8-K: Jet.AI to Divest Aviation Business to flyExclusive in All-Stock Deal, Pivots to AI Data Centers

Jet.AI is selling its aviation business to flyExclusive in an all-stock transaction, allowing Jet.AI to focus on becoming a pure-play AI solutions company and investing in AI data centers.

Summary

• Jet.AI Inc. has entered into a definitive agreement to sell its aviation business to flyExclusive in an all-stock transaction.
• Jet.AI shareholders will retain their Jet.AI stock and receive new Class A common shares in flyExclusive as part of the transaction.
• The purchase price will be determined based on Jet.AIs Net Cash multiplied by the Applicable Premium Percentage, with a Net Cash of at least $12 million as a condition to closing.
• The applicable premium percentage paid for the aviation business will be between 115% and 120%, equivalent to a dollar value today contemplated in the range of $12mm to $22mm, depending on the Net Cash value at the close of transaction.
• Jet.AI is shifting its focus to AI data centers, signing a letter of intent for a 50-megawatt project as part of a new one-hundred-and-twenty-acre campus with plans for a full gigawatt of capacity.
• The company estimates it costs about $10 million to build a megawatt of data center capacity, which generates roughly $1 million in Net Operating Income (NOI).
• The transaction is expected to close in the second quarter of 2025, subject to various closing conditions, including Jet.AI financing, regulatory review, and shareholder approval.

Sentiment

Score: 7

Explanation: The document presents a positive outlook for both Jet.AI and flyExclusive, highlighting the benefits of the transaction and the potential for future growth. However, there are also risks and uncertainties associated with the transaction and the companys future performance.

Positives

• Jet.AI shareholders gain exposure to both private aviation and AI growth.
• flyExclusive benefits from acquiring Jet.AIs aviation assets, supporting its 2025 growth plans.
• Jet.AI can focus on its AI solutions and invest in AI data centers, a growing market.
• The all-stock deal provides flyExclusive with additional growth capital and enhanced shareholder liquidity.
• Jet.AI has signed a letter of intent for its first 50-megawatt AI data center project, with plans for a full gigawatt of capacity.

Negatives

• Jet.AI is exiting the aviation business, which may disappoint some investors.
• The transaction is subject to closing conditions, including Jet.AI financing, regulatory review, and shareholder approval, which could delay or prevent the deal from closing.
• Potential dilution to Jet.AI shareholders from any financing.

Risks

• The Business Combination might not be completed in a timely manner or at all.
• The 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 occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement for the Business Combination.
• The effect of the announcement or pendency of the transaction on Jet.AIs or flyExclusives business generally.
• Risks that the Business Combination disrupts current plans or operations of Jet.AI or flyExclusive.
• The outcome of any legal proceedings that may be instituted against Jet.AI or flyExclusive related to the Business Combination.
• The ability to realize any of the benefits anticipated in 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

Jet.AI will focus on AI solutions and AI data centers, while flyExclusive will integrate Jet.AIs aviation business to support its growth plans.

Management Comments

• Jim Segrave, flyExclusives Founder and Chief Executive Officer, stated that the transaction benefits flyExclusive investors and will augment continued growth and market share expansion.
• Mike Winston, Jet.AI Founder and Executive Chairman, said that the Business Combination with flyExclusive offers shareholders the opportunity to benefit from growth in both private aviation and AI.

Industry Context

The transaction reflects the growing demand for AI infrastructure and the increasing consolidation in the private aviation industry.

Comparison to Industry Standards

• flyExclusive operates 113 planes, making it the #5 player in private aviation by fleet size.
• FlexJet operates 275 planes, and NetJets operates 750 planes, illustrating the scale Jet.AI needed to achieve in fractional aviation.
• The International Energy Agency estimates data centers could consume 4% of global electricity by 2030, highlighting the growing demand for AI data centers.

Stakeholder Impact

• Jet.AI shareholders will retain their Jet.AI stock and receive new Class A common shares in flyExclusive.
• flyExclusive investors will benefit from the acquisition of Jet.AIs aviation assets and the additional growth capital.
• Customers of both Jet.AI and flyExclusive may experience changes in service as the companies integrate their operations.

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 transaction is expected to close in the second quarter of 2025, subject to closing conditions.

Key Dates

Keywords

Jet.AI, flyExclusive, aviation, AI, data centers, merger, acquisition, spin-off, shareholders, financing