XTI Aerospace, Inc. 8-K

What Happened
XTI Aerospace announced that all outstanding Series 10 Convertible Preferred Stock (purchased by Unusual Machines for $25,000,000 in November 2025) automatically converted into common stock following shareholder approval on December 30, 2025. Under the conversion terms (stated value $1,000 plus accrued 12.0% annual preferential dividends, conversion price $1.492), on January 5, 2026 the company issued 1,721,980 shares of common stock to Unusual Machines and a pre‑funded warrant to purchase 15,307,735 additional shares (exercise price $0.0001, deemed pre‑paid). The pre‑funded warrant is immediately exercisable but subject to beneficial ownership limits (default 4.99% or holder election up to 9.99%). As of January 5, 2026 there were 34,508,796 shares of common stock outstanding. These securities were issued in a private placement under Regulation D.

Key Details

• Series 10 purchase and conversion: $25,000,000 subscription (closed Nov 12, 2025); conversion effective Jan 5, 2026 using $1,000 stated value plus accrued 12.0% annual dividends, conversion price $1.492.
• Securities issued: 1,721,980 common shares issued; pre‑funded warrant for 15,307,735 shares with $0.0001 exercise price (pre‑paid).
• Beneficial ownership cap: warrant may not be exercised if holder would own >4.99% (or, if elected, 9.99%) post‑exercise; changes to cap require notice (61 days for increases).
• Executive compensation: On Jan 9, 2026 XTI entered a new employment agreement with Chief Strategy Officer Tobin Arthur (effective Jan 5, 2026) — $600,000 annual base salary, quarterly bonus potential up to 100% of base (annual cap 100%), $250,000 continuation bonus (paid over six months), and a grant of options to purchase 1,512,200 shares at $1.58/share (10‑year term; 1/3 vested immediately, remainder vest quarterly over 2 years). Severance and enhanced change‑in‑control protections (including up to 18–36 months pay in certain circumstances) are included.

Why It Matters
These actions materially increase potential dilution: the conversion added ~1.7M shares and created a pre‑funded warrant convertible into ~15.3M shares subject to ownership limits. While the warrant’s ownership cap restricts immediate concentration, the instrument represents a large pool of shares that could be issued over time and affects outstanding share count and shareholder dilution calculations. The new employment agreement and sizable option grant to the CSO create ongoing compensation expense and stronger retention/termination protections, which investors should factor into governance and dilution considerations.