Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 87

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 87
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2024, based upon certain economic
conditions and historical losses through December 31, 2024. After consideration of these factors, management deemed it appropriate
to establish a full valuation allowance with respect to the deferred tax assets for XTI Aerospace, Inc., XTI Aircraft Company, Nanotron
GmbH, Intranav GmbH, and Inpixon Holding (UK) Limited.

A
liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax filings that
do not meet these recognition and measurement standards. As of December 31, 2024 and 2023, no liability for unrecognized tax benefits
was required to be reported. The guidance also discusses the classification of related interest and penalties on income taxes. The Company’s
policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. No interest or penalties
were recorded during the years ended December 31, 2024 and 2023.

Business
Combinations

We
account for business combinations using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired
business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value
is recorded as goodwill. Any changes in the estimated fair values of the net assets recorded for acquisitions prior to the finalization
of more detailed analysis, but not to exceed one year from the date of acquisition, will change the amount of the purchase price allocable
to goodwill. Any subsequent changes to any purchase price allocations that are material to our consolidated financial results will be
adjusted. All acquisition costs are expensed as incurred and in-process research and development costs are recorded at fair value as
an indefinite-lived intangible asset and assessed for impairment thereafter until completion, at which point the asset is amortized over
its expected useful life. Separately recognized transactions associated with business combinations are generally expensed subsequent
to the acquisition date. The application of business combination and impairment accounting requires the use of significant estimates
and assumptions.

Upon
acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date and are included in
our Consolidated Financial Statements from the acquisition date.

44

Components
of Results of Operations

Revenue

Commercial
Aviation

We are still working to design, develop and certify the TriFan 600
airplane and thus have not generated revenue from this segment. We do not expect to begin generating significant revenues until