Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 170

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 170
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XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended June 30, 2025 and
2024, the Company recognized compensation expense of $0 and approximately $1.3 million, respectively, which is included in general and
administrative expenses on the condensed consolidated statements of operations, relating to the Ali Consulting Agreement. During the
six months ended June 30, 2025 and 2024, the Company recognized compensation expense of approximately $2.3 million and $1.6 million,
respectively, which is included in general and administrative expenses on the condensed consolidated statements of operations, relating
to the Ali Consulting Agreement. As of December 31, 2024, the Company owed Mr. Ali accrued consulting fees of approximately $0.2 million,
which is included in accounts payable on the accompanying consolidated balance sheets.

Pursuant to the Settlement Agreement (see “Settlement
Agreement” below in this note), as of June 30, 2025, the Company owed Mr. Ali accrued consulting fees of $1.0 million, which
is included in accounts payable on the accompanying condensed consolidated balance sheets.

On July 24, 2023, the compensation committee of
the Board (the “Compensation Committee”) of Legacy Inpixon adopted a Strategic Transaction Bonus Plan, which was amended on
March 11, 2024 (the “Strategic Transaction Bonus Plan”), and was intended to provide incentives to certain employees, including
Mr. Ali, and other service providers to remain with the Company through the consummation of a qualifying transaction. As of December 31,
2024, the Company had a transaction bonus obligation of approximately $2.1 million payable to Mr. Ali, which is included in accrued expenses
and other current liabilities on the accompanying condensed consolidated balance sheets. On March 31, 2025, the Company repaid the remaining
transaction bonus obligation to Mr. Ali pursuant to the Settlement Agreement (see “Settlement Agreement” below in this
note).

Settlement Agreement

On March 27, 2025 (the “Effective Date”),
the “Company entered into a settlement agreement (the “Settlement Agreement”) with 3AM, Grafiti Group LLC (“Grafiti
Group”) and Nadir Ali (“Ali”). The terms of the Settlement Agreement include:

    ● Ter