Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 317

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 2
Chunk 317
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 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 the development of the TriFan 600 airplane.

    ●
    Sales and marketing expenses, which increased by $1.7 million, as the Company invested more in brand development and awareness, trade show participation, and business development initiatives.

    ●
    General and administrative expenses, which increased by $8.7 million, due primarily to an increase of approximately $8.2 million in stock-based compensation and an increase in administrative headcount to support operational growth.

Other (Expense) Income

Other (expense) income for
the three months ended September 30, 2025 was income of $1.4 million compared to a loss of $0.2 million for the comparable period in
the prior year.

The income for the three months
ended September 30, 2025 was primarily attributable to the recognition of a $2.2 million gain related to the change in fair value of a
warrant liability which was partially offset by $0.8 million of financing costs incurred relating