Company: XTIA
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032213
Chunk: 306

Company: XTI Aerospace, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 306
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12.4 million in goodwill which was allocated to our Industrial IoT reporting
unit. Since the closing date of the XTI Merger on March 12, 2024, the price of our common stock has declined significantly and may continue
to fluctuate in future periods. A sustained decrease in the price of our common stock is one of the qualitative factors to be considered
as part of an impairment test when evaluating whether events or changes in circumstances may indicate that it is more likely than not
that a potential goodwill impairment exists. We will continue monitoring the analysis of the qualitative and quantitative factors used
as a basis for the goodwill impairment test during fiscal year 2024 and at the Company’s October 1st annual testing date.
As of December 31, 2024, management evaluated potential triggers and completed a qualitative assessment and determined in the aggregate,
it is more likely than not, that the fair value of the Goodwill is less than its carrying value. Management moved to a quantitative assessment
and noted that based on that assessment, the fair value of the Industrial IoT reporting unit is greater than the carrying value of the
reporting unit. The Company notes that the fair value exceeded the carrying value by 22% as of December 31, 2024. Therefore, no goodwill
impairment was recognized for the year ended December 31, 2024.

Deferred
Income Taxes

In
accordance with ASC 740 “Income Taxes” (“ASC 740”), management routinely evaluates the likelihood of the realization
of its income tax benefits and the recognition of its deferred tax assets. In evaluating the need for any valuation allowance, management
will assess whether it is more likely than not that some portion, or all, of the deferred tax asset may not be realized on a jurisdictional
basis. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods
in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In performing its analyses,
management considers both positive and negative evidence including historical financial performance, previous earnings patterns, future
earnings forecasts, tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards
within a reasonable timeframe. To this end, management considered (i) that we have had historical losses in the prior years and cannot
anticipate generating a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning
str