Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2025

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Note 6 - Goodwill and Intangible Assets

Goodwill

In connection with the XTI Merger, the excess of the purchase price over the estimated fair value of the net assets assumed of $12.4 million was recognized as goodwill.

The following table summarizes the changes in the carrying amount of Goodwill for the nine months ended September 30, 2025 (in thousands):

	Amount
Beginning balance - January 1, 2025	$	12,072
Foreign currency translation adjustment		1,137
Impairment		(4,049	)
Ending balance – September 30, 2025	$	9,160

The Company tests goodwill for impairment at the reporting unit level annually, on October 1, or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. In accordance with ASC 350, the Company first assessed whether there were any indicators of goodwill impairment that would require a quantitative analysis to be performed (i.e., a triggering event). The Company determined there was no triggering event during the three 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.

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
Trade Name/Trademarks		486		(191	)		(115	)		180		4.4
Proprietary Technology		1,395		(469	)		(293	)		633		5.2
Customer Relationships		137		(42	)		—			95		3.5
In-Process R&D		243		(20	)		(223	)		—		—
Totals	$	2,729		(929	)	$	(631	)	$	1,169		5.8

	December 31, 2024
	Gross Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Patents	$	468	$	(184	)	$	—		$	284
Trade Name/Trademarks		897		(142	)		(451	)		304
Proprietary Technology		2,860		(326	)		(1,583	)		951
Customer Relationships		684		(109	)		(473	)		102
In-Process R&D		243		—			—			243
Totals	$	5,152	$	(761	)	$	(2,507	)	$	1,884

Amortization expense for the three and nine months ended September 30, 2025 was approximately $0.1 million and $0.2 million, respectively. Amortization expense for the three and nine months ended September 30, 2024 was approximately $0.2 million and $0.4 million, respectively.

Future amortization expense on intangibles assets is anticipated to be as follows (in thousands):

Year ending December 31,	Amount
2025 (for 3 months)	$	58
2026		224
2027		224
2028		224
2029		173
2030 and thereafter		266
Total	$	1,169

The Company tests for impairment if a change in circumstances or the occurrence of events indicates that potential impairment exists. In accordance with ASC 360, the Company first performed a qualitative assessment to determine if there were any indicators of impairment that would require a quantitative analysis to be performed. The results of the qualitative analysis performed by the Company determined there was no triggering event during the three months ended September 30, 2025. However, a triggering event was identified by the Company during the first and second quarters of 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. 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, during the nine months ended September 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.