Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 36

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 36
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 of June 30, 2025 
     12,149,465 

    Exercisable as of June 30, 2025 
     12,148,708 

The weighted average exercise price of warrants
outstanding as of June 30, 2025 was $3.84. The weighted average exercise price of exercisable warrants outstanding as of June 30, 2025
was $3.84.

 Warrants Granted

January 2025 Public
Offering

As part of its compensation for acting as placement
agent for the January Offering (refer to Note 9), the Company issued ThinkEquity warrants (the “Placement Agent Warrants”)
to purchase 72,727 shares of common stock. The Placement Agent Warrants are exercisable commencing January 10, 2025, expire January 8,
2030 and have an exercise price of approximately $17.1875 per share.

The Placement Agent Warrants are classified as
a contingently redeemable warrant in accordance with ASC 718, since these warrants did qualify for equity classification, but could be
settled in cash or other assets in the event that another person or entity becomes the beneficial owner of 50% of the outstanding shares
of the Company’s common stock. Because this contingently redeemable feature could result in the warrant holders receiving additional
compensation not on par with the holders of Common Stock, the Placement Agent Warrants were classified as temporary equity and therefore
reported in “Mezzanine Equity” on the Company’s condensed consolidated balance sheets as of June 30, 2025.

The measurement of fair value of the warrants
was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price
of $7.31, exercise price of $17.1875, term of five years, volatility of 98%, risk-free rate of 4.6%, and expected dividend rate of 0%).
The proceeds of the January Offering were allocated to each of the warrants and the common stock based on their relative fair value.

24

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The grant date fair value of the warrants and
shares of common stock on January 10, 2025 is summarized below and is reflected as temporary equity for the warrants and within additional
paid-in capital for the common