Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 89

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 89
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 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.

45

Other
Income (Expense)

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.

Inducement
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. The Company
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.

Change
in fair value of warrant liability represents the remeasurement of certain Legacy XTI and Legacy Inpixon outstanding warrants to fair
value. These outstanding warrants were exchanged for common shares of the Company during the second quarter of 2024.

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

Results
of Operations

Year
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 In