Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 18

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 18
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 timing of the Company’s revenue recognition
may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment
and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the
Company records deferred revenue until the performance obligations are satisfied, principally within one year.

12

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Customer Deposits

The Company periodically enters into aircraft
reservation agreements that include a deposit placed by a potential customer. The deposits serve to prioritize orders when the TriFan
600 airplane becomes available for delivery. Customers making deposits are not obligated to purchase any airplanes until they execute
a definitive purchase agreement. Customers may request return of their deposit any time up until the execution of a purchase agreement.
The Company records such advance deposits as a liability and defers the related revenue recognition until delivery of an airplane occurs,
if any.

Stock-Based Compensation

The Company’s stock-based compensation
relates to stock options granted to employees and non-employees. The Company recognizes the cost of share-based awards granted to employees
and non-employees based on the estimated grant-date fair value of the awards. Forfeitures are accounted for as they occur, which may
result in negative expense when forfeitures exceed the expense recorded within the period.

The Company recognizes expense on a straight-line
basis over the requisite service period of the award, which is generally equal to the vesting period of the award.

The Company estimates the grant-date fair value
of the stock option awards with service only vesting conditions using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model utilizes
inputs and assumptions which involve inherent uncertainties and generally require significant judgment. As a result, if factors or expected
outcomes change and significantly different assumptions or estimates are used, the Company’s stock-based compensation could be
materially different.

Net Loss Per Share 

Net loss per share attributable to common stockholders
is computed using the two-class method required for multiple classes of common stock and participating securities. The Company’s
participating securities included the Company’s convertible preferred stock and preferred stock. Neither the holders of convertible
preferred stock, preferred stock nor the holders of the Company’s common stock warrants have a contractual obligation to share
in losses.

Basic net loss per share attributable to common
stockholders is calculated by dividing