XTI Aerospace Acquires Drone Nerds for $40M as Unusual Machines Invests $25M in DJI Ban Bet

XTI Aerospace closed a $40 million acquisition of Drone Nerds and secured a $25 million strategic investment from Unusual Machines on November 10, 2025, positioning both companies to capitalize on potential Chinese drone restrictions just 43 days before a critical federal deadline.

The dual transactions mark a significant consolidation play in the U.S. drone market as the December 23, 2025 FCC deadline for DJI’s security audit approaches. If the review isn’t completed, DJI and Autel will automatically land on the FCC’s Covered List, blocking new device approvals and reshaping the American drone landscape.

VTOL Aircraft Maker Pivots Into Drone Distribution

XTI Aerospace, primarily known for developing the TriFan 600 vertical takeoff and landing aircraft, acquired Drone Nerds, one of the largest drone distributors in the United States. The Colorado-based company reported Drone Nerds generated more than $100 million in 2024 annual revenue and exceeded $55 million through June 30, 2025, according to the company’s announcement.

The acquisition brings a decade-long profitable distribution business under XTI’s umbrella. Drone Nerds provides comprehensive drone solutions for enterprise, private, and recreational customers, with its proprietary Always Flying program offering reliability and enterprise support across industry verticals including public safety, government, agriculture, construction, energy, and inspection.

The total purchase price of approximately $40 million breaks down as $20 million in cash from XTI’s reserves, $11.9 million in promissory notes (including roughly $1.6 million in working capital adjustments), and $9.7 million in equity consideration. The equity portion can be exchanged for 6,524,576 common shares of XTI after May 1, 2026, representing 19.9% of XTI’s common shares outstanding before the acquisition. The resulting XTI common stock will remain locked until November 10, 2026.

Unusual Machines Makes $25 Million Strategic Bet

Immediately following the acquisition closing, Unusual Machines invested $25 million in XTI through a private placement. The Florida-based drone component manufacturer purchased 25,000 shares of newly designated Series 10 Convertible Preferred Stock at $1,000 per share.

The preferred shares convert into XTI common stock at $1.492 per share upon shareholder approval required by Nasdaq Listing Rule 5635. XTI plans to commence the proxy process for shareholder approval before year-end.

Unusual Machines owns popular FPV drone brands Rotor Riot and Fat Shark and has rapidly expanded its Pentagon contracts throughout 2025. The company signed a $12.8 million agreement with Strategic Logix in September to supply over 160,000 drone components for the military’s Rapid Reconfigurable Systems Line.

Allan Evans, CEO of Unusual Machines, positioned the investment within the broader domestic drone production push.

“Drone Nerds has an unprecedented opportunity to define the entire domestic drone landscape over the next few years as the U.S. intensifies its ban on Chinese drone companies,” Evans said. “We are excited to be a part of the Drone Nerds – XTI strategy and look forward to further strengthening our years-long relationship with Drone Nerds, and we are demonstrating our confidence in the XTI strategy by our investment as we collectively build the American aerospace ecosystem.”

Strategic Timing and White House Executive Order Context

The November 10 transaction timing aligns with escalating federal pressure on Chinese drone manufacturers and aggressive promotion of domestic alternatives. On June 6, 2025, President Trump signed Executive Order 14307, “Unleashing American Drone Dominance,” directing federal agencies to prioritize American-manufactured drones and accelerate domestic production for commercial and military applications.

The Trump administration’s $1.4 billion funding initiative for small drone expansion under the One Big Beautiful Bill Act has fueled speculation that domestic manufacturers positioned near distribution channels will capture significant market share as Chinese competitors face restrictions.

Scott Pomeroy, CEO of XTI Aerospace, framed the acquisition as foundational to building vertical flight capabilities.

“The acquisition of Drone Nerds is a foundational step as we advance our strategy to build the most comprehensive portfolio of vertical flight and UAS capabilities in the industry,” Pomeroy stated. “The addition of Drone Nerds significantly expands XTI’s scale, recurring revenue base and near-term operating footprint.”

Jeremy Schneiderman, CEO of Drone Nerds, explicitly connected the deal to federal policy shifts.

“We believe joining XTI positions Drone Nerds at the center of aviation’s next transformation,” Schneiderman said. “Together our solutions are aimed at enabling customers to realize meaningful cost efficiencies, as well as speed and competitive advantages that drones and unmanned flight can deliver across a variety of economic sectors from logistics and emergency response to defense, security, delivery, and energy, agriculture and infrastructure inspection. We have built a close relationship with the XTI executive team over the last several months and we are excited to support their innovative approach to advancing U.S. drone leadership consistent with the June 6, 2025, White House Executive Order on domestic drone development and the broader Vertical Economy framework.”

XTI’s Expanded Portfolio Strategy

XTI Aerospace operates as the parent company of XTI Aircraft Company, an aviation business near Denver developing the TriFan 600. The fixed-wing business aircraft features vertical takeoff and landing capability similar to a helicopter, speeds reaching 345 mph (555 km/h), and range up to 700 miles (1,127 km), creating what the company calls a vertical lift crossover airplane (VLCA) category.

The company’s Inpixon business unit provides real-time location systems technology for manufacturing and industrial facilities. XTI will benefit from Drone Nerds’ market-leading position in unmanned aircraft systems solutions, spanning systems design and configuration including hardware and software for corporate and consumer operational missions.

XTI also acquired a business focused on development and marketing of enterprise drone solutions as part of the transaction. No XTI common stock was issued to Drone Nerds, any acquired party, or Unusual Machines at the closing of either the acquisition or the private placement.

ThinkEquity acted as the introducing party and exclusive M&A advisor to XTI in connection with the acquisition. ThinkEquity also served as the exclusive placement agent for the $25 million private placement investment by Unusual Machines.

Additional information regarding the transactions, including material terms of the acquisition agreements, will be contained in a Current Report on Form 8-K that XTI intends to file with the SEC.

DroneXL’s Take

This acquisition represents the most explicit DJI ban speculation we’ve seen in the drone industry M&A space. XTI Aerospace, a company developing passenger VTOL aircraft that has nothing to do with consumer or commercial drones, just spent $40 million to buy the largest U.S. drone distributor—and secured a $25 million investment from a manufacturer positioning itself as the domestic alternative to DJI.

The timing is everything. With 43 days until the December 23 FCC deadline, both companies are making massive financial bets that Chinese manufacturers will lose access to the American market. Drone Nerds built its business distributing DJI, Autel, and other Chinese brands that dominate the consumer and commercial segments. If those restrictions materialize, Drone Nerds will need American-made alternatives to sell—which is exactly what Unusual Machines manufactures.

We’ve been tracking Unusual Machines’ explosive growth throughout 2025, from its HP 3D printing partnership to its controversial Pentagon contracts following Trump Jr.’s involvement. The company’s stock surged over 900% in 2025 as investors bet on domestic drone production mandates. Now UMAC is doubling down by investing $25 million into a distributor that will need products to sell if DJI gets blocked.

The consolidation trend extends beyond this deal. We’ve covered Robinson Helicopter’s acquisition of Ascent AeroSystems, John Deere buying Sentera, and Boeing attempting to sell Insitu as the industry reshuffles in response to federal procurement policies and potential Chinese restrictions.

But here’s the uncomfortable reality: domestic manufacturers still can’t match DJI’s capabilities, prices, or scale. The U.S. Army plans to buy 1 million drones over the next two to three years, yet American companies barely produce drones at meaningful volume. Secretary of Defense Pete Hegseth’s July memo reclassified small drones as “consumables” to remove bureaucratic barriers, but removing red tape doesn’t create manufacturing capacity.

XTI’s strategy appears to be building a vertically integrated “anything that flies” portfolio—passenger VTOL aircraft through its core business, enterprise drones through the Drone Nerds acquisition, and industrial location systems through Inpixon. Whether this diversification pays off depends entirely on what happens December 23 and whether domestic manufacturers can actually scale production to fill the void if Chinese drones get restricted.

The broader question remains: will legitimate drone operators—search and rescue teams, infrastructure inspectors, farmers, first responders—suffer from restricted access to affordable, capable equipment in the name of security theater? Or will companies like Unusual Machines and the newly combined XTI-Drone Nerds entity deliver genuine American alternatives that match Chinese capabilities?

What do you think? Share your thoughts in the comments below.