Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 259

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 259
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 towards our goal of achieving certification of our TriFan 600 airplane
on an efficient timeline.

Research and development expenses
consist primarily of costs incurred in connection with the research and development of the TriFan 600 airplane. These expenses include:

    ●
    employee-related expenses, including salaries and benefits for personnel engaged in research and development functions;

    ●
    expenses incurred under agreements with third parties such as consultants and contractors; and

    ●
    software and technology-related expenses to support computer-aided design of the aircraft, flight simulations, and other technology needs of our engineers.

Research and development costs
are expensed as incurred. We expect our research and development expenses to increase significantly as we increase staffing to support
aircraft engineering and software development, build aircraft prototypes and continue to explore and develop technologies.

We cannot determine with certainty
the timing, duration or the costs necessary to complete the design, development, certification, and manufacturing of our TriFan 600 airplane
due to the inherently unpredictable nature of our research and development activities. Development timelines, the probability of success,
and development costs may differ materially from expectations.

Sales and Marketing Expenses

Sales and marketing costs
include activities such as aircraft reservation procurement, brand awareness campaigns, public relations and business opportunity advancement.
These functions mainly generate expenses relating to travel, trade show fees and costs, salaries and benefits. Sales and marketing expenses
are expensed as incurred.

General and Administrative Expenses

General and administrative
expenses consist primarily of salaries and related costs for personnel in executive, finance, corporate and business development, and
administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, including
non-capitalizable transaction costs; professional fees for accounting, auditing, tax and administrative consulting services; insurance
costs, facility related expenses including maintenance and allocated expenses for rent and other operating costs.

We anticipate that general
and administrative expenses will increase substantially in the future as we increase our headcount to support continued research and development
and commercialization of the TriFan 600.

Other (Expense) Income

Interest expense, net consists
primarily of (i) interest relating to convertible and promissory notes payable, (ii) amortization of debt discounts relating to warrants
and stock options issued in conjunction with convertible notes, and (iii) interest income on notes receivable.

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Loss on extinguishment of
debt includes (i) prepayment penalties and other expenses incurred during the six months ended June 30, 2025 as