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| Debt | Note 9 - Debt
As of December 31, 2025 and 2024, no portion of the Company’s long-term debt is due within one year. Interest expense on outstanding debt totaled approximately $0.3 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.
Streeterville Promissory Notes
In May 2024, the Company issued two secured promissory notes to Streeterville Capital, LLC (“Streeterville”) with aggregate principal of approximately $2.7 million. The notes bore interest at 10.0% per annum and were scheduled to mature within 12 months of issuance.
During the first quarter of 2025, the Company entered into exchange agreements with Streeterville pursuant to which the Company issued an aggregate of 240,229 shares of common stock in exchange for $750,000 of principal amount under the notes, in each case at per share prices equal to the Minimum Price as defined in Nasdaq Listing Rule 5635(d).
On March 31, 2025, the Company repaid the remaining outstanding balance of the notes in full, including accrued interest, fees and a contractual prepayment premium. In connection with the repayment, Streeterville released its security interests in the Company’s equity interests in Legacy XTI and the related assets. The Company recognized a loss on extinguishment of debt of approximately $0.4 million during the year ended December 31, 2025.
Acquisition-Related Promissory Notes
In connection with the November 2025 acquisition of Drone Nerds, XTI Drones Holdings, LLC issued promissory notes to the sellers with an aggregate original principal amount of approximately $11.9 million (the “Notes”).
The Notes bear interest at a rate of 7.25% per annum, calculated on a 365-day year. Accrued interest is payable in accordance with the terms of the Notes, and unpaid interest is added to principal if not paid when due.
The Notes require scheduled principal repayments as follows:
On November 30, 2025, the Company made the required aggregate payment of $4.0 million. On March 31, 2026, the Company made the required aggregate payment of $2.0 million.
The Notes may be prepaid at any time without premium or penalty, provided that accrued and unpaid interest is paid through the prepayment date. The outstanding principal balance of the Notes is subject to reduction in connection with indemnification obligations under the applicable purchase agreements.
The Notes contain customary events of default, including bankruptcy-related events, upon which the outstanding principal and accrued interest may become immediately due and payable.
As of December 31, 2025, the aggregate outstanding principal balance and accrued interest balance of the Notes was approximately $7.9 million and $0.049 million, respectively.
Asset-Based Revolving Line of Credit (Drone Nerds)
At the time of the Company’s acquisition of Drone Nerds in November 2025, Drone Nerds was party to an asset-based revolving credit facility with a financial institution with a maximum borrowing capacity of $25.0 million (the “Revolving Facility”). The Revolving Facility bore interest at one-month Term SOFR plus 2.50%, subject to a 6.00% minimum rate, with interest payable monthly, and was scheduled to mature in July 2027.
Outstanding borrowings under the Revolving Facility were assumed by the Company as part of the acquisition. In connection with the transaction, the lender required that the outstanding balance be repaid in full at closing. Accordingly, shortly after closing, the Company funded approximately $10.5 million to Drone Nerds to fully repay the outstanding borrowings. amounts were outstanding under the Revolving Facility as of December 31, 2025.
In February 2026, the Revolving Facility was replaced by a new revolving credit facility with a financial institution. See Note 20 for additional information.
SBA Loan
The Company had an outstanding balance of approximately $65,000 under a U.S. Small Business Administration loan as of December 31, 2024. The loan bore interest at 3.75% per annum and was repaid in full during 2025.
Promissory Notes Assumed in Connection with the Drone Nerds Acquisition
In connection with the acquisition of Drone Nerds, the Company assumed two unsecured promissory notes payable to parties associated with Drone Nerds with aggregate principal of $450,000. The notes consist of a $250,000 note and a $200,000 note, each bearing interest at 10% per annum.
On November 9, 2025, each note was amended and restated in connection with the acquisition transaction. Beginning January 1, 2026, the notes require monthly interest-only payments, with the outstanding principal due at maturity on March 31, 2027. The notes may be prepaid at any time without premium or penalty.
As of December 31, 2025, the aggregate outstanding principal balance of these notes was $450,000. |
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