Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 161

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 161
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 and technology obsolescence.

The Company tests goodwill for potential impairment
at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying
amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to
determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less
than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than
not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test
by comparing the fair value of a reporting unit with its carrying amount.

The Company calculates the estimated fair value
of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed
discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash
flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount
rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions
on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections,
and its expectations.

The Company reviews its long-lived assets, inclusive
of its right-of-use assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not
be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset to the future undiscounted
cash flows expected to be generated from the use of the asset and its eventual disposition. If the carrying amount of an asset group
exceeds its estimated future undiscounted cash flows, an impairment charge is recognized for the amount by which the carrying amount
of the asset group exceeds its fair value.

11

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2025, the Company determined
that its long-lived assets were impaired by approximately $0.6 million. For the nine months ended September 30, 2025, the Company determined
that its goodwill was impaired by approximately $4