Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 16

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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 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.

For the three and six months ended June 30, 2025,
the Company determined that its long-lived assets were impaired by approximately $0.1 million and $0.6 million, respectively. For the
three and six months ended June 30, 2025, the Company determined that its goodwill was impaired by approximately $4.05 million and $4.05
million, respectively.

11

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

In accordance with ASC Topic 606, Revenue from
Contracts with Customers (“ASC 606”), the Company recognizes revenue when the customer obtains control of promised goods,
in an amount that reflects the consideration that it expects to receive in exchange for those goods. To determine revenue recognition
for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify
the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including
variable consideration, if any, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize
revenue when (or as) the