Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 79

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 79
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 not produce the same results.

Revenues

The revenue amount for the
periods presented represents the results of the revenue-generating Industrial IoT segment. Revenues for the three months ended September
30, 2025 were $2.5 million, compared to $0.9 million for the three months ended September 30, 2024, representing an increase of approximately
$1.6 million. The increase was primarily attributable to a $1.3 million increase in hardware revenue related to the Company’s IoT
business, resulting from improved supply chain conditions. These improvements followed the resolution of disruptions caused by regional
conflict in the Middle East, which had impacted operations of the Company’s Israeli supplier and resulted in delays in hardware
product deliveries during the first half of 2025. In addition, we communicated our plan to explore our strategic options to wind down
and/or sell the hardware portions of our Industrial IoT business to our customers which resulted in customers increasing their hardware
purchases, and as a result, we do not expect this trend to continue.

Cost of Revenues and Gross Profit

Cost of revenues for the
three months ended September 30, 2025 was $1.4 million compared to $0.4 million for the comparable period in the prior year for an increase
of approximately $1.0 million. This increase is consistent with the increase in revenues noted above.

Gross profit for the three
months ended September 30, 2025 was $1.1 million compared to $0.5 million for the comparable period in the prior year, an increase of
approximately $0.6 million, which is consistent with the increase in revenue. The gross margin percentage was 43.4% and 56.6% for the
three months ended September 30, 2025 and 2024, respectively. The margin decrease is due primarily to a shift in sales mix to lower margin
hardware products during the three months ended September 30, 2025.

44

Operating Expenses

Operating expenses for the
three months ended September 30, 2025 were $15.9 million and $4.7 million for the comparable period ended September 30, 2024, an increase
of $11.2 million. We expect operating expenses to continue to increase as we increase our headcount to accommodate our growth. This increase
was primarily attributable to:

    ●
    Research and development expenses, which increased by $0.8 million mainly to advance