Material Agreement Form 8 K

Item 1.01 Entry into a Material Definitive Agreement.

Second Amendment to Business Combination Agreement

As previously disclosed, XTI Aerospace, Inc. (the "Company") entered into a Business Combination Agreement, dated as of October 23, 2023, with Damon Motors Inc., a British Columbia corporation ("Damon"), Grafiti Holding Inc., a British Columbia corporation ("Spinco"), and 1444842 B.C. Ltd., a British Columbia corporation ("Amalco Sub"), which agreement was amended by the Amendment to Business Combination Agreement, dated as of June 18, 2024 (the "First BCA Amendment," and the agreement amended from time to time, the "Business Combination Agreement"). Pursuant to the Business Combination Agreement, it is proposed that Amalco Sub and Damon amalgamate under the laws of British Columbia, Canada, with the amalgamated company continuing as a wholly-owned subsidiary of Spinco (the "Business Combination"), subject to the terms and conditions of the Business Combination Agreement.

On September 26, 2024, the Company, Damon, Spinco and Amalco Sub entered into a Second Amendment to the Business Combination Agreement (the "Second BCA Amendment"), which, among other things, (i) adds as a condition to the Business Combination that Spinco and/or Damon, collectively, are to have received legally binding commitments for financing in the amount of no less than $13,000,000 in aggregate gross proceeds, (ii) tolls the date on which the Business Combination Agreement may be terminated until October 30, 2024, (iii) provides that if any shareholder of Damon is released early from the lock-up agreement contemplated by the Business Combination Agreement, then the Company and holders of Spinco common shares prior to the effective time of the Business Combination who are current or former officers, directors, employees or consultants of Spinco will also be released from their respective lock-up obligations to the same extent and (iv) provides that the Business Combination Agreement may be amended, supplemented or modified only by execution of a written instrument signed by Spinco and Damon; provided, however, that the Company's signature will also be required on any such written instrument providing for an amendment, supplement or modification that materially and adversely affects the rights of the Company under the Business Combination Agreement or the rights and interests of the applicable record date shareholders of the Company receiving shares of Spinco pursuant to the Spinout (as defined in the Business Combination Agreement).

The foregoing description of the Second BCA Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Combination Agreement, which was filed as Exhibit 2.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on October 23, 2023, the First BCA Amendment, which was filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on June 24, 2024, and the Second BCA Amendment, which is filed as Exhibit 2.1 to this Current Report on Form 8-K, and are incorporated by reference herein.