for the three months ended June 30, 2025 and 2024 was immaterial.

### Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024

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

*(in thousands, except percentages)*

|  | Six Months Ended June 30, 2025 Amount | 2024 Amount | $% Change | Change\* |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $1,084 | $1,251 | $(167) | (13.3)% |
| Cost of revenues | $266 | $448 | $(182) | (40.6)% |
| Gross profit | $818 | $803 | $15 | 1.9% |
| Operating expenses | $22,350 | $23,607 | $(1,257) | (5.3)% |
| Loss from operations | $(21,532) | $(22,804) | $1,272 | (5.6)% |
| Other (expense) income | $(12,204) | $5,508 | $(17,712) | (321.6)% |
| Income tax benefit (provision) | $6 | $(16) | $22 | (137.5)% |
| Net loss | $(33,730) | $(17,312) | $(16,418) | 94.8% |

\* Amounts used to calculate dollar and percentage changes are based on numbers in the thousands. Accordingly, calculations in this item, which may be rounded to the nearest hundred thousand, may not produce the same results.

### Revenues

The revenue amount for the periods presented represents the results of the revenue-generating Industrial IoT segment. Revenues for the six months ended June 30, 2025 were $1.1 million compared to $1.3 million for the comparable period in the prior year for a decrease of approximately $0.2 million. This decline in revenue was primarily attributable to supply chain disruptions caused by regional conflict in the Middle East, which impacted our Israeli supplier’s operations and resulted in delays in hardware product deliveries to our customers.

### Cost of Revenues and Gross Profit

Cost of revenues for the six months ended June 30, 2025 were $0.3 million compared to $0.4 million for the comparable period in the prior year.

Gross profit for the six months ended June 30, 2025 and 2024 was $0.8 million. Despite a decline in revenue for the six months ended June 30, 2025 compared to the comparable period in the prior year, gross profit for such periods remained consistent because of improved gross margins. The gross margin percentage was 75.5% and 64.2% for the six months ended June 30, 2025 and 2024, respectively. The margin increase is due primarily to a shift in sales mix to higher margin software solutions during the first half of 2025.

### Operating Expenses

Operating expenses for the six months ended June 30, 2025 were $22.4 million and $23.6 million for the comparable period ended June 30, 2024, a decrease of $1.2 million. Excluding nonrecurring expenses incurred during the six months ended June 30, 2024 including (i) merger-related transaction costs of $6.5 million, (ii) transaction bonus expense of $6.7 million, and (iii) professional fees of $0.6 million relating to post-XTI Merger integration efforts including regulatory filings triggered by the merger, operating expenses increased by $12.6 million.

This increase of $12.6 million was due primarily to (i) an increase in research and development expenses of $2.1 million, mainly attributable to the development of the TriFan 600, as the Company secured additional financing during the first half of 2025, (ii) an increase in sales and marketing expenses of $1.4 million as the Company invested more in brand development and awareness, trade show participation, and business development initiatives, (iii) an increase in non-cash impairment of goodwill and intangible assets of $4.7 million relating to the Industrial IoT segment, (iv) an increase in nonrecurring consulting compensation expense of $0.4 million relating to consulting agreements entered into with the prior executives of Legacy Inpixon on March 12, 2024 that had either expired in 2024 or, in the case of the prior Legacy Inpixon CEO, terminated on March 27, 2025 pursuant to the Settlement Agreement, (v) an increase in the Industrial IoT segment’s general and administrative expenses of $0.4 million as the results for the six months ended June 30, 2024 only reflect the activity of the segment since the closing of the XTI Merger on March 12, 2024, and (vi) an aggregate increase of approximately $3.6 million due to (a) increases in legal and accounting fees relating to capital raising activities during the first half of 2025, (b) increase in administrative headcount to support operations growth, and (c) increases in public company-related professional fees as the 2024 historical results reflect the operations of a private company, Legacy XTI, from January 1, 2024 through the March 12, 2024 closing date of the XTI Merger.

### Other (Expense) Income

Other (expense) income for the six months ended June 30, 2025 was a loss of $12.2 million compared to a gain of $5.5 million for the comparable period ended June 30, 2024. The loss during the six months ended June 30, 2025 was primarily driven by (i) $5.8 million of financing costs incurred relating to the issuance of warrants in connection with the March Offering and June Offering, (ii) the recognition of a $5.4 million loss related to the change in fair value of a warrant liability, and (iii) a loss on extinguishment of debt of $0.4 million.

The gain during the six months ended June 30, 2024 was primarily attributable to the Company recognizing income of approximately $12.9 million relating to the remeasurement of convertible notes at fair value during the six months ended June 30, 2024, partially offset by inducement losses on debt conversions of approximately $6.7 million incurred during the six months ended June 30, 2024.

### Income Tax Benefit (Provision)

The income tax benefit (provision) for the six months ended June 30, 2025 and 2024 was immaterial.

### Liquidity and Capital Resources

Our current capital resources and operating results as of and through June 30, 2025, consist of:

1\) working capital of approximately $2.4 million, adjusted to approximately $16.9 million when excluding derivative warrant liabilities;

2\) cash and cash equivalents of approximately $20.0 million; and

3\) net cash used by operating activities for the six months ended June 30, 2025 of $22 million.

The breakdown of our working capital as of the periods indicated below is as follows (in thousands):

| Working Capital Current Assets | June 30, 2025 | December 31, 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Cash and cash equivalents | $20,046 | $4,105 | $15,941 |
| Accounts receivable, net | 338 | 706 | (368) |
| Other receivables | 48 | 538 | (490) |
| Inventories | 2,490 | 2,214 | 276 |
| Prepaid expenses and other current assets | 1,290 | 1,018 | 272 |
| **Total Current Assets** | 24,212 | 8,581 | 15,631 |
| **Current Liabilities** |  |  |  |
| Accounts payable and related party payables | 2,685 | 5,538 | (2,853) |
| Accrued expenses and other current liabilities | 1,822 | 6,703 | (4,881) |
| Accrued interest | 342 | 522 | (180) |
| Customer deposits | 1,350 | 1,350 | — |
| Warrant liability | 14,564 | — | 14,564 |
| Operating lease obligation, current | 95 | 119 | (24) |
| Deferred revenue | 979 | 532 | 447 |
| Short-term debt | — | 2,657 | (2,657) |
| **Total Current Liabilities** | 21,837 | 17,421 | 4,416 |
| **Net Working Capital (Deficit)** | $2,375 | $(8,840) | $11,215 |

### Balance Sheet Improvement

During the six months ended June 30, 2025, we raised approximately $41.8 million in net proceeds through (i) our now expired ATM with Maxim, (ii) public offerings of our securities placed and underwritten by ThinkEquity LLC, and (iii) the exercise of warrants issued in connection with the March Offering and the June Offering. The proceeds from these capital raises and warrant exercises allowed us to significantly reduce debt and other obligations, while progressing the development of the TriFan 600 airplane. The following summarizes the improvements to our balance sheet from December 31, 2024 to June 30, 2025:

- Cash and cash equivalents increased by approximately $15.9 million primarily due to the net proceeds received from the June Offering.
- Net working capital increased by approximately $11.2 million or by approximately $25.8 million when excluding derivative warrant liabilities.
- In March 2025, we repaid in full the outstanding secured promissory notes issued to Streeterville, which resulted in the release of Streeterville’s security interest in the assets of XTI Aircraft Company. As of June 30, 2025, we had less than $0.1 million of interest-bearing debt outstanding, which matures in 2050.
- In March 2025, we redeemed the remaining outstanding shares of Series 9 Preferred Stock, leaving zero shares of Series 9 Preferred Stock issued and outstanding as of June 30, 2025. The Series 9 Preferred Stock had restricted our ability to raise capital, as we were prohibited from taking certain actions without prior written consent from the holders of the Series 9 Preferred Stock.
- In March 2025, we repaid the remaining Strategic Transaction Bonus Plan obligation to prior Legacy Inpixon management, which was the primary driver for the approximate $4.9 million decline in accrued expenses and other current liabilities from December 31, 2024 to June 30, 2025.
- In March 2025, we repaid the accounts payable and most commitments that were inherited from Legacy Inpixon. A remaining deferred consulting fee commitment of $1.0 million is still owed to Nadir Ali, the Company’s former Chief Executive Officer, which is payable in two $500,000 installments during the remaining fiscal year 2025.

We believe the Company’s ability to raise capital has been favorably impacted by (i) the reduction of obligations either assumed from Legacy Inpixon or created by the XTI Merger closing and (ii) the elimination of the Streeterville secured debt and equity instruments with fundraising restrictions.

### Contractual 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 merger-related transaction liabilities that are included in our condensed consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of June 30, 2025, the total obligation for capitalized operating leases was approximately $0.3 million, of which approximately $0.1 million is expected to be paid in the next twelve months.

#### Customer Deposits

As of June 30, 2025, 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 aircraft are delivered, which may not be for many years or at all if we do not deliver the aircraft. The deposits prioritize orders when the aircraft becomes available for delivery. Customers making deposits are not obligated to purchase aircraft 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.

#### Commitment to Nadir Ali

As disclosed in Note 17 of the condensed consolidated financial statements, the Company has a remaining commitment to pay Nadir Ali deferred consulting fees of $1,000,000 by wire transfer of immediately available funds in two equal installments of $500,000 each on September 30, 2025 and December 31, 2025.

### Risks and Uncertainties; Sources of Liquidity

As of June 30, 2025, the Company has working capital of approximately $2.4 million, adjusted to $16.9 million when excluding derivative warrant liabilities, and cash and cash equivalents of approximately $20.0 million. For the six months ended June 30, 2025, the Company had a net loss of approximately $33.7 million. During the six months ended June 30, 2025, the Company used approximately $22.0 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 and debt securities and proceeds from loans and bank credit lines. The Company has incurred net losses and negative operating cash flows from operations since the XTI Merger completed on March 12, 2024, and the Company expects to continue to incur losses and negative operating cash flows for the foreseeable future until it commences sustainable commercial operations of the TriFan 600 airplane. Since the XTI Merger, the Company has funded its operations primarily with proceeds from equity financings, including through our now expired ATM with Maxim and three public offerings completed in January 2025, March 2025 and June 2025, and through the issuance of promissory notes. We believe that our current revenue, as supplemented by proceeds from our financings, including the approximately $36.4 million net proceeds we raised in various public offerings of our securities placed and underwritten by ThinkEquity during the first six months of 2025, a portion of which was used to fully repay short-term obligations including the outstanding Streeterville promissory note balances, 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.

#### ThinkEquity Waiver and Filing of Shelf Registration Statement on Form S-3

As disclosed in Note 9 of the Notes to Condensed Consolidated Financial Statements, on June 24, 2025, the Company entered into an underwriting agreement with ThinkEquity, pursuant to which the Company agreed not to, without ThinkEquity’s prior consent, offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of its shares of common stock or securities convertible into common stock or file any registration statement relating to the offering of any shares of its capital stock for a period of 60 days after the date of the underwriting agreement (the “Lock-Up Period”). On August 1, 2025, the Company entered into a waiver agreement with ThinkEquity (the “Waiver”), pursuant to which ThinkEquity agreed to waive the Lock-Up Period solely in connection with a potential public offering of the Company’s securities (the “Potential Offering”) and to allow the Company to file a shelf registration statement on Form S-3 in connection with the Potential Offering. The Company filed a shelf registration statement on Form S-3 on August 1, 2025, which was declared effective by the SEC on August 12, 2025, pursuant to which the Company may offer and sell, from time to time, in one or more offerings, up to $1 billion in any combination of common stock, preferred stock, depositary shares, debt securities, warrants, units and subscription rights until such shelf registration statement expires in August 2028.

#### Long-Term Liquidity Requirements

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. We expect to fund our operations primarily through equity and/or debt financings at least until we commence sustainable commercial operations of the TriFan 600.

Equity financing may result in dilution to the interests of our existing stockholders and could involve issuing securities with rights, preferences, or privileges senior to those of existing common stockholders. Similarly, debt financing could involve instruments with terms that supersede those of preferred or common stockholders and may include operational restrictions. It is important to note that capital markets have experienced volatility in the past and may do so again, which could impact our ability to raise funds on favorable terms or at all.

We currently do not have material cash obligations related to existing contracts. As a result, our future cash needs are closely tied to management’s strategic decisions regarding the pace and priorities of short- and long-term initiatives. These requirements are subject to fluctuation based on operational choices, including the timing and scale of infrastructure and development of sub-scale and full-scale test aircraft. Factors influencing our future capital needs include revenue growth, aircraft pre-order deposit timing, expansion of sales and marketing efforts, and the scope of development initiatives.

We may also pursue strategic acquisitions or investments in complementary businesses, technologies, or products, which could necessitate additional financing. If we are unable to raise additional capital when needed or on acceptable terms, it could limit our ability to innovate, develop, and compete effectively—ultimately affecting our business performance and financial condition. In such a case, we may be forced to reduce or delay investments in manufacturing, infrastructure, and R&D, or adjust our expansion plans—any of which could have a material adverse impact on our operations and long-term prospects.

#### Cash Flows

The Company’s net cash flows used in operating, investing and financing activities for the three months ended June 30, 2025 and 2024 and certain balances as of the end of those periods are as follows (in thousands):

|  | For the Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(21,983) | $(8,190) |
| Net cash (used in) provided by investing activities | (103) | 2,911 |
| Net cash provided by financing activities | 37,688 | 11,059 |
| Effect of foreign exchange rate changes on cash | 339 | (6) |
| Net increase in cash and cash equivalents | $15,941 | $5,774 |

|  | As of June 30, 2025 | As of December 31, 2024 |
| --- | ---: | ---: |
| Cash and cash equivalents | $20,046 | $4,105 |
| Working capital (deficit) | $2,375 | $(8,840) |

47

### Operating Activities for the six months ended June 30, 2025

Net cash used in operating activities during the three months ended June 30, 2025 was approximately $22.0 million. The cash flows related to the three months ended June 30, 2025 consisted of the following (in thousands):

|  |  |
| --- | ---: |
| Net loss | $(33,730) |
| Non-cash income and expenses | 17,654 |
| Net change in operating assets and liabilities | (5,907) |
| Net cash used in operating activities | $(21,983) |

The non-cash income and expense of approximately $17.7 million consisted primarily of the following (in thousands):

|  |  |
| ---: | --- |
| $68 | Depreciation and amortization |
| 152 | Amortization of intangible assets |
| 76 | Amortization of right-of-use asset |
| 145 | Non-cash interest expense, net of interest income |
| 1,177 | Stock-based compensation |
| 4,049 | Impairment of goodwill |
| 631 | Impairment of intangible assets |
| 421 | Loss on extinguishment of debt |
| 5,795 | Warrant issuance expense |
| 5,431 | Change in fair value of warrant liability |
| (291) | Other |
| $17,654 | Total non-cash expenses |

The net cash used in the change in operating assets and liabilities aggregated approximately $5.9 million and consisted primarily of the following (in thousands):

|  |  |
| ---: | --- |
| $401 | Decrease in accounts receivable and other receivables |
| 94 | Decrease in inventories, prepaid expenses and other current assets and other assets |
| (1,865) | Decrease in accounts payable and related party payables |
| (4,905) | Decrease in accrued expenses and other current liabilities |
| 67 | Increase in accrued interest |
| 376 | Increase in deferred revenue |
| (75) | Decrease in operating lease obligation |
| $(5,907) | Net cash used in the changes in operating assets and liabilities |

The decrease in accrued expenses and other current liabilities of approximately $4.9 million was mainly attributable to (i) cash payments to settle the remaining accrued transaction bonuses and consulting fees owed to prior Legacy Inpixon executives, and (ii) payment of accrued employee bonuses.

### Operating Activities for the six months ended June 30, 2024

Net cash used in operating activities during the six months ended June, 2024 was approximately $8.2 million. The cash flows related to the six months ended June 30, 2024 consisted of the following (in thousands):

|  |  |
| --- | ---: |
| Net loss | $(17,312) |
| Non-cash income and expenses | 398 |
| Net change in operating assets and liabilities | 8,724 |
| Net cash used in operating activities | $(8,190) |

The non-cash income and expense of approximately $0.4 million consisted primarily of the following (in thousands):

|  |  |
| ---: | --- |
| $47 | Depreciation and amortization expenses |
| 235 | Amortization of intangible assets |
| 92 | Amortization of right-of-use asset |
| 173 | Non-cash interest expense, net of interest income |
| 5,733 | Stock-based compensation |
| (12,882) | Change in fair value of convertible notes payable |
| 6,732 | Loss on extinguishment of debt |
| 281 | Change in fair value of warrant liability |
| (13) | Other |
| $398 | Total non-cash expenses |

The net cash provided by the change in operating assets and liabilities aggregated approximately $8.7 million and consisted primarily of the following (in thousands):

|  |  |
| ---: | --- |
| $309 | Decrease in accounts receivable and other receivables |
| 302 | Decrease in inventory, prepaid expenses and other current assets and other assets |
| 1,981 | Increase in accounts payable |
| 6,494 | Increase in accrued expenses and other liabilities |
| 86 | Increase in accrued interest |
| (354) | Decrease in deferred revenue |
| (94) | Decrease in operating lease obligation |
| $8,724 | Net cash provided by the changes in operating assets and liabilities |

### Cash Flows from Investing Activities for the six months ended June 30, 2025 and 2024

Net cash flows used in investing activities during the six months ended June 30, 2025 was approximately $0.1 million. Net cash flows provided by investing activities during the six months ended June 30, 2024 was approximately $2.9 million. Cash flows related to investing activities during the six months ended June 30, 2024 consist primarily of the cash assumed from Legacy Inpixon in connection with the XTI Merger.

### Cash Flows from Financing Activities for the six months ended June 30, 2025 and 2024

Net cash flows provided by financing activities during the six months ended June 30, 2025 was approximately $37.7 million. During the six months ended June 30, 2025, the Company received incoming cash flows of $1.7 million from the now expired ATM, $36.4 million from the sale of common stock and warrants via three public offerings, and $3.8 million from the exercise of warrants issued in connection with the public offerings. During the six months ended June 30, 2025, the Company paid $2.7 million to fully settle the two outstanding promissory note obligations with Streeterville and $1.4 million to redeem the remaining outstanding Series 9 Preferred Stock.

Net cash flows provided by financing activities during the six months ended June 30, 2024 was approximately $11.1 million. During the six months ended June 30, 2024, the Company received incoming cash flows of $8.5 million from the now expired ATM, $2.0 million from promissory notes issued to Streeterville, and $1.0 million in proceeds from an existing promissory note arrangement with Legacy Inpixon. During the six months ended June 30, 2024, the Company repaid $0.5 million towards outstanding promissory notes.

### Off-Balance Sheet Arrangements

We 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.

### Recently Issued Accounting Standards

For a discussion of recently issued accounting pronouncements, please see Note 3 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

## Controls and procedures

As filed, 2,216 characters.

### Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Internal controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized, recorded and reported; and (2) our assets are safeguarded against unauthorized or improper use, to permit the preparation of our condensed consolidated financial statements in conformity with GAAP.

We conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

### Changes in Internal Controls

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the quarter ended June 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

### Limitations of the Effectiveness of Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations of any control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

## Risk factors

As filed, 10,412 characters.

We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by these risks. In addition to the risk factors set forth below and the other information set forth in this Form 10-Q, you should carefully consider the factors disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 15, 2025, which report is incorporated by reference herein, all of which could materially affect our business, financial condition and future results.

***Adverse judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results and cash flows.***

We may be a party to claims that arise from time to time in the ordinary course of our business, which may include those related to, for example, our securities offerings, contracts, sub-contracts, protection of confidential information or trade secrets, adversary proceedings arising from customer bankruptcies, employment of our workforce and immigration requirements or compliance with any of a wide array of state and federal statutes, rules and regulations that pertain to different aspects of our business.

Additionally, we are and we may be made a party to future claims relating to the XTI Merger. On December 6, 2023, Xeriant, Inc. (“Xeriant”) filed a complaint in the United States District Court for the Southern District of New York 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 alleges that it provided intellectual property, expertise, and capital in connection with Legacy XTI’s TriFan 600 aircraft and that it 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 including breach of contract, fraud, unjust enrichment, and misappropriation of confidential information. It seeks damages in excess of $500 million, injunctive relief, a royalty obligation, and other equitable relief. On March 13, 2024, Legacy XTI moved to dismiss portions of the second amended complaint. The Court 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. Xeriant has moved to dismiss Legacy XTI’s amended counterclaims, and that motion remains pending. The Court has denied Xeriant’s renewed motion to stay discovery. On July 10, 2025, XTI filed a letter motion requesting a conference to address: (i) ongoing deficiencies in Xeriant’s discovery responses; and (ii) Xeriant’s untimely service of discovery requests on XTI, which were served more than three months after the applicable deadline. The Court granted XTI’s letter motion on the same day, and held a conference on July 18, 2025. During the conference, the Court ordered: (i) an extension of all discovery deadlines by three months, through November 24, 2025; (ii) an extension of expert discovery through February 16, 2026; and (iii) that the parties finalize a protective order and Electronically Stored Information (“ESI”) protocol by July 25, 2025. The parties subsequently submitted a stipulated protective order and ESI protocol, which the Court entered on July 28, 2025. The parties are continuing to exchange written discovery and will be conducting depositions. The litigation remains in the early stages of discovery. The Company believes the claims against Legacy XTI are without merit and intends to continue to vigorously defend against them. At this time, the Company is unable to predict the outcome of this matter or estimate the likelihood or magnitude of a potential loss, if any.

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 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 the timing and, if the insurers prevail, the amount of our available insurance coverage for a particular claim.

We may also be required to initiate expensive litigation or other proceedings to protect our business interests. There is a risk that we will not be successful or otherwise be able to satisfactorily resolve such claims or litigation. Litigation and other legal claims are subject to inherent uncertainties. Those uncertainties include, but are not limited to, litigation costs and attorneys’ fees, unpredictable judicial or jury decisions and the differing laws and judicial proclivities regarding damage awards among the states in which we operate. Unexpected outcomes in such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such proceedings, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our current financial status may increase our default and litigation risks and may make us more financially vulnerable in the face of threatened litigation.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-076767. Last ingested by Listed: Nov 6, 2026, 18:14 ET. No prices; not investment advice.