Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 215

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 2
Chunk 215
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2024, respectively. The margin increase is due primarily to a shift
in sales mix to higher margin software solutions during the first quarter of 2025.

42

Operating Expenses

Operating expenses for the
three months ended March 31, 2025 were $10.7 million and $9.0 million for the comparable period ended March 31, 2024, an increase of $1.7
million. Excluding the nonrecurring merger-related transaction costs of $6.5 million incurred during the three months ended March 31,
2024, operating expenses increased by $8.2 million.

This increase of $8.2
million was due primarily to (i) an increase in research and development expenses of $1.3 million, mainly attributable to the
development of the TriFan 600, as the Company secured additional financing during the first quarter of 2025, (ii) an increase in
sales and marketing expenses of $0.7 million as the Company invested more in brand development and awareness, trade show
participation, and business development initiatives, (iii) an increase in non-cash impairment of intangible assets of $0.5 million,
(iv) an increase in nonrecurring consulting compensation expense of $2.3 million relating to a consulting agreement entered into
with the prior Chief Executive Officer of Legacy Inpixon on March 12, 2024 that terminated on March 27, 2025 pursuant to the
Settlement Agreement, (v) an increase in the Industrial IoT segment’s general and administrative expenses of $0.6 million as
the results for the three months ended March 31, 2024 only reflect the activity of the segment since the closing of the XTI Merger
on March 12, 2024, and (vi) an aggregate increase of approximately $2.8 million due to (a) increases in legal and accounting fees
relating to capital raising activities during the first quarter of 2025, (b) increase in administrative headcount to support
operations growth, and (c) increases in public company-related professional fees as the 2024 historical results reflect the
operations of a private company, Legacy XTI, from January 1, 2024 through the March 12, 2024 closing date of the XTI Merger.

Other (Expense) Income

Other (expense) income for the three months ended March 31, 2025 was
a loss of $2.