Company: XTIA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076767
Chunk: 26

Company: XTI Aerospace, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 26
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 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.

17

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Other Balance Sheet Information

Prepaid expenses and other current assets

Prepaid expenses and other current assets as
of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

    As of  June 30, 2025  
    As of December 31, 2024 
  
    AVX deposit - related party 
    $—  
    $464 
  
    Prepaid insurance 
     558  
     293 
  
    Deposits