Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 159

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 159
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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Investment
in Equity Securities

On
October 23, 2023, a Business Combination Agreement (the “Damon Business Combination Agreement”) was entered into by and among
XTI, Grafiti Holding Inc., 1444842 B.C. LTD (“Amalco Sub”), and Damon Motors Inc. (“Damon”), pursuant to which
Damon combined and merged with Amalco Sub, a British Columbia corporation and a wholly-owned subsidiary of Grafiti Holding, Inc., with
Damon continuing as the surviving entity and a wholly-owned subsidiary of Grafiti Holding, Inc. (the “Grafiti Holding Transaction”).
The Damon Business Combination closed in November 2024.

On
October 26, 2023, Legacy Inpixon purchased a convertible note through a private placement in aggregate principal amount of $3.0 million
for a purchase price of $3.0 million paid in cash from Damon. Interest on the convertible note accrues at 12% per annum. The note was
subsequently amended in November 2024. As amended, the note was set to mature on November 30, 2024. The convertible note is subject to
certain conversion features which include qualified financing, and/or qualified transaction, as defined in the securities purchase agreement.
The note was required to convert upon Damon Motors Inc.’s completion of the public company event. The convertible note receivable
is not traded in active markets and its fair value was determined using a present value technique. The convertible note receivable is
accounted for as an available-for-sale debt security based on “Level 3” inputs, which consist of unobservable inputs and
reflect management’s estimates of assumptions that market participants would use in pricing the asset, with unrealized holding
gains and losses excluded from earnings and reported in other comprehensive income (loss).

On
November 18, 2024, Damon completed the Grafiti Holding Transaction which converted the Company’s note receivable into 402,338 shares
of Damon’s common stock. The carrying value of the note receivable at conversion was approximately $3.7 million. The fair value
of the shares received was approximately $1.0 million at the time of conversion and the shares received are accounted for as a marketable
equity security and