Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 62

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 1
Chunk 62
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 approximately
$0.3 million. The revenue amount for the three months ended March 31, 2025 and 2024 represents the results of the revenue-generating Industrial
IoT segment.

Cost of Revenues

Cost of revenues for the three
months ended March 31, 2025 were $0.1 million compared to $0.1 million for the comparable period in the prior year. The cost of revenues
represents the results of the revenue-generating Industrial IoT segment.

Gross Profit

Gross profit for the three
months ended March 31, 2025 was $0.3 million compared to $0.1 million
for the comparable period in the prior year, an increase of approximately $0.2 million, which is consistent with the increase in
revenue. The gross profit amount represents the results of the revenue-generating Industrial IoT segment. The gross margin percentage
was 69.2% and 64.1% for the three months ended March 31, 2025 and 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