airsp_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File No. 001-40222

Airship AI Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		93-4974766
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8210 154th Ave NE, Redmond,		98052
(Address of principal executive offices)		(Zip Code)

(877) 462-4250

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AISP	The Nasdaq Stock Market LLC
Warrant	AISPW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2024, there were a total of 23,736,027 shares of the registrant’s common stock issued and outstanding.

Airship AI Holdings, Inc.

Quarterly Report on Form 10-Q

Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements (Unaudited).	3
	Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3
	Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023	4
	Consolidated Statements of Changes in Stockholders’ Deficit	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	6
	Notes to the Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	SIGNATURES	35

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS.

AIRSHIP AI HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30, 2024 and December 31, 2023

	June 30, 2024			12/31/2023 (1)
ASSETS	(Unaudited)

CURRENT ASSETS:
Cash and cash equivalents	$	226,750		$	3,124,413
Accounts receivable, net of provision for credit losses of $0		3,440,121			1,648,904
Prepaid expenses and other		494,616			18,368
Income tax receivable		9,640			7,230
Total current assets		4,171,127			4,798,915

PROPERTY AND EQUIPMENT, NET		-			1,861

OTHER ASSETS
Other assets		180,432			182,333
Operating lease right of use asset		953,713			1,104,804

TOTAL ASSETS	$	5,305,272		$	6,087,913

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable - trade	$	1,505,442		$	2,908,472
Advances from founders		2,550,000			1,750,000
Accrued expenses		161,406			200,531
Senior Secured Convertible Promissory Notes		2,675,919			2,825,366
Current portion of operating lease liability		198,002			174,876
Deferred revenue- current portion		3,791,970			4,008,654
Total current liabilities		10,882,739			11,867,899

NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion		795,993			943,702
Warrant liability		5,972,729			667,985
Earnout liability		11,741,351			5,133,428
Deferred revenue- non-current		3,878,997			4,962,126
Total liabilities		33,271,809			23,575,140

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' DEFICIT:
Preferred stock - no par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023		-			-
Common stock - $0.0001 par value, 200,000,000 shares authorized, 23,736,027 and 22,812,048 shares issued and outstanding as of June 30, 2024 and December 31, 2023		2,372			2,281
Additional paid in capital		3,014,089			-
Accumulated deficit		(30,979,174	)		(17,476,700	)
Accumulated other comprehensive loss		(3,824	)		(12,808	)
Total stockholders' deficit		(27,966,537	)		(17,487,227	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	5,305,272		$	6,087,913

(1)	Derived from the audited consolidated balance sheet.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

AIRSHIP AI HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)

For the three and six months ended June 30, 2024 and 2023

(Unaudited)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
NET REVENUES:
Product	$	5,358,808		$	1,805,163		$	14,757,584		$	3,639,329
Post contract support		1,042,223			964,855			2,218,462			2,069,286
		6,401,031			2,770,018			16,976,046			5,708,615
COST OF NET REVENUES:
Cost of Sales		1,306,386			557,792			9,095,795			2,135,958
Post contract support		588,438			538,889			745,917			1,095,040
		1,894,824			1,096,681			9,841,712			3,230,999
GROSS PROFIT		4,506,207			1,673,337			7,134,334			2,477,616
RESEARCH AND DEVELOPMENT EXPENSES		702,771			665,203			1,398,137			1,339,283
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,827,120			4,092,646			6,162,414			5,925,016
TOTAL OPERATING EXPENSES		3,529,891			4,757,849			7,560,551			7,264,299
OPERATING INCOME (LOSS)		976,316			(3,084,512	)		(426,217	)		(4,786,683	)
OTHER INCOME (EXPENSE):
Gain (loss) from change in fair value of earnout liability		14,876,927			-			(6,607,923	)		-
Gain (loss) from change in fair value of warrant liability		1,542,347			-			(5,304,744	)		-
Gain (loss) from change in fair value of convertible debt		1,527,193			-			(512,184	)		-
Loss on note conversion		-			-			(158,794	)		-
Interest expense, net		(421,500	)		(19,005	)		(453,324	)		(19,005	)
Other (expense) income		(39,288	)		238			(39,288	)		(9,767	)
Total other income (expense), net		17,485,679			(18,767	)		(13,076,257	)		(28,772	)

INCOME (LOSS) BEFORE PROVISON FOR INCOME TAXES		18,461,995			(3,103,279	)		(13,502,474	)		(4,815,455	)

Provision for income taxes		-			-			-			-

NET INCOME (LOSS)		18,461,995			(3,103,279	)		(13,502,474	)		(4,815,455	)

OTHER COMPREHENSIVE INCOME
Foreign currency translation income, net		3,239			-			8,984			42,551

TOTAL COMPREHENSIVE INCOME (LOSS)	$	18,465,234		$	(3,103,279	)	$	(13,493,490	)	$	(4,772,904	)

NET INCOME (LOSS) PER SHARE:
Basic	$	0.80		$	(0.14	)	$	(0.59	)	$	(0.21	)
Diluted	$	0.58		$	(0.14	)	$	(0.59	)	$	(0.21	)

Weighted average shares of common stock outstanding
Basic		23,220,709			22,812,048			23,059,598			22,812,048
Diluted		30,272,228			22,812,048			23,059,598			22,812,048

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

AIRSHIP AI HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the six months ended June 30, 2024 and 2023

(Unaudited)

			Common		Additional					Other			Total
	Common		Stock		Paid in		Accumulated			Comprehensive			Stockholders'
	Stock		$		Capital		Deficit			Income (Loss)			Deficit
Balance as of January 1, 2023		22,812,048	$	2,281	$	1,963,727	$	(10,314,313	)	$	(10,106	)	$	(8,358,411	)
Stock-based compensation		-		-		136,709		-			-			136,709
Net loss		-		-		-		(1,712,176	)		-			(1,712,176	)
Balance as of March 31, 2023		22,812,048		2,281		2,100,436		(12,026,489	)		(10,106	)		(9,933,878	)
Stock-based compensation- stock option grants		-		-		136,709		-			-			136,709
Stock based compensation- warrants		-		-		2,136,115		-			-			2,136,115
Foreign currency translation gain		-		-		-		-			42,551			42,551
Net loss		-		-		-		(3,103,279	)		-			(3,103,279	)
Balance as of June 30, 2023		22,812,048		2,281		4,373,260		(15,129,768	)		32,445			(10,721,782	)

Balance as of January 1, 2024		22,812,048		2,281		-		(17,476,700	)		(12,808	)		(17,487,227	)
Stock-based compensation		-		-		268,989		-			-			268,989
Issuance of common stock for prior period services		15,000		-		-		-			-			-
Issuance of common stock for conversion of debt		169,204		17		835,593		-			-			835,610
Issuance of common stock for exercise of warrants		162,867		16		293,233		-			-			293,249
Foreign currency translation gain		-		-		-		-			3,239			3,239
Net loss		-		-		-		(31,964,469	)		-			(31,964,469	)
Balance as of March 31, 2024		23,159,119		2,314		1,397,815		(49,441,169	)		(9,569	)		(48,050,609	)
Stock-based compensation		-		-		261,636		-			-			261,636
Issuance of common stock for services		50,000		5		198,495		-			-			198,500
Issuance of common stock for exercise of warrants		100		-		800		-

SEC Form 10-Q filed by Airship AI Holdings Inc.