XTI Aerospace Signs Capital Distribution Agreement for Proposed Investment of up to $55 Million at $275 Million Valuation

Rhea-AI Summary

XTI Aerospace has announced a strategic equity investment agreement with FC Imperial , linked to the FinExic Concordia Group, for up to $55 million. This investment values XTI at $275 million. The capital is expected to accelerate the development of XTI's TriFan 600, a long-range VTOL business aircraft. The funding will support key milestones, including design and assembly phases. XTI's CEO, Scott Pomeroy, emphasized the alignment of values and vision between the organizations. The investment consortium sees the TriFan 600 as a versatile aircraft with potential for global adoption across various sectors, including healthcare, emergency services, and luxury travel.

Positive

• Proposed $55 million investment to accelerate TriFan 600 development.
• $275 million post-money valuation reflects significant progress.
• Alignment of long-term interests between XTI and the Investor Consortium.

Negative

• Investment still subject to successful consummation of the transaction.

Insights

Financial Analyst

The proposed $55 million investment in XTI Aerospace at a post-money valuation of $275 million potentially represents a significant capital influx which could expedite the development of the TriFan 600. This investment indicates a substantial vote of confidence from the Investor Consortium, suggesting that after thorough due diligence, they believe in the commercial viability and technological innovation of the TriFan 600.

For retail investors, this can be seen as a positive indicator, as strategic equity investments at favorable valuations typically lead to enhanced liquidity and financial stability for the company. In the short term, the completion of this investment could buoy the stock price due to increased investor confidence. However, retail investors should be aware that the issuance of convertible preferred stock may lead to future dilution of common shares, which is an important factor to consider.

Long-term implications depend on XTI's ability to meet critical milestones and convert this capital into tangible progress. The focus on multiple applications for the TriFan 600, spanning from emergency services to luxury, suggests a broad potential market, adding a layer of versatility to the investment proposition.

Aviation Technology Expert

The TriFan 600's development marks an ambitious leap in civilian VTOL technology, aiming to blend the efficiency of fixed-wing aircraft with the capabilities of a helicopter. This hybrid design is intended to offer significant advantages in speed, range and versatility. The mention of moving into critical design review and preparing for the assembly phase places XTI at a important juncture in its product development cycle.

For investors, understanding the technical milestones is key. Progressing from preliminary design to critical design review signifies that the project is transitioning from conceptual to more detailed and executable plans. Successful completion of these phases can reduce technical risks and pave the way for eventual market entry. This can be particularly compelling for investors keen on innovative aviation technologies with disruptive potential.

However, investors should also be conscious of the inherent risks in aerospace development, which include technological hurdles, regulatory approvals and potential delays. The smooth execution of these phases will be vital for maintaining investor confidence and realizing the full potential of the TriFan 600.

Investment Expected to Significantly Accelerate Development of Revolutionary TriFan 600 Long-Range Civilian Fixed-Wing VTOL Business Aircraft, if Successfully Consummated

ENGLEWOOD, Colo., July 1, 2024 /PRNewswire/ -- XTI Aerospace, Inc. (NASDAQ: XTIA) ("XTI" or the "Company") today announced that it has entered into an agreement with FC Imperial Limited ("FCIL"), an affiliate of a private global investment consortium, FinExic Concordia Group, ("FCG" or "Investor Consortium"), for a proposed strategic equity investment for shares of convertible preferred stock (the "Investment") of up to $55 million (the "Maximum Amount") at a post-money valuation of $275 million (the "Locked Valuation"), with the successful consummation of the entire transaction process.

Mr. Anindya Chakraborty, leading the investment structuring for the Investment Consortium, said "For well over a year, extensive discussions were held with XTI management and XTI engineering team along with review of sector trends and technologies being developed. The Trifan is unique and perhaps the most efficient, practical, versatile and commercially viable VTOL aircraft with clear attributes of ushering in a game changing reality to the aviation industry."

Scott Pomeroy, chairman and CEO of XTI, stated, "XTI has had the pleasure of working with and sharing information with the investment team for over a year, and they have performed extensive technical and financial due diligence on XTI Aircraft Company and the TriFan. Assuming the completion of the proposed investment, we believe the additional capital will help accelerate the development of the TriFan through several major milestones including completion of the updated preliminary design review along with launching the critical design review phase in preparation for the assembly of XTI's Test Aircraft No. 1. Importantly, we also believe that our relationship with the Investor Consortium, which is a true collaboration of values and vision, aligns the long-term interests of both organizations." 

Mr. Pomeroy continued, "The $275 million valuation aligns with the fairness opinion delivered to the Inpixon Board of Directors prior to Inpixon's merger with XTI Aircraft Company. This valuation reflects the progress we have made, especially since our last private company capital raise, which was based on a $100 million valuation."

Mr. Chakraborty added that "The Trifan represents traditional time-tested stability, hyper-boosted with intelligent innovation and we believe its elegant, utilitarian, cross purpose design is expected to fill up the skies across multiple geographies, including in the emerging aviation markets and some of the fastest growing economies like India, SE Asia and Middle East. It is a bold statement for a new segment in the aviation industry and with its unparalleled blend of speed and long-range VTOL capabilities, we feel the TriFan is uniquely positioned to achieve widespread global adoption. It is tailored for a broad spectrum of applications, from critical healthcare and emergency services to para-military operations, elite corporate mobility, and the ultimate aspirational luxury for enthusiasts. The Investment Consortium is willing to work with XTIA to provide more capital and help facilitate additional raises as milestones are met."

Proposed material terms of Investment

The parties have entered into an agreement which stipulates a structured process for the distribution of capital within a defined time frame at the Locked Valuation of $275 million and issuance of convertible preferred stock for an investment up to $55 million which will convert into common stock through defined exchange events subject to execution of a definitive purchase agreement.

Further details of the proposed investment will be included in the Current Report on Form 8-k which will be filed by the Company with the Securities and Exchange Commission.

About XTI Aerospace, Inc.

XTI Aerospace (XTIAerospace.com) is the parent company of XTI Aircraft Company (XTIAircraft.com), 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 345 mph and a range of 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.

Cautionary Statement Regarding 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 XTI and FCG entering into a definitive purchase agreement on the terms described in the agreement mentioned above, or whether XTI and FCIL or the Investor Consortium will make any of the contemplated capital contributions, and 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.

The proposed Investment is subject to the parties successfully completing all the processes under the agreement including execution of a definitive purchase agreement, and there can be no assurance that such transaction will materialize.

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 Aerospace 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

What is the recent investment announced by XTI Aerospace?

XTI Aerospace announced a proposed strategic equity investment of up to $55 million from FC Imperial , valuing XTI at $275 million.

How will the $55 million investment affect XTI Aerospace?

The investment is expected to accelerate the development of the TriFan 600 long-range VTOL business aircraft by supporting key milestones in its design and assembly.

What is the valuation of XTI Aerospace after the proposed investment?

The proposed investment values XTI Aerospace at $275 million.

What are the expected applications of the TriFan 600 aircraft?

The TriFan 600 is expected to serve various sectors including healthcare, emergency services, para-military operations, elite corporate mobility, and luxury travel.

What are the key milestones for the TriFan 600 development supported by the investment?

The investment will support the completion of the updated preliminary design review and the launch of the critical design review phase, leading to the assembly of XTI's Test Aircraft No. 1.