XTI Aircraft is a cool concept in aviation for vertical take-off and landing plane. The idea addresses a pain point for plane enthusiasts – the need to be near an airport. Following a successful Testing the Waters (TTW) campaign where over $20 million in indicated interest was captured, XTI filed with the SEC a Tier 2 Reg A+ offer. The results were not as encouraging as the issuer failed to reach it self-imposed $3 million lower limit on StartEngine.
Today XTI has refiled with the SEC to try once again. In the offering circular, XTI explained;
“XTI recently conducted a best-efforts, minimum-maximum offering under Regulation A, but was unable to meet the $3 million minimum contingency and therefore terminated the offering and returned all funds to subscribers. The current Offering is substantially similar to that offering, with the exception that the current Offering has no minimum contingency.”
The question is why so many potential investors failed to show up once they had to commit?
Most early stage investment is driven by the team first, and the concept second. XTI appears to have both as management includes a solid list of aviation industry executives. And who would not want to fly a plane they could easily land in their back yard?
Perhaps the answer can be uncovered by the risk factors enumerated by XTI. Management explains that, even if their development schedule is met, XTI does not expect to deliver a certified aircraft until 2022. That is the earliest date possible.
XTI also tells potential investors the company “depends on receiving large amounts of capital and other financing to complete its development work. The big question here is how much is large? The Offering Circular states “XTI will require a minimum of $400 million in capital to fully implement its proposed business plan.” This means early stage investors may face a reality that most likely includes significant amount of dilution going forward.
The XTI offer is a good example of fascinating product that is a highly risky investment. As XTI tells prospective investors, “evaluating XTI Aircraft Company and an investment in the shares, careful consideration should be given to the following risk factors [itemized in the offering circular]. Let’s see if this time XTI takes off (no pun intended).
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