Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 261

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 261
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. Accordingly, calculations in this item, which may be rounded to the nearest hundred thousand, may not produce the same results.

Revenues

The revenue amount for the periods presented represents the results
of the revenue-generating Industrial IoT segment. Revenues for the three months ended June 30, 2025 were $0.6 million compared to $1 million
for the comparable period in the prior year for a decrease of approximately $0.4 million. This decline in revenue was primarily attributable
to supply chain disruptions caused by regional conflict in the Middle East, which impacted our Israeli supplier’s operations and
resulted in delays in hardware product deliveries to our customers.

Cost of Revenues and Gross Profit

Cost of revenues for the three
months ended June 30, 2025 was $0.1 million compared to $0.4 million for the comparable period in the prior year for a decrease of approximately
$0.3 million. This decline is consistent with the decline in revenues.  

Gross profit for the three
months ended June 30, 2025 was $0.5 million compared to $0.7 million
for the comparable period in the prior year, a decrease of approximately $0.2 million, which is consistent with the decrease in
revenue. The gross margin percentage was 80.5% and 64.2% for the three 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 second quarter of 2025.

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Operating Expenses

Operating expenses for the
three months ended June 30, 2025 were $11.6 million and $14.6 million for the comparable period ended June 30, 2024, a decrease of $3.0
million. Excluding nonrecurring expenses incurred during the three months ended June 30, 2024 including (i) transaction bonus expense
of $6.7 million, (ii) advisory compensation expense of $1.3 million, which related to consulting arrangements entered into with prior
executives of Legacy Inpixon, 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 $5.6 million.

This increase of $5.6 million
was driven by the Company’s efforts to secure additional financing during the first