Airship AI Holdings, Inc. To List On NASDAQ Through Business Combination With BYTE Acquisition Corp.

Robust AI-driven surveillance video, sensor and data management platform

BYTE Acquisition Corp. (NASDAQ:BYTS), a special purpose acquisition company ("BYTE"), and Airship AI Holdings, Inc. ("Airship AI"), a robust AI-driven edge video, sensor and data management platform for government agencies and enterprises that gathers unstructured data from surveillance cameras and sensors, applies artificial intelligence ("AI") analytics, and provides visualization tools to improve decision making in mission critical environments, announced today the signing of a definitive agreement for a business combination that is expected to result in Airship AI becoming a public company. Upon closing of the transaction, subject to approval by BYTE's shareholders and Airship AI's shareholders and other customary requirements, the combined company is expected to list on Nasdaq under the ticker symbol "AISP." The transaction is expected to close in the third quarter of 2023. Simultaneously with the issuance of this press release, BYTE has filed an investor presentation outlining Airship AI's business and the proposed business combination, including the following investment highlights:

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230626861400/en/

• Large and Rapidly Growing Size of Addressable Market
  • $7 billion edge AI software and hardware addressable market today, projected to grow to over $40 billion in 20301
  • This growth is expected to be driven by strong demand for AI solutions in public safety, industrial, and logistics settings

• Differentiated End-to-End Solution
  • Solutions work with clients' existing hardware and capitalize on rapidly growing use of AI to create efficiency, increase speed, reduce costs, and improve decision-making

• Blue-Chip Customer Base
  • Existing customers include federal government agencies across the Department of Homeland Security, Department of Justice, Department of Defense, and Intelligence Community, along with state and local law enforcement agencies and Fortune 500 companies FedEx and Home Depot.

• Strong Growth with Software Margin
  • 2022A: $14.5 million revenue, 57.9% gross margin, positive EBITDA
  • NTM (Next Twelve Months, which denotes July 1, 2023 - June 30, 2024 forecast period): $39 million revenue, 65% gross margin, $9 million EBITDA
  • Opportunity for margin expansion with recently launched Edge products

• Visible and Robust Pipeline
  • $163 million pipeline predominantly with the U.S. government in addition to new growth opportunities within the commercial sector

Airship AI leverages AI at the edge to help improve public safety and operational efficiency for public sector and commercial customers by providing predictive analysis of events before they occur and meaningful intelligence to decision makers.

"We're excited to partner with the BYTE team which brings substantial software and business expertise," said Airship AI President Paul Allen. Mr. Allen continued, "We believe being a public company will bolster our credibility as a financially strong partner to our customers by demonstrating to them our financial flexibility and transparency."

"We are excited to reach this important milestone with Airship AI. We believe that Airship AI is an exceptional company with which to complete a business combination," said BYTE Chief Executive Officer and Chief Financial Officer Sam Gloor. Mr. Gloor continued, "The company is operating in attractive government and commercial end markets utilizing AI technology to help improve safety and operational efficiency. Airship AI's Outpost edge device, Acropolis operating system, and Command Nexus viewing client provide a differentiated end-to-end solution which we believe adds value for customers and that will propel Airship AI's continued growth going forward. We believe a public listing will provide Airship AI with enhanced visibility, selling opportunities and financial flexibility to perform its business plan and broaden its customer base. We look forward to working with Airship AI's management team to consummate the business combination."

Transaction Overview

Pursuant to the business combination agreement, BYTE will acquire Airship AI for a pre-money equity value of $225 million. In connection with the transaction, BYTE will issue 22.5 million newly issued shares to current shareholders of Airship AI. Equityholders of Airship AI as of the date of the business combination agreement will also receive the contingent right to receive up to 5 million additional shares, subject to Airship AI's achievement of the earlier of:

1. Share performance milestones: 1sttranche of 2.5 million shares at share price target of $12.50; 2nd tranche of 2.5 million shares at share price target of $15.00, both within five years of closing of business combination;
2. Operating performance milestones: 1st tranche of 1.25 million shares on achievement of (a) $39 million of revenue during the period ending on the full calendar quarter immediately following 1 year post-closing of the business combination or (b) the aggregate value of new contract awards with federal law enforcement agencies growing by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the business combination agreement; 2nd tranche of 3.75 million shares on achievement of $100 million of revenue during the period ending on the full calendar quarter immediately following 3 years post-closing of the business combination.

BYTE has agreed to secure $7 million in non-redemption agreements to be executed within 21 business days following the later of (a) the date of the business combination agreement and (b) the delivery of Airship AI's year-end financials with an unmodified opinion of a U.S. registered independent accounting firm.

Airship AI shareholders will not receive any cash proceeds as part of the transaction and will roll 100% of their equity into the combined company. Assuming no BYTE shareholders exercise their redemption rights, gross proceeds of approximately $25 million will be released to the combined company from the trust account in connection with the transaction.

The boards of directors of Airship AI and BYTE have unanimously approved the transaction.

Upon closing of the transaction, Airship AI's senior management will continue to serve in their current roles. Current Airship AI shareholders will retain approximately 70% of ownership in the combined company, assuming no BYTE shareholders exercise their redemption rights.

Additional information regarding the proposed business combination, including a copy of the business combination agreement and other relevant materials, will be provided by BYTE on a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the "SEC").

Advisors

Roth Capital Partners is acting as exclusive M&A advisor to Airship AI. Loeb & Loeb LLP is acting as legal advisor to Airship AI. White & Case LLP is acting as legal advisor to BYTE.