Company: XTIA
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001213900-25-112615
Chunk: 21

Company: XTI Aerospace, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 21
---
 months ended September 30, 2025 related to the IoT reporting unit. However, a triggering event was identified by the Company during
the quarter ended June 30, 2025, in the form of a current period operating and cash flow loss, a consistent history of operating losses,
and the revenue results for the current period missing forecasted targets due to (i) the sales cycle to close transactions taking longer
than anticipated and (ii) supply chain issues causing delays in our delivery of Nanotron product to customers.

14

XTI AEROSPACE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In accordance with ASC 350, given a triggering event was identified,
the Company performed a quantitative goodwill impairment analysis related to its Industrial IoT reporting unit, which concluded the carrying
amount of the reporting unit exceeded its estimated fair value, indicating that the goodwill of the reporting unit was impaired. Therefore,
the Company recorded an impairment loss of $4.05 million during the quarter ended June 30, 2025, related to its Industrial IoT reporting
unit.

The Company utilized an income approach to assess
the fair value of the reporting unit as of June 30, 2025. The income approach considered the discounted cash flow model, considering
projected future cash flows (including timing and profitability), 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 of the reporting unit included
a 3% terminal growth rate and a discount rate of 29%. Management’s estimates of projected cash flows related to the reporting unit
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.

Intangible Assets

Intangible assets as of September 30, 2025 and
December 31, 2024 consisted of the following (in thousands):

     September 30, 2025      Gross Amount   Accumulated Amortization   Impairment   Net Carrying Amount   Remaining Weighted Average Useful Life   Patents  $468   $(207)  $—   $261    9.1