Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 557

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 8
Chunk 557
---
, 2023  
    As
    of December 31, 2023 
  
    A 
     38% 
     62%
  
    B 
     **  
     23%

**Represents
                                            less than 10% of the total for the respective period

F-13

XTI
AEROSPACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

Business
Combinations

The
Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 805, “Business Combinations” using the acquisition method of accounting, and accordingly, the assets
and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price
over the estimated fair value is recorded as goodwill. All acquisition costs are expensed as incurred.

Acquired
In-Process Research and Development (“IPR&D”)

In
accordance with authoritative guidance, the Company recognizes IPR&D at fair value as of the acquisition date and subsequently accounts
for it as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts. Once
an IPR&D project has been completed, the useful life of the IPR&D asset is determined and amortized accordingly. If the IPR&D
asset is abandoned, the remaining carrying value is written off. During fiscal year 2024, the Company acquired IPR&D through the
XTI Merger.

Intangible
Assets and Goodwill

Finite-lived
intangible assets primarily consist of developed technology, patents, customer relationships, and trade names/trademarks. They are amortized
ratably over a range of 5 to 15 years, which approximates customer attrition rate and technology obsolescence.

The
Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that
the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment,
the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that
the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company
con