8-K: flyExclusive to Acquire Jet.AI Aviation Business in All-Stock Deal, Transforming Jet.AI into Pure-Play AI Company

flyExclusive is set to acquire Jet.AI's aviation business in an all-stock transaction, allowing Jet.AI to focus on AI solutions and providing flyExclusive with growth capital.

Summary

• flyExclusive, a provider of premium jet charter experiences, has entered into a definitive agreement to acquire the aviation business of Jet.AI.
• The transaction involves Jet.AI spinning off its aviation business into a new company (SpinCo), which will then be acquired by flyExclusive in an all-stock transaction.
• Jet.AI shareholders will retain their Jet.AI stock and receive new Class A common shares in flyExclusive.
• The purchase price will be determined based on Jet.AI's Net Cash multiplied by an Applicable Premium Percentage.
• A Net Cash of at least $12 million is a condition to closing the Business Combination.
• The Applicable Premium Percentage will be between 115% and 120%, potentially valuing the aviation business between $12 million and $22 million.
• The transaction is expected to close in the second quarter of 2025, subject to closing conditions, including Jet.AI financing, regulatory review, and shareholder approval.
• Jet.AI has signed a $50 million non-binding term sheet with Hexstone Capital LP on economic terms substantially similar to those of its existing $16.5 million arrangement with Ionic Ventures LLC.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the strategic benefits outlined for both companies, including growth capital for flyExclusive and a focus on AI for Jet.AI. However, the deal is subject to closing conditions and potential risks, tempering the overall optimism.

Positives

• flyExclusive gains additional growth capital and enhanced shareholder liquidity.
• Jet.AI transforms into a pure-play AI solutions company.
• The transaction is expected to augment flyExclusives continued growth and market share expansion.
• Jet.AI shareholders have the opportunity to benefit from growth in both private aviation and AI.

Risks

• The Business Combination might not be completed in a timely manner or at all.
• There is a risk of failure to satisfy the conditions to the consummation of the Business Combination, including required Jet.AI financing, board and shareholder approvals.
• Potential dilution to Jet.AI shareholders from any financing.
• The Business Combination disrupts current plans or operations of Jet.AI or flyExclusive.
• There is a risk of the outcome of any legal proceedings that may be instituted against Jet.AI or flyExclusive related to the Business Combination.
• The companies ability to raise funding in the future, as needed, and the terms of such funding, including potential dilution caused thereby.
• The companies ability to maintain the listing of its securities on a national securities exchange.

Future Outlook

The Business Combination is expected to provide flyExclusive with additional growth capital and enhanced shareholder liquidity and to allow Jet.AI to focus as a pure-play AI solutions company.

Management Comments

• Jim Segrave (flyExclusive): 'The proposed transaction with Jet.AI is the latest example of the value flyExclusives vertically integrated private aviation platform provides to industry participants.'
• Mike Winston (Jet.AI): 'This Business Combination with flyExclusive offers our shareholders the opportunity to benefit from growth in both private aviation and AI.'

Industry Context

This announcement reflects a trend of consolidation in the private aviation industry, with companies seeking to expand their fleets and service offerings. It also highlights the growing interest in integrating AI technologies into aviation operations.

Comparison to Industry Standards

• flyExclusive, as the fifth-largest operator in the industry by hours flown, is a significant player in the private aviation market.
• The acquisition of Jet.AI's aviation business is a strategic move to enhance flyExclusives growth and market share.
• The all-stock transaction structure is a common approach in mergers and acquisitions, allowing for the combination of assets without immediate cash outlay.

Stakeholder Impact

• Jet.AI shareholders will retain their Jet.AI stock and receive new Class A common shares in flyExclusive.
• flyExclusive customers can expect continued premium jet charter experiences.
• Jet.AI employees in the aviation business will transition to flyExclusive.
• The transaction is expected to benefit both companies and their respective stakeholders.

Next Steps

• Jet.AI and flyExclusive will file relevant materials with the SEC, including a registration statement on Form S-4.
• Jet.AI will hold a meeting of shareholders to approve the Business Combination.
• The companies will work to satisfy closing conditions, including Jet.AI financing and regulatory review.
• The transaction is expected to close in the second quarter of 2025.

Key Dates