Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 146

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 146
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, the Company first performed a qualitative
assessment to determine if there were any indicators of impairment that would require a quantitative analysis to be performed. The results
of the qualitative analysis performed by the Company determined there was a triggering event during the six months ended June 30, 2025,
in the form 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 Proprietary Technology of $0.1 million for the three months ended June 30, 2025. 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, for the six months ended June 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.

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