Inpixon, a leading provider of real-time location systems (RTLS), has entered into a definitive merger agreement with XTI Aircraft Company, a US aviation company developing the fixed wing, VTOL TriFan 600 aircraft.
The enterprise value of XTI was ascertained by an independent financial advisory firm to be within the range of $252 million and $343 million. This was determined after comparison with certain public companies with similar business models to XTI in the air travel/VTOL segment of the aviation industry, with an average enterprise value of approximately $1.6 billion. If completed, the merger will result in a combined publicly traded company that will focus on advancing the TriFan 600 to market, as well as continuing to offer Inpixon's real-time location systems technology to manufacturing and warehousing facilities for streamlined operations, greater efficiency and improved safety. The companies will launch a merger information portal at xti-inpx-merger.com where interested parties can keep abreast of transaction news.
XTI founder and chairman David Brody says: “We're excited to announce this transaction, which we believe will be a transformative event for both companies. We believe that the TriFan 600 aircraft will revolutionise point-to-point air travel by combining the comfort, speed and range of similar conventional business aircraft with the flexibility, convenience and pinpoint transportation of a helicopter. In 2019, we successfully conducted multiple hover tests of our two-thirds scale unmanned proof-of-concept configuration of the TriFan. After we close, we expect to be in a strong position to expand our operations, work toward building our first full-scale piloted test aircraft and continue our efforts toward achieving FAA certification and commercial production.”
XTI CFO and board member Scott Pomeroy adds: “We believe this merger, which results in XTI's listing on NASDAQ, is the logical next step to give XTI access to the broader public capital markets following its earlier Regulation CF and Regulation A offerings. We further believe that our future capital plans are supported by the existing strong demand for the TriFan 600, evidenced by the more than 700 conditional pre-orders under a combination of aircraft purchase agreements, non-binding reservation deposit agreements and options. These pre-orders represent potential gross revenues of approximately $7.1 billion, based on our current list price of $10 million per aircraft, assuming the company is able to execute on the development programme for the TriFan, secure FAA certification and deliver these aircraft.”
Inpixon CEO Nadir Ali says: “We believe that with XTI's experienced executive team and the disruptive potential of the TriFan 600 for the aviation industry, this transaction has the potential to unlock value for Inpixon shareholders. We anticipate that this transaction will not only aid in the growth of XTI but will also enable Inpixon shareholders to own a meaningful interest of approximately 40 per cent of the outstanding common stock of the combined company with a higher valuation in a multibillion-dollar market.”
The merger agreement provides for XTI shareholders to own approximately 60 per cent of the outstanding shares of common stock of the post combination company and Inpixon shareholders to retain approximately 40 per cent. However, that ratio is subject to adjustment and determination of the final exchange ratio in accordance with the terms of the merger agreement.
Upon closing of the transaction, the combined company is planning to operate under the name XTI Aerospace and to trade on the Nasdaq Capital market under the symbol XTIA, or other symbol to be announced. Inpixon's industrial RTLS solutions will be offered as a separate business line of XTI Aerospace, and XTI Aircraft Company will operate as a wholly owned subsidiary of XTI Aerospace.
In connection with the closing of the transaction, Nadir Ali and Wendy Loundermon are expected to resign as chief executive officer and chief financial officer of Inpixon. It is anticipated that XTI's current board member and chief financial officer Scott Pomeroy will become the chairman and chief executive officer of XTI Aerospace, with XTI founder David Brody becoming a member of the board of directors of XTI Aerospace. Michael Hinderberger will continue in his current role as chief executive officer of XTI Aircraft Company, leading the technical development of the TriFan 600. Soumya Das, chief operating officer of Inpixon, will continue to lead the RTLS business line.
The TriFan 600 will combine the performance of a fixed wing business aircraft with VTOL capability. XTI estimates a speed up to 345 mph and a range of 700 miles, both more than twice that of most civilian helicopters similar in size to the TriFan, thus creating a new 'vertical lift crossover aircraft' (VLCA) category. The TriFan 600's current worldwide addressable market is comprised of 58,000 turbine powered business aircraft (fixed wing and rotorcraft). In addition, the company will target the emerging advanced air mobility (AAM) market. XTI is led by an experienced management team with a successful track record of bringing aircraft to market, and has secured patent protection in various countries, including the US, Canada, China, Japan and Europe.
The TriFan 600 accommodates a pilot plus up to six passengers in a spacious, comfortable cabin. It targets a broad range of end users including business aircraft and helicopter operators, fractional operators, air medical operators, HNWIs, government and military. The turbine engines currently planned for the propulsion system will be capable of using sustainable aviation fuel, which the International Air Transport Association considers key to reducing the industry's carbon footprint. And XTI's future plans include incorporating hybrid-electric or all-electric propulsion as these technologies mature and become commercially viable.
The proposed merger is expected to be completed by the fourth quarter of 2023.