Airship AI Reports Third Quarter 2024 Financial Results

Third Quarter 2024 Net Revenues of $2.9 Million, Gross Profit of $2.2 Million and Gross Margin of 75%

2024 Net Revenue of $19.9 Million Through the 9 Months ended September 30, 2024 Represents a 61% Increase over FY 2023 Net Revenue of $12.3 Million

New Pro-U.S. Border Security Administration Provides Additional Macro Tailwinds for 2025 & Beyond

REDMOND, Wash., Nov. 14, 2024 (GLOBE NEWSWIRE) -- Airship AI Holdings, Inc. (NASDAQ: AISP) (“Airship AI” or the “Company”), a leader in AI-driven video, sensor, and data management surveillance solutions, today reported its financial and operational results for the third quarter ended September 30, 2024.

Q3 2024 Financial Highlights

• Net revenues for the quarter ended September 30, 2024, were $2.9 million.
  
• Gross profits for the quarter ended September 30, 2024, were $2.2 million.
  
• Gross margin percentage was 75% for the quarter ended September 30, 2024. Higher margins were in part due to product mix, with reduced equipment purchases and increased Outpost AI sales.
  
• Operating loss was $1.6 million for the quarter ended September 30, 2024, which reflected increased stock based compensation and overall sales levels.
  
• Other income for the quarter ended September 30, 2024, was $7.8 million, primarily due to a gain from a change in the fair value of earnout liability of $5.5 million, change in fair value of warrant liability of $1.5 million and change in fair value of convertible debt of $0.4 million.
  
• Net income for the quarter ended September 30, 2024, was $6.2 million, or $0.25 per basic share, primarily related to noncash income of $7.8 million.
  
• Net cash used in operating activities was $0.4 million in the quarter ended September 30, 2024.
  
• Cash and cash equivalents was $6.5 million as of September 30, 2024.
  
• Closed an $8 million public offering with net proceeds of approximately $7.3 million, after deducting the estimated offering expenses, in the quarter ended September 30, 2024.
  

Q3 2024 & Subsequent Operational Highlights

• Backlog as of September 30, 2024, was $6.6 million, representing firm fixed price contracts awarded in the second and third quarter that will be shipped and invoiced in the fourth quarter of 2024 or first quarter of 2025. Backlog is not indicative of future quarterly revenue as approximately 75% of quarterly revenue is transactional and recognized in the same quarter.
• Our total validated pipeline at the end of the quarter was approximately $130 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across all our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes throughout the next 18-24 months.
• Due to the sensitive nature of many of our customers and deployment use cases, we are often restricted from publicly disclosing awards and or limited as to the specifics of the customer and use case. Consequently, the vast majority of our awards are executed on closed or restricted contract vehicles which further limits the sharing of information that might be otherwise available.
• Multiple large contracts awarded throughout the quarter including but not limited to:
  
  
  • $4.0 million firm-fixed price contract for an agency within the U.S. Department of Homeland Security (“DHS”), for advanced integrated solutions supporting real-time intelligence collection operations along the United States’ borders, leveraging the Company’s edge IoT appliance, Outpost AI.
  • $1.2 million firm-fixed price support and maintenance contract for our existing deployment of Acropolis Enterprise Video and Data Management Platform supporting a Fortune 100 Transportation and E-Commerce company’ global operations.
    
    
• We successfully completed a pilot opportunity to replace failing capabilities within critical infrastructure on the U.S. southern border, leading to an Airship AI brand-name only award that will be shipped and installed in the fourth quarter of 2024. This initial award is in support of our single-largest opportunity, valued at more than $50 million over the next four (4) years. Estimated total contract value is conservatively based on data points from published market research, including size and scope, and pricing approved via awarded procurement efforts.
• We participated in JIFX, or Joint Interagency Field Exercise, an invite only event led by the Naval Post-Graduate School. The JIFX team leads experimentation in alternative methods to enable rapid technological development by cultivating a community of interest and hosting broadly scoped quarterly collaborative field events which enable DoD, US government, and allied stakeholders to identify, influence, and accelerate early-stage technology development that address national and collective security challenges.
• We participated in TIDE, or Technology Innovation Discovery Event, an invite only Department of Defense (DoD) sponsored event that aims to help innovative small businesses and non-traditional DoD performers showcase new hardware and software technologies that can significantly improve existing software or meet new challenges in support of the National Defense Strategy.
• We were a primary sponsor of and participant in UTAC, the premier unmanned aerial and robotic systems tactical event for Police, Public Safety, Government, and Defense agencies. UTAC is a fully immersive training event where public safety, government, enterprise, and defense operators gather to learn best practices, establish procedures, and gain experience with the latest innovations in unmanned aerial, ground, and maritime systems along augmenting technical solutions.
• Completed $8.0 million at-market public offering with net proceeds to the company of $7.0 million after deducting placement agent fees and offering expenses.
  
  
• Capital Markets Update:
  • Airship AI to commence regular quarterly conference calls in conjunction with financial results reporting in Fiscal 2025.
  • Airship AI to participate at the 13^th Annual ROTH Technology Conference in New York City on November 19-20, 2024.
  • Benchmark Company initiated coverage of Airship AI on November 13, 2024, with a Buy rating and price target of $6.
  • Airship AI to participate at the 13^th Annual Discovery One-on-One Conference in New York City on December 11, 2024.

2024 Outlook

• Triple-digit revenue growth and positive cash flow for calendar year 2024 supported by a strong and validated pipeline of ~$130 million, improving gross profit margins, and a strong recurring revenue model.
  
• Make tactical and strategic investments across our sales and business development organizations through organic cash flow from business operations and the cash exercise of public warrants.
  
• Release new Outpost AI product offerings as well as expand custom trained AI models supporting emerging edge analytic workflows.
  
• Continued innovation across our core Acropolis software platform supporting new workflows for cloud-based deployments in highly secure operational environments.
  
• Develop and execute expansionary opportunities in the commercial and retail markets, particularly around those companies involved in combating organized retail crime (“ORC”).
  
• Improve sourcing, supply chain management and production-based process efficiencies to help drive continued margin expansion.
  
• Targeted focus on brand awareness and engagement in new verticals through targeted marketing outreach opportunities, social media platforms, Airship AI hosted technology events, and industry tradeshow events.
  

Management Commentary

“The third quarter of 2024 saw continued momentum in support of our trajectory for triple-digit revenue growth for the full year,” said Paul Allen, President of Airship AI. “Our team was able to generate solid revenues for the quarter of $2.9 million at a gross margin percentage of 75%, our second consecutive quarter of gross margin percentages above 70%. We ended the quarter with $6.5 million in cash and cash equivalents and $1.1 million in accounts receivables.

"Historically, our third quarter tends to be slower due to the focus on the U.S. Government’s fiscal year-end, during which many of our larger opportunities go out for bid in the September timeframe. We also saw several large opportunities pushed out to FY 2025 or drastically cut due to budget challenges across several federal agencies. Additionally, the completion of the capital raise late in the quarter caused delays in bringing in several opportunities as the funds were needed to cover the cost of goods sold for those opportunities. Despite these headwinds, we achieved 18% year-over-year growth in net revenue for the quarter and 61% net revenue growth as compared to full year 2023 revenue of $12.3 million.

"While our recently completed capital raise did not close in time to be reflected in the Q3 results, it has significantly enhanced our ability to execute large transactions, particularly those involving substantial up-front costs of goods sold. The capital raise has also enabled us to expand our sales, business development, and partner marketing capabilities by bringing in specialized industry expertise and experience in managing large-scale defense programs. We have already made progress toward this objective with the addition of several high-caliber team members, and we are in the process of bringing on even more talent to further strengthen our capabilities.

"With former President Trump's election as president-elect and his stated commitment to rapidly increase investments in securing the border, we are already seeing a positive shift in the market dynamics surrounding our pipeline. Currently our pipeline is heavily weighted to initiatives directly supporting the Department of Homeland Security (DHS) and specifically Customs and Border Protection (CBP). This positions us exceptionally well to capitalize on increased investments in technology supporting securing the border as it leverages our strong relationship as an established, trusted partner of CBP, with a proven track record of successful software and hardware deployments across the agency.

“Building on our established presence in the federal law enforcement investigative environment, our rapidly expanding footprint in the broader federal market, including the Department of Defense (DoD), positions us to capitalize on the growing demand for AI-driven capabilities at the edge, an area where we have made significant investments. By transforming existing “dumb” sensors that require constant monitoring into autonomous systems that proactively alert users when specific conditions are met, we are not only revolutionizing homeland security, but also enhancing digital operations on battlefields worldwide,” concluded Mr. Allen.

About Airship AI Holdings, Inc.

Founded in 2006, Airship AI (NASDAQ: AISP) is a U.S. owned and operated technology company headquartered in Redmond, Washington. Airship AI is an AI-driven video, sensor and data management surveillance platform that improves 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. Airship AI’s product suite includes Outpost AI edge hardware and software offerings, Acropolis enterprise management software stack, and Command family of visualization tools.

For more information, visit https://airship.ai.

Forward-Looking Statements

The disclosure herein includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward looking. These forward-looking statements include, but are not limited to, (1) statements regarding estimates and forecasts of financial, performance and operational metrics and projections of market opportunity; (2) changes in the market for Airship AI’s services and technology, expansion plans and opportunities; (3) the projected technological developments of Airship AI; and (4) current and future potential commercial and customer relationships. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Airship AI’s management and are not predictions of actual performance. These forward-looking statements are also subject to a number of risks and uncertainties, as set forth in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024, and the other documents that the Company has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its assessments to change. However, while it may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Investor Contact:

Chris Tyson/Larry Holub
MZ North America
949-491-8235
AISP@mzgroup.us

AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
As of September 30, 2024 and December 31, 2023
	September 30, 2024				December 31, 2023
ASSETS	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	6,515,688			$	3,124,413
Accounts receivable, net of allowance for credit losses of $0		1,121,862				1,648,904
Prepaid expenses and other		373,498				18,368
Income tax receivable		-				7,230
Total current assets		8,011,048				4,798,915
PROPERTY AND EQUIPMENT, NET		-				1,861
OTHER ASSETS
Other assets		155,432				182,333
Operating lease right of use asset		929,890				1,104,804
TOTAL ASSETS	$	9,096,370			$	6,087,913
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade	$	722,742			$	2,908,472
Advances from founders		1,750,000				1,750,000
Accrued expenses		121,978				200,531
Senior Secured Convertible Promissory Notes		1,793,360				2,825,366
Current portion of operating lease liability		267,660				174,876
Deferred revenue- current portion		3,326,543				4,008,654
Total current liabilities		7,982,283				11,867,899
NON-CURRENT LIABILITIES:
Operating lease liability, net of current portion		718,393				943,702
Warrant liability		3,501,543				667,985
Earnout liability		6,229,390				5,133,428
Deferred revenue- non-current		3,585,344				4,962,126
Total liabilities		22,016,953				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 September 30, 2024 and December 31, 2023		-				-
Common stock - $0.0001 par value, 200,000,000 shares authorized, 26,954,871 and 22,812,048 shares issued and outstanding as of September 30, 2024 and December 31, 2023		2,692				2,281
Additional paid in capital		11,845,413				-
Accumulated deficit		(24,765,218	)			(17,476,700	)
Accumulated other comprehensive loss		(3,470	)			(12,808	)
Total stockholders' deficit		(12,920,583	)			(17,487,227	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	9,096,370			$	6,087,913

AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
For the three and nine months ended September 30, 2024 and 2023
(Unaudited)
	Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
NET REVENUES:
Product	$	1,730,521			$	910,441			$	16,525,515			$	4,415,386
Post contract support		1,137,128				1,473,915				3,318,180				3,677,585
		2,867,649				2,384,356				19,843,695				8,092,971
COST OF NET REVENUES:
Cost of Sales		285,448				439,565				9,381,244				2,575,523
Post contract support		428,820				342,869				1,174,737				1,437,910
		714,268				782,434				10,555,981				4,013,433
GROSS PROFIT		2,153,381				1,601,922				9,287,714				4,079,538
RESEARCH AND DEVELOPMENT EXPENSES		1,073,735				688,798				2,471,872				2,028,081
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,667,130				2,142,327				8,829,544				8,067,343
TOTAL OPERATING EXPENSES		3,740,865				2,831,125				11,301,416				10,095,424
OPERATING LOSS		(1,587,484	)			(1,229,203	)			(2,013,702	)			(6,015,886	)
OTHER INCOME (EXPENSE):
Gain (loss) from change in fair value of earnout liability		5,511,961				-				(1,095,962	)			-
Gain (loss) from change in fair value of warrant liability		2,471,186				-				(2,833,558	)			-
Gain (loss) from change in fair value of convertible debt		370,548				(400,921	)			(141,636	)			(400,921	)
Loss on note conversion		(434,797	)			-				(593,591	)			-
Interest expense, net		(133,824	)			(33,761	)			(587,149	)			(57,830	)
Other income (expense)		16,366				(2,722	)			(22,922	)			(7,425	)
Total other income (expense), net		7,801,440				(437,404	)			(5,274,818	)			(466,176	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		6,213,956				(1,666,607	)			(7,288,520	)			(6,482,062	)
Provision for income taxes		-				-				-				-
NET INCOME (LOSS)		6,213,956				(1,666,607	)			(7,288,520	)			(6,482,062	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation income (loss), net		354				(2,410	)			9,338				40,141
TOTAL COMPREHENSIVE INCOME (LOSS)	$	6,214,310			$	(1,669,017	)		$	(7,279,182	)		$	(6,441,921	)
NET INCOME (LOSS) PER SHARE:
Basic	$	0.25			$	(0.07	)		$	(0.31	)		$	(0.28	)
Diluted	$	0.17			$	(0.07	)		$	(0.31	)		$	(0.28	)
Weighted average shares of common stock outstanding
Basic		24,696,425				22,812,048				23,609,189				22,812,048
Diluted		35,445,694				22,812,048				23,609,189				22,812,048

AIRSHIP AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2024 and 2023
(Unaudited)
	Nine Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,288,520	)		$	(6,482,062	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		1,861				11,160
Stock-based compensation		803,797				479,913
Stock-based compensation- warrants		284,478				2,136,115
Amortization of operating lease right of use asset		174,914				513,234
Accelerated amortization of ROU asset - lease termination		-				265,130
Gain from lease termination		-				(344,093	)
Issuance of common stock for services		198,500				-
Noncash interest expense		520,758				-
Loss from change in fair value of warrant liability		2,833,558				-
Loss from change in fair value of earnout liability		1,095,962				-
Loss from change in fair value of convertible note		141,636				400,921
Loss on note conversions		593,591				-
Changes in operating assets and liabilities:
Accounts receivable		527,042				104,814
Prepaid expenses and other		132,512				(295	)
Other assets		26,901				(255,431	)
Operating lease liability		(132,525	)			(461,203	)
Payroll and income tax receivable		7,230				960,383
Accounts payable - trade and accrued expenses		(2,261,087	)			377,519
Accrued income tax expense		-				(10,000	)
Deferred revenue		(2,058,893	)			(220,144	)
NET CASH USED IN OPERATING ACTIVITIES		(4,398,285	)			(2,524,039	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and warrants for offering, net		7,290,000				-
Proceeds from convertible promissory note		-				1,984,582
Proceeds from warrant exercise		294,049				-
Advances from founders, net		-				1,150,000
Proceeds from stock option exercises		196,173				-
Repayment of small business loan and line of credit		-				(424,540	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		7,780,222				2,710,042
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,381,937				186,003
Effect from exchange rate on cash		9,338				(2,244	)
CASH AND CASH EQUIVALENTS, beginning of period		3,124,413				298,614
CASH AND CASH EQUIVALENTS, end of period	$	6,515,688			$	482,373
Supplemental disclosures of cash flow information:
Interest paid	$	-			$	21,438
Taxes paid	$	2,410			$	17,247
Noncash investing and financing
Elimination of advances to founders in connection with contribution of Zeppelin by shareholders	$	-			$	1,100,000
Elimination of payables to founders in connection with contribution of Zeppelin by shareholders	$	-			$	1,100,000
Issuance of common stock for debt interest payment	$	487,642			$	-
Issuance of common stock for debt conversion	$	1,770,340			$	-
Recognition of warrant liability	$	-			$	15,418