Transaction sharpens strategic focus, reduces cost structure, and supports path to profitability in 2026 ENGLEWOOD, Colo., Feb. 5, 2026 /PRNewswire/ -- XTI Aerospace, Inc. (Nasdaq: XTIA) ("XTI" or the "Company"), an aerospace technology company focused on building and scaling its newly acquired Drone Nerds LLC platform for enterprise and government customers, announced that it has completed the sale of its real-time location systems ("RTLS") business by transferring all of the shares of Inpixon GmbH, a Ger ...

Financial Performance - XTI Aerospace closed a $18.5 million net public offering in September 2025, significantly enhancing its balance sheet and liquidity for ongoing engineering work [2]. - Cash and cash equivalents increased to $32.2 million as of September 30, 2025, up from $4.1 million at December 31, 2024, primarily due to the proceeds from the public offering [6]. - Stockholders' equity grew to $10.5 million as of September 30, 2025, up from $6.6 million at December 31, 2024, reflecting new capital raised [6]. - A $25 million strategic investment from Unusual Machines was secured, strengthening the balance sheet and aligning with the domestic drone ecosystem [8]. - XTI's working capital position improved to $1.1 million, or $29.3 million excluding warrant liabilities [6]. Product Development - The company completed initial flight operations for the Sparrow and Kestrel prototypes, validating aerodynamic and stability models for the TriFan 600 [3]. - The TriFan 600 program is on track for a piloted demonstrator in 2027, with ongoing subscale aircraft testing and FAA engagement [10]. - The Valkyrie Vanguard Platform was announced, integrating AI and advanced materials into next-generation VTOL development, enhancing digital-twin capabilities [9]. - The company plans to advance supplier integration across avionics, propulsion, structures, and hybrid-electric components as part of its strategic priorities [10]. Strategic Acquisitions - XTI acquired Drone Nerds, adding a profitable business with over $100 million in revenue for 2024, enhancing its strategic posture in the drone industry [8].

Revenue Generation and Financial Performance - The company has not generated any revenue from aircraft sales as it is still in the design and development phase of the xVTOL airplane, specifically the TriFan 600[230]. - The Company has not generated revenue from the Commercial Aviation segment as it continues to design and develop the TriFan 600 airplane[270]. - Revenues for Q3 2025 were $2.5 million, a 171% increase from $0.9 million in Q3 2024, primarily driven by a $1.3 million increase in hardware revenue due to improved supply chain conditions[284]. - For the nine months ended September 30, 2025, revenues were $3.6 million, a 64% increase from $2.2 million in the same period of 2024, with hardware revenue contributing $0.9 million and recurring software revenue increasing by $0.4 million[292]. - The company reported a net loss of approximately $47.2 million for the nine months ended September 30, 2025, with cash used in operating activities amounting to approximately $30.4 million[309][318]. - Net loss for Q3 2025 was $13.4 million, a 203% increase from a net loss of $4.4 million in Q3 2024[284]. - Other expense for the nine months ended September 30, 2025 was a loss of $10.8 million, compared to a gain of $5.3 million in the same period of 2024, primarily due to financing costs and changes in fair value of warrant liabilities[297]. Strategic Acquisitions and Investments - The company acquired Drone Nerds and Anzu Robotics for a total consideration of approximately $41.6 million, which includes $20 million in cash and $11.9 million in promissory notes[239]. - The Company made a strategic investment of $2 million in Valkyrie Sciences Holdings LLC through a convertible promissory note, with an interest rate of 10% per annum[252]. - The company acquired 100% of Drone Nerds and Anzu Robotics for a total purchase consideration of $40.0 million, which included $20.0 million in cash and $11.9 million in promissory notes[310]. Research and Development - Research and development expenses are expected to increase significantly as the Company builds aircraft prototypes and develops technologies for the TriFan 600[273]. - The TriFan 600 program made notable progress in engineering development, completing initial flight operations for subscale prototypes during Q3 2025, with a full-scale demonstrator expected to be completed in 2027[258]. - The company is focused on developing a family of versatile aircraft and solutions within the Vertical Economy, which includes various aircraft types and supporting technologies[237]. Operational and Administrative Expenses - Operating expenses for Q3 2025 increased to $15.9 million from $4.7 million in Q3 2024, reflecting a 235% rise attributed to increased headcount and operational growth[288]. - Operating expenses for the nine months ended September 30, 2025 were $38.2 million, up 35% from $28.3 million in the prior year, driven by increases in research and development, sales and marketing, and general and administrative expenses[296]. - General and administrative expenses are anticipated to rise substantially as the Company increases headcount to support research and development and commercialization efforts[277]. Financing Activities and Cash Flow - The company raised $25 million through a private placement of Series 10 Convertible Preferred Stock, receiving net proceeds of approximately $23.1 million after expenses[242]. - The September Offering closed on September 15, 2025, resulting in net proceeds of approximately $18.5 million after deducting placement agent fees and expenses of about $1.5 million[254]. - Net cash flows provided by financing activities for the nine months ended September 30, 2025, were approximately $58.6 million, significantly higher than the $11.9 million reported for the same period in 2024[323][324]. - Cash and cash equivalents increased by approximately $28.1 million from December 31, 2024, primarily due to net proceeds from public offerings[305]. - Cash and cash equivalents as of September 30, 2025, were approximately $32.2 million, with working capital adjusted to $29.3 million excluding derivative warrant liabilities[309]. Future Plans and Certifications - The company aims to achieve FAA certification for the TriFan 600, which is critical for future revenue generation and operational success[235]. - The company expects to commence deliveries of the TriFan 600 no earlier than 2030 and plans to fund operations primarily through equity and/or debt financings until then[313]. - The company plans to hold a shareholder meeting by January 31, 2026, to obtain approval for the removal of conversion limitations on the Series 10 Preferred Stock[245]. Compliance and Regulatory Engagement - The Company maintains active engagement with the FAA to ensure compliance with regulatory requirements during the development of the TriFan 600[259]. - The company does not have any off-balance sheet guarantees or trading activities involving non-exchange traded contracts[325].

Aircraft Development - The company is developing the TriFan 600, a vertical takeoff and landing (VTOL) airplane designed for various applications, including private aviation and emergency medical services, with a range of over 1,000 miles and speeds twice that of competing helicopters [223]. - The company achieved several key development milestones for the TriFan 600, including finalizing the Global Finite Element Model and selecting key components for the drivetrain system [239]. - The FAA has assigned the Fort Worth Certification Branch Office to oversee the TriFan 600 certification activities, marking a significant step in the certification process [239]. - The company is actively engaging with the FAA to ensure compliance with regulatory requirements as it advances the TriFan 600 toward certification and commercialization [240]. - The company is exploring hybrid-electric propulsion solutions for future aircraft variants through a collaboration with VerdeGo Aero [239]. - The company expects to commence deliveries of the TriFan 600 by 2030 at the earliest, funding operations primarily through equity and debt financings until then [296]. Financial Performance - Revenues for the three months ended June 30, 2025 were $0.6 million, a decrease of 41.8% compared to $1 million for the same period in 2024, primarily due to supply chain disruptions [266]. - Gross profit for the three months ended June 30, 2025 was $0.5 million, down from $0.7 million in the prior year, with a gross margin percentage of 80.5% compared to 64.2% [268]. - Operating expenses for the three months ended June 30, 2025 were $11.6 million, a decrease of $3 million from $14.6 million in the same period in 2024 [269]. - Revenues for the six months ended June 30, 2025 were $1.1 million, a decrease of 13.3% from $1.3 million in the prior year, also due to supply chain disruptions [275]. - Gross profit for the six months ended June 30, 2025 was $0.8 million, consistent with the prior year, with a gross margin percentage of 75.5% compared to 64.2% [277]. - Operating expenses for the six months ended June 30, 2025 were $22.4 million, a decrease of $1.2 million from $23.6 million in the same period in 2024 [278]. - The company recorded a loss of $9.7 million in other (expense) income for the three months ended June 30, 2025, compared to a loss of $0.8 million in the prior year [271]. - The company reported a net loss of approximately $33.7 million for the six months ended June 30, 2025, compared to a loss of $8.2 million for the same period in 2024 [293]. Capital and Funding - The company raised approximately $14.7 million in net proceeds from a public offering of 6,231,200 shares of common stock, which closed on June 26, 2025 [233]. - The company raised approximately $41.8 million in net proceeds through various public offerings and warrant exercises during the first half of 2025 [286]. - Cash and cash equivalents increased by approximately $15.9 million, primarily due to net proceeds from the June Offering, bringing total cash to approximately $20.0 million as of June 30, 2025 [288][284]. - Net working capital improved by approximately $11.2 million, reaching $2.4 million, adjusted to $16.9 million when excluding derivative warrant liabilities [285][293]. - The company filed a shelf registration statement on Form S-3, allowing it to offer up to $1 billion in securities until August 2028 [295]. Strategic Initiatives - The company is focused on expanding into autonomous, remotely operated drones as part of its strategic initiatives to create new revenue opportunities across multiple industries [231]. - The company has expanded its corporate advisory board to ten members to evaluate strategic opportunities related to the anticipated demand for the TriFan 600 [238]. - The company reported that during the quarter ended December 31, 2024, it began exploring strategic options to wind down and/or sell the hardware portions of its Industrial IoT business segment to focus on software sales [227]. Goodwill and Impairment - A goodwill impairment of $4.05 million was recognized for the three and six months ended June 30, 2025, attributed to the Industrial IoT reporting unit [249]. - The company will continue to monitor qualitative and quantitative factors for potential goodwill impairment during fiscal year 2025 [248]. Cash Flow and Expenses - The company incurred $22 million in net cash used by operating activities for the six months ended June 30, 2025 [284]. - Net cash used in operating activities for the three months ended June 30, 2025 was approximately $22.0 million, with a net loss of $33.7 million [301]. - Non-cash income and expenses for the three months ended June 30, 2025 totaled approximately $17.7 million, primarily due to stock-based compensation of $1.2 million and impairment of goodwill of $4.0 million [301]. - Net cash used in changes in operating assets and liabilities was approximately $5.9 million, mainly due to a decrease in accrued expenses of $4.9 million [301]. - Net cash used in investing activities for the six months ended June 30, 2025 was approximately $0.1 million, compared to $2.9 million provided in the same period of 2024 [304]. - Net cash flows provided by financing activities during the six months ended June 30, 2025 was approximately $37.7 million, including $36.4 million from the sale of common stock and warrants [305]. - The company received $1.7 million from the now expired ATM and $3.8 million from the exercise of warrants during the six months ended June 30, 2025 [305]. - The company repaid $0.5 million towards outstanding promissory notes during the six months ended June 30, 2024 [306]. - The decrease in accrued expenses and other current liabilities of approximately $4.9 million was mainly due to cash payments for accrued transaction bonuses and consulting fees [301]. - The company does not have any off-balance sheet guarantees or engage in trading activities involving non-exchange traded contracts [307].

Financial Performance - Revenues for Q1 2025 were $0.5 million, a 120% increase from $0.2 million in Q1 2024, driven by the Industrial IoT segment [248]. - Gross profit for Q1 2025 was $0.3 million, up 137.6% from $0.1 million in Q1 2024, with a gross margin of 69.2% compared to 64.1% in the prior year [251]. - Operating expenses increased to $10.7 million in Q1 2025 from $9.0 million in Q1 2024, with a significant portion attributed to R&D and consulting expenses [252]. - Net loss for Q1 2025 was $12.9 million, a 394.7% increase from a net loss of $2.6 million in Q1 2024 [248]. - Cash and cash equivalents as of March 31, 2025, were approximately $8 million, an increase of $3.9 million from $4.1 million at the end of 2024 [258]. - Net working capital improved to $12,000 as of March 31, 2025, compared to a deficit of $8.8 million at the end of 2024 [259]. - The company raised approximately $23.3 million in net proceeds during Q1 2025, which helped reduce debt and support the development of the TriFan 600 airplane [260]. - Customer deposits as of March 31, 2025, totaled approximately $1.4 million from non-binding aircraft purchase agreements and reservation deposits [264]. - The company raised approximately $21.7 million in net proceeds from public offerings during the first quarter of 2025, which was partially used to repay short-term obligations [268]. - The company's cash and cash equivalents increased to approximately $8 million as of March 31, 2025, up from $4.1 million as of December 31, 2024 [271]. - Net cash used in operating activities increased significantly from approximately $2.6 million in Q1 2024 to approximately $15.2 million in Q1 2025 [273][272]. - Net cash flows provided by financing activities were approximately $19.2 million for the three months ended March 31, 2025, compared to $1.4 million in the same period of 2024 [276][277]. - The company experienced a decrease in accrued expenses and other current liabilities of approximately $4.9 million, primarily due to cash payments for transaction bonuses and employee bonuses [272]. - The company reported a working capital of approximately $12,000 as of March 31, 2025, compared to a deficit of $8.84 million as of December 31, 2024 [271]. - Cash flows used in investing activities were approximately $45,000 for the three months ended March 31, 2025, compared to a net cash inflow of approximately $3 million in the same period of 2024 [274]. - The company became ineligible to use Form S-3 until August 2025, which may impair its ability to raise necessary capital [270]. Business Development - The company has not generated any revenue from aircraft sales as it is still in the design and development phase of the TriFan 600 airplane [208]. - The FAA accepted the company's type certification application for the TriFan 600 on March 17, 2025 [222]. - The company increased the wing fuel volume of the TriFan 600 from approximately 300 gallons to 400 gallons, enhancing its maximum range and mission length [221]. - The company is exploring strategic options to wind down and/or sell the hardware portions of its Industrial IoT business segment to focus on software products [210]. - The fair value of the Industrial IoT reporting unit exceeded its carrying value by 2.2% as of March 31, 2025, resulting in no goodwill impairment recognized for the quarter [232]. - The company is expanding into autonomous, remotely operated drones as part of its strategic focus to create new revenue-generating opportunities [214]. - The company is developing ancillary service offerings related to the TriFan 600, such as flight training and maintenance products [211]. - Research and development expenses are expected to increase significantly as the company expands staffing for aircraft engineering and software development [236]. - The company has authorized a share repurchase program to acquire up to $5 million of its common stock [218]. - The company has a commitment to pay $1.5 million in deferred consulting fees to Nadir Ali in three installments through 2025 [265]. - As of March 31, 2025, the company reported a net loss of approximately $12.9 million and used approximately $15.2 million in cash for operating activities [266][272].

Merger and Acquisition - The company completed a merger with Legacy XTI on March 12, 2024, resulting in a name change to XTI Aerospace, Inc.[18] - The merger is accounted for as a reverse acquisition, with Legacy XTI as the accounting acquirer, affecting the consolidated financial statements from the closing date through December 31, 2024[19] - XTI Aerospace completed a merger with Legacy XTI on March 12, 2024, with Legacy XTI as the accounting acquirer[18] - The merger is accounted for as a reverse acquisition, with the financial statements reflecting a continuation of Legacy XTI's results[19] Stock Split - A reverse stock split at a ratio of 1-for-100 was executed on March 12, 2024, to comply with Nasdaq Listing Rule 5550(a)(2)[21] - A subsequent reverse stock split of 1-for-250 is planned for January 10, 2025, also for compliance with Nasdaq Listing Rule 5550(a)(2)[21] Financial Performance and Challenges - The company has a history of losses and faces challenges in achieving profitability and delivering non-prototype aircraft to customers[13] - Future financial results are subject to uncertainties, and actual outcomes may differ from projections due to various risks[15] - Economic conditions, including inflation and supply chain challenges, may impact the company's performance and customer base[16] Development and Commercialization - The development and commercialization schedule for the TriFan 600 is critical, with necessary certifications still pending[13] - Conditional pre-orders for aircraft may be subject to cancellation or modification, impacting future cash flows[13] Competitive Landscape and Risks - The company is navigating a competitive landscape with emerging technologies that may outpace its developments[13] - The company faces risks related to long development cycles, quality control, and dependence on third-party suppliers[16] - The company is subject to potential lawsuits and regulatory investigations, including those from the SEC[16] - Future patent applications may face delays or rejections, incurring substantial costs for the company[16] - The company must manage risks associated with system failures and changes in tax regimes[16] Operational Focus - The company is focused on enhancing its brand reputation and expanding its customer base while managing manufacturing and supply chain relationships[16] - The ability to attract and retain qualified personnel is critical for the company's growth and operational success[16]

Core Insights - XTI Aerospace's business unit Inpixon has won the "RTLS Solution of the Year 2025" award at the IoT Breakthrough Awards, competing against over 40 entrants [1][2] - Inpixon's RTLS solutions enhance operational efficiency, safety, and decision-making across various industries [1][3] Company Overview - XTI Aerospace, Inc. is developing the TriFan 600, a fixed-wing business aircraft with VTOL capabilities, speeds of 345 mph, and a range of 700 miles [5] - Inpixon specializes in real-time location systems (RTLS) technology, providing solutions that optimize operations and enhance safety in sectors like manufacturing, logistics, and government [5][3] Industry Recognition - The IoT Breakthrough Awards recognize top companies and technologies in the global IoT market, highlighting Inpixon's leadership in RTLS technology [2] - The award reflects Inpixon's commitment to innovation and its role in advancing Industry 4.0 through AI-powered location-aware solutions [3]

Financial Performance and Liabilities - Total balance sheet liabilities as of December 31, 2024 were reduced compared to September 30, 2024[7] - The company's financial statements for the quarter ended December 31, 2024 are unaudited and subject to change, with final results potentially differing materially from preliminary information[8] Capital Raising and Stock Information - The company raised approximately $25,000,000 in gross proceeds from the sale of common stock under its "at-the-market" offering program since the end of the quarter ended March 31, 2024[7] - The company's common stock is traded under the symbol XTIA on the Nasdaq Capital Market[3] Business and Financial Updates - The press release dated January 23, 2025, provides updates on recent business and financial highlights[5]

Merger and Acquisition - The company completed its merger with Legacy XTI on March 12, 2024, structured as a reverse triangular merger[235]. - The XTI Merger was completed on March 12, 2024, with Legacy Inpixon as the legal acquirer and Legacy XTI as the accounting acquirer under GAAP[318]. - Legacy XTI's historical financial statements are considered the financial statements of the combined company[318]. - The integration of Legacy XTI into the company's system of disclosure controls and procedures is currently being evaluated by a third-party consulting firm[319]. Aircraft Development - The company is primarily focused on developing the TriFan 600, a VTOL aircraft, which is expected to offer speed, range, and comfort comparable to business aircraft while providing helicopter versatility[217]. - The company reported that the Commercial Aviation segment is currently pre-revenue as it is still in the development phase of the TriFan 600 aircraft[219]. - The company plans to seek FAA certification for the TriFan 600, with significant milestones including the critical design review and preliminary testing of a full-scale flight test aircraft[227][230]. - The company is pursuing additional capital to complete the development of the TriFan 600 and is exploring multiple funding alternatives[223]. Financial Performance - Revenue for the three months ended September 30, 2024, was $0.9 million, an increase of approximately $0.9 million compared to $0.0 million in the same period last year[271]. - Cost of revenues for the three months ended September 30, 2024, was $0.4 million, compared to $0.0 million for the same period in the prior year[272]. - Gross profit for the three months ended September 30, 2024, was $0.5 million, compared to $0.0 million in the prior year, with a decline of approximately $0.2 million from the previous quarter due to a one-time inventory impairment charge[273]. - Operating expenses for the three months ended September 30, 2024, were $4.7 million, an increase from $2.4 million in the same period last year, primarily due to increased expenditures related to the TriFan 600 aircraft development[274]. - Net loss for the three months ended September 30, 2024, was $4.4 million, compared to a net loss of $2.7 million in the prior year, reflecting an increase of 64%[268]. - Revenues for the nine months ended September 30, 2024, were $2.2 million, a significant increase from $0.0 million in the same period of 2023, attributed to the Industrial IoT segment post-XTI Merger[280]. - Cost of revenues for the same period was $0.8 million, compared to $0.0 million in the prior year, reflecting the operational results of the Industrial IoT segment[281]. - Gross profit for the nine months ended September 30, 2024, was $1.3 million, up from $0.0 million in the comparable period of 2023[282]. - Operating expenses increased to $28.3 million from $7.7 million year-over-year, primarily due to nonrecurring transaction bonuses and merger-related costs[283]. - Net loss for the nine months ended September 30, 2024, was approximately $21.7 million, compared to a net loss of $8.9 million in the same period of 2023, representing a 144% increase in losses[299]. - Other income for the nine months ended September 30, 2024, was a gain of $5.3 million, a turnaround from a loss of $1.2 million in the prior year, largely due to the remeasurement of convertible notes[285]. Cash Flow and Working Capital - As of September 30, 2024, the company had a working capital deficit of approximately $11.9 million and cash and cash equivalents of approximately $0.5 million[288]. - The company used approximately $14.3 million in cash for operating activities during the nine months ended September 30, 2024[299]. - The Company sold 3,190,727 shares of common stock under the ATM Offering, generating net proceeds of approximately $1.0 million during the three months ended September 30, 2024[301]. - The Company reported a net cash used in operating activities of approximately $14.3 million for the nine months ended September 30, 2024, compared to $3.0 million for the same period in 2023[304][310]. - Net cash provided by investing activities was approximately $2.9 million for the nine months ended September 30, 2024, compared to $0.0 million for the same period in 2023[313]. - Net cash provided by financing activities was $11.9 million for the nine months ended September 30, 2024, with $9.6 million from the ATM Offering and $2.0 million from promissory notes[314]. - The Company has a working capital deficit of $11.9 million as of September 30, 2024, compared to $13.0 million as of December 31, 2023[304]. Compliance and Governance - The company received a letter from Nasdaq on July 9, 2024, indicating it no longer meets the minimum bid price requirement of $1 per share, with a compliance period until January 6, 2025[236]. - The company is in the process of preparing a plan to regain compliance with Nasdaq listing rules following a Low Price Deficiency Letter received on November 7, 2024[237]. - The company is currently seeking additional financing to meet cash requirements, with potential actions including curtailing operations or seeking bankruptcy protection if unable to secure funding[303]. - The integration of Legacy XTI into the Company's disclosure controls and procedures is ongoing and being evaluated by a third-party consulting firm[318]. - As of September 30, 2024, the company concluded that its disclosure controls and procedures were not effective[318]. - There have been no material changes in internal control over financial reporting during the quarter ended September 30, 2024[320]. - The company has no material pending legal proceedings as defined by Item 103 of Regulation S-K[322]. Research and Development - Research and development expenses are expected to increase significantly as the company increases staffing to support aircraft engineering and software development[259]. - General and administrative expenses are anticipated to increase substantially in the future as the company expands its headcount to support continued research and development[263]. Industrial IoT Segment - The Industrial IoT segment has focused on building the Indoor Intelligence platform since 2019, positioning the company as a market leader in providing comprehensive solutions for data collection and insights[226]. - The company believes its RTLS products offer superior accuracy compared to competitors, which primarily rely on BLE or Wi-Fi technologies[234].

Financial Performance - Revenue for the three months ended June 30, 2024, was $1.0 million, an increase of approximately $1.0 million compared to $0.0 million in the same period of 2023[236]. - Operating expenses for the three months ended June 30, 2024, were $14.6 million, an increase of approximately $10.5 million from $4.0 million in the same period of 2023, primarily due to nonrecurring transaction bonus expenses and increased legal and accounting fees[239]. - Net loss for the three months ended June 30, 2024, was $14.7 million, compared to a net loss of $4.6 million in the same period of 2023, representing an increase of $10.1 million[234]. - Revenue for the six months ended June 30, 2024, was $1.3 million, compared to $0.0 million for the same period in 2023, reflecting the results of the Industrial IoT segment post-merger[245]. - Operating expenses for the six months ended June 30, 2024, were $23.6 million, an increase of approximately $18.3 million from $5.3 million in the same period of 2023[243]. - Gross profit for the three months ended June 30, 2024, was $0.7 million, compared to $0.0 million in the same period of 2023[238]. - Gross profit for the six months ended June 30, 2024, was $0.8 million, compared to $0.0 million for the same period in 2023[247]. - Other income for the six months ended June 30, 2024, was a gain of $5.5 million, compared to a loss of $0.9 million for the same period in 2023, reflecting a fluctuation of approximately $6.4 million[250]. - For the six months ended June 30, 2024, the company incurred a net loss of approximately $17.3 million and used approximately $8.2 million in cash for operating activities[273]. Cash Flow and Working Capital - As of June 30, 2024, the company had a working capital deficit of approximately $7.9 million and cash and cash equivalents of approximately $5.8 million[252]. - Net cash used by operating activities of $8.2 million for the six months ended June 30, 2024[252]. - Net cash used in operating activities for the six months ended June 30, 2024 was approximately $8.2 million, compared to $1.6 million for the same period in 2023[276][279]. - Net cash flows provided by investing activities during the six months ended June 30, 2024 were approximately $2.9 million, compared to $0.0 million in 2023[281]. - Net cash flows provided by financing activities during the six months ended June 30, 2024 were $11.1 million, significantly higher than $1.5 million in 2023[282]. Transaction Bonuses and Liabilities - The company accrued 100% of the transaction bonuses, recognizing approximately $6.7 million of transaction bonus expense for the three and six months ended June 30, 2024[180]. - As of June 30, 2024, approximately $6.7 million of accrued transaction bonuses remained outstanding, included in Accrued Expenses and Other Current Liabilities[180]. - As of June 30, 2024, the company has accrued 100% of the transaction bonuses, totaling $6.7 million, with $0.9 million paid during Q3 2024[269]. - As of June 30, 2024, the company has liabilities of approximately $0.5 million and $0.1 million related to deferred compensation and retention bonuses[272]. Legal Matters - The company is involved in litigation with Xeriant, which claims damages in excess of $500 million due to alleged breaches and fraudulent actions by Legacy XTI[184]. - There are no material pending legal proceedings involving the company, other than ordinary routine litigation[288]. - No adverse legal interests involving directors, officers, or significant shareholders were reported[288]. Mergers and Acquisitions - The XTI Merger was completed on March 12, 2024, with Legacy Inpixon as the legal acquirer and Legacy XTI as the accounting acquirer under GAAP[285]. - The historical financial statements of Legacy XTI will be considered the financial statements of the combined entity[285]. - The Transaction Value for the XTI Merger was assessed at $225 million, based on the enterprise value of Legacy XTI[260]. - The company issued 385,359 registered shares of XTI Aerospace common stock as part of the financial advisory fees in connection with the XTI Merger[255]. Development and Engineering - The company is developing the TriFan 600, a vertical takeoff and landing aircraft, and is currently in the pre-revenue stage for the Commercial Aviation segment[193][196]. - The company is focused on securing FAA certification for the TriFan 600, which is critical for generating revenues in the commercial aviation segment[200]. - The company completed its preliminary design review (PDR) for the TriFan 600 in 2022, setting the stage for further design development[203]. - The company has established a core engineering organization and retained consulting firms to enhance its engineering capabilities for the TriFan 600[202]. - The company aims to enhance its sales and marketing capabilities to increase awareness and customer orders for the TriFan 600[199]. - The company is pursuing multiple funding alternatives to complete the development of the series of Test Aircraft[199]. - Research and development expenses are expected to increase significantly as the company expands staffing to support aircraft engineering and software development[229]. Market Position and Products - The company’s Industrial IoT business is positioned as a market leader with a comprehensive suite of products aimed at enhancing workplace environments[201]. - The company’s RTLS Indoor Intelligence products compete with major players like Aruba and Cisco, but it believes its offerings are more comprehensive and accurate[208]. - The company is committed to ongoing research and development to maintain a competitive position in the rapidly changing technology landscape[206]. - The TriFan 600 is expected to offer lower direct operating costs and the ability to fly almost twice as many missions compared to competing helicopters[207]. Internal Controls and Governance - As of June 30, 2024, the company's disclosure controls and procedures were deemed ineffective by the Chief Executive Officer and Chief Financial Officer[285]. - The company began integrating Legacy XTI into its disclosure controls and procedures during the second quarter of 2024[285]. - A third-party consulting firm is being engaged to assist in evaluating and remediating internal controls over financial reporting for the combined entity[285]. - No changes in internal control over financial reporting were identified during the quarter ended June 30, 2024, that materially affected internal controls[286]. - Anticipated changes to the internal control environment are expected in the third quarter of 2024 due to integration efforts[286]. - The company acknowledges that no control system can provide absolute assurance that all control issues have been detected[286]. Future Outlook - The company expects revenues for the third and fourth quarters of 2024 to remain consistent with the second quarter of 2024[236]. - The company’s financial statements are prepared under the assumption of continuing as a going concern for the next twelve months, dependent on obtaining additional financing and improving operational efficiency[274].