Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 15

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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. As soon as the outcome of a contract can be estimated reliably, contract revenue is recognized in the condensed
consolidated statement of operations in proportion to the stage of completion of the contract. Contract costs are expensed as incurred.
Contract costs include all amounts that relate directly to the specific contract, are attributable to contract activity, and are specifically
chargeable to the customer under the terms of the contract.

Contract Balances

The 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 stock