Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 168

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 168
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 of a current period operating and cash flow loss, a consistent history of operating losses, and the revenue results
for the current period missing forecasted targets due to (i) the sales cycle to close transactions taking longer than anticipated and
(ii) supply chain issues causing delays in our delivery of Nanotron product to customers. Based on a quantitative assessment, the Company
recorded an impairment to its Trade Names & Trademarks, Proprietary Technology, and In-Process Research and Development of $0.1 million,
$0.3 million, and $0.2 million, respectively, during the nine months ended September 30, 2025, which is included in ‘Impairment
of intangible assets’ in the unaudited condensed consolidated statements of operations. These assets were part of the Company’s
Industrial IoT segment.

The Company assessed the fair value of the Trade
Names & Trademarks, Proprietary Technology, and In-Process Research and Development by using an income approach in the form of a
relief from royalty model, which considered a specified royalty rate, discount rate reflecting the risk inherent in future cash flows,
perpetual growth rate, and projected future economic and market conditions. The inputs for the fair value calculations included a 3%
terminal growth rate, discount rate of 29%, and a royalty rate of 2% and 10% for Tradenames and Trademarks and Proprietary Technology,
respectively. Management’s estimates of projected cash flows include, but are not limited to, future earnings of the reporting
unit using revenue growth rates, gross margins, and other cost assumptions consistent with the reporting unit’s historical trends,
and working capital requirements and future capital expenditures necessary to fund future operations. The assumptions in the fair value
measurement reflects the current market environment, industry-specific factors and company-specific factors. As a result of the impairment,
the Company assessed the remaining useful lives of the Trade Names & Trademarks and Proprietary Technology and concluded that there
were no changes required.

Note 7 - Other Balance Sheet Information

Prepaid expenses and other current assets

Prepaid expenses and other current assets as
of September 30, 2025 and December 31, 2024 consisted of the following (in thousands):

    As of  September 30,
    2025  
    As of December 31, 2024 
  
    AVX deposit - related party 
    $—  
    $464 
  
    Prepaid insurance 
     434