Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 85

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 85
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, we initiate our review whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability of an asset is measured by
comparison of its carrying amount to the expected future undiscounted cash flows that the asset is expected to generate. Any impairment
to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Significant management judgment
is required in this process.

For
intangible assets not subject to amortization such as goodwill, we test for impairment annually, or whenever events or changes in circumstances
indicate that their carrying value may not be recoverable. In testing goodwill for impairment, we compare the fair value with the carrying
value. The determination of fair value is based on a discounted cash flow analysis, using inputs and assumptions such as revenue growth
rates, other projected expenses, and discount rates. If we were to experience a decrease in forecasted future revenues attributable to
the intangible assets, this could indicate a potential impairment. If the carrying value exceeds the estimated fair value, the goodwill
is considered impaired, and an impairment loss will be recognized in an amount equal to the excess of the carrying value over the fair
value of goodwill.

43

We
will perform our annual goodwill impairment test required by ASC 350 as of October 1st of each year. In testing goodwill for
impairment, we analyze qualitative factors as stated within ASC 350 to determine if the fair value of our single reporting unit may be
less than the carrying value of the reporting unit. We have one reporting unit that carries goodwill (Industrial IoT). If the fair value
of the reporting unit, based on qualitative factors, may be less than the carrying value of the reporting unit, we then perform the goodwill
impairment test required under ASC 350 by comparing the fair value of the reporting unit with the carrying value of the reporting unit
and, if the fair value is less than the carrying value, the amount that the carrying value exceeds fair value represents the amount of
goodwill impairment. Accordingly, we would recognize an impairment loss in the amount of such excess.

In connection with the XTI
Merger, we recorded approximately $4.8 million in intangible assets which was allocated to various asset groups under our Industrial IoT
reporting unit. In connection with the XTI Merger, we recorded $12.4 million in goodwill which was allocated to our Industrial IoT reporting
unit. Since the closing date of the X