Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 190

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 190
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 the design, development, certification, and manufacturing of the airplane.

Industrial IoT

Our RTLS products are primarily
sold on a license and SaaS mode, which we call “location as a service” or “LaaS.” In our licensing model, we also
typically charge an annual maintenance fee. The LaaS model is typically for a 3-5 year contract and includes a license to use, maintenance
and hardware upgrades. The LaaS model generates a recurring revenue stream.

Operating Expenses

Research and Development

Research and development activities
represent a significant part of our business. Our research and development efforts focus on the design and development of (i) our indoor
intelligence products, and (ii) our TriFan 600 airplane, including certain of the systems that will be used in it. As part of our aircraft
development activities, we continue to work closely with the FAA 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