Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 311

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 311
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, 2024 reporting date, whereas the Company was
pre-revenue in 2023. We expect revenue to increase to approximately $5 million for the fiscal year 2025 driven by the revenue-generating Industrial IoT segment.

46

Cost of
Revenues

Cost
of revenues for the year ended December 31, 2024 were $1.3 million compared to $0.0 million for the comparable period in the prior year.
The cost of revenues amount for the year ended December 31, 2024 represents the results of the revenue-generating Industrial IoT segment
following the XTI Merger closing date of March 12, 2024 through the December 31, 2024 reporting date, whereas the Company was pre-revenue
in 2023.

Gross
Profit

Gross profit for the year ended December 31, 2024 was $1.9 million
compared to $0.0 million for the comparable period in the prior year. The gross profit amount for year ended December 31, 2024 represents
the results of the revenue-generating Industrial IoT segment following the XTI Merger closing date of March 12, 2024 through the December
31, 2024 reporting date, whereas the Company was pre-revenue in 2023. The Company’s gross margin percentage for the year ended December
31, 2024 was approximately 59%, a lower percentage than Legacy Inpixon reported in previous fiscal years as the Company’s inventory
value was increased to fair value in March 2024 as part of the purchase price allocation accounting relating to the XTI Merger, resulting
in lower margins being recognized on subsequent hardware sales during 2024.

Operating
Expenses

Operating expenses for the year ended December 31, 2024 were $38.9 million
and $7.6 million for the comparable period ended December 31, 2023. This increase of approximately $31.3 million was primarily
attributable to (i) the inclusion of $9.0 million of Industrial IoT segment’s operating expenses from the XTI Merger closing date
through the December 31, 2024 reporting date, which included a $2.5 million non-cash impairment of intangible assets, (ii) the recognition
of $6.3 million of nonrecurring transaction bonus expense during the second quarter of 2024 as the bonuses became payable upon the
earlier of the