Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 312

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 2
Chunk 312
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will and intangible assets not subject to amortization are reviewed annually for
impairment in accordance with ASC 350, “Intangibles – Goodwill and Other,” or more often if there are indications of
possible impairment.

The analysis to determine
whether or not an asset is impaired requires significant judgments that are dependent on internal forecasts, including estimated future
cash flows, estimates of long-term growth rates for our business, the expected life over which cash flows will be realized and assumed
royalty and discount rates. Changes in these estimates and assumptions could materially affect the determination of fair value and any
impairment charge. While the fair value of these assets are less than their carrying value based on our current estimates and assumptions,
materially different estimates and assumptions in the future in response to changing economic conditions, changes in our business or
for other reasons could result in the recognition of impairment losses higher than the amount currently recorded.

For assets to be held and
used, including acquired intangible assets subject to amortization, we initiate our review whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be recoverable. Recoverability of an asset is measured by comparison of its
carrying amount to the expected future undiscounted cash flows that the asset is expected to generate. Any impairment to be recognized
is measured by the amount by which the carrying amount of the asset exceeds its fair value. Significant management judgment is required
in this process.

For intangible assets not
subject to amortization such as goodwill, we test for impairment annually, or whenever events or changes in circumstances indicate that
their carrying value may not be recoverable. In testing goodwill for impairment, we compare the fair value with the carrying value. The
determination of fair value is based on a discounted cash flow analysis, using inputs and assumptions such as revenue growth rates, other
projected expenses, and discount rates. If we were to experience a decrease in forecasted future revenues attributable to the intangible
assets, this could indicate a potential impairment. If the carrying value exceeds the estimated fair value, the goodwill is considered
impaired, and an impairment loss will be recognized in an amount equal to the excess of the carrying value over the fair value of goodwill.

We perform our annual goodwill
impairment test required by ASC 350 as of October 1st of each year. In testing goodwill for impairment, we analyze qualitative factors
as stated within ASC 350 to determine if the fair value of our reporting unit