Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 88

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 88
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 we are
able to complete 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, 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