Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 396

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 396
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OLs are available to the Company as a part of the continuing activity.

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. In assessing the realization of deferred tax assets, management considers,
whether it is “more likely than not”, that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences
representing net future deductible amounts become deductible.

ASC
740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that
all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be
considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.
After consideration of all the information available, management believes that uncertainty exists with respect to future realization
of its deferred tax assets with respect to XTI Aerospace, Inc, Nanotron, Intranav GmbH, Inpixon Holding (UK) Limited and has, therefore,
established a full valuation allowance as of December 31, 2024. As of December 31, 2024 and 2023, the change in valuation allowance was
an increase of the valuation allowance of $3.9 million, excluding the recording of Inpixon for the merger.

ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The Company is required to file income tax returns in the United States (federal), Germany, United
Kingdom, and in various state jurisdictions in the United States. These filings include discontinued activity periods. Based on the Company’s
evaluation, it has been concluded that there are no material uncertain tax positions requiring recognition in the Company’s consolidated
financial statements in years ended December 31, 2024 and December 31, 2023.

The
Company’s