XTI Aerospace, Inc.

Overview

XTI Aerospace is a provider of unmanned aerial systems (“UAS”) solutions operating through two business divisions: a commercial drone solutions business and an advanced systems and defense division. The Company expects to continue developing a third business division, a domestic manufacturing and technology division. The Company’s commercial drone solutions business, conducted primarily through its majority owned subsidiary, XTI Drones Holdings, LLC, which owns Drone Nerds, LLC and Anzu Robotics, LLC (collectively, “Drone Nerds”), constitutes substantially all of the Company’s revenues. The advanced systems and defense division (formerly XTI Aircraft) is in an earlier stage of development and has not yet generated any revenues.

The Company was originally founded around the development of the TriFan 600, a planned vertical takeoff and landing (“VTOL”) aircraft. In 2025, the Company acquired Drone Nerds and, in light of that acquisition and its assessment of near-term opportunities in the unmanned systems market, redirected its former XTI Aircraft division beginning in 2026 toward the design and development of unmanned platforms for defense and commercial applications. The TriFan 600 program has been paused and the underlying intellectual property and engineering work product is being preserved and maintained. See “Business Divisions — TriFan 600 Strategic Context and Organizational Evolution” below for additional detail.

The Company’s near-term focus is on growing its commercial drone platform, expanding the range of products and services offered to enterprise and government customers, and pursuing strategic acquisitions that extend its geographic reach and customer base. The Company also is seeking to generate revenue from its advanced systems and domestic manufacturing divisions.

The Company’s strategy is organized around three priorities:

Corporate Strategy

XTI’s objective is to build a scalable UAS solutions platform through organic growth in its commercial business, targeted acquisitions and the staged development of its advanced systems and domestic manufacturing capabilities. The following describes each element of this strategy.

1. Strengthen the Commercial Drone Solutions Business

The Company is focused on expanding the scope of products and services offered through Drone Nerds to increase revenue per customer and improve operating margins. Current expansion areas include training and certification programs, repair and maintenance services, fleet management support, compliance assistance, and financing solutions. By offering these services alongside hardware distribution, the Company seeks to increase customer retention and establish longer-term customer relationships.

Drone Nerds operates as an OEM-agnostic distributor, meaning it is not restricted to the products of a single manufacturer. The Company believes this model provides a competitive advantage by allowing it to recommend the most suitable platform for a given customer’s operational requirements, independent of manufacturer relationships. However, the Company’s ability to maintain this model depends on continued access to OEM products and dealer programs, which are subject to change.

2. Grow Through Strategic Acquisitions and Partnerships

The UAS distribution and services market is highly fragmented. The Company intends to pursue acquisitions of complementary businesses that expand its customer base, geographic presence, or service capabilities. The Company uses data derived from its subsidiaries, primarily from Drone Nerds, to inform acquisition targeting decisions. There can be no assurance that suitable acquisition targets will be identified, that acquisitions will be completed on acceptable terms, or that acquired businesses will be successfully integrated.

The Company is also seeking to expand its customer base in government, defense, and public safety markets. Procurement in these markets is subject to requirements around platform compliance, cybersecurity and domestic sourcing, which the Company believes may favor distributors with established compliance capabilities. XTI believes it is well positioned to leverage its supply-side expertise and enterprise platform to serve these growing markets; however, government procurement decisions are subject to budgetary, regulatory and political factors outside the Company’s control.

3. Expand Domestic Manufacturing and Technology Capability

XTI intends to develop U.S.-based manufacturing and advanced technology capabilities for unmanned systems through partnerships, joint ventures, and selective investments. These initiatives are designed to address demand from government and enterprise customers for domestically manufactured platforms, which has been increasing as regulatory and procurement requirements around foreign-sourced systems have tightened. These development activities are at an early stage, and there can be no assurance that the Company will be able to execute manufacturing partnerships on acceptable terms or that demand for domestically manufactured platforms will develop as anticipated.

Business Divisions

Commercial Drone Solutions – XTI Drones (Drone Nerds)

XTI’s commercial drone solutions business is currently conducted primarily through Drone Nerds, a UAS solutions provider offering hardware distribution, training and certification, repair and maintenance, fleet sustainment, compliance support, and integrated solutions to enterprise and government customers. Drone Nerds operates through wholesale distribution, direct sales, and direct-to-consumer retail channels, including a retail showroom in South Florida and an e-commerce platform. The Company believes Drone Nerds is a significant enterprise-focused UAS distributor in the United States.

The commercial drone solutions business currently generates substantially all of the Company’s revenues and provides the customer relationships, operational infrastructure, and market data that support the Company’s broader acquisition and development strategy.

Autonomous Defense Systems (ADS), formerly XTI Aircraft — Strategic Context and Organizational Evolution

The ADS division reflects a strategic shift away from the TriFan 600 program and toward nearer-term unmanned systems opportunities. Management determined that continued development of the TriFan 600 program would require substantial additional time and capital, and the Company therefore redirected resources toward unmanned systems opportunities that it believes may offer nearer-term commercial applications.

In response, management conducted a structured search for new divisional leadership with a mandate to reorient the business around nearer-term, capital-efficient opportunities. That search concluded with the appointment of Steve Zohrabian, whose background in advanced manufacturing and defense product development is relevant to the operational and contractual realities of serving government and defense customers.

The acquisition of Drone Nerds in November 2025 served as the second anchor point around which the division’s updated strategy was set. Together, Zohrabian’s appointment and the Drone Nerds acquisition defined the strategic perimeter of the division and marked the beginning of a transformation in staffing, focus, and organizational priorities — a transformation substantially completed in Q1 2026.

The ADS team is now building a core capability around the design, development, and production of unmanned platforms, with an emphasis on serving defense customers and supporting domestic procurement initiatives aligned with U.S. national security priorities. The Company believes the unmanned systems market — particularly in defense and government procurement — presents a more actionable near-term revenue opportunity than continued TriFan 600 development at this stage of the Company’s evolution.

TriFan 600 Program Status

The TriFan 600 program has been paused. The underlying intellectual property and engineering work product are being preserved.

Whether and when development may resume will depend on a number of factors, including capital availability, market conditions for advanced air mobility, further maturation of core technologies of the TriFan 600, such as full autonomy capabilities, and the Company’s overall strategic priorities at the relevant time.

Autonomous Defense Systems (ADS)

The Company refers to this division as Autonomous Defense Systems, or ADS, a provisional designation. The division’s official name and branding have not yet been finalized and will be disclosed in a subsequent filing upon determination.

The ADS division is focused on the design, development, and production of unmanned platforms for defense and commercial applications, drawing on the engineering expertise and intellectual property developed through the Company’s prior aerospace program. The division’s capabilities span autonomous systems design, advanced propulsion, and airframe engineering. ADS pursues opportunities through internal development, strategic partnerships, and co-development arrangements, with an emphasis on defense procurement programs and domestic unmanned systems initiatives aligned with U.S. national security priorities.

As described above, the division substantially completed its organizational transformation in Q1 2026 following the appointment of new leadership and the acquisition of Drone Nerds. Additional information regarding the division’s official name, organizational structure, and specific strategic initiatives will be provided as those matters are finalized.

The ADS division has not yet generated any revenues. Its ability to generate revenues will depend on success in securing development contracts, partnerships, or procurement awards, all of which are subject to significant uncertainty. We are currently pursuing participation in five identified program opportunities with a combined potential R&D program value of approximately $147 million. If these development programs advance to production phases — which is subject to government procurement decisions, budgetary constraints, shifting defense priorities, program cancellations, competitive selection processes and other factors outside our control, and as to which there can be no assurance — and if we are able to develop the manufacturing capabilities necessary to meet resulting demand, we estimate the associated manufacturing opportunity could reach approximately $1.5 billion in the aggregate. These programs span potential customer agencies that include the U.S. Marine Corps, U.S. Army, U.S. Special Operations Command (SOCOM), U.S. Air Force, U.S. Navy, the Defense Advanced Research Projects Agency (DARPA), and the Air Force Research Laboratory (AFRL). See “Risk Factors — Risks Related to Our Business and Industries” for a discussion of the material risks associated with this division.

Advanced Technology and Manufacturing (ATM)

The Company refers to this division as Advanced Technology and Manufacturing, or ATM, a provisional designation. The division’s official name, organizational structure, and branding have not yet been finalized and will be disclosed in a subsequent filing upon determination.

The Advanced Technology and Manufacturing (ATM) division is expected to be led by Alex Williams, Ph.D., and is expected to be focused on developing and scaling U.S.-based production capabilities for unmanned systems, components, and related technologies. The division’s mandate will be to build a domestically sourced supply chain designed to support compliance with applicable federal procurement and sourcing requirements, including Section 848 of the National Defense Authorization Act for unmanned aerial systems — addressing the growing demand from federal agencies, defense contractors, and enterprise customers for drone platforms and components that meet Section 848 of the National Defense Authorization Act and satisfy applicable government procurement requirements for compliant UAS platforms and components.

Demand for compliant, domestically manufactured unmanned systems has accelerated as regulatory and procurement requirements around foreign-manufactured components have tightened. The Company believes this environment creates an opportunity to develop manufacturing relationships and capabilities that may support government and enterprise demand for compliant UAS platforms and components.

The division plans to pursue growth through manufacturing partnerships, co-development arrangements, targeted acquisitions of domestic production capacity, and strategic investments in U.S.-based technology and component suppliers.

The Company’s position as a distributor and aggregator of market intelligence across the unmanned systems industry is expected to provide the ATM division with an operational insight base that may support identifying manufacturing gaps, qualifying suppliers, and structuring partnerships that address the specific procurement and compliance requirements of defense and government customers.

The ATM division has not yet generated any revenues, and its activities are at an early stage of development. The division’s ability to generate revenues will depend on its success in establishing manufacturing partnerships on acceptable terms, securing National Defense Authorization Act (“NDAA”) -compliant production capacity, and converting that capacity into defensible customer relationships and contract awards — each of which is subject to significant uncertainty. There can be no assurance that manufacturing contracts and/or partnerships will be established on acceptable terms or that the division will generate revenues within the timeframe the Company anticipates.

Capital Strategy

XTI is executing a capital strategy designed to support disciplined growth, fund targeted acquisitions, and accelerate the development of its three operating divisions. The Company is working with its financial advisors to evaluate financing alternatives that optimize flexibility and preserve shareholder value.

Market

The commercial UAS market has experienced growth in recent years, driven by increasing adoption across enterprise verticals including agriculture, construction, infrastructure inspection, mining, insurance, energy and utilities, and public safety. Defense and government applications represent an additional and growing end market. The overall market remains fragmented, with no single provider holding a dominant position across all verticals and use cases.

The Company believes that consolidation among UAS distributors and solutions providers is likely as customers increasingly prefer vendors capable of providing integrated, multi-manufacturer solutions alongside training, maintenance, and lifecycle support. The Company’s strategy is designed to position the Company to participate in this trend, both through organic growth and through acquisitions. However, the pace and direction of industry consolidation are uncertain, and larger, better-capitalized competitors may consolidate more quickly or effectively than the Company.

Regulatory and procurement trends have generally been favorable for domestic UAS distributors and manufacturers. Restrictions on foreign-manufactured platforms in certain government procurement contexts, actions by the FAA and FCC relating to UAS operations and equipment authorization, and growing national security scrutiny of foreign-sourced unmanned systems, have all contributed to demand for compliant, U.S.-based solutions. These trends may benefit the Company, though regulatory requirements are subject to change and may also impose compliance costs or operational constraints on the Company and its customers.

The advanced air mobility market — the market the TriFan 600 program was originally designed to address — remains at an early stage of development. The Company does not generate revenues from advanced air mobility and has paused the active development of the TriFan 600 program. If the Company were to resume that program, its prospects would depend in part on the development of regulatory frameworks, infrastructure, and customer demand for advanced air mobility, none of which can be predicted with certainty.

The Company competes with other UAS distributors, value-added resellers, and solutions integrators, as well as directly with OEM manufacturers that sell through direct channels. Certain competitors are larger and have greater financial, technical, and marketing resources than the Company. There can be no assurance that the Company will be able to compete successfully.

Products and Services

XTI delivers UAS solutions through its three operating divisions. The commercial drone solutions business is currently the primary operating division and source of revenues. The advanced systems and defense division and domestic manufacturing and technology division are in development and have not generated any revenues to date. Together, these divisions are designed to serve customers across the full UAS lifecycle — from initial platform selection and procurement through training, deployment, maintenance, fleet sustainment, and integrated mission solutions.

Commercial Drone Solutions – XTI Drones (Drone Nerds)

The Company’s commercial drone solutions business is conducted primarily through Drone Nerds. Drone Nerds provides UAS solutions through a combination of hardware distribution and service offerings, supporting a broad ecosystem of UAS manufacturers, payload and sensor providers, and software vendors.

The Company delivers solutions through wholesale distribution, direct sales, and direct-to-consumer retail channels. Wholesale revenue represents sales through resellers and channel partners serving enterprise, commercial, and governmental end customers. Direct sales represent sales to enterprise, commercial, and governmental customers that utilize drones as part of their operations. Retail revenue represents sales to consumer end users, including transactions at a retail showroom in South Florida and through an e-commerce platform. Enterprise, commercial, and governmental customers may also purchase through the e-commerce platform; such transactions are classified as direct sales based on customer type.

The Company serves customers across multiple end markets, including agriculture, construction, inspection, mining, insurance, security, energy and utilities, and public safety.

The Company’s UAS offerings generally fall into the following categories:

Hardware and Related Products. The Company distributes UAS platforms, payloads, sensors, batteries, accessories, and related equipment from third-party manufacturers. The Company assists customers in evaluating and selecting platforms and payload configurations suited to their operational requirements, including inspection, mapping, surveying, public safety response, security monitoring, and other applications. The Company’s ability to offer and support specific platforms is subject to OEM product availability, dealer program terms, regulatory authorizations, and supply chain conditions. Revenue from hardware sales is generally recognized upon shipment or delivery.

Training and Program Enablement. The Company provides training services designed to help customers establish and operate drone programs and navigate applicable regulatory requirements. Training may include platform operation, mission planning, payload use, safety procedures, and other operational topics. The Company also provides program implementation support through operational best practices, documentation support, and workflow integration guidance. Customer adoption may be affected by evolving regulatory requirements, including FAA operational rules, waivers, and related approvals.

Service, Repair, and Lifecycle Support. The Company provides repair, maintenance, and lifecycle support services to maintain fleet readiness and reduce downtime. Services include diagnostics, repair, routine maintenance, and fleet sustainment programs. The Company also supports manufacturer warranty processes and, in certain cases, performs warranty services in accordance with OEM requirements. Service revenue includes time-and-materials work, warranty-related services, and service contracts.

Fleet Support, Software Enablement, and Operational Services. The Company supports enterprise and public sector customers with fleet management tools, software integration, and operational workflow support. The ability to deliver these services depends in part on access to third-party software platforms, OEM system interfaces, and internal and third-party cloud-based systems.

Sales Support and Financing. The Company provides procurement support and, in certain cases, financing arrangements to facilitate customer adoption. Financing arrangements involve third-party financing providers and are subject to applicable credit approvals, contractual terms, and other conditions.

Advanced Systems and Defense Division

XTI’s advanced systems and defense division is focused on the design, development, and productization of unmanned platforms for defense and commercial customers, drawing on the engineering expertise developed through the Company’s prior TriFan 600 program. The division is building capabilities in unmanned systems design, systems integration, and autonomous platform development, with an emphasis on defense procurement requirements and domestic platform programs. The division pursues opportunities through internal development, strategic partnerships, and co-development arrangements.

The division has not yet generated any revenues. Additional information regarding this division’s organizational structure, products under development, and strategic initiatives will be provided as those matters are finalized.

Domestic Manufacturing and Technology Division

XTI’s domestic manufacturing and technology division is focused on developing and scaling U.S.-based production capabilities for unmanned systems and related technologies. The division pursues manufacturing partnerships, joint ventures, co-development arrangements, and targeted investments in domestic production capacity. The division has not yet generated any revenues. Additional information regarding this division’s organizational structure and strategic initiatives will be provided as those matters are finalized.

Research and Development

The Company’s research and development activities are organized across its operating divisions and are focused on advancing unmanned systems capabilities, improving operational performance, supporting regulatory compliance, and enabling future commercialization. The Company expenses research and development costs as incurred. The Company’s research and development efforts require significant engineering, technical, and operational expertise and may involve the use of third-party contractors, consultants, suppliers, and testing partners.

Research and Development Expenses

Research and development expenses consist primarily of personnel-related costs, engineering and technical consulting fees, prototype and testing costs, software and tooling expenses, and other costs incurred in connection with product and technology development activities.

R&D activity within the XTI commercial drone solutions business is focused on solution enablement, including platform evaluation, integration support, and the development of training and service capabilities that support enterprise and public sector customers.

R&D activity within the Company’s advanced systems and defense division is focused on the design, development, and productization of unmanned platforms, including systems integration, autonomy development, and the application of the Company’s aerospace engineering capabilities to defense and commercial unmanned systems programs.

R&D activity within the domestic manufacturing and technology division is focused on the development of production processes, manufacturing partnerships, and technology integration capabilities that support scalable domestic UAS production.

XTI expects R&D expenses to fluctuate from period to period based on the timing and scope of development activities, technical milestones, testing requirements, and the progression of programs across our operating divisions.

UAS Operations — Development Activities

The XTI commercial drone solutions business is primarily oriented toward distribution, integration, training, and lifecycle services. It devotes resources to technical evaluation, solution enablement, and service capability development in support of enterprise and public sector customer requirements. These activities generally include:

Platform and payload evaluation. The Company assesses new UAS platforms, payloads, sensors, batteries, communications systems, and related equipment to determine suitability for customer mission profiles and operational requirements.

Solution integration and enablement. The Company supports customers in deploying UAS solutions that may involve interoperability between platforms, payloads, software applications, fleet management systems, data processing tools, and customer workflows.

Training and program methodology development. The Company continuously refines training content and program enablement procedures to reflect evolving customer needs, safety practices, and regulatory requirements.

Service, repair, and sustainment capability development. The Company invests in improving diagnostics, repair procedures, maintenance workflows, parts logistics, and technician training to expand service offerings and reduce customer downtime.

Operational procedures and compliance support. XTI develops internal processes and operational playbooks designed to support enterprise deployment, including customer onboarding, fleet sustainment programs, and compliance management support.

The Company’s development efforts across all divisions are influenced by third-party product roadmaps, regulatory frameworks, certification requirements, and the commercial practices of OEM partners and software providers. Its ability to support certain solutions or expand related services may depend on the availability of products and continued cooperation from third parties.

Intellectual Property

The Company’s primary intellectual property assets prior to the Drone Nerds acquisition were developed through its former TriFan 600 manned VTOL aircraft program. The engineering work, design concepts, and technical development undertaken through that program generated a body of intellectual property, including proprietary aircraft design concepts, engineering work product, trade secrets, and other assets associated with VTOL and autonomous systems development. The Company seeks to protect these assets through a combination of patent filings, trade secret protections, confidentiality agreements, and internal information security controls. Patent protection, where pursued, may cover certain design elements, systems, or methods; however, the scope and duration of such protection are subject to examination and applicable law, and there can be no assurance that patent protection will be obtained or maintained.

XTI’s UAS distribution and services business relies primarily on brand assets, customer relationships, proprietary training materials, operational processes, repair methodologies, technical know-how, and service capabilities. The Company protects these assets through confidentiality agreements, intellectual property assignment provisions with employees and certain third parties, and contractual arrangements with suppliers and customers.

Because the XTI UAS business model is largely distribution, integration, training, and services-based, it does not rely primarily on owned patents for competitive differentiation. Instead, the Company’s competitive position depends on operational expertise, brand reputation, service infrastructure, and relationships with OEMs and customers. It also relies on intellectual property owned by third-party OEMs and software providers whose products the Company distributes or supports, and the Company’s ability to sell and service such products is subject to the terms of applicable distribution, dealer, and licensing agreements.

As described above under “Business Divisions — TriFan 600 Strategic Context and Organizational Evolution,” the Company paused the TriFan 600 program in 2026 and redirected the division’s resources toward unmanned systems development. The intellectual property developed through the TriFan 600 program remains an asset of the Company and is being preserved. The Company believes that certain underlying technologies — including work related to autonomous flight systems, advanced propulsion, and airframe design — are applicable to the unmanned systems development work now underway within the ADS division. As of the date of this filing, all expenditures associated with the former aircraft division are directed toward unmanned systems development and manufacturing programs.

Government Regulation

The XTI business is subject to a broad range of federal, state, local, and, in certain cases, international laws and regulations that affect the products it distributes, the services it provides, customer procurement decisions, and the ability of customers to deploy UAS platforms. Key regulatory and compliance areas include:

Federal Aviation Administration (“FAA”) regulation of UAS operations. UAS operations in the United States are subject to FAA rules governing operator certification, operational limitations, waiver processes — including for beyond visual line of sight (“BVLOS”) operations — remote identification requirements, and related safety and operational standards. The ongoing evolution of FAA rulemaking, particularly with respect to BVLOS operations and advanced air mobility, represents a material compliance consideration and may affect the timing and scope of broader enterprise and government deployment as expanded operational authorizations enable such deployment. In addition, if the Company were to resume development of the TriFan 600 or other manned or semi-autonomous aircraft, such programs would be subject to additional FAA certification requirements, which are complex, time-consuming, and uncertain.

Federal Communications Commission (“FCC”) equipment authorization and communications requirements. Certain UAS platforms, payloads, and related communications equipment are subject to FCC equipment authorization and related technical requirements. Recent FCC actions related to national security concerns involving certain foreign-manufactured unmanned aircraft systems may affect the availability, eligibility, or timing of new product introductions into the U.S. market. In December 2025, the FCC added foreign-produced UAS and UAS critical components, on a going-forward basis, to the Covered List, which restricts new equipment authorizations for those systems in the United States and may accelerate customer demand for compliant domestic alternatives.

Government procurement, sourcing, and supply chain security requirements. Public sector customers may be subject to procurement restrictions, sourcing requirements, and supply chain security rules that affect platform eligibility, vendor qualification, and procurement timing. These requirements may evolve based on national security, cybersecurity, and data protection considerations. XTI’s OEM-agnostic, compliance-oriented distribution model is designed to support customers in navigating these requirements.

Export controls, sanctions, and trade compliance. Certain products, technologies, and customers may be subject to U.S. export controls, sanctions, and related trade compliance requirements, which may impose restrictions on sales activities, shipment destinations, end users, and product configurations.

Privacy, surveillance, and data regulation. UAS deployments may involve the collection, processing, storage, or transmission of imagery and other data. Customers and operators may be subject to privacy, surveillance, and data protection laws and regulations that influence adoption, operational policies, and compliance requirements.

The regulatory environment applicable to UAS distribution, operations, data use, and unmanned systems development continues to evolve. We monitor regulatory developments and adjust our compliance processes, supplier relationships, and customer support practices as appropriate to align with applicable requirements and procurement standards.

See Item 1C for information regarding the Company cybersecurity risk management, strategy, and governance.

Employees

The Company’s employees support UAS sales, marketing, repair and maintenance operations, training, customer support, and corporate functions, as well as engineering and program development activities within the advanced systems and domestic manufacturing divisions.

The Company initiated a workforce transition reflecting two developments: the 2025 acquisition of Drone Nerds, which added 82 employees to the Company’s headcount, and the 2026 strategic reorientation of the former XTI Aircraft division toward unmanned systems development. As part of that reorientation, the division’s workforce was restructured and new leadership and technical personnel were hired with experience in unmanned platform development, defense programs, and advanced manufacturing. These changes were partially offset by the transfer of 22 employees in connection with the divestiture of the Inpixon real-time location systems business.

As of March 31, 2026, the Company had 105 employees, consisting of 96 full-time employees and 9 part-time employees. None of the Company’s employees are represented by a labor union or are party to a collective bargaining agreement. The Company has not experienced any work stoppages and considers its employee relations to be satisfactory.

Acquisition of Drone Nerds and Disposition of Inpixon Business

In November 2025, we completed the acquisition of Drone Nerds, LLC and Anzu Robotics, LLC (“Anzu”). Prior to the acquisition, Anzu was affiliated with Drone Nerds, LLC (then known as Drone Nerds, Inc.) through common ownership and its financial results were included in the historical audited financial statements of the Drone Nerds business. The acquisition represented a strategic shift in our operating focus toward enterprise and public sector UAS solutions.

Prior to the acquisition, Drone Nerds, LLC operated as a U.S.-based enterprise drone solutions provider offering hardware distribution, training, service and repair, and fleet support across multiple commercial and public sector verticals. Anzu operated within the broader Drone Nerds ecosystem and contributed additional UAS platform and product capabilities.

The transaction was structured as a purchase of the equity interests of Drone Nerds, LLC and Anzu. Consideration consisted of a combination of cash, promissory notes and equity, as further described in the notes to our consolidated financial statements included in this Annual Report. The acquisition was accounted for under the acquisition method of accounting in accordance with U.S. GAAP, and the results of Drone Nerds have been included in our consolidated financial statements from the acquisition date.

We pursued the acquisition to establish a revenue-generating operating platform in the UAS market and diversify beyond development-stage aircraft activities.

Prior to the acquisition, our primary focus was the Inpixon Business and the development of the TriFan 600 VTOL aircraft program. Following the acquisition, our ongoing operations are centered primarily on UAS solutions and services.

Drone Nerds maintains enterprise sales capabilities, service and repair infrastructure, training programs, and logistics operations that enable end-to-end customer support. We believe this infrastructure provides a foundation for expansion into additional verticals and public sector channels.

Following closing, Drone Nerds, LLC and Anzu became our primary operating subsidiaries for UAS activities. We retained key operational leadership and began aligning reporting structures, corporate functions, and compliance processes across the combined organization.

The acquisition materially changed the composition of our business and revenue base. During December 2025, we actively explored strategic alternatives for the Inpixon Business, including engaging with potential buyers and evaluating a potential sale of the business. In February 2026, we completed the disposition of the Inpixon Business through the sale of all of the shares of Inpixon GmbH to an unrelated party. Our current operations are focused on UAS solutions and aerospace development.

Corporate History and Information

XTI Aerospace, Inc. is a Nevada corporation incorporated in 1999, formerly known as Inpixon, which completed a business combination with XTI Aircraft Company in March 2024. The Company recently moved its principal executive offices, which are now located at:

15505 Wright Brothers Dr.

Addison, TX 75001

Telephone: (800) 680-7412

XTI common stock trades on the Nasdaq Capital Market under the symbol “XTIA.”

The Company conducts its operations primarily through its majority owned subsidiary, XTI Drones Holdings, LLC, which owns Drone Nerds, LLC and Anzu Robotics, LLC and its wholly owned subsidiary, XTI Aircraft Company.

The Company website address is www.xtiaerospace.com. The information contained on, or accessible through, the website is not incorporated by reference into this Annual Report, and you should not rely on any such information in making any investment decision relating to the Company’s securities.