Company: XTIA
Filing Date: 2025-05-19
Form Type: 10-Q
Source: 0001213900-25-045396
Chunk: 157

Company: XTI Aerospace, Inc.
Filing Date: 2025-05-19
Form: 10-Q
Item: Part I, Item 8
Chunk 157
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12, 2024, the price of our common stock has declined significantly and may continue to fluctuate in future periods. A sustained
decrease in the price of our common stock is one of the qualitative factors to be considered as part of an impairment test when evaluating
whether events or changes in circumstances may indicate that it is more likely than not that a potential goodwill impairment exists.
We will continue monitoring the analysis of the qualitative and quantitative factors used as a basis for the goodwill impairment test
during fiscal year 2025 and at the Company’s October 1st annual testing date. As of March 31, 2025, Management evaluated
potential triggers and completed a qualitative assessment and determined in the aggregate, it is more likely than not, that the fair
value of the IoT reporting unit is less than its carrying value. Accordingly, Management performed a quantitative assessment whose results
determined the fair value of the reporting unit is greater than the carrying value of the reporting unit. The Company notes that the
fair value exceeded the carrying value by 2.2% as of March 31, 2025. Therefore, no goodwill impairment was recognized for the three months
ended March 31, 2025. 

40

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 we complete the design, development, certification, and manufacturing of the airplane.

Industrial IoT

Our RTLS products are primarily
sold on a license and SaaS mode, which we call “location as a service” or “LaaS.” In our licensing model, we also
typically charge an annual maintenance fee. The LaaS model is typically for a 3-5 year contract and includes a license to use, maintenance
and hardware upgrades. The LaaS model generates a recurring revenue stream.

Operating Expenses

Research and Development

Research and development activities
represent a significant part of our business. Our research and development efforts focus on the design and development of (i) our indoor
intelligence products, and (ii) our TriFan 600 airplane, including certain of the systems that will be used in it. As part of our aircraft
development activities, we continue to work closely with the FAA towards our goal of achieving certification of our TriFan 600 airplane
on an efficient timeline.

Research and development expenses
consist primarily of costs incurred