Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 221

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 8
Chunk 221
---
 Therefore, a goodwill impairment of $4.05 million was recognized during the second quarter of 2025. One of the key factors
in the calculation of the impairment amount is the Company’s forecasted financial performance for the IoT reporting unit. If the
projected revenues decreased by 10%, the goodwill impairment amount would have increased by $2.9 million. This estimate is subject to
significant uncertainty due to the potential for volatile financial market conditions.

42

Components of Results of Operations

Revenue

Commercial Aviation

We continue 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 in connection with the research and development of the TriFan 600 airplane. These expenses
include:

    ●
    employee-related expenses,
    including salaries and benefits for personnel engaged in research and development functions;

    ●
    expenses incurred under
    agreements with third parties such as consultants and contractors; and

    ●
    software and technology-related
    expenses to support computer-aided design of the aircraft, flight simulations, and other technology needs of our engineers.

Research and development
costs are expensed as incurred. We expect our research and development expenses to increase significantly for the foreseeable future
as we increase staffing to support aircraft engineering and software development, build aircraft prototypes and continue to explore and
develop technologies.

We cannot determine with
certainty the timing, duration or