Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 178

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 178
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5  9/4/2025   1,613,000   Chief Strategy Officer of XTI Aerospace, Inc.  9/4/2025  9/4/2025   1,512,200   Total Granted         7,336,500  

The measurement of fair value of options is determined
utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance. The following assumptions were
used in estimating the fair values of options awarded during the nine months ended September 30, 2025:

    Fair
    value of common stock
    $1.50 - $2.00
  
    Exercise
    price
    $1.50 - $2.00
  
    Expected
    term
    5.47 years
  
    Volatility
    98.91% - 99.42%
  
    Risk-free
    interest rate
    3.62% - 3.71%
  
    Dividend
    yield
    	—	%

22

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-based Compensation Expense

The Company accounts
for options granted to employees by measuring the cost of services received in exchange for the award of equity instruments based upon
the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as an expense over the period
during which the recipient is required to provide services in exchange for that award.

The Company measures
compensation expense for its non-employee stock-based compensation under ASC 718, “Stock-Based Compensation”. The fair value
of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the
services received. The fair value is measured at the value of the Company’s common stock or stock award on the date that the commitment
for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity
instrument is charged directly to stock-based compensation expense and credited to additional paid-in capital.

The assumptions used
in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and
the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based