Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 132

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 8
Chunk 132
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2030 and have
an exercise price of approximately $17.19 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
March 31, 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 $17.19, 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.

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 stock as of March 31, 2025.

    Instrument
     
    Grant Date Fair Value

    Common stock
     
    $
    19,663,008

    Placement Agent Warrants
     
    $
    337,000

March 2025 Public
Offering

As part of the March Offering (refer to Note 10),
the Company issued pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 2,176,000 shares of common stock, and
common warrants (the “Common Warrants”) to purchase up to 2,941,200 shares of common stock.

Each Pre-funded Warrant was immediately exercisable upon issuance,
has an exercise price of $0.001 per share and may be exercised at any time until all of the Pre-funded Warrants are exercised in full.
Each Common Warrant was immediately exercisable upon issuance, has an exercise price of $1.36 per share, and expires on the fifth anniversary
of the date of issuance.

Upon