Airship AI Holdings, Inc.

Previous wording

Our total validated pipeline as of March 31, 2026 was $165.3 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes over the next 18-24 months.

Current wording

Separately, our total validated pipeline as of August 6, 2026 was $206.1 million, consisting of single and multi-year opportunities for AI-driven edge, video, and sensor and data management platform across our customer verticals. Our pipeline includes opportunities at varying stages of progression with expected award timeframes over the next 18-24 months. Backlog reflects awards already executed, whereas pipeline reflects identified and qualified opportunities that have not yet resulted in awards. We can give no assurance as to whether, when, or in what amount pipeline opportunities will convert into backlog or revenue.

Previous wording

We are a robust AI-driven data management platform that solves complex data challenges for large institutions operating in dynamic and mission-critical environments with rapidly increasing volumes of data being ingested from a similarly rapidly growing number of data sources.

Current wording

We are an AI-driven data management platform that solves complex data challenges for large institutions operating in dynamic and mission-critical environments characterized by rapidly increasing volumes of data ingested from a rapidly growing number of data sources. We address these challenges by structuring “dark” or unstructured data at the edge, the location at which the data is generated and collected using purpose-built AI models, enabling real-time decision-making rather than transmitting raw data to a central location for processing.

Previous wording

We specialize in ingesting all available metadata from edge-based sensors used by government and law enforcement agencies around the world, including surveillance cameras (video), audio, telemetry, acoustic, seismic, and autonomous devices, along with large commercial corporations with fundamentally similar capabilities and requirements.

Current wording

We specialize in ingesting metadata from edge-based sensors used by government and law enforcement agencies worldwide, including video, audio, telemetry, acoustic, seismic and autonomous devices, as well as by large commercial organizations with similar requirements. Our trained AI models detect and extract identifying characteristics of objects within a video frame (for example, a vehicle’s license plate characters and its make, model and color), a process we refer to as “structuring” the data, and allow customers to act on that data both in real time and through historical search.

Previous wording

Our primary offerings include Outpost AI, Acropolis, and Airship Command. Our offerings allow customers to manage their data across the full data lifecycle, when and where they need it, using a highly secure permissioned based architecture.

Current wording

Our primary offerings include Outpost AI (edge structuring and analysis), Acropolis (enterprise management software backbone, deployable on-premises or in cloud/multi-cloud architectures), Airship Command (visualization across workstation, web and mobile) and Fortress Server (our on-premises data center server and storage platform). These product offerings allow customers to manage their data across the full data lifecycle through a secure, permission-based, single-pane-of-glass architecture.

Previous wording

Our typical customer engagement is a multi-year contractual agreement, an agreement which includes our core offerings as well as professional services, technical support, and software maintenance, which we expect will result in predictable, long-term recurring revenue. Our history shows that organizations that have chosen to partner with Airship AI stick with Airship AI.

Current wording

Our typical customer engagement is a multi-year agreement that includes our core offerings together with professional services, technical support and software maintenance, which we expect to result in predictable, long-term recurring revenue. From inception until the Merger in December 2023, we operated as a 100% employee-owned, bootstrapped company with no outside investment. As a U.S.-based company, we operate at the intersection of public safety and AI, in which we address a combined market we estimate at more than $70 billion in 2026 and growing, spanning edge AI hardware and software (approximately $30 billion, according to Grand View Research, 2026, service and professional robotics, including robotics-as-a-service (approximately $31 billion according to Fortune Business Insights, 2026), and agentic AI (approximately $10 billion according to multiple industry analysts, 2026).

Previous wording

Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the three months ended March 31, 2026, cost of sales decreased $81,000 to $3,187,000 as compared to $3,268,000 for the three months ended March 31, 2025. The decrease was due product mix with increased higher margin commercial sales during the three months ended March 31, 2026, offset by raw material cost increases.

Current wording

Cost of Net Revenues — Cost of net revenues primarily consists of product costs and post customer support. For the three months ended June 30, 2026, cost of sales increased $412,000 to $1,026,000 as compared to $614,000 for the three months ended June 30, 2025. The increase was due to increased sales and reflects product mix with increased higher margin commercial sales during the three months ended June 30, 2026, offset by raw material cost increases.

Previous wording

Research and Development Expenses — Research and development expenses for the three months ended March 31, 2026 increased $125,000 to $844,000 as compared to $719,000 for the three months ended March 31, 2025. The increase was due to increased expenses for product development in the United States and Taiwan.

Current wording

Research and Development Expenses — Research and development expenses for the three months ended June 30, 2026 increased $113,000 to $854,000 as compared to $741,000 for the three months ended June 30, 2025. The increase was due to increased expenses for product development in the United States and Taiwan.

Previous wording

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended March 31, 2026 increased $674,000 to $3,904,000 as compared to $3,230,000 for the three months ended March 31, 2025. The increase is primarily due to an increase in stock-based compensation expense of $238,000 and other personnel costs.

Current wording

Selling, General and Administrative Expenses — Selling, general and administrative expenses for the three months ended June 30, 2026 increased $921,000 to $3,735,000 as compared to $2,814,000 for the three months ended June 30, 2025. The increase is primarily due to an increase in stock-based compensation expense of $579,000 and other personnel costs.

Previous wording

Other Income (Expense) — Other income for the three months ended March 31, 2026 was $861,000 as compared to other income for the three months ended March 31, 2025 was $25,422,000. Other income for the three months ended March 31, 2026 consisted of (i) loss from change in fair value of earnout liability of $726,000; (ii) gain from change in fair value of warrant liability of $1,499,000; and (iii) interest income of $88,000. The loss from change in fair value of earnout liability resulted from the increase in the volatility factor to 78.4%, offset by a decrease in the our share price. The income from change in fair value of warrant liability was primarily the result of a decrease in our stock price.

Current wording

Other (Expense) — Other expense for the three months ended June 30, 2026 was $916,000 as compared to other expense for the three months ended June 30, 2025 was $21,735,000. Other expense for the three months ended June 30, 2026 consisted of (i) loss from change in fair value of earnout liability of $193,000; (ii) loss from change in fair value of warrant liability of $833,000; and offset by (iii) interest income of $110,000. The loss from change in fair value of earnout liability resulted from an increase in the our share price. The expense from change in fair value of warrant liability was primarily the result of an increase in our stock price.

Previous wording

*Net (Loss)*Income — Net (loss) for the three months ended March 31, 2026 was $721,000 as compared to a net income of $23,708,000 for the three months ended March 31, 2025. The net loss primarily related to increases in selling, general and administrative and research and development expenses.

Current wording

Net (Loss)* *— Net loss for the three months ended June 30, 2026 was $2,407,000 as compared to net (loss) of $23,757,000 for the three months ended June 30, 2025. The net loss primarily related to increases in selling, general and administrative and research and development expenses.

Previous wording

Other income for the three months ended March 31, 2025 consisted of (i) gain from change in fair value of earnout liability of $9,824,000; (ii) gain from change in fair value of warrant liability of $15,521,000; (iii) other income of $77,000. The gain from change in fair value of various financial instruments was primarily the result of a decrease in our stock price.

Current wording

Other income for the six months ended June 30, 2025 was $3,687,000 as compared to other expense of $13,076,000 for the six months ended June 30, 2024. Other income for the six months ended June 30, 2025 consisted of (i) gain from change in fair value of earnout liability of $2,522,000; (ii) gain from change in fair value of warrant liability of $1,027,000; and (iii) other income of $138,000. The gain from change in fair value of various financial instruments was primarily the result of an increase in our stock price.

Previous wording

Net income for the three months ended March 31, 2025 primarily related to noncash items of $24,833,000. Noncash items included (i) gain from change in warrant liability of $15,521,000; and (ii) gain from change in earnout liability of $9,823,000; and offset by (iii) stock based compensation of $428,000; and (iv) net amortization of operating lease right of use assets of $83,000.

Current wording

Net loss for the six months ended June 30, 2025 was $49,000. The net loss primarily related to an operating loss of $3,700,000 offset by noncash items of $2,569,000. Noncash items included (i) gain from change in warrant liability of $1,027,000; (ii) gain from change in earnout liability of 2,522,000; and offset by (iii) stock based compensation of $800,000; and (iv) net amortization of operating lease right of use asset of $180,000.

Previous wording

Liquidity is our ability to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. We have incurred losses from operations in the past few years and had an accumulated deficit of $46 million as of March 31, 2026.

Current wording

Liquidity is our ability to generate funds to support our current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. We have incurred losses from operations in the past few years and had an accumulated deficit of $48.7 million as of June 30, 2026. As of June 30, 2026, we had cash and cash equivalents of $12.4 million and no outstanding debt. Based on our current available cash and operations, we have concluded there is no substantial doubt about our ability to continue as a going concern for at least twelve months from the issuance of these financial statements.

Previous wording

On October 8, 2025, we entered into warrant exercise inducement offer letter with the holder of existing common stock warrants exercisable for an aggregate of 2,162,162 shares of common stock to exercise such warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds received from the exercise of the existing warrants were approximately $9,729,729, before deducting financial advisory fees. We intend to use the net proceeds from the exercise of the existing warrants for working capital and general corporate purposes.

Current wording

On October 8, 2025, we entered into warrant exercise inducement offer letter with the holder of existing common stock warrants exercisable for an aggregate of 2,162,162 shares of common stock to exercise such warrants at the existing exercise price of $4.50 per share, in exchange for our agreement to issue new common stock warrants to purchase 2,702,702 shares of common stock at an exercise price per share of $6.20. The aggregate gross proceeds received from the exercise of the existing warrants were $9,729,729, before deducting financial advisory fees. We intend to use the net proceeds from the exercise of the existing warrants for working capital and general corporate purposes.

Previous wording

Net cash generated by operating activities for the three months ended March 31, 2026 was $814,000. This amount was primarily related to (i) net loss of $721,000; and (ii) noncash items of $5,000; offset by (iii) operating assets and liabilities changes of $1,540,000 (including a $493,000 increase in deferred revenues). Noncash items included (iv) gain from change in warrant liability of $1,499,000; and offset by (v) loss from change in earnout liability of $726,000; (vi) stock based compensation of $666,000; and (vii) net amortization of operating lease right of use asset of $102,000.

Current wording

Net cash generated by operating activities for the six months ended June 30, 2026 was $579,000. This amount was primarily related to (i) net loss of 3,127,000; offset by (ii) noncash items of $2,077,000; and (iii) operating assets and liabilities changes of $1,629,000 (including a $314,000 increase in deferred revenues). Noncash items included (iv) loss from change in earnout liability of $919,000; (v) stock based compensation of $1,617,000; (vi) net amortization of operating lease right of use asset of $207,000; and offset by gain from change in warrant liability of $666,000.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $2,098,000. This amount was primarily related to (i) net income of $23,708,000; and offset by (ii) operating assets and liabilities reductions of $973,000 (including a $713,000 reduction in deferred revenues); and (iii) noncash items of $24,833,000. Noncash items included (iv) gain from change in warrant liability of $15,521,000; and (v) gain from change in earnout liability of $9,823,000; and offset by (vi) stock based compensation of $428,000; and (vii) net amortization of operating lease right of use assets of $83,000.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $3,919,000. This amount was primarily related to (i) net loss of $49,000; (ii) net working capital reductions of $1,301,000 (including a $606,000 reduction in deferred revenues); and offset by (iii) noncash items of $2,569,000. Noncash items included (iv) gain from change in warrant liability of $1,027,000; (v) gain from change in earnout liability of 2,522,000; and offset by (vi) stock based compensation of $800,000; and (vii) net amortization of operating lease right of use asset of $180,000.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $11,000 and consisted of proceeds from stock option exercises.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 was $56,000 and consisted of net proceeds from stock option and warrant exercises.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 was $497,000 and consisted of (i) repayment of advances by founders of $600,000; and offset by (ii) net proceeds from exercise of warrants of $60,000; and (iii) proceeds from stock option exercises of $43,000.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 was $1,182,000 and consisted of (i) repayment of advances by founders of $1,300,000; and offset by (ii) net proceeds from exercise of warrants of $60,000; and (iii) proceeds from stock option exercises of $58,000.

Previous wording

On September 7, 2023, we entered into a lease in Redmond, WA for 15,567 square feet of office and warehouse space which started August 1, 2024. The monthly payment is approximately $29,600 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on August 1, 2025 and each year thereafter. There is a one three year option to extend the lease based on the fair market rate on October 31, 2027. We do not believe that is reasonably certain that the lease will be extended.

Current wording

On September 7, 2023, we entered into a lease in Redmond, WA for 15,567 square feet of office and warehouse space which started August 1, 2024. The monthly payment is approximately $29,600 per month. The lease expires October 31, 2027 and the monthly payment increases 3% on August 1, 2025 and each year thereafter. There is a one three year option to extend the lease based on the fair market rate on October 31, 2027. The option must be exercised by October 31, 2026. We do not believe that is reasonably certain that the lease will be extended.

Previous wording

On December 6, 2024, we entered into two separate office leases in Mooresville, North Carolina, the terms of which commenced on February 1, 2025. We lease an aggregate of 5,240 square feet and the net monthly payment is approximately $9,105. The leases expire January 31, 2028 and the monthly payment increases 3% on February 1, 2026 and each year thereafter. There is no option to extend the lease.

Current wording

On December 6, 2024, we entered into two separate office leases in Mooresville, North Carolina, the terms of which commenced on February 1, 2025. We lease an aggregate of 5,240 square feet and the net monthly payment is $9,105. The leases expire January 31, 2028 and the monthly payment increases 3% on February 1, 2026 and each year thereafter. There is no option to extend the lease.

Previous wording

We believe that the significant accounting policies described in “Note 2, Summary of Significant Accounting Policies” to our audited consolidated financial statements are accurate and complete. The critical accounting estimates and policies during the three months ended March 31, 2026 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

We believe that the significant accounting policies described in “Note 2, Summary of Significant Accounting Policies” to our audited consolidated financial statements are accurate and complete. The critical accounting estimates and policies during the three and six months ended June 30, 2026 have not materially changed to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.