Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 195

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 195
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venues and Gross Profit

Cost of revenues for the six
months ended June 30, 2025 were $0.3 million compared to $0.4 million for the comparable period in the prior year.

Gross profit for the six months
ended June 30, 2025 and 2024 was $0.8 million. Despite a decline in revenue for the six months ended June 30, 2025 compared to the
comparable period in the prior year, gross profit for such periods remained consistent because of improved gross margins. The gross margin
percentage was 75.5% and 64.2% for the six months ended June 30, 2025 and 2024, respectively. The margin increase is due primarily to
a shift in sales mix to higher margin software solutions during the first half of 2025.

Operating Expenses

Operating expenses for the
six months ended June 30, 2025 were $22.4 million and $23.6 million for the comparable period ended June 30, 2024, a decrease
of $1.2 million. Excluding nonrecurring expenses incurred during the six months ended June 30, 2024 including (i) merger-related transaction
costs of $6.5 million, (ii) transaction bonus expense of $6.7 million, and (iii) professional fees of $0.6 million relating to post-XTI
Merger integration efforts including regulatory filings triggered by the merger, operating expenses increased by $12.6 million.

This increase of $12.6 million 
was due primarily to (i) an increase in research and development expenses of $2.1 million, mainly attributable to the development of the
TriFan 600, as the Company secured additional financing during the first half of 2025, (ii) an increase in sales and marketing expenses
of $1.4 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 goodwill and intangible assets of $4.7 million relating to the Industrial IoT segment, (iv)
an increase in nonrecurring consulting compensation expense of $0.4 million relating to consulting agreements entered into with the prior
executives of Legacy Inpixon on March 12, 2024 that had either expired in 2024 or, in the case of the prior Legacy Inpixon CEO, terminated
on March