XTI Aerospace, Inc. Announces Offering of Common Stock Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

XTI Aerospace (NASDAQ: XTIA) has announced a best-efforts offering of 363,636,364 shares of common stock priced at-the-market under Nasdaq rules. The shares are being offered at $0.055 per share, with expected gross proceeds of approximately $20 million.

The offering is anticipated to close on January 10, 2025, subject to customary closing conditions. The company plans to use the net proceeds for general working capital and corporate purposes. ThinkEquity is serving as the sole placement agent for this offering.

The securities will be offered through a shelf registration statement on Form S-3 filed with the SEC on May 31, 2024, which became effective on June 18, 2024.

Positive

• Secured $20 million in gross proceeds through stock offering
• Successfully executed at-market offering under Nasdaq rules
• Strengthening working capital position

Negative

• Significant shareholder dilution with 363.6M new shares
• Low share price of $0.055 indicates potential financial distress
• Best-efforts offering structure suggests uncertain demand

Insights

Investment Banking Analyst

This dilutive offering represents a significant capital raise that warrants careful analysis. At $20 million, the fundraising amounts to approximately 162.5% of XTIA's current market cap, with shares priced at a mere $0.055 per share. The massive dilution of 363.6M new shares will substantially impact existing shareholders' ownership stakes.

The at-the-market pricing mechanism typically indicates urgency in raising capital, often suggesting financial pressure. The company's vague intended use of proceeds for "general working capital and corporate purposes" rather than specific strategic initiatives raises concerns about cash burn and operational sustainability. This type of broad use of proceeds language often signals defensive capital raising rather than growth-oriented investment.

The timing and structure of this offering, combined with the penny stock price level, suggests significant financial distress. The extreme dilution and low share price point to challenging market conditions for XTIA, with potential implications for long-term viability.

Securities Law Expert

The offering's structure under the recently effective S-3 shelf registration (filed May 2024) demonstrates compliance with SEC regulations while providing expedited access to capital markets. The best-efforts placement approach, rather than a firm commitment underwriting, indicates lower institutional confidence and higher execution risk.

The explicit disclaimers and detailed prospectus requirements highlight the regulatory scrutiny around penny stock offerings. The placement agent's involvement provides some validation, though ThinkEquity's sole placement role, rather than a syndicate of banks, suggests institutional interest.

The offering's pricing "at-the-market under Nasdaq rules" raises concerns about maintaining Nasdaq listing requirements, particularly the minimum bid price requirement of $1.00. This could foreshadow future compliance challenges and potential delisting risks.

ENGLEWOOD, Colo., Jan. 7, 2025 /PRNewswire/ -- XTI Aerospace, Inc. (Nasdaq: XTIA), ("XTI" or the "Company"), a pioneer in advanced aircraft design, today announced the pricing of a best-efforts offering of 363,636,364 shares of its common stock priced at-the-market under Nasdaq rules. Each share of common stock is being sold at an offering price of $0.055 per share. All of the shares in the offering are being offered by the Company. Total gross proceeds from the offering, before deducting the placement agent's fees and other offering expenses, are expected to be approximately $20,000,000. The offering is expected to close on January 10, 2025, subject to satisfaction of customary closing conditions.

The Company intends to use the net proceeds from the offering primarily for general working capital and general corporate purposes.

ThinkEquity is acting as sole placement agent for the offering.

The securities will be offered and sold pursuant to a shelf registration statement on Form S-3 (File No. 333-279901), including a base prospectus, filed with the U.S. Securities and Exchange Commission (the "SEC") on May 31, 2024 and declared effective on June 18, 2024. The offering will be made only by means of a written prospectus. A prospectus supplement and accompanying prospectus describing the terms of the offering will be filed with the SEC on its website at www.sec.gov. Copies of the prospectus supplement and the accompanying prospectus relating to the offering may also be obtained, when available, from the offices of ThinkEquity, 17 State Street, 41^st Floor, New York, New York 10004.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About XTI Aerospace, Inc.

XTI Aerospace (XTIAerospace.com) (NASDAQ: XTIA) is the parent company of XTI Aircraft Company, an aviation business based near Denver, Colorado, currently developing the TriFan 600, a fixed-wing business aircraft designed to have the vertical takeoff and landing (VTOL) capability of a helicopter, speeds of up to 345 mph and a range of approximately 700 miles, creating an entirely new category – the vertical lift crossover airplane (VLCA). Additionally, the Inpixon (inpixon.com) business unit of XTI Aerospace is a leader in real-time location systems (RTLS) technology with customers around the world who use the company's location intelligence solutions in factories and other industrial facilities to help optimize operations, increase productivity, and enhance safety. For more information about XTI Aerospace, please visit XTIAerospace.com and HangerXStudios.com (an aviation innovation podcast), and follow the company on LinkedIn, Instagram, X, and YouTube.

Forward Looking Statements

This press release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. All statements other than statements of historical fact contained in this press release, including without limitation, statements about the products under development by XTI, the advantages of XTI's technology, and XTI's customers, plans and strategies are forward-looking statements.

Some of these forward-looking statements can be identified by the use of forward-looking words, including "believe," "continue," "could," "would," "will," "estimate," "expect," "intend," "plan," "target," "projects," or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates, forecasts, and assumptions that, while considered reasonable by XTI and its management, are inherently uncertain, and many factors may cause the actual results to differ materially from current expectations. XTI undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that might subsequently arise. Readers are urged to carefully review and consider the risk factors discussed from time to time in XTI's filings with the SEC, including those factors discussed under the caption "Risk Factors" in its most recent annual report on Form 10-K, filed with the SEC on April 16, 2024, and in subsequent reports filed with or furnished to the SEC.

Contacts:

General inquiries:
Email: contact@xtiaerospace.com
Web: https://xtiaerospace.com/contact

Investor Relations:
Crescendo Communications
Tel: +1 212-671-1020
Email: XTIA@crescendo-ir.com

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SOURCE XTI Aerospace, Inc.

FAQ

How much money will XTIA raise in its January 2025 stock offering?

XTI Aerospace expects to raise approximately $20 million in gross proceeds through its January 2025 stock offering.

What is the price per share for XTIA's January 2025 stock offering?

XTI Aerospace is offering shares at $0.055 per share in its January 2025 stock offering.

How many new shares will XTIA issue in its January 2025 offering?

XTI Aerospace will issue 363,636,364 new shares of common stock in its January 2025 offering.

When will XTIA's January 2025 stock offering close?

The stock offering is expected to close on January 10, 2025, subject to customary closing conditions.

How will XTIA use the proceeds from its January 2025 stock offering?

XTI Aerospace intends to use the net proceeds for general working capital and general corporate purposes.