Stock Award Plans and Stock-Based Compensation

9 Months Ended

Sep. 30, 2025

Stock Award Plans and Stock-Based Compensation [Abstract]

Stock Award Plans and Stock-Based Compensation

Note 11 - Stock Award Plans and Stock-Based Compensation

In 2011, Legacy Inpixon adopted the 2011 Employee Stock Incentive Plan (the “2011 Plan”). The 2011 Plan terminated by its terms on August 31, 2021 and remains in effect as to outstanding equity awards granted prior to the date of expiration. No new awards will be issued under the 2011 Plan.

During 2017, Legacy XTI adopted the 2017 Employee and Consultant Stock Ownership Plan (the “2017 Plan”), which was amended in 2021 to increase the maximum shares eligible to be granted under the 2017 Plan. The Company assumed the 2017 Plan in connection with the XTI Merger. The Company may issue awards in the form of restricted stock units and stock options to employees, directors, and consultants. Under the 2017 Plan, stock options are generally granted with an exercise price equal to the estimated fair value of the Company’s common stock, as determined by the Company’s Board of Directors (the “Board”) on the date of grant. Options generally have contractual terms of ten years. Incentive stock options (ISO) may only be granted to employees, whereas all other stock awards may be granted to employees, directors, consultants and other key stakeholders. As of September 30, 2025, there are no shares available for future grants under the 2017 Plan.

In February 2018, Legacy Inpixon adopted the 2018 Plan, which is utilized for employees, corporate officers, directors, consultants and other key persons employed. The 2018 Plan provides for the granting of incentive stock options, NQSOs, stock grants and other stock-based awards, including Restricted Stock and Restricted Stock Units (as defined in the 2018 Plan). In August 2025, the Board approved the amendment and restatement of the 2018 Plan which, among other things, provides that the Board may authorize one or more of the Company’s officers to grant awards pursuant to the 2018 Plan, provided that the Board must specify the total number of shares of common stock that may be subject to the awards granted by such officer.

As of September 30, 2025, there are no unvested Restricted Stock or Restricted Stock Units outstanding under the 2018 Plan.

Incentive stock options granted under the 2018 Plan are granted at exercise prices at a minimum of 100% of the estimated fair market value of the underlying common stock at date of grant. For any individual possessing more than 10% of the total outstanding common stock of the Company, the exercise price per share for incentive stock options is a minimum 110% of the estimated fair value of the underlying common stock on the grant date. Options granted under the 2018 Plan vest over periods ranging from immediately to four years and are exercisable over periods up to ten years from the grant date.

The aggregate number of shares that may be awarded under the 2018 Plan as of September 30, 2025 was 77,105,687. As of September 30, 2025, 10,714,289 stock options were granted to employees, directors and consultants of the Company and 62,240,174 options were available for future grant under the 2018 Plan.

See below for a summary of the stock options granted under the 2011, 2017 and 2018 plans:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (In millions)
Beginning balance as of January 1, 2025		51,185		$	455.00		9.3	$	—
Granted		10,668,256			1.95
Exercised		—
Expired		—
Forfeited		(2,485	)		2,476.56
Ending balance as of September 30, 2025		10,716,956		$	3.54		9.9	$	—
Options vested and exercisable as of September 30, 2025		3,654,641		$	4.63		9.9	$	—

The compensation committee of the Board approved awards of options to certain Company executives under the 2018 Plan. Each option has an exercise price of $2.00 per share. The options vested 1/3^rd on the grant date with the remaining 2/3^rd vesting in equal quarterly installments over two years starting from the grant date. The options expire ten years from the grant date. Options were granted as follows:

Grantee	Grant Date	Vesting Start Date	Options Granted
Chief Executive Officer of XTI Aerospace, Inc.	9/4/2025	9/4/2025		2,621,100
Chief Financial Officer of XTI Aerospace, Inc.	9/4/2025	9/4/2025		1,512,200
Chief Executive Officer of the XTI Aerospace, Inc. Real-Time Location System Division	9/4/2025	9/4/2025		78,000
Chief Operating Officer of XTI Aerospace, Inc.	9/4/2025	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	— %

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 compensation expense could be materially different for future awards.

The Company incurred the following stock-based compensation charges for the periods indicated below (in thousands):

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2025		2024			2025		2024
Employee and consultant stock options1	$	6,301	$	(2,159	)	$	7,234	$	(2,075	)
Vesting of previously unvested warrants2		—		—			—		270
Professional fees2		49		270			293		496
Merger-related professional fees		—		—			—		5,153
Total	$	6,350	$	(1,889	)	$	7,527	$	3,844

¹ Amount included in general and administrative expenses on the condensed consolidated statements of operations.

² Amount included in merger-related transaction costs on the condensed consolidated statements of operations for the three and nine months ended September 30, 2024.  Amount included in general and administrative expenses on the condensed consolidated statements of operations for the three and nine months ended September 30, 2025.

As of September 30, 2025, the total unrecognized compensation expense related to unvested awards was approximately $14.0 million, which the Company expects to recognize over an estimated weighted average period of 1.71 years.